South Africa’s ”buy South Africa campaign”, Proudly South African (PSA), is floundering. Hundreds of disillusioned members have withdrawn their annual subscription fees, key staff members have resigned and revenue from founding sponsors has run dry.
The PSA campaign, established in 2001 as a National Economic Development and Labour Council (Nedlac) initiative, flowed from the Presidential Job Summit in 1998. It was established mainly to stimulate local demand and create employment by encouraging South African consumers to buy local retail and corporate brands.
Member companies are charged an annual subscription fee of 0,1% of annual turnover, to a minimum of R500 and maximum of R500 000. Offered benefits are branding with the PSA logo, promotional exhibitions, discounted media advertising opportunities and preferential state procurement opportunities.
At the end of 2003, PSA had a membership of 2 500 companies, a figure which has since dwindled to about 1 500. A string of ex-members interviewed by the Mail & Guardian gave a lack of return on their fees as a key reason for their withdrawal.
Only 276 new members have joined in the past year — in the first three years, an average of 60 new members joined every month. Since January this year, only 54 members have joined, generating an average income of R30 000 in total a month, according to PSA figures.
In addition, contracts with founding sponsors South African Airways, Eskom, Old Mutual, PetroSA, Barlo-world and Telkom, yielding R24-million in the first three years, lapsed in 2004.
Manana Moroka, CEO of PSA, said she was negotiating with them over ”the possibility of renewing their sponsorships”, but no agreements had been reached. A tender was recently put out for a company to raise new sponsorships, she said.
It is understood that PSA’s monthly overheads — averaging R3-million a month, according to previous reports — now far exceed its revenue. A source familiar with Nedlac and the campaign said: ”At this rate, the campaign will run out of money and collapse in less than 12 months. That the campaign has reached this low point is a very poor reflection on the board … This needs a board that understands strategic branding and can manage management.”
Six senior staff have resigned over the past year, several citing an inability to work with Moroka. She said the resignations were due to ”natural reasons … such as career development”.
Erik Jansen, South African MD of international hotel group NH Hotels, said his company had withdrawn from PSA because it had been ”let down” by the campaign.
”It became clear that none of the promised marketing efforts or potential spin-offs were happening,” said Jansen. ”There were no newsletters, no networking functions and no interaction between co-members to support each other for business purposes.” The last printed PSA member newsletter was sent out in October last year.
PG Group CEO Stuart Jennings confirmed that the company had also withdrawn. ”We weren’t getting bang for our buck from PSA,” he said.
Chris Barnard, a director of Boston Breweries, said that while his company had every intention of paying its membership fee, it had not received an invoice since June last year. ”It is now our intention to withdraw our membership,” he said.
Susan Haywood, the owner of Chocolate Time, said the company was still paying its annual subscription in the hope of some benefit. However, ”nothing has been done for us yet”.
Premier Food, SAB/Miller and Comair have also pulled out. SAB’s Michael Farr said the company did not think there was ”sufficient business value” in the R500 000 annual membership fee.
Moroka, appointed CEO in November last year, took over the organisation when it was in a state of flux. Former CEO Martin Feinstein left in mid-2004. In the interim, PSA has had two acting CEs.
According to Moroka, the first three years of the organisation’s existence were aimed at ”establishing the PSA brand”. ”During the past six months, the organisation has been undergoing major changes … in preparation for the challenges posed by the campaign’s second phase,” she said. ”Member retention, value added tangible member benefits and changing consumer behaviour in favour of purchasing quality Proudly South African products are the primary focus area for phase two.”
”If members have started to leave the campaign, that’s sad, because it has enormous potential,” said Feinstein. ”At its core, Proudly South African is a brand and, like any other brand, its reputation and its value to users are closely linked. Brands have to be carefully managed and supported by delivery on the ground. If the brand isn’t delivering, people will lose faith in it and, while that situation can be reversed, it’s a tough job.”