The devastating effects of the COVID-19 pandemic could see Africa’s most valuable brands lose up to 12-14 percent of brand value cumulatively, a decline of around $60 billion, London-based consultancy Brand Finance has said in its latest report.
Beyond Africa, the value of the 500 most valuable brands in the world ranked in the Brand Finance Global 500 for this year could fall by an estimated $1 trillion as a result of the pandemic. The impact assessment is based on the effect of the outbreak on enterprise value, compared to the original January 1 valuation date.
Impact on industries covered in the report are classified into three categories – limited (minimal brand value loss or potential brand value growth), moderate (up to 10 percent brand value loss), and heavy (up to 20 percent brand value loss) – based on the level of brand value loss observed for each sector in Q1 2020.
MTN Group was named the most valuable African brand – with a value of $3.3 billion – in the inaugural Africa 150, a ranking of the most valuable and strongest brands in the continent. “Over the last year, Africa’s largest mobile operator has celebrated solid profits and impressive subscriber growth, which currently stands at over 250 million across 23 countries,” the report says.
The South African telco giant is “being squeezed from all sides” as with all big network operators globally, the consultancy notes. That is down to the impacts of Over-The-Top messaging apps like WhatsApp on voice and SMS revenue, even as challenger brands offer comparable data services at below-market rates, leading to fierce price competition and decreasing margins.
COVID-19 may however be an opportunity for telecoms brands to reverse their fortunes, as Brand Finance predicts a limited overall impact on the sector and even potential for growth as demand surges – it categorised the telecoms sector as “limited impact.” That is due to the increasingly important role that mobile operators have played in keeping people connected amid the pandemic, the report notes.
South Africa dominates the ranking with all the top 10 brands coming from the continent’s most industrialised economy. A total of 87 brands from the country feature in the list with a cumulative brand value of $34.6 billion, accounting for 76 percent of the total brand value in the ranking.
“No truly Pan-African 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,” notes Declan Ahern, Valuation Director at Brand Finance. “It is no surprise that South Africa is by far the most represented economy in the ranking.”
Only 19 out of the 54 African countries are represented in the Africa 150 ranking. Behind South Africa, Nigeria’s 16 brands account for 7 percent of the total brand value in the ranking (cumulative brand value $3.2 billion) and Morocco’s nine brands make up 5 percent (cumulative brand value $2.2 billion).
“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. This does pose, however, a great opportunity for African brands to develop in a market ripe for consolidation and M&A,” Brand Finance Africa Managing Director Jeremy Sampson said.
