November 28, 2022
Kenya begins implementation of the Nairobi International Financial Center regime
The Nairobi International Financial Center (NIFC or Center) is a flagship initiative under the economic pillar of Kenya's Vision 2030. The NIFC aims to fortify the country's global competitiveness by optimizing the operating framework for financial services, transactions and incidental activities.
Essentially, the Center seeks to provide a predictable and efficient business environment by creating opportunities to mobilize international savings and investments as well as increasing employment opportunities in the financial sector among other benefits. This is set to not only make it easier to conduct these services but to also make it attractive to invest in the sector.
Legislative and regulatory framework
Notably, The NIFC was established by the Nairobi International Financial Centre Act of 2017. The Act establishes the Board, the Steering Council and the Tribunal, being bodies that are mandated to ensure that the Center realizes its objectives. Section 32 of the NIFC Act provides the following rights and benefits for organizations operating in the NIFC:
The operational framework of firms at the NIFC is guided by the NIFC Regulations of 2021.
Benefit of becoming an NIFC Member Firm
Firms that are licensed by the NIFC Authority will enjoy the following benefits among others:
Prerequisites for benefiting as an NIFC member firm
In order to leverage the aforementioned benefits, a business is required to first be a provider of qualifying activities as outlined in the First Schedule of the NIFC Regulations.
Qualifying activities include finance, banking, insurance, and professional services, among other wide spectrum of services. Ordinarily, a member firm is expected to get the prerequisite licenses from primary regulators such as Central Bank of Kenya, and the Insurance Regulatory Authority, among others where applicable.
An applicant is required to complete the forms specified by the NIFC Authority and submit the completed forms accompanied by such documents specified in the forms or accompanying instructions. Additionally, they must provide such further information as the NIFC Authority may require and pay the required certification fees.
A certified firm must demonstrate to the satisfaction of the Authority at all times that they are fit and proper and that they have adequate resources, including financial resources. They must also have adequate compliance arrangements, including policies and procedures in order to comply with the applicable requirements. Their proposed business activities must also be in line with the NIFC core objectives and the strategic priorities of the Centre.
Notably, certification is open to existing local qualifying firms, international firms and the creation of new firms if they meet the requirements
The Center is currently operating as a virtual platform with no restricted physical location within which certified firms must set up their operations. This provides firms the flexibility of setting up their companies in any location but still requires the certification of the NIFC.
There are currently ongoing stakeholder engagements on various facets of the NIFC. Consequently, investors/potential participants should submit their proposals to the NIFC for consideration.
For additional information with respect to this Alert, please contact the following:
Ernst & Young (Kenya), Nairobi
Ernst & Young Société d'Avocats, Pan African Tax – Transfer Pricing Desk, Paris
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York