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South African innovation activity decreased during pandemic

Covid forced many companies to reprioritise innovation or put it on hold, survey finds

The proportion of South African businesses engaged in innovation dropped during the Covid-19 pandemic, data have shown.

The share of businesses performing innovation dropped from 69.9 per cent between 2014 and 2016 to 61.8 per cent between 2019 and 2021, a period that coincides with the pandemic.

The findings come in the latest iteration of the South African Business Innovation Survey, published on 7 March, which drew on data from more than 57,000 companies.

Pandemic effects

Businesses reported a range of ways in which they coped with the effects of the pandemic on their innovation activities.

Many said the pandemic had compromised both their innovation expenditure and their funding sources, and that it had caused them to reprioritise their existing innovation activities.

More than half of innovation-active businesses reported that their innovation activities or projects were put on hold, delayed or abandoned as a result of the pandemic.

Some 27 per cent reported high costs to be a significant innovation barrier, while 25 per cent pointed to too much competition and 24 per cent highlighted a lack of funding.

Innovation patterns

The survey, carried out by the Human Sciences Research Council, found that businesses that engaged in innovation were more integrated in global markets and had better access to external knowledge.

“The innovation situation for all South African businesses should concern us, including the reasons why firms do or do not innovate,” said Moses Sithole, research director for the council’s Centre for Science, Technology and Innovation Indicators.

Glenda Kruss, executive head of the centre, said the survey “informs how we should design support for greater business innovation in our country”.

“A fine-grained understanding of the patterns of innovation exhibited in South African businesses enables us to build the capabilities suited to South Africa’s context and its challenges,” she said.