"Leveraging its strategic geographical location, modern legal and regulatory framework, good corporate governance, and compliance with international financial regulations and ease of setting up and doing business, KIFC has a strong value proposition which will facilitate strategic investments into Africa, and create a bridge between the continent and the rest of the world, particularly North America (US and Canada), Latin America, Europe, and Asia,….. It will fill the void in facilitating domiciliation and structuring of African focused investments.” 

African markets offer enormous trade and investment opportunities with high returns and strong growth potential.

In the infrastructure space alone, the African Development Bank (AfDB) estimates that the minimum infrastructure needs to sustain economic growth, population, and income level of African countries, is between US$130 billion and US$170 billion per annum. 

With the ongoing implementation of the African Continental Free Trade Area (AfCTA), which has established a free trade area of 1.3 billion people across 55 countries with a total GDP valued at US$3.4 trillion, cross-border trade will be boosted and international investment opportunities will grow significantly.

 Other factors driving the investment opportunities available in African markets, include the demographic dividend, vast consumer base, and arable land.

However, these growing investment opportunities are only being partially tapped, despite increasing interests from Western European countries, the USA, China, India, Japan, and Australia.

There remains a perception amongst some international investors that the risks of African markets outweigh the potential benefits.

The major factor dampening the appetite of potential international investors, including private equity firms, from investing in the continent, is the perception that in African countries, the macroeconomic environment is unstable; political and security risks are high; governance is poor and corruption rife; the legal and regulatory framework is uncertain; there is geographic diversity: and there is a shortage of local expertise and suitable investment vehicles, among other factors.

I must emphasis that this is a perception.

The expansion of world-class IFCs in Africa attracts more investors and provides more choice of Africa-based platforms for structuring the investments of Development Finance Institutions for Africa. It also provides more choice, both for domiciling fund vehicles and investment holding vehicles.

Although the main financial hubs on the continent - Casablanca Finance City, Johannesburg, and Mauritius, have addressed the concerns of hesitant international investors, Africa, particularly East Africa and the Great Lakes Regions, will benefit from the attractiveness of the KIFC, which provides a promising prospect of not only bridging an existing gap in the heart of Africa, but also help in changing the perceptions of international investors and increasing capital deployment in Africa.

Building on Rwanda’s leadership role in the establishment of AfCFTA, KIFC will strive to lead in the promotion of cross-border investments. Rwanda has already established itself as a country where: doing business easy; legislation is business friendly; Government institutions and private sector (especially banks and financial institutions) are compliant with global practices of transparency, governance, and ethics; the legal and regulatory framework sound; there is zero tolerance policy for bribery and corruption; and there is a low crime rate and political stability. It is safe, compliant, and has a pro-business and financial ecosystem.

To provide greater comfort to international investors and enhance the attractiveness of KIFC, Rwanda Finance is diligently implementing key reform actions, to strengthen the investment frameworks with investor friendly policies, modern and innovative laws, and forward thinking-regulations.

These reforms include acceleration of the signing of Double Taxation Treaties and Investment Promotion and Protection Agreements, mobilization of highly qualified professionals and development of skilled talent pool for the KIFC.  They also include strategic initiatives to support the development of FinTech and Sustainable Finance, as well as mobilize skilled talent for KIFC members.

In the meantime, KIFC is positioning itself as the preferred gateway for investment flows into Africa. It is also positioning itself as a platform for financial services and trade in Africa in general, and the East and Central African regions in particular.

 Rwanda is an active member of the African Union, East African Community, the Common Market for Eastern and Southern Africa and the Council of the Great Lakes, and Rwanda Finance has the expertise and experience to understand the demands of the different markets, investor expectations and the challenges that are present when investing in African countries.

Leveraging its strategic geographical location, modern legal and regulatory framework, and compliance with international financial regulations, KIFC has a strong value proposition which will facilitate strategic investments into Africa, and create a bridge between the continent and the rest of the world, particularly North America (US and Canada), Latin America, Europe, and Asia,…..It will fill the void in facilitating domiciliation and structuring of African focused investments.

In view of the foregoing, I am optimistic that post-Covid-19, KIFC will become the home of a number of international banks, more legal firms, corporate services, investment funds and private equity funds, which will play key role in fostering capital deployment in Africa, and contribute to the continent’s structural transformation.

The writer is the Vice Chair of Rwanda Finance Limited.

The views expressed in this article are of the author.