Nigerian billionaire businessman Aliko Dangote has sharply criticised South Africa’s black economic empowerment (BEE) laws, calling them an obstacle to investment from other African states and a brake on intracontinental trade.
Speaking to Business Day on the sidelines of the South Africa-Nigeria Business Forum on Tuesday, Mr Dangote said: "In Nigeria, we had these laws demanding that any (foreign) investor had to have a Nigerian partner. But that just dried up the capital flows. Now anyone can do business with anyone in Nigeria."
Mr Dangote said South Africa’s BEE laws and policies would have to be reviewed in order to attract more investment from Africa to South Africa and to encourage all Africans to participate in South Africa’s economy.
Mr Dangote is listed as number 43 on the Forbes Richest List and is considered to be the richest man in Africa by Forbes Magazine. He has a 64% stake in Sephaku Cement and has been credited with assets totalling about $600m in South Africa.
Trade and Industry Minister Rob Davis and his Nigerian counterpart, Olusegun Aganga, hosted the South Africa-Nigeria Business Forum as part of the state visit by Nigerian President Goodluck Jonathan, who will be speaking at the World Economic Forum on Africa later this week.
The Department of Trade and Industry expects the Black Economic Empowerment Amendment Bill to be promulgated next month.
The law would give the trade and industry minister the discretion to allow public entities or organs of state to set qualification criteria higher than those set out in the codes of good practice.
Mr Davies has defended the changes to the BEE law, saying they would help to ensure the economy broadly represents the population and does not just remain in the hands of a small minority.
It would be used for very large projects and for those sectors such as aviation and defence, where black empowerment was still limited.
Mr Dangote said South Africa’s BEE rules and regulations benefited only 5%-10% of the population.
"If you want real economic empowerment, then you have to do this based on merit and increased access to the capital markets," he said, adding, "the whole world needs capital. If you make it difficult for me to invest in one country then I will move my capital somewhere else where it is easier to invest."
He said any review of South Africa’s rules and regulations had to take into account how people from other African countries could invest in the country without being inhibited by the BEE rules and regulations.
"In my view, we are all African brothers and sisters. There has to be a review that encourages Africans from other countries to participate in the (South African) economy," he said.
Mr Dangote compared BEE regulations to a forced marriage.
"If I want to invest and then I am forced into a marriage with someone who does not have the same appetite as me, or who does not have the equity behind them, then we have a problem."
Mr Dangote said his deal to buy Sephaku Cement meant that he had to loan the BEE partner the money for their equity, and this had to be guaranteed through a complicated system using Nigerian and South African banks.
"We had a lot of work to do and under normal circumstance we would not do this," he said.
However, Mr Dangote said he was satisfied with the performance of the investment and was looking for other opportunities in South Africa.
Mr Davies countered Mr Dangote’s statement, saying: "Our black economic empowerment laws and policies remain valid. We are aiming for greater participation by black people in the economy and not just ownership."
During his formal speech to the South Africa-Nigeria Business Forum, Mr Dangote said Nigeria had two major strengths. "One is that we are a nation of entrepreneurs and the second is a banking system that is locally owned and understands the risks of doing business in our country."
He said investments in Nigeria often received a return of 30% a year and that capital was generally repaid within four years.
Mr Aganga emphasised in his address that Nigeria was open for business with the rest of Africa and that intracontinental trade made up only 8% of Africa’s total trade.
"We have the links (to do business) and now we should be doing the business," he said.
The Department of Trade and Industry says in the past year trade with Nigeria accounted for 40% of South Africa’s exports into West Africa. Total trade between South Africa and Nigeria amounted to R36.6bn last year.