The Impact of Covid-19 on the South African Innovation Ecosystem - AfriLabs

The Covid-19 pandemic brought the world to a standstill. How did the pandemic impact the innovation ecosystem in South Africa? And what can be done to guarantee future resilience?

KTN Global Alliance and AfriLabs – A synergy

The year 2020 has become synonymous with the global spread of and response to the Covid-19 virus. Africa has not been spared, with the continent recording its first case in February 2020, followed by a significant rise in reported cases in the following months.

In order to track the impact of the pandemic on the innovation ecosystem in Africa, AfriLabs and KTN Global Alliance worked together to deliver a rapid analysis of innovation response to the Covid-19 pandemic, with focuses on Kenya, Nigeria and South Africa. Their research looked into the impact of the pandemic on the innovation ecosystem, the response to it, the success and failures, and the opportunities to strengthen the African innovation ecosystem.

What has been the main impact of the pandemic?

South Africa was hit hard by the Covid-19 pandemic, resulting in a months-long nationwide lockdown. From the onset, enormous effort went into healthcare, ensuring large scale testing and treatment through existing and purpose-built infrastructure. Additionally, large scale financial support was made available, with focus on supporting the basic needs of the poorest while funding for SME and innovation was rerouted to food supply for the vulnerable.

On the economic front, businesses and organisations that could provide full or partial services digitally continued operations while the rest, bar designated essential service providers, were brought to complete standstill. Many closed down for good, while many others laid off staff out of necessity and in an effort to save their overall businesses/missions. Small businesses, tourism and entertainment industries were some of those impacted the most.

What are the lessons learnt?

Although the South African innovation landscape was hit hard by the Covid-19 pandemic, some sectors like education and health managed to adapt quickly, resulting in a strong digital education system (albeit in a small portion of the market) and a drive towards healthcare equipment in the manufacturing sector to name a few.

Innovative SMEs and entrepreneurs that were able to adjust their business models and pivot their services to a full or partial digital offering were the ones that survived. Those overwhelmed, those relying on a quick return to normalcy and those with businesses and models requiring a face-to-face engagement to serve their customer unfortunately failed.

Specific impact on innovation funding

In South Africa, significant funding from government and ecosystem support organisations were almost immediately rerouted to feeding schemes and the supply of food parcels to the poorest of the poor. The immediate impact on innovators was far less funds available, especially to the already struggling early-stage startups. Furthermore, the prevailing uncertainty meant that businesses turned away from their growth strategies towards newly defined “survival strategies” resulting in less opportunities for the innovators, entrepreneurs and SMEs to access institutional funding.

What barriers and opportunities did stakeholders identify?

Key shortcomings identified by stakeholders include a lack of funding (particularly for early stage and pivot innovations), lack of access to digital channels (resulting from a lack of access to affordable internet and data), lack of digital literacy and lack of accessible business mentorship and support. While the South African innovation ecosystem eventually responded by providing many of the above support to innovators, shortcomings exist in reach and timeline of provision.

What direction should future research and analysis take?

As one of the informants rightfully noted: South Africa has a great talent pool of entrepreneurs but more needs to be done to support them. Future research and analysis into business support methods to improve or in the minimum maintain the channelling of funds to early startup entrepreneurs in emergency times and for critical survival pivots would be helpful. Also critical is the analysis of infrastructure, access to data and governmental policies required to fuel the continuous growth of entrepreneurs and innovators in the local ecosystem in emergency and post-emergency times.

“…We have fundamental advantages, we have a growing population and a rising middle class. We have a young population and some of the most amazing entrepreneurs producing some of the most amazing innovation. So, you have the market, you have the talent, what you need is enablement for this market to grow and the talent to capture the growth of this market and to attract the investors that will follow it. The opportunity is if we’re indeed the next Asia…. the investors will come, but why they are not coming now is because we have all these roadblocks either by design or by accident.” – Key Informant – South Africa.

Recommendations towards greater resilience

Resilience is as much a tool for persisting during a crisis as it is for thriving. Now, more than ever, programme design and intervention strategies for players within the innovation ecosystem must be intended at assisting them build resilience in the immediate to long-term. Implementing the following recommendations would aid such resilience.

• Greater access to flexible and responsive financing support.
• Increased digital literacy and access to affordable data.
• Greater resilience through targeted policy design.
• Identify and facilitate value-driven partnerships.

You can view a slide presentation which analyses the innovation response here.

Related events

Global Ideas Exchange: Enhancing Innovative Resilience in Africa – 19 to 29 October 2020

As Covid-19 rapidly started sweeping the globe, KTN’s Global Alliance Africa project quickly shifted its activities to track and map the innovation response to the pandemic in Nigeria, Kenya and South Africa. KTN’s new “Global Ideas Exchange: Enhancing Innovative Resilience in Africa” event series is our way of responding to these calls. We hope to encourage sharing and learning and aim to showcase the latest ideas and best practice in innovation.

Who should attend?

This event series is an inclusive platform for innovators, innovation enablers, investors, industry leaders, academia, the public sector and global innovation community to share knowledge, exchange ideas, and enable inclusive, multi-scalar approaches to resilience.

We have partnered with AfriLabs, CcHub, and the South African Technology and Innovation Agency, while also reaching out to other international partners to collect experience data, case studies and best practice from 23 countries across Europe, Asia and Africa.

What are our aims?

• To share the findings of our rapid analysis and provide inclusive platforms to drive constructive discussions around key findings and clearer information around public sector offerings.
• To ensure participation from diverse innovation stakeholders in the UK, Nigeria, Kenya, South Africa, and from around the world in building frameworks for future cooperation.
• To launch inclusive communities of practice that can actively support more robust and effective investment pipelines in Africa.
• To improve the visibility of existing connections and develop new avenues for communication between policymakers and innovation enablers.

For more information and to register for this exciting event series, click here.

AfriLabs Annual Gathering – 12 to 14 October 2020

AfriLabs is a network organisation of 225 innovation centres across 47 African countries. They support hubs to raise successful entrepreneurs that will create jobs and develop innovative solutions to African problems. AfriLabs’ mission is to raise high potential entrepreneurs that will stimulate economic growth and social development in Africa. They achieve this through capacity building, financing, networking, policy advocacy, and providing insightful, reliable data.

The AfriLabs’ Annual Gathering provides a unique opportunity for tech hubs in the AfriLabs network and other stakeholders in the African tech ecosystem like local innovators (entrepreneurs), corporates, investors, academia and developmental agencies to convene, network and share knowledge. The AfriLabs Annual Gathering has historically been held at different cities around the African continent in collaboration with national and local governments, the private sector and their member hubs.

KTN Global Alliance will present the Global Ideas Exchange Masterclass on the 12 October 2020 at 1:30pm – 3pm in the afternoon part of the programme agenda. For more information and to register, click here.