Transcript Innovation, Growth and Development in Africa

Second Meeting of the Committee on Development
Information, Science & Technology (CODIST-II)
Addis Ababa, Ethiopia
02 – 05 May 2011
Emmanuel NNadozie
Director of EDND, UNECA
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To understand how innovation contributes to growth and
development in African countries the paper:
Reviews the current literature on innovation, growth and
development in Africa to highlight the state of affairs and
examine the role of the state.
Examines the type of studies undertaken, their focus and
main findings.
Assesses the role of African governments in fostering
innovation
Recommends actions to improve state effectiveness in
fostering innovation.
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What is innovation and what do we know about the links
with economic growth and development?
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Innovation, growth and development in Africa:
◦ Type of studies and focus
◦ Main findings
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The role of African governments in fostering innovation
◦ Current role
◦ How to improve that role
A definition of Schumpeter, 1934
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innovation is the implementation of a new or significantly
improved :
◦ product or process,
◦ marketing method or organizational method
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It may be introduced in business practices, workplace
organization or external relations..
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Innovation is about a different employment of the economic
system's existing supplies of productive means.
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The vectors of innovation are entrepreneurs (individual, local
firms, Multinationals/FDIs)
Global Innovation & Competition Trends
They are characterized by:
 Speed-up in creation and dissemination of knowledge
 Increased trade liberalization
 Increased globalization
 Increasing role of FDIs and MNCs
 Increasing importance of ICTS
 Increasing importance of education and training, and high
level human capital
 Increased importance of innovation for economic growth
and development
Knowledge is very important
for innovation: A Knowledge
index (2006)
Source : www.worldbank.org/kam
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The literature on innovation and development in Africa is
scarce, which highlights the need for more studies.
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It includes books, research papers and institutional
reports from research centres and organizations.
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It involves quantitative and qualitative studies.
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The focus have been on the economy as a whole or on
specific sectors such as agriculture, health, ICT, etc.
Quantitative studies:
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they include descriptive, comparative, multivariate
analyzes…
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They investigate on:
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the links between innovation and economic performance;
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the determinants of adopting innovation;
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African countries capacity to adopt innovation.
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the position of Africa in comparison to other regions in
terms of financing innovation,
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Etc.
Qualitative studies:
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Contributions are more normative (indicate how innovation
should be harnessed to contribute to growth and
development in Africa) than positive (describe the actual
contribution of innovation to growth in Africa).
These studies show that the contribution of innovation and
knowledge to growth in Africa is below the potential and
could be harnessed more effectively.
The findings are presented according to the research
question and by sector.
Link between innovation and growth in Africa
 With a clear and focused innovation strategy in some well
identified sectors such as agriculture, health, ICT, arts,
Africa can add at least 2 percent to GDP growth annually;
Intensity of Investment in R&D in Africa : low
 Only South Africa invests 0.9 percent of its GDP in R&D;
 In the rest of SSA it is generally less than 0.3% of GDP.
 The potential for private sector contributions to bridging
financing gaps is hampered by the high business risk attributed
to the costs of doing business.
Africa’s innovation capacity
 Africa does not appear among the firsts innovators in the world
: the Global Innovation Index of INSEAD, ranking more than
130 countries yields for 2010:
 South Africa is the first African country on the list, and is 51st;
next come Mauritius 73 th , Mauritania 78th and Kenya 83 th.
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the extent of innovation is positively related to:
◦ the education level of the entrepreneur
◦ technical manpower,
◦ training expenditures,
◦ external technical assistance,
◦ the size of the firm
◦ and its involvement in exporting,
◦ etc
◦ Innovation is greater in firms located in conurbations
compared to firms located in large and small towns.;
Agriculture sector
Africa lags behind on the adoption and use of technology for
farming and fertilizers. In 2008 there were :
 15 tractors per 100 km2 of land in SSA vs 183 in South-Asia;
 farmers in SSA applied only 9.4 kg of fertilizer/ha while the
figure was of 143 kg/ha in South-Asia and Latin-America.
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Raising yields on key crops to 80 percent of the world would
increase the annual value of Africa’s agricultural production by
US$235 billion over the next two decades;
Improvements in African agriculture would have a huge impact
on growth and job creation.
information and communication technologies (ICT) sector
 Improvements in ICT added as much as 1 percentage point to
Africa's per capita growth rate in 2001-2005 compared with
1991-1995, accounting for over half of Africa's improved growth
performance observed between the two periods.
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growth in Africa’s mobile communications market has
outstripped growth in the global mobile market by a factor of 2
to 1 over the past five years;
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at the end of 2009 there were almost 450 million mobile
subscribers. Internet usage growth has shown a similar trend
ICT sector (cont’d)
 One of the most famous ICT related innovations is Kenya’s
Safaricom M-Pesa project.
 It is an innovative solution that enables customers to transfer
money by phone.
 M-Pesa is popular today and provides services to over 9 million
customers across many countries in the region.
Health sector
 An example of innovation in the fields of production,
organization, process and marketing techniques is Kenya
producing today pharmaceutical products which are sold to
Novartis for the manufacturing of artemesinin products.
Current role
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African leaders recognize the role of science and innovation
in economic transformation and they are putting a growing
emphasis on this matter.
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The 8th African Union Summit held in January 2007 In Addis
Ababa adopted a series of regional decisions on science and
technology for development.
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The decisions are part of a growing body of guidance on the
role of science and innovation in Africa's economic
transformation.
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African leaders are working together on the ICT front, the
pharmaceutical and in agriculture front, sponsoring regional
initiatives and projects.
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A few examples of initiatives:
Comprehensive Africa Agriculture Development Program
(CAADP), launched in 2003 by the African Union and NEPAD
to support increases in agriculture production and
productivity;
the Regional Communications Infrastructure Program, an ICT
project to bring broadband to East Africa ;
the Yaoundé Process to help develop tools and policies
needed to develop the pharmaceutical industry.
At national levels, governments are increasingly devoting
attention to the quality of their universities and research
centers.
Some Recommendations
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Supporting more country-based studies for a deeper
understanding of how innovation can serve as a veritable
engine of long-term growth and development;
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Creating the right incentive framework for innovation: macroeconomic stability, affordable and easy access to capital,
openness to trade, appropriate competition policy laws, a
solid intellectual property rights and patent laws regime and
an overall good governance regime;
Some Recommendations (Cont’d)
 Improving the quality of education: especially tertiary
education; universities; and vocational training schools;
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Developing partnerships with universities and the private
sector and providing incentives for business to invest in
research and development.
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Creating a favorable environment for FDI as these are
proven to be an important vector of innovation and work at
improving the business environment for local firms.
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Contribute to Dissemination of existing knowledge:
It is thought that more significant than the creation of new
technical or policy knowledge, at least in the short run, is the
dissemination of knowledge that already exists somewhere in
the world to meet the needs of developing countries.
Support the development of indigenous capability
ECA can help to establish or strengthen the relevant
institutions, providing technical assistance and training in
order for countries to acquire or increase the ability to use the
knowledge locally.
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