2018: Managing the pace of change in Africa – the year ahead
The success of African governments is increasingly defined by their ability to manage the pace of social and political change. Africa’s burgeoning youth populations are flocking to the cities, embracing new forms of communications and media, and vocally demanding greater accountability from their governments.
Young and aspirational societies are above all hungry for jobs, but they also expect better public services and more evident social justice. This tide of expectation from the grassroots makes change inevitable. But while governments cannot stop it, they can still shape the pace and direction of change.
The African continent today is characterised by two types of nations – those led by reform-minded governments with the political will to deliver on their development strategy and overseeing robust growth driven by their private sectors; and those that resort to window-dressing efforts at reform while clinging to power through a reliance on patronage. In 2018, I anticipate more bumps in the road for African leaders who fail to respond to the clamouring of their young populations. But I also see the emergence of a new generation of leadership, like ours in Botswana, which has grown responsive to the needs and expectations of its citizens.
The new administrations of Cyril Ramaphosa in South Africa, Joao Lourenco in Angola, and Emmerson Mnangagwa in Zimbabwe, while facing notable political and economic challenges, will all strike a more reformist and accountable tone than their predecessors in 2018. I anticipate Ramaphosa will make bold cabinet selections in South Africa to reassure the capital markets, step back from some of President Jacob Zuma’s more controversial recent populist policy interventions, and importantly, push for investigations into some of the alleged graft which has rocked South African politics in recent years.
This will not be an easy task, such is the divided nature of his party and the fragile state of the economy. But he will look to assert his authority and strike a note of change, while upholding aspects of the ANC’s radical economic transformation agenda, which remains so critical to South Africa’s long-term socio-economic rebalancing post-apartheid.
Lourenco is also making waves in Angola as he seeks to assert his authority over the state apparatus and dilute the lingering influence of the dos Santos family, who have dominated Angolan politics for the last three decades. From his new position of growing strength, I anticipate that Lourenco’s reforms will move beyond personnel changes to actually tackle some of the monopolies that thrive in Angola’s heavily politicised business landscape. It remains to be seen however, whether such actions constitute part of a coherent development agenda, or whether they are simply a means of wrestling control of key patronage structures from one faction to another.
In those countries where leaders have sought to push back and resist the forces of change, political risks will increase, as was evidenced recently in Zimbabwe. In perhaps the most prominent example of this dynamic, President Joseph Kabila’s dance around the international community in the DRC will continue to fuel a political and security crisis in 2018 that carries risks of escalation. Kabila will continue to play to the gallery on his commitment to elections, but I see this as a means to detract from his entrenchment in power. This dynamic will continue to foment unrest and violence as the country limps along to an inevitable transition.
Between populism and pragmatism
Linked to this same demographic pressure for reform and progress, governments are having to make tough decisions on how they run their economies, make policy and fund their development plans. With commodity prices still somewhat subdued, donor streams proving unreliable, and China taking a more restrained approach to the continent, in the last two-to-three years African governments have been forced to place a greater focus on economic diversification, debt-raising, fiscal reform, and efforts to broaden the tax base.
Such reforms are much-needed to strengthen the macro-economic sustainability of many countries. But they also carry structural risks, and notable opportunities and risks for business, which need to be carefully evaluated. With regards to structural risk, IMF chief Christine Lagarde in December 2017 sounded the warning bell over resurgent public debt levels in Africa, with external debt in particular vulnerable to foreign currency appreciation noting the likelihood of further interest hikes in the US and Euro-area this year.
After a swathe of debt write-offs in the 2000s with the launch of the Heavily Indebted Poor Countries Initiative (HIPC) in 1996, African debt is again on the rise, with many governments using commercial and conditional borrowing to plug persistent fiscal and budgetary gaps. On a positive note, unlike in previous debt cycles, much of the focus of recent borrowing has been to fund capital spending on infrastructure and developmental projects.
However, many governments have also proven either reluctant or unable to trim the public wage bill, cut back on subsidies and reduce wastage in the system by pioneering robust public-sector reform. This has proven evident in the challenging IMF negotiations around concessional reforms to enable extended credit facilities in countries like Mozambique and Zambia.
While 2018 is unlikely to be the year when the tide turns on African debt, we expect this issue to come increasingly into focus with several bond issuances nearing maturity, and the long-term sustainability of debt in countries like Guinea, Ghana and Kenya being called into question. Fortunately, African governments appear more engaged with the IMF and other lenders than they were during the stubborn debt crises of the 1980s.
But public-sector reforms will prove a bitter pill to swallow, and with governments under pressure to maintain spending and preserve jobs, the debt mountain is more likely to swell than deflate. This issue could well come back to bite, and donors are unlikely to countenance a second bailout along the lines of HIPC, underlining the long-term structural risks this presents if spending is not contained.
On the other hand, the move towards economic diversification – particularly in resource dependent economies – presents huge opportunities to business. These range from reforms and incentives to open untapped or under-productive sectors like mining and agriculture, to the launch of Special Economic Zones or ring-fenced industrial parks like the export-oriented manufacturing hubs being developed in Zambia or Ethiopia. Such moves are unlocking significant potential for both companies and government, with an aligned benefit from wealth and jobs creation, and increased fiscal contributions.
Yet in other areas, fiscal reforms and efforts to broaden the tax base come with risks for business. Internal revenue generation in Africa is lamentably low due to a combination of poor checks and systems, high levels of informality in the economy, low tax rates, and corruption. The drive to address this issue forms an important step to build more sustainable economies.
Yet while improving tax collection systems and broadening the tax base to capture untaxed areas is likely to be a positive move, we are also likely to see a struggle play out between the need for pragmatic fiscal management and the desire to secure easy populist wins which carry political capital. In particular, where tax authorities target the low-hanging fruit of existing tax payers to drive up tax collection, this is likely to carry risks to business and in some instances, have a detrimental effect on economic activity.
In 2018, we are likely to see hikes in excise taxes on consumer goods that are seen to carry health and environmental impact – notably drinks, plastics and tobacco products – and the telecoms sector will also face similar pressures as a perceived cash-cow for government. While environmental and health issues will be used as the rationale, often the real driver of fiscal change will be short-term revenue-raising requirements. And while the foot has been taken off the pedal in terms of resource nationalism in the extractives sector after a wave of fiscal and regulatory reform in the last decade, tax and regulatory enforcement – including stringent sanctions for non-compliance – is likely to remain a feature for this strategic sector, where local content and beneficiation will be the primary government focus.
Businesses will need to be alert to these risks, which can originate domestically or result from contagion stemming from ‘influencer markets’ like South Africa which wield significant regional influence. While the risk of contagion from the more radical forms of policy that has been pursued in recent years in countries like Zimbabwe or even Tanzania is limited by the realities of the political-economy in other markets, tax and regulatory pressures are likely to become a growing challenge for business, requiring robust and proactive engagement to manage the impact on operations and the bottom line.
Marcus Courage, CEO of Africa Practice Group, a pan-African strategy and communications consultancy with offices in London, Gaborone and six other African capitals. www.africapractice. com
Opinions
IEC Disrespects Batswana: A Critical Analysis
The Independent Electoral Commission (IEC) has recently faced significant criticism for its handling of the voter registration exercise. In this prose I aim to shed light on the various instances where the IEC has demonstrated a lack of respect towards the citizens of Botswana, leading to a loss of credibility. By examining the postponements of the registration exercise and the IEC’s failure to communicate effectively, it becomes evident that the institution has disregarded its core mandate and the importance of its role in ensuring fair and transparent elections.
Incompetence or Disrespect?
One possible explanation for the IEC’s behavior is sheer incompetence. It is alarming to consider that the leadership of such a critical institution may lack the understanding of the importance of their mandate. The failure to communicate the reasons for the postponements in a timely manner raises questions about their ability to handle their responsibilities effectively. Furthermore, if the issue lies with government processes, it calls into question whether the IEC has the courage to stand up to the country’s leadership.
Another possibility is that the IEC lacks respect for its core clients, the voters of Botswana. Respect for stakeholders is crucial in building trust, and clear communication is a key component of this. The IEC’s failure to communicate accurate and complete information, despite having access to it, has fueled speculation and mistrust. Additionally, the IEC’s disregard for engaging with political parties, such as the Umbrella for Democratic Change (UDC), further highlights this disrespect. By ignoring the UDC’s request to observe the registration process, the IEC demonstrates a lack of regard for its partners in the electoral exercise.
Rebuilding Trust and Credibility:
While allegations of political interference and security services involvement cannot be ignored, the IEC has a greater responsibility to ensure its own credibility. The institution did manage to refute claims by the DISS Director that the IEC database had been compromised, which is a positive step towards rebuilding trust. However, this remains a small glimmer of hope in the midst of the IEC’s overall disregard for the citizens of Botswana.
To regain the trust of Batswana, the IEC must prioritize respect for its stakeholders. Clear and timely communication is essential in this process. By engaging with political parties and addressing their concerns, the IEC can demonstrate a commitment to transparency and fairness. It is crucial for the IEC to recognize that its credibility is directly linked to the trust it garners from the voters.
Conclusion:
The IEC’s recent actions have raised serious concerns about its credibility and respect for the citizens of Botswana. Whether due to incompetence or a lack of respect for stakeholders, the IEC’s failure to communicate effectively and handle its responsibilities has damaged its reputation. To regain trust and maintain relevance, the IEC must prioritize clear and timely communication, engage with political parties, and demonstrate a commitment to transparency and fairness. Only by respecting the voters of Botswana can the IEC fulfill its crucial role in ensuring free and fair elections.
Opinions
Fuelling Change: The Evolving Dynamics of the Oil and Gas Industry
The Oil and Gas industry has undergone several significant developments and changes over the last few years. Understanding these developments and trends is crucial towards better appreciating how to navigate the engagement in this space, whether directly in the energy space or in associated value chain roles such as financing.
Here, we explore some of the most notable global events and trends and the potential impact or bearing they have on the local and global market.
Governments and companies around the world have been increasingly focused on transitioning towards renewable energy sources such as solar and wind power. This shift is motivated by concerns about climate change and the need to reduce greenhouse gas emissions. Africa, including Botswana, is part of these discussions, as we work to collectively ensure a greener and more sustainable future. Indeed, this is now a greater priority the world over. It aligns closely with the increase in Environmental, Social, and Governance (ESG) investing being observed. ESG investing has become increasingly popular, and many investors are now looking for companies that are focused on sustainability and reducing their carbon footprint. This trend could have significant implications for the oil and fuel industry, which is often viewed as environmentally unsustainable. Relatedly and equally key are the evolving government policies. Government policies and regulations related to the Oil and Gas industry are likely to continue evolving with discussions including incentives for renewable energy and potentially imposing stricter regulations on emissions.
The COVID-19 pandemic has also played a strong role. Over the last two years, the pandemic had a profound impact on the Oil and Gas industry (and fuel generally), leading to a significant drop in demand as travel and economic activity slowed down. As a result, oil prices plummeted, with crude oil prices briefly turning negative in April 2020. Most economies have now vaccinated their populations and are in recovery mode, and with the recovery of the economies, there has been recovery of oil prices; however, the pace and sustainability of recovery continues to be dependent on factors such as emergence of new variants of the virus.
This period, which saw increased digital transformation on the whole, also saw accelerated and increased investment in technology. The Oil and Gas industry is expected to continue investing in new digital technologies to increase efficiency and reduce costs. This also means a necessary understanding and subsequent action to address the impacts from the rise of electric vehicles. The growing popularity of electric vehicles is expected to reduce demand for traditional gasoline-powered cars. This has, in turn, had an impact on the demand for oil.
Last but not least, geopolitical tensions have played a tremendous role. Geopolitical tensions between major oil-producing countries can and has impacted the supply of oil and fuel. Ongoing tensions in the Middle East and between the US and Russia could have an impact on global oil prices further, and we must be mindful of this.
On the home front in Botswana, all these discussions are relevant and the subject of discussion in many corporate and even public sector boardrooms. Stanbic Bank Botswana continues to take a lead in supporting the Oil and Gas industry in its current state and as it evolves and navigates these dynamics. This is through providing financing to support Oil and Gas companies’ operations, including investments in new technologies. The Bank offers risk management services to help oil and gas companies to manage risks associated with price fluctuations, supply chain disruptions and regulatory changes. This includes offering hedging products and providing advice on risk management strategies.
Advisory and support for sustainability initiatives that the industry undertakes is also key to ensuring that, as companies navigate complex market conditions, they are more empowered to make informed business decisions. It is important to work with Oil and Gas companies to develop and implement sustainability strategies, such as reducing emissions and increasing the use of renewable energy. This is key to how partners such as Stanbic Bank work to support the sector.
Last but not least, Stanbic Bank stands firmly in support of Botswana’s drive in the development of the sector with the view to attain better fuel security and reduce dependence risk on imported fuel. This is crucial towards ensuring a stronger, stabler market, and a core aspect to how we can play a role in helping drive Botswana’s growth.  Continued understanding, learning, and sustainable action are what will help ensure the Oil and Gas sector is supported towards positive, sustainable and impactful growth in a manner that brings social, environmental and economic benefit.
Loago Tshomane is Manager, Client Coverage, Corporate and Investment Banking (CIB), Stanbic Bank Botswana
Opinions
Brands are important
So, the conclusion is brands are important. I start by concluding because one hopes this is a foregone conclusion given the furore that erupts over a botched brand. If a fast food chef bungles a food order, there’d be possibly some isolated complaint thrown. However, if the same company’s marketing expert or agency cooks up a tasteless brand there is a country-wide outcry. Why? Perhaps this is because brands affect us more deeply than we care to understand or admit. The fact that the uproar might be equal parts of schadenfreude, black twitter-esque criticism and, disappointment does not take away from the decibel of concern raised.
A good place to start our understanding of a brand is naturally by defining what a brand is. Marty Neumier, the genius who authored The Brand Gap, offers this instructive definition – “A brand is a person’s gut feel about a product or serviceâ€. In other words, a brand is not what the company says it is. It is what the people feel it is. It is the sum total of what it means to them. Brands are perceptions. So, brands are defined by individuals not companies. But brands are owned by companies not individuals. Brands are crafted in privacy but consumed publicly. Brands are communal. Granted, you say. But that doesn’t still explain why everybody and their pet dog feel entitled to jump in feet first into a brand slug-fest armed with a hot opinion. True. But consider the following truism.
Brands are living. They act as milestones in our past. They are signposts of our identity. Beacons of our triumphs. Indexes of our consumption. Most importantly, they have invaded our very words and world view. Try going for just 24 hours without mentioning a single brand name. Quite difficult, right? Because they live among us they have become one of us. And we have therefore built ‘brand bonds’ with them. For example, iPhone owners gather here. You love your iPhone. It goes everywhere. You turn to it in moments of joy and when we need a quick mood boost. Notice how that ‘relationship’ started with desire as you longingly gazed upon it in a glossy brochure. That quickly progressed to asking other people what they thought about it. Followed by the zero moment of truth were you committed and voted your approval through a purchase. Does that sound like a romantic relationship timeline. You bet it does. Because it is. When we conduct brand workshops we run the Brand Loyalty ™ exercise wherein we test people’s loyalty to their favourite brand(s). The results are always quite intriguing. Most people are willing to pay a 40% premium over the standard price for ‘their’ brand. They simply won’t easily ‘breakup’ with it. Doing so can cause brand ‘heart ache’. There is strong brand elasticity for loved brands.
Now that we know brands are communal and endeared, then companies armed with this knowledge, must exercise caution and practise reverence when approaching the subject of rebranding. It’s fragile. The question marketers ought to ask themselves before gleefully jumping into the hot rebranding cauldron is – Do we go for an Evolution (partial rebrand) or a Revolution(full rebrand)? An evolution is incremental. It introduces small but significant changes or additions to the existing visual brand. Here, think of the subtle changes you’ve seen in financial or FMCG brands over the decades. Evolution allows you to redirect the brand without alienating its horde of faithful followers. As humans we love the familiar and certain. Change scares us. Especially if we’ve not been privy to the important but probably blinkered ‘strategy sessions’ ongoing behind the scenes. Revolutions are often messy. They are often hard reset about-turns aiming for a total new look and ‘feel’.
Hard rebranding is risky business. History is littered with the agony of brands large and small who felt the heat of public disfavour. In January 2009, PepsiCo rebranded the Tropicana. When the newly designed package hit the shelves, consumers were not having it. The New York Times reports that ‘some of the commenting described the new packaging as ‘ugly’ ‘stupid’. They wanted their old one back that showed a ripe orange with a straw in it. Sales dipped 20%. PepsiCo reverted to the old logo and packaging within a month. In 2006 Mastercard had to backtrack away from it’s new logo after public criticism, as did Leeds United, and the clothing brand Gap. AdAge magazine reports that critics most common sentiment about the Gap logo was that it looked like something a child had created using a clip-art gallery. Botswana is no different. University of Botswana had to retreat into the comfort of the known and accepted heritage strong brand. Sir Ketumile Masire Teaching Hospital was badgered with complaints till it ‘adjusted’ its logo.
So if the landscape of rebranding is so treacherous then whey take the risk? Companies need to soberly assess they need for a rebrand. According to the fellows at Ignyte Branding a rebrand is ignited by the following admissions :
Our brand name no longer reflects our company’s vision.
We’re embarrassed to hand out our business cards.
Our competitive advantage is vague or poorly articulated.
Our brand has lost focus and become too complex to understand. Our business model or strategy has changed.
Our business has outgrown its current brand.
We’re undergoing or recently underwent a merger or acquisition. Our business has moved or expanded its geographic reach.
We need to disassociate our brand from a negative image.
We’re struggling to raise our prices and increase our profit margins. We want to expand our influence and connect to new audiences. We’re not attracting top talent for the positions we need to fill. All the above are good reasons to rebrand.
The downside to this debacle is that companies genuinely needing to rebrand might be hesitant or delay it altogether. The silver lining I guess is that marketing often mocked for its charlatans, is briefly transformed from being the Archilles heel into Thanos’ glove in an instant.
So what does a company need to do to safely navigate the rebranding terrain? Companies need to interrogate their brand purpose thoroughly. Not what they think they stand for but what they authentically represent when seen through the lens of their team members. In our Brand Workshop we use a number of tools to tease out the compelling brand truth. This section always draws amusing insights. Unfailingly, the top management (CEO & CFO)always has a vastly different picture of their brand to the rest of their ExCo and middle management, as do they to the customer-facing officer. We have only come across one company that had good internal alignment. Needless to say that brand is doing superbly well.
There is need a for brand strategies to guide the brand. One observes that most brands ‘make a plan’ as they go along. Little or no deliberate position on Brand audit, Customer research, Brand positioning and purpose, Architecture, Messaging, Naming, Tagline, Brand Training and may more. A brand strategy distils why your business exists beyond making money – its ‘why’. It defines what makes your brand what it is, what differentiates it from the competition and how you want your customers to perceive it. Lacking a brand strategy disadvantages the company in that it appears soul-less and lacking in personality. Naturally, people do not like to hang around humans with nothing to say. A brand strategy understands the value proposition. People don’t buy nails for the nails sake. They buy nails to hammer into the wall to hang pictures of their loved ones. People don’t buy make up because of its several hues and shades. Make up is self-expression. Understanding this arms a brand with an iron clad clad strategy on the brand battlefield.
But perhaps you’ve done the important research and strategy work. It’s still possible to bungle the final look and feel. A few years ago one large brand had an extensive strategy done. Hopes were high for a top tier brand reveal. The eventual proposed brand was lack-lustre. I distinctly remember, being tasked as local agency to ‘land’ the brand and we outright refused. We could see this was a disaster of epic proportions begging to happen. The brand consultants were summoned to revise the logo. After a several tweaks and compromises the brand landed. It currently exists as one of the country’s largest brands. Getting the logo and visual look right is important. But how does one know if they are on the right path? Using the simile of a brand being a person – The answer is how do you know your outfit is right? It must serve a function, be the right fit and cut, it must be coordinated and lastly it must say something about you. So it is possible to bath in a luxurious bath gel, apply exotic lotion, be facebeat and still somehow wear a faux pas outfit. Avoid that.
Another suggestion is to do the obvious. Pre-test the logo and its look and feel on a cross section of your existing and prospective audience. There are tools to do this. Their feedback can save you money, time and pain. Additionally one must do another obvious check – use Google Image to verify the visual outcome and plain Google search to verify the name. These are so obvious they are hopefully for gone conclusions. But for the brands that have gone ahead without them, I hope you have not concluded your brand journeys as there is a world of opportunity waiting to be unlocked with the right brand strategy key.
Cliff Mada is Head of ArmourGetOn Brand Consultancy, based in Gaborone and Cape Town.
cliff@armourgeton.com