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Key to a strong economy

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Innovation can help navigate global economy risks - and we're proving we have what it takes ...

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Africa’s economy is being tossed like a cork in the stormy waters of an unprecedented and violent recalibration of the global economy. 

This is especially severe because the old mitigation mechanisms of robust multilateral instruments, such as the UN and the World Trade Organisation, are diluted as 21st century nationalism has become the dominant paradigm. 

On most indices, South Africa appears to be wealthy. The World Bank and International Monetary Fund rankings have South Africa as the 31st largest economy in the world based on the gross domestic product. That puts South Africa in the top 15% globally in terms of the size of its economy. 

However, the National Credit Amendment Act’s figures suggest a gloomy picture as 10 million South Africans are heavily indebted.

A key driver of a successful economy is innovation. This is the key to navigate the risks of a competitive global economy while taking advantage of the few opportunities in a depressed economic environment.

The Global Innovation Index 2017 ranks South Africa 58th out of 127 countries, again acknowledging a high market sophistication, this time at 23rd in the world. It is weighed down by an infrastructure ranking, to 84th place. 

This talks to the difficult story of the “Innovation Chasm” where the country continues to be in the top 20 producers of knowledge globally through academic publications, but fails to derive the industrialisation dividend of that knowledge base because, as President Cyril Ramaphosa put it in his address to the 25 Years of Democracy Conference on 23 July, “over the last 25 years… we have been less successful in addressing the structural faults in our economy”.
We produce an impressive list of innovations and inventions made by South Africans who have been forced to industrialise and produce elsewhere in the world. We lose out on an opportunity to reverse the patterns on our technology balance of payments and, in turn, our export deficit. 

This shouldn’t be the case since the launch of the National Science and Innovation Decadal Plan 2008 to 2018.

The state of human capital is the primary concern. The WEF Global Human Capital Report (2017) puts the country at 87th out of 130 counties where we are ranked 65th on capacity (educational levels) and 90th on our track record in the development of the next generation. Given the emphasis on the Fourth Industrial Revolution, one would expect this to be higher. The most alarming component is that of deployment. 

Ideally, a country that has the 21st highest average salary in the world (between Spain and Italy, and higher than Korea and Portugal) on purchasing power parity (ppp) should display better figures. Inequality is to blame. 

The water and sanitation research and innovation sector has developed possibilities and South Africa, as a top 20 producer of new knowledge in the water domain globally, produces new solutions with a regularity that is almost clockwork. Many of the solutions, inventions and technologies have the potential to solve South African problems and position the country as a major global manufacturing hub for the products. 

Let me offer three examples beginning with acid mine-water and saline water (including seawater). Traditional desalination technology based on the gold standard reverse osmosis is effective but has two fatal flaws. The first is that the processing has a high energy budget and second, the technology and membranes are expensive. 

The water research community, led by the Water Research Commission, is working on six lower-energy, lower-cost options that have been proved at laboratory scale and need investment to complete the journey through pilots and demonstration before they can be used as long-term solutions. They have the potential to deal with acid mine water in the hot spots of Gauteng, Mpumalanga and KwaZulu-Natal, and provide options for desalination in coastal regions. Star among these is the home-grown technology of eutectic freeze developed by Allison Lewis and her team at the University of Cape Town. 

Another suite is 4IR water efficiency tools. These are devices and computer management tools to increase water and process optimisation to enable every drop to stretch further. As an example, a computer-based intelligent irrigation scheduling system has been shown to save 80 million litres annually in just one irrigation scheme. The technology will have a huge impact on agricultural water use and make billions of litres available for new agricultural entrants and other users.

The third example addresses the sanitation targets of the Sustainable Development Goals. This is a daunting task in the global economic climate as well as increasing water scarcity worldwide. As a benefit of South African ingenuity and the partnership with the Bill and Melinda Gates Foundation Reinvent the Toilet programme, we have access to revolutionary products under the banner of “New Sanitation” to solve the problem. 

New Sanitation products use either no or very little water. Top-end solutions are innovative in their engineering in that they operate without the costly sewerage infrastructure – waste treatment is on site. This addresses financial and budgetary constraints. 

South Africa is a key player in the global sanitation research and innovation network within which the exploration of beneficiated products from human waste treated locally is advanced, will make us look at human waste is a new light. The solutions will deal with service delivery backlogs and mitigate pollution risks. If industrialised innovatively, they can turn South Africa’s economic fortunes around swiftly and sustainably. 

• Naidoo is chief executive at the Water Research Commission