Enterprises must promote innovation: Africa can gain dividends from its growing youth population

Entrepreneurship is generally viewed as the process of starting a business or organisation. It is a creative act that adds a new institutional element to the economy.

Much of the discussion about entrepreneurship focuses broadly on economic transformation and job creation.

But as stressed in the 10-year Science, Technology and Innovation for Africa Strategy (STISA-2024), enterprises play a vital role as loci for the search, adaptation and diffusion of technological know-how. In this regard, enterprises should be viewed as centres of technological learning and not simply sources of jobs and products.

Pursuing this view rests on the premise that technological capabilities usually accumulate in enterprises. This is because it is enterprises that develop internal competence to compete in the market. Technology-based firms are therefore the central actors in entrepreneurial ecosystems.

Most of the technologies needed to propel African economies already exist somewhere. The first step is therefore to develop a better understanding of market needs and embark on searching for existing technologies. This is indeed one of the key advantages of Africa’s latecomer status. It is does not need to generate new technologies from scratch. But it needs to create new businesses.

Let us look at two examples. Mobile technology is now serving as a major technological platform for enterprise development in Africa. This sector was not driven by basic research and development or scientists but by entrepreneurs and engineers seeking to solve specific problems related to microfinance.

Entrepreneurs often operate by identifying a problem and searching first for an existing solution. In this particular case, the solution existed in the form of the basic function for transferring airtime. The bulk of the initial technical work involved making the mobile money transfer system secure and transparent.

Another illustration of how entrepreneurship leads to technology development is the response to the common inconsistency in mobile signal strength in Africa. Subscribers respond to this challenge by using multiple SIM cards. This leads to airtime often being locked up on a SIM card that is not in use.

The Chura start-up

A Kenyan software engineering, Samuel Njuguna, has developed a web-based application that “leaps” airtime between mobile carriers, enables it to be exchanged for cash and purchased in more user-friendly denominations. Called Chura (meaning frog in Kiswahili), the start-up was recently chosen as a finalist in the first Africa Prize for Engineering Innovation awarded by the UK’s Royal Academy of Engineering.

The case of Chura, which was initially marketed to students, shows that it is the process of adapting technology to local environments inspired complementary research and development. The industry is now inspiring young people interested in developing new applications to seek further training in electronic engineering, mathematics and related technical fields. In effect, entrepreneurship led to technology development, which in turn is leading scientific and mathematical explorations. This process has also led to efforts to upgrade existing universities so that they can respond to the growing skill needs of the sector.

A similar scenario can be envisaged for other fields such as health. Africa faces major health challenges and relies heavily on drug imports. A large share of the imported drugs is either substandard or counterfeit. The engineering capacity needed to manufacture drugs in Africa already exists.

What is needed is to come up with viable business models that can facilitate the acquisition of manufacturing capabilities. But such business ventures need to be visualised as ways to build technological capabilities in fields related to pharmaceutical production. These include chemical engineering, manufacturing, quality control, packaging, molecular biology, logistics and marketing.

The diverse skills, capabilities and resources needed to run an effective pharmaceutical enterprise can be aggregated in a geographical locale to create an entrepreneurial ecosystem. Such an ecosystem can then help to spawn new businesses. For example, the knowledge built up in packaging can form the design basis for many other products.

Adding a research and teaching component will make the entrepreneurial ecosystem act as a “factory school” where young innovators benefit from experiential learning. This would also help to attract other firms that rely on high quality expertise to relocate to the area. An example of such a pharmaceutical entrepreneurial ecosystem is the Medicon Valley that spans Denmark and Sweden and includes leading research universities.

Another area where entrepreneurship drives technology and science is data-based agricultural firms. Firms such as Gro Intelligence (based in Nairobi and New York) started off by seeking to increase investment in African agriculture. But to make better decisions Gro Intelligence aims to “gather, aggregate and process data using proprietary algorithms to unlock crucial insights into weather patterns, trade flows, pricing dynamics and production.” By defining itself as a data-driven firm, Gro Intelligence is recruiting people with competence in fields such as computing and engineering. It is positioning itself to also serve as a locus for the diffusion of advanced technological capacity into African agriculture.

Absence of mentors

The challenge facing African countries is finding ways to identify technology-based enterprises and support them to promote industrial development. This task presupposes the existence of a clear vision for industrial development that is not dependent on a country’s natural resource endowment. It requires reversing the logic of policy thinking from seeking to export raw materials in whatever form to importing know-how.

An industrial vision that focuses on firms as centres of technological learning includes specific measures that help to create university-industry linkages. Singapore offers interesting examples of how to strengthen such university-industry linkages. The positive results of the linkages were largely a product of strong government support guided by an overarching vision to strengthen the country’s global competitiveness.

One of the key barriers to technology-based entrepreneurs in Africa is the absence of mentors with the appropriate experience. In many cases such mentorship is more important than simply having access to angel funding or venture capacity. The experience of the Africa Engineering Innovation Prize shows how mentoring can help young entrepreneurs not only to improve their business plans but also to explore ways to upgrade their technologies.  Such mentoring activities will be greatly multiplied if they are connected to technology-based universities.

There is a large pool of entrepreneurs with experience in Africa and other regions of the world that could be associated with universities to serve as mentors for young entrepreneurs. One way to enable them to do so is appoint them as adjunct faculty. This would also help strengthen linkages between universities and the private sector, as has been done with remarkable success in Singapore through the National University of Singapore, the Nanyang Technological University and the Singapore Management University.

Defining enterprises as centres of technological innovation helps to bring new dynamism into the economy. It is through the growth of enterprises as well as the creation of new ones that countries can expand employment opportunities and promote inclusive growth. With the appropriate policies, government incentives and financial support, Africa stands to benefit significantly by focusing on technology-based enterprises.

It is through investing in such experiential learning that Africa can gain dividends from its growing youth population.

• The article first appeared on NewAfrican

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