Ensure Kenyans gain from financial centre
Kenya has finally launched the Nairobi International Financial Centre (NIFC) whose goal is to develop a more predictable and efficient business environment. The move is expected to bolster domestic and foreign investment, thus improving wealth and job creation.
The move aims to leverage the utility to raise over Sh236 trillion ($2 billion) on targeted incremental cumulative investments by 2030.
NIFC will target firms that provide large pools of capital, drive innovation and are committed to the highest standards of Environmental, Social and Governance (ESG) performance. This should drive sustainable businesses that should, if well executed, cement Kenya’s position as the region’s business hub. It will also open up services of venture capital firms, asset managers, insurance companies and financial services companies with a focus on fintech and green finance. This, we acknowledge, is the way to future growth of business and the economy.
As the third-largest economy in sub-Saharan Africa, Kenya is already a vibrant commercial hub, with major global companies choosing to locate their regional headquarters in Nairobi. Kenya is expected to rival existing centres like the one in Johannesburg and Mauritius, which have both built solid reputations, attracting much needed foreign capital. This, without a doubt, is the way to the future. The good news is that Kenya already enjoys an efficient financial infrastructure, vibrant professional skills market, insurance sector and a promising economy, all of which are critical for the success of financial centres. All that the country, and the relevant stakeholders need, is to build on this foundation to attract new investment that will drive industrial and commercial innovations.
However, the bad news is that the major challenge for all financial centres today is the fight against money laundering. This remains a serious challenge for Kenya, which has been battling illicit inflows of dirty money. Financial centres have in the past been misused to, among others, transfer or recycle money issued from, or linked to illegal activities. In a fast globalising world, however, and due to growing significance of organised crime, the State must note that risk has increased considerably in recent years, in all major financial centres and Kenya will not be an exception. For this reason, it must set up serious firewalls to make its financial centre unattractive to illicit inflows.