In the ever-evolving landscape of global economies, innovation stands as the driving force behind progress and societal development. For South Africa, a country at the forefront of innovation in Africa, the need for increased investment in this dynamic sector has never been more pressing. Despite being ranked 59th in the 2023 Global Innovation Index, South Africa is falling short in its investment in critical areas such as research and development (R&D), hindering the full potential of its innovation ecosystem.

The Global Innovation Landscape:

As South Africa engages in the World Economic Forum (WEF) DAVOS 2024, the focus on emerging technologies, particularly Artificial Intelligence (AI), highlights the transformative impact innovation can have on economies and societies. The 2023 Global Innovation Index showcased South Africa’s potential, ranking it second among 28 Sub-Saharan African economies. However, to maintain this position and ascend higher, increased investment is imperative.

Challenges in R&D Funding:

The National Advisory Council’s 2023 findings from the National Survey of Research and Experimental Development unveil a concerning trend in R&D funding. Corporate South Africa’s contribution to R&D is declining, making up only 26% of the total funding, while government-led funding accounted for 56.3% in 2020/21. This decline has led to an overall reduction in R&D investment from 0.76% of GDP in 2017/2018 to 0.61% in 2020/21.

Startups and Innovation:

Despite the challenges in R&D funding, the startup ecosystem in South Africa experienced a surge in investment in 2022. Diversified funding from both corporations and government programs, such as the DSI Innovation Fund, fueled this growth. A thriving startup ecosystem not only contributes to economic vibrancy but also addresses social challenges on a local level, creating employment opportunities and injecting dynamism into various sectors.

Funding Gaps and Inclusive Growth:

While innovation investment has positively impacted South Africa’s youth and addressed societal challenges, there remain significant funding gaps, particularly in early and growth-stage funding. Efforts like the Telkom Centres of Excellence (CoE), representing successful public-private partnerships, showcase how collaborations can support national innovation and bridge these gaps. These centers not only conduct groundbreaking research but also provide specialized training, transforming graduates into leaders in the ICT and telco sector.

Government Initiatives:

Recognising the importance of innovation investment, the government has taken significant steps. The first Presidential Science, Technology, and Innovation Panel unveiled a R1 billion (US$53 million) investment in PhD training from the National Skills Fund. This initiative, bringing together representatives from various sectors, demonstrates a commitment to fostering innovation, with the President inviting further private sector investments.

Investment in innovation is a journey that demands long-term commitment and collaboration. South Africa has made strides, with initiatives like the CoEs and the Presidential Science, Technology, and Innovation Panel setting the stage for sustained growth. By redirecting collective resources towards local innovators, startups, and research initiatives, South Africa can foster an environment that not only nurtures creativity and problem-solving but also propels the nation into a leading role on the global innovation stage. The time for increased investment in innovation is now, as it holds the key to unlocking the full potential of South Africa’s bright future.