Radical innovation or muddling through?

The European Partnership Agreements, under conclusion or negotiation with the European Union, will help to stimulate inclusive growth, but only if governments, business and centres of learning put in place the right framework conditions.

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    In a Trap?

    African countries find themselves in the middle-income trap or low-income trap, frustrating the hopes of their fast growing population for a better tomorrow. Instead of reform, governments seem to favour the status quo and path dependency. According to the World Bank, the middle-income trap has many causes, differing from country to country, but primarily it results from a lack of investment in science and technology, education and in development of their own innovation ecosystems (World Bank, 2011). The low and middle-income traps are largely homemade.

    Of course, there are contextual conditions which are necessary for growth and innovation to succeed. They are in the first place the rule of law and the absence of corruption, necessary conditions for trust of citizens and investors in the government and for an economically efficient allocation of public resources. Equally important are openness and collaboration with a variety of stakeholders to ensure creativity and serendipity in the public debate. Social inclusion has recently been recognised widely as a key ingredient of successful economic transformation; without a strong and large middle class, who will buy many of the new products and services? In particular, small and medium-sized companies need a solid home base too. The low and middle-income trap is mostly the result of innovation failures: strengths and opportunities available or achievable are underused or not developed because of a failure of systemic innovation. This requires new concepts and methods of governance in the public and private sectors alike (Sefer Sener & Stefan Schepers ed., Innovation, Governance and Entrepreneurship, 2017). Unfortunately, there is no African country among the best performing countries in terms of economic innovation capabilities and global competitiveness. In the World Economic Forum ranking, African countries are near the bottom of the list, with Mauritius placed highest in 45th place, followed by South Africa in 53rd place. The innovation ranking of INSEAD, Cornell University and the World Intellectual Property Organisation (WIPO) explains why the competitiveness ranking is so low. The African country first to appear is again Mauritius in 53rd place, followed, again, by South Africa in 58th place. Why does no African country come near the top 30 of competitive and innovative countries?

    Africa’s growth is still largely driven by the global commodities trade, with some agricultural and even less manufacturing trade in addition. Its regional market integration is still highly insufficient, depriving it from one important source of internal trade and development. It is importing technology, rather than focussing on improving its education systems which would allow it to develop its own technology. Because of this and for other reasons, it is very vulnerable to developments elsewhere.

    But can one expect countries, which are still coping with a multitude of structural problems, to invest in innovation policy when there are so many other pressing demands on public budgets, not least poverty alleviation? Yes. Can countries with limited government capabilities and a small research infrastructure do it? Yes. And can a comprehensive innovation policy facilitate solving the complex structural problems? Yes.

    There are two serious misunderstandings about innovation policy: it is not a matter of high public spending on research, but of creating the right framework conditions for people and companies, small and large, to innovate in the market; and it does not concern only high-technology sectors, but all sectors of the economy, including the most traditional ones which tend to offer the greatest scope for innovation.

    The key objective of an innovation policy is to create value for society by enhancing the quality of life of its citizens and the (global) competitiveness of its enterprises. This happens through intelligent interaction between a variety of stakeholders, principally economic actors (companies and other entities), public governance systems (African Union, regional market structures, national, provincial and even city governments), universities and other centres of knowledge and often also civic society and consumer organisations. It requires leadership and an open, collaborative mindset from governments, not a hierarchical, authoritarian, bureaucratic approach. Africa’s surviving communal traditions, its proclaimed Ubuntu, could help to innovate governance to make it appropriate for the 21st century.

    Value creation implies to start from broad, inclusive concepts of demand. It requires permanent strategic agility, scanning the global context, scouting for opportunities and attention to economic and technological continuities or discontinuities. The emergence of novel concepts, processes, products or services, is often the result of out-of-the-box thinking, improvisation, repeated trial and error and the emergence of new tacit and explicit knowledge until some form of consolidation takes place.

    To achieve an innovative economic and social context, a kind of ecosystem must emerge through careful nurturing and reforms. An ecosystem of innovation aims to emulate nature in its organisational complexity and to create the dynamics, interactions and feedback that produce desired outcomes, spin-offs and cumulative effects. Paradoxically, it requires a parallel effort of construction and deconstruction and of creation of the right framework conditions, which can only be done through consistent holistic steering. (Klaus Gretschmann & Stefan Schepers, ed., Revolutionising EU Innovation Policy, 2016).

    Or like an antelope forward?

    Africa is not lacking so much in capacities, but it does have a serious problem of coherence of vision and purpose, of creating cumulative effects, and of political culture, due to organisational fragmentation, persistence of multiple barriers in markets and the absence of a system approach. It does not have the right culture and governance tools to develop an ecosystem of innovation appropriate for the present challenges, because it continues too much on the government trajectories inherited from the colonial age (Moeletsi Mbeki, The architects of poverty, 2009).

    It is time for a new approach: developing innovation ecosystems in Africa, responding to its own needs and opportunities and taking the global market context into account. Clear and consistent leadership from the top will be needed to create the framework conditions to facilitate other actors, primarily companies and centres of knowledge and to develop and manage the dynamic interactions which lead to measurable innovation and added value creation. It can be done on a country by country basis, without ignoring the opportunities from cooperation across borders and sectors and cross-fertilisation, and involving business leaders, centres or research and civil society organisations. Correctly assessing contextual change is a difficult task because of a tendency to compare to the past. It is therefore essential to develop a realistic cognitive map, based on an assessment of the interacting developments, with Horizon 2030 and on the basis of foresight studies.

    The resulting scan of innovation challenges and opportunities for Africa should be formulated solution neutral. This will enable the emergence of creative ideas, which are the embryonic solutions whose potential impact can then be further analysed. It will also avoid that future innovation efforts are determined by tactical considerations. The persistent gap with the most dynamic economies must be overcome by leapfrogging and by trend mutation. It is not just the case to catch up in sectors of high innovation and rapid productivity growth, where Africa continues to seriously lag behind, but also in traditional sectors, where there often is competitive advantage, and in public governance, whose policies and accumulation of rules are the main cause of this lack of competitiveness. It requires radical thinking, ‘outside-the-box’.

    To achieve a higher degree of innovativeness, new methods of governance must be considered and implemented. The focus in innovative economies is on collaborative governance and on public-private partnerships and a learning mindset, moving beyond a culture of regulation and control and towards a culture of appropriate stewardship.

    Coherence is a key ingredient to bring cumulative effects in an innovation ecosystem. It demands an overall perspective, based on the long-term foresight and in particular, in the early stage of innovation development when inertia and status quo approaches risk to undermine the need for radical new departures. To properly align the various agendas, it is essential to involve all the economic actors, because they often possess an understanding of market needs second to none. This demands to develop the culture and the tools which go beyond mechanistic consultation procedures, to bring a shared vision, engagement and cooperation during implementation. Research and centuries of experience show that there is a positive correlation between a society’s degree of openness and tolerance for the independent, creative and entrepreneurial-minded and its economic success Finally, regular peer review, scrutiny of process and evaluation of achievements, or the lack thereof, by independent multi-stakeholder groups of experts, is essential to ensure firmness of purpose and agility of methodologies. Experimenting with fundamentally new methods and abandoning or modifying programmes when they appear not to move fast enough towards tangible results must be a full part of an innovation ecosystem. All this will be a radical departure from existing bureaucratic culture and requires strong leadership support, transparency and communication with stakeholders.

    Evaluation is part of constant learning under circumstances of uncertainty. Learning capacities and risk acceptance are major characteristics of an innovation ecosystem. They provide the basis for adjustments and often lead to additional innovativeness, to better value creation and competitive advantage. An exploration of innovation ecosystem development will help to move the economies forward, but it should never be forgotten that the sole purpose is to improve the living conditions of all people.

    About the author
    Stefan Schepers is Secretary General of the independent High level Group on Innovation Policy Management, Chairman of EPPA, visiting Professor European Studies at Henley Business School and Chairman of Mazungumzo.

    Read the full magazine issue

    Africa-Europe relations: Time to reboot – Volume 6, Issue 5 (November/December 2017)
    'To rebuild mutual trust, both Europe and Africa will have to design new and more effective types of partnerships and shake off past habits and practices.'
    16 November 2017
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