Innovation and entrepreneurship have been identified as key drivers of the South African economy, but challenges such as lack of funding, talent, skills and infrastructure often obstruct their development at a grassroots level.
These and other challenges, opportunities and solutions were identified during a recent focus group hosted by KTN Global Alliance Africa with the ultimate aim of co-creating an Innovation Action Plan for Gauteng which will provide practical recommendations for implementation in the ecosystem. “With the new emphasis on creating a national policy framework to support innovation; KTN Global Alliance Africa is now exploring what a local framework could look like in Gauteng communities,” says Fredell Jacobs, KTN Global Alliance Africa’s Country Lead for South Africa.
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KTN Global Alliance Africa is a six-year project funded by UK Aid through Innovate UK, the Global Challenges Research Fund (GCRF) and the Foreign and Commonwealth and Development Office (FCDO). The long-term ambition of the project is to promote job creation, inclusive growth and poverty reduction through knowledge transfer, skills building and opportunities to support businesses and innovations that deliver scalable impact and sustainable economies.
Entrepreneurship has the ability to improve standards of living and create wealth, not only for the entrepreneurs but also for related businesses
The event was attended by key stakeholders in Gauteng innovation including representatives from the Gauteng Department of Science & Technology, eKasi Labs, JoziHub, the Technology Innovation Agency, and Soweto Business Forum, among others, together with the founders of several up-and-coming of innovative startups in the Soweto and Braamfontein areas.
On the issue of funding, it was raised that there are too many avenues to secure government funding, but not enough knowledge on how to access it. In addition, the feedback from aspirant entrepreneurs was that inefficiencies in government, combined with a lack of comprehension by government employees, result in funding not being dispensed. It was suggested that funding be localised to communities in Soweto and Braamfontein to avoid businesses operating in less developed areas being forced to compete for the same funding with those in better resourced areas. It was also posited that government funds be managed by the private sector for increased efficiency and impact; and that there should be an independent governance body to oversee funding allocation and effectiveness. Another recommendation was for there to be fewer conditions around government funding with founders saying that startups need the autonomy to use funding as they see fit.
It was noted that while VC funding can fill the gap, access is severely limited for Sowetan startups who don’t have the necessary connections and have limited knowledge around what investors are looking for, nor how to achieve it. Attendees also shared that the “glorification of unicorns” needs to stop as this sees investors consolidating funding into one or two key businesses in the hope that they scale to a level that will create jobs and meaningful impact. Instead of them putting all their eggs in one basket; funding needs to be more diverse and widespread and focus on building businesses at all levels. They remarked that job creation and meaningful impact can be achieved by having several smaller businesses (“sub-unicorns”) which, together can achieve the same impact as a unicorn while at the same time spreading the risk of failure. In this vein, they urged that funding be focused on low-tech solutions, which are easy wins in Sowetan communities where high-tech skills and the infrastructure to support them are lacking.
Speaking of skills, Sowetan startups reported that there is a major lack of talent in the area due to historic inequality and inequity which is frustrating as startups need access to competent skills and experience to build traction, attract funding, and scale. The need for support for skills development in these communities was raised and it was proposed that this be achieved through the creation of skills incubators. At the same time, it was stressed that programmes and incentives be introduced to make it easier for younger people to learn the soft and operational skills needed to grow startups and for them to be given opportunities to potentially intern at local businesses where these skills can be tested and improved.
Access to affordable (and reliable) infrastructure such as internet, data, electricity and transport – all of which are critical to business operations – is severely lacking in many areas of Soweto. Attendees said that support needs to be provided to businesses to help them build their own energy supplies, or to be able to access resources at a more affordable rate.
Jacobs concludes by saying, “The only way that these issues can be successfully resolved is by developing solutions in partnership with all ecosystem players. This will help us pave the way for a more prosperous Gauteng of the future.”
The design and construction of a Local, Gauteng Innovation Action Plan based on the findings from the focus group is currently underway. For more information, go to https://ktn-uk.org/programme/africa.