УДК 339.13, 339.98

Actual problems of positioning and promoting brands in african countries (on the example of the Republic of Madagascar)

Моса Петер Бернар  – магистрант филологического факультета направления «Реклама и PR» Российского университета дружбы народов им. Патриса Лумумбы

Abstract: Nowadays, the economies of least developed countries in Africa are not able to breath in conditions of high competition in the modern world. The article describes the main cases of difficulties that hinder the growth of entrepreneurship in most African countries, considering the Republic of Madagascar as an example. The subject of this article is the investment climate in African countries. The goal is to analyze the existing barriers that may complicate the lives of investors and entrepreneurs in positioning brand in Madagascar, then give an appropriate recommendation to increase the number of national brands – “Made in", in order to improve the country’s competitiveness and image. By writing the article, the methods of analyzing data of international organizations, such as the World Bank, the World Economic Forum and others, were used. As a result of the study, several dozen problems faced by developing brands in Madagascar are presented. It was concluded that for the country to be able to develop its economy more sustainable, it is necessary to increase its competitiveness by overcoming its internal shortcomings, that delay the creation of conditions for enriching the investment field of the country.

Keywords: investment climate, business difficulties, brand implantation, brand development, economy competitiveness, image of the state, Africa, Madagascar.

The progress of development in many countries in Africa is going too slow and the fight against poverty is proving difficult for Governments. The maximum GDP growth of the Republic of Madagascar, for example, does not exceed 5% per year, if in the western countries it reaches up to 10-20%. According to the 2019 ranting of the World Economic Forum, Madagascar ranked 132nd out of 140 countries in terms of competitiveness [1], which is in 16th place among the most uncompetitive countries in the world if we do a reversible count. Improving the industrial sector in African countries is a prerequisite for sustainable growth and reduce its vulnerability. By enriching national brands, the country has opportunities to withstand the high concurrence nowadays. "There is no doubt that a strong country brand can add billions to national wealth by supporting product brands in a hypercompetitive world. Countries must actively work to manage their national brand to gain value", said David Hay, founder of Brand Finance [2].

The country's ability to create comfortable conditions for the development of the investment field is important, although in most African countries there are various problems that may affect these abilities. Robert Lucas asked a question that never ceased to intrigue the scrupulous attention of economists: "Why is capital from rich countries not sent to poor countries?” [3, p. 1]. A continent rich in resources like Africa, what prevents its countries from attracting the attention of investors and flourishing the African investment field? The answers are funded in following results of the studies.

The ease of doing business in Madagascar according to the World Bank reports from 2020 is estimated at 47.7% and ranks 161st out of 193 countries members of the United Nation [4, p. 4]. These statistics and estimations give us an idea of the difficult process of business creation and development in the country. Madagascar does not have such a law restricting foreign investment, but there are many other obstacles that make it difficult to attract foreign investment [5].

For the Republic of Madagascar, there are at least ten main factors restricting the business opportunities, according to report World Economic Forum in 2019.

The first most common problem in Madagascar is government instability. Observing the constant change in the composition of the Government of the Republic of Madagascar, we can say that this does not exist anywhere in the world. In one mandate in Madagascar, ministers might be replaced in 5-6 times for an unknown reason. In this regard, the time for good governance and completing tasks to achieve the national goal, including to establish an effective plan for development of the investment sector, is spent on replacing the ministers, heads and leaders. Since the reign of President Andry Rajoelina, that is, from 2019 to the present, for example, there have been five changes in his government. As the Madagascar Tribune newspaper writes: "Eight new ministers are part of the 'fifth' government of Christian Ntsay (Madagascar Prime minister), while seven other ministers nominated in August are leaving their place" [6].

Coup’s d'état. Madagascar also has almost no completed mandate. Since Madagascar’s independence from France, almost all presidents have experienced coups during their reign. This situation deteriorates the country's development prospects and hinders the growth of the investment sector, worsens the country's relations with foreign investors and international organizations and others, their trust in Madagascar entrepreneurs [7].

Political instability. This kind of problem is also considered one of the main factors complicating the lives of investors in Madagascar. However, in the country, the political movement of various political parties against the ruling party is almost non-stop. This situation does not allow citizens to calmly engage on their own in business, and also affects the interest of investors in the implantation of their company and cooperation with local entrepreneurs [8].

The basic political practice in Madagascar is not based on how to succeed and integrate in its domestic market, unite many forces as possible, using all the assets to meet the needs of its population. Madagascar's political leaders do not support local entrepreneurs in finding solutions to local production problems, giving meaning to local and regional investment fields and, most importantly, in helping them find a new market internationally. The Madagascar government have high hopes for the experience and knowledge of western and northern countries in exploiting domestic resources and making definitive changes to them. All national resources must be exported to turn them into finished products, what impedes the development of entrepreneurship and spoils the cost of products in the local market. "Dependence on commodity exports has made African economies vulnerable to global shocks and has impeded inclusive development for too long", said UNCTAD secretary-general Rebeka Greenspan [9].

The constant expectation of international assistance is also becoming a serious problem, hampering the path to autonomy and full State sovereignty. Governments are still waiting for help from international organizations, while taking on debts as part of all sorts of development projects. This fact pulls the country's economy back, especially destroys its image in the international arena [10].

Access to finance. Speaking about the population's access to funding, Madagascar has one of the lowest levels among other African countries. However, only a small part of the population has a bank account and the ability to obtain a loan. As noted by the U.S. International Trade Administration: "In Madagascar, the penetration rate of banking services, access to a bank account or mobile payment service for adults, is about 18%, which is one of the lowest rates in sub-Saharan Africa. In urban areas, there is little competition between microfinance institutions, while rural and remote areas are neglected" [11].

In Madagascar, the main obstacles for young people in integrating into the business field and developing a company are considered to be problems with finding capital. Anyone who is interested in creating and promoting a company should look for a piggy bank for themselves, which is impossible when implementing a larger and more innovative project.

Crimes and thefts. The reason for the concentration of credit institutions and banks in cities is the high level of crime and theft in the country since their investments can only be protected when they are in cities. This also happens with the new investors and entrepreneurs interested in implanting their companies in the country. They think many times about their security and the ability to freely develop investments without any risks, before deciding. At the moment, in Madagascar the average crime rate is 62.53%, which is one of the highest in world.

Low level of technology development. The implantation and promotion of any modern company requires high level of technology, although in most African countries, including Madagascar, the development of technologies is considered one of the lowest in the world. Advertisement and other marketing methods as a way of attracting and persuading people to purchase products in Madagascar and it has a much smaller impact on the population, since the level of use of the media and modern gadgets (smartphone, laptop, tablet, etc.) remains still very low [12].

Insufficient infrastructure development. Despite recent intensive efforts by the Government of Madagascar to increase the quantity and quality of infrastructure as part of the country's development program, this sector remains a major challenge in the country. Electricity and water supply are considered as the most problems in Madagascar, which is vital for the implantation of any business project. According to World Bank data in 2022, only 54.4% of the population has access to basic water supply services, 12.3% to sanitation services and only 33.7% of the population have access to electricity, and 1% of the population has access to organic cuisine [13].

To conclude, it can be noted that in order for the efforts of African Governments to be successful in improving the national economy and image of their country, it is necessary to overcome a number of internal shortcomings that inhibit the introduction of positivity, the development of national brands and the productivity of the country as a whole. Besides the governments should be able to balance the level of "imports" and "exports" in the country by investing a lot of effort in supporting local entrepreneurs in order to produce what needs to be done locally, what the population needs and to increase the number of their national brands, their "Made in", which can completely change the appearance of country. All steps to develop the country, to improve its economy, promote the image should begin from the inside, since development does not occur by itself and cannot come from the outside.

References

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