While developing countries as a whole accounted for 52 per cent of global exports of high technology products in 2014 – an 18 percent rise since 2000, African countries are lagging behind, representing just 0.3 per cent of this total, the UNCTAD Technology and Innovation Report [PDF] has found.
World Bank data shows that only 4% of exports from Africa in 2012 were high-technology products. Of the US$3.2 billion worth of exports, US$2.3 billion was from South Africa, Sub-Saharan Africa's most industrialized country.
This is especially worrying, considering that Africa is a significant producer of the raw materials that go into these high-tech products, with countries such as the DRC and Central African Republic being the biggest exporters of essential elements such as coltan, gold and tungsten.
The UNCTAD report attributes the low figures to difficulties in coordinating policy frameworks and plans which are necessary for the establishment and growth of industries.
While they are often formulated with the best intentions, these policies often go in opposite directions. Paradoxically, African countries that spend more on research and development as a proportion of gross domestic product (GDP) do not manage to export more high- and medium-technology products either.
To shed light on this picture, the report provides in depth analyses of industrial and science, technology and innovation policies in Ethiopia, Nigeria and Tanzania, along with regional trends and initiatives in policies in other African countries. The report shows that patterns of policy conceptualization, design, planning and implementation are critical to the success of companies and hold the key to making technology work for business.
It is not enough to just have a policy emphasis on technology-led growth. Instead, the success of policies depends on how policy processes work to facilitate collaboration and cooperation between policy agencies, companies, businesses and research. Moreover, policymakers need to formulate industrial policies not as a standalone framework but in coherence with other policies so that they can work in tandem instead of cancelling each other out.
Ethiopia, Nigeria and Tanzania were chosen for the study due to their differing economic profiles. Nigeria is an oil-rich developing country, while Ethiopia is a least developed country whose resources are concentrated in agriculture, mainly coffee. These countries are juxtaposed with Tanzania, which has a mix of resource-based activities, tourism, agriculture and a variety of other sectors. Each country serves to illustrate a developmental challenge when it comes to the coordination of industrial and innovation policies for developmental outcomes.
The three countries each have national vision documents, new industrial development strategies and science, technology and innovation policies that embody the aspiration of their Governments to transform the nations into middle-income economies within the next two to three decades.
In addition, all three countries had relatively impressive GDP growth rates over the past decade, accompanied by increased research and development expenditure as a percentage of GDP in the 2000s. Despite this, they have faced difficulties in focusing those investments into greater technological learning, particularly in firms, as demonstrated by the lack of medium- and higher-technology products in their exports.
Almost all countries in Africa, including the three countries that were studied, and more generally in the developing world, are currently at a developmental stage where industrial development through technological change should be a central, if not the most important, priority. Not only is there a policy transition in that direction, field surveys have shown that there is an extensive degree of political commitment to enacting elaborate industrial policy frameworks and revising science, technology and innovation policies towards innovation.
Notably, the report finds that there are overlaps between industrial and innovation policies. While industrial policy aims to facilitate structural transformation by promoting certain economic activities, sectors and technologies with development potential, innovation policy aims at promoting technological learning and adaptation.
These two policies often use similar incentives and instruments, but approach the problem from different points of view.
The report highlights six points on innovation and industrial development that are highly relevant for African countries:
- Innovation policies are quite new to African countries and thus often not well implemented
- Innovation systems in African suffer from many shortcomings, many of which inhibit their effectiveness
- Industrial policies in many African countries followed in the past did not have much emphasis on promoting technological learning
- Even if industrial development policies had a technological change focus they were not properly coordinated with science, technology and innovation policies
- Most firms, which are family-owned and operate on a small scale, often face financial constraints and capacity problems in acquiring new technologies; moreover, lack of skilled human resources, “brain drain” effects and governance problems in technology transfer hinder innovation in these economies
- To stimulate sustainable industrial development in the region, firms need a more coherent policy environment.
The UNCTAD report also finds that existing policies do not always correspond to the reality of the situation on the ground. Policies are often formulated to meet a need that doesn't exist or to satisfy political interests, meaning that the sectors that genuinely need support are often neglected.
Policymakers in developing countries need to establish an inclusive policy process that assembles stakeholders from different sectors of the economy, including ministries, public sector institutions, private sector companies, universities and research institutes. This would allow incentives for local firms, such as research and development grants and loans, tax credits and governmental procurement, to be relevant to local needs and effective as incentive tools.
Cover Photo via htxt.africa