The Creation of International Financial Centres in Africa: The Case of Kenya
International financial centres (IFCs) are jurisdictions whose laws and institutions provide optimal conditions for the financial services industry. While some of the activities they encourage may have positive effects on a country’s economy, IFCs also facilitate money laundering, tax evasion, tax avoidance, and other practices generally considered harmful. These effects have been recognised at least since 1998, when the Organisation for Economic Co-operation and Development (OECD) established an international framework to counter harmful tax competition.
For an aid-recipient country like Kenya, the establishment of an IFC is problematic. Some features of IFCs can undermine the achievement of crucial goals – particularly tax collection, domestic revenue generation, and financial integrity and transparency – that donors pursue when they assist developing countries. This raises the question of how donors should respond to plans for the creation of an IFC in an aid-recipient country.
Waris, A. The Creation of International Financial Centres in Africa: The Case of Kenya. U4 Anti-Corruption Resource Centre, CMI, Bergen, Norway (2014) 4 pp. [U4 Brief, September 2014: 8]