BVI’s viability for scaling East African businesses was a major part of discussions during the recent East Africa CxO Roundtable, hosted by African Review and BVI Finance.
The webinar’s theme: “Facilitate Trade and Investment While Mitigating Risks” turned conversations towards how IFCs like the BVI, can serve as a conduit for development and finance in the East Africa region, especially with the commencement of the African Continental Free Trade Area (AfCFTA).
Nicholas Kuria, Counsel at Conyers BVI said, “The AfCFTA represents a tremendous opportunity to boost development and growth in the region.”
He continued, “BVI sits as a platform for foreign and direct development into the continent through the BVI’s expertise and standing as a highly effective platform for international and joint ventures - bringing together parties from different jurisdictions for investment…BVI is very well set up to accommodate various approaches for investment in the continent.”
Mr. Kuria highlighted a few scenarios in which the BVI’s corporate structures can be used, including the establishment of a club of institutional investors based outside the continent, multinational corporations, or local investors looking to partner up with international investors.
The counsel gave a brief overview of the BVI’s regulatory sandbox regime which he explained allows businesses to trail products in financial services in a light touch regulatory framework. After eight months, businesses are given an option to extend for six more months, after which, they can proceed to become a fully licenced financial services provider, or cease operations. The sandbox, he said, is recommended for financial technology businesses.
“We want to ensure people are aware of the availability of the various corporate structures and how they can be used to present an investment proposition globally, that is familiar to investors and regulators around the world,” said Mr. Kuria.
“BVI has a deep well of expertise with regards to investors,” he further stated that the BVI has tax neutrality, robust legislation, an independent court system and English based legal system.
East African Investment Opportunities
Agnes Gitau, Partner, GBS Africa highlighted some of the existing investment in the region, that being over $400M in tech-based sectors, and $30BN in the oil and gas industry. That being said, Ms. Gitau said business trends are in FinTech, which makes sense for the region, known for its innovation.
Referring to the AfCFTA, Ms. Gitau said it is allowing for the coordination of local governments to address the infrastructure needs in the region, which she opines will make the region even more appealing to investors, including small and medium enterprises looking to expand and take advantage of the AfCFTA.
“The region is always inviting investment in job creating sectors...we’ve seen a lot of interest in impact-based sectors - those interested in conserving the environment, technology, financial services,” said Ms. Gitau.
Mitigating Risks
Isaac Lupohela, Head of Finance, Tanga Cement offered various solutions for mitigating risks for businesses in East Africa, and underscored the importance of having proper processes and good governance.
Matthew Gilbert, Partner at Maples Group pointed to how available corporate structures are commonly used for risk mitigation when trading cross-border.
“Much of the reasons investors would use BVI or other IFCs within their corporate structures is for risk mitigation, [in addition to] the legal and political systems in place, [BVI being] a neutral jurisdiction, English common law, familiar legal and judicial systems.”
He continued, “Beyond that, we’re looking at neutrality in terms of a level playing field. Nobody has a home advantage and for most of us, that is key.”
Other speakers at the CxO Roundtable included Shani Kinswaga, CFO, Exim Bank and moderator Noah Kiphemboi, Business Anchor & Reporter KTN News, Kenya.
BVI Finance collaborates with African Review, a business magazine, to host the CxO roundtables where panelists discuss various business and financial services matters on the African continent.
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