One of the recent big stories in business circles has been how a few local entrepreneurs are making billions by selling their companies to foreigners. On the face of it, this appears to be great news. But there is another side to it.

In 2007, I made a presentation at a Common Market for Eastern and Southern Africa (Comesa) Business Summit. I did so in my capacity as the then vice chairman of the Marketing Society of Kenya. I argued that Africa would never become an economic powerhouse if it did not grow and own its own mega global brands.

The presentation showed how the US was perched at the top of the GDP statistics from the International Monetary Fund and was also conveniently perched atop Interbrand’s ranking of top global brands in terms of dollar value, due to the fact that about 50 per cent of the top 100 brands in the world originated from the US.

There was also a clear link between economic prowess and the ranking of the country brand as compiled by world-renowned destination guru Simon Anholt.

What is my point now? We began this journey with great homegrown East African brands such as Tusker, AccessKenya, Interconsumer, Safaricom and Equity Bank, but somewhere along the way, we seem to have lost the plot. Granted, all these brands have increased the inflow of foreign direct investment, a move lauded at the recent World Economic Forum in South Africa as being a fitting replacement for aid dependency.

That may be true, but selling off our young brands will not augur well for our long-term economic future. Have we failed to notice that China has kept its hold on “the factory of the world” slot but cleverly ventured into a buying spree, acquiring top brands such as Volvo from Sweden, Lenovo from IBM, exclusive Swiss watch brands Corum and Eterna?

Just in case you haven’t followed the goings on in the financial big leagues, here are a few of the facts as reported in the Kenyan press.

AccessKenya recently revealed that it has received and is entertaining an offer from US-based Dimension Data Plc for a complete buyout. This would make the Somen family and current shareholders a tidy sum of money since the offer is above the stock’s value as at its last day of trading on May 6. The move, if approved by the required 75 per cent of shareholders, would see the stockmarket become one listed firm poorer and the loss of another homegrown brand.

Foreign interests

Equity Bank is at the brink. Don’t get me wrong, the books are looking as rosy as ever. However, what has been happening away from the loud world of “I’m a member” advertisements and other direct and indirect messages that have made residents of East Africa believe that “this is our bank that saved us from the big banks’ tyranny,” is that foreign interests have slowly grown their stake, which now stands at 47.4 per cent, according to the latest regulatory filings.

It would only take another 2.6 per cent of foreign investor stake to turn “our Equity” into what would technically be a foreign bank just like Barclays or Standard Chartered. Something does not read right here.

If Equity does not read right as a foreign bank, try the Tusker brand. Tusker is part of the East African Breweries stable where the UK-based Diageo has a controlling stake.

Tusker is a foreign beer brand. Tusker is loved, even adored by alcohol -consuming Kenyans, but it still a foreign beer as far as real ownership is concerned. Bell Lager is loved by alcohol consuming Ugandans. Bell is still a foreign beer since Diageo’s EABL owns 98.2 per cent of Uganda Breweries. Serengeti is loved by alcohol-consuming Tanzanians. Serengeti is still a foreign beer since Diageo’s EABL owns 51 per cent of Serengeti Breweries.

Safaricom continues to break regional revenue records and the latest results released a couple of weeks ago were no exception. What the media picked up, however, in the light of potential frosty relations with the British following the March presidential elections was that British firm Vodacom was carting away Ksh4.96 billion ($58.3 million) from its 40 per cent shareholding in Safaricom.

An additional Ksh2.3 billion ($27.05 million) in income was from licence fees from what many Kenyans believe is their own innovation, M-pesa, Safaricom’s money transfer service.

Undoubtedly, the most celebrated transaction that saw a local brand move into foreign hands is the recent purchase of Interconsumer’s health and beauty arm by L’Oreal of France. Interconsumer was started on a shoestring budget back in 1995 and is famous for the Nice & Lovely brand. The deal is estimated at Ksh1.5 billion ($17.6 million).

Is this trend set to continue? Are local brands going to continue planting for foreign firms to swoop in and reap the huge fruits when the real harvest comes in? As a region, are we selling our way to economic obscurity? Have we refused to acknowledge that real economic power lies in owning brands? May be it is just a phase. Time, as always, will tell.

Tom Sitati is the managing partner of Brand Integrated Consulting, a strategic brand and business advisory firm based in Nairobi.