Kigali International Financial Centre supporting international investment into Africa

Over the past eight years the Rwanda Government has deliberately considered and studied the possibility of advancing the competitiveness of Rwanda’s financial sector to meet international standards and position the country as a financial services hub for the continent. After wide consultation and engagement, the Rwandan Government established Rwanda Finance Limited to lead the development and promotion of Kigali International Financial Centre (KIFC) The KIFC is a positive development on the continent that should help to attract more investment into Rwanda and other African countries. Over the last two years, Rwanda has deliberately enhanced a number of laws and regulations to support its existing financial services industry and to position Rwanda as an attractive ecosystem for foreign investment. “KIFC”, as it is known, is promoted by Rwanda Finance Limited and positions Kigali as a preferred financial centre for international investment in African for: Holding Companies, Fund and Fund Management Companies, Foundations and Family Offices, Business Process Outsourcing, Fintech Companies, International Banks, Foreign Exchange Trading hubs, Trust and Corporate Services providers and other entities. KIFC is the first of its kind in Africa, in that it is not offering a location, a building, an economic free zone or a specific category of company registration. Instead it is providing a conducive ecosystem for these organisations to operate in and invest in Rwanda specifically as a gateway to the rest of Africa. KIFC’s umbrella network of laws and regulations is intended to nurture domestic and foreign talent, support leading technologies that drive value and inspire trust amongst investors, regulators and other stakeholders. Rwanda Finance Limited seeks to position KIFC as aligning the needs of financial centre investors, related professional services providers, the government and regulators. The strategy to support and develop Rwanda as a financial centre has picked up momentum and the future looks promising. Typically, at a global level, financial centres provide a regulatory and legislative ecosystem for certain entities to operate. Through its financial centre, a country’s government will clearly articulate the tax, legal and regulatory requirements for these entities and that level of clarity engenders confidence amongst these entities and trust in the financial centre itself. Trust is extremely important. Countries and financial centres that offer aggressive tax incentives to attract capital flow are increasingly becoming outdated and are being subjected to higher international standards and scrutiny. KIFC deliberately adheres to and supports full compliance with international tax standards in the provision of incentives and requirements associated with minimum economic substance, Rwanda’s tax regime and recent reforms. This strategy ensures that KIFC will not compete with other financial centres on aggressive and harmful tax incentives that could be detrimental to the reputation of Rwanda, nor will Rwanda’s tax regime or reforms erode the existing tax revenue base in Rwanda. The ‘Africa rising’ story is not new, but there is a need for financial centres like KIFC to provide an ecosystem for the kinds of Holding Companies, Funds and Professional Services that support significant inward investment into Africa. For example, a multinational opening a holding company to support a number of subsidiaries in different African markets will need an appropriate tax and regulatory regime for its holding company to operate efficiently. Recognising that need for clarity, Rwanda’s government has endeavoured to pass a number of tax and legal reforms and continues to do so. Rwanda has also initiated 24 new double taxation treaties, 13 of them on the African continent, six with Europe and the others in countries like China, South Korea, Israel, and the US. This number of treaties is exceptional in Africa and helps to position Rwanda as a highly credible financial centre for inward investment in Africa.