A nation’s competitiveness depends on the capacity of its entrepreneurial and industrial sectors to innovate and upgrade, and Africans are innovating at an astounding level. African start-ups are disrupting competition in ways the world has simply not expected. They have become the catalyst for making the continent the most attractive investment destination in the world for at least the next two decades.
Innovation has no political or geographic borders
Innovation is rapidly changing the landscape of world markets. It is also changing the way the world sees Africa. As British-Nigerian author Nnamdi Oranye argues (Disrupting Africa, Ryan Peter, 2017), “Africa is well and truly ahead of the developed world when it comes to innovation” (p. ix), because African governments and institutions are willing to try new things to home-grow their talent.
Innovation is about changing lives for the better, and it occurs in space and context. It is not defined by the past of other nations, as is too often implied about the future of African development. It is not limited by what those who live outside the African space and context think is valuable. Nor does it require that Africans copy and paste someone else’s trajectory.
Africans are creating a new story, their own story, by learning from others and using African-rooted wisdom to apply what they learn to their continent and localities, to their realities, to where they are, to what their challenges are and to what they see as necessary to overcome them. That’s why innovation in Africa is breaking all boundaries and tangibly changing the lives of Africans. Because it’s about Africans creating for Africans, and in the process creating solutions that challenge established perceptions about risk in Africa.
Indeed, the greatest risk for investors looking for new opportunities is not being in Africa. As the Beninese proverb says: An old story does not open the ear as a new one.
Blending out of the innovation box
African start-ups have been able to free themselves of the Western boxed-in path for innovation. In Africa there is no tension between economic measurement and innovation. It doesn’t matter if the product or service resulting from innovation is big or small. What matters is how it resolves a specific local problem and addresses evolving or unmet needs in a new or better way that is constructively meaningful for Africans.
African innovation is disrupting and disruptive because it springs from home-grown talent rather than hand-me-down solutions from those who know little (or couldn’t care less) about the continent and its particular needs because they think they know what’s “best” for the largest growing consumer market in the world and can therefore invest in it by remote control. Of course, if you want to invest successfully in Africa you have to be in Africa (Oranye), along with three friends from another African proverb: courage, sense and insight.
Success is measured in terms of how the technical and market linkages of specific innovations drive the business cycle and foster a kind of chain reaction that motivates the creation of innovation clusters. The economic significance of innovation lies not only in the degree to which it spreads, because it is useful and relevant, but also in the degree to which it motivates an increase in the number of start-ups that are created and survive.
The the region South of the Sahara, composed of 48 countries, has the highest rate of adults involved in early-stage entrepreneurial activity. Africans create twice as many start-ups than North America and three times as many as Europe.
Aurora Chiste points out in her on-line article “West Africa – Transforming Potential into Impact” that a high rate of entrepreneurial activity doesn’t necessarily correlate with a high output of innovation. But that’s precisely what’s happening in Africa. The problem is that Chiste’s definition of innovation suffers from a generalized bias against Africans: 1) biased data resulting from an ethnocentric definition of what “real” entrepreneurship is and 2) strongly biased towards a limited view of technology, as if only e-tech and fintech counted.
Just because in Africa there is a higher number of necessity-driven entrepreneurs does not mean that those businesses are not innovative or that they don’t have a relevant impact on the local economy. And non-e-tech and fintech innovations, such as for food transformation and packaging, storage and conservation, or market and sales, have a much more significant and direct impact on the local economy. The crux of the matter is: Innovative for whom? Impactful for whom?
Let’s not forget that for innovation to “count” it has to be meaningful and relevant contextually and spatially. In other words, in the case of Africa, it has to be relevant and meaningful for Africans. Yet, there is little or no innovation-geography data available at regional, country or city levels in Africa for most of the indicators of innovation defined by Western institutions. In addition, surveyors of innovation, who for all practical purposes of measurement decide what an innovation is, are by and large not African.
R&D does not innovation make
Americans and Europeans would like to believe that R&D is the “mother” of innovation.The reality is that innovative activities are not exclusively a result of R&D. Innovation is done by people, whether in a modern high-tech facility or under a Palaver tree. The common attribute, whether American or Asian or African, is that people in a given facility or under a Palaver tree pass on tacit and codified knowledge to others in another facility or under another Palaver tree, or even across the globe, through knowledge networks.
The articulability of the knowledge that leads to innovation and its applications (The Economic Geography of Innovation, edited by Karen R. Polenske, Cambridge University Press, 2007) in the African context depends on the extent to which tacit knowledge becomes explicit or codified by Africans in their specific context. It will therefore be inevitably meaningless and thus ignored in the American or European context. But the same is true inversely: the articulability of American or European knowledge imported into Africa, or rather imposed on Africans, is to a great extent irrelevant for the African context, unless it is adapted by Africans for specific African needs.
In other words, the data and indicators used to show the nature of the African innovation process, which is characterized by learning-through-interacting, are not available. What is available reflects what is important to the foreign institutions that define the indicators and data relevancy. The problem is that each nation’s innovation process is the result of how innovative inputs are transformed into innovative outputs that are relevant for their context, not for foreign observers.
The institutions who “measure” innovation are Western of Western-influenced, and they define indicators and data relevancy outside the African context. The result is that they don’t convey relevant information on the economic efficiencies of the innovation process in the African context, nor do they show the technical complexity and economic significance of the innovative inputs, outputs or agents in the African context.
The African renewal of free competition
Innovation is an intensely collective effort that grows out of the knowledge, personal creativity, skills and abilities of a nation’s entrepreneurs to react to changes and discover new opportunities. It is successful when it is the product of a strong relationship between market performance and new products that respond to market evolution. This is what fosters competitive advantage.
African governments have understood what the American government is still grappling with: that neither trillions ingovernment “investment” in targeted sectors or technologies nor government endeavors to seduce and fuse with big business will help a nation gain a competitive edge or preserve the one it has. This removes vast swaths of business activity from free competitive enterprise altogether and displace and distort free enterprise.
It’s great that the Biden administration is thinking big again, after previous decades of government disinvestment from innovation. But it needs to be more courageous in pushing markets into newareas, rather than just trying to fix them.
American policy makers need to consider the multi-dimensional economic, social and political context within which innovation occurs. If policies are to contribute to achieving a competitive advantage, the first and foremost thing needed is not trillions of government spending in technology or subsidies for R&D and the construction of new factories, which is what the U.S. America Competes Act and the U.S. Innovation and Competition Act posit through legislation. Building and enhancing tomorrow’s vital technologies and strengthening innovation infrastructure is important, of course. But these risk becoming big white elephants if they’re not preceded by investment in innovation seeding.
The American government should focus on broadening the technological opportunity landscape, and with it the overall pie of national output, through an effort to stimulate private investment that otherwise would not occur. As Mariana Mazzucato argues in her book entitled The Entrepreneurial State (Anthem Press, 2015), the Biden Administration “should aim not only to kick-start the economy but also and possibly more importantly to do things that are not even envisioned and therefore not done at all” (p.9). This requires new approaches, methods and tools if the government wants to make things happen.
The name of the market competition game is free competitive business activity that innovates by creating unique capabilities and products. That innovative activity is spurred by collective learning and information exchange of tacit knowledge through formal and informal networking that is spatially and contextually motivated.
Tacit knowledge is the basis for innovation-based value creation and is therefore the prime determinant of innovative activity. It is defined by the social context within which innovation takes place, and its central role is to reinforce the local over the global in the innovation process. In fact, tacit knowledge is the key determinant of the very geography of innovative activity: it is acquired experientially, it is context-specific and it is socially fluid.
In short, because innovation is a culturally-grounded, social process of joint interplay between innovation and tacit knowledge production, the priority should be education, training and upskilling for innovation purposes. If markets and the behavior of economic actors are socially constructed, embedded and governed so is innovation and the process of innovating. It can’t be legislated but it can be developed.
Bottom-up vs. top-down innovation
The conclusion to be drawn is that the African bottom-up power of innovation is enabling the continent to compete more and better in today’s competitive context, while the American top-down, legislated framework for innovation is weakening the competitive edge America once had.
As Bill Clinton said in his 2014 keynote address at The Hamilton Project’s two-day summit on Addressing America’s Poverty Crisis, “Intelligence and effort, the willingness to work, and dreams are pretty well evenly distributed throughout the world.” However, “what are not evenly distributed are opportunities, preparation, and the supportive environment necessary to succeed.”
The economic geography of Western innovation and the entrepreneurship "typology" that motivates it has for decades focused trying to make Africans blend in. Foreign aid and investments, both based on a "we know best" approach, has limited the opportunities, preparation and support for African innovation.
Today, African entrepreneurs are innovating by purposefully blending-out. African innovation doesn’t fit into Western-defined and pre-determined, “acceptable” metrics for what development and innovation are. That’s because African entrepreneurs are defining their needs based on what is uniquely African, rather than just taking at face value what others say Africans need.
That’s why African innovation is so special and competitive, because African entrepreneurs are not copying what may have worked in America or Europe in the past. They are forging a new way to innovate according to African realities (Oranye). And it’s disrupting not only Africa but the entire world, yes, even the United States.