Nation Brand Performance
Over the past 15 years the concept of managing the reputation of Nation Brands has emerged
as a global trend. One of the primary reasons for this is that nation branding is able to provide a
competitive advantage in an increasingly competitive world that is striving to attract investment,
tourism, events and skills and to drive exports.
“The overall reputation of a nation brand has to be measured, managed and influenced by a
partnership between tourism, culture, government, business and civil society” says nation
branding pioneer Simon Anholt.
A useful model is the Anholt-GfK Nation Branding Hexagon, which describe the elements that
make up a nations brand and provides a thorough assessment of a country's standing, making it
one of the most effective tools available for managing a country's reputation around the world.
“The overall reputation
of a nation brand has to
be measured, managed
and influenced by a
partnership between
tourism, culture,
government, business and
civil society,” Simon Anholt.
Investment Potential and
attractiveness to outsiders
Investment
&
Immigration
Competency fair
governance, human
rights, international
contribution
Potential
attractiveness and
economical
contribution
Tourism
Exports
Governance
People
Level of satisfaction
with country's
products
and services
Culture &
Heritage
Commercial and cultural
Products and sporting prowess
Nation Brand Hexagon
Building nation brands, including brand South Africa, is a long journey which requires a consistent
and coordinated effort. The South African nation brand must be built through consistent
communications and reputation management both domestically and internationally. A nation
brand has major impact if all stakeholders work together around a single, visionary national
reputational strategy.
South Africa’s national strategy was driven and monitored through the Office of the Presidency,
and the Nation Brand Strategy formed an integral part of this plan. Nation branding to increase
Brand South Africa Annual Report 2012 2013
21
global competitiveness can make a vital contribution to the goals of the
South African Planning Commission, which is located in the Presidency.
South Africa’s value-proposition and positioning must reflect the country’s
Vision 2030: and so the benefits of a close connection are evident.
International research shows that in countries with the most dynamic
global rankings, the President is the key ‘brand champion’ who leads
and personifies the positioning of the country. For example, in Brazil,
USA, UK, and Tunisia’s branding efforts are all led by the Presidency, apart from the UK who has a monarchy and not a President - whether
through an organisation like Brand South Africa or by the Presidents
and their ministers.
The President has the most influence over the content and tone of
those speaking and writing about the country, and creating consistency
in messaging by the President. The Presidency strengthens a nation’s
brand standing within the global community.
In an early paper on nation branding in 1998, “Nation Brands of the
Twenty-First Century” Anholt pointed out that a country’s image and
reputation are acquired as a result of the things governments, business
and the people do and how they are perceived, but generally they
evolve slowly over time – unless there was a dynamic intervention or
defining moments (which serve as accelerators) occur.
South Africa has had various defining moments which have propelled
the brand forward in a hugely positive manner. Some notable ones
were the country’s peaceful transition to democracy and the successful
hosting of the soccer world cup in 2010. South Africa’s recent rise
to the BRICS grouping of countries is undeniably the next defining
moment, in the country’s journey, to becoming one of the strongest
nation brands globally.
The same holds true for the fourth and highly successful municipal
elections (2011), which reflected the maturing of South Africa’s
democracy and a broadly inclusive and participatory electoral process.
From a brand building perspective these achievements are critical
milestones and defining moments, as they reflect the country’s forward
movement, to being a successful country brand.
In reality, Brand South Africa ’belongs’ to all citizens of South Africa, and
they are the true custodians of the brand, and Brand South Africa’s role
is to Coordinate, Articulate, Enable and Inspire, creating a voluntary
franchise. However, Brand South Africa does not have line authority
to enforce compliance with the brand framework, and requires the
support of the Office of the Presidency to ensure traction for the nation
22
branding effort. For this reason the championing of nation brand
building efforts from the centre and the top, is imperative for effective
and impactful brand building, both domestically and internationally.
Aligned to this, is the need for coordination between all the different
role players: government, business and civil society organs.
An analysis of the research
South Africa: A top developing and globally competitive nation.
Brand South Africa worked hard to improve South Africa’s global
reputation, and to position the country as an investment destination of
choice and trade partner. The emphasis throughout is on South Africa
being open to new global business.
In a year when South Africa hosted, for the first time on the African
continent, the annual BRICS Summit, the theme of the fifth BRICS
Summit reflected changes taking place in the global political economy.
In this report we bring together several pieces of analysis, published
in the year under review, of country performance Brand South Africa
developed to understand country competitiveness in rapidly changing
global environment. We also identified the key strengths unique to the
South African economy. These indicators highlight that South Africa
has unique competitive strengths in the context of the developing
world. The broader context of South Africa’s inclusion into the BRICS
formation, as well as South Africa’s competitiveness performance
compared to other developing nations, shape the approach taken to
the research presented in this report.
Highlights include the World Economic Forum’s competitiveness
report that ranks South Africa 15th globally for Quality of Air Transport
Infrastructure, while the country’s financial services sector, banks and
stock exchange are top global performers. In addition South Africa,
compared to the BRICS grouping of nations, came first in five of the ten
criteria the World Bank uses to assess ease of doing business, namely
starting a business, dealing with construction permits, getting credit,
protecting investors, and paying taxes. This means that South Africa
offers protection to direct foreign investments, and is certainly a business
friendly environment in which new trade, investment, and related
economic interactions are fostered. As South Africa heads towards the
milestone of 20 years of democracy, it is important to assess the road
travelled, and to understand the position the country occupies globally,
as a developing nation in the early 21st century.
Brand South Africa’s research tracks a wide variety of competitiveness,
reputation, and related global studies and indices. The goal is to monitor
Brand South Africa Annual Report 2012 2013
and evaluate overall country performance in a highly competitive and
uncertain global economy. These third party information sources are then
supplemented by Brand South Africa commissioned research projects,
and subscriptions to domestic research vehicles. In order to further
deliver on research insights, Brand South Africa convenes Research
Reference Groups that reflect on, and provide Brand South Africa with
expert input and advice on key issues of concern at the time.
In this Report we reflect on the key findings from research conducted
by Brand South Africa in the past year. Significant findings include an
analysis of indicators showing that South Africa is a top performing
globally competitive developing nation. This is important in the context
of the country’s membership of the BRICS grouping, as well as macroeconomic changes taking place in the world system. Hence the specific
focus on developing a comparative understanding of how South Africa
performs in terms of competitiveness in relation to fellow developing
nations.
The competitive strengths, together with indicators on international
investor perceptions of the country, can be viewed as an inspiration
to indicate the strengths in the national economy. These become
building blocks of excellence for the realisation of the Vision 2030 in
the National Development Plan, whilst at the same time contributing
positively to enhancing South Africa’s reputation globally.
But, why is this important? In this report we highlight Brand South
Africa research regarding country performance in a broad range
of competitiveness, doing business, governance, and reputation
indicators. In this regard the analysis of the country’s reputation and
competitiveness has to be seen in the context of larger patterns of
change unfolding in the global political economy.
The 2013 United Nations Development Programme, Human
Development Report, contains powerful insights regarding the
increasingly important role developing countries, such as South Africa,
are playing in the 21st century. The UNDP indicated that the South
(developing nations and emerging markets) currently produced half
the world’s economic output. In 1990 these countries contributed
only about a third of world economic output. To further illustrate
the significant shift in the global economic balance of power, the
UNDP claimed that the combined GDP of eight developing countries:
Argentina, Brazil, China, India, Indonesia, Mexico, South Africa and
Turkey matched the GDP of the United States. The UNDP implied that
countries such as Brazil, South Africa, India and China, have become
major drivers of the global economy and are forces for change in the
developing world. It is pertinent to understand how South Africa is
Brand South Africa Annual Report 2012 2013
positioned within this rapidly changing global economy and by the
implication of its geopolitical environment.
This report brings together a range of competitiveness and human
development indicators which are used to benchmark South Africa’s
strengths, in relation to fellow BRICS and other promising developing
nations, broadly referred to as the Next11. What emerges is a pattern
of each country’s performance, indicating that South Africa matches
and outperforms other peer developing countries in critical areas
of national competency. These are important indicators to use in
positioning South Africa as a reliable trade partner, and attractive
investment destination.
We also reflect on findings from an annual international investor
perception study commissioned by Brand South Africa, as well as the
findings from the annual Anholt Gfk-Roper Nation Brand Index (NBI).
The NBI studies the global reputation of a select group of 50 nations.
South Africa’s performance in the NBI, together with findings from the
investor perception study, should provide high-level insights into the
overall perception of South Africa.
Competitiveness and related Human Development indicators
In a rapidly changing global economic and geopolitical environment,
competition for FDI, trade opportunities, and related business
activity increased. The sections below present some highlights and
comparisons between South Africa, the BRICS nations, and the Next11
group of developing nations.
As indicated below, South Africa performed well in comparison to
other developing nations. This implies that South Africans can have
confidence in their capabilities, skill, and knowledge necessary to
improve the country’s overall global competitiveness, create jobs, and
realise human and skills development goals in the future.
World Economic Forum - Global Competitiveness Report
2012/13
Top issues emerging from the World Economic Forum’s Competitiveness
Report indicate that South Africa compares quite well with fellow
developing nations and emerging markets. South Africa’s strengths in
the 2012/13 report include globally leading performance in:
y
Legal Rights Index (1st)
y
Regulation of Securities Exchanges (1st)
y
Efficacy of Corporate Boards (1st)
23
y
Strength of Auditing and Reporting Standards (1st)
y
Availability of Financial Services (2nd)
y
Financing through local equity market (3rd).
In general it showed that the country made improvements in three
of the WEF competitiveness pillars during the past three years:
Institutions, Financial Market Sophistication, and in Technological
Readiness. Below are indicators of South Africa’s performance in each
of the twelve pillars, according to the World Economic Forum (WEF)
competitiveness criteria.
South Africa's performance 2010-2012
140
120
100
80
60
40
PLOT AREA
20
0
Institutions
Infrstructure
Macro- Health & Higher Goods & Labour Financial
TechMarket
econ
Primary Education Market
Market
Market
nology
Size
Envirom- Education & Training Efficiency Efficiency Develop- Readiness
ment
ment
43
124
75
40
97
9
76
25
Business InnovaSophistition
cation
2010
47
63
38
44
2011
46
62
55
131
73
32
95
4
76
25
38
41
2012
43
63
69
132
84
32
113
3
62
25
38
42
Due to the wider global context, and in a year where South Africa
hosted the fifth BRICS Summit, Brand South Africa focused on
developing deeper insight into the country’s performance compared
to fellow developing nations. When benchmarking South Africa against
other BRICS nations, there was positive news for the country. Its
competitive strengths can be seen in financial market development,
where it ranked first amongst the BRICS nations and third overall in
global terms, business sophistication where it ranks second amongst
the BRICS nations and 38th overall,; and goods and market efficiency
where it ranks first amongst the BRICS nations and 32nd in the world. It
is worth noting that the high level of confidence shown in South Africa's
financial market development comes at a time when global market
confidence is slow to return. The country is undoubtedly benefitting
from the size of its economy and from the quality and accountability of
its private institutions where it achieves a second place global ranking.
The graph below illustrates how South Africa performs in comparison
to the average performance of fellow BRICS nations on the 12 WEF
competitiveness pillars.
1. Institutions
150
12. Innovation
Figure 1 – South Africa’s performance in WEF Competitiveness Report 2010-2012
11. Business
Sophistication
A critical area of competitiveness in the 21st century - technological
readiness - shows dramatic improvement in the 2012 report. South
Africa has also made improvements in institutions, goods and market
efficiency in the past three years.
10. Market size
2. Infrastructure
100
3. Macro-economic
environment
50
4. Health and
primary education
0
5. Higher education
and training
9. Technological
readiness
South Africa versus the BRIC nations: competitiveness
comparison
South Africa’s inclusion in the BRICS grouping of nations is significant
for many reasons. For example, the BRICS constitute 43% of the
world’s population. In addition the combined GDP of these countries
is estimated at US$13.7 trillion (+/-20 – 25% of global GDP), and the
BRICS’ combined foreign reserves is estimated to be US$4 trillion.
BRICS accounted for 11% of global foreign direct investment (FDI) flow
in 2012 (USD465 billion) and 17% of world trade. This implies that from
a global perspective South Africa is a member of a group of nations that
brings together twenty first century economic giants with significant
influence both globally and within their respective regions. BRICS
membership is an important evolving dimension of South Africa’s
international reputation building and strategic economic positioning
efforts.
24
6. Goods and
market efficiency
8. Financial market
development
7. Labour market
efficiency
Figure 2 – South Africa WEF performance versus BRIC average
A close look at the indicators shows that South Africa outperformed
its BRIC peer nations on several of the WEF Competitiveness pillars:
y
Infrastructure (equal to BRIC average)
y
Institutions
y
Goods and Market Efficiency
y
Financial Market Development
y
Technological Readiness
y
Business Sophistication
y
Innovation.
Brand South Africa Annual Report 2012 2013
This clearly established South Africa as a competitive developing
nation among the BRICS grouping. South Africa was a natural choice
for inclusion in the BRICS when it comes to competitiveness.
South Africa vs. Next 11
1. Institutions
140
South Africa - Next11 Comparison
12. Innovation
2. Infrastructure
120
100
In a similar comparison with Next11 nations, further insights emerge.
A comparison between South Africa and the Next11’s average
performance for each pillar indicated that South Africa has tremendous
competitive advantages over the Next11 nations.
80
11. Business
Sophistication
3. Macro-economic
environment
60
40
20
The Next11 group of nations include other developing nations, and
emerging markets that have significant roles to play in their respective
regions, as well as in the emerging global economic reality. It is
interesting to track the overall competitiveness scores for this group of
countries. As the indicators in the graph below shows, if South Africa
was part of this group, it would have been a top five competitive nation.
4. Health and
primary education
0
10. Market size
5. Higher education
and training
9. Technological
readiness
8. Financial market
development
6. Goods and
market efficiency
7. Labour market
efficiency
South Africa
Next 11 (Average)
South Africa vs. Next 11 - Country Score Comparison
140
124
120
118
Figure 4 – South Africa WEF performance versus. Next 11 average
115
107
100
80
75
64
The above indicators show that South Africa outperforms the Next11
on the following seven pillars:
65
60
52
53
50
y
Institutions
y
Infrastructure
y
Goods and market efficiency
y
Financial market development
y
Technological readiness
y
Business readiness
y
Innovation.
41
40
20
19
0
South Africa Bangladesh
2012
52
120
Egypt
107
Indonesia
50
Iran
64
Mexico
53
Nigeria
115
Pakistan
124
Maldives
65
Turkey
41
South Korea
19
Malaysia
75
Figure 3 – Next11 and South Africa overall rankings in the WEF Competitiveness Report 2012/13
In terms of overall ranking, South Africa is located in the top five among
the Next11 group of developing nations. This shows that South Africa
can confidently say that it is a top five globally competitive developing
nation. Fig. 4 illustrates South Africa’s competitive strengths per WEF
competitiveness pillar compared to the average performance of the
Next11 nations.
In addition, South Africa equals the Next11’s average on the following
two pillars:
y
Higher education and training
y
Market size.
The above demonstrates South Africa’s competitiveness in 9 of the 12
pillars, in comparison to the Next11, which is indicative of a top five
developing nation.
Brand South Africa Annual Report 2012 2013
25
Institute for Management Development (IMD) Global
Competitiveness Report 2012/13
According to the IMD 2012/13, South Africa improved its overall
ranking and performance from number 52 in 2011, to 50 in 2012. The
IMD assessed competitiveness since 1989, and provided long term
measured assessments of the performance of 59 countries, according
to 329 criteria.
In terms of South Africa’s overall performance in the 2012 IMD report,
the country has improved its ranking in:
all citizens of African states have a right to access social services. It
measured the governance performance of African states according to
eighteen criteria. South Africa came fifth in its overall performance in
the IIAG in 2012.
South Africa ranked in the top five for the following criteria:
y
1st – Public Management
y
2nd – Gender
y
3rd – Rule of Law
y
3rd – Participation and Human Rights
y
Government efficiency 29 (up from 32 in 2011)
y
4th – Welfare
y
Business efficiency 37 (up from 40 in 2011)
y
5th – Education
y
Infrastructure 54 (up from 56 in 2011)
y
5th – Accountability
y
Economic performance 57 (down from 54 in 2011).
y
5th – Participation
From the WEF and IMD reports we learn that South Africa has been
advancing slowly on institution and government efficiency. These
competitiveness indicators show that South Africa compares well with
other BRICS, and various developing nations. The comments below
relate to a comparison between South Africa and the BRICS, on the
twelve pillars of competitiveness, the World Economic Forum used to
assess a nation’s overall competitiveness.
The identified economic performance strengths of South Africa
according to the IMD report are:
y
Cost-of-living index (ranked 7)
y
Terms of trade index (ranked 9)
y
Resilience of the economy to the economy (ranked 26)
y
Tourism receipts (2,5% of GDP)
y
Direct investment stock abroad (ranked 29)
The weaknesses, as identified by the IMD report, are the unemployment
rate, direct investment flows abroad, GDP per capita, and relocation
services. However, these are not seen as threats to the future of the
economy by the IMD, but relate more to cyclical market trends and
prevailing conditions in the global economy.
The Ibrahim Index of African Governance (IIAG)
Governance is a key issue that results in political, economic and
socio-political debate and activity on the African continent. South
Africa performed well in the IIAG, which is based on the concept that
26
World Bank’s Ease of Doing Business Index (DBI)
South Africa’s overall ranking in the 2013 World Bank Ease of Doing
Business Index (DBI) slipped three positions, from the 35th position the
country occupied in 2012 to 39th in 2013. South Africa showed a slight
decline in its performance this year. This result is not a reflection of the
country performing badly, it is an effect of other countries moving up
the ranking ladder, by improving the conditions of doing business at a
faster pace than South Africa.
This year’s report notes that among the 50 economies with the biggest
improvements since 2005, a third is in Sub-Saharan Africa. This is a
significant finding for the region, indicating improving conditions
for doing business, in a period when negotiations regarding the
establishment of the Trilateral Free-Trade Area, encompassing the
Southern African Development Community (SADC), Community
of East and Central African States (COMESA), and the East African
Community (EAC) are taking place. This free trade area will create an
integrated market of more than 650 million people.
Other findings on South African performance in the DBI showed that the
country passed a new company law, which eliminated the requirement
to reserve a company name and simplified the incorporation
documents. This makes it easier to start a business. The DBI indicated
that South Africa made transferring property less costly and more
efficient, by reducing the transfer duty and introducing electronic filing.
South Africa also introduced a new reorganisation process to facilitate
the rehabilitation of financially distressed companies.
Brand South Africa Annual Report 2012 2013
South Africa’s improved its performance on the Trading Across Borders
rank. In the DBI 2012, South Africa ranked 144th and improved its
ranking by 29 positions to 115th in the DBI 2013. This is a significant
improvement due to the fact South Africa has decreased the time, cost,
and red tape, companies have to handle to get products to port and
shipped to international markets.
South Africa – BRIC DBI Comparison
The World Bank assesses the ease of doing business according to
10criteria. The country performs particularly well when compared to
its BRICS partners. South Africa came first in the criteria, as indicated in
brackets in the table below.
Comments by WEF on South Africa travel and tourism
Important WEF findings indicates South Africa as a country is ranked
highly at 17th place for its natural resources, and 58th for cultural
resources. According to WEF, this is due to many World Heritage
sites, rich fauna, creative industries, and plenty of international fairs
and exhibitions hosted in the country. The latter can be interpreted
as a strong selling point for the country, with positive communication
implications.
A further positive finding from WEF indicates that South Africa’s
infrastructure is well developed for the region, with the air transport
infrastructure ranking 43rd, and an assessment of railroad quality (46th)
and road quality (42nd).
BRICS Comparison - World Bank Ease of Doing Business 2013
BRAZIL
RUSSIA
INDIA
CHINA
SOUTH AFRICA
Over-all
130
112
132
91
39 (1)
Starting a business
121
101
173
151
53 (1)
Dealing with construction
permits
131
178
182
181
39 (4)
Getting electricity
50
184
105
114
150 (4)
Registering property
109
46
94
44
79 (3)
Getting credit
104
104
23
70
1 (1)
Protecting investors
82
117
49
100
10 (1)
Paying taxes
156
64
152
122
32 (1)
Trading across borders
123
162
127
68
115 (2)
Enforcing contracts
116
11
184
19
82 (3)
Resolving insolvency
143
53
116
82
84 (3)
Figure 5 - BRICS comparison 2013- World Bank Ease of Doing Business
According to the indicators above, South Africa came first in six of the
DBI criteria, among the BRICS grouping of nations. This implies that
South Africa can make a strong business case to attract trade partners,
investment, and clients from fellow BRICS members. South Africa offers
several competitive advantages. One important selling point to use for
South Africa as a business destination, is that it has an open business
environment
World Economic Forum – World Travel and Tourism Index
South Africa improved its position in the WEF Travel and Tourism Index
this year. This year’s index covered 140 countries. South Africa improved
its position on the WTTC in 2013 to 64 from 66 in 2011. South Africa
ranked third in the Sub-Saharan Africa region after Seychelles (1st), and
Mauritius (2nd).
Brand South Africa Annual Report 2012 2013
South Africa is admired for its travel and tourism related policies, rules
and regulations as these are conducive to the sector’s development
(ranked 29th). WEF indicates that South Africa has been making steady
improvements in this area over the past few assessments.
UNDP – Human Development Report (HDR)
The good news in the report for South Africa is that the country
improved its HDR ranking, by two positions from 123 in 2011, to 121
in the 2012/13 report.
This year’s report claims there has been a transformation in the world
economic system in recent years. This is partly due to the global
economic situation, and the meteoric rise of developing nations and
their significance to the future of the world economy as a whole. The
growing economic influence of developing nations effects political
influence, which is having a significant impact on the progress of
human development, according to the UNDP.
South Africa HDR indicators
YEAR
BANK
HDR
VALUE
LIFE
MEAN
EXPECTED
GROSS
EXPECT-
YEARS OF
YEARS OF
NATIONAL
ANCY
SCHOOLING
SCHOOLING
INCOME
8.5
13.1
8.5
13.1
$ 9594
2012/
13
121
2011
123
0.629
0.619
53.4
52.8
(PPP)
$ 469 (PPP)
Figure 6 - South Africa’s performance in the UNDP Human Development Index
27
The UNDP’s emphasis in this year’s report falls on the impact of the
global economic situation on human development indicators. South
Africa is singled out with other major developing nations as an example
that reflects the global shift of economic and political power to the east
and south.
Reputation Indicators and International Investor Perceptions
The sections to follow will reflect on two issues: South Africa’s global
reputation as measured annually by the Anholt Gfk-Roper Nation
Brand Index, and investor perceptions of South Africa based on key
findings from Brand South Africa’s annual Project Thrive, International
Investor Perception Research.
Anholt Gfk-Roper Nation Brand Index
Brand South Africa subscribes to the annual Nation Brand Index
reputation study conducted by the Anholt-Gfk Roper Nation Brand
Index (NBI). The NBI is an important measure of a country’s reputation
in terms of the six criteria outlined in the hexagon below. Perceptions
of Investment and Immigration, Exports, People, Cultural and Heritage,
Governance, and Tourism form the main pillars according to how a
country’s reputation is assessed.
South Africa’s Culture remains its strongest asset (28th). South Africa has
seen score erosion on its top dimension, though several nations have
seen a decline in this area. With a strong People profile (31st globally),
South Africans are admired across most panel countries – especially
when it comes to wanting someone from South Africa as a close friend
(ranked 28th). South Africa continues to rank 34th globally on Tourism,
with much stronger perceptions as the country being naturally
beautiful (15th) than on having historic buildings (41st). The country
ranks highly on sporting excellence (16th), but is somewhat less known
for its culture – both contemporary (34th) and historic (33rd).
When it comes to rankings, South Africa records some gains in 2012.
South Africa surpasses fellow BRICS nations, India and Russia, on
Governance and moves ahead of Russia, South Korea and China on
People. Yet, it has lost some ground on Culture.
The table below shows South Africa’s performance per pillar between
2010 and 2012.
South Africa NBI performance
Investment
Potential
attractiveness and
economical
contribution
&
Immigration
Tourism
Exports
Governance
People
Culture &
Heritage
Commercial and cultural
Products and sporting prowess
Figure 7 - Nation Brand Hexagon
In 2012 South Africa was ranked 36th out of the 50 nations for the
second year in a row. This comes in a year where two-thirds of the
nations have experienced overall reputation score declines. South
Africa’s overall reputation has remained stable, which is no small feat.
28
2010
36
36
37
Exports
37
37
38
Governance
41
41
40
Culture
28
25
27
People
31
34
31
Tourism
34
34
35
Immigration and Investment
38
39
43
Ranking by pillar
Investment Potential and
attractiveness to outsiders
Level of satisfaction
with country's
products
and services
2011
Overall ranking
What is a Nation Brand?
Competency fair
governance, human
rights, international
contribution
2012
Figure 8 – South Africa's overall and pillar performance in the Nation Brand Index
Investor perceptions - Key findings from Brand South Africa Project
Thrive, International Investor Perception of South Africa Research
Brand South Africa conducts an annual international investor perception
study. This year’s results show a steady improvement in international
investor perceptions of the country as a business destination of choice.
The study shows that South Africa’s economy is positively seen as an
environment full of opportunities. Below are some key findings from
the report:
y
South Africa’s key performance indicators remain stable in this
year’s findings, despite the global economic conditions and labour
issues/events experienced in the country during 2012.
Brand South Africa Annual Report 2012 2013
y
A high percentage of non-investors are currently unavailable for
investment, due to global economic uncertainty.
y
There has been a slight increase in the number of investors currently
investing in South Africa, while countries like India and Brazil have
seen a slight decline in the amount of investors.
y
Mining and quarrying sectors remain strongly associated with
South Africa. However, there has been a significant increase in
associations with other sectors in the South Africa economy like
retail trade, construction, financial/insurance/real estate business,
electricity and gas water supply, post and telecommunications.
This indicates that international investors are increasingly seeing
South Africa as a business destination.
y
44% of the sample was aware of the positioning statement “Inspiring
New Ways”. which was launched two months before fieldwork for
Thrive began.
y
Investors are most likely to have heard from an online source (60%
internet, 24% blogs). These sources tend to be more neutral.
y
Word of mouth is also an important source of information for
investors (41%).
y
Television was the most negative source of information (25% of
reports negative).
y
Thrive data modelling indicates that South Africa can attract more
FDI if the country offers more suitably qualified labour to investors.
Mining and Quarrying
Hospitality, Hotels, Restaurants
Agriculture, Hunting, Forestry
Wholesale and Retail Trade
Manufacture
Construction
Financial, Insurance, Real Estate
2012
(n=534)
Transport, Storage and Communication
Electricity, Gas and Water Supply
Post and Telecommunications
Community, Social and Personal
Other
Don’t know
The Thrive study questions respondents’ awareness of South Africa
policies and initiatives. This can be divided into two broad categories.
The first speaks to government policy initiatives such as the New Growth
Path (56% positive awareness), tax incentives in manufacturing (49%
positive awareness), BEE (37% positive awareness), trade policies (55%
positive awareness), labour policies (48% positive awareness), investor
protection policies (45% positive awareness). The second category
speaks to South African-led initiatives such as the Square Kilometre
Array bid (33% positive awareness). The latter can have a tremendously
positive impact as proof of South Africa’s technological readiness and
sophistication within the developing world context.
Non-investors associate South Africa with a growing market with
economic potential. This is an important finding, however, perceptual
associations with South Africa as a country with a high crime rate
persists. This issue has an adverse effect on the country’s reputation,
and requires attention. The conclusion to be drawn is that more work
remains to be done to increase positive awareness of key investor and
economic policies that can attract FDI and trade.
South Africa’s performance in a range of competitiveness and human
development indicators suggest the country has tremendous strengths
that can be leveraged positively to position the country as a business
partner and investment destination of choice. As indicated above, it
is necessary to understand how South African ranks and is positioned
among fellow developing nations. While the competitiveness
indicators utilised above, point to high-level indicators of national
competency, more research should be conducted on a sector-specific
basis to question issues particular in specific areas of economic activity.
Nevertheless, national strengths in the financial sector, goods and market
efficiency, and indicators that show South Africa outperforming Next11
nations on a technological readiness, innovation, and institutions,
clearly establish the country as a leader among developing nations.
These strengths can be used as an inspiration to engage robustly with
areas of competitiveness where the country’s performance is weaker.
In terms of overall competitiveness performance, South Africa ranks
third among the BRICS nations, and in the top five of the Next11.
The conclusion is that as a developing nation, South Africa compares
well with fellow developing nations, but shares many unique social,
educational, and human development challenges that are characteristic
of developing societies and nations. In order to strengthen and advance
the nation brand, critical areas of skills development, education, and
services require attention.
Figure 9 – Project Thrive: Economic sectors associated with the South African economy
Brand South Africa Annual Report 2012 2013
29
In terms of reputation the report reflects findings from an annual
international investor perception study commissioned by Brand South
Africa. From the Project Thrive, the results show it is clear that positive
associations exist in terms of investment incentives for international
investors, and that the country is increasingly seen as a business
destination by international investors. This is particularly evident due
to increased associations with South Africa’s retail, construction, and
financial services sectors.
The WEF Competitiveness Report, South Africa and a
Performance Comparison with the Next 11 Countries By Miller Matola, CEO of Brand South Africa
When the World Economic Forum launched its annual Global
Competitiveness Report last week, it provided an unprecedented
opportunity for South Africa to truly benchmark its performance in
the global marketplace against the 144 other nations involved in the
survey. As the global economy grapples with slow growth and weak
market recovery, emerging and developing countries are growing faster
than advanced economies. The most interesting data emerges from
a comparison not just with the other BRICS members that represent
43% of the world’s population, but also with what is commonly known
as the Next 11 countries (Bangladesh, Egypt, Indonesia, Iran, Mexico,
Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam).
Although each of these countries has very different geographic and
economic features, their common denominator is their high economic
potential and their substantial populations representing exciting
market opportunities.
All 11 countries demonstrate population growth rates
above those of Western nations, indicating greater consumer market
potential over the short to medium term. Large populations represent
a wide potential pool of consumers for businesses to target; while high
growth rates mean that this market will expand rapidly, providing
proportionally more potential customers. It is not surprising that these
markets, together with the BRICS member countries, are the focus of
much global economic attention and speculation at the current time.
So, how does South Africa’s competitiveness performance
measure up in statistical terms against these Next 11 countries
according to the 12 key pillars outlined in the Global Competitiveness
Report? South Africa’s comparative strengths can be seen in the
field of financial market development where it ranks first amongst
the Next 11 nations and third overall in global terms. Only Turkey
featured in the top 50 nations in this important pillar from the Next
30
South Africa, it can be concluded, is a globally competitive developing
nation. Areas of national competency can be taken as an inspiration
to develop and enhance country performance, economic social
development in the future.
11 countries. Similarly, South Africa’s strongly performing and highly
regarded Institutions helped the country to achieve a first place ranking
in this pillar against the Next 11 and a 43rd place globally overall in
the report. None of the other Next 11 countries managed a place
in the top 50 in the survey. It is worth noting that the high level of
confidence shown in South Africa's financial market development
comes at a time when global market confidence is slow to return. The
country is undoubtedly benefitting from the size of its economy and
from the quality and accountability of its private institutions. Against
this pillar, South Africa also outperformed the Next 11 countries in the
fields of the Legal Rights Index, the Regulation of Securities Exchanges,
the Efficacy of Corporate Boards, and the Strength of Auditing and
Reporting Standards, the Availability of Financial Services and the area
of Financing through Local Equity Markets.
Continuing on the positive performance note, South Africa
recorded high rankings against the Next 11 countries against the
pillars of Infrastructure (3rd place behind South Korea and Turkey),
technological readiness (3rd place behind South Korea and Turkey) and
Innovation (3rd place behind South Korea and Indonesia). Other strong
performance areas for South Africa in the survey when compared with
Next 11 countries are in the pillar of business sophistication where South
Africa ranked 2nd behind South Korea and 38th overall. Interestingly,
against this particular pillar, many of the Next 11 countries performed
well with Indonesia, Mexico, Philippines and Turkey all appearing in
the top 50 performing countries in the field of business sophistication.
Another highlight for South Africa was in its performance
against the goods and market efficiency pillar where it ranked 2nd
amongst the Next 11 nations, placed once again behind South Korea
with Turkey in third place, and 32nd in the world, Overall, this pillar
did not see strong performances from the majority of the Next 11
countries which appeared in the mid to bottom half of the table. South
Africa’s strong performance in these areas shows that the country has a
competitive advantage over many Next 11 nations in these pillars and
associated sectors.
Brand South Africa Annual Report 2012 2013
However, this year’s Global Competitiveness Survey was not
all good news for South Africa when benchmarking against the Next
11 nations. The country’s overall ranking was negatively impacted
by its declining performance in critical areas for economic and
social developmental growth. If South Africa is to improve its global
competitiveness particularly in regard to the Next 11 countries, it will
need to significantly address a number of these key weaknesses. Against
the pillar of health & primary education, South Africa was amongst the
worst performing of the Next 11 nations, with only Nigeria recording a
worse ranking, and was positioned 132nd out of 144 global economies.
Interestingly, only South Korea which was placed first and Iran which
was placed second out of the Next 11 countries in the field of health,
made it into the top 50 in the global survey, signifying that this is a major
problem for the majority of these nations.
Particular areas of concern for South Africa and which
contributed to its poor ranking against this critical pillar remain the
number of Tuberculosis cases recorded per 100,000 people in the country,
where South Africa is positioned 143rd out of 144 countries. Other
equally worrying statistics include the business impact of HIV/Aids where
South Africa is positioned 135th, and the country's HIV prevalence rate
which positions it globally in 141st position. In the Life Expectancy Years
pillar, South Africa ranks 133rd in the world. These results remain a huge
matter of concern and will continue to affect the country's future growth
and development if effective solutions are not found.
Of equal concern to South Africa on the global competitiveness
stage against the Next 11 countries was its performance against the
pillar of Quality of Maths and Science Education, where it ranked 143rd
place out of 144 countries. Nigeria also performed poorly, attaining
142nd place, with Bangladesh and Pakistan also scoring outside of the
Brand South Africa Annual Report 2012 2013
top 100 global nations in this critical area. South Korea and Iran were
the only two Next 11 nations to record top 50 places for the Quality
of their Maths and Science Education, scoring 11th and 46th places
respectively.
South Africa's performance decreased significantly in the
country's Macroeconomic Environment, which saw a drop from 43rd
place to 69th place overall, in the survey. This ranking movement was in
stark contrast to Next 11 country members such as South Korea which
placed 10th globally, Indonesia in 25th global position, Philippines
in 36th position in the world, Nigeria close behind in 39th position,
and Mexico in 40th place in the global survey, all making the top 50
ranking.
The need to address issues such as Labour Market Efficiency
where South Africa suffered the impact of a dramatic drop from 97th
place overall in the world to 113th place today is a problem shared by
all Next 11 countries, with not one single member making the top 50
ranking against this particular pillar. Four members (Bangladesh, Egypt,
Nigeria and Pakistan) did not even make the top 100. In particular,
South Africa’s rigid hiring and firing practices ranking it 143rd out of 144
in the world, its lack of flexibility in wage determination by companies
ranking it 140th; and significant tensions in labour-employer relations
ranking it 144th in the world; do not help the country’s reputation in this
regard. These statistics require vigorous debate and a new approach, if
South Africa is going to successfully hold its own, when benchmarking
against the Next 11 nations and proving its worth and ensuring its
economic prosperity on the global competitive stage.
[This article was published in September 2012 in the Sunday Independent]
31
National Perceptions Audit
Intergenerational mobility
Brand South Africa subscribes to the annual National Perceptions Audit
conducted by Kuper Research, to understand how South Africans view
themselves and the country. The survey takes into account various
issues such as class mobility, inter-generational mobility and related
social perceptions.
Parents at same age you are now
52%
43%
36%
31%
Class Mobility
8%
Class is essentially a self-classification, based on people’s perceptions
of the class they themselves fall into: lower/working class; middle class,
upper middle class and upper class. Intergenerational class mobility is
measured by asking about the class their parents fell into when they
were the same age.
Class mobile people do not see themselves as static but as ‘moving up
the ladder’ and their lifestyles and behaviour mirror their aspirations.
South Africa is arguably one of the most socially mobile societies in
the world. The move from the circumstances of previous generations
is substantial – so there is optimism about the future despite the
economic recession.
Own Class
Working Class
Middle Class
12%
3%
Upper Middle
3%
Upper Class
6%
6%
Don't know
Not Sure
Source: National Perceptions Audit 2012/13
The above graph illustrates individuals’ own class, versus that of
their parents at the same age. Individuals, who classified themselves
as working class, are fewer than their parents at their own age. In a
direct comparison to middle and upper class, more individuals view
themselves as progressive in their class classification, in relation to their
parents. This suggests that South Africa is a socially mobile country.
The educated
(diploma or degree 42%; matric 61%) and the youth (62%)
Joblessness
anxiety
are reflecting significant anxiety levels.
54%
40%
39%
3,262m
15%
Upper Middle/
Upper Class
2006
9,215m
43%
Middle Class
7,842m
36%
Working/Lower Class
32%
30%
2007
2008
2009
2012
Source: National Perceptions Audit 2012/13
In 2012, 54% of people indicated that they felt anxious about never
getting a job. In particular, university graduates, matriculants and a large
proportion of the youth (62%) specified this concern. Graduates battle
with the predicament of securing employment with little or no skills. In
comparison to the number of matriculants and graduates entering the
job market each year, there are not enough job openings in the skilled
sector to accommodate them.
Source: National Perceptions Audit 2012/13
According to the National Perceptions Audit, 36% of the country’s
citizens classify themselves as working/lower class, with 43% in the
middle class and 15% upper middle/upper class.
32
Brand South Africa Annual Report 2012 2013
Protest Consequences
Social Cohesion
When asked, 74% of people agreed with the statement ‘Government
does not take issues seriously until civil action or strikes occur’. Strike
actions in South Africa are a threat to job creation. This makes it difficult
to embark on the New Growth Path, which aims to create jobs in the
next few decades. Strike actions do not allow the economy to reach its
potential. However, when citizens feel deprived and frustrated, it leads
to aggression which manifests in strike action.
Disagree
16%
Don't know 10%
By cultural
belief
3%
By
religion
2%
South
African
52%
Source: National Perceptions Audit 2012/13
When asked how individuals in South Africa identify themselves, 52%
stipulated South African, 29% African, 9% by race, 4% by language,
3% by culture and 2% by religion. This was a positive indication that
the apartheid boxes that once defined and identified individuals
along racial lines is slowly disintegrating, although only along initial
identifying factors.
Source: National Perceptions Audit 2012/13
Standard of education in comparison to parents
The figure below indicates that 77% of individuals agree with the
statement ‘My standard of education is better than my parents
managed to achieve’. Although the education system has caused
much controversy in recent years, the majority of people feel that,
compared to their parents, education systems have improved. Access
to education is equal across all spheres of society, race, gender, social
class and economic status.
No
10%
By
language
group
By race 4%
9%
African
29%
Agree
74%
To some
extent
10%
The majority of people no longer see themselves in the artificial boxes of the apartheid era
Cultural Coexistence
The dream of cultural co existence has the potential to increase to increase our competitive
in times to come
Disagree
11%
Don't know 8%
Yes
81%
Don't know 3%
Yes
77%
Source: National Perceptions ordered 2012/13
Source: National Perceptions Audit 2012/13
Brand South Africa Annual Report 2012 2013
When asked, 81% of people agree with the following statement ‘Black
and white people in South Africa need each other to survive and
prosper’. This was significant as it indicates that there is a desire for
social and cultural harmony. South Africans agree that to prosper as
a nation, they need to work together with a shared unity and vision,
despite the outward and cultural differences.
33
Mobilising the good of the country
Pride levels
I actively encourage fellow South Africans to be proud of their
country.
72%
I am willing to do whatever I can to help make South Africa a better
place.
70%
I believe that small actions on my part can make a difference.
69%
I would like to get involved in helping things to get better in the
country but I don't know how.
65%
I would like to become more actively involved in making South
Africaa better place for all its people.
62%
I make an effort to help better my own or other communities.
62%
I am already actively involved in helping to make South Africa a
better place in some way.
54%
The findings illustrated in the figure below, indicate that the
overwhelming majority of South Africans are proud to be South
African. Overall levels of national pride have remained stable since
June 2010 and demographic analysis has found that the findings are
positive across all race groups.
Proud
Neutral
Not Proud
Source: National Perceptions Audit 2012/13
The majority of South Africans play an active role in mobilising for the
good of the country, and 72% encourage others to be proud of South
Africa. The majority of South Africans are proud to be South African,
and they will do whatever it takes to make the country a better place
via the spoken word and active participation.
South Africa is an ideal country to live in
In the last quarter of 2012 (October to December, shown in the figure
below), over two-thirds (68%) of South Africans said that South Africa is
the ideal country to live in. There has been a gradual increase (+8%) in
these ratings since the survey period between September to November
2011.
100%
92%
87%
90%
90%
90%
87%
90%
88%
87%
88%
80%
Source: GCIS Domestic Tracker
70%
60%
Reasons to be proudly South African
50%
In the last quarter of 2012 national pride remained mainly centred
around issues of cultural diversity (28%), the achievements of our
democracy (18%), the beautiful landscape (15%) and the people of the
country (14%).
40%
30%
20%
9%
10%
0%
6%
2%
4%
11%
9%
8%
2%
2%
3%
8%
9%
8%
2%
3%
2%
10%
2%
June 10 - Sept 10 - Dec 10 - March 11 - June 11 - Sep 11 - Nov 11 - March 12 - Q4 2012
Sept 10 Nov 10 Mar 11 Jun 11
Aug 11 Nov 11 Mar 12 May 12
Interestingly, the annual international nation reputation study
conducted by Anholt -GfkRoper Nation Brands Index finds that South
Africans are well respected globally. This is a strong feature of the
country’s international reputation.
Source: GCIS Domestic Tracker
34
Brand South Africa Annual Report 2012 2013
Negative factors influencing South Africa
28%
The cultural diversity
The vast majority of South Africans (88%) highlighted crime and safety
as the major negative factors impacting on the country’s reputation.
This was followed by poverty (74%), xenophobic attacks (68%), violent
demonstrations and protests (67%), politics (67%) and service delivery
issues (66%). These negative influences should not be viewed in isolation,
but should be analysed on a holistic basis, including socio-economic,
political and psychological factors.
18%
Achievements of our democracy
15%
The beautiful landscape
14%
The people in general
88%
Crime and safety
Poverty
0%
20%
40%
60%
80%
74%
Xenophobic attacks
68%
Violent demonstrations and protests
67%
100%
Politics
Source: GCIS Domestic Tracker
67%
Service delivery
66%
Social inequality and injustices
57%
49%
Nationalisation debates
An attribute association was undertaken to test the credibility of various
Brand South Africa elements. The results show that all of the statements
in the figure below, which were presented to respondents in the last
quarter of 2012, have high credibility and are closely associated with
the brand.
South Africa has a rich diversity of people and cultures
14%
80%
South has a good place to travel for international tourists
80%
South Africaha sa great potential for its own citizens
South Africa has a lot of possibilities
6%
18%
71%
41%
Education
0
20%
South Africa is a country that will take its place as one
of the top countries in the future
61%
South Africa is a country that continuosly achieves its goals
59%
South Africa comes up with creative solutions to problem
56%
0%
20%
Neither believe nor disbelieve
40%
21%
32%
33%
17%
13%
12%
8%
24%
11%
15%
Financial / personal problems
15%
12%
13%
25%
60%
100%
27%
7%
26%
80%
In the last quarter of 2012, the important issues that worried
respondents the most, centred around their economic and personal
circumstances, such as ‘being unemployed and/or having no income’
(27%), ‘financial/personal problems’ (15%) and ‘poverty’ (7%).
Being unemployed / no income
8%
24%
66%
60%
Issues worrying South Africans the most
The crime rate
South Africa is an influental country
40%
Source: GCIS Domestic Tracker
7%
21%
67%
47%
Health care
8%
20%
68%
South Africa is dynamic and upcoming
6%
17%
69%
South Africa will succeed in the future
7%
18%
74%
South Africa is an environmentally conscious country
4%
15%
72%
The people of South Africa embody the spirit of Ubuntu
4%
15%
77%
South Africa has good investyment opportunities for the international
community
Completely believe/believe
59%
Economy
Attributes associated with South Africa
15%
80%
7%
3%
6%
Poverty
100%
5%
Education
Do not believe/do not believe at all
Source: GCIS Domestic Tracker
The top three attributes associated with South Africa that play a role
in contributing to a positive brand for the country, are the rich cultural
diversity, a travel destination of choice for international tourists and the
potential South Africa can bring to its citizens.
3%
4%
4%
6%
9%
Financial security and safety of my family
3%
3%
3%
High rate of corruption in SA
2%
3%
The housing shortage
0%
Q4 2012
20%
MAR 12 - MAY 12
40%
60%
80%
100%
NOV 11 - MAR 12
Source: GCIS Domestic Tracker
Brand South Africa Annual Report 2012 2013
35
Summary of South Africa’s brand performance
Competitive Environment - Current Performance
Domestic
Perception
Audit
‡y
‡y
‡y
‡y
National
Brand
Reputation
y 2012/13 South Africa is ranked 36 out of 50 nations fo r the second y ear in a row; in a year where two
thirds of the nations have experienced overall decline.
y South Africa’s culture remains its strongest asset at 28th and a strong People profile 31st globally.
y South Africans are admired across most panel countries especially relating to “wanting a South Africa as
a close friend”.
y South Africa continues to rank 34th globally on Tourism; sporting excellence 16th; but less known for its
contemporary and historic culture.
WEF Global
Competitiveness
Index
y South Africa’s rankings declined by two points to reach 52 in the 2012/13 GCI index.
y South Africa achieves highest rankings in Legal Rights index (1st); Regulation of Securities Exchanges
st
st
1st
Financial Services (2 nd ); Financial t hrough local equity market (3 rd).
y Higher Education and Training pillar - South Africa did not perform well: Quality of Maths and Science
education (143 rd ); Quality of Education System (140 th ); Internet access in schools (111 th ); In
comparison to BRICS, South Africa lags behind in performance on Health and Primary Education pillars.
International
Tracker
Results
88% of South Africans are proud to be South African.
83% of South Africans believe the country is a good place for travel and international tourists.
75% of South Africans believe that the country embodies the spirit of Ubuntu.
62% of South Africans believe the country is an ideal place to live.
y SA’s hosting the 5th BRICS Summit marks a high point for the country as an important roleplayer in global
governance. Increased volumes of reporting in BRICS member states due to South Africa being host nation.
y Increased reporting on Business and Politics pillars across all markets due to BRICS Summit.
y Increased awareness of South Africa as economic, business, and service hub due to the country’s role in
the African Union and BRICS.
y Project Thrive International Investor Perception study conducted by Brand SA indicates a substantial
increase in the country seen as a business destination by international investors.
y 2012/13 average reputation score 35%.
y During this financial year, two incidents had a negative impact on the reputation score: the Marikana
Reputation
Index
36
mine incident and the Oscar Pistorius case.
y Increased coverage in the following markets: France, Democratic Republic of Congo, China, USA, UK, UAE.
Brand South Africa Annual Report 2012 2013