What does an innovation economy involve for South Africa?

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Innovation economyIn my last post, inspired by a ventureburn article by Barry Dwolatzky, I mentioned an innovation economy for South Africa, and some of things that we need to focus on as a nation post the irresponsible Zuma era. The idea of creating an innovation economy is not new, it is based on the ideas of Joseph Schumpeter who contended that evolving institutions, entrepreneurs, and technological change were at the heart of economic growth, not independent forces that are largely unaffected by policy. It follows then that creating an innovation economy involves the establishment and implementation (we are not good at implementation in South Africa) of public policy that fosters economic growth through innovation.

The following are some of the elements required to build an innovation economy to replace or neglected and broken one:

  1. Stop the silly, self-serving rhetoric that capital is bad. Capital is necessary to repair the economy. Irrespective of what colour it is perceived to be, capital must be used to grow the economy so all benefit.
  2. Rebuild our tax system, attack corruption with vigour, and refocus government money on building the innovation economy. It will begin to pay off very quickly.
  3. Get rid of policies that are based on the notion that the economy is like a barrel of pilchards, fixed in size, and in need of redistribution. Like pilchards in the sea, good management will create an economy that grows.
  4. Take 20-50 years (yes this is long term stuff), and focus money from the fiscus on those areas that will have the most significant impact on the innovation economy.
  5. Using the directed resources noted above, improve school-level education (teachers, schools, what is learnt and how it is learnt). Make innovation part of school education. Create maker facilities in every school, and don’t just focus on technology, focus also on arts and humanities. But above all, fix our science and mathematics programmes at school level.
  6. Enhance the FET sector to grow and develop the skills and human resources necessary to meet the needs of the growing innovation economy.
  7. Create innovation centres around existing universities. If necessary, help institutions acquire land to foster this type of development, which must be in close proximity to the institutions.
  8. Create at least two innovation universities in major urban areas or at worst, on their periphery.
  9. Using the university and FET system, create a cadre of young people who have PhD level expertise and are able to drive the innovation agenda in higher education, government and the private sector. Direct additional funding to programmes that focus on innovation in a particular context (which can happen in any discipline).
  10. Using the innovation economy focus, bring global leaders to South Africa on a regular basis to help inspire young people, and also to invest in our innovation economy. Establish an advisory council on innovation and invite top local and global entrepreneurs and investors to participate.
  11. Create tax-free zones for innovation, where companies who invest in innovation centres around universities get a determined period of complete tax-free status.
  12. Use tax incentives to foster employee ownership of significant shares in companies participating in the innovation challenge. Also, seek ways to turn beneficiaries of the big investment schemes into owners, so that the assets can be used to raise capital to start businesses. Create insurance schemes for this type of investment, so that the risk of total loss of assets is lowered for individuals investing.
  13. Provide investment opportunities for local and international investors to contribute to growing the innovation economy.
  14. Create incentives not just for the beneficiation of resources, but higher levels of incentives for innovation around out natural resources, both biological and mineral.
  15. South Africa is well positioned to take advantage of the so-called “green economy” that is rising globally. Provide extra incentives for green technology innovation. Fix the insanity that is Eskom at the moment, and make Eskom one of the attractors of green technology in the electricity production sector. Provide incentives to develop technologies that scale.
  16. Create incentives for incipient, innovation based industries, to establish businesses in South Africa. Biotech, nannotech, new materials, computational tech, are examples to be encouraged. Make South Africa the go to place for investment in these industries.
  17. Bring urban planning and innovation together to create living, recreational and working spaces that are intermingled for a better quality of life.
  18. The land issue is important, but not in the way the rhetoric is treating it at present. The land issue, or perhaps more accurately the property issue, is a massive challenge for South Africa today. We need to find creative ways for people to own property, and by owning property, to be able to raise capital for starting small businesses. More small businesses are needed because a growing innovation economy will lead to more opportunities to grow other businesses around areas of innovation and within communities.

These are just some of the things that could be done, if only we had a responsible government. Some of these items are contained in the national development plan, which has been languishing since it was written. This plan needs to be brought to the fore, and updated with a focus on creating the innovation economy. From what I remember from reviewing the plan after it was made public, many of these items are already there in some form, so the changes might not be as big as you might think given the high level of nonsense currently emanating from our corrupt pseudoleaders.