Repositioning the Country’s Brand
South Africa exists in a very competitive global environment. It is competing with provinces in China, cities in England, Eastern Europe, Brazil etc. One clear example of this competition is that 90% of the world’s biggest luggage is made in a town in China that is not bigger than Cape Town. As such South Africa will never be able to compete in areas that its competitors are advanced in.
Writes: Edwin Sipho Rihlamvu
What sets South Africa distinctly apart from the rest of the world is arguably the spirit of its people. However, as a developing country South Africa cannot afford to be lax and assume to be sure of the future. It is a given that the country is under the spotlight, particularly because of the 2010 Soccer World Cup and that it needs to do something different – it requires to differentiate itself from its competitors – through sustained tourism.
Probing the abilities South Africa’s tourism sector
In 2006 almost 8.4 million foreign nationals visited South Africa. This was easily the highest number of arrivals South Africa has ever experienced, and it represented a 13.9% increase over the previous year (2005). The global average growth was 4.5% over this period.
“Tourism has been recognized at the highest possible level for its significant impact on the economy. The industry’s contribution to the GDP has increased from 4.6% in 1993 to 8.3% in 2006. We are now looking to increase our GDP contribution to 12% by 2014” says Marthinus van Schalkwyk, Minister of Environmental Affairs and Tourism.
Tourism brings in over R66 billion per annum to the economy and contributes over half a million jobs and the industry just keeps growing.
It is known that for every visitor that comes to a country and has a good experience, three more people are likely to come! For every visitor that comes and has a bad experience, 10 more people are likely not to come. It is also known that 70% of customer brand perception is determined by experiences with people.
Thus South Africa’s critical imperative is to constantly improve if not perfect its frontline strategy while packaging products – this will assist in shaping perceptions about the country, whether a visitor is a tourist or an investor coming to trade. Just to paint the picture more vividly, investors look past the clever advertising and look for quality and reliability.
This is not different in terms of product branding as tourists look beyond the brand promise and look for depth of experience. Therefore, as a developing country South Africa has so far succeeded to create something special which, differentiates it from the competition.
Comments Nthato Malope of the International Marketing Council of South Africa: “For tourism to consistently grow before, during and after the 2010 Soccer World Cup, South Africa would have to create the appropriate brand behavior, brand discipline, brand language, brand culture and brand leadership. This is critical in starting to create the depth of experience when people engage with the country”.
The importance of this is evident in other countries’ commitment to improving their branding. For example, India has a budget of $300 million a year to promote tourism and investment to its shores.
It is also known that some parts of India are worse than Alexandra Township in Johannesburg, but this has not dented the image of that country as its economy continues to grow while it enjoys a successful pull-factor for international investment and tourism.
“Our competitors are far more advanced in terms of defining who they are, their size and scale of the economy. What is going to set us apart is the depth of experience when people come to South Africa, feeling very welcomed in the country, with us having a sense of ubuntu” declared Fikile Dilika, Chief Director, Investing in Culture, at the Department of Arts and Culture.
However, South Africa would have to do more than branding if it hopes to capitalize on international markets. At the Italy – South Africa tourism seminar that was held in June 2007 in Johannesburg, Guiseppe Boscoscuro, president of ASTOL (Italian Tour Operators Association) cautioned: “Until a direct flight between Italy and South Africa is reinstated, nothing can be done to boost Italian arrivals”. This after the seminar heard that 680 000 Italians have expressed interest in traveling to South Africa, compared with the 53 600 who actually did in 2006.
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Daniel Winteler, Chairman and CEO of Alpitour in Italy, said this is not due to airlift constraints, but also due to ineffective marketing practices. “Effective marketing needs to be achieved collaboratively. Co-marketing is vital as South Africa needs to find the engine that connects demand with supply” said Winteler.
Black Economic Empowerment (BEE)
For the South African economy to grow there needs to be in place an active black population. Beyond the obvious grounds, this economic imperative should drive BEE from both a Government and a private sector point of view.
The principles espoused by the Tourism BEE Charter of measuring BEE success beyond equity ownership, and the spread of that ownership, are crucial. To this end the Tourism BEE scorecard will be a powerful driver of real BEE transformation in South Africa.
Furthermore, one by one, the different industrial sectors of the country’s business landscape are coming to the party, with aggressive “charters” mapping out the route that will be followed over the next five to ten years to put BEE sensibly into effect. There is no doubt that in a relatively short period of time BEE will be just as much part of the South African business community as watching the exchange rate.
According to Nikki Kearns, director of business banking at Standard Bank, one of the sponsors of the 2005 Global Entrepreneurship Monitor Report (GEM), black economic empowerment legislation could potentially have a positive effect on stimulating entrepreneurial activity in South Africa – and with the country’s level of early stage business activity measured to be at a relatively low level in comparison with other developing nations around the world, such an effect could not have come at a better time.
“GEM 2005 indicates that South Africa’s level of entrepreneurial activity has decreased since the 2004 survey. However, as the effects of broad based black economic empowerment legislation take place in this country, it is my view that as the level of people entering the formal economy – as well as gaining access to banking systems increases, more people will be in a position to exercise their business creativity than was previously possible” says Kearns.
However, with the introduction of the BEE Financial Sector Charter in 2003, certain provisions and responsibilities have been set out for financial institutions to contribute to the redress of past economic imbalances. While many of these responsibilities focus on an increase in the executive-level participation of the previously disadvantaged, there is a believe in the combination of certain measures that will contribute to improved entrepreneurship, such as requirements for skills development, corporate social investment and notably, the introduction of an initiative to extend bank services to more South Africans.
Sindiswa Nhlumayo, Head of the BEE Charter Council at the Department of Environmental Affairs and Tourism (DEAT) reflects: “We see BEE as a benefit to the economy and business in South Africa. BEE enables economic growth and by bringing on an empowerment partner will give businesses access to new markets, which in turn will lead to business growth”.
2010 FIFA Soccer World Cup
The 2010 FIFA World Cup will have a greater impact on the South African economy than previously thought, with consulting firm Grant Thornton estimating the event will contribute at least R51.1 billion to the country's gross domestic product (GDP). This is against the original estimate of R21.3 billion, which was presented in a financial impact report by Grant Thornton's tourism, hospitality and leisure division for South Africa's World Cup bid committee in 2004.
Business Report reported that R15.6 billion of this new estimate will be brought in by foreign tourists. The revised estimates of the impact of the World Cup on the economy include direct expenditure of R30.4 billion, up from R12.7 billion initially. According to the paper, this additional GDP contribution will sustain the equivalent of 196 400 annual jobs, some of which already exist.
According to Grant Thornton, the economic impact was based on 289 000 overseas visitors watching three to four matches each and 48 000 African visitors watching three matches each. About 115 000 domestic tourists will watch two matches each. Calculations are based on a stay of 15 days because foreign tourists are not expected to stay for the month-long tournament.
Standard Bank economist Goolam Ballim said that "There will be a big direct injection for the economy. But the indirect impact may be more meaningful for a sustainable economic lift in subsequent years ... it will help change the perceptions that a large number of foreign investors hold of Africa and South Africa".
On his visit to South Africa in June 2007, FIFA president Sepp Blatter told local media that “nothing, nothing can be against a World Cup in South Africa, nothing but God.”
At the forty fifth meeting of the United Nations World Tourism Organization’s Commission for Africa in May 2007 in Addis Ababa, Ethiopia South Africa was unanimous elected as the Chair of the 2010 Soccer World Cup Steering Committee.
“This is indeed confirmation of expectations to see South Africa playing a leading role towards the successful hosting of the 2010 Soccer World Cup” said Patience Molokoza, Director, International Tourism Relations at DEAT.
“As a consequence we have been communicating with citizens of the world that the “Win in Africa with Africa” slogan that was presented and adopted in Ethiopia is itself an affirmation that the 2010 Soccer World Cup should be a collaborative project which is to be led by Africans” concluded Molokoza.
While leading a delegation to South Africa in June 2007 to strengthen relations that are aimed at promoting the country in the United States of America, Agrippa Ezozo, president of the US-based African Diaspora Foundation pronounced that “special emphasis would be placed on prospects for tourism development and sports related businesses in anticipation of the 2010 FIFA Soccer World Cup”.
"We are confident that the 2010 Soccer World Cup will do the same to consolidate our self-respect and dignity, gained when we attained our freedom and democracy in 1994 and, in a unique way, help our own nation and the continent of Africa, also to bask in the 'miracle of South Africa' " said Thabo Mbeki, President of the Republic of South Africa. "Every day we take important steps to unite what was a divided nation" he concluded.
Conclusion
It is so far convincing that the tourism sector in South Africa is making interesting strides in positioning the country internationally. The pay-off line that the country is “alive with possibilities” holds true in this age than it never was before. The challenge would be how the country plans to keep alive the momentum. This because the ultimate beneficiaries of these interactions would be ordinary South Africans who should emerge from the poverty trap that afflicts the continent, increase employment and more equitably spread the gains of economic growth. At this stage, more than any other in the history of its democracy and freedom, South Africans we must hold steadfast and deliver on the pledge to build a better life for all.
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erihlamvu@deat.gov.za