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29 JUNE 2020
The regulatory environment can stop innovation in Africa
by Liezl Rees and Nikitta Hahn
When 2020 started, the African continent had no idea what was in store. At the beginning of the year, Africa was home to most of the world’s fastest-growing economies, oil prices were stable, and dedicated athletes were training to bring home the gold to Africa from the 2020 Olympics, then scheduled for July. Fast-forward a few months and the world has become unrecognisable as the coronavirus continues to wreak havoc with peoples’ lives, their communities and their businesses. Governments across the continent are grappling with a crisis no one could have foreseen, with revenues plummeting and debt rising as they try to manage the fallout of lockdowns and economic disruption on an unprecedented scale.

But there have been some good news stories. In Africa, innovators have put themselves in the front line of the continent’s fight against the pandemic, developing home-grown and small-scale mobile tech solutions to address market gaps, demonstrating how challenging situations are a call to action for entrepreneurs. Necessity is, after all, the mother of invention.

As governments focus on health interventions to contain the spread of the pandemic, innovators have been busy developing solutions to complement their efforts. In the medical sphere, this has included creating apps to educate people about the virus, to assist with identifying infection and providing solutions for digitising medical records in underdeveloped countries. Across the continent, medical schools and universities are working locally and internationally in the search for a vaccine for Covid-19.

Other innovations are addressing the impact on people whose ability to earn an income and provide food has been hard hit by the lockdowns. For example, the call to stay at home to avoid infection has affected the operations of all retailers, including the traditional markets that many Africans rely on for their daily supplies.

To overcome this challenge, female market sellers in Uganda are using the Market Garden mobile app to continue earning an income while safely social distancing when selling and delivering fresh produce to customers. This ‘stay at home market app’ allows women to sell their products online from the safety of their homes and deliver the goods to customers by motorcycle. In order to limit the risk of transmitting the virus through cash payments, the women are paid via the online platform.

In Zimbabwe, Fresh In A Box, delivers fresh produce directly from farmers to consumer’s doorsteps. This app-based service also uses motorcycles to deliver the food boxes, which reduces the risk of infection and helps to reduce food insecurity.

Africa.com’s recent ‘Brilliant African Innovations Against COVID-19 Competition’ saw Laud Basing of Ghana, founder of Incas Diagnostics, win first place for his rapid Covid-19 test. The test works in conjunction with an app that integrates symptom assessment, data capture of test results, tracking of patient location using GPS, and dissemination of all relevant information to public health authorities.

Mary Mwangi of Kenya, founder of Data Integrated, was also placed in the competition with her Epesi Trip Planner invention. The app allows tuk-tuk (three-wheeler scooters) passengers to book and pay for a trip online and avoid crowds while waiting to board public transport. The payment of fares is electronic.

These are just a few examples of the creativity of African innovators who understand their local context well and have devised solutions to some of the challenges their communities face during the pandemic.

A recent Harvard Law School webinar revealed that there have been 192 innovations in Nigeria, and more than 90 from South Africa, in response to the coronavirus pandemic. This highlights the fact that COVID-19, while wreaking havoc across Africa has also helped to accelerate Africa’s participation in the digital revolution.

But it is not all plain sailing. Even though African ingenuity is flourishing, solutions-driven businesses continue to battle with the lack of a supportive regulatory and legal framework, which compromises their long term scalability and sustainability. An environment that fosters growth in innovation and protects the intellectual property (IP) of business ventures improves profitability, competitiveness, and encourages original ideas.

According to the US Chamber International Intellectual Property Index 2020, which maps the IP ecosystem in 53 countries, economies with effective IP protection are 39% more open for business and attractive to foreign investment, 38% more likely to attract venture capital and private equity and have 26% greater global competitiveness.

One major challenge Africa’s innovators face is a lack of IP protection, or weak enforcement of existing regulations in this regard. This leaves them susceptible to having their ideas stolen, and it has the wider effect of discouraging investment in budding enterprises, and in the country generally.

Given that businesses in Africa are already hampered by high levels of bureaucracy, expensive and often inefficient operating environments, and a lack of funding, failure of governments to adequately protect IP, an important tool that countries use to stimulate innovation, is yet another limitation and missed opportunity in unlocking the continent’s potential.

A review of the performance of two of Sub-Saharan Africa’s largest innovation hubs on the Index – South Africa and Nigeria - highlights some of the challenges Africa’s innovators face in protecting their IP.

The report found that South Africa, which ranked 42nd out of the 53 countries measured, has relatively low levels of software piracy (32%) compared to other African economies. However, the US Chamber report finds that the country’s current IP policy does not fundamentally address South Africa’s gaps in IP protection. It was noted that the focus is not on innovation, but on the use of existing IP through compulsory licenses, and restricting patentability of pharmaceuticals. The report concluded that major gaps exist in the country’s laws and enforcement across all categories on the Index.

Nigeria performed poorly on the Index, ranking 50th out of 53. The report found it had a weak and limited legal and regulatory framework when it comes to protecting IP, with an absence of critical IP rights as well as significant enforcement challenges where legal protection does exist. Nigeria has persistently high rates of physical and online piracy, with barriers and restrictions in place for technology transfer and licensing.

In the long term, while this pandemic has underscored the promise and potential of African innovators to create solutions for some of the continent’s greatest challenges, it has also highlighted the significant legal barriers that exist when it comes to protecting companies’ IP and with it, the long-term growth and sustainability of many businesses.

Necessity may be driving innovation at this time, but to properly realise the benefits of this trend requires that more attention be paid to improving the enabling environment, particularly regulatory and legal frameworks. Without this, the huge potential of Africa’s innovators and their ability to build profitable businesses will be compromised.

By Liezl Rees, Head of the Centre for African Business (CAB) at the Johannesburg Business School (JBS), and Nikitta Hahn, researcher for the CAB.
Source:

Johannesburg Business School
With a focus on developing leaders and managers for the future, and innovation with a purpose are at the core of the Johannesburg Business School's (JBS) understanding of Industry 4.0. Part of the University of Johannesburg's College of Business and Economics (CBE), JBS offers programmes that are expertly designed to equip and develop effective, ethical, impactful and enterprising African leaders and managers. Visit our InfoCentre or website.

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