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Facilitating Innovation in African Firms (Part 2)
Innovation in Africa’s Manufacturing and Service Firms (Cont'd)
Agriculture, manufacturing and services are the major economic sectors in Africa. Three out of every five persons in Africa is involved in small-scale farming, yet this form of agriculture is grossly inefficient in the development and adoption of appropriate innovations. Most technologies introduced into the agricultural sector have had the transfer process fraught with diverse challenges. How can African countries overcome these challenges? Recently, although Africa’s manufacturing sector is underperforming, the service sector has become a significant contributor to GDP on the continent. Yet, innovation in both sectors remains poorly understood in Africa. How are African manufacturing and services firms faring with development and adoption of innovation? What options exist for overcoming constraints to innovation in Africa’s small-scale agriculture, and in the manufacturing and services industries? Based on a recent collection of empirical work, we propose some answers to these questions and more in this two-part blog series.
On Africa’s Small-scale Farming
Although almost one quarter of the gross domestic product of sub-Saharan Africa comes from agriculture, most of the agricultural production relies on crude tools and methods. The resulting inefficiency and low productivity , particularly in small-scale agriculture (which is the largest employer of labour in the region) is responsible for continued poverty and several losses including losses due to low crop harvests, low animal products, and wastage of outputs, among others. While the challenges are massive and require multi-pronged approaches to overcome them, some dimensions that can be explored are highlighted below.
An entrepreneur is a person that starts a business, whether or not the person participates in the day-to-day operations of the business. A potential entrepreneur is someone who shows interest in starting a new business but has not yet done so. The success of businesses is dependent on the quality (capacity, knowledge and skills) of the entrepreneur. The quality of the entrepreneur or manager greatly influences management of the business, its productivity as well as the growth-orientation.
The more educated entrepreneurs and managers have shown to have higher quality than their less educated counterparts. Entrepreneurship education and training is as a good means of intentionally growing high-quality indigenous entrepreneurs. Hence, the conception and implementation of the compulsory entrepreneurship education by the Nigerian government in 2006. What were the impacts of the policy on the students? In the first large scale study on the impact of this policy on entrepreneurial interest (EI) and entrepreneurial practice (EP) of students, about 27,000 students from 50 institutions were surveyed over a five-year period (from 2007 to 2011). The findings suggest that Nigeria and other developing countries can greatly harness the potential of their youthful, high-quality entrepreneurs by implementing targeted policies.
Business development and entrepreneurship are among the most favoured options as African countries explore several options to change the longstanding labels of poverty, insecurity and economic backwardness. The 21st century business environment is highly dependent upon technology. However, most African businesses are lagging behind in their deployment of technology. This severely limits their growth potentials, making them less competitive on the global stage. Following a thorough consideration of recent studies on the roles of technologies in the African business climate, here are five key approaches through which African countries and African businesses can use technology to meet present economic challenges.
Develop Human Capital
It is clear that the presence of abundant natural resources does not necessarily make any country more competitive on the global stage. Many of the successful countries across the world did not achieve success merely because they have natural resources. Instead, they succeeded because they evolved systems that help their people make maximal use of the natural resources for their development. The progress achieved through human capital investments by some countries without natural resources underscores the fact that humans are more to be treasured than natural resources. It also shows beyond doubt that human capital development trumps mineral resource exploitation.
From founding to operation to expansion and growth, capital, interactions and support are critical success factors in any enterprise. They are even more important in social enterprises, that is, entrepreneurial organizations that solve societal problems through innovative products and services. Social enterprises seek to achieve a balance between profit and continually addressing the social challenge. Hence, their operations are hinged upon successful identification and deployment of innovations.
Innovation depicts changes in products and processes that define and drive improvement in organizations, communities and the world at large. Most social enterprises thrive on open innovation, or what we call social open innovation. Social open innovation essentially describes a situation whereby members of the society are actively involved with technology in the processes of developing, deploying and evaluating products and services that are aimed at solving social problems.
A study of over 1,300 companies across the manufacturing and service sectors of Nigeria’s economy has shown that companies in the two sectors introduce non-technological innovations differently. Organizational innovation, an example of non-technological innovation, includes the introduction of new or improved business methods in the operation of a company.
Non-technological innovations are crucial facilitators of companies’ competitiveness. Specifically, organizational innovations do not directly lead to physical products that are placed on the market, but they affect the creation and marketability of products and services offered by companies. In fact, organizational innovation is sometimes considered as a prerequisite for technological innovation.