Research and Venture building in Africa

Summary:

• Lack of investment in research and development in Africa hinders innovation and sustainable venture building on the continent.
• Developed economies allocate significant funds to research, leading to groundbreaking innovations, economic growth and sustainable ventures.?
• In contrast, Africa's research effort is abysmal, with only 0.14% of GDP dedicated to R&D. As a result, there’s little to no innovation from ventures building in Africa as they are left to copy ideas from developed countries without considering the local economic landscape.
• Investing in research and funding for educational institutions in Africa can foster collaboration between startups and academia, leading to uniquely tailored solutions and greater success rates for startups.

Typically, In pursuing innovation, the scientific and research method shines as a guiding beacon. Besides discovering new ideas, the scientific method also ensures that hypotheses are rigorously tested before venturing into the real market. All modern innovations and inventions that were built since the scientific revolution started in the 16th century depended on this simple fact.? By building on existing theories and researching new ways to do things, the scientific method has kept innovation at a neck-breaking speed.

The most basic example that illustrates this idea is the discovery of the sustainable light bulb. Thomas Edison had to build on the existing body of knowledge from the likes of Humphry Davy, an English scientist, Sir Joseph Wilson and? Swan Light while researching new ways to make a light bulb sustainable for a long period of time. He succeeded in 1879 when his team made a light bulb that survived 1,200 hours.? It is estimated that Edison made millions of dollars off that invention and other subsequent inventions.?

Given the potential profit gained from discovering new ideas and innovation, the line between academia, research and venture building blurred in the 20th century. Researchers in higher institutions often became founders of various ventures based on their discoveries and ideas that have been tested out in the laboratory. Silicon Valley, the most valuable technology hub in the world ($1.1 trillion in 2023), was built on this foundation. Much of the work that went into Silicon Valley in its early days came from Fredrick Terman, the Head of the department of the Department of Electrical Engineering at Stanford University.

Having recognised the need for research to build valuable innovation and sustainable ventures,? governments, private individuals, and companies have ploughed billions of dollars into research. In 2020, over $700bn was poured into research in the United States, growing from $406bn that was recorded in 2010. In 2020, the ratio of U.S. R&D to GDP was 3.40%, growing from 2.78% in 2009.?

Other developed economies have recorded similar values; China (2.40%), France (2.35%), Germany (3.13%), Japan (3.27%),? Israel (5.44%) and South Korea (4.81%). Typically, Universities and research labs are the recipients of this funding. In the United States alone, $51 billion (in 2022) was allocated to research and development towards the field of Artificial Intelligence, Nanotechnology, Nuclear energy resources, etc.

However, In Africa,?research effort is abysmal, which has led to almost zero effort in innovation.?This number stands at a miserly 0.14% of GDP.?South Africa, the country with the highest research budget in Africa, spent just 0.85% of their GDP on R&D in 2022. So it is hardly any surprise that there is barely any groundbreaking innovation on the continent. Many ventures being built depend on copying models and ideas from developed countries without considering Africa's unique economic landscape.

After considering this number, one of the reasons why Africa struggles to build sustainable ventures (i.e. solving major problems and generating significant revenue)? should be obvious to anyone. There is a lack of adequate funding to test hypotheses to know what works in the local context. Universities are severely underfunded that students sometimes copy and paste from the internet, needing more rigour to validate ideas. Public Schools in Nigeria have been on strike for a combined 1,404 days (3.85 years) since 1999; good luck making meaningful strides in such conditions.

History and events in more developed economies have proven that funding research efforts is directly proportional to creating sustainable and healthy businesses. There is a direct correlation between Research & Development budget and economic growth and sustainable venture building. Therefore, the ecosystem must invest in research and funding for educational institutions. This will lay the groundwork for sound hypotheses, fostering collaboration between startups and academia. Startups embrace the scientific method, testing locally tailored ideas in partnership with universities. This dynamic collaboration will lead to uniquely tailored solutions for Africa, steering away from regional imitation.

Through research-driven entrepreneurship, startups will thrive amidst challenges. By tapping into university knowledge, they gain insights and evidence to bolster their strategies. This transformation will elevate success rates and turn failure into stepping stones. As Africa's startup landscape flourishes with research-backed innovation, it will draw global interest and investment, fueling more remarkable success stories.