Kenya has invited public comments on a planned law seeking to transform Nairobi into a financial hub.
National Treasury Cabinet Secretary Henry Rotich said the Nairobi International Financial Centre Bill will lay the groundwork for establishing the centre modelling Nairobi as a financial district in line with existing financial centres in European, Middle East, and Far East capitals such as London, Dubai and Hong Kong.
“It provides a framework to facilitate and support the development of an efficient and globally competitive financial services sector in Kenya that generates high levels of national savings and investments,” says Mr Rotich.
The proposed law envisions the establishment of the Nairobi International Financial Centre Authority to preside over the activities of the financial centre.
The hub is expected to increase employment in financial services by attracting international capital issuers and investors to Kenya and the East African Community region.
However experts say, Kenya must isolate an area of expertise if the efforts are to succeed.
“The idea of the international financial centre is not to mimic other centres of gravity like Dubai or Mauritius. I think we need to further define our competitive edge and given the long-standing convertibility of the shilling, I personally sense a sub-Saharan Africa foreign exchange should be an area of expertise and differentiation for ourselves. The multiplier effect would be off the charts,” said Rich Management CEO Aly-Khan Satchu.
Mr Khan said Nairobi had established itself as a sophisticated forex market and this could mark its competitive advantage.
Other analysts said Kenya’s quest to make Nairobi a financial hub must be well thought out as a number of countries in the region are thinking along the same lines.
“Given the level of already-established international competition (and one might say, the proximity of other, already-established centres), it is difficult to see where Kenya’s specific competitive strengths might lie,” Razia Khan, chief economist Africa, at Standard Chartered Bank said in an earlier interview.
Ms Khan said while the plans are “sound enough ambition,” implementation is going to be important.
“How does Kenya succeed in this project given the already-established competition, and the fact that global regulation is moving in a direction where the traditional strength of international financial centres are increasingly questioned?” she posed.
The Bill says a person who intends to operate as an NIFC firm shall apply to the proposed Nairobi International Financial Centre Authority, in the prescribed form so as to be considered.
Kenya initiated efforts to move the country towards a financial hub with the launch of a steering committee which would develop a financial centre in the capital five years ago.