Top African brands could lose $60bn from COVID-19

Africa’s 150 most valuable brands could lose up to 12 percent of brand value cumulatively, a drop of $60 billion compared to the original valuation as of January 1, 2020, the latest Brand Finance Africa report said.

The report, a ranking of Africa’s top 150 most valuable and strongest brands by Brand Finance, assessed the impact of Covid-19 based on the effect of the pandemic on enterprise value, compared to what it was on January 1, 2020.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.

“There is no denying that the African market remains immature and fragmented in comparison to its global counterparts. The lack of connectedness between nations across the continent means that brands’ growth is being stifled and they are unable to flourish beyond their home markets,” Jeremy Sampson, managing director, Brand Finance Africa said.

He further said that this presents opportunity for African brands to develop in a market ripe for consolidation and mergers and acquisitions (M&AS).

Looking beyond Africa, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated $1 trillion as a result of the coronavirus outbreak.

The entire top 10 African brands are South African brands, and a total of 87 brands feature with a cumulative brand value of $34.6 billion, equating to 76 percent of the total brand value in the ranking.

MTN, South Africa’s telco giant, is the continent’s most valuable brand, despite recording a one percent brand value loss to $3.3 billion, followed by Vodacom (brand value down 8 percent to $2.1 billion), First National Bank (down 6 percent to $1.6 billion), Absa (down 3 percent to $1.5 billion) and Old Mutual (up 16 percent to $1.4 billion).

Only 19 out of the 54 African countries are represented in the Brand Finance Africa 150 2020 ranking. Behind South Africa, Nigeria’s 16 brands account for seven percent of the total brand value in the ranking (cumulative brand value $3.2 billion) and Morocco’s eight brands account for five percent (cumulative brand value $2.2 billion).

This is the first time that Brand Finance has launched the Africa top 150 ranking.

According to Declan Ahern, valuation director, Brand Finance London, no truly PanAfrican brands exist, with even the highest performing brands in the ranking often only operating out of their home countries and therefore finding themselves a complete unknown across the continent and globally.

“It is no surprise that South Africa is by far the most represented economy in the ranking, with 87 brands featuring, which account for 76 percent of the total brand value,” Ahern further said.