KIFC eyeing funds from Luxembourg and Sweden – Jeune Afrique
The Kigali International Financial Center (KIFC) is expecting investors from Luxembourg and Sweden as it positions itself as the premier location for investment in Africa.
According to Ntoudi Mouyelo, the investment director of Kigali International Finance Center (KIFC) interviewed by The Africa Report/Jeune Afriquea Luxembourg fund has “confirmed its interest” in opening an entity in the Rwandan financial centre. The fund, whose name has not yet been revealed, wants to use the country as a hub allowing it to invest in the bond debt of African SMEs. This installation, which will take the form of a dedicated investment vehicle (special purpose vehicle) is expected in the third quarter of this year.
Also according to Ntoudi Mouyelo, a Swedish fund is also planning to establish an entity in Rwanda to target investments in start-ups on the continent. The move, he said, is expected to be announced at the Commonwealth Heads of State meeting scheduled to take place in Kigali in June.
As a reminder, KIFC, mentioned since 2017 and in operation since 2020, intends to respond to the desire of the Rwandan authorities to position their country as a hub for African and international investors wishing to carry out operations across the continent. The place must benefit from international agreements and the legislative reforms put in place by Kigali. In October, the country signed a bilateral agreement with Luxembourg aimed in particular at supporting the KIFC. A month earlier, Rwanda, which wants to set up an attractive tax regime, signed a treaty with Luxembourg to put an end to double taxation. This measure has facilitated the interest of the Luxembourg fund, according to Ntoudi Mouyelo. A similar agreement was reached with China in December.
Also according to the investment manager of KIFC, fund managers from West and Southern Africa have applied for licenses to open structures in Rwanda. By June at the latest, at least one new manager from each of these two regions will be established in Rwanda, maintains Ntoudi Mouyelo. Fund administrators and corporate service providers from Mauritius are also expected by the fourth quarter of 2022. “We are not only a place of transition of resources but a place where talents meet”, insists the leader of KIFC.
Fintech first
Rwanda has reformed its tax laws and introduced new legislation on insolvency and arbitration in order to attract inflows. The February 2021 law to promote foreign investment in the country guarantees the repatriation of profits and interest on loans. International companies having their headquarters or a regional office in Rwanda benefit from a zero corporate tax rate. There is also a seven-year corporate tax exemption for investments in sectors such as manufacturing, energy, healthcare and technology.
In November, KIFC announced the creation of the $250 million Virunga Africa Fund I, whose main investors are Qatar Investment Authority and the Rwanda Social Security Board (Public Pension Fund).
In February, KIFC created an African fintech fund launched by South African investor Vusi Thembekwayo. The fund is looking to raise an initial amount of $50 million, with an eventual target of between $100 million and $120 million. Seen from Kigali, this shows that Rwanda is better placed than South Africa as a center for cross-border investment.
“The common denominator is the pan-African orientation,” explains Ntoudi Mouyelo. “We want to be the financial center for African investments”. KIFC also wants to be the conduit for Africans who want to invest outside the continent, recalls the head of the financial center, who highlights the advantages of Rwanda’s tax regime, compliance with international compliance standards and the absence of restrictions on currency movements and repatriation of capital gains.