Reporting on the Brand Values (BV) of top brands - arguably the most important single class of intangible assets owned by global enterprises – the BrandFinance® Global 500 2010 report reveals some interesting results from Africa.
AFRICA VS. THE DEVELOPED WORLD
Most notably, it shows that although the recession dented the value of African companies, with the percentage of intangible assets having moved from 65% in 2007 to 57% in 2008 and 54% in 2009, enterprise values (EV) have not dropped as dramatically in Africa as in the developed world. The value of intangible assets did not drop as precipitously in 2008 and has remained stable in 2009, and tangible asset investment continues apace to build infrastructure. In the developed world, EVs and intangible asset values dropped dramatically and rebounded almost as dramatically once the recovery in sentiment took hold.
The difference in performance has several causes. The African economy is more dependent on basic industries like banking, mining and telecoms, so is less volatile. African banks in general didn’t suffer the same devastating fall from grace as the US and UK. The drop in value of over-leveraged and over-valued businesses in the developed world can be compared with the solid progress of down-to-earth African businesses. Also, Africa starts from a low base, but economic growth is solid and continuing.
MOST VALUABLE AFRICAN BRANDS
Sadly, African domiciled brands contributed only $7 billion to the total brand value within the Global 500. This is 21% growth up on 2009, but still low. Only two South African brands made it into the BrandFinance® Global 500 2010 table and both were in the booming telecom sector.
Vodacom is a great African brand, covering five countries in Africa, and has reached a scale to enter the Global 500 table. It is now a full subsidiary of Vodafone and may be migrated to the Vodafone master brand to achieve global synergies.
Vodacom has struggled to keep up with the rapid expansion of rival MTN in Africa and the Middle East. MTN is the most valuable brand in the African region with a brand value double that of Vodacom. In order to become the largest African telecom company, MTN is apparently keen to merge with Zain, a Kuwaiti mobile operator. Could MTN become another SAB, which is now technically domiciled in the UK?
Interestingly, the two most valuable African brands are from South Africa, reflecting the scale and sophistication of the South African telecoms sector; a pattern also reflected in the performance of South African banking brands.
A strong economy, political stability, a reliable legal system, an educated population and good regulation have created the right conditions for Pan African growth by South African brands. Nigeria and North African bank brands also fare well, but South Africa is the clear leader in brand value creation. No doubt this year’s FIFA World Cup will help to create more South African brands on the global stage.
Beyond the telecom and bank sectors, high-value African brands are in short supply, although there are clearly many small brands trying to make progress. The dilemma for African governments is that most major brands in most major categories are foreign. The top 10 brands by African ‘footprint’ of revenues illustrate this point.