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Kenya shows great innovation potential despite years of poor investment in sector


Kenya shows great innovation potential despite years of poor investment in sector

The country tops Africa and ranks 64 globally in knowledge and creative outputs

Kenya could step onto the global innovation platform if more resources are invested in the area, reveals the 2019 Global Innovation Index (GII), which shows that the country produced more outputs relative to levels of inputs and is way ahead of its peers on many fronts.

A poor standard of education, low investment in research and uneven adoption of innovative processes, products and solutions by businesses have held back innovation in the country for the past decade even as the it leads Africa in knowledge and technology, and creative outputs.

“Sometimes the people who set up the enterprises have low knowledge. You need them to have knowledge so that they can better their firms,” says Dr Bitange Ndemo, a professor of entrepreneurship at the University of Nairobi’s School of Business.

Despite minimal government and business support for innovation, Kenya, a lower middle-income country, outperforms all upper middle-income economies on the continent, including South Africa, Mauritius, Namibia, Botswana and Algeria on the innovation output sub-index. Ranking 64 globally, it also outshines 15 upper middle-income countries outside the continent, including Brazil, Jamaica, Colombia and Ecuador and eight high income-nations such as Qatar, Argentina, Saudi Arabia and Bahrain.

The GII, published by the World Intellectual Property Organization, INSEAD Business School and Cornell University, considers innovation as not only high-tech research and development but also as a concept that is applicable to local industries and that solves local problems through incremental innovation. “Countries are well-advised to see the potential for innovation in all economic sectors, including agriculture, food, energy, and tourism, be they classified as high-tech or low-tech. This entails breaking the myth that innovation is solely concerned with heavily science-driven and high-tech outputs,” says the global report.

In the overall index that is an average of the input and output sub-index scores, Kenya improved 12 places in almost a decade from position 89 in 2011 to 77 of 129 economies. But while the country is punching above its weight on the output sub-index (the results of innovation activities in an economy), a deeper look at the five pillars factored into the input sub-index (innovation investment) reveals that the country’s weaknesses are in human capital and research, and business sophistication. The other three indicators are institutions (political stability, security and cohesive policies), infrastructure, and market sophistication (availability of credit and an environment that supports investment and competition).

On human capital and research, which measures the level and standard of education and research activity in an economy, Kenya dropped 60 places from 44 in 2011 to 104 this year, the steepest decline of all the indicators. The indicator’s score out of 100 also fell by 25 points to 18 this year from 43 in 2011. This paints a worrying image on the capacity of the education system to churn out skilled graduates and the level of investment in research. The research pillar also considers full-time researchers and quality of scientific and research institutions.

According to GII, the human capital and research pillar considers the accumulation of human capital through education, particularly higher education and the prioritisation of research and development activities, an indispensable condition for innovation to occur. The business sophistication pillar also expects businesses to foster their productivity, competitiveness, and innovation potential with the employment of highly qualified professionals and technicians.

During the period under review, the country slid 10 places to position 61 from 51 in business sophistication, which gauges how conducive firms are in accommodating innovation activities.

Dr Bitange Ndemo, a professor of entrepreneurship at the University of Nairobi’s School of Business, attributes the drop to an existing imbalance in knowledge between academia and industry. “Sometimes the people who set up the enterprises have low knowledge. You need them to have knowledge so that they can better their firms,” he says.

Kenya’s ranking on innovation investment (input) sub-index was 89 out of 129 countries this year with a score of 38 points out of 100, according to the index. This placed the country in the bottom third of the list in terms of investment. The score has been stagnant since 2011 despite the potential of innovation in reducing the unemployment rate, which stands at 19 percent among young people age 15-24, according to the World Bank.

The resources universities receive from the Kenyan government are not allocated on the basis of an objective and transparent funding model and are not used as an instrument to ensure that the institutions are aligned with the country’s national development objectives, according to the 2019 World Bank policy report titled Improving Higher Education Performance in Kenya. Neither does it have in-built incentives to encourage the universities to be innovative in the types of programmes they set up.

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Spending on research, science, technology and innovation under the State Department for University Education was estimated to be Sh2.49 billion in the 2018/2019 financial year, according to the Treasury, accounting for two percent of the total spending on university education. Overall, the country spends 0.8 percent of its GDP on research.

The World Economic Forum’s Global Competitiveness Report 2018 recommends that low-income economies that are looking to innovation for employment should prioritise the creation of a favourable education system, extensive information and communication technologies (ICTs) adoption and domestic market competition.

Dr Ndemo says Kenya did not have a specific innovation policy until the enactment of the Science, Technology and Innovation Act of 2013. “Although we haven’t invested enough in the innovation institutions established by the law, it was a very positive way forward,” he says.

The top investors in innovation globally are Singapore, Switzerland, the US, Sweden and Denmark. Overall, the most innovative country is Switzerland, with a score of 67 points out of 100, which is more than twice Kenya’s score. Sweden is second while the US, Netherlands and the UK round up the top five. War-stricken Yemen is the least innovative.

Together with India, Vietnam and Moldova, Kenya is mentioned in the report as outperforming on innovation relative to its GDP.

Of the 30 African countries analysed in the 2019 report, Kenya ranks seventh in investment, behind South Africa, followed closely by Rwanda and Mauritius. The bottom three countries in Africa are Burundi, Guinea and Zambia.

Human capital

Last month, President Kenyatta, speaking at the Young Scientists Kenya National and Technology Exhibition, directed the Education and Trade ministries to put in place a robust mechanism for acquiring scientific ideas, projects and innovations among the Kenyan youth.

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Technical and Vocational Education and Training (TVET) has been identified as one way of promoting innovation among young people. But Dr Ndemo says there is a culture that despises technical training, hence making young people hesitant to join TVET institutes despite the government’s investment in the centres. “The culture they see around them is that of untrained workers living poor lives. To change this, we need to put those TVET skills into national use, and provide good wages. That is how you incentivise more of them to enrol in such courses,” he explains.

Figures from the Commission for University Education also show that about one in three university students is enrolled in a science, technology, engineering and mathematics (STEM) course, while a lesser share (a quarter) actually graduates from similar courses. The World Bank report highlights the lack of provision of incentives that universities can take advantage of so as to be innovative and increase STEM enrolments.

Post-Handshake era

Kenya’s score greatly improved in the infrastructure indicator, largely driven by improvements in the ICT sector, and in institutions. Specifically, the country has never performed better in political stability, one of the sub-indicators in the institutional pillar, probably thanks to the post-handshake era. The country scored 60 out of 100.

Kenya also improved in market sophistication, largely driven by easy access to credit, ranking eighth globally, according to the Doing Business 2019 report, even though loans remain expensive and unaffordable especially to small enterprises that are viewed as high-risk by financial institutions.