The Kigali International Financial Centre (KIFC) aims to attract foreign enterprises and investors, enhancing Rwanda’s competitiveness in the financial sector. In 2021, Kigali became part of the Global Financial Centres Index (GFCI), which evaluates the competitiveness of 120 financial centers worldwide across five key criteria: financial sector development, human capital, business environment, infrastructure, and reputation.
As per the recent index released on March 23, 2023, Kigali maintained its fourth position in Sub-Saharan Africa, remaining among the top 15 International Financial Centres globally with a strong reputation and visibility. It is the only African IFC that is projected to become more influential in the near future. Another notable financial center in the region, Mauritius, witnessed an improvement in its GFCI ranking by 10 spots, largely attributed to its removal from the Financial Action Task Force (FATF) grey list, emphasizing the significance of robust anti-money laundering practices for financial centers.
Rwanda joined the Global Forum on Transparency and Exchange of Information for Tax Purposes in 2017 and continues to implement substantial reforms to ensure full compliance with international best practices in anti-money laundering and tax transparency. This year alone, Rwanda has enacted more than five laws to strengthen financial and tax transparency.
However, beyond compliance and good governance, emerging trends discussed during the index’s launch have an impact on the competitiveness of financial centers. These include advocating for carbon accounting standards to promote investments in critical sectors and technologies, as well as a shift in professionals’ and investors’ preferences for locations in the post-Covid era, where air connectivity plays a lesser role. Sustainability and green financing are becoming increasingly influential factors in choosing the location for financial activities, as the industry as a whole transitions towards green and sustainable business models.
The global trend towards sustainable finance presents significant opportunities for emerging and smaller financial centers like Kigali. Professor Michael Mainelli, Executive Chairman of the Z/Yen Group, highlighted the success of financial centers such as Stockholm, Copenhagen, and Amsterdam in establishing themselves as sustainable finance specialists. Asian centers like Seoul and Singapore have also made substantial investments in talent development and transforming their financial industries towards green financing and FinTech.
To excel in sustainable finance, African financial centers must commit to a green transition of the entire economy. Additionally, centers like Kigali need to develop expertise in sustainable finance, establish carbon pricing and trading mechanisms, and incorporate environmental standards across various sectors.
Another crucial trend is the growing influence of FinTech in the financial services industry, compelling traditional providers to adopt FinTech solutions to stay relevant. This presents a significant opportunity for African financial centers, considering the limited presence of legacy systems on the continent and the expanding population of unbanked individuals.
Recognizing this opportunity, the Kigali International Financial Centre has positioned itself as a FinTech hub, offering attractive incentives and a regulatory sandbox under the National Bank of Rwanda where FinTech companies can test new products in a secure environment. The need for regulators to address regulatory challenges promptly and act as enablers for FinTech was emphasized by Professor Mainelli and Mr. Sopnendu Mohanty, Chief FinTech Officer at the Monetary Authority of Singapore, during a preparatory meeting for the upcoming Inclusive FinTech Forum.
The Inclusive FinTech Forum, organized by the Kigali International Financial Centre and Elevandi (a company established by the Monetary Authority of Singapore), is a global platform for financial inclusion and FinTech for good. Scheduled to take place in Kigali from June 20-22, 2023, the forum will bring together the global FinTech community, including government leaders, regulators, entrepreneurs, and investors, to Rwanda.