The NIFC is the new business environment aimed at making the delivery of financial services easier and attractive to both domestic and foreign investors. This helps in the generation of greater savings as well as the economic growth of the country. It is important to note that the NIFC was birthed by the Economic Pillar of Kenya’s vision 2030, aimed at providing investors with the best environment within which to work.
It should be noted that before the establishment of the NIFC, Kenya entered into an MOU with Qatar to help in its establishment. This makes Qatar a key player in the establishment of the policies, legal and regulatory framework for the NIFC.
Just like other global financial centers, the NIFC is characterized by both economic and political stability, supportive services, good communications, efficient and experienced financial community.
What are the aims and objectives of the NIFC?.
Improving Kenya’s competitiveness in the economic world.
Supporting the reforms needed to move Kenya from a frontier market to an emerging market.
Provide firms with better and wider investment opportunities.
- Legal basis
The institution is based on the provisions of the Nairobi international Financial Centre Act. Section 4 of the Act provides for the establishment of the institution.
The Nairobi International Financial Centre Act.
The Act was established to give provisions that would govern the Nairobi International Financial Centre. The Act therefore provides for the establishment of the Centre and the authority which shall be a body corporate to govern the NIFC. The Act also provides for the establishment of the steering council which shall have the president as the chairperson and the deputy president as the deputy chairperson and which shall review the progress of the Centre, provide direction and address any challenges in the development of the Centre and the overall financial services sector in Kenya and may, from time to time, give such directions to any person which the Council considers necessary in order to achieve the objectives of the Act. The Authority shall serve as the secretariat to the council.
In addition, the NIFC Act also provides the process through which firms may join the NIFC. This is through the process of certification
- Who can join?
The NIFC invites both domestic and international investors.
- Where else has it worked?
As earlier on stated, Qatar has an established International Financial Centre and it is for this reason that Kenya sought to have an MOU in order to have a well-established Financial institution.
Apart from Qatar, New York as well has the largest international financial centre in the world which has topped in the global financial centers index (GFIC). This is due to the fact that many buildings in the city have connections with the Financial center. It is worth noting these buildings represent the global significance and impact that NYC has in terms of commerce, media, finance, fashion, art, technology, research, entertainment, and education.
- Do I need to pay before joining the NIFC?
Section 28 of the NIFC Act addresses the issue of fees when seeking certification as well as the annual fees to be paid by an NIFC firm. Section 28(2) states that; An application under subsection (1) shall be accompanied by the prescribed application fee and any other additional information as the Authority may require.
On the other hand, Section 28(7) of the Act provides that: An NIFC firm shall pay an annual fee as the Authority may prescribe from time to time.
- How to join.
Firms considering conducting business through the NIFC must apply for certification from the NIFC Authority. The NIFC Authority will provide a checklist of the required documentation and upon receipt will review and process all applications. The certification is open to both domestic/local and international firms as long as they meet the requirements. This is provided under sections 5-7 of the Nairobi International Financial Centre Act which provide for the establishment, objectives of the Authority as well as the powers and functions of the authority.
- Advantages of being an NIFC firm.
The financial and strategic advantages of IFC firms are not only for the countries they are situated in but also for companies and individuals seeking to take advantage of the incentives granted by them. Considering that the NIFC is structured on Qatar’s IFC, we can surmise that the incentives shall at least include;
- Tax incentives – IFCs usually provide low taxes or tax exemption to attract investors who can either be multi-national corporations, pensions funds, private equity firms, insurance firms and even individual investors. These tax incentives ultimately mean that the returns made by an investor are higher with the trade-off that the incentive shall generate greater economic activity and therefore benefits for the jurisdiction in which the IFC is located.
- Access to finance capital – amongst the challenges faced by local and regional entrepreneurs is access to alternative sources of financial capital. The entry into the region of NIFC firms shall provide alternative sources to obtain financing and financing related services. Further, competition amongst the financial services providers is likely to result in a lower cost of financial services to the benefit of the consumers.
- Access to new markets – NIFC firms shall be able to provide financial services to East and Central Africa clients and due to the potential incentives, they are likely to have a competitive edge over their contemporaries.
In summary, the Nairobi International Financial Centre was established to provide investors with an opportunity to fully benefit from their investment as well as to have an opportunity to compete internationally. Both local and international firms are invited to make applications to join. Certification to join shall be done by the Authority established in the NIFC Act. The international financial centers are widely recognized and have posted positive results in the New York City as well as Qatar.