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The ‘why’ behind the outranking of African innovation on the world stage

By Davis Cook, CEO RIIS

Despite a whirlwind of start-up activity in the continent over the last few years, Africa cannot crack the ranks of the world’s most innovative countries. Why does our continent appear to struggle with innovation?

For over a decade, Switzerland has been ranked as the top innovator in the world, according to the annual Global Innovation Index (GII) 2021. Sweden, the United States and the United Kingdom have consistently ranked among the top five most innovative countries in the past three years. Five Asian economies feature among the top fifteen, although the top 25 countries continue to come from Europe. African countries are among the innovation stragglers. Our most innovative country, Mauritius, is ranked 52 out of 132 countries, with South Africa making an appearance almost ten points below at 61. Kenya is up next at 85 and after that Tanzania, with a ranking 90.

The correlation between economic growth and innovation has been well documented for decades. A 2019 study of millions of US patents found that by identifying the number of “exceptionally innovative” patents filed in a particular year – which had to meet specific criteria in order to be deemed exceptional – the researchers could estimate how much breakthrough innovation happened in that year. Changes in the level of breakthrough innovations were associated with changing productivity levels across time periods, industries, firms and ultimately economic growth.

The definition of innovation is continually broadening. The GII 2021 suggests that innovation today is “more general and horizontal in nature, and includes social, business model and technical aspects.”  The Index incorporates 81 different indicators from international and private sources and is calculated as the average of two sub-indices, namely innovation inputs and innovation outputs.

The question of how new knowledge translates into superior economic performance has not been completely locked down. In 2017, a research study measured the link between innovation and per capita economic growth in 19 European countries, finding a somewhat mixed bag: in some instances per capita economic growth led to innovation, while in other instances it was found that innovation regulated the level of per capita economic growth. There were circumstances where innovation and per capita economic growth were found to be mutually interdependent, and even others where innovation and per capita economic growth appeared independent of each other.

A key conclusion drawn from the research was that in order to promote per capita economic growth, attention should be paid to policy strategies that promote innovation (for example, actions that increase investment). Governments should play a more positive role in fostering innovation and then integrating it with per capita economic growth.

Many governments are putting innovation at the centre of their growth strategies. In Africa, while the last decade has seen a growing interest in innovation policy implementation, many countries lack the capacity for innovation policymaking, thus rendering their innovation systems less effective.

An innovation mapping study undertaken in 2020 by innovation and management consulting firm RIIS, for the Gauteng City Region (to analyse the region’s innovation ecosystem) identified the corresponding policy and regulatory frameworks in South Africa that had an impact on innovation (among other critical innovation factors). The study found thirteen policies across different government agencies which stated the need to boost innovation in the country. Yet other policies unwittingly worked against this. For example, government procurement policies had a negative impact on innovation-focused start-ups by limiting their access to government supply-chains. Labour laws did not favour innovation, and stifled the ability of fast-moving, global companies to attract the right levels of human capital, knowledge capabilities and organisational scaling. Also, minimal incentives for investors (such as micro-financing, angel, venture capital) in innovation and intellectual property resulted in a low-risk appetite.

The study also found low levels of collaboration between innovation ecosystem actors (such as universities, government agencies and private corporations). Existing innovation programmes were hamstrung by a lack of successful implementation, leading to the dilution of knowledge and skills transfer to innovation actors. This was identified as a contributing factor to the lower success rates and sustainability of innovation-focused initiatives, start-ups and SMMEs.

High income and advanced countries have an advantage over their African counterparts with strong infrastructure in place, a head-start in the implementation of technology, and favourable policy instruments.

Notwithstanding the impact of the Covid-19 pandemic in 2020, innovation is taking hold in Africa as evidenced in the continent’s booming start-up sector. Last year, the World Economic Forum predicted that Africa will evolve into a software development powerhouse to rival Asia by 2026, and included seven African start-ups in its list of 100 Technology Pioneers of 2021, from pharmaceuticals and renewable energy, to e-commerce and educational sectors. However, African innovation ecosystems must be ably structured in order to mature into robust environments that would have a positive influence on per capita economic growth. Getting this right will require many things, which cannot all be enumerated here. Among these, and of primary importance, is the need for Africa’s governments to focus with intent on innovation policy development and harmonisation (bearing in mind the strengths and weaknesses of their innovation ecosystems), and the creation of enabling innovation environments.