KENYA CONTINUES TO MAKE GAINS IN THE GLOBAL INNOVATION INDEX

By John Syekei Wednesday, August 14, 2019
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The 12th Edition of the Global Innovation Index (GII) was released jointly by WIPO, Cornell University, INSEAD and the 2019 GII Knowledge Partners on 24 July 2019. The GII 2019 reports innovation and economic growth not only in economic powerhouses such as the United States of America (USA), China and Switzerland (which topped the list as the most innovative country), but it also highlights some Sub-Saharan innovation leaders – among which Kenya features.

What is the GII?

There has been exponential growth in the world in the past 50 years – both leading up to and during the 2000 millennium. These past few decades have been characterised by massive innovation in numerous sectors, which has seen the global economy and capacity for growth increase.

With its first edition dating back to 2007, the GII is an annual ranking of countries based on their space and capacity for, and realisation in, innovation. It therefore acts as a global benchmark that supports policy makers in creating policies that encourage and gauge innovative activity – which, in the digital age, has been established as a main driver of economic and social development.

The GII is based on about 80 indicators, from traditional measurements such as research and development investments and international patent and trademark applications to newer indicators including mobile phone app creation and high-tech exports. The GII is not blind to economic context and evaluates countries which, despite signs of slowing economic growth, continue to make strides in innovation.

How the GII is measured

The GII analyses a number of countries, taking into account both input markers (economic factors that enable innovative activity, such as infrastructure, business and market sophistication, etc.) and output markers (actual signs of innovative activity, particularly knowledge and technology outputs and creative outputs). Three measures are then calculated: first, the Innovation Input Sub-Index which is the average score of the various input markers; second, the Innovation Output Sub-Index which is the average score of the output indicators; and third, the overall GII score which is the average of the Input and Output Sub-Indices. In 2019, the GII analysed and ranked 129 countries across the world.

Kenya leads among other Sub-Saharan countries

It is well known that Kenya has established itself as a regional giant in innovation, which has facilitated rapid economic growth in the country within the past two decades. As the regional leader in ICT in East and Central Africa, Kenya is now considered a top global technology hub, attracting the strategic business activities of ICT companies in emerging markets.

This reflects in the GII, where Kenya has steadily achieved high levels of innovation relative to its level of development, showing a continuously improved performance since 2011. What’s more, Kenya has been an innovation achiever (a country that outperforms on innovation compared to its peers at similar levels of development) for nine consecutive years, holding the record with Vietnam, India and Moldova. In Africa, Kenya, Mozambique, Malawi, Madagascar and Rwanda stand out for being innovation achievers at least three times in the past eight years.

In the Sub-Saharan Africa region, the GII 2019 reported an improved ranking from 2018 for Kenya, Rwanda and Senegal, while South Africa, Mauritius, Botswana and Tanzania dropped positions.

The GII 2019 places Kenya at 77th worldwide, behind South Africa (63) and ahead of Mauritius (93). This places Kenya as second in Sub-Saharan Africa, indicating improvement from 2018, when the country was third after South Africa and Mauritius. Kenya also outshone neighbouring nations Tanzania and Uganda, which placed 97th and 102nd respectively.

The GII 2019 celebrates Kenya as one of the countries to break out as an innovation leader in the region, owing to its consistent investment in innovation. This is evinced by the nation’s strong high-tech exports. Strengths for Kenya include market sophistication facilitated mainly by ease of access to credit and investor protection. These results illustrate the growth of unconventional banking and related services that facilitate small-scale farmers’ access to markets. The nation boasts of several leading microfinance institutions, including Faulu Kenya, SMEO Microfinance Bank and Kenya Women Microfinance Bank (KWFT), among others.

Kenya has also established itself as a leader in business sophistication facilitated by innovation linkages, and further in creative outputs, ranking 61st and therefore beating out South Africa at 91st place. This strength in creative outputs is encouraging since intellectual property is the main marker for growth in this indicator, and the growth therefore confirms the rising profitability in monetising intellectual property rights and in applying ICT to businesses.

What this means for Kenya’s Big Four Agenda

The Big Four Action Plan has been a hallmark of the 2013-to-present political regime, highlighting four major action points that the government would focus resources on. They are: enhancing manufacturing, achieving food security, universal health coverage and affordable housing.

Notably, while the GII 2019 reported massive successes for Kenya in the indicators highlighted above, a lag was reported in Kenya’s infrastructure and in human capital and research, ranking 116th and 104th respectively. This is worrying data, as human ingenuity remains the most crucial tool to actualise and develop new solutions that advance agricultural sustainability, ensure food security, support the affordability of low-cost housing, boost universal health coverage and increase productivity by enhancing manufacturing.

This anomaly demonstrates the incongruence between policy making and/or government support on the one hand, and innovation on the ground in Kenya on the other. For instance, although Kenya has emerged as the second most innovative economy in the Sub-Saharan Africa region, it remains the only lower-middle income nation in the top three African economies, with Mauritius and South Africa both ranking as upper-middle income nations.

The Kenyan economy is ranked 112th worldwide in gross capital formation. Capital formation directly influences aggregate income, as the higher the capital formation of an economy the faster an economy can grow its aggregate income. This weakness in capital formation cascades into the actualisation of the Big Four Action Plan goals, as more than anything, income is a major driver of the goals.

Nonetheless, there is some hope in realising the third goal - universal health coverage. While Kenya has in the past struggled with affordable healthcare due to lack of state prioritisation, the mobilisation of public-private partnerships in the health sector has brought immense benefits as highlighted by the GII 2019. For instance, the Ministry of Health in 2015 entered into partnerships with various private international health equipment suppliers for the supply and maintenance of medical equipment through the Managed Equipment Service Project (the MES Project) to county governments. Similar trends were observed in Tanzania and Ghana. However, as partnerships of this kind are highly complex undertakings, it is important for the government to ensure that project outcomes support larger health system goals and further that facilities and services developed in the course of these public-private partnerships are integrated into the broader health system.

Concluding thoughts: Next steps for Kenya

The upshot of the above is that while there is no doubt about Kenya’s strength in ICT and other creative outputs such as intellectual property and fintech, the government’s role in economic progression cannot be overstated. It is imperative that the government hones in to ensure that policies and procedures in the country attune to achieving not only the Big Four Action Plan goals, but also the larger global economic goals.