Wednesday, 27 May 2020

For the third time in a row, Dangote Group has emerged as the most admired African brand, of African continent origin, by consumers, paired with the telecommunication giant, MTN in a survey of 100 Africa best brands announced in a novel global virtual event that incorporated the market openings of Kenya, South Africa and Nigeria.

GT Bank returns to the top spot in financial services and the United Kingdom's BBC retains its media category ranking as the most admired media brand in separate category sub-surveys of the most admired financial services and media brands in Africa. African brands only occupy 13 of the 100 entries, seven less from last year.

Established 10 years ago, to coincide with the 2010 FIFA World Cup, the world’s biggest single sporting event, the Brand Africa 100: Africa’s Best Brands survey and rankings have established themselves as the most authoritative survey, analysis, and metric of brands in Africa.

African brands only occupied 13 of the 100 entries, 7 less from last year’s. Founder and Chairman of Brand Africa and Brand Leadership, Thebe Ikalafeng during an online interactive session via Zoom said: “African brands have an important role in helping to build the image, competitiveness and transforming the continent’s promise into a real change. It’s concerning that in the 10 years since the triumphant FIFA World Cup in South Africa which globally highlighted the promise and capability of Africa, and despite the vibrant entrepreneurial environment, Africa is not creating more competitive brands to meet the needs of its growing consumer market.” Global Client Development Manager, GeoPoll, Caitlin van Niekerk said: “The reach and accessibility of mobile across the continent enabled us to survey respondents across a representative sample of countries quickly and effectively, giving us vital and timely results at a critical time. Kantar has been the insight lead for Brand Africa since inception in 2010.”

It is a consumer-led survey which seeks to establish brand preferences across Africa. The survey is conducted among a representative sample of respondents 18 years and older, in 27 countries which collectively represent 50 per cent of the continent, covering all economic regions and accounting for an estimated 80 per cent of the population and the GDP of Africa. The 2020 survey was conducted between February and April 2020 and yielded over 15,000 brand mentions and over 2,000 unique brands

Out of the top 100 brands in 2010/11, only half still appear in this year’s list due to mergers, acquisitions and the obsolescence of many brands. The most prominent changes are in the technology category with the demise Blackberry (#32 in 2010/11), the consolidation of Vodafone (#54 in 2010/11 and now #13 in 2020) which acquired Vodacom in 2008 and re-branded in 2011, Etisalat (#40 in 2010/11) re-branding to 9 Mobile in 2017 and Motorola (#39) being acquired by Lenovo in 2014. A Chinese brand, Tecno, has raced up the ranking from #33 to #5 in the rankings – a dominant performance for one of China’s premier global brands that are not even sold in China

In his reaction, Group Chief Corporate Communication Officer of the Dangote Group, Anthony Chiejina said the management was not unexpected of the ranking because  the company has a long standing reputation for quality, relevance compliance and social stewardship. “Our mission and vision engage and inspire us to by extension connects us to with both our internal and external stakeholders.  

“We fervently believe that only Africans can develop Africa, and this gives us stronger sense of relevance  in all the countries where we have our operations. We are touching lives by providing their basic needs and empowering Africans more than ever before creating jobs reducing capital flight, helping government conserve foreign exchange drain by supporting different industrial infrastructural projects of African government.”

Mr. Chiejina stated further that Dangote Cement has been producing high quality and affordable cement, reducing poverty, engaging in unprecedented philanthropy and above all respecting the laws of the land where we operate. “All these are our credo and we do not compromise it, it is our way. And the ranking is just an acknowledgement of all these by our stakeholders, We keep our brand promise and stay authentic.” he concluded

Published in Business

The African Continental Free Trade Area was launched two years ago at an African Union (AU) summit in Kigali. It was scheduled to be implemented from 1 July 2020. But this has been pushed out until 2021 because of the impact of COVID-19 and the need for leaders to focus on saving lives.

Studies by the International Monetary Fund (IMF), the United Nations Economic Commission for Africa and others state that the free trade area has the potential to increase growth, raise welfare and stimulate industrial development on the continent. But there are concerns. Some countries, particularly smaller and more vulnerable states, could be hurt. For example, they could suffer revenue losses and other negative effects from premature liberalisation.

The impact of COVID-19 will only worsen these structural weaknesses. The Economic Commission for Africa has reported that between 300,000 and 3.3 million people could lose their lives if appropriate measures are not taken. There are several reasons for this level of high risk. These include the fact that 56% of urban dwellings are in overcrowded slums, 71% of Africa’s workforce is informally employed and cannot work from home and 40% of children on the continent are undernourished.

Africa is also more vulnerable to the impact of COVID-19 because it is highly dependent on imports for its medicinal and pharmaceutical products and on commodity exports. The latter include oil, which has suffered a severe collapse in price.

Other contributing factors are high public debt due to higher interest rate payments than Organisation for Economic Co-operation and Development (OECD) countries, a weak fiscal tax base, and the negative impact on Africa’s currencies due to huge stimulus measures taken by OECD countries.

The COVID-19 crisis has brought these weaknesses into sharp relief. But it also provides an opportunity for African countries to address them. For example, they could accelerate intra-regional trade by focusing on the products of greatest need during the health crisis. Countries could also start building regional value chains to advance industrialisation, improve infrastructure and strengthen good governance and ethical leadership.

These are all vital to guiding African countries through the current crisis.

These goals can be achieved if African states adopt a “developmental regionalism” approach to trade integration. This would include fair trade, building regional value chains, cross-border investment in infrastructure and strengthening democratic governance.

Fair trade

A number of conditions need to be met for a free trade area to succeed.

Firstly, African states vary widely in size and economic development. As a result some may warrant special attention and specific treatment. In particular, among Africa’s 55 states 34 are classified by the United Nations as least developed countries. These are low income countries that have severe structural problems impeding their development.

Building trade agreements in favour of small and less developed economies will contribute to fairer outcomes of the free trade deal.

Secondly, African governments should include their stakeholders – businesses (both big and small), trade unions and civil society organisations – in the national consultation process. This will require effective institutions that enable the fullest participation.

Additional steps countries should take to cope with the fallout from COVID-19:

  • Reduce tariffs on vital pharmaceutical products (such as ventilators), personal protective equipment and food products;

  • Stimulate intra-regional trade by prioritising these products for an immediate or early phase down in the free trade area.

Building regional value chains

African countries are increasingly connected to the global economy, but tend to operate at the lowest rung of the ladder. They are mainly supplying raw materials and other low-value manufactured outputs.

Cooperation is needed between Africa’s emerging entrepreneurs and industries to improve their competitiveness in global markets. This would have a number of positive outcomes including:

  • triggering industrialisation, which will transform economies

  • helping African countries obtain a fairer share of the value derived from African commodities and labour, and

  • improving the lives of people on the continent.

The current crisis creates an opportunity for African countries to build value chains on medical equipment, pharmaceuticals and personal protective equipment.

The clothing and textile sector could also be restructured to meet the needs of the health sector while taking advantage of the breakdown in supply chains from China and Europe.

As more countries lock down their economies and apply movement controls, agricultural and processed food supply chains are disrupted. This creates opportunities to build regional supply chains and partner with retailers.

There are also opportunities to build infrastructure to support the health response: hospitals, water and sanitation, schools, low-cost housing and alternative energy.

African countries can also benefit from the growing interest in environmental tourism.

Cross-border infrastructure investment

Since most African countries are less developed, and many are small, intra-regional trade will require them to cooperate to improve their infrastructure. This includes physical ports, roads and railways as well as customs procedures, port efficiency and reduction of roadblocks.

Progress is already being made. Examples include the Mombasa-Nairobi Corridor; the Addis to Djibouti road, rail and port connection; and the Abidjan-Lagos Corridor, which handles more than two-thirds of West African trade.

Increased investment in these types of cross-border infrastructure projects will benefit regional integration.

Democracy and governance

Most African states have started accepting multi-party systems of governance. Many have also embraced a culture of constitutionalism, rule of law and human rights.

Democratic governance supported by active citizenship will create an environment of transparency and predictability that encourages domestic and foreign investment. Both are vital for growth and industrialisation. The process is also essential for the sustainability of regional economic integration and democracy in Africa.

Countries are becoming better at fulfilling their democratic obligations. For example, 40 African countries, including the Seychelles and Zimbabwe, voluntarily joined the African Peer Review Mechanism. The mechanism is a remarkable achievement that the free trade area agreement must build on.

The way forward

The free trade area could become a landmark in Africa’s journey towards peace, prosperity and integration. The COVID-19 pandemic, notwithstanding its devastating impact on the health and economies of Africa, could be an opportunity to advance the free trade area in a more developmental, inclusive and mutually beneficial way for African countries.The Conversation

 

Faizel Ismail, Director of the Nelson Mandela School of Public Governance, University of Cape Town

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Business
Wednesday, 27 May 2020 05:21

Germany to Bail Out Lufthansa

Germany threw Lufthansa a 9 billion euro ($9.8 billion) lifeline on Monday, agreeing a bailout which gives Berlin a veto in the event of a hostile bid for the airline.

The largest German corporate rescue since the coronavirus crisis struck will see the government get a 20% stake, which could rise to 25% plus one share in the event of a takeover attempt, as it seeks to protect thousands of jobs.

Lufthansa has been locked in talks with Berlin for weeks over aid it needs to survive an expected protracted travel slump, with the airline wrangling over how much control to yield in return for financial support.

Germany’s central government has spent decades offloading stakes in companies, but remains a large shareholder in former state monopolies such as Deutsche Post and Deutsche Telekom. Berlin also still has a 15% holding in Commerzbank, which it took on during the global financial crisis.

Other airlines including Franco-Dutch Air France-KLM and U.S. carriers American Airlines, United Airlines and Delta Air Lines have also sought state aid after the coronavirus hit global travel.

Germany’s Finance and Economy Ministries said on Monday that Lufthansa, whose shares closed up 7.5% at 8.64 euros, had been operationally healthy and profitable with good prospects, but had run into trouble because of the pandemic.

“The support that we’re preparing here is for a limited period,” Finance Minister Olaf Scholz said of the deal, under which Germany is buying new shares at the nominal value of 2.56 euros apiece for a total of about 300 million euros.

Berlin, which has set up a 100 billion euro fund to take stakes in companies struck by the coronavirus crisis, said it plans to sell the Lufthansa stake by the end of 2023.

“When the company is fit again, the state will sell its stake and hopefully ... with a small profit that puts us into a position to finance the many, many requirements which we have to meet now, not only at this company,” Scholz added.

Conditions of the deal include the waiver of future dividend payments and limits on management pay, Lufthansa said, adding that the government will also fill two seats on its supervisory board, with one becoming a member of the audit committee.

SILENT PARTICIPATION
Under the bailout package, details of which were earlier reported by Reuters, the government will also inject 5.7 billion euros in non-voting capital, known as a silent participation.

Part of this could be converted into an additional 5% equity stake, either to protect Lufthansa against a hostile takeover or in case coupon payments of 4% in 2020 and 2021, increasing to 9.5% by 2027, are missed by the airline.

“This (bailout deal) will prevent Lufthansa from being sold out,” Economy Minister Peter Altmaier said, adding that it would help to save thousands of jobs but did not include any extra environmental conditions on top of planned measures.

Lufthansa will separately receive a 3-billion-euro three-year loan from state-backed KfW and private banks.

The state’s WSF rescue fund plans to refrain from exercising voting rights at regular shareholder meetings under the bailout deal, which still requires approval by shareholders as well as the European Commission, Lufthansa said.

Altmaier declined to give details about the remaining sticking points in negotiations with the European Commission, but he said he was convinced that Brussels would give the green light for the bailout.

“We liaised with Brussels on all big rescue packages with which we avoided millions of unemployed and prevented a lot of companies from bankruptcy. They were all approved at the end... so this gives me hope that we’ll also find a solution in this case,” Altmaier told ARD public television.

Germany is still discussing with Europe’s competition watchdog which airport slots it will have to give up to ensure the bailout does not hamper competition, a person close to the matter said.

“Scrutiny is extremely thorough as it is the first large equity-based bailout in the pandemic,” the source said.

German newspaper Handelsblatt reported that Chancellor Angela Merkel told fellow conservatives during a closed-door meeting on Monday that Berlin would fight to ensure that remedies were not too stringent.

 

Reuters

Published in World
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