Odhiambo believes the establishment of an international financial centre in Nairobi will have a huge impact on the regional economy and provide many benefits for businesses investing in diverse sectors across East Africa.
“It’s going to evolve over time, a number of rules and norms will be established, tried and tested just to see how it works,” said Odhiambo, a founding partner of KO Associates LLP in Kenya. “But having an international financial centre here is big, because it enables you to now arrange for bigger ticket syndicate financing deals within the continent.”
The move for Nairobi from being a capital city with corporate activity to an official international financial centre is a major leap, he commented. Odhiambo thinks some big-ticket financing can start to be arranged on local currencies rather than being pegged to overseas currencies, and that investors will have access to more local expertise which should lead to further cost savings.
“An even bigger benefit is the sense that you’re starting to have centres which are focused on this market,” he added. “If you’re raising funds in Europe, or in Singapore or Hong Kong, you’re competing for investors’ interest, essentially, with all other markets. But for the people who are going to be here, they’re going to have a more laser focus on African markets, and that is big.” This would help in crowding in much needed capital for investments in large scale infrastructure such as renewable energy, transport and logistics, manufacturing hubs and social services of health and education.
Officially launched on 27 July, the Nairobi International Financial Centre (NIFC) aims to raise more than $2 billion in targeted investments by 2030. Already, giant insurer Prudential has announced it will become an anchor tenant and TheCityUK announced £132 million of investment in the region for green affordable homes, clean energy and manufacturing.
The establishment of the NIFC is part of a major evolution of the investment sector in Kenya and East Africa over the past decade. “One of the big changes we’ve seen is the refinement and updating of all financial services laws,” said Odhiambo. Another big change in the local investment landscape that brings confidence is the entrenchment of arbitration in corporate contracts and legal frameworks across the region.
Odhiambo believes the NIFC has really good potential to increase the economic contribution of financial services to the East African economy, along with building local capacity in financial services and lowering costs for target firms and financiers.
KO Associates feels “very bullish, very confident” about the future in Kenya and East Africa despite recent hiccups of COVID-19 and security concerns in a number of countries. It has been ramping up capacity by making key hires and enhancing regional partnerships in its Citadel Law Africa group. “We have been singularly focused on the sectors that are great growth engines and facilitators of the regional economies, sectors where there have been significant gaps but also significant potential – infrastructure, technology, renewable energy, trade and investments. We have gained a very good understanding of these areas, which is now paying off, not only for us but also for the clients we work with,” he added.
“For us a big focus is to be at the forefront of driving homegrown excellence,” explained Odhiambo, whose firm won Specialist Law Firm of the Year at the 2020 African Legal Awards. “To provide the same quality, the same rigour of advice that multinationals will get in London or New York, and having boots on the ground has a lot of advantages; it’s something that we’re very passionate about and the results are showing.”
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