Currency devaluation pulls back African brands from top global position

Currency devaluation in most African countries and consistent strengthening of the dollar have made it extremely difficult for some African brands which crave to be among top global brands to achieve their purpose.

No African brand made the Brandz first 100 Top 100 Most Valuable Global Brands in 2017 ranking conducted by WPP and Millward Brown. WPP is the world’s largest communications services group with billings of US$74 billion and revenues of over US$19 billion.

African brands have found it difficult to maintain or grow their value relative to the global brands due to exchange rate against the dollar, Soumya Saklani, COO West East and Central Africa and Managing Director, East Africa, Insights told BusinessDay.

However, Soumya who recognised that MTN made the list between 2012 and 2014 advised African brands for sustained profitable growth outside their own home markets, saying that this would help African brands grow in scale and  footprint. “And indeed, with a large and growing middle class, continued foreign investment, it’s inevitable that African brands and companies will bounce back and make it to the top 100 global brands list, just as Asian brands started doing so a decade or so ago”

According to him, while no African brand made it to the top 100 global Brandz list for this year, there are a number of brands such as Coca Cola, Vodafone among many others that have over the years seen significantly increasing contributions from their Africa operations, in their global performance.

On the performance of ecommerce businesses, Soumya said ”What we  see is that specialist retailers  are doing relatively better than the traditional retailers who are encumbered by a lot of infrastructure (huge stores) and are finding it harder to shift their financial model to a more efficient web based service.

The ranking report stated that the value growth of pure online retailers increased +388% since 2006, while traditional retailers dropped -23% as they took longer to adapt their offering to include online.

Daniel Obi