State steps up plan to woo foreign investors

Shelter Solutions Limited managing director and CEO Saleh Mung'ang'a (holding a microphone) take foreign investors through an architectural design of the Shimoni Integrated Development Project.[Gideon Maundu,Standard]

Kenya has stepped up plans for a financial centre that seeks to position the country as the first stopover for foreign investors targeting the rest of the continent.

The centre, which was first mooted in 2014, hopes to attract institutional investors who will offer a range of services in the financial market.

“We are not in for quick bucks,” said Nairobi International Financial Centre (NIFC) Chairman Vincent Rague.

“NIFC is about creating a regulatory environment to attract investments,” he added.

In December 2016, Cabinet approved the Nairobi International Financial Centre Bill.

It seeks to provide a framework to facilitate and support the development of an efficient and globally competitive financial services sector through the establishment of the Nairobi International Financial Centre and the Nairobi International Financial Centre Authority. An IFC is typically a concentration of a wide variety of international financial businesses and transactions in one location, usually a city and whose laws and institutions provide optimal conditions for a country’s financial services industry.  

The Nairobi IFC aims to have raised over Sh200 billion in investments by 2030.

Just a week ago, Prudential, a global insurance provider with footprints in much of Africa, showed intention to join the centre during President Uhuru Kenyatta’s visit to the United Kingdom.

Rague said at the moment, they are more focused on the policy side of things than on putting up a physical office.

“There is no point in having an international financial centre building if there is no business,” he said.

The idea is to have a well-established centre like Mauritius’, which has positioned itself in the continent to attract financial investments.

“If you look at London or Hong Kong, it took 50 and 100 years respectively, while it took Dubai 30 years. We should not expect this to be a flick of the finger,” said Rague.

Rague said Africa has been viewed as a difficult continent to do business in, but the centre will position Kenya as a one-stop shop for would-be investors.

This, added Rague, will in turn improve the country’s ranking in the Ease of Doing Business list by the World Bank.

He said even if international businesses do not put up physical offices here, which means they may not be subjected to certain taxes, some benefits will still accrue from using the financial services centre.

For instance, any money that goes through the country will attract service fees.

“And if the money sits in Nairobi for two or three days, there will be even more benefits,” said Rague, citing corporations like General Electric.  

“These people are either renting a house or using our services so they are an addition to our economy,” he says.

He says the centre will also serve local high-net-worth individuals.

“Instead of people leaving Kenya to set up investment trusts in New York or London, we want them to manage (them) here,” said Rague.

However, he was quick to point out that no investor will be allowed in the centre just because there is a possibility they will not be subjected to taxes.

The NIFC chair said they will conduct due diligence on businesses that want to set up through the centre.

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