Firm-Level Innovation and Business Obstacles in Sub-Saharan Africa: A cross-country analysis

G. Tadesse | F. Gachango | T. Gwatidzo

Published as AKADEMIYA2063 Working Paper No. 003 May 2022.

Read the paper here.

Abstract

This study explores the concept of firm level innovation, and how it has developed over time. It also conducts descriptive and econometric analysis on the patterns and drivers of innovations among firms of different categories from nine African countries such as Cameroon, Côte d’Ivoire, Ethiopia, Ghana, Kenya, Rwanda, Senegal, Zambia and Zimbabwe. Key emphasis is given to an approach that assesses innovation from the perspectives of intention, invention and protection resulting in six innovation indicators: Investing in Research and Development (R&D), Process Innovation, Product Innovation, Organizational Innovation, Marketing Innovation and Protection of Intellectual Property Rights. Overall, despite significant variations across the different indicators and countries, most African firms display limited levels of innovation. However, firms in Kenya, Ghana and Zimbabwe were found to be more innovative than others, with over 50% of firms in these countries engaging in at least three of the six innovation indicators. High levels of engagement by firms in R&D investments , though declining over several years, is evident across all firm types and countries. Large firms and publicly listed firms were found to be more innovative than smaller and unlisted firms. Contrary to our expectations, the econometric results suggests that firms that were affected by power outages were more likely to innovate. The same applies to those that consider access to finance as a major obstacle. These findings indicate that firms in Africa are innovating as a strategy to cope with business obstacles, rather than to enhance competitiveness.