The Kigali International Financial Centre (KIFC) looks at attracting foreign businesses and investors, which is set to improve Rwanda’s competitiveness, within the financial sector.
In 2021, Kigali joined the Global Financial Centres Index (GFCI), which measures the competitiveness of 120 financial centres globally, across five key indicators; including financial sector development, human capital, business environment, infrastructure, and reputation.
Following the latest index released on March 23, 2023, Kigali retained the fourth position in Sub-Saharan Africa, continuing to be ranked among the top 15 International Financial Centres globally with the highest reputational advantage or visibility, and has been ranked twice as the only African IFC to become more significant in the near future.
Another key financial centre in the region that performed well was Mauritius which saw an improvement in the GFCI ranking by 10 spots largely attributed to its removal from the Financial Action Task Force (FATF) grey list – an indicator that continues to showcase the importance of effective anti-money laundering practices for financial centres.
Rwanda joined the Global Forum on Transparency and Exchange of Information for Tax Purposes in 2017 and continues to implement significant reforms to be fully compliant with international best practices in anti-money laundering and tax compliance. Just this year, Rwanda has gazetted more than five laws towards strengthening financial and tax transparency.
Beyond compliance and good governance, however, during the index’s launch, Mike Wardle, the CEO of the Z/Yen Group, highlighted a few emerging trends that are beginning to affect the competitiveness of financial centres. These include the lobbying of regulators for standards on carbon accounting to promote investments into critical sectors and technologies, as well as professionals and investors becoming more open to moving to new places in the post-Covid era where air connectivity plays less of a role. Sustainability and green financing are increasingly becoming key factors in the choice of location for financial activities, with the financial industry as a whole transitioning towards green and sustainably linked business models.
There is a clear trend towards sustainable finance globally, creating huge opportunities for newer and smaller financial centres such as Kigali. Professor Michael Mainelli, Executive Chairman of the Z/Yen Group, added to this, mentioning Stockholm, Copenhagen and Amsterdam as financial centres that have been successful in establishing themselves as specialists in sustainable finance, as well as Asian centres such as Seoul and Singapore that have invested a great deal in talent development, and the transformation of their financial industries towards green financing and FinTech.
In order for African financial centres to do well in sustainable finance, a commitment towards a green transition of the whole economy is necessary, coupled with the need for centres including Kigali to develop talent in sustainable finance, develop carbon pricing and trading mechanisms as well as incorporate environmental standards across the economy.
Another key emerging trend, is the increasing influence of FinTech in the financial services industry, forcing traditional financial service providers to adopt FinTech solutions to keep up with the changing times. This is also poised to provide African financial centres with a significant opportunity to leap-frogging others, considering the fewer number of legacy systems on the continent and the increasing size of unbanked populations.
Kigali International Financial Centre has taken heed to this opportunity, positioning itself as a FinTech hub that offers significant incentives and a sandbox under the National Bank of Rwanda where FinTech’s can test new products in a safe environment. The need for regulators to swiftly address regulatory challenges and act as an enabler for FinTech was highlighted by both Professor Mainelli, as well as Mr. Sopnendu Mohanty, Chief FinTech Officer with the Monetary Authority of Singapore, during the preparatory meeting held last month for the upcoming Inclusive FinTech Forum.
The Inclusive FinTech Forum is a global platform for financial inclusion and Fintech for good, organised by the Kigali International Financial Centre and Elevandi, a company established by the Monetary Authority of Singapore (MAS) to advance FinTech in the digital economy. This year’s forum will be held in Kigali from June 20-22, 2023, bringing the global FinTech community including government leaders, regulators, entrepreneurs, and investors to Rwanda.
Laura Bierer - Advisor, Tony Blair Institute and Charlotte Uwase Gahima Strategy & Impact Analyst, Rwanda Finance Limited