• Monday, July 15, 2024
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BusinessDay

African brands’ value recovers $50bn on digital transformation

Digital transformation has helped top brands in Africa to achieve recovery in their aggregate brand value, a new report by South Africa (SA) based Brand Finance Africa, a brand valuation consultancy states.

The 150 top African brands surveyed in the report saw their valuation increase by 25.3percent to $50.1 billion from $40 billion in 2021. Besides, it is 10.1percent higher than 45.5 billion in 2020.

The report released Wednesday to commemorate this year’s Africa Day states that African brands have benefited significantly from adapting to uncertain business conditions caused by COVID-19 pandemic, by leveraging technological disruption to tackle supply chain issues and national lockdowns.

“Brands from diverse sectors including banking, telecommunications, and food & beverage found innovative ways to connect with the customers online.”

This latest report, the third by the organization and analysed from May 2021/2022, comes at a time when businesses are still reeling from the impact of the pandemic.

In measuring brand value – the net economic benefit a brand owner achieves by licensing it in the open market -Brand Finance Africa adopted the royalty relief approach.

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This method involves a combination of the market and income valuation approaches.

The value of the intangible asset is based on the costs that the company would avoid by not having to pay a license fee or royalty to use the asset. This is compliant with the industry standards set in ISO 10668.

Further analysis of the report showed that SA brands (value up by 30percent to $36.9 billion) are leading the African continent, followed by Nigerian brands (value up by 35percent to $3.2 billion) and Egyptian brands (value up by 42percent to $3.1 billion).

Others are Moroccan brands ($2.6 billion) and Kenyan brands ($2.1 billion).

Babatunde Odumeru, managing director at Brand Finance Nigeria, says it is thrilling to see the growth in the value of Nigerian brands.

“This is a resulting effect of how well these brands connected with their consumers during the pandemic period. The pandemic compelled many businesses to move towards digital transformation in a bid to stay relevant to their consumers,” Odumeru states.

He also adds that those who did well were able to increase efficiency, enhance their value proposition, and thus increase their brand value.

In terms of sectors, banking recorded the most valuable brands followed by telecommunication and retail.

For the banking brands, Standard Bank ($1.6 billion), First National Bank ($1.6 billion), and Absa ($1.4 billion) are contributing to the success of African brands significantly with a 26percent of the total brand value growth.

The top three telecommunication brands are MTN with $4.0 billion, followed by Vodacom with $2.0 billion, and Maroc ($851 million).

Retail brands such as SA’s Woolworths ($1.2 billion), Shoprite ($1.0 billion), and Spar SA ($1.0 billion) are the top three.

“African brands have achieved strong performances by being agile amid a change in the business environment,” Jeremy Sampson, managing director at Brand Finance Africa said.

“Whilst South African brands will continue to dominate the ranking for some time, there are encouraging signs of strong brands emerging around the continent, especially amongst the banking and telecommunication sectors,” Sampson concluded.