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Four barriers hindering innovation in Africa

Minister Kwabena Frimpong-Boateng (left) and Jean-Claude Bastos de Morais

At the 2017 Innovation Prize for Africa event, held in Ghana’s capital Accra, a high-level roundtable discussed how best to support the next generation of innovators and entrepreneurs on the African continent.

The panel included speakers like Ghana’s Minister of Environment, Science, Technology and Innovation Kwabena Frimpong-Boateng, African Innovation Foundation (AIF) founder Jean-Claude Bastos de Morais and Yofi Grant, the CEO of the Ghana Investment Promotion Centre (GIPC). They tackled a variety of topics, including: innovation- and technology-led investment into the African continent; investment approaches that are best suited for African innovators and entrepreneurs; and financing instruments that are going to best support Africa’s development.

Below are four key barriers, brought up in discussion, that hinder innovation on the continent.

Disconnect from the youth

Bastos de Morais believes there is a growing gap in understanding between what young innovators want, when they want it, and what support structures – like the IPA – are actually providing. “[Young people] don’t believe in the tomorrow, they want it now… it is not allowing us anymore in Africa to follow the traditional ways of education, to follow the traditional ways of doing business,” he said.

Bastos de Morais also mentioned the ‘hungry’, risk-taker attitude of entrepreneurs today doesn’t gel well with the banking sector’s risk adversity. “It literally kills the ability to do business for small companies and start-ups. So that means that they can’t… then go onto a more risky profile of an investor – like private equity.”

Panellist Rowena Bethel, a member of both the AIF board and the UN Committee of Experts in Public Administration (CEPA), added that there is a danger in assuming what the next generation needs – it’s better to rather “listen to young people”.

Inharmonious business environment

By focusing on improving efficiency in the business environment, Bastos de Morais sees that Africa can kill two birds with one stone: bettering the ease of doing business and combatting corruption.

Grant agreed with Bastos de Morais, and surmises that by improving the operating landscape, corruption will die out. “I think that regulation reforms are also very important. For instance, to improve the ease of doing business in Ghana, we have taken some steps to digitise the economy… And if you take away a lot of the human interaction with processes then you limit a lot of the corruption.”

According to Bethel, the “government can be an enabler, the government can be a facilitator” and that it is partly the government’s duty to build a strong private sector.

Ghanaian software entrepreneur, Herman Kojo Chinery-Hesse, maintains it is the responsibility of successful business people to make it easier for start-ups to survive. He sees the fact that the older generation suffered, as a reason to ensure others don’t have to.

Securing financing

“Africa is driven by informal markets,” Bastos de Morais noted. Therefore he urged that the cost of financing and the taxes for future start-ups come down.

Grant and Frimpong-Boateng both acknowledged the importance of government providing opportunity and capital for start-ups to grow, and referenced how Ghanaian president Nana Akufo-Addo set up the National Entrepreneurship and Innovation Plan (NEIP) to support innovators and entrepreneurs through the construction of infrastructure and the provision of financing.

However, Frimpong-Boateng believes the majority of funding for entrepreneurs should come from the private sector – but, according to him, this isn’t happening.

Grant also highlighted a problem with entitlement from start-ups, which is the reason so many fail. “There is an issue around the thinking once you have an idea or product then you will find financing. No you won’t,” he said. “Investors don’t look at projects because of the age of an entrepreneur – they look at projects because of its merit.”

He continued: “A business person doesn’t need any regulation to tell him, ‘This is a real business idea, so I am going to put my money there and it is going to make money’. Whatever concept or whatever new business that is set up will be funded on how attractive and how viable a business it is… They must have a proof of concept and proof of viability – this business must show that this is a business that will generate income.”

Intellectual property protection

On one hand, Bethel thinks that Africa needs a framework that offers entrepreneurs and innovators protection for their intellectual property (IP) – like trademarks, copyrights, and patents.

On the other, Bastos de Morais dismissed IP rights in favour of ‘time to market’ – the time it takes to design and manufacture a product before it becomes available to buy. He believes getting a product to market as quick as possible is the best way to protect its IP.

However, while Bethel agreed the time-to-market approach may work in some countries, she expressed concern regarding the speed with which many foreign companies can replicate an idea, protect their IP rights and then market it globally.

“So I believe the two really must go hand in hand, I don’t see that the one necessarily dominates the other. And my advice would be to protect your intellectual property.”

Frimpong-Boateng agreed that IP protection for innovators is a must. “People have dreams they can no longer afford to postpone.”

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