The impact of xenophobic attacks on South African brands.

You are probably wondering what the xenophobic attacks have to do with brands. Well… the answer is EVERYTHING, because in this world nothing ever works in isolation. The impact may be direct or indirect and its magnitude may differ but the bottom line is that there is an impact. According to Otto Sterlik founder of the Protea Group, xenophobic attacks not only have an effect on the tourism industry but the entire South African economy.

A report by Ernst & Young states that Africa is an important growth market that no consumer products business can afford to ignore. More and more global companies are establishing business in Africa. South Africa, being one of the largest economies in the African continent, is often used as a “gateway” to Africa. The companies first set up base in South Africa before penetrating other African markets.

South African companies are also making inroads to the entire African continent as part of their growth strategy. The spell on fellow African brothers and sisters is therefore not only detrimental to the foreigners but to the companies that have already established themselves in other African countries and those that have plans to enter other African countries.

Over the weekend I received a very disturbing voice note from a friend. The man speaking on the voice note (whom I assume is a Nigerian national) is calling on all other African nations to “bomb” South African businesses in foreign countries if the South Africans don’t stop attacking foreigners. Last week, the MTN Head Office in Abuja, Nigeria had to shut down after they were invaded by anti-xenophobic protesters.

Nigeria is MTN’s largest and most profitable market. In 2013, MTN Nigeria reported more profits than MTN South Africa.

MTN is not the only South African brand that could be adversely affected by the wake of the xenophobic protests. Shoprite, a leading retailer in South Africa has about 7 stores in Nigeria compared to the 600 store in South Africa. The giant retailer sells more bottles of Moet and Chandon Champagne in Nigeria than in all liquor  South Africa. This is an indication of how significant the Nigerian market is.

Nigeria is not the only market that South African brands have successfully established business in. Countries such as Angola, Tanzania, Botswana, Mozambique and so forth, have also opened their boarders for South African brands that are doing quite well.

If the xenophobic attacks continue, the growth of brands such as Standard Bank, DSTV, Woolworths, Tiger Brands and many others will be impeded. The brands will lose out on the investments already made in other African countries.  South Africa’s GDP will drop and ultimately more people will become unemployed. The consequences are just undesirable.

South Africans need to unite against the few culprits of the xenophobic attacks to prevent South African brands being attacked in other African countries.  I would also like to urge the South African brands to use their influence in their respective industries to educate and help curb the xenophobic attacks.

Kwame Nkrumah was famously quoted as saying “the forces that unite us are intrinsic and greater than the superimposed influences that keep us apart”. Unemployment, corruption and drugs are all global problems. It is time for Africa to unite, because we are one!

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