Despite Nigeria being home to Africa’s most valuable brands last year, only 15 Nigerian-owned brands made the Brand Finance Africa’s 150 most valuable brands list for 2020, a BusinessDay analysis shows.
The Brand Finance Africa 150 2020 report shows that a total of 87 South African brands with a cumulative brand value of $34.6 billion, representing 76 percent of the total brand value in the ranking, were recorded as against Nigeria’s 15 brands that accounted for 7 percent of the total brand value in the ranking (cumulative brand value $3.2bn).
This is the first time that Brand Finance has launched the Africa top 150 ranking. Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. And in a global marketplace, a brand is one of the most important assets of any state, encouraging inward investment, adding value to exports, and attracting tourists.
According to Babatunde Odumeru, managing director, Brand Finance Nigeria, Nigeria does not build enough strong brands that are recognisable beyond its borders and this hinders growth.
“South Africans have a better understanding of the strategic importance of brands than we currently do. So, they bring this to bear in their corporate strategic options,” Odumeru said.
He said our huge market, which serves as a leverage in our nation brand valuation, can also be a disadvantage when it comes to building Pan African brands, because businesses tend to be complacent with just the size of our market.
Last year, Nigeria overtook South Africa for the first time in nine years as the country with the most valued brands in Africa. The country recorded a total of $255.6 billion, making it number one, while South Africa had $218 billion.
Brand Finance measures the strength and value of brands using a method based on the royalty relief mechanism. From the report, the royalty relief mechanisms are based on the notion that brands are strategic assets to the companies that own them. That is, if you own a brand then you can exploit them through licensing agreements.
“If you licence your brand out, what is paid to you is known as a royalty. This means you earn a percentage rate of the income the borrower of yours earns from using your brand name,” the report stated.
The top brands in the 2020 report from South Africa include MTN ($3.3bn), followed by Vodacom ($2.1bn), First National Bank ($1.6bn), Absa ($1.5bn) and Old Mutual (up 16% to $1.4bn).
Globacom Limited ($569m) Nigeria Breweries ($478m), Dangote Cement ($309m), Zenith Bank ($287m) and Access Bank ($242m) are the top brands in Nigeria.
Many of the tech entrepreneurs are laying the seeds of creating Pan African brands by building ventures with footprints in Africa and using a standardised branding program strategy, Odumeru noted, saying, “I believe that by the time the sector reaches its maturity stage, we’ll see impressive brand values.”
Recently, Brand Finance Africa 150 2020 report noted that brands in the continent could lose up to $6 billion of cumulative value due to the Covid-19 pandemic.
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