How Chinese innovation can spur economic growth in Africa
Jean-Claude Bastos de Morais says Africa can learn from China’s continued economic expansion, and tap into its rich reserves of human capital, through investment by governments, non-profits and the private sector to achieve self-sustaining growth
China’s economic success has been the envy of the world in recent decades. Its GDP grew by an average of 9.71 per cent between 1989 and 2017. The country’s story has evolved in tandem with three key factors: steady deregulation, major investment in infrastructure and a surge in innovative technologies. These three factors have proven throughout history to be reliable liberators of economic growth – but can the same be applied thousands of miles away in one of the world’s most complex regions, sub-Saharan Africa?
Africa – a region of 54 countries – is separated by thousands of miles of terrain, complicated political histories and anywhere between 1,000 and 3,000 languages. It also has significant socioeconomic challenges such as access to education, infrastructure, poverty and life expectancy. Yet Africa and China have much in common.
China and Africa both have huge populations, which in the pursuit of industrialisation and economic growth is hugely important. Between them, over a third of the planet’s people live in either Africa and China – 2.6 billion. Of these, 1.2 billion live in Africa. Unlike China however, Africa has an extremely young population – and it is the fastest growing in the world. This provides the African continent with the richest source of human capital in the world – but it must be nurtured.
China’s story illustrates how important it is for human capital to be nurtured. At a 2016 event combining the national conference on science and technology, the biennial conference of the Chinese Academy of Sciences (and the Chinese Academy of Engineering, President Xi Jinping said that, “China should establish itself as one of the most innovative countries by 2020 and a leading innovator by 2030”. He went on to say that, “Great scientific and technological capacity is a must for China to be strong and for people’s lives to improve.”
This is as true for Africa as it is for China. The emphasis in both countries must be to push enterprise from the grass roots. Government zeal is key and, in Africa, there is a rapidly growing understanding among policymakers that innovation – and the support of innovation – is critical. Therefore, investment in innovation ecosystems and infrastructure in Africa must be a key priority.
According to a recent study by Boston Consulting Group, China’s later-stage R&D spending has already surpassed that of the US and this is crucial if innovations are to realise commercial success. China has benefited from state financial support and public- and private-sector investment in start-ups, SMEs and innovators – and this has seen China’s technology sector boom.
Two of the world’s biggest companies by stock market capitalisation are Chinese technology firms. Tencent has seen its shares rocket by 43.6 per cent in 2017 so far, outperforming Facebook. It is one of the world’s largest internet companies and the biggest gaming company in the world. It provides a social network, web portals, e-commerce, mobile games and smartphones. These services meet the unique cultural needs of the Chinese population and they are extremely popular. China’s Weibo has eclipsed Twitter, with over 340 million monthly users compared to its American rivals 328 million in the first quarter of the year.
China’s prowess in technology and innovation can be replicated in Africa – the world’s fastest-growing and youngest population, if African countries commit to investing heavily in SMEs and providing platforms for innovators to succeed. That investment cannot, however, come solely from the government. In the diverse African continent, private sector and not-for-profit organisations are pushing for the kind of grass-roots innovation that has helped China succeed.
Venture capital involvement in African start-ups has sharply increased. Data from Crunchbase, TNA analysis shows that private funding for technology startups stood at only US$40.6 million in 2012. Within two years, the figure had surged to US$414 million and is projected to reach around US$608 million in 2018. The 2015 book, The Next Africa by Aubrey Hruby and Jake Bright, also supports this trend. It says, “Across the region a Silicon Valley inspired network is developing. The research I’ve done highlights the existence of roughly 200 innovation hubs, 3,500 new tech-related ventures and US$1 billion in venture capital to a pan-African movement of startup entrepreneurs.”
Not-for-profit organisations in Africa such as the African Innovation Foundation seek out and support innovators right across the continent. The organisation’s Innovation Prize for Africa searches for innovators and entrepreneurs who present commercially viable self-sustaining solutions to Africa-specific challenges.
It is this “self-sustaining” nature of innovation that is so important and China has proved that it reaps rewards. Many Chinese companies – particularly in technology – have succeeded because they identify a gap in the domestic market and find a solution. This is how Africa will succeed. And, with the continued support of national governments, the private sector and not-for-profits, the continent’s enormous and incredibly young population has a real opportunity to make Africa the next China.
Jean-Claude Bastos de Morais is the founder of the Africa Innovation Foundation, founder and CEO of the Quantum Global Group and an International Council member at the Belfer Centre for Science and International Affairs, Harvard Kennedy School