The 2019 Nations Brand report by Brand Finance Africa had one big surprise. After nearly a decade of being the topdog, South Africa was finally overthrown by Africa’s largest economy as Africa’s most valuable national brand.
For so long, Nigeria always came second best, ranking last year as the 50th most valuable nation brand.
The independent brand valuation and strategy consulting firm released the 2019 edition of the report in December. But the 2018 edition valued Nigeria’s brand at USD 203 Bn, while South Africa’s was USD 207 Bn.
But the position as Africa’s darling brand came with warning, citing that the South Africa could be relegated in the following years due to poor management.
Nigeria has been where it was due to its national image on the brands based there, which are now becoming widely acknowledged. In the global marketplace, it is one of the most essential assets of any state. It also encourages inward investments, adds value to exports and attracts tourists as well as skilled migrants.
The Brand Finance report shows the benefits that a strong nation can confer. It also reveals the extent of lingering economic damage that can be brought on by global events and poor nation brand management.
The 2018 report showed that Nigeria increased its brand value by 6 percent – from USD 191 Bn to USD 203 Mn. South Africa, who ranked 49th on the index went USD 7 Bn down from USD 222 Bn – the brand value it held as at 2017.
The decline was as a result of the ups and downs the economy of the Southern African country went through during the administration of ex-President Jacob Zuma.
He cited that while a majority of emerging economies improve at a rate of 5 percent, South Africa was struggling at under 1 percent.
In a conversation with WeeTracker, Babatunde Odumeru, the Managing Director of Brand Finance Nigeria said that Nigeria did not only emerge as the most valuable brand in Africa because South Africa is doing poorly.
“Brands from the country are beginning to do a lot better, as startups are becoming more intentional and effective with the way they operate,” he said on a call from Lagos.
Odumeru, who is also the Founder and CEO of Saha Investor – a West African capital-raising platform – believes that there are a couple of factors, chief of which is that the South African economy has been growing at a flat rate for a number of years.
In October 2019, a report from the World Bank cut South Africa’s growth forecast for 2019 through to 2021. It cited that weak investor sentiment and lingering policy uncertainty were the major causes. Growth for 2019 was projects at 0.8 percent, which was half a percentage point lower than April’s forecast and unchanged from 2018.
South Africa’s growth is expected to hit 1 percent in 2020, 0.7 percentage points lower than the previous forecast. It will also grow 1.3 percent in 2021, but that is also half a percentage lower than previous estimates.
The economy, the second largest in Africa, escaped a second recession in 2 years in the second quarter. The GDP posted a 3.1 percent quarter-on-quarter expansion after a first quarter contraction. Ultimately, growth is expected to be almost flat in the third quarter.
With the way things are going, South Africa is more likely to miss its projections for GDP growth and stands in the face of a possible junk credit rating from the trio of major rating agencies.
The domestic and international pressures weigh heavily on the country’s finances, and everyone blames the start of it to the Zuma-led administration.
The slow growth of the country’s economy has been the resultant effect of the political instability dogged by the Zuma years This has resulted in an increase in unemployment rate, public debt as a ratio of GDP, and a decline in GDP per capita; all of which cumulatively contribute to a tepid growth of 5 percent growth in brand value.
In early October, Zuma was reported to face standing trial on USD 2.5 Bn-related corruption charges. He, who held office from 2009 to 2018, had applied for 16 charges for fraud, racketeering and money laundering to be effectively struck out.
The 77-year-old leader was ousted from office last year after an internal battle within the ruling African National Congress party. His successor, Cyril Ramaphosa, who pledged to eradicate corruption, said October that graft under Zuma cost South Africa USD 34 Bn.
“However, this must be taken into perspective. Nigeria is taking the spotlight as Africa’s most valuable nation brand is not a simple case of South Africa’s economic growth declining.
Despite the plethora of challenges Nigeria as a nation brand faces, there have been visible efforts in fixing problems here and there,” says Odumeru.
According to him, a prime example is the economic reform to diversify the economy away from oil dependence. As this is taking effect – however slowly and challenged – new industries are emerging and sub-brands are being built and scaled in different sectors.
Last year, South Africa was the world’s 49th most valuable national brand, while Nigeria was the 50th. This year, Nigeria leaps 10 places and comes six places before South Africa, securing the 40th place on the ranking. Africa’s former most valuable national brand now occupies the 47th place on the report.
“When you look at the tech space for instance, companies are being built with footprints regionally in Africa, with a standardised branding program around the footprints in the various locations.
These sub- brands play a great but subliminal role in leveraging the nation’s brand. An aura of coolness attached to these brands can traced to the country of origin.This is happening in doses and we need to see more of this in other sectors in order to have a collective impact”.
Nigeria’s tech space in unmistakably growing rapidly. The amount of investments being poured into the sector year after year surpass that which is invested in other parts of the continent.
With nearly half a million dollars poured in this quarter alone, the country’s fintech market is arguably the largest unit in Africa. The country is showing immense capability at building strong brands that are not just recognized in the country, but also on the international front.
Nigerian brands are also winning more awards than ever. From pitching events to tech-focused competitions, companies from the country are beating several odds to emerge as one of the best globally.
The country has also become the focus for expansion for many outside brands, from tech-enabled startups to disruptive businesses. Even though America, China and Germany remain the most valuable national brands, beliefs are that companies from Nigeria will take over the world someday.
There is concern as to how long Nigeria will retain the position as Africa’s most valuable national brand. Odumeru says it is the real test of wills.
“For Nigeria to maintain longevity in retaining her new found position, her brand value must grow consistently at exponential rates. The brand value grew from an average of 6 percent in previous years to 26 percent this year.
That is not a bad leap, when you consider it from a stand alone basis. But when we compare this with other African countries such as Ghana and Uganda, etc. With an average brand growth rate of 50 percent, it is still a far cry from where we ought to be in terms of growing our nation brand”.
Featured Image: Shutterstock