If SA were a com­pany, the dra­matic plunge in its brand value would be a deep worry. Can the bal­ance sheet be fixed?

Financial Mail - - EDITOR’S NOTE - @ro­brose_za

The the­ory is that the strength of a coun­try’s cur­rency roughly re­flects that na­tion’s “share price” — the rel­a­tive value of, say, SA Inc. Of course, it’s far more nu­anced than that, with all sorts of other fac­tors in­flu­enc­ing a cur­rency’s strength. But it’s hard to ar­gue with the fact that in the week of Ja­cob Zuma’s in­au­gu­ra­tion in May 2009, the rand was at R8.30/$, and to­day, nine years later, it is R14.86/$.

It’s a telling and tangible in­dict­ment of the years of list­less rule, of Nkandla, the Gup­tas and Eskom be­ing pil­laged, and a graphic re­flec­tion of how SA slipped down the in­vest­ment rank­ings. It also shows why the down­grades from Moody’s, S&P Global Rat­ings and Fitch were in­evitable.

This week, a Lon­don-based com­pany called Brand Fi­nance pub­lished its “na­tion brands” in­dex, a slightly off­beat but in­trigu­ing way of track­ing the value of a coun­try’s brand rel­a­tive to oth­ers. As the re­searchers say, it shows the ben­e­fits of a strong brand, as well as the dam­age that can be caused by “poor na­tion-brand man­age­ment”.

At the top of the list of most valu­able brands is the US (up 23% to $25.9-tril­lion), fol­lowed by China (up 25% to $12.8-tril­lion). Far lower down you’ll spot SA, which has been grow­ing weaker for years.

SA is still the top African “na­tion brand”, but it sits all the way down at 49th, hav­ing fallen from 43rd, with its “value” drop­ping 7% to $207bn this year. It is marginally ahead of Nige­ria, at 50th, which grew 6% this year to reach $203bn, but trails many emerg­ing­mar­ket peers like Bangladesh, Viet­nam and Malaysia.

In 2011, in the first flush of the Zuma years, SA was 34th on the list. Back then, there was a coun­try mile be­tween it and other coun­tries on the con­ti­nent — Egypt was next at 51, and Nige­ria was 57th. So the slide seems in­ex­orable.

Jeremy Samp­son, MD of Brand Fi­nance Africa, says SA’S per­for­mance is a re­flec­tion of the rot dur­ing the Zuma years. “When it comes to per­cep­tions, the cor­rup­tion un­der Zuma and the fact that the min­ing in­dus­try, which used to be a pil­lar of SA, has seen im­mense dis­in­vest­ment, knocked the rat­ing. The cor­po­rate scan­dals too — Mckin­sey, SAP, Stein­hoff — all these things have hurt SA’S rep­u­ta­tion,” he says.

Samp­son says he found it fas­ci­nat­ing to com­pare SA with Aus­tralia, which seems to have a new prime min­is­ter ev­ery few months, yet was ranked 11th (value up 11% to $1.6-tril­lion). “Their po­lit­i­cal lead­er­ship changes the whole time, yet they’re still stronger from a brand per­spec­tive. It shows the dam­age of the Zuma years, and how long it takes to change per­cep­tions.”

There was good news else­where on the con­ti­nent, though. Six of the top 10 fastest-grow­ing brands were from Africa: the Demo­cratic Repub­lic of Congo (up 39%, ranked 96th), Egypt (up 37%, ranked 56th), Kenya (up 37%, ranked 72nd), Tan­za­nia (up 35%, ranked

88th), Ethiopia (up 29%, ranked 78th), and Ghana (up 28%, ranked 84th).

But the brand rank­ings also show how SA has failed to grasp the net­tle com­pared with other coun­tries. Take Sin­ga­pore, which was rated the “strong­est brand” (though not nec­es­sar­ily the most valu­able) — es­sen­tially, a mea­sure of how highly re­garded it is.

As Samp­son puts it, Sin­ga­pore has done what SA could have done: “They’ve looked af­ter their com­mu­ni­ties, en­sured top-qual­ity ed­u­ca­tion, driven down crime and en­sured ev­ery­one is looked af­ter.” For ex­am­ple, the Pro­gramme for In­ter­na­tional Stu­dent As­sess­ment rank­ings, run by the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment, puts Sin­ga­pore at the top of the maths, sci­ence and read­ing ta­bles at school level.

Of course, these rank­ings are a back­ward-look­ing mea­sure and are evenly split be­tween per­cep­tion and em­pir­i­cal facts, rather like the World Eco­nomic Fo­rum’s com­pet­i­tive­ness rank­ings. So a slew of bad press doesn’t help.

To dig into the method­ol­ogy, coun­tries are first judged on 26 cri­te­ria (such as open­ness, in­fra­struc­ture, cor­po­rate ethics, ju­di­cial sys­tem, use of tal­ent and in­vestor pro­tec­tion), then a hy­po­thet­i­cal “roy­alty rate” is de­ter­mined for the brands, GDP is fac­tored in, and a dis­count rate is ap­plied.

Still, it shows the value of fix­ing the story, so that a coun­try’s “share price” bet­ter re­flects the value of the peo­ple within its bor­ders. Pres­i­dent Cyril Ramaphosa has done many of the things that need to be done to cor­rect the share price. The harder thing will be fix­ing the struc­tural prob­lems to make his “com­pany” more at­trac­tive than the oth­ers fight­ing for the busi­ness.

The cor­po­rate scan­dals too — Mckin­sey, SAP, Stein­hoff — all these things have hurt SA’S rep­u­ta­tion

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