Voices

In search of the real New Dawn

2019-09-06 00:54

The level of innovation in Africa has been interesting to watch, largely fuelled by the equalising nature of technology and mobile telephony.

In the past 18 years African economies have enjoyed growth above the global average, except for a few including South Africa.

This has largely been fuelled by mining and agriculture, with growth linked to China’s demand for raw materials. Although this demand has slowed down, the rise of African countries remains a “watch this space” – a forthcoming allure.

In 2016 the African population reached 1.069 billion people, the majority of whom are under 30. Africa has the highest rates of urbanisation; its poor infrastructure, which has previously hampered growth and development, remains a catalyst for innovation. The cellphone has become a game-changer for the continent.

There are 930 million cellphones in Africa, almost one for every person on the continent.

There is greater mobile penetration than electricity penetration.

Now, people are able to connect, get news, trade, get access to healthcare and even transfer money.

However, the road to sustainable growth and economic development is still stunted. Why?

The Chinese government has grand ambitions to make China a tech superpower, such as its Made in China 2025 policy initiative for building national companies into high-tech champions, and its Internet Plus plan to power up the mobile internet and the internet of things.

China’s rise in tech has been a bone of contention in the US-China trade war, unsettling President Donald Trump and other US policymakers.

There are 930 million cellphones in Africa, almost one for every person on the continent.

China has 86 “unicorns” – start-ups valued at $1 billion (about R15 billion) or more – compared with 151 in the US, according to CB Insights.

And it scored the world’s most valuable unicorn – AI-powered news and video app ByteDance at a $75 billion valuation.

You, like me, might be tempted to ask: What’s so special about China that we Africans can’t emulate?

Well, China has made a lot of investments in tech in the past two decades and they’re paying off.

Already China has the world’s largest internet and mobile communication markets, the most supercomputers, the highest number of science, technology, engineering, mathematics graduates, at 4.7 million, and the most scientific academic papers.

These factors have led China’s ascent to second place in worldwide patent filings, at 21% of the world total, right behind the US at 22%.

Economists have long noted the role that technology plays in economic progress.

They measure technology and innovation according to three main metrics – research and development effort, scientific and research talent, and the level of innovation – and then combine them in a new, comprehensive global technology index.

Just this week, President Cyril Ramaphosa and his African colleagues were dined at the G7 Summit in France, followed by the Tokyo International Conference on Africa’s Development in Japan.

All they brought was not solutions to jump-start Africa’s growth but hats in hands begging for mercies and hand-outs like scroungers. We have a binary choice to remain scroungers or change the paradigm.

Today an unprecedented number of African children complete primary school.

However, most of those pupils don’t leave primary school with the skills that they need, either in mathematics, reading or higher-order skills.

There are lots of reasons for young people to want to acquire skills and education: After all, a good education can help you appreciate life more deeply.

But a central reason – usually the central reason, particularly in poor countries – is that they want jobs. They want good jobs.

And we know, globally, that good education facilitates the ease of getting better jobs. Globally, an additional year of schooling tends to increase earnings by 8% to 10% (World Bank), and those numbers are higher for women.

Likewise, education helps economies grow faster: Countries where pupils can demonstrate higher ability have higher growth rates over time.

As Africans, we are much further from the development frontier than China.

So, by economic theory, we should be able to gain even more from investments in adapting and adopting innovations.

And yet investments in research and development are lower in Africa than anywhere in the world.

What’s missing?

The resolution to the “innovation paradox” lies in complementarities.

Unless we learn to share among ourselves, we cannot realise the enormous promised gains from innovation.

Before China really started expanding in innovation, it had years of solid industrial growth, building a firm stock of physical capital.

It had strong investments in human capital, with a broad investment in basic education and growing investments in higher education. It even scores on measures of management.

As Africans, we are much further from the development frontier than China.

We struggle with each of these elements.

And of course, capital and management don’t come from nowhere.

They are dependent on a range of underlying economic policies: The cost of doing business, the protection of intellectual property rights and trade policies, among others.

We see that the returns to innovation are dependent on these other factors.

So, the point is that, unless we change gear, we shall remain on the menu of the likes of the G7 Summit – as subjects of engagements not objects.

To increase innovation capacity, we must invest in three aspects of innovation policy needs.

The first includes managerial and organisation capabilities. These come first because they allow organisations to adopt existing innovations and piggyback on the advances that rich countries make.

A second part of that first step is to start collaborative projects with higher performing countries. The second step involves building technological capabilities so that we adapt and create more of our own innovations.

And the third step involves investing longer term in technological programmes. As a country, we need to invest in all three steps.

But there is another model of innovation, one that might be more relevant to many African countries. Norway’s history of innovation had a few key characteristics.

First, it built on sectors where it had a comparative advantage, which at least initially consisted of natural resource sectors.

Second, it did more adoption and adaptation of innovation rather than original development. Third, it drew on international investors. Clearly there are lessons for us here.

The story of innovation encompasses two elements: First, increase the productivity of the economy, and second, structurally transform the economy.

This has practical implications. What share of our economy should be invested in increasing the productivity of the economy of today and what is the share that needs to be invested to prepare the economy to tomorrow’s challenges, thereby taking advantage of the upcoming technological changes?

Because of contesting budget demands, maybe we need to focus only on technology adoption or should we anticipate huge technological changes and help create the technologies of tomorrow?

Research and development are not luxuries. They take long-term planning.

It is doctorate students or researchers working on artificial intelligence and quantum computing who will to accelerate the structural transformation of our economy and invent the future.

We do not have the same level of domestic savings as China. Therefore, we have no option: If we want to follow a long-term innovation policy, we must join forces.

Another important lesson is that there is no innovation without failure. Innovation requires an environment in which failure is a source of learning.

China has very much internalised this Schumpeterian principle. Investment funds are still too cautious.

Last, innovation is really the key to sustained growth both in China and in the countries of Africa.

Each new generation seeks to apply its skills in new, challenging jobs that offer new opportunities.

But innovation is the producer of those new jobs, whether they are ultimately found in a lab, in a factory, or even on a farm using the latest technologies.

That should be our “new dawn” and vision 2063.

Maxon is a social commentator

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September 15 2019