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