COVID-19 wipes $153m off-brand values of Africa’s top countries
By assigning financial values to countries in determining their individual worth as a brand, top African countries lost at least $153 million of their brand values in 2020 due to the impact of the Covid-19 pandemic on their economies, according to a report by Brand Finance, a consultancy on brand valuation made available to Businessday.
Africa’s top 10 most valuable country brands saw their total valuation drop to $893 million in 2020 from $1.05 billion in 2019. And by subtracting the total value in 2020 from 2019, Businessday arrived at $153 million.
In the global marketplace, a country’s brand is one of the most important assets that is used to attract investment, add value to exports, and bring in tourists leading to economic growth and prosperity.
“Key African nations are experiencing a decline in their brand value because of the impact of the pandemic which has affected the size of foreign direct investments and key revenues from exports and tourism,” Babatunde Odumeru, managing director, Brand Finance Nigeria said.
According to Damilola Adewale, a Lagos-based economic analyst, the coronavirus-induced demand shock weighed on the revenue performance of corporates in those countries, hence the decline in brand valuation.
Brand Finance measures the strength and value of the nation brands of 100 leading countries using a method based on the royalty relief mechanism. The report analysed nation brands between October 2019 and October 2020.
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 earns from using your brand name,” the report stated.
Nigeria, Africa’s largest economy retained its position for the second year as the continent’s most valuable nation brand. But its value declined by 15.2 percent to $217 million from $256 million in 2019.
“Nigeria may still continue to dominate the league table. However, we may still continue to see a decline in brand value as the second wave of the pandemic will have a huge impact on key sectors such as oil and gas, air transport and tourism which is still in its infancy,” Odumeru said.
Other countries among the top 10 brands in Africa include; South Africa ($162 million), Egypt ($151 million), Algeria ($73 million), Kenya ($62 million), Ethiopia ($61 million), Morocco ($57 million), Ghana ($47 million), Angola ($42 million), and Uganda ($21 million).
For the past decade, the report has provided key benchmarks for diplomats, tourism boards, trade agencies, nation brand consultants and managers. It also analyses the benefits that a strong nation brand can confer, as well as the economic damage that can be caused by global events and poor nation brand management.