Rwanda’s plan to become a financial hub gains momentum

Rwanda's plan to establish the Kigali International Financial Centre (KIFC) as a financial hub in Africa is gaining momentum. The newly formed Rwanda Finance Board of Directors recently held its first meeting, signaling progress towards realizing the full establishment of the KIFC. CNBC Africa had the opportunity to speak with Umulinga Karangwa, a board director at Rwanda Finance Limited, to shed light on the latest developments and future prospects for the financial center. During the interview, Karangwa highlighted the success of the initial board meeting, where discussions revolved around strategic plans for launching the KIFC. The meeting was described as highly productive, setting the stage for what promises to be a groundbreaking project that will unfold over the next few years. Karangwa expressed enthusiasm for the upcoming launch and emphasized the importance of key legal and policy reforms that have been put in place to attract international investors to the financial center. Notably, Rwanda has recently enacted four laws aimed at creating an attractive and sustainable legal framework for investments. These laws include provisions such as the Partnership Law, essential for facilitating the establishment of funds in the KIFC. With these reforms in place, the KIFC is poised to welcome investors and open doors to new opportunities. Karangwa underscored the significance of these reforms in enhancing Rwanda's financial structure to attract substantial investments. The country has shown dedication over the past few years to establish a robust framework that aligns with international standards. As the launch of the KIFC draws near, ongoing efforts will focus on maintaining an appealing environment for investors. In terms of international tax standards, Rwanda has set an effective tax rate of 3% for eligible activities within the KIFC. This rate is in line with similar financial centers worldwide, offering a balance between attractive yet compliant tax regimes. The KIFC aims to cater to both foreign and domestic investors, fostering growth and value creation within Rwanda's financial services industry. To address cross-border taxation concerns, Rwanda is actively expanding its network of double taxation avoidance treaties with other countries. These treaties, based on the OECD model, provide clarity on the taxation of cross-border investments and promote international investment transparency. Karangwa assured that these treaties are standard practice and are essential for creating a conducive investment climate. Rwanda has already established key treaties with jurisdictions like the UAE and South Africa, with plans to broaden its network further to attract a diverse range of investors. Looking ahead, the launch of the KIFC is scheduled to coincide with the Commonwealth Heads of Government Summit, offering a prominent platform to showcase the financial center to potential investors from various countries. The event, expected to take place in the coming months, signifies a significant milestone in Rwanda's journey towards establishing the KIFC as a leading financial hub in Africa.