South Africa must cultivate a conducive business climate that is able to support innovation so start-ups can thrive and ultimately create jobs.
Releasing the 10th edition of South Africa’s Economic Update in Tshwane, the World Bank identified innovation as the bedrock for a country that is keen to drive up employment against a backdrop of sustained global economic distress.
In October, Statistics South Africa (Stats SA) announced that the unemployment rate remained at 27.7% in the third quarter of 2017, unchanged from the second quarter. Employment, Stats SA reported, was at 16.2 million, while the absorption rate was at 43.3%. The country’s absorption rate has not recovered to the level of 45.8% seen in 2008.
The World Bank’s country report, themed ‘Innovation for Productivity and Inclusiveness’, showed that South Africa is lagging behind its emerging market peers and global technological and knowledge leaders.
World Bank Country Director for South Africa, Paul Noumba Um, said the update offers a review of the country’s recent economic and social developments, and its outlook in the context of global economic prospects.
“While South Africa is a highly skilled economy, it has a low skilled labour force. We need to upskill our labour in order to respond to the innovation taking place so that we respond to the job creation agenda,” said Noumba Um.
The Department of Trade and Industry (dti) facilitated the World Bank’s presentation of the report to address challenges raised in the update.
The dti’s Special Economic Zones (SEZ) Deputy Director General, Sipho Zikode, said the World Bank’s report will assist his division to achieve government’s goal of radical economic transformation.
“Radical economic transformation has three elements, namely to ensure that people who were disadvantaged in the past have a share in the economy, ensure that economic participation is evenly spread to all regions and not just areas like Gauteng and Cape Town and increase the productivity of the country as a whole,” Zikode said.
The World Bank, whose mandate is to end extreme poverty and share possible solutions, presents these reports bi-annually under topical themes in the development agenda of its member states.
The report puts strong emphasis on harnessing South Africa’s untapped potential for innovation by encouraging competition in Information and Communication Technologies (ICT) and more effective public support for innovation.
The World Bank urges government to nurture innovation ecosystems in cities, build the skills base, improve ICT infrastructure and enhance the effectiveness of public programmes and incentives for innovation.
World Bank lead economist John Gabriel Goddard said innovation strengths, academic excellence and the concentration and connectedness of centres of innovation in large metros need to be integrated more effectively with the rest of the economy.