I was fortunate to watch Mariana Mazzucato being interviewed and talking about her book on The Entrepreneurial State. She is a Professor of Economics and Chair of Science and Technology at the University of Sussex. She is also a member of President Ramaphosa’s Economic Advisory Council. Mariana emphasized the important role that a state must play in the development of innovative ideas.

The state needs to develop the framework within which innovation takes place and to provide the mechanisms including capital, by which “innovators can engage in commercialisation of high-risk innovative ideas”. This provides the opportunity for the development of these ideas into commercial products in the private sector. This she pointed out is the way that most states (eg pharmaceuticals in the USA and India) ensure the successful development of innovation ideas in the world.

The nature of innovation, and especially innovative technologies, is that it often has high risks associated with it because there is such a high failure rate. Projects that offer ROI are limited, but overall investment in innovative technologies provides great returns because those projects that succeed and generate returns, far exceed the costs of the failures. For example, she mentioned that the World Bank’s ROI on innovative ideas was -2% compared to China’s 8%. The European Union through its development channels has been more successful generating a ROI of up to 20%.

This ROI comes through taxes generated from revenues through the sales of products or licensing of technology. Although she is of the belief that this is not the most appropriate way for the state to generate returns for the high risks ventures that they get involved in. She always talks about “socialising the risk” and “privatising the rewards” when she makes her point on why taxes are an inappropriate system for the public to realise returns.

Probably the best return would come from the benefits accruing from investments into the social well-being of citizens, communities, and societies. This she points out in her book, justifies the state investing in innovative ideas, especially when the social return is higher that the ROI from commercialization.

Because of this, it is important for agencies of the state, like the Industrial Development Corporation (IDC), Technology Innovation Agency (TIA) and programmes of government departments, like the Department of Trade and Industry, to provide funding for technology and other innovations. This is to enable South Africa to move towards the forefront of technology developments in the world, promote economic development in key economic sectors and promote critical social developments needed to improve the well-being of the people of South Africa and other countries on the continent.

Innovation needed for smart socio-economic development in SA

Mariana said that economic growth must be smart, sustainable and inclusive. Innovation is a critical aspect of how this can be accomplished and, in the post Covid-19 world, will become that much more important.

President Ramaphosa has on many occasions stated that South Africa should be a leader in the development of innovative technology in Africa.At the Science, Technology and Innovation Dialogue between China and South Africa in July 2018, the President emphasized the importance of innovative technologies in “developing South Africa’s human capital, addressing demographic imbalances, increasing research output, and using knowledge for economic and social development”.

AfricaScope has conceptualized and developed prototypes of such an innovative technology. The technology called the African Geospatial Access Platform (AGAP) focuses on the provision of geospatial information with innovative technologies that would allow the optimum provision of government services in states throughout the African continent and in other regions of the world.

In the Covid-19 world that we presently living in, AGAP would have enabled the optimum and rapid location of health services (e.g. field hospitals, testing sites, isolation and quarantine facilities) in areas facing the highest incidence of the pandemic. The technology would also automate the classification of remote sensing imagery of various ground and spectral resolutions, so that all dwellings of different types could be mapped.

Information from secondary sources and the use of machine learning algorithms would allow demographic information to be imputed to the dwellings. This would allow countries to update their population estimates on a regular basis and at a fraction of the cost of decentennial censuses. Other socio-economic and consumer behaviour data could also be generated and mapped at a small area level for use in policy and strategy development.

AGAP would revolutionize the conducting of censuses and household surveys in the world as well as the planning of government services, shopping malls and retail outlets. The technology would allow the optimum number and location of government services and retail outlets to be defined. Using multiple models available in AGAP, the networks of government services and retail outlets could be expanded, relocated or rationalized. It is likely that this is going to be a key part of the “new normal” post Covid19.

The technology received national and international recognition by global players in the remote sensing sector as well as key national stakeholders, including an innovation agency of the state. Key stakeholders internationally and nationally also provided support for the technology. Yet, funding agencies in South Africa would not make a commitment to fund this innovative technology for what is believed to be spurious reasons. Initial explorations for funding from European agencies are showing great promise.

SA’s poor support of innovation threatens post Covid-19 development

The President emphasized the danger that South Africa faces when inappropriate responses are given by agents of the state to developing innovative technologies that could reinforce South Africa’s dependence on imported technology in the implementation of the Fourth Industrial Revolution.

By not supporting innovative technologies of this type, the development of South Africa’s human capital and addressing demographic imbalances, through the optimum provision of early childhood development centres, schools and tertiary institutions, will be constrained. Innovative technology is needed as Mariana puts it, to bring about smart, sustainable and inclusive economic and social development, which President Ramaphosa sees as a necessity for South Africa.

The agencies responsible for creating the framework and supporting innovation remain ineffective in their mandated responsibility. Furthermore, as Marianna points out in her book, it is important that the state is accountable for funding agencies and innovation enterprises. It is questionable whether this is the case in South Africa. As a consequence, South Africa as a state is not where it should be when it comes to facilitating the development of innovative ideas, it is in fact missing in action.