Rwanda aims to become domicile for funds from Luxembourg, Sweden

By David Whitehouse
Posted on Monday, 21 February 2022 13:29

Rwanda’s Kigali International Finance Centre (KIFC) has funds from Luxembourg and Sweden in its pipeline as it seeks to become the domicile of choice for African investment.

The KIFC has “confirmed interest” from a Luxembourg fund, chief investment officer Ntoudi Mouyelo tells The Africa Report. The fund wants to use Rwanda as its domicile for investing in bonds from African small and medium-sized businesses and may establish a special-purpose vehicle in Rwanda in the third quarter, he says.

A Swedish fund is also planning to establish an entity in Rwanda for start-up investments, Mouyelo says. That initiative is likely to be announced at the Commonwealth heads of state meeting in Kigali in June, he adds.

The KIFC was set up in 2020 as part of Rwanda’s drive to establish itself as an African investment hub. In October, Luxembourg signed a bilateral agreement to back the KIFC. Rwanda is aiming for competitive tax status, and signed a treaty with Luxembourg to end double taxation in September. That move facilitated the interest from the Luxembourg fund, Mouyelo says.

  • Rwanda concluded a further agreement to end double taxation with China in December.

Fund managers from western and southern Africa have made requests for licensing in Rwanda, and Mouyelo expects that by June there will be at least one new manager from each region established and regulated in Rwanda.

  • Fund administrators and corporate-services providers are also in the process of coming to Rwanda from Mauritius, and Mouyelo expects to see a first batch of arrivals by the fourth quarter.
  • “We are not just a conduit,” Mouyelo says. “We are also a place where talent will meet.”

Fintech First

Rwanda has reformed its tax laws and introduced new legislation on insolvency and  arbitration in a bid to attract inflows. The investment promotion law of February 2021 ensures the repatriation of profits and interest on loans. International companies with their head office or regional office in Rwanda get a zero rate of corporate income tax. There is also a seven-year corporate-income tax holiday for investments in sectors such as manufacturing, energy, health and tech.

  • The KIFC in November announced the establishment of the $250 million Virunga Africa Fund I, which has the Qatar Investment Authority and the Rwanda Social Security Board as its core investors.
  • In February, KIFC attracted an African fintech fund started by South African investor Vusi Thembekwayo. The fund is seeking to raise an initial $50m, with a final target of between $100m and $120m.

Thembekwayo’s decision, Mouyelo argues, shows that Rwanda is better positioned as a hub for cross-border investments than South Africa. The fund, backed by Thembekwayo’s MyGrowthFund Venture Partners,  is billed as the first in Africa which will invest just in fintech.

“The common denominator is a pan-African focus,” Mouyelo says. “We want to be the financial centre for African investment.” KIFC also wants to be the conduit for Africans who want to invest outside the continent, he says, pointing to Rwanda’s tax regime, international standards of compliance, and lack of restrictions on foreign exchange and profit repatriation.

Bottom Line

Rwanda is confident that it can become a fund-management hub for Africa.

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