Covid-19 can fuel innovation in Africa
The Sub-Saharan African region will experience a plunge of between -2.1% to as low as -5.1% in economic growth this year due to the Covid-19 global crisis. The region is estimated to fall into its first recession for 25 years, compared with 2.4% growth last year, according to the World Bank’s Africa’s Pulse report.
The economic contraction will cost Sub-Saharan Africa between $37 - $79 billion in lost output this year due to a sharp decline in output growth with key trading partners as well as a steep fall in commodity prices, led by oil. The pandemic has also put a halt on tourism for months and many countries will continue to experience reduced tourism activity.
Many Africans will lose their jobs or struggle to find employment during and after this pandemic. The full or partial lockdown of major cities such as Lagos, Johannesburg, Nairobi, Harare and Accra among others across Africa has also highlighted the harsh reality of how the majority of urban Africans live off the cash-driven informal sector which dominates most of the region’s economies. Much larger populations will be forced into relying on the informal sector for survival. With everything going wrong in African economies at the moment, what good can come of it?
The great thing about the pandemic creating the recession is that it forces entrepreneurs to think, innovate and take risks on new business.
Entrepreneurs must view this crisis as an opportunity. The great thing about the pandemic creating the recession is that it forces entrepreneurs to think, innovate and take risks on new business. Some countries have shown that start-up activity can actually surge during a recession. This is the time to take note of why certain businesses failed, how to bring them back better, and make them relevant with the times. This is a time than DEMANDS innovation!
Instead of thinking of this period as a recession, it should be referred to as a “reset”. Innovation can spur in hard times and fill the landscape of the post-recession economy. It is just a period of economic decay; reset is a chance to start over.
Economic crises is proven to give rise to major rounds of technological innovation, hence the reason to call them Great Resets. For example, The Great Depression birthed the light bulb, phonograph, and telephones. It was probably the “most technological progressive decade in the 20th century”, according to research by Alexander Field. Joseph Schumpete also showed how economic crisis give rise to the gales of creative destruction—as new entrepreneurial individuals seize the opportunity to forge new business models, and new industries revolutionize and transform the economy.
This is the time for Africa to allow the recession to become a breeding ground for innovation and entrepreneurship. Allow the recession to become a catalyst for innovation.