Rwanda’s Kigali International Financial Center (KIFC) is one of the reasons the small East African nation is one of the leading sources of investment on the continent as of 2023.
KIFC has been ranked 3rd in Africa and 2nd in Sub-Sahara Africa in the latest 2023 Global Financial Centres Index (GFCI 34).
Investors under the KIFC are granted a preferential corporate income rate and exemption from withholding tax on dividends, interest and royalty payments, in addition to being facilitated to legally and operationally set up their various enterprises and activities, in under 6 months.
“What Rwanda is doing is developing an international financial centre with a clear proposition to investors: direct access to multiple African markets and a centralized, holding presence for investors to locate all their financial activities across Africa, within a safe, fully compliant, transparent environment underpinned by the rule of law and serviced by Rwanda’s fast growing, high quality financial services industry.”
– Kigali International Financial Center
According to Jean-Marie Kananura, Chief Investment Officer, Rwanda Finance Limited, through KIFC, various structures are facilitated to set up in Rwanda. These include:
In a recent interview, Kananura highlighted some of the steps the center is taking to increase business competitiveness and set-up processes.
“To make Rwanda as a preferred destination for investors means we must have better legal framework, develop necessary skills and enhance our promotion activities,” he said. “We have 16 tax treaties in force to enable firms setting up in Rwanda for instance avoid being taxed twice, which is an incentive,” he noted.
According to the Global Financial Centers 2023 Index, Kigali International Financial Center is ranked among the top 15 destinations they consider will become more significant over the next two to three years. @LongFinance
The center is also welcoming to startups, offering them a supportive environment to nurture and develop their business ideas.
“One of the startups which has benefited is the America’s Zipline, it designs, manufactures, and operates the world’s largest instant logistic and delivery system.”
At present, the financial sector constitutes 3 percent of Rwanda’s economy. However, the government has set ambitious targets for the future. By 2035, their goal is to elevate the financial services sector’s contribution to the GDP to 5.2 percent, and by 2050, they aim for an even more substantial contribution, targeting 11.8 percent.
The common theme for KIFC incentives is that for investors to access them, they have to fulfill both minimum economic substance requirements and also demonstrate that management and control resides in Rwanda.
According to KIFC, for example, for management and control, investors will need to demonstrate the following:
At least (minimum quorum) one director or twenty-five percent of directors reside in Rwanda
50% of board members should be in Rwanda for board meetings. Virtual meetings are acceptable
Board meetings for strategic decisions should occur in Rwanda
Board resolutions should be in Rwanda for safe keeping
The Board must include at least two professional or qualified Rwandan residents
A physical office of the company in Rwanda
At least 30% of the professional staff are Rwandan
Threshold set for minimum annual expenditure in Rwanda
Threshold set for total assets to be consolidated in Rwanda
Since making its debut on the Global Financial Centres Index (GFCI), which assesses the competitiveness of financial centers worldwide, KIFC has consistently maintained 5th position in Africa with the most recent year [2023] seeing it jump to 3rd position.
KIFC ranks 3rd in Africa among such financial jurisdictions measured by the index below:
1.) Casablanca
2.) Mauritius
3.) Kigali
4.) Johannesburg
5.) CapeTown
6.) Lagos
Author:
MANZI
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