Africa’s knowledge economy dreams still distant

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“I wanted to be here because Africa is on the move,” US president Barack Obama told an energetic crowd at the Global Entrepreneurship Summit in Nairobi in July.

The president’s visit underscored his support for the idea that investment in technology and innovation can propel African economies forward in ways that agriculture, manufacturing and natural resources have not.

Yet two decades after the OECD began promoting the idea that reorienting Africa’s economies towards knowledge generation could fast-track development, none of the region’s 54 nations are yet able to compete on a global scale. Knowledge economies rely on intellectual capabilities to generate value, rather than physical inputs or natural resources.

Rwanda set its course toward a knowledge-based economy in 1997 with the launch of the Kigali Institute of Science and Technology. The institute aimed to bring about the country’s “economic renewal through the creation of highly skilled manpower”. It was central to longtime Rwandan president Paul Kagame’s plan to turn Rwanda into “the Singapore of Africa”.

Other African nations have followed suit. This year, Nigeria announced it would host the UN’s first Investment and Technology Promotion Office in sub-Saharan Africa. South Africa signed a 10-year ICT partnership with China to boost research, improve internet access and incubate tech SMEs. Meanwhile Kenya is orchestrating the construction of a $14.5bn tech city.

Despite these initiatives, these nations are not yet competing. Kenya ranks 111 out of 143 countries on the World Bank’s Knowledge Economy Index, and in recent years it has been moving down the list.

So has South Africa, which slumped 15 places between 2000 and 2012. Rwanda, despite being one of the first countries in the region to articulate such a strategy, ranks 127th. So far, no African country has yet broken into the ranking’s top 60.

“There is a desire to transform the economy, but there is really nothing concrete that is backing that up,” says Dr Uyi (Osamuyimen) Stewart, chief scientist at IBM Research in Nairobi.

All talk, little action

The factors that prevent Africa from competing are no mystery. Even tech-inclined South Africa suffers from a lack of investment in research, with only 1.4 out of 1,000 workers employed in research positions, compared with more than 8 in the UK, Japan and Denmark.

In 2009 South Africa spent just 0.92 percent of its GDP on research and development. By comparison, China spent nearly double that, according to a 2010 study published in the African Journal of Science.

The outcomes of these discrepancies in investment are reflected in intellectual property claims. South Africa, for instance, applied for 265 patents at the United States Patent Office in 2008, and was granted 91 patents that year.

By comparison, countries such as India and Brazil were granted 679 and 103 patents, respectively, according to the 2010 study. Based on these figures, the authors conclude that “sub-Saharan Africa is a passive bystander in the global ‘knowledge economy’ race”.

The problem is linked to education. South Africa, often perceived to be one of the more advanced economies in Africa, ranked a woeful 75 out of 76 places in the OCED’s 2015 Global Schools ranking.

Today, few South African public schools offer basic computer literacy programmes. A decade ago, 749 out of 1000 Americans had access to a personal computer. In sub-Saharan Africa only 15 did. The gap in access is far from being closed.

The Asian model

Some development economists point to the success of Asian countries such as Singapore, Korea and, more recently, India to argue there is hope for ‘knowledge’ transformation in Africa. These economies transitioned from poor, agrarian models to become global leaders in tech innovation and finance in the space of 60 years.

Yet the benefits of those transitions are not spread equally. Economist Pundarik Mukhopadhaya at Muquaire University in Sidney argues that the restructuring of the Singaporean economy towards knowledge-based industries “result(ed) in higher inequalities between educational groups”. These were largely due to salary increases among a new class of high earners.

For many Africans, the prospect of a knowledge economy may pose a threat. “The new jobs (generated by a knowledge-based economy) tend to favour educated workers over those with less education and skills,” according to a Harvard University study from 2004. “At the same time, low-skilled positions are made redundant by technology, which decreases the need for less-educated workers.”

Unless African governments undertake sweeping reforms in basic education and access to technology, a shift toward knowledge is unlikely to benefit the masses.

“If the country’s education issue is not addressed from the grassroots level, the majority of the population, with a basic education, will find themselves unemployed and alienated,” warns Richard Firth, CEO of the South African financial software development company MIP Holdings.

The alternative

Knowledge is not Africa’s only path forward. The African Growth and Opportunity Act, for instance, has generated 350,000 direct jobs and increased annual US-Africa trade from $7bn to $25bn.

AGOA embodies a more traditional economic model: helping African nations capitalise on inexpensive labour and other existing advantages rather than attempting to create new ones. Many African economies have enjoyed a decade of high growth – but little thanks to knowledge sectors. Resources, retail, and agriculture still top McKinsey’s list of the drivers of African GDP.

“Technology can transform lives. But technology without skills is a vastly diminished resource – and in most cases Africa’s education systems are not imparting the skills required,” the Africa Progress Panel, chaired by Kofi Annan, writes in its 2014 annual report.

Instead, the APP urges African governments “to prioritise the more mundane challenge of delivering on the basics”. Perhaps, for now, this should remain the focus.

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