Kenya deal with UK aims to turn Nairobi into Africa’s financial hub

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Co-operation agreement intends to help drive international investment into the east African city

The central business district of Nairobi, Kenya’s capital. Officials have said the agreement could result in $2bn worth of deals over the next five years © Thomas Mukoya/Reuters

Kenyan and British officials are to sign a deal on Tuesday to boost investment in Nairobi, with the ultimate aim of turning the city, which is home to some of the continent’s biggest banks, into Africa’s financial hub.

The goal of the co-operation agreement, which officials have said could result in at least $2bn worth of deals during the next five years, is to help funnel international investment into Kenya and east Africa more broadly, people involved said. This should over time enable Nairobi to compete with Dubai, as a conduit for trade in the region.

The deal includes closer links between the London and Nairobi stock exchanges, as well as moves to ease incorporation and registration of companies in Kenya, east Africa’s economic powerhouse.

British insurer Prudential, which has grown rapidly in Africa, where it has 1.2m customers in eight countries, is the first non-African company to set up its regional head office in Nairobi under the new arrangements. Kenyan mining company Mayflower Gold has also announced plans to dual list its shares on both the London and Nairobi stock exchanges in a deal worth £14m.

The agreement, which kicks off Kenyan president Uhuru Kenyatta’s three-day visit to the UK, could further bolster economic ties between the two countries. In March this year, Kenya and the UK ratified a trade agreement signed last December — one of more than a dozen deals inked during the Brexit transition period — with Britain saying it would help to boost the £1.4bn in mutual trade.

UK foreign secretary Dominic Raab is to welcome Kenyatta to the Mansion House in London on Tuesday to unveil £132m of new British investments in Kenya. “This package of investments will create new jobs and unlock new opportunities for UK and Kenyan businesses by strengthening the relationship between Nairobi and the City of London,” said Raab.

Nairobi’s advantages included political stability and good connectivity, as well as a stable exchange rate and diverse pool of talent, said Vincent Rague, a former senior adviser to the National Treasury of Kenya and the incoming chair of the board for the International Financial Centre. “Obviously, you have to have incentives, but I think much more fundamentally you have to [provide] the wider ecosystem in terms of the regulatory environment for financial services,” he said.

With Kenyan banks such as KCB and Equity expanding regionally, an Africa-based British official said: “The point now is to bring more pan-African businesses into Nairobi, [it] could be an international bank from anywhere that wants to put its African headquarters in Nairobi.

”But for the Kenyan capital to become a hub “won’t be without challenges”, said a local banking executive, pointing to the World Bank’s Ease of Doing Business ranking, which puts Kenya behind Mauritius and Rwanda. Nairobi is also ranked behind Dubai and, in Africa, after Casablanca, Cape Town, Port Louis and Johannesburg in the latest Global Financial Centres Index.

Source: Financial Times

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