Previously I referred to the brand positioning of the principality of Poyais by General MacGregor as a viable destination for foreign direct investment (FDI). But according to Melissa Aronczyk in her book, “Branding the Nation: The Global Business of National Identity”, the issue of a contemporary structured mechanism, at multilateral level, for brand positioning places as such could be traced back to 1990 in a report aptly titled “Marketing a Country: Promotion as a Tool for Attracting Foreign Investment” which was written by two American business professors Louis T Wells, Jnr, and Alvin G Wint. This research was funded by the World Bank’s institutions – namely, the World Bank Research Fund, the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
This report recommended that in the light of the rapid process of globalisation, there was a strategic imperative for the establishment of the national investment promotion agencies by countries. Wells, Jr and Wint posit that “becoming a more attractive space for foreign investment was not simply a matter of having the right policies or incentives, it was also a matter of representing the country’s offerings in a particular way to appeal to these potential investors. In short, the report emphasised that the way to attract FDI levels was to focus on strategies that would improve the IMAGE of the nation state.”
Their report further posits: “The new competitive foreign investment has prompted analogies between competition among government for foreign investment and competition among firms for market share. Given the similarities in the nature of the competition, it is not surprising that countries are adopting marketing strategies that parallel those of private companies. Some of the findings of research on company marketing programs can thus benefit countries that are trying to attract investment.”
This argument on image management was also based on an argument advanced by Klaus Shwabb, founder of the World Economic Forum (WEF), on redefining the concept of competitiveness in the 1979 annual Global Competitiveness Report as encompassing social, political and cultural considerations: “Traditionally, competitiveness is defined mainly in terms of the cost of production and productivity. However, we know today that many other elements come into play: the internal dynamism of a country, its socio-political consensus, the quality of its human resources, its commercial spirit, the manner in which it prepares for the future, etc.”
The point on image management is what I have always been arguing to all my previous employers that trade and investment promotion is essentially a marketing competence – it primarily requires brand management expertise. It is about managing investor and consumer perceptions – the former in terms of decision making on destinations for their investments, and the letter in terms of deciding on the perceived quality of products to uptake from which country.
The report led into the consolidation of the investment promotion agencies (IPAs) into the multilateral World Association of Investment Promotion Agencies (WAIPA). The reality is that WAIPA’s presence is low key in Africa, or put the other way round, Africa’s influence on Africa is highly limited. South Africa’s representation in this multilateral body is through the Trade and Investment South Africa (TISA) branch at the Department of Trade, Industry and Competition (the dtic).
As I have argued previously in my dissertation for MSc in Global Marketing, I haven’t thus far seen the wisdom of the then Department of Trade and Industry in incorporating the stand-alone state-owned company, TISA, into the department and repositioning it as a branch in 2002. I’m glad Melissa concurs with me when she posits: “Investment promotion in the service of the public sector required close contact with government, since funding as well as the bureaucratic functions of screening and negotiating foreign requests for investment and issuing approvals and permits came from government apparatuses. BUT (my own emphasis) the specific marketing tasks that would ultimately build the image of the territory ARE not natural to the public sector…”
As far as I’m concerned, this subjected TISA to the stringent and inflexible government bureaucracy. Beyond this, it reduced the salary package of the CEO by almost 50%. This is not just numbers, psychologically it disempowered the CEO who was supposed to preside over a national forum of provincial IPA CEOs who earned at least twice more than the TISA head.
Wells, Jr and Wint’s report asserted matter-of-factly: “Investment promotion is significantly different from traditional government processes such as directing, controlling, and regulating, creating and administering laws, exercising authority, operating as a custodian, and so forth. Investment promotion is, in fact, more like activities typical of the private sector, particularly marketing. It requires a continuous liaison with the private sector, the flexibility to respond speedily to investors’ needs, adjust to changing market conditions, and acquire scarce management skills, and the autonomy to generate and implement investment promotion strategies that are consistent throughout a long period. Conventional government organisations are typically not very good at these tasks.”
But let me hasten to say my engagements with a number of provincial IPAs has indicated that although TISA has a low profile among them, they do have confidence in Invest SA – although it’s also placed within the public service architecture. But my discomfort is that they seem to misconstrue the role of Invest SA which is primarily to remove regulatory bottlenecks impeding the implementation of the investments facilitated by TISA. That’s why at the Gauteng Growth and Development Agency (GGDA) – which is the first in SA to establish such a one-stop service centre for investors in 2012 – Invest SA was a sub-division reporting into me as a Group Executive: Trade, Investment and Regulatory Enablement (TIRE). As a brand architect, I do believe although this endorsement of Invest SA could be attributed to stakeholder perceptions, I believe in reality this could be because of the success of the South Africa Investment Conference (SAIC) – a series of annual event hosted by the President of the Republic with Invest SA being a critical and most prominent role player. Put in the mix also is the President’s Infrastructure and Investment Office. This year’s edition of the SAIC will be on 24 March 2022.
I know the criticality of the numbers on the human psychology. When I was a Chief Director for Marketing Commumications at the then DTI, we developed the Department’s brand architecture that directed that we led what we called the Council of Trade and Industry Institutions (COTII) and our agencies were to be positioned as our sub-brands. This was encapsulated in our corporate identity manual which also said all agencies should have a post tertiary descriptor: “an agency of the dti”.
Did we succeed in forcing the gigantic Industrial Development Corporation (IDC) to comply. I’m using this strong verb “force” because that how draconian the vocabulary of brand management is as it talks about brand “policing” to ensure inflexible compliance – no deviations allowed so compliance with military precision, if I may add – with the prescription of an approved CI. To answer my question: it’s an emphatic NO.
Talking about the structural architecture of an IPA, I hear there’s a move by another province to become the second in the country to merge its investment promotion with provincial tourism agency. Although the buzzword in the country is rationalisation of state-owned companies in response to the acute budgetary constraints the national fiscus is facing, I’m not for such a move. Investment promotion as a competence is totally different from destination marketing – the principles are not similar. Even in terms of the value chains, the former mobilises investment for the development of tourism infrastructure while the latter brand positions the facility as an ideal location. Globally, you then have UNCTAD and WAIPA as multilateral bodies overseeing IPAs and the World Tourism Organisation (WTO) for the latter.
So what is the role of the GGDA in this international space? While provinces and metropolitan cities have established their own agencies – such as the City of Tshwane’s Tshwane Economic Development Agency (TEDA) – it is worth noting that the Gauteng City Region is a member of the World Regions Forum (WRF) which is hosted by Milan, Italy. This is a body of the world’s wealthiest city regions such as Italy’s Lombardy (whose capital is Milan); New York State; London; and Shanghai. These are the city regions whose GDP is exceedingly higher than those of many countries. The GCR is the only member of the WRF as it is the seventh biggest economy on the continent – yes, bigger than the economies of 47 African countries.
By the way, a study by the Gordon Institute of Business Science which was commissioned by the Premier of Gauteng mapped the Gauteng City Region as stretching from Mpumalanga’s Secunda in the east to the North West’s Rustenburg, Hammanskraal in the north to Vereeniging in the south.
The GGDA is the custodian of the nascent IPA CEO Forum constituted with 13 of its biggest African trading partners plus Egypt with its 2021 GDP of $329,53 billion making it the second biggest economy on the continent after Nigeria’s $432 billion. Egypt replaced South Africa on the number 2 as the latter’s GDP is $301,9 billion. We’re glad that the GCR biggest trading partners include two west African states (Nigeria and Ghana); east African regional capital, Kenya; one Francophone African country, DRC; two Lusophone African countries, Mozambique and Angola; and three Regional Economic Communities (SADC, EAC and ECOWAS).
With the economic crisis having hit southern European states in the past few years – namely, Portugal, Ireland, Italy, Greece and Spain (PIIGS) – that are Mediterranean partners to the north African states and historically making them their biggest trading partners, the north is bound to look southward to also benefit from the opportunities accruing from the continent’s integration through the AfCFTA. So intra-trade between the GCR and the northern African states is bound to increase taking into consideration that Algeria is the continent’s fourth biggest economy with a GDP of $145 billion and Morocco the fifth with $112,8 billion. Egypt also hosts the Africa Export-Import Bank. Intra-regional trade in north Africa is estimated to be below 4%.
It goes without saying that the second phase of the Forum should see us adding more countries into the mix to cover the top 20 biggest economies on the continent – such as Ethiopia (the 6th biggest with the GDP worth $107 billion) and hosts to the African Union Côte d’Ivoire (the 9th with $70,99 billion) which also happens to host the headquarters of the African Development Bank (ADB); Tanzania being the 11th with $51,46; and such countries as Cameroon, Sudan, Senegal and Seychelles.
Mindful of the fact that governments can only create an enabling environment for growth, we will engage private sector. We have already started engaging the three continental chamber federations – namely, the African Business Council (AfBC), Pan African Chamber of Commerce and Industry (PACCI) and the All African Chambers of Mines and Allied Association (AACMAA) which already has members in 32 African countries. Yes, our relationship with regional business councils – particularly the COMESA Business Council – is growing steadily.
By the way, a study by the Gordon Institute of Business Science which was commissioned by the Premier of Gauteng mapped the Gauteng City Region as stretching from Mpumalanga’s Secunda in the east to the North West’s Rustenburg, Hammanskraal in the north to Vereeniging in the south.
This week has registered another milestone in our business life. After sharing the virtual stage with Constant Nemale, the founder of the home grown pan African premier television channel, Africa 24, I reached out to him to explore collaborations. This week we had a meeting with his representative and agreed in principle to collaborate on a number of projects, particularly the three platforms we’re managing: the Africa IPA CEO Forum; Biashara Services and Products Africa (BiSPA) Conference and Exhibition; and this weekly news portal. This is big for us considering Africa 24 is the fifth biggest television channel in Africa – preceded only by CNN, BBC World Service, Al Jazeera and CNBC. Yes, this is the biggest home grown television channel on the continent. We’re crossing fingers.
For those interested in listening to last week’s one hour interview with UNISA’s Dr ME Malobane and I conducted by Dr Nimrod Mbele in his “Beyond Governance” on Chai FM, please click here. We have feedback on our three day workshop on climate smart agriculture on behalf of the United Nations (UN) and the European Union (EU).
Enjoy your weekend.
Saul Molobi
Publisher
Group Chairman and Chief Executive Officer
Brandhill Africa (Pty) Ltd
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