Knowledge Economy – Our responsibility for the future of South Africa

2016-09-23 09:43

An outstanding debate in the South African narrative and perhaps one that would take us a few decades to table as a debate is, “What should be the economic priority for the South Africa?” As permeations goes, two ideas have surfaced, and have become a point of debate in our political discourse. Firstly from the left of the political spectrum (Including EFF, Afrocentric and Pan Africanist movement) there is no doubt the issue is Land. The ANC on the other hand have advocated the development of the secondary sector, through Industrialisation Action Plan and the Black Industrialist Programme.

Now here is, essentially the biggest challenge we face as a country. 53.8% of people can afford enough food and non-food items but fall under the widest definition of poverty in SA, surviving on under R779 per month. More than half the population of the country is struggling and there is need to have an intervention. The left believes such an intervention will come from Primary Sector activities after land redistribution and the ruling party feels there is scope to leverage the cross cutting advantages of the secondary sector. Both sectors contribute 12% and 21% to the South African economy respectively.

Enter Knowledge Economy

The term knowledge economy describes a shift from traditional economies (Primary and Secondary) to ones where the production and use of knowledge is a critical ingredient in the development of people. It places people at the centre of their own economic development and it would result in a growing tertiary sector. Academic institutions and companies engaging in research and development are an important foundations of such a system. According to the World Bank, knowledge economies are defined by four pillars.

1. Institutional structures that provide incentives for entrepreneurship and the use of knowledge,

2. Skilled labour availability and good education systems,

3. ICT infrastructure and access, and

4. A vibrant innovation landscape that includes academia, the private sector and civil society.

The World Bank developed the Knowledge Economic Index (KEI) to benchmark how countries compare on the four pillars to each other. The KEI takes into account whether the environment is conducive for knowledge to be used effectively for economic development. It is an aggregate index that represents the overall level of development of a country towards the Knowledge Economy. South Africa scored a KEI of 5.47 out of a possible 10 and we ranked around 57 in the world, indicating a lag in us fully exploring the space.

This week in the news

There is no missing the social attention generated by the #FeesMustFall and #DataPricesMustFall campaigns in the news this week. Even as the debates were deteriorating to the same old debate of privilege vs disfranchisement and another class war brewed, our appreciation for knowledge came into question. I personally believe that building a services economy is a lower hanging fruit for South Africa than the question of land and Industrialisation, notwithstanding the importance of those sectors. I would like to advance the following reasons in this case:

South Africa is already oriented towards tertiary sector and the scope for further development in the tertiary sector will be easier to support, for a sector contributing 67% to the GDP.

For a competent person in an economy, the investment to turn their skills into winning ideas is not capital heavy. The famous example of UBER not owning any cars but service that supports car owners.

In times of economic crisis or downturns, it’s easier to reposition services in the market as opposed to manufactured products when exchange rates are unfavourable and commodity prices don’t support minerals.

There is low environmental impact and degradation as opposed to heavy industry, and also supported by reductions in material & energy consumption

The biggest driver of development in the continent of Africa is the rate of urbanisation happening in the continent. African cities are expected to swell up with urban population expected to exponentially increase. Now this provides room for South Africa to export competence to these markets as modern cities begin to embrace mature technologies in our own market. An important tool for a country not able to absorb 12% of its current graduates.

Developing people should be a lot faster and easier than developing infrastructure. This is a distinct advantage for faster economic development compare to traditional patterns

Innovation follows across the world the enhancement of knowledge, when we begin to grow in knowledge, we then create room for new patents, new ideas, new processes and improvements, ushering a new age of growing the secondary sector on the strength of competence and innovation.

The most successful form of entrepreneur in South Africa according to the HSRC is a person with a post matric qualification. 70% of all start-ups fail in the first year and the vast majority of those that survive, are those business anchored on selling the skills of the entrepreneur. These include enterprises such as engineering firms, legal firms, IT firms, management consultants, sales agency and such related services businesses.

The five pronged challenge

Developing people with the support of Information Communication Technology (ICT) seems to be a solution at face value to the challenges raised by both the #FeesMustFall and #DataPricesMustFall campaigns. However there bigger picture shows a five part challenge of the riddle that is South Africa;

Affordability: Yes both data and higher education costs are too high for the poor of the country to afford and for meaningful development to be drawn from both.

Access: Despite improvement in University capacity of 55 000 to absorb new students, South African institutions still reject 1 in 8 new applications. 700% rejection rate means, NSFAS will have to deal with three four years of excluded matriculants before addressing the needs of new ones.

Throughput: The dropout rate for university student is 50-60%, owing to student’s fitness to enter into higher learning environment, logistics like transport and accommodation, finance and even inadequate food or poverty.  It is said that a significant population of student rely on civic organisations for food.

Productivity: Only 35% of students are able to graduate in record time affecting our rate producing skills. This also affect the number of new researchers that the economy is producing, where we have 1.5 R&D or PHD researchers per 1000 people as opposed to peers standing at around 4.

Internalisation: Finally what is the position of South Africa’s higher education in the region, the continent and the globe? How are we developing skills for the region or continent and how are we integrating our society academically into the world? This area has a new legislation pending.

How government is viewing the role of higher education in the development of our economy is cause for concern. We have a part challenge that I believe needs simultaneous attention, if we are to build a skilled society and achieve a knowledge economy. This are requires a technocracy that won’t defer challenges to higher learning institutions. It also requires calmer heads in the relationship between students and institutions management. Violence and vandalism have no place in finding solutions for these challenges. If we manage the whole, various puzzle pieces should be solvable.

I pause here and God willing I will expound on these ideas in following publications

Be Inspired SA!

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