Introduction to a special issue on ‘Building innovation capabilities for sustainable industrialization in Africa: status and prospects’

ABSTRACT

The special issue of Innovation and Development on ‘Building innovation capabilities for sustainable industrialization in Africa … ’, presents a series of articles on building local technological capabilities and their implications for formulating and implementing policies in Africa’s industrialization agenda. Despite the high potential of Africa in advancing its industrialization mainly in resource-intensive sectors, progress remains low. Empirical evidence on the reasons for this problem is inadequate and patchy. Articles in this special issue address the gaps by delving into empirical issues ranging from sector-specific innovation capabilities to national systems of innovation. Based on first-hand data collected from South Africa, Ethiopia, Ghana, Nigeria, Kenya, and Rwanda, the articles unravelled key structural and systemic problems behind Africa’s dismal progress in developing technological and industrial capabilities. Together, these articles advance our understanding of how to improve the effectiveness of innovations, industrial policies, and coordination for inclusive and sustainable industrialization.

KEYWORDS:

• Innovation and development
• industrialization
• Africa

1. Introduction

African nations have pursued industrial development over decades, yet many parts of the continent are not industrialized (Sampath 2016). Moreover, in the few areas where it has occurred, industrialization remains significantly undeveloped and less sustainable (Moyo 2017). This is mainly due to the low accumulation of innovation capabilities in the industrial sector. African nations need to build innovation capabilities to make headways in industrial development. However, insights into the types of innovation capabilities relevant in the African context and how they can be built to play pivotal roles in industrialization are generally lacking in the innovation and development literature (Lundvall et al. 2013).

Industrialization may be achieved through various paths of development, which are subject to different internal and external dynamics. However, it is important that Africa develops sustainably in order to minimize the overexploitation of natural resources, environmental pollution, income inequalities, and social exclusion. Sustainable industrialization is now prioritized on the African development agenda (Opoku and Yan 2019). As a strategy for promoting sustainable jobs and livelihood opportunities (Moyo 2017), this agenda will help address Africa’s persistent problems, particularly those relating to poverty, unemployment, insufficient energy supply, high cost of industrial production, and overdependence on the exports of primary agriculture production.

Low industrialization persists primarily because of ineffective industrial policy formulation and implementation strategies that do not encourage building capabilities for innovations with positive spillover effects. According to Bell (2009), mainstream development analysis and the policy formulation of industrialization understand very little about developing innovation capabilities. The low competitiveness of most industrial sectors in Africa reinforces the need for insights into promoting innovation and industrial policies that are effectively implemented and supported by adequate funding and well-functioning partnerships.

With the ever-growing global concern about climate change, the need for building sustainable innovation systems and low-carbon industrial development capabilities is core to innovation and development research. However, there is inadequate knowledge on the extent and nature of the nexus between innovation capabilities and sustainable industrialization and their implications for broader policy outcomes. Majority of existing empirical works treat these gaps in the literature as standalone issues without relating them to emerging issues of climate change for instance, with few exceptions, such as the special issues of Altenburg and Pegels (2012) and Lema, Iizuka, and Walz (2015). The authors made valuable contributions to the innovation and development field by shedding light on the developmental challenges that underlie the mismatch between the formidable threats of climate change and the innovation capabilities required to withstand it.

The first special issue (Altenburg and Pegels 2012) introduced the concept of ‘Sustainability-oriented innovation systems’ (SoIS) inspired by the need for a new technological paradigm to overcome the impending global challenges posed by climate change. Altenburg and Pegels (2012) argue that traditional innovation systems pursuing incremental innovations along conventional technological trajectories cannot tackle the unfolding challenge adequately. Therefore, the authors saw the importance of introducing new systems that can trigger a policy-induced paradigm shift and address challenges related to uncertainties, long time horizons, and multiple market failures (Altenburg and Pegels 2012). The second is the special issue on ‘low-carbon development (LCD) and innovation systems’, which constitutes various interesting studies with a focus on drawing insights and identifying future challenges for research (Lema, Iizuka, and Walz 2015). This special issue brought together cases and conceptual discussions linking innovation systems with low-carbon oriented development in the context of developing countries. The objective was to create a better understanding of the distinctive challenges developing countries face in creating synergy between climate change and broader policy goals through the lens of learning, innovation, and competence-building systems.

Both of these special issues have made appreciable strides towards addressing the dearth of knowledge on the potential difficulties encountered by policymakers in designing and implementing sustainable development policies. While acknowledging the depth of work and collaboration required to synchronize all the development policies, the conceptual relationships between sustainable industrialization and innovation systems were implicit in these special issues. There are instances in which this relationship is implied. For instance, Altenburg and Pegels (2012) indicated the possibility of environmental sustainability-oriented innovation policies to generate diverging patterns of industrial specialization by affecting technology choices. Differences in the extent of difficulties involved in making environmental sustainability-centred policies between developed and developing countries have been emboldened in both special issues. Factors related to institutional, social, market, and political settlements are the key differences among countries.

Developing countries aspiring to achieve sustainable development through industrial and innovation policies are expected to identify all important market failures and design more effective interventions to address them. These involve sorting out specific issues pertaining to all aspects of sustainability, including the social, political, and environmental dimensions. With advancements in technologies and industrialization, climate change appears to be the most significant market failure (or challenge) the global economy has ever faced. Stiglitz (2017) stressed this fact while indicating the ineffectiveness of the market related to carbon pricing in inducing countries and firms to reduce their carbon emissions. Stiglitz’s paper provided suggestions on the implementation of industrial policies in developing countries to enhance the use of renewable energy and reduce the creation of carbon-intensive industries and technologies.

The social dimension of sustainable industrialization includes the inclusiveness of policy outcomes and the development of social capital. Policies geared towards sectors with greater job creation and linkage potential can be more effective in generating inclusive outcomes. Thus, most African countries are expected to place greater emphasis on agro-processing and extractive industries, where they have a comparative advantage (Murray 2018). In addition to inclusiveness, social sustainability requires building social capabilities. In support of this, Stiglitz (2017) stressed how important creating a learning society is to achieve more successful and sustained growth with the increasing global tendency of moving toward a knowledge economy. It is therefore crucial to formulate industrial policies that influence technological changes by promoting learning as well as research and development (R&D) efforts (Stiglitz 2017). Likewise, the World Bank (2010) associates the rationale for innovation policies with the need for boosting technological change, which is considered pivotal in transforming economic growth, social development, and environmental adaptation. However, there are indications that establishing an innovation policy is a daunting challenge, even for advanced countries. It is even more formidable in developing countries where the institutional context is more difficult, resources are limited, and managerial skills required to formulate and implement policy measures are lacking (World Bank 2010). Therefore, it is crucial to pursue context-specific policy orientations for making innovation policy work in diverse contexts. Policymakers in Africa face the extreme challenge of balancing building sustainable innovation systems and setting competitive industrialization trajectories by harnessing the potentials and comparative advantages of their respective countries.

Building innovation capabilities that create new configurations of products and processes is key to strengthening industry competitiveness within value chains (Kaplinsky 2000). Effective ways of fostering stronger linkages between R&D organizations, service providers, and industrial firms are crucial to learning and accumulating innovation capabilities. The industrial sector in Africa largely comprises micro and small enterprises; therefore, building innovation capabilities at these levels and upgrading agro-processing value chains is crucial for industrialization.

According to Stiglitz (2017), Africa’s strategy should focus on adapting knowledge produced in developed countries and diffusing it within their own countries. Considering this and the notion of market failures in creating a learning society and promoting innovation, Stiglitz (2017) underlined the critical function of the governments in promoting sustained growth through technological progress and innovation. To this end, he indicated the need for comprehensive interventions capable of affecting learning and innovation, including devising strategies that impact education and innovation systems as well as macroeconomic, investment, and industrial and trade policies. The availability of comprehensive empirical evidence on this issue is vital to understanding what works in specific circumstances. Therefore, an industrialization agenda for Africa will benefit from more research in these areas.

Unfortunately, there have been relatively few empirical studies linking innovation capabilities and low-carbon-oriented industrialization strategies in the African context. This highlights the research gap in understanding and modelling the conceptual links between building innovation capabilities, innovation systems, and sustainable and effective industrialization alternatives. Evidence-based information for policymaking on strategic policies that can better mitigate key market and institutional failures is also limited.

Unpacking the concept of ‘sustainable industrialization’ in the context of Africa poses several questions that the current innovation and development literature has not answered. This challenge of conceptualization is compounded by the lack of empirical research that focuses on how innovation capabilities can support and sustain the industrialization processes in Africa. The current special issue aims address the gaps in literature, including inadequate studies that explicate the conceptual relationships between sustainable industrialization, innovation capabilities, and innovation systems.

2. Objectives of the special issue

The special issue of Innovation and Development on ‘Building innovation capabilities for sustainable industrialization in Africa: Status and prospects’ seeks to contribute knowledge to reduce the aforementioned conceptual and empirical challenges. This is done by providing insights on how industrial firms of different shapes and sizes (Hansen et al. 2018) can enhance their innovation capabilities in different economic sectors to support a sustainable industrialization agenda on Africa (Lema et al. 2018). The broad objective of this special issue is to understand how innovation capabilities can be built in different contexts and contribute to sustainable industrialization in Africa. The focus is on, but not limited to, investigating the characteristics of ongoing efforts, influencing factors, leveraging opportunities, policy frameworks, and the interventions required to build innovation capabilities for sustainable industrialization in African countries.

3. The articles in the special issue

To seek answers to the above mentioned questions, a call for contributions to the special issue was sent out to interested researchers in the area. Rigorous empirical evidence, theoretical analysis, and/or methodological underpinnings of studying innovation capabilities and sustainable industrialization processes in various African countries were particularly sought. Among all the manuscripts submitted in response to the call, 8 contributions were finally selected for inclusion in the special issue. These contributions can be categorized into broader themes of energy and green energy technologies, technological capabilities in agro-processing industries, innovation systems development, and measurement of informal innovations. Each contribution constitutes valuable inputs and policy recommendations to the innovation capability literature and formulation of evidence-based policy strategies. The core highlights of the contributions are as follows:

The first three papers on the special issue discuss environmental sustainability and green innovation. Of these, Larsen and Hansen’s paper examined the localization of wind-turbine component production in South Africa. The study was inspired by increasing investment in renewable energy (RE) accompanied by establishing several local RE component-manufacturing facilities across various African countries. The authors see the local manufacture of RE components as an interesting opportunity for achieving sustainable industrialization in Africa. They raise concerns about the gap in research information on the enabling and constraining factors, and the capability required to tap into emerging opportunities for localizing the production of RE components. In their effort to bridge the gap and better understand the opportunities and challenges involved in achieving sustainable industrialization, the authors analyse the determinant conditions for localizing wind-turbine components production in South Africa. Specifically, they explore the role of governance structures in the global value chain (GVC) pertaining to specific components in shaping national policy efforts to encourage industry localization. They established that localizing production of wind turbine towers has generally made the most progress compared to blade and nacelle production. Furthermore, GVC governance structures may impede and/or accelerate the effect of adopted policies on the localization of the industry. The authors highlight the significance of the state in promoting local RE manufacturing industries to achieve sustainable industrialization in Africa.

Drawing on experiences from the Lake Turkana Wind Power project in Kenya, Gregersen (2020) analysed local learning and capability building through technology transfer. Through the lens of technology transfer and technological capability concepts, Gregersen analysed empirical data collected from a large Lake Turkana Wind Power project in Kenya to explore the core ideas of technology transfer and interactive learning among firms for the accumulation of local capabilities. She emphasizes the multiplicity of actors involved in a complex infrastructure project and explores the nature of their relationships and interactions. The author answers the question, ‘What are the opportunities and limitations for local learning and capability building through technology transfer regarding large renewable energy infrastructure projects?’. By identifying organizational interactions across multiple phases of the project, she shows that the discontinuity of actors across phases of the project limited the long-term capability building process. Furthermore, the project-based nature of contracts and the focus on intra-organizational learning may limit inter-organizational learning. The author concludes that a deliberate investment aimed at building collective capabilities is needed, if a wider project learning or learning for sustainable industrialization must occur.

Because of the growing tendency to intensify industrialization and pursue green growth and the circular economic strategies of African countries, Andersen, Ogallo, and Faria (2021) examine green and circular economy and innovation in Kenyan companies. The authors emphasize the lacking empirical research on Africa’s capability to pursue green and circular economic strategies. Therefore, by applying evolutionary economic theory and a business perspective approach, the authors investigate how green and circular structural changes in their economies evolve. Based on earlier findings obtained through a survey of 27 different manufacturing companies in the Ruaraka industrial area in Nairobi, the authors highlight green and circular innovation trends, conditions, and dynamics for different types of industries and firms. They find that Kenyan companies are reaching levels typically called a moderate to medium stage of greening. However, the companies seem to be at varied levels of greening. Moreover, industrial differences are significant. Further, circular innovations are relatively widespread, while the secure supply of resources seems to be a more important incentive than cutting costs among companies. Overall, there are strong business incentives to go circular among Kenyan companies. However, these incentives are not necessarily realized by the companies, a factor that should be considered in policy formulation. The authors concluded the paper by suggesting a strong business-oriented survey methodology as a way forward to collect data and expand insights into the greening of industries in Africa and similar economies.

Two contributions, the fourth and fifth, by Osei-Amponsah (2020) and Ahmad (2020), respectively, explore issues of developing technological and innovation capabilities of agro-processing industries as a viable avenue for kick-starting sustainable industrialization in Africa. Osei-Amponsah (2020) examines innovation capabilities and learning mechanisms in the case of Ghanaian fresh fruit processing enterprises. She pegs her analysis on the crucial role of strengthening the capabilities of agro-processing enterprises to be innovative and competitive which remains a long-term industrial development challenge in Africa. Her research aims to address the limited empirical insight on the ability of enterprises to assimilate and use knowledge for innovations, thereby contributing to the effectiveness of policy in supporting capability building. To this end, she applies a multi-case qualitative research approach to track and understand innovation capability-building processes on the argument that learning mechanisms vary with the size of the enterprise. The findings reveal that acquiring knowledge in micro and small enterprises is embedded in learning-by-doing and informal mechanisms that require context-specific development interventions. Based on this, she concludes that knowledge supply organizations must understand the underlying peculiarities to support agro-processing enterprises with easy-to-understand and use technologies and practical managerial information. Finally, the author suggests that policymakers need to formulate and implement strategies that can effectively facilitate partnerships and technology development and transfer within an enabling industrial policy environment for enhanced capability building and a competitive industrial sector.

The contribution of Abdi Y. Ahmad is similar to that of Osei-Amponsah since it is based on the premise that African manufacturing in particular and sustainable industrialization generally can be fostered through harnessing opportunities in the agro-processing sector and increasing engagement of micro and small externalities (MSEs) in various value-adding activities. It also presents a multi-case qualitative analysis exploring the local production of edible oil in Ethiopia with implications for developing technological capability. His research aims to uncover problems that constrain policy efforts in this regard and identify opportunities to help improve policy-making efforts. Ahmad’s study also constitutes a cross-country quantitative analysis to enrich the empirical ground regarding the nexus between local production systems and technological capability. The quantitative analysis applies a system-generalized method of moment (SYSGMM) using data from different sources including the WDI, WEF, WITS and UNCTAD-EORA databases. The qualitative analysis is guided by ‘a generalized local production systems (LPS) development framework’, with special focus on the African context. The quantitative analysis shows a strong linkage between local production, local value chain development, and technological capability. The results of the qualitative analysis show that the local production of edible oil and related technological capabilities have been weakened due to different structural constraints and poor development of supply chains. The author concludes that well-developed local value chains play a crucial role in building technological capabilities and a foundation for sustainable industrialization in Africa.

In close relationship with the fourth and fifth contributions, Kingiri (2021) examines innovation capabilities in the deployment of crop biotechnology innovation in Kenya. The author argues that agro-biotechnology deployment has been extremely slow in Africa, but still has the potential to enhance sustainable development and industrialization. She attempts to examine the underlying factors that characterize the deployment process of new technologies. Her study builds upon innovation capabilities as the point of interrogation, considering that very few products have received regulatory approval for large-scale commercialization in Africa using Kenya’s agro-biotech innovation system as a case study. Her study finds that creating and accumulating innovation capabilities is much broader than R&D capability and entails institutional capabilities that are needed to enhance biotech innovation that may lead to sustainable industrialization.

The seventh contribution, by Yongabo and Göransson (2020), is an important variant in that it focuses on the national system perspective, unlike the preceding contributions that happen to pursue sector-or firm-level capability perspectives. Yongabo and Göransson’s study assessed the process of constructing the National Innovation System (NIS) in Rwanda with a special focus on efforts and challenges. Based on their study, the authors underline the importance of reaching a consensus on and accepting the concept of NIS among stakeholders in the early process of constructing an efficient and dynamic innovation system. They also argue that building sustainable innovation capabilities in Africa requires an innovation system capable of producing, disseminating, and using new knowledge. On this basis, the authors use primary empirical data from Rwanda, which is analysed in a regional context. Their findings show that the NIS concept is generally being integrated and utilized in building sustainable innovation capabilities in Rwanda. In particular, the study reveals that Rwanda exhibits promising progress in establishing and reinforcing infrastructure and institutions as well as policies aimed at promoting innovation. However, the authors uncovered challenges that persistently limit building an NIS. Among the main challenges are low research capacity, low level of interactions among stakeholders, limited financial resources, and lack of a coordination framework, all of which contribute to hampering the development of sustainable innovation capabilities.

Finally, Mustapha et al. (2020) contribute to the special issue by reporting their efforts to address problems underpinning the measurement of innovation in the informal sector of Africa, in view of the importance of aligning industrial and innovation policies. The authors particularly aim to find solutions to the challenges African countries face in designing and implementing innovation and industrial policies that consider the unique structural nature of African economies, in which the informal sector is prevalent. They argue that a measurement programme focused on innovation in the context of local economic development is imperative for setting industrial and innovation policies in Africa. To design new measures of innovation in Africa, that include the informal sector, the authors propose a novel methodology and framework for measuring informal sector innovation, based on a local innovation and production systems approach. The study concludes by proposing the use of the evidence gathered from their methodology and a continental strategy that lends itself to direct policy intervention that targets local economic development and value chains upgrading.

4. Conclusion

This special issue sets a tone for the discussion on the status of and prospects for building innovation capabilities toward sustainable industrialization in Africa. Conclusions drawn from all the eight articles indicate that the innovation capability is inadequate and poses major challenges in the energy, green and circular economy, agro-processing, and agro-biotechnology sectors for all the focused African countries. In the current slow progress of innovation capabilities, prospects for sustainable industrialization are bleak for the industries in the abovementioned sectors, which are straddled by informal learning mechanisms. Insights from two articles on the ‘National Innovation System’ and ‘Local Innovation and Production System’ approaches provide the way forward to addressing these challenges, which were considered related to inappropriate industrial policy strategies, weak coordination, and/or ineffective implementation of planned interventions.

Regarding the current status of innovation capabilities and prospects for improvement in Africa, the special issue concludes that for the energy sector, industrialization can be promoted when the manufacturing of the component parts of renewable energy is localized and the uptake of such components in the domestic market enhanced (Larsen and Hansen 2020). This should be backed with careful assessments and planning within the context of global value chains to align localization policy strategies to the prevailing conditions in specific industries (Ibid.). From another perspective, it is recommended that an enabling environment be created for multiple actors to interact and improve opportunities for better local embeddedness and learning in order to enhance innovation capability building (Gregersen 2020). Stemming from a green and circular economy approach, companies in the renewable energy sector can be supported through business and innovation-oriented policy interventions to promote green and sustainable industrialization (Andersen, Ogallo, and Faria 2021).

Regarding the agro-processing industrial sector, micro- and small enterprises currently build basic technological and managerial innovation capabilities through informal learning and practical experience sharing on the job. Nevertheless, there is a need for further research to understand how to build innovation capabilities for niche-specific agro-processed products. Furthermore, sustainable industrialization in the African context requires creating space in agro-industrialization policy processes for practical learning, interactive training, and internet-based information search mechanisms for building innovation capability. To gain better insights into building innovation capability, learning mechanisms that encapsulate both formal skill acquisition and practical learning-by-doing are recommended.

It is generally difficult to build the technological capabilities of MSEs in the edible oil industry. Therefore, there is need to support and effectively link medium and large enterprises with better technological capabilities to MSEs along specific value chains for collective learning. For a sustainable industrialization agenda, it is important to revise policy directions toward developing local industrial capability. This requires formulating and implementing policy strategies that discourage oilseed exports while incentivizing increased and sustainable supply to local manufacturers through designing strategies such as outgrower schemes that benefit all actors (Ahmad 2020).

Undoubtedly local context, learning, knowledge, and cumulative capabilities are important in the diffusion of innovations for industrialization, especially in the biotechnology sector (Kingiri 2021). This implies that attention should be given to creating and accumulating capabilities that are much broader than just R&D capabilities. Building innovation capability could be explored within a national innovation system space, which enhances interactive learning by balancing various modes of learning, as well as implementing inclusive policy strategies (Parfait). It is important to consider the dynamics in organizational structure, knowledge production capacity, and the absorptive capacity of end users. It is crucial at this low pace of industrialization for African economies to ensure that indicators used to inform the design and implementation of industrial policy are grounded in context, and particularly capture informal sectors (Mustapha et al 2020).

The special issue concludes that, in most African economies, building innovation capabilities for sustainable industrialization is currently at a low pace. This is mainly because of the constraining policy process environment regarding both formulation and implementation, which does not consider the informal sectors and learning context. The industrialization process is also underpinned by strong political interests that may create inefficiencies and misalignments to planned industrialization agendas or frameworks. This special issue contributes to some approaches and recommendations to address the constraints and leverage opportunities to build innovation capabilities for sustainable industrialization in Africa. However, further research and stakeholder engagements are needed to establish the specific learning mechanisms required for different sectorial contexts and the ‘how’ to ensure the development of industrialization processes that are outlined in development agendas, which often get integrated with political interests.

Acknowledgment

The authors acknowledge the AfricaLics Research Capacity Building Project (2017-2021) and SIDA for funding the post-doctoral fellowship research and the publishing of this special issue. Special thanks to the special issue advisors, Margrethe Andersen, Rasmus Lema and Edward Lorenz. Our gratitude to all the authors and anonymous referees who contributed to the issue. We would like to thank Editage (www.editage.com) for English language editing.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by Africalics.