WEF: Owner rights a major concern

Dar es Salaam – Dramatic changes to government regulations that infringe on investors’ ownership rights pose a great risk to investment in Africa.

Speaking during a discussion on investment in Africa at the 20th World Economic Forum (WEF) on Thursday, Nku Nyembezi-Heita, CEO of ArcelorMittal in South Africa, pointed out that South Africa’s mining charter and Zimbabwe’s controversial legislation on mining and mineral rights had caused investments in the mining sector to shrink.

“Regulations that take away ownership rights are very serious,” she said. However, Nyembezi-Heita said the absence of regulations is sometimes also a problem.

“There’s no shortage of potential in the [South African] private sector to generate electricity,” she said. “But it is not getting under way, because there are no rules to regulate it.”

South African Finance Minister Pravin Gordhan said that investment in Africa must lead to meaningful job creation.

“Economic strategy and policy must give hope to the youth of South Africa and the continent in the form of education and training,” he said.

Anna Tibaijuka, under-secretary general and executive director of the United Nations Human Settlements Programme (UN-Habitat), who is also a joint chairperson of this year’s WEF, said on Wednesday that over 60% of Africa’s population is under the age of 30.

Gordhan also said that African countries must expand their fiscal bases and get more people to pay tax. “There’s a huge tax gap on the continent,” he said.

“In addition, between $200bn and $400bn leaves the continent every year. If this money could stay here, we wouldn’t need to borrow as much and could grant more tax concessions.”

According to Gordhan, potential investors shouldn’t see tax as a deterrent. “Businesses have a responsibility to pay tax and in this way invest in the continent,” he said.

Nyembezi-Heita said in response to this that tax is indeed overemphasised, and that other factors carry greater weight when a company looks at a new investment destination.