JOHANNESBURG-based MTN Group Ltd. is trying to reduce the record $5.2 billion fine imposed by Nigeria’s telecommunications regulator on its operator in the West African nation by as much as 80%.
MTN has until Nov. 16 to pay the penalty, which relates to the timing of the disconnection of 5.1 million subscribers and is based on a charge of 200,000 naira ($1,005) for each unregistered customer.
MTN is the market leader in Nigeria’s mobile-phone market, with more than 62.5 million customers. The difficulty of disconnecting 5.1 million subscribers is partly because they they were too many. Ironically, then, in one way it the result of its being too successful.
Perhaps unsurprisingly, MTN emerged Africa’s most admired brand for the second year in a row, according the recent fourth annual Brand Africa 100 rankings, the “Brand Africa 100: Africa’s Best Brands” list.
Homegrown African brands, according to Mail & Guardian Africa’s analysis account for a nearly quarter of “Most Admired Brands in Africa” and less than 1% of the total value of the “Top 100 Most Valuable Brands in Africa”. Mail & Guardian Africa studied these brands, and gleaned some trends and strains of similarities which give a strong hint as to why they are so successful in the African market.
Old is Gold - but diversification and innovation is key!
Of the 14 different brands listed in the top 10 lists for most “admired” or “valuable”, 11 of the African brands are over 25 years old. Of those; two are over 93, two are over 66 and two are over 55!
For these brands, they were able to establish firm roots with often limited competition and become a household institution very early on. This was certainly the case for Peak Milk in Nigeria and Sasko in South Africa.
But they might not have lasted long if they hadn’t kept consistent quality and diversified once they had dominated the market. For example, Peak Milk prides, diversified its range so that products would follow an individual through all their “life stages” - for instance powdered milk as an infant and condensed milk as an adult. This journey also establishes a strong personal connection with the brand.
In Sasko’s case, the company - a leading manufacturer of essential and value-added foods in South Africa - has been milling wheat into flour for over 60 years. It adapted its strategy to meet changing consumer needs, launching products such as instant maize porridge, for people on the move, and a range of pasta - becoming the first in South Africa to produce pasta from white maize.
Innovation is also key to keeping the brand alive. In Nigeria, Zenith Bank blazed the trail in digital banking, STAR beer took innovative strides by introducing packaging in cans - making it the first Nigerian beer to be canned, while in South Africa, Multichoice kept viewers coming back for more and jumping on board with technological innovations such as Personal Video Recorders, Mobile television, Online Catch Up services and Digital Terrestrial Television (DTT).
Invest at home first - then expand, fast
A key trend in all of these companies that Mail & Guardian Africa read is that they started off as locally as possible before quickly expanding. Nigerian billionaire Aliko Dangote, who owns the Dangote Group, is a strong believer in this - that the main prerequisite to building a successful business is in developing a firm belief in your country and investing there before seeking greener pastures elsewhere. Many other successful brands think this way too.
Incorporated in South Africa in 1994, multinational mobile telecommunications company, MTN, waited 3 years before it began its journey into Africa in 1997 providing services in Uganda, Rwanda and Swaziland. Similarly, even though Multichoice began in South Africa in 1986, when M-Net was founded as one of the first two subscription television services outside of the US, its involvement in the African continent began in 1992 (helped no doubt by the end of apartheid too) with the launch of an analogue service, launched via satellite to more than 20 African countries.
Manufacture, don’t just trade
The Dangote Group in Nigeria was established in 1981 as a trading business with an initial focus on cement. The Group diversified over time into a conglomerate trading cement, sugar, flour, salt and fish. But what was key to its success was when in 1999, a strategic decision was made to transit it from a trading based business into a fully fledged manufacturing operation. In a country where imports constitute the vast majority of consumed goods, there was a clear gap for a vast and growing population and now Dangote is one of the largest manufacturing conglomerates in sub-Saharan Africa.
Other brands took the same capital intensive route. Also in Nigeria, Golden Penny Foods mastered the art of flour making and now produces a range of flours used in the manufacture of products such as cakes, biscuits, spaghetti, macaroni, penne, twist, confectionary and noodles as well as all types of bread.
In East Africa, Mukwano in Uganda started off as a trading company in 1910 but moved into manufacturing and are is now regionally recognised for the production of a wide range of high quality and affordable fast moving consumer goods ranging from laundry and toilet soaps, edible oils and fats, powder detergents, domestic and industrial plastics and packaged drinking water.
It’s all about football
One other major trend that Mail & Guardian Africa saw in five of the top 14 brands, was that they had some sort of relationship with football. For example, in East Africa, Tusker, a beer brand owned by East African Breweries, has financial interests in a soccer club called the Tusker FC while in South Africa, MTN 8 is one of the country’s most significant football tournaments and has been in existence for over 40 years.
In West Africa, Globacom, the latest player in Nigeria’s mobile telecomms market, was described by the Minister of Sports as being the number one supporter of football in the country. In 2011 the company signed a 5-year sponsorship agreement with the Nigeria Football Federation, while in 2013 the company renewed its sponsorship of the Nigerian League now known as the Glo Premier League.
This is a clever strategy since it allows the brand to “give back” to the country whilst marketing through the most popular sport on the continent. It also ensures that the brand is seen by future generations - a key tactic for longevity.
Target the younger ones
Children are bombarded by brand messages almost from birth and it has been seen that children as young as two can start to recognise logos and request specific brands when they get older. Companies will want to target their future market ensuring attachment from a young age. MTN did this with their “education bundle” - a laptop that comes with preloaded, educational content specially designed for children which will allow them to learn and explore the world through the internet. Meanwhile in Nigeria, Zenith bank combined the pull effect of football, announcing a partnership for youth football development and capacity building programs.
For the slightly older market, because Tusker beer was seen as appealing to more older men, a couple of years ago East Africa Breweries came up with a strategy to reinvigorate the brand and to broaden its appeal which included the launch of “Tusker Project Fame” - a talent-scouting reality show much like X-Factor or Pop Idols.
Targeting nutrition and health benefits
In the case of food stuffs, the top brands were quick to jump on the nutrition bandwagon ensuring that the avid mother or father doing the shopping would go for products which they believed would give their children the most benefits.
For example, all Peak products, including its powder milk and condensed milk, contain 28 vitamins and minerals, including vitamin B1, B12 and iodine. In South Africa, Sasko launched White Star as a top-end super maize meal, positioned as the first fortified maize meal (with added Vitamin A), the brand quickly took to the sky and showed an incredible growth rate becoming the most successful brand within this category in 2002.
By Africans, for Africans - knowing the consumer inside out
When Guinness Nigeria launched Orijin in 2013, many were skeptical about how well the brand would perform in the ready-to-drink alcoholic beverage category. What they got right though, is that they marketed the product in a relatable way - herbs are a really important part of Nigerian lives and so this concoction, an alcoholic blend of African fruits and herbs, became seen as the traditional drink for the modern Nigerian. There was widespread adoption with Orijin consumers quickly dubbing themselves “Orijinals”.
Having a full anthropological understanding of consumer habits is also what drove the success of Kenyan mobile network operator, Safaricom. The per second billing strategy was a massive boost in the early days when only few people had access to mobile phones and the cost of making calls were very high. When the company then launched the famous M-Pesa mobile money transfer system, they had tapped into a real need in the country since money transfer methods, like Western Union or through the post office, took a lot of time, were complicated and expensive.
In Nigeria, Globacom has also tapped its own indigenous knowledge by becoming a strong supporter of the Ofala Festival in the Anambra State, making the event a real success. It is possibly one of the most important surviving traditions in that state and can be traced back to the 1950s. This was a clever move by the company which has bought into the hearts and minds of a state with a population of about 4.2 million people, of whom 98% are from the Igbo community - bearing in mind that over the whole country this community is 32 million strong.