Johannesburg - Frustration over Africa’s disparate tax, travel, investment and trading regimes boiled over yesterday as Chris Kirubi, a leading Kenyan businessman and one of the wealthiest people on the continent, tore into South Africa’s failure to be a leading light in opening up the continent for business.
Kirubi was a participant in a panel discussion at the “Africa: The Outlook, the Opportunity” event hosted by former New York City mayor Michael Bloomberg in downtown Johannesburg.
To underscore his frustration, the outspoken Kirubi questioned why African travel businesses kept going to Europe and North America to sell African tourism, leaving behind Africans like him who needed no further convincing about visiting Africa.
“Open markets are not happening yet. We must open markets for people, goods and services,” Kirubi said. “South Africa needs to take leadership by opening up for smaller countries. How many of us have been allowed to invest here?”
His sentiments on the issue of openness were echoed by Reserve Bank governor Gill Marcus, who said the focus in Africa should be about co-operation and less about competition. Marcus, who seemed rather at ease five days after a slide in global emerging market currencies prompted her to hike interest rates, said the issue was “how do we use our different strength to benefit Africa as a whole”. She said co-operation would be particularly critical in dealing with three core challenges facing the continent: water, food and energy.
To illustrate what was possible if African governments worked together to create a more open investment environment, Aigboje Aig-Imoukhuede, the vice-president of the Nigerian Stock Exchange (NSE), said there was an emerging notion in west Africa, in terms of which Ghana was seen as the gateway and Nigeria as the destination.
He added that the NSE was planning to visit the JSE in the coming months to explore areas of possible co-operation.
In that regard, as an economic powerhouse, South Africa had an important role to play in reshaping how Africa did business, not only with the rest of the world but more importantly with itself.
“There are major issues we are not addressing and it is an issue of laws,” added Kirubi, who is also the east Africa chairman of a joint venture with Tiger Brands, South Africa’s biggest consumer goods company.
On tax, he asked why South Africa and Kenya did not have a tax agreement and why he needed to go via Mauritius each time he needed to open a holding company. “We have a problem. We’ve got to wake up.”
Finance Minister Pravin Gordhan was also among the panellists. He acknowledged that there were “huge challenges” in the mining sector, but reiterated the need for perspective on issues relating to labour strikes. “There is a lot of good work being done. In the next few years, skills development and training will be [enhanced] a lot more.”
On the issue of emerging market volatility and recent currency slides, Gordhan said: “We will survive this crisis as as we have survived others”, referring to a sharp depreciation in the rand and investment outflows triggered in part by the US Federal Reserve’s bid to gradually reduce the availability of easy stimulus money.
Nonkululeko Nyembezi-Heita, the outgoing chief executive of steel group ArcelorMittal South Africa, and Sizwe Nxasana, the chief executive of FirstRand, spoke about local labour market conditions.
Nyembezi-Heita identified education as the biggest constraint to progress, and added that “people feel that there is an unnecessary level of rigidity in the South African labour market system”.
A rigid labour market has often been cited as one of the factors that make investing in South Africa unattractive.
However, Nxasana said he was not sure that such a view was based on facts because, as a chief executive of a telecoms company, he found rigidity in places like India and Ghana. The argument must be based on facts, he said.
He also raised the issue of a need for South Africa to have a real conversation about income inequality, especially in view of a clear misalignment between executive pay and pay for the average worker. Gordhan agreed, saying income inequality could be a social destabiliser.
Bloomberg, the founder of news and information provider Bloomberg, was the 108th mayor of New York City. He is in South Africa this week for the C40 Cities mayors’ summit on development and climate change.