Kenya To Establish the Nairobi International Financial Centre

Kenya hopes to position itself as a financial services hub similar to other financial hubs in the world e.g. London, New York, Dublin, Mauritius and Johannesburg.

Towards this end, finance minister Hon. Uhuru Kenyatta has launched a committee that will guide the establishment of the Nairobi International Financial Centre (NIFC), whose key task will be integrate the domestic financial sector to others in the region and globally. The committee will come up with proposals on the preferred type, financial implications, funding options and an implementation plan for the centre. The Steering Committee for Nairobi International Financial Centre was gazette is now operational.

The term “international financial centre” (NFIC) is often used interchangeably with “tax haven” or “secrecy jurisdiction,” although the latter terms have more negative connotations. Scholars generally label as “tax havens” those territories that offer favourable tax regimes and bank secrecy laws designed to attract foreign investors.

An International Financial Center is part of Kenya's Vision 030 and the Vision pointed to Mauritius and the Seychelles as potential models for the Kenyan IFC. It is envisioned that the NIFC may grant tax incentives, including a maximum 10-year tax holiday, along with VAT and customs exemptions.

It is envisioned that the NIFC may grant tax incentives, including a maximum 10-year tax holiday, along with VAT and customs exemptions.  However the international Financial Center will transform the economy, but observers warn it could contribute to illicit financial flows, inequality and a lack of transparency.

Meanwhile, in the regional context the World Bank has provided funding for the development of the  EAC Financial Sector Development & Regionalization Project and Financial Services is one of the 7 trade in services sectors to be liberalized under the EAC Common Market Protocol on the Free Movement of Services.

Setting up of the NIFC along with legal and institutional reforms are some of the projects envisioned for the financial sector under the country’s economic blueprint — vision 2030 — along with banking sector consolidation, pension reform and increasing diaspora remittances. 

The NIFC would also have a separate legal and judicial framework that would attract companies to set up shop.

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