Ideas & Debate

How Nairobi can turn round to become top financial hub

NAIROBI

A view of Nairobi. FILE PHOTO | NMG

While Kenyans rejoiced as Mary Keittany topped the New York 2018 marathon women’s edition, bagging her fourth title, New Yorkers were also in jubilation mode for emerging first in the world of financial centres.

The 24th edition of the Global Financial Centres Index (GFCI 24) September 2018 ranked the Big Apple at top position, just two points above London. Nairobi was nowhere on the radar - it has yet to achieve the number of assessments required to be listed in the main financial centre index.

But something else was noted in the report; in a decade, 60 percent of the index had moved from Western centres to Asian hubs. This is great news to us.

While the world of 2002 was a bit Western-centric, other centres began emerging after 2008 slowly bridging the gap. Can Nairobi rise to be the emerging financial centre of tomorrow? Never say never. Amid its faded glory, Kenya’s capital can still become King.

But a couple of important steps first. One, there is need to specialise. Finding a niche to stand out is proving essential. A few have embarked on this path. In 2009, South Koreans decided to nurture their port city of Busan – the fifth busiest facility in the world - into a major financial hub specialising in maritime finance and derivatives.

Today, the city is regarded as a top maritime player, ranking above major players such as Dubai, Osaka and Paris despite making its debut in the index four years ago.

Similarly, Kuala Lumpur’s (Malaysia) focus in Islamic banking is turning it into a formidable financial hub. Two, Nairobi needs to maximise on its geographical position. Our time zone hours overlap those of the United Kingdom, America and Asia – something, which definitely put the city in good stead when it comes to trading.

Three, leveraging on its “gateway status” with a focus on access to East and Central Africa. Connecting all this should be technology.

That said, our beloved city faces tough competition regionally. Top ranked African financial centres include; Casablanca (28), Cape Town (38), Mauritius (49) and Johannesburg (57) which are miles ahead. In fact, among the centres considered to become more significant over the next two to three years in the GFCI report, Casablanca was the only African city in the list of 15.

This gives an indication on the magnitude of work needed to be done to improve our competitiveness. Joining the GFCI index – which serves as a valuable reference for policy and investment decisions – these three areas will be a must; a favourable business environment (read: great infrastructure, legal and human capital), efficient financial sector (read: improve on market illiquidity and depth, merging bonds and equity clearing systems, removal of investment flows tax) and a good reputation (read: curbing on corruption, money laundering).

Can Nairobi rise to become an international financial hotspot? I believe so. Nothing is impossible. Hegemonic power long enjoyed by New York, London and Hong Kong has proven shakeable. Amid the Brexit drama, America isolationist policies and China’s restrictions on its financial markets, there’s a fighting chance for Nairobi to become King.