Mapping Innovation for Rural Development in Dr Ruth Segomatsi Mompati District Municipality

Transcription

1 Mapping Innovation for Rural Development in Dr Ruth Segomatsi Mompati District Municipality

2 MAPPING INNOVATION ACTIVITIES FOR RURAL DEVELOPMENT IN DR. RUTH SEGOMOTSI MOMPATI DISTRICT MUNICIPALITY: PILOT STUDY PRELIMINARY FINDINGS RURAL INNOVATION ASSESSMENT TOOLBOX (RIAT) PHASE TWO Prepared by: Alexandra Mhula- Links, Makale Ngwenya, Brandon Bodenstein, Tim Hart and Peter Jacobs 31 August 2013

3 TABLE OF CONTENTS LIST OF FIGURES AND DIAGRAMS... v LIST OF TABLES... vi EXECUTIVE SUMMARY... viii 1. INTRODUCTION BACKGROUND TO RIAT CORE CONCEPTS AND WORKING DEFINITIONS METHODOLOGY SOCIO- ECONOMIC INFORMATION FOR THE DISTRICT Social Profile Population Poverty and health Education Services and infrastructure Economic Profile Employment Gross Value Added The Green Economy Conclusion RURAL INNOVATION IN DR. RUTH MOMPATI DISTRICT MUNICIPALITY Introduction Enterprise profiles Local Understanding of Innovation and Social Innovation Local understanding of social innovation Innovation value chains and innovation types Adoption Diffusion Adapt The innovation trail - referral method Innovation activities in DR. Ruth Mompati District ( ) TWO ILLUSTRATIVE EXAMPLES OF INNOVATION IN DR RUTH MOMPATI Introduction Example 1: Wildsilk Description of the enterprise and innovation activities Innovation value chain Example 2: Peanut Farm Description of the enterprise and innovation activities Innovation Value Chain iii

4 7.4 Comparison of the Illustrative Examples MICRO OR INTERNAL ENVIRONMENT OF THE ENTERPRISE Innovation enabling environment Theme 1: Innovation as new ideas and creative thinking in an enterprise Theme 2: Innovation is more than invention, it is a continuous process Theme 3: Networks and new connections are important Training and skills development MACRO CONTEXT - BROADER INSTITUTIONAL AND REGULATORY ENVIRONMENT The local and national level of institutional support Regulatory environment Reasons why innovations are not introduced CONCLUSION AND LESSONS REFERENCES APPENDIX: RIAT Feedback Session to Dr Ruth Mompati District iv

5 LIST OF FIGURES AND DIAGRAMS Figure 5.1: North West Province Source LGH North West (2013)... 9 Figure 5.2: Dr Ruth Segomotsi Mompati District Map Source LGH North West (2013)... 9 Diagram 6.1: IVC for The Peanut 100 Machine v

6 LIST OF TABLES Table 5.1: Total population by age group classification Table 5.2: Highest level of education: age 15years Table 5.3: Dwelling type Table 5.4: Social and economic needs identified by the local municipalities Table 5.5: Employment by sector Table 5.6: Sectors contribution to economic growth Table 5.7: Gross Value Added per sector Table 5.8: Contribution to total economic growth (% point, Constant 2005 prices) Table 6.1: Share (%) of enterprises/organisations in terms of statutory registration, taxation, economic sector, group membership & output distribution by enterprise Type, (N = 122) Table 6.2: Share (%) of enterprises aware of social innovation and main purpose of innovation by enterprise type, (N=122) Table 6.3: Share (%) of enterprises engaged in Innovation activities by enterprise type, 2011 & 2012, (N = 122) Table 8.1: Share (%) of enterprises with direct access to resources and facilities for innovation, (N = 122) Table 9.1: Share (%) of enterprises familiar with STI state policies by enterprise type, (N=122) Table 9.2: Share (%) of enterprises participating in innovation networks and system by enterprise type, (N= 122) vi

7 ACKNOWLEDGEMENTS The Department of Science and Technology (DST) contracted the Human Sciences Research Council (HSRC) to develop and pilot the Rural Innovation Assessment Toolbox (RIAT) in four rural district municipalities. The RIAT aims to enhance the contribution of science and technology interventions to rural development, deepen understanding of the social and institutional dynamics of rural innovations and inform the work of the multi- stakeholder Rural Innovation Partnership. Based on the outcomes of this project, the team must also explore ways to institutionalise RIAT as a self- discovery diagnostic tool for innovators. This is the third in a series of four district municipality reports and provides the findings for the Dr. Ruth Segomotsi Mompati District Municipality in North West Province. The early conceptual inputs from members of the RIAT Project Steering Committee and other regular, but part- time, RIAT Project Team members, who are not authors of this specific paper, are acknowledged. Also acknowledged are the contributions of the various fieldworkers involved in this pilot study, namely: Aubrey Mphateng, Matsekola Mokori, Michael Saneka, Sydney Fryer and Brandon Bodestein. We also acknowledge the assistance of those people in the Dr. Ruth Segomotsi Mompati District who participated in the research. Alison Ziki and Annemarie Booyens are thanked for editing and layout of the final document. The views expressed are those of the authors and do not necessarily reflect those of any other party. vii

8 EXECUTIVE SUMMARY This report provides preliminary findings on using the Rural Innovation Assessment Toolbox to map innovation activities among a purpose- built sample of 122 enterprises in Dr. Ruth Segomotsi Mompati District Municipality. To contextualise our findings and motivate some local development possibilities that investment in innovation might be able to increase, the report starts with a brief overview of the research methodology used, the sampling frame, an explanation of working definitions and the pertinent demographic and socio- economic information for Dr. Ruth Mompati District; the latter is used to explore the potential of innovation activities as a catalyst for human wellbeing enhancing local development. It then discusses the findings of the quantitative and qualitative aspects generated from the application of the RIAT innovation mapping instrument. Roughly 13% of the provincial population lives in Dr. Ruth Mompati District, with more than 65% of these residents located in rural areas across this district. Human wellbeing indicators for the district generally fall below the North West provincial averages, suggesting relatively lower quality of life and living standards. Access to services such as potable water, sanitation and electricity and roads is relatively low. The district is the largest beef cattle producing district in the country. Locals sometimes refer to it as the the Texas of South Africa. Farmers also produce maize and peanuts for the national and the export markets. Tertiary services followed by primary sector activities (particularly agricultural) dominate gross value added and economic growth. Several high- level insights flow from the assembled evidence and deserve to be highlighted as a helpful step towards thinking about appropriate policy recommendations. Based on technical criteria about registering with a statutory authority and for income tax purposes with SARS, approximately 75% of all sampled enterprises could be classified as formal sector enterprises. Another striking feature of the sampled enterprises is that they are predominantly involved in tertiary services (community and financial services) and primary sector economic activities (particularly agriculture, instead of mining). In the sampled enterprises, almost all respondents equated innovation with hard technologies, creativity, and bringing something new into the enterprise. The traditional notion of innovation was fairly well known among participating enterprises. Almost 90% of private organisations engage in innovation activities for direct economic benefit. Not surprisingly, 75% self- report no awareness of the restricted meaning of social innovation. On the other hand, a substantial share of sampled public and non- profit enterprises pursue innovation activities with the explicit or implicit goal to improve human and social wellbeing, yet no more than one out of four of these organisations reported an awareness of the restricted definition of the concept social innovation. This fact, if coupled with increased government support to social innovation, may well increase the prospects for new ideas and practices to directly uplift the living standards of large numbers of people. viii

9 Unfortunately, at grassroots level there is poor localised awareness of national innovation policies and government assistance to promote innovation. Approximately 30% of enterprises self- reported an awareness of national Science, Technology and Innovation (STI) policies - heavily skewed in favour of public enterprises. A significant share of the enterprises considered institutional support (policies, laws and agencies regulating and supporting innovations) an important contributor to innovation activities. However, what reduces an appreciation of the need for institutional support is the disproportionately negative perception of institutional support prevalent among private enterprises in our sample. A novel framework to comprehensively document the nature and extent of innovation activities (invention, adoption, adaption and diffusion) in Dr. Ruth Mompati District underpins this report. With the aid of this approach and its related methodology we were able to uncover patterns of rural innovation that can potentially overcome rural underdevelopment and raise the living standards of rural communities. Very few enterprises in this district are pioneering creators of new products, processes, organisational or marketing arrangements coupled with intensive research and development for new knowledge production. This traditional notion of innovation, or simply invention, took place within a marginal share of all sampled enterprises for the years 2011 and This evidence is not surprising because the critical drivers of original knowledge and artefact creation are generally missing as is access to further development and refinement. Adoption was far more prevalent among enterprises and this stands in sharp contrast to invention. The evidence points towards more vigorous uptake of new ideas, practices and artefacts originally developed by other enterprises outside Dr. Ruth Mompati District. An impressive 85% of sampled enterprises are actively involved in knowledge sharing networks, which adopters are most likely to benefit from. Among the enterprises participating in self- reported networking for innovation, interactions with partners are predominantly formal rather than informal although there are sectoral differences. Moreover, enterprises that adopt innovative ideas, arrangements and products from outsiders confirmed that they are offered various choices, enjoy the freedom to choose and tend to introduce the new knowledge into their enterprises. Improvements and incremental changes to innovations sourced from outside enterprises rank a distant second after adoption in terms of the proportion of enterprises involved in this activity. On average, only one out of four enterprises actively adapts innovations, with private enterprises ahead of non- profits on this front. The private commercial enterprises that actively adopt and adapt rarely applied for government support for the dominant innovation activities, contrary to some non- profits (56%) that do apply. ix

10 The proportion of enterprises that transfer, share and distribute new ideas, products and practices in Dr. Ruth Mompati District have increased from 7% to 13% from 2011 to Diffusion of innovations among sampled enterprises clearly surpassed invention within two years, thus shifting it into the third most prevalent innovation activity in the district. Although there is some evidence of innovation activity in the district, improved government support could largely improve the environment for innovation. One of the reasons identified by the sampled enterprises is the lack of coherent support for innovation in the rural district by the government. Also, the highly bureaucratic funding process is discouraging for most enterprises. At enterprise level, lack of capacity is another reason for the low level of innovation. This factor could also be improved through government support in creating necessary innovation awareness and skills transfer. To sum up, findings of this pilot study in Dr. Ruth Mompati District support a basic proposition: in order for innovation to be a catalyst for rural development, with an emphasis on enhancing human wellbeing, the costs hindering innovative performance must be cut. In practice this means easing the ability of enterprises based in Dr. Ruth Mompati District to adopt and adapt innovative products, processes, organisational and marketing arrangements. Strengthening learning capabilities of actors in the local innovation space, especially know- how of STI policies and the national system of innovation, combined with effective institutional coordination are urgent interventions to successfully harness innovation for broad- based quality of life enhancement in rural Dr. Ruth Mompati District. x

11 1. INTRODUCTION The report focuses on Dr. Ruth Mompati District in North West Province and provides some of the findings, and analysis thereof, from the pilot use of the Rural Innovation Toolbox (RIAT) rapid mapping tool (Version 2). This part of the RIAT pilot study took place between the 21 April and the 24 May The next two sections of the report provide some background to the RIAT study, the core concepts invoked and the research methodology used in the Dr. Ruth Mompati District. The remainder of the report presents a short socio- economic review of the district, drawn largely from the district municipalities (DMs) latest Integrated Development Plan (IDP) and recent data obtained from Global Insight Regional Explorer, followed by the presentation and discussion of the findings derived from the pilot RIAT rapid mapping instrument. Experiences gained during the implementation of this part of the RIAT pilot study are described in the final report for the Department of Science and Technology (DST) and are not described here. These experiences along with those gleaned from the pilot exercise in Chris Hani District Municipality and Mopani District Municipality were used to refine the instrument for implementation in the Dr. Ruth Mompati umzinyathi District Municipalities. That instrument is RIAT rapid mapping tool Version 2. Little is known about innovation in Dr. Ruth Mompati District, whilst an exhaustive and coherent picture of localised innovation actors and activities in this rural district does not exist. This study is an initial attempt at filling this knowledge gap, and the authors are mindful of the fact that the documented evidence of innovation in this report makes up a tiny fraction of what might be occurring in reality. Nevertheless, it is a repository of policy- relevant information which did not exist prior to this study and can serve as a useful guide to policy interventions aimed at boosting local innovative performance, which ought to begin with knowledge capabilities and what enterprises within the district actually know (or do not know) about innovation as well as what innovative activities are prevalent in the district. 2. BACKGROUND TO RIAT The Rural Innovation Assessment Toolbox (RIAT) starts from the basic understanding that innovation is a multifaceted process of knowledge generation, adaption, spread and use for the delivery of broad- based societal benefits (technological, institutional and social). Based on this open- ended notion of innovation, RIAT has prepared the ground for longer- term mapping of innovation value chains in spatially marginalised contexts; in this instance the 24 deprived RDMs in South Africa serve as examples of spatially marginalised contexts. The pilot testing of the RIAT rapid mapping instrument in this district, as well as the other three, enabled further refinement of the instrument and guided the formulation of the other tools in the RIAT toolbox. These other tools will be further 1

12 explored in the third phase of the pilot study to be carried out in the remaining 20 RDMs. The results of the rapid mapping instrument, as with the other tools in the RIAT, builds upon the conceptual contributions to rural innovation systems thinking and an appropriate practice oriented methodology, informed by theoretical learning on innovation indicator development (Mhula, Jacobs and Hart, 2013) and experiences gained from pilot fieldwork in this district. The primary objective of the RIAT project is firstly to develop a tool that can map out innovation actors, activities and systems in spatially marginalised contexts. The second key objective is to develop a complementary set of instruments (a toolbox) that could assist actors to improve their self- learning about their innovation potential and activities. The third objective is to design the instruments in such a way that they could assist with the future monitoring and evaluation of innovation activities in the RDMs. Cutting across these three objectives is the need to apply systems thinking to broad- based rural innovation to understand the actors and factors influencing new knowledge generation, diffusion, use (adoption) and improvement (adaption) for rural development in South Africa (Hart et al, 2012). In order to achieve these objectives, the research team made three major investments. Firstly they invested in grounding the various innovation assessment tools in cutting- edge conceptual and policy thinking on science, technology and innovation both internationally and in South Africa. This grounding process required understanding current innovation conceptual and policy thinking. It resulted in the production of several concept papers and engagement with South African and international innovation experts, formally and informally, thereby ensuring that subsequently developed tools would derive from this state of the art thinking. The second investment was to develop new experts and scholars on rural innovation systems by incorporating interns and junior researchers into the RIAT team, enabling their rapid development in this field and assistance with the theoretical and practical applications of rural innovations systems research. The third investment was the crafting of appropriate methodologies to map rural innovation activities, understand how these from a systems perspective, to test self- reflective learning potential of rural actors and to determine monitoring and evaluation potential of the various instruments over the medium- term. The critical engagement with theoretical and practical approaches to innovation systems thinking in South Africa and internationally were vital in understanding the meanings of rural innovation and informing the methodology for information collection and analysis. 3. CORE CONCEPTS AND WORKING DEFINITIONS The RIAT research team spent several months reviewing existing local and international definitions in order to arrive at practical working definitions for the implementation of the pilot project (this work is showcased in the various concept papers compiled by the team and available on the EPD page of the HSRC website: The development of working definitions was undertaken to 2

13 facilitate the interaction with the enterprises, organisation and individuals within the RDMS as well as to clarify the definitions that were adopted for the purpose of the study. The most crucial definition in this study is that of innovation, so time was spend here clarifying the concept and various characteristics of innovation. The working definition of social innovation that was used for the purposes of this study is then presented, emphasising what was considered to be important in distinguishing the typical or generic use of innovation from that of social innovation. Innovation refers to both a process and the output of that process. The innovation process typically involves four activities: adoption (the incorporation or use of an innovation into an enterprise or individual s way of doing things which improves on what was previously done); adaption (the changes made by the user to an innovation in order to make it more useful to the user); diffusion (the transfer or sharing of an innovation with others to use for their own purposes it does not necessarily always include the sharing of all of the knowledge required to use the innovation); invention (the creation of a virtually new or much changed and improved innovation this can be incremental such as the move from portable phones to cellular phones to smart- phones; a process aided by the increased improvement in computer technology and network platforms). Not all of these activities need to be present for an innovation process to have occurred. Quite simply, adoption of something new that improves what one is doing is an innovation, i.e. a single activity means that an innovation process has taken place. While adoption may lead to adaption or even diffusion, invention does not have to occur in the present for something to be considered an innovation. Essentially, one would anticipate that invention should be followed by adoption, adaption and then diffusion. However, invention could be equally followed by diffusion without the inventing enterprise or individual actually adopting the innovation for their use. More importantly, if we consider the example of a smart- phone we realise that it is based on the integration of a number of technologies and systems that have been developed since the late 19th Century and improved during the course of the 20th Century to result in the smart- phone used in the 21st Century. In such instances it would be incorrect to say that the smart- phone was invented in the 21st Century by a specific company or person. It has emerged incrementally overtime and we would not expect to identify the specific time and place when the smart- phone was invented. In this example we would not see a process involving invention but rather one involving adaption, diffusion, adoption and perhaps further adaption and diffusion. In other words, the process of innovation is not a linear one and need not start with invention. In fact, within a specific spatially bounded area the innovation process might begin with adoption. The study has interpreted the innovation process as one akin to the value chain and named it the Innovation Value Chain (IVC). Various factors and actors along the value chain determine how far an innovation travels and what happens to it as it travels. Some innovations may have long journeys (such as the telephone) involving the repetition of various innovation activities. Others may have much shorter journeys and only involve one or two innovation activities. We discuss this IVC process 3

14 in more detail in the presentations of the findings below and look at how it is manifested in this district. Innovation or innovations (plural) are the output of the innovation process (or activities), which is generally accepted to occur as part of the core function of enterprises, organisations or individuals, and where the purpose of innovations is to improve or increase the core function directly or indirectly. In this regard four innovation types are identified: products (these include goods and services); processes (these include the means to provide/deliver improved products); marketing strategies (ways to increase the quality, scale and access to existing or new markets); and organisational arrangements (to use new organisational methods, including new or changed business practices, internally in an organisation or to create changes and improvements in external relations with other organisations). Knowledge is also crucial to the innovation process and outputs. The development of the Rural Innovation Assessment Toolbox (RIAT) has started from the basic understanding that innovation is a multifaceted process of knowledge generation, adaption, spread and use, for the delivery of broad- based 1 societal benefits (economic, technological, institutional and social). Knowledge appears to have two important roles in innovation. In the first instance some level of knowledge is required to generate new knowledge. In this sense there has to be a building on existing knowledge to bring about new knowledge that is considered by the user to be an improvement. Some level of knowledge is required for innovation to occur and improve or new knowledge can be the output of the innovation process. In the second instance knowledge may be required to be part and parcel of a product (service or good), process, organisational arrangement or marketing strategy so that these can be used effectively by both the provider and the consumer in their respective roles. Innovation is both a process as well as output of this process and involves the use of knowledge in the innovation process and/or the development of improved or new knowledge through this process. Sometime this knowledge is required to make use of other outputs of the innovation process. There are three further characteristics that determine whether or not a product, process, strategy or arrangement is considered to be an innovation. It is possible to draw out three minimum core requirements for something to be considered an innovation. The first is the idea of novelty. To be considered an innovation, an idea, practice, process, product, etc., must be new to the organisation or at least be a significantly improved version. This requirement of novelty or newness holds for the producing or adopting enterprise or individual. The second requirement is that of value. To be considered as an innovation, the product, process, marketing strategy or organisational arrangement must have value. However, value need not necessarily be exclusively confined to notions of financial or commercial value - social value, welfare, 1 Of course there could be accumulation by individuals but our understanding of the DST interest and focus is that of broad- based direct societal benefits, rather than individual and trickle- down benefits of innovation. 4

15 satisfaction, perceived improvement in one s life are all important. The adoption of an innovation indicates its usefulness and potential for further innovation in the form of adaption or even incremental change. In light of this some scholars suggest that a further or third requirement for something to be an innovation is that it can be diffused beyond the producing individual or enterprise broader adoption requires diffusion. Such diffusion or sharing can take place through market and non- market channels. However, some scholars argue that R&D is not innovation until the outputs thereof connect to a market (Gault 2010). It is the authors opinion that such a market need not be commercially oriented and is more likely to be determined by the need or desire for an innovation. If no diffusion occurs beyond the developing enterprise or individual then there might not be any actual broader economic or social impact. Social innovation differs from the more generic concept of innovation in the sense that the outputs of the social innovation process should have an identifiable social impact rather than simply an economic or other (e.g. adding to the state of knowledge or science) impact. There is much debate about what is or is not reasonably classified as a social innovation. Analysis of the literature on the subject illustrates that there are three primary understandings of the concept of social innovation, as well as variations of these. The first understanding considers the organisation or the management of people and things within enterprises or social settings. Furthermore, these can be both informal and formal organisations and arrangements. Examples include trade unions, bargaining councils, stokvels, working parties, job- sharing schemes and distribution methods. A second understanding proposes that social innovations are those that have social outputs or benefits. They make welfare, well- being or social improvement contributions, which enable poorer people to access and participate more actively in socio- economic opportunities and affairs of the state (governance/service delivery). Examples include not only access to but also input into improved health, sanitation, water, electrification, education and security. Such innovations can be products or processes. However, they must involve social value and possibly inter- generational value and improvement. Medium- term ideas around sustainable environmental development, reduction of the carbon footprint and promoting the green economy are examples of innovations that have inter- generational value. Loan strategies that are directed to and accessible to the poor, as well as national radio and television broadcasters, are also considered to be social innovations in this category, as the affordability of such products and services is maximised through various means, including state funding. However, some scholars argue that a social innovation must be a social and public good (Harris and Albury, quoted in YF/SIX 2010: 16) and they would not consider the private sector development of a necessary vaccine as a social innovation, unless it was subsidised, freely available and accessible. Other scholars see Google as a social innovation, despite its origins in the private sector (like the vaccine example above), because its value to society outweighs the profits to the private sector. 5

16 The third understanding is a rather narrow combination of the above two. Social innovations are those innovations (new products, services, models and practices) that concurrently meet social requirements and produce new social collaborations outside of the enterprise environment. This notion excludes innovations occurring in enterprises. Social innovations must have social means (driven by users) and ends (benefits to users). Users should influence social innovation rather than it being exclusively top- down; therefore it must achieve systemic change (YF/SIX 2010). There is also an increasing awareness of the social dynamics of innovation processes and outputs. Here the roles of history, politics, social relationships, etc. in influencing the innovation process and outputs, particularly focusing on access to resources, are examined. The study s interest was more on the existence of social innovations although it is clear that social dynamics have an important role in influencing innovation activities of all types within the RDMs; especially with regard to what is available and who gets access to innovations. The study adopted a middle of the road approach with regards to social innovation, whereby it must emphasise improvement in social wellbeing or welfare improvement for society as a whole; or for a specific marginal or vulnerable group in society, such as infants, orphans or the poor. It should do this through products, processes and/or formal and informal social and organisational arrangements. As a result the study did not focus deeply on social innovations linked to marketing strategies and in fact did not pick up any such innovations in its sample. While the authors accepted that there can be economic spin- offs from social innovation, they are of the opinion that the social contribution must be greater and it should involve community participation and empowerment in innovations that enhance social wellbeing. 4. METHODOLOGY Given the relative newness of this type of innovation measurement and mapping exercise, exploratory methods proved to be most suitable for pilot- testing Component 1 of the RIAT, the survey instrument to conduct rapid mapping of the rural innovation system and value chain. A scoping visit was undertaken in Dr. Ruth Mompati District Municipality in November The purpose of the scoping visit to the district was to establish how best to link the innovation concepts derived from the literature and engagement with the experts, with the experiences and prevailing circumstances in the district. The scoping visit was also used to establish the most suitable sampling approach and build on the survey instrument design by illustrating thematic and crucial areas for the questionnaire structure. Furthermore, the scoping visit had the purpose of identifying key stakeholders, initiating contacts and potential interviewees, and getting a feel for innovation activities and types within the district. 6

17 Unlike most national and international STI surveys, which primarily focus on registered and fairly easily identifiable firms as the unit of analysis, RIAT does not have this luxury, because many of the actors (enterprises, organisations and individuals) engaged in the innovation value chain in rural settings are often not easily identifiable. Some are unregistered organisations and others include unregistered individually owned micro- enterprises. To take care of these hidden elements of the rural innovation value chain, the pilot phase combined purposive survey design and snowball sampling. This sampling was considered most suitable for overcoming many of the initial obstacles encountered in identifying the rural innovation actors, but it also brought with it some internal constraints. The sampling approach is now discussed in some detail. As the population of innovators or innovation actors in rural areas are often hidden and therefore unknown, it is difficult to identify the best sample size. Therefore, it was decided that the sample drawn need not be random because the lack of a discernible and finite population would make probability sampling redundant. The team adopted a purposive built survey design in which non- probability sampling was based on convenience. Following from this, snowball sampling was the best approach to selecting individual respondents. Potential respondents were firstly identified through a referral process (often peer referral or service provider referral) and then were screened to determine if they were suitable respondents (i.e. those to whom the survey instrument can be administered because they were engaged in innovation activities during 2011 and 2012). In the case of RIAT rapid mapping instrument and primarily for subsequent monitoring and evaluation purposes it was decided that respondents should have engaged in at least one innovation activity during the previous two years (2011 or 2012). Of course this meant that this pilot study unfortunately excludes earlier innovation activities that exist in the district and which contribute to ensuring economic and social development. A further restriction that this approach places on the data collected is that, because it is not a random probability sample from a discernible and finite population, the evidence cannot be used to make any inferences beyond the sample generated during the study. Given this situation and the fact that this is a pilot study this study cannot and does not attempt to make broad inferences for out- of- sample enterprises based on the collected data. A range of relevant contact people were identified during the scoping visit in November Following discussions with these contact people, in which the project and specific purpose of the questionnaire were explained, they were asked to refer the fieldworkers to potential innovation actors from various sectors, i.e. those engaged in one or more innovation activities of invention, adoption, diffusion and adaption. In the pilot phase all the actors on the lists generated during the scoping visit were screened and if appropriate, interviewed using the rapid mapping survey instrument (Component 1 of the toolbox). They were then asked by fieldworkers to refer them to another two to three potential innovator respondents and the screening and interview process was repeated. In this manner, the snowball sampling approach identified appropriate respondents that were interviewed as part of the survey. 7

18 A more or less generic approach to sampling and interviewing was used in Dr. Ruth Mompati District Municipality during the pilot phase. The district was divided into two zones or hubs, where the main economic activities in the RDM are concentrated. These hubs were Vryburg (Zone A) and Bloemhof (Zone B). The fieldworkers comprised of three teams of two people; each fieldworker underwent three days of intensive fieldwork training in Pretoria. In the district they were coordinated by an HSRC intern who assisted with administration, fieldwork and research activities. A senior researcher, who managed the district team, visited the Dr. Ruth Mompati District twice to ensure that the fieldwork was on track, to resolve possible obstacles and to ensure that questionnaires were being accurately completed. The referral process started with the scoping visit contacts and thereafter expanded through the identification of new participants mainly, but not exclusively, from participating respondents. Within the Dr. Ruth Mompati District three teams identified and interviewed a total of 122 innovation actors (individuals/organisations/enterprises), which translates to 81 actors in Zone A and 41 actors in Zone B. The targeted sample was unevenly spread across the sampling zones. The reality, as emphasised by the scoping visits, is that each zone has a different composition of sectors and industries. Because of the presence of informal actors in the innovation systems in these areas, the fieldworkers were advised to ensure that the final sample includes a good and representative mix of informal enterprises/activities 2. The willingness and availability of respondents to participate is an important factor in understanding the results, as not all identified innovators were willing to be interviewed and others were unavailable. Consequently, the fieldwork teams had to identify other actors who were engaged in at least one of the four innovation activities in order to achieve the upper and lower limits set by the research managers. It is envisaged that the rapid mapping survey technique evolves with the other tools in the RIAT to form an integrated package of instruments for final use at the end of the third phase of the study. There was significant fine- tuning of the rapid mapping instrument on the basis of a richly nuanced picture of grassroots innovation activities pieced together from investigations over the last ten months. The research experience and use of the tool in the Mopani and Chris Hani Districts also guided the refinement of the rapid mapping tool used in Dr Ruth Segomtosi Mompati and umzinyathi Districts. This experience will help inform sampling methodologies for more frequent and less resource intensive measurement, monitoring and evaluation beyond Phase 3. 2 More information on sampling in terms of sectors and industries per RDM can be accessed by downloading the relevant methodology RIAT Concept Paper, available on the EPD page of the HSRC website: 8

19 5. SOCIO- ECONOMIC INFORMATION FOR THE DISTRICT Dr. Ruth Mompati (DRM) District Municipality is located in the North West Province (Figure 5.1 below) with an estimated population of , which is approximately 13% of the North West population that is estimated at Figure 5.1: North West Province (Source: LGH North West 2013) The district comprises of six local municipalities, these are Naledi, Greater Taung, Kagisano, Mamusa, Lekwa Teemane and Molopo (Figure 5.2 below). Figure 5.2: Dr. Ruth Segomotsi Mompati District Map 2013 (Source: LGH North West 2013) 9

20 The main towns in the district are Vryburg, Christiana, Schweizer- Reneke and Bloemhof. Of the estimated residents in the district, 65.5% live in rural areas compared to the 34.5 % that live in urban areas in the larger towns (Global Insight 2013). 5.1 SOCIAL PROFILE Population The total population 3 in Dr. Ruth Segomotsi Mompati District is estimated at (Global Insight 2013). Slightly more than half of the population are female (52.1%) compared to the male population of 47.9%. Table 5.1 indicates the total population in the district for According to the table the youth and young adults make up the largest single share of the population, the minority are the infants and elderly. Table 5.1: Total population by age group classification Classification Age Number Share % Infants Children Youth and young adults Mature adults Elderly Total Source: Global Insight (2013) Poverty and health DRM District is characterised by a high level of poverty with an estimated 53.7% of people living in poverty in 2011, compared to an estimated 43% of people living in poverty in the North West Province as a whole. The Gini Coefficient is 0.59 which indicates a highly unequal distribution of income within the district. The Human Development Index (HDI) is 0.52 which indicates a medium level of human development within the district. HIV and AIDS affects local economic development through illnesses and deaths associated with the disease. The share of people who are HIV positive is estimated at 9.8% (45 291) while the share of the population who die annually from AIDS is estimated at 0.5% (2 337) in the district (Global Insight 2013). 3 The total population of a region is the total number of people within that region in the middle of the respective year. It therefore includes all residents, non- residents and individuals of any age, gender and population group. 10

21 5.1.3 Education The functional literacy 4 rate in DRM for the age group 20 years and older who completed Grade 7 or higher is 50.3 % for 2011, while the provincial functional literacy rate is substantially higher at 71.3%. The district rates indicate small and steady improvement over the period from 40.9% in 1996 to 50.3% in However, the district literacy rate is much lower than the provincial literacy rate. Table 5.2 illustrates the highest level of education for the age group 15 years and older in the district, education is broken down into nine categories. Table 5.2: 5 Highest level of education: age 15years+ Level of Education Number of People Share % No schooling % Grade % Grade % Grade % Grade % Certificate / diploma without Matric % Matric only % Matric & certificate / diploma % Matric & Bachelor s degree % Matric & Postgraduate degree % TOTAL % Source: Global Insight (2013) Services and infrastructure The backlog for sanitation in Dr. Ruth Segomotsi Mompati District is estimated at , which is the number of households without hygienic toilets, i.e. they have no formal toilet or they make use of either a pit toilet or the bucket system. The water backlog for the number of households below the Reconstruction and Development Programme 6 (RDP) basic standard is approximately Houses of a standard above the RDP level are not considered to be part of the water supply backlog. Households above the RDP level include all households that have access to piped water within their 4 The functional literacy rate of those aged 20+ measures the number of people in a region who have completed their primary education (Grade 7), and are thus deemed functionally literate. If someone is functionally literate, they are assumed to have a level of reading and writing skills, enabling them to manage daily life and employment. The output can be broken down according to population group and represented as those who are literate, those who are illiterate or the percentage of people who are literate, which is commonly known as the literacy rate. 5 This measure represents the highest level of education for those aged 15 or older, broken down according to population group. An age of 15 is used because, according to the United Nations definitions on education, one is an adult if they are 15 or older. Using this cut off point therefore allows for cross country comparisons. Furthermore, age 15 is the legal age at which children may leave school in South Africa. 6 Households at or above the RDP level are not considered to be part of the water supply backlog. Above RDP level includes all households that have access to piped water within their dwelling, within their yard or within 200 metres of their dwelling. 7 This includes houses that are formal but for the households living in these formal structures, water is accessed more than 200 metres from their dwelling. 11

22 dwelling, within their yard or within 200 metres of their dwelling (Global Insight 2013). The number of households without electrical connections is (Global Insight 2013, but see Dr Ruth Segomotsi Mompati IDP for more details DRM 2012) Number of households by type of dwelling The majority of households living in what is classified as formal housing are estimated at , while households living in what is classified as traditional houses is estimated at The number of households living in informal houses is approximately (Global Insight 2013). This is indicated in Table 5.3 below. Table 5.3: Dwelling Type Type of dwelling Number of households Very Formal Formal Informal Traditional Other dwelling type 314 Total Source: Global Insight (2013) Naledi and Mamusa local municipalities are the dominant contributors to the district economy. Most of the other economic contributions are through agricultural activities, such as farming. Manufacturing, retail trade and financial institutions also play an important role. The Dr. Ruth Segomotsi Mompati District Municipality has prioritised the following needs, listed in Table 5.4 (most of which are basic social needs), as crucial for social and economic development in each of the five local municipalities. Undoubtedly, significant attention must be paid to basic social infrastructural services before economic development can significantly increase. Table 5.4: Social and economic needs identified by the local municipalities Local municipality Naledi Mamusa Lekwa- Teemane Greater Taung Kagisano- Molopo Source: Dr RSM IDP 2012/17 Needs Roads, human settlements, water, sanitation, and jobs Water, human settlements, roads, sanitation and electricity Water, human settlements, roads and storm water, social amenities Roads, sanitation, water, electricity, human settlements, bridges Roads, human settlements, water, water for livestock, electricity, in- fills, sanitation and job creation 12

23 5.2 ECONOMIC PROFILE Dr. Ruth Segomotsi Mompati District Municipality is located in the less densely populated and more impoverished western region of the North West Province. It is one of four district municipalities in the North West. The district is the largest beef cattle producing district in the country, known for the Bonsmara and the Hereford breeds. Locals sometimes refer to it as the the Texas of South Africa. Farmers also produce maize and peanuts for the national and the export markets. The administrative seat is Vryburg Employment The official unemployment rate 8 in the Dr. Ruth Mompati District is very high, with 31.6% of the population being unemployed in The larger share of this portion constitutes females at 37.3%, followed by males at 27.6% (Global Insight 2013). Table 5.5 below illustrates the provincial and district formal sector employment. For the province, mining employs 34.9%, agriculture 9%, and the household sector 6.2%. For the district, agriculture employs 2.1%, household sector 0.7% and community services 0.6%. Table 5.5: Employment by sector Formal Sector Employment 9 Region's share of national total (%) North- West Dr. Ruth Segomotsi Mompati Agriculture 9.0% 2.1% Mining 34.9% 0.3% Manufacturing 2.4% 0.1% Electricity 5.0% 0.5% Construction 3.7% 0.3% Trade 5.1% 0.3% Transport 4.0% 0.2% Finance 2.4% 0.1% Community services 6.2% 0.6% Households 6.2% 0.7% Total 6.3% 0.5% Source: Global Insight (2013) 8 The unemployment rate represents the number of people that are unemployed (according to the strict definition) that are living in a region, taken as a percentage of the economically active population of that region. The strict definition of unemployment considers all people who are currently not working, but who are actively looking for work. It therefore excludes those who are not actively seeking work. These people, if they would like to work, are referred to as discouraged work seekers and form part of the non- economically active population. 9 The region s share of national total employment is the contribution of this region to all formal employment in South Africa. In other words, it is the number of all employed people who work within the specific region divided by the number of people who work within the whole country. For example, if there are 100 working people in South Africa, and 12 of them work in this region, we would say that this region s share of national employment is 12%. The regional share output can be categorised into the various broad or detailed economic sectors. 13

24 5.2.2 Gross Value Added The economic sectors in an area are distributed into three main sectors, namely the primary, secondary and tertiary sectors. The primary sector consists of agricultural and mining activities. The secondary sector consists of the manufacturing, electricity, construction and trade activities. The tertiary sector consists of the transport, financial and community services. Table 5.6 illustrates the contribution of the different sectors to economic growth in the province and the district. In Dr. Ruth Segomotsi Mompati District the tertiary sector (73.7%) is the highest contributor, while the secondary sector is at 8.7% and the primary sector is at 17.6%. Table 5.6: Sectors contribution to economic growth Sector's share of district total (%) North- West Province Dr. Ruth Segomotsi Mompati District Primary sector 43.4% 17.6% Secondary sector 8.3% 8.7% Tertiary sector 48.3% 73.7% Total 100.0% 100.0% Source: Global Insight 2013 According to Global Insight data for the 2011 period, as indicated in Table 5.7, mining (40.7%), community services (19.6%) and finance (12.1%) are the biggest contributors in the province. For the district, the sectors share of regional total indicates that community services (34%), finance (21%), agriculture and trade (11.8%) contributed the most. Table 5.7: Gross Value Added per sector Gross Value Added by Region (GVA- R) North- West Sector's share of regional total (%) Dr. Ruth Segomotsi Mompati Agriculture 2.7% 14.3% Mining 40.7% 3.2% Manufacturing 4.5% 3.4% Electricity 1.6% 2.2% Construction 2.1% 3.1% Trade 10.1% 11.8% Transport 6.5% 6.9% Finance 12.1% 21.0% Community services 19.6% 34.0% Total Industries 100.0% 100.0% Source: Global Insight (2013) Table 5.8 indicates the provincial and district s contribution to economic growth. The province s contribution to the economy was more in the tertiary sector and lower for the primary and 14

25 secondary sectors. For the district, the primary sector contribution was 0.5%, secondary 0.1% and tertiary the highest at 3.2%. Table 5.8: Contribution to total economic growth (% point, Constant 2005 prices) Primary, Secondary & Tertiary Sector aggregates North- West Province Dr. Ruth Segomotsi Mompati District Primary sector - 0.7% 0.5% Secondary sector 0.2% 0.1% Tertiary sector 1.5% 3.2% Total 1.1% 3.8% Source: Global Insight (2013) The Green Economy There are various projects within the Dr. Ruth Segomotsi Mompati District with activities related to developing the green economy. There are environmental projects including the improvement of land- fill sites, veldt improvement and rainwater harvesting. Other projects are the field crop fencing, to prevent grazing and in some cases over- grazing by unattended livestock, and field crop improvement. 5.3 CONCLUSION The Dr. Ruth Mompati District Municipality is characterised by relatively high levels of unemployment, poverty and educational challenges, including the shortage of schools and classrooms. These challenges combine to constrain the local economy and adversely affect economic and social development. The majority of the population is very young, which holds a lot of potential for the local economy if the challenge of education and skills development is overcome. There are sectors with a comparative advantage such as financial institutions, community services, agriculture and retail which are a source of employment, and they boost the local economy. The tertiary sector plays a significant role in the local economy; however, other sectors should be explored that could have potential to create jobs and grow the local economy. Diversified economies tend to weather economic recessions better. 6. RURAL INNOVATION IN DR. RUTH MOMPATI DISTRICT MUNICIPALITY 6.1 INTRODUCTION The rapid mapping survey instrument can be simply divided into five core sections, each composed of several questions that together provide evidence about the five main areas of interest. These areas are discussed in turn and the study concludes by discussing what the results of the survey are 15

26 able to inform us about rural innovation. The reader is again reminded that the discussion refers only to the sample obtained during the pilot study, so no further inferences can be made outside of the sample. Similarly, the study was a pilot study so the reliability and validity of the questions, the practical usefulness of the instrument and the sampling frame and methodology were in a process of development when the information was gathered. A sample of 122 enterprises were visited and interviewed. However, several more enterprises were visited but not interviewed because no innovation activities were identified that took place during the years 2011 and/or ENTERPRISE PROFILES The first section of the survey instrument aimed at developing profiles of the enterprises, organisations and individuals that were interviewed during the Rural Innovation Assessment Toolbox pilot survey in Dr. Ruth Mompati District Municipality. Of the total sampled enterprises, 31 were found to be public enterprises, 57 were private enterprises and 34 were non- profit organisations (this is indicated in the Table 6.1 below). The referral and innovating enterprise identification method used in the sampling process seemed to generate a high number of private and non- profit enterprises in contrast to public enterprises. This distribution was expected given the high number of private enterprises in the economy generally. The number of non- profit organisations, which is slightly higher than that of public enterprises, includes volunteer groups, spiritual and religious groups, various social clubs, development NGOs and CBOs, etc. The high number indicates that they have an important role to play in the district, cannot be overlooked and must be included into the national system of innovation, especially as most concentrate on social development and welfare. Table 6.1 also summarises the three types of enterprises in terms of statutory registration as a legal entity, registration for income tax purposes, economic sectors within which the enterprises operate and the dominant subsector within each economic sector, and participation in a larger group or company (including franchises). If we look at statutory registration we note that the majority of public enterprises in the sample (87%) were registered with government departments. Just over half of the private enterprises (54%) were formally registered as legal companies (CC or PTY Ltd.). Of the remaining, private enterprises (21%) were registered as sole proprietors but 14% were not registered at all. The 2% of private enterprises registered as NPOs or with government departments cannot be explained accurately and is probably due to respondent or researcher error during the interview. Of the sampled Non- Profit Organisations (NPO), 65% are registered as either an NPO with the Department of Social Development (DSD) or as a Section 21 company with Department of Trade and Industry (DTI). Another 3% were registered with another undisclosed government department, and 9% were not 16

27 registered. Consequently, nine out of ten enterprises in our sample are registered as some sort of legal entity. Of the 122 enterprises, 91 enterprises were registered for income tax purposes with SARS whereby the majority (90%) of public enterprises are registered for income tax purposes, followed by 84% of the private enterprises. A larger share of NPO compared to the public and private enterprises were not registered for income tax purposes with SARS, less than 45% of the NPOs that participated in the survey were registered. One possibility for this low number is that some of these are voluntary and informal community groups or associations. Table 6.1: Share (%) of Enterprises/Organisations in terms of statutory registration, taxation, economic sector, group membership & output distribution by enterprise Type, (N = 122) Public Private Non- Profit Valid Profile information enterprises enterprises Organisations observations (n = 31) (n = 57) (n = 34) Statutory registration Business CC/PTY(LTD) Registered with government Department NPO/ Section Cooperative Partnership Sole proprietor Not registered Income tax SARS registration Exempted from business Not registered Economic sector Primary Sector (Agriculture & forestry) (25) (71) (83) (100) Secondary Sector (Manufacturing) (13) (0) (100) (100) Tertiary Services (Community social services) (Trade and Finance) (38) (26) (67) (8) (3) (76) (81) (8) Part of larger group or organisation Part Main territory of output distribution Sales output- Local/regional Note: Valid Observations refer to the number of non- missing values; n = the total number of observations/enterprises (individuals or companies) 17

28 More than 60% of the sample comes from the tertiary sector. The subsectors within the primary, secondary and tertiary sectors listed in Table 6.1 only demonstrate the most dominant subsectors in each of the three sectors. We see that the larger share of enterprises in the primary sector is engaged in agricultural activities, irrespective of whether they are public, private or non- profit enterprises. Interestingly, all the NPOs in our sample in the primary sector engage in agricultural activates. In the secondary economic sector, the larger share of enterprises is engaged in manufacturing activities. Here as well, all the private sector and NPO enterprises of our sample in the secondary sector engage in manufacturing activities. As we would expect there are no public enterprises engaged in this subsector. Lastly in the tertiary economic sector the largest share of enterprises are engaged in community social services. Interestingly, the numbers of non- profit organisations (81%) that engage in community services activities is higher than that of the public enterprises (67%). The second largest share of tertiary sector is trade and finance, with one out of four enterprises coming from the trade and finance sectors dominated by private enterprises. Perhaps most significantly is that from the sample, 79 of the 122 (65%) sampled enterprises are engaged in the tertiary sector. This suggests that there is significant innovation taking place in this sector and that it deserves increasing attention. Not all enterprises/organisations are part of a larger group or organisation; however, the majority of public enterprises as expected are part of a larger group or organisation, e.g. local municipality being part of a district municipality. The highest share (77%) of public enterprises that were included in the survey was found to be part of a larger group or organisation. Lastly, when it comes to the distribution of output, more than half of the sampled enterprises are distributing their output locally. 6.3 LOCAL UNDERSTANDING OF INNOVATION AND SOCIAL INNOVATION Following the enterprise profiling section, the questionnaire focused on paying particular attention to local understandings of innovation and social innovation in the Mopani District and attempting to understand the purpose of innovation among the sampled enterprises. From the analysis of the qualitative data it became clear that most of the respondents in the survey had an understanding about innovation. Many of the responses had to do with bringing about change within an organisation and doing things differently. Other responses were more specific and related to technology: bringing in new technology and using old technology in new ways. There were also comments relating to creating something new or creating something that hasn t existed before. A small share of the respondents acknowledged having no idea of the term innovation, but the screening process indicated that despite this they were engaged in some form of innovation activity such as invention, adoption, adaption or diffusion. This section provides an analysis of the social 18

29 innovation within the DRM district. The section will focus on two main aspects of social innovation in the district. The first aspect will focus on the respondents understandings of social innovation. The section allowed participants to explain social innovation in their own terms and unpacks the response provided and describes the understandings provided in a number of themes. The second aspect of social innovation is the presence of social innovations in the DRM district. These social innovations will also be discussed as aspects of innovation value chains (IVCs) within the district. One overarching theme is that Aspect 1 (understandings of social innovation) is related to whether or not Aspect 2 (acts of social innovation) is applicable. The discussion will conclude with an analysis of this overarching theme and explain the importance of social innovation in the DRM district Local understanding of social innovation There is little knowledge of the terms social innovation or social technology in the district. The majority of respondent enterprises explain that they simply don t know what the term social innovation means. The enterprises are not able to define clearly their understandings of social innovation because the majority have never heard the two terms, social and innovation, used in conjunction. In some instances enterprises are able to loosely define social technology, but there are even fewer attempts to explain social innovation. Social technology is explained as a means of communicating through the social network. This explanation is a reference to making use of social networking facilities (often ICT based) to ensure better communication between people in the communities. This understanding of social technology is not related to social upliftment, in terms of addressing social ills. The conceptualisations of what social innovation is are broad, and more often than not, equated with community development and upliftment. The enterprises that are able to define it are usually in the community services sectors and the social innovation concept is interwoven with their goals and objectives as enterprises that are there with the purpose to address social ills and provide complementary and supplementary services to those provided by the state. Some definitions include social innovations are innovations that work for all, people coming together to achieve a common goal, innovations that benefit more than one person in a community and introduction of something new that benefits the people. The understanding of social innovation as a way of addressing social ills within a specific community was the main focus in the definitions provided. The social innovations are mainly activities which involve addressing the community s primary social needs. These social ills and needs are defined by the people in the community and the social innovations are attempts to address these problems in a new way, because the existing means of addressing the social ills and needs are inefficient and in many instances non- existent. The social innovations are responses to the community needs. Each community is different and as a result the required social innovations are different. The social innovation mentioned in the DRM district are mainly focused on improving education, addressing HIV and AIDS awareness and prevention as well as social innovations geared towards addressing food shortages in the communities. Examples of these social innovations will be discussed in the sections 19

30 below. While the majority of organisations are not able to define social innovation it does not prevent them from introducing new activities (products, process and organisational arrangements) that have distinctive characteristics of social innovation as defined in the RIAT questionnaire. Social innovation is taking place in the DRM district and can be identified in multiple sectors (including both the private and the public registered enterprises). Social innovations are a focal point of many enterprises. The enterprises that are involved in social innovation understand these to be innovation activities with direct social benefits. There are instances of innovations which are geared towards social upliftment and also benefit financially from the innovation activities within an enterprise. One such example is Jet s training school, a private enterprise established in 1998 and serving the education and training sector. The enterprise adopted a new 12 month internship programme and started offering mobile training. The enterprise visits enterprises and train people who register with the enterprise. The adoption is of a product, in this case a new service of bringing the training courses into the communities where there is a demand. The adaption of the mobile training took place in 2012 when the enterprise started providing artisan qualifications, which was not offered initially in the mobile training. The mobile training service was adapted due to the lack of a college in the local community that trains people to be artisans. The enterprise is a private enterprise focusing on improving their financial gain as a business; however, the enterprise has managed to fill a much needed position in the DRM district. The enterprise has filled a gap in the community. This gap was the need for training to take place within a local context. They provide a service that was originally not offered. This is a good example of social innovation that can be profitable. This type of innovation can be viewed as a move towards the private sector addressing social problems by providing services when other means are not functioning to address the lack of certain services in the communities. The IVC starts with an adoption that is economically driven and then social upliftment is seen as a by- product of the successful adoption. An example of a social innovation directly aimed at social upliftment and benefit is the Department of Agriculture and Land Reform with their diffusion of a new product called the earthbox. The department supplied the maintenance- free boxes, inputs and limited equipment. This initiative was started with the intention of developing agricultural skills in the local communities by offering an easy and affordable innovation which would offer the opportunity for households to improve their production of crops for household consumption. In this way, the department intended to improve local food security. The earthbox is an example of a social innovation because it was introduced to reduce food insecurity in rural areas as well as making food production possible on a subsistence or small commercial scale. Interestingly the Department of Agriculture respondents had no understanding of the term social innovation, but they were involved with a project geared towards social upliftment through the provision of a new product that would reduce food insecurity in rural areas. This exemplifies that an understanding of social innovation is not essential in carrying out innovations that contribute to social upliftment. 20

31 Another example of a social innovation is introduction of a soup kitchen feeding programme at Amanda s crèche. The soup kitchen is an example of a social innovation that involved the adoption of a service. The innovation resulted from the increased awareness of hunger amongst the children. The children would arrive at school without having breakfast, lunch and in some instances dinner the previous night. This was attributed to the increase in poverty in the local community. The social innovation has now been used for two years and has also contributed to an increase in the number of registered children attending the crèche. This social innovation involves addressing a social problem identified within the activities of the school as well as the community. The school incorporated the feeding scheme to ensure that the children are well fed in order to encourage early childhood development. This social innovation is made possible through the provision of resources from enterprises in the local district. Many of the resources, such as food and cooking utensils, were sponsored by private enterprises. Social innovation in this instance was made possible through the donation of resources, without the continued donations the innovation would not be possible. Despite the fact that these examples illustrate social innovation activities and some awareness of social innovation in the district, quantitative data suggest quite the opposite. As indicated in Table 6.2 below, most enterprises public (65%), private (74%) and especially NPOs (88%) are not aware on the concept social innovation (only one out of four enterprises are aware of the concept). These results are especially surprising in the case of NPOs given that it would be expected that these enterprises should have some knowledge of social innovation. On the other hand, with regards to purposes of innovation activity, most public enterprises and NPOs view innovation as being for society wellbeing and welfare. However, most private enterprises (88%) expect innovation activity to be a source of direct economic benefit but in some cases engage in social innovations to achieve this. Table 6.2: Share (%) of enterprises aware of social innovation and main purpose of innovation by enterprise type, (N=122) Public Private Non- Profit Valid Awareness and main purpose enterprises enterprises organisations observations (n= 31) (n= 57) (n= 34) Awareness of concept social innovation Aware of social innovation Not aware Main purpose of innovation activity Direct economic benefit Society wellbeing and welfare Basic subsistence purposes Expand frontiers of new knowledge Note: Valid Observations refer to the number of non- missing values; n = the total number of observations/enterprises (individuals or companies) 21

32 Only a small number of enterprises (less than 5%) engage in innovation activity for basic subsistence purposes and only 1 enterprise out of the entire sample uses innovation as a source to expand new knowledge. In conclusion, the definitions of social innovation can provide insight into local understandings of the terminology. The definitions bear some similarities to the definition used in the RIAT questionnaire. The main purpose of gauging the various understandings of social innovation should not be used to determine whether or not the social innovations are taking place, rather, they should be used to identify new insight into whether the terminology has gained traction in the local communities. In the case of DRM district the concept of social innovation has not trickled down clearly into the local context. This lack of understanding in the district does not act as an indicator of whether or not social innovation takes place. The cases above show how lack of understanding terminology does not restrict social innovation from taking place. There were two main motivators for social innovation in the cases mentioned above. They are both similar with regard to the outcome of the innovation, which is to say, is the outcome of addressing social ills and/ or addressing a social need in the community. However, they differ in their ways of innovating. In the first case of Jet s training school the innovation of a mobile facility serves two important (but separate) needs. The first is the financial gain of the enterprise and the second is addressing a social problem, as expressed by the community. In the second case of Amanda s crèche the social innovation is aimed directly at addressing hunger in children. However, in the second case the social innovation is only possible through the sponsorship. These two cases show that social innovation can be achieved using two financial means. The first relies on own financial income to carry out the innovation which benefits the community in the long- term if there are artisan jobs available after training. The second relies on continued financial support from sponsors and donors from the private sector. Therefore social innovations should not be understood as purely socially driven activities. 6.4 INNOVATION VALUE CHAINS AND INNOVATION TYPES The innovation value chain (IVC) is described as consisting of four innovation activities: invention, adaption, adoption and diffusion. There are few combinations of the value chains that are occurring in our sample of Dr. Ruth Mompati District that is to say, the IVC is not linear and the activities need not follow any specific order in a certain location or enterprise. The section starts with a discussion of the prevalence of innovation activities in the Dr. Ruth Mompati District and aims to understand what innovation entails within the context of DRM by presenting the innovation value chains as manifested in the DRM. The common innovation activities and types in the district are presented and discussed in detail. The first major innovation activity is that of adoption - typically the adoption of products, processes or marketing strategies. These adoptions usually stand alone and are not followed or preceded by 22

33 another innovation activity, such as adaption, diffusion or invention. Innovation involving adaption is the second most widespread innovation activity in our sample of the district. Innovation involving diffusion by adopting, adapting or inventing enterprise is also a part of the IVC, but to a lesser extent. These themes mentioned are backed by examples in the section to follow Adoption Innovation in our sample of the DRM district is mainly focused on the adoption of products, processes and marketing strategies with little apparent adoption involving organisational arrangements. Adoption usually consists of the adoption of a product as is evident from the example of an enterprise in the education sector, called Amanda s crèche established in The enterprise expressed that their innovation involved the adoption of a new product, in this case a service. The service adopted is a soup kitchen for the school children. The enterprise started with providing day care facilities and then adopted the new service of feeding the children at the school by providing them with breakfast and lunch to ensure that children where fed two nutritionally balanced meals daily. They started the kitchen with the intention of addressing malnutrition in the children attending the crèche. This adoption has seen an increase in children attending the crèche. The enterprise was only involved in this one innovation activity during This innovation is described as making a difference in the crèche s objectives of addressing early childhood development. While the innovation activities mainly involve adoption of fairly simple innovations, it is clear that a single adoption can have a big impact on the core objectives of an enterprise, as illustrated by the example whereby increased enrolment enables more children to be exposed to early childhood development. A similar trend and emphasis on adoption is evident in many other examples identified during the research in the district. These adoptions are often involve low- technological innovations but such innovations have a great impact because they require little or no training to address a request made to the enterprise [by the community]. The Fount farm is an agricultural enterprise, which adopted a slaughter house into their production process, to enable the enterprise to slaughter their livestock on- farm and reduced the cost of transporting the livestock to abattoirs. This new process enabled the farm to cut out the middle man and sell directly to the general public. The slaughter house was adopted in 2012 and replaced the process of selling the produce to the abattoir. This has enabled the enterprise to reduce transportation costs, get a better price for their produce and allowed the owner to regulate the price of meat produced and sold. This process innovation was an attempt to reduce the overall production and selling costs and is said to be more cost- effective than the previous approach of engaging with the retailers through the abattoir. The adoption of additions or variations to the production process can be understood as saving on costs and ensuring greater market access for the enterprise. While the two enterprises described above, and several others, suggested that low technological innovations have been fundamental to the success of the enterprise, there are instances in the 23

34 district where the innovations adopted are highly technical and require greater skills. One example of a highly technical adoption is Consideration farm, established in This enterprise adopted a new process of breeding climate tolerant cattle. The process adopted is known as In Vitro Fertilisation (IVF). This is a process by which an egg is fertilised by sperm outside the body. This process allowed the breeder to match the genetics needed to create a cattle breed which may be more resistant to the drought conditions in the district. This process was started in 2011 and required the importation of semen from Australia. This is one of the few farms, in South Africa, that is equipped for the procedure of in a fully equipped laboratory situated on the farm premises Diffusion Enterprises in our sample of the DRM district have an affinity towards incorporating diffusion into their innovation endeavours. While the diffusion may not be as prominent as adoption it does feature in many of the enterprises and is explained as important in the transfer of skills into the district. One example is Champ Clinic and Youth Centre, an enterprise in the health sector established in The Champ Clinic and Youth Centre focuses attention on a variety of core functions including preventing minor human ailments, sexually transmitted disease management, voluntary HIV testing and counselling, and life skills development in local schools. In 2011, Champ Clinic and Youth Centre adopted a new programme called TADA (Teenagers against Drug Abuse). This programme was an adoption of an organisational arrangement by creating leaders or pupil supporters which coordinate self- help groups in the local community. The programme is aimed at learners between the ages of 13 an 24 years of age. The clinic collaborates with local schools to introduce these self- help groups, as well as offer insight into ways of dealing with drug and substance abuse. In 2011 the clinic was able to diffuse the new service in how to carryout awareness campaigns on the fight against drug and substance abuse. The IVC of the enterprise starts with the adoption of an organisational arrangement which is followed by the diffusion of the TADA toolkit which is adopted by the programmes established in the schools. Another example of diffusion in the DRM district that incorporates diffusion is the introduction of the earthbox by the Department of Agriculture and Land Reform in The earthbox is a portable, re- usable, maintenance- free container gardening system that produces a 60% higher yield than a conventional garden of the same size using half the fertiliser and 40% less water. This new product is explained as being a low- technological innovation. The enterprise diffused the earthbox concept to small- scale farmers as well as backyard cultivators in the district. The approach used in the diffusion of the ideas above is described as formal in the sense that it was part of an official programme. The IVC that consists of diffusion always includes another innovation activity, as illustrated in these two examples. This activity is the initial adoption by the organisation doing the diffusion. Diffusion as a part of the IVC is not type- specific, but can involve products, processes, marketing strategies or 24

35 organisational arrangements. This is important to recognise because it acknowledges that diffusion of any innovation type is possible, whether it be an organisational arrangement, product, process or marketing strategy. The process of diffusion needs to receive more attention, or in- depth research, to ensure that the difficulties of diffusing certain innovations can be clearly understood. One suggestion would be to focus not only on the difficulties of diffusing but also the factors that encouraged the diffusion of the particular innovation and the existence of similar innovations. The IVC consisting of adoption and diffusion is also prevalent in the commercial private agricultural sector. ABC Potato Farmers was established in 1988 and consists of 180 hectares of farmland. The enterprise produces mainly beef, wheat and potatoes. Recently, potatoes have become the main focus of their innovation activities. In 2012 the enterprise adopted easier cultivated potatoes (a type of biotechnology developed potato) that uses less water and is less vulnerable to disease. The enterprise claims that these are also potatoes with better nutritional value, as a result of their diseases resistance and reduced water use. These easier cultivated potatoes also offered new marketing opportunities. The adopted innovation was subsequently diffused, in the same year, to neighbouring potato producing farmers Adapt The last apparent IVC component is that found in enterprises that adapt their own or others innovations. Adaption is irregular with regard to how often it occurs and in the majority of the enterprises this adaption entails firstly adopting ideas from another enterprise in the same sector. In our sample of the DRM district the adoptions are usually followed by adaption to ensure appropriateness for the local setting. The adaption is deemed appropriate once it can perform the desired functions, for which it was introduced, within the enterprise environment. Adaption ensures that the innovation functions in the local context as well as the enterprise. The adoptions are usually from surrounding enterprises and these adoptions usually have to be adapted to the needs of the enterprise that has adopted it. One example of innovation adaption is Jet s Training School, a private enterprise established in 1998 and located in the education and training sector. The enterprise adopted a new 12- month internship programme and offering mobile training facilities. The enterprise visits other enterprises and individuals based in local villages and trains people who register with Jet s Training School and the locally based organisations. The adoption in this case is a new service of bringing the training courses into the communities where there is a demand. The adaption of the mobile training service took place in 2012 when the enterprise started providing artisan qualifications as part of this mobile service. The mobile training service was adapted due to the lack of presence of a local college to train artisans. IVCs in DRM that consist of adaption often occur as a need is identified or a niche opens up in the market. 25

36 6.4.4 The innovation trail - referral method The DRM district sample results expressed a new aspect of the IVC that was previously unacknowledged in the earlier pilot phase in the districts in the Limpopo and Eastern Cape Provinces. This new aspect of IVC is the tracking of innovation activities which cut across sectors as well as enterprises. The example (explained in greater detail in Section 7) is of the collaboration between agricultural and light engineering enterprises. Peanut Farm in collaboration with AB engineers developed The Peanut 100 Machine. The idea of tracking the actual innovation allows for the opportunity to properly make use of the referral method of snowballing. The IVC is clear and concise, if need be one could also incorporate the institutional environment into Diagram 6.1 to explain the supply of insight, resources and funding if it exists. Diagram 6.1 below shows how the IVC can be understood in relation to the actual innovation whether it be a product, process, organisational arrangement or marketing strategy. It may be worth considering as a way of understanding what contributes to the success of a single innovation and who are the actors involved in innovation invention, adoption, adaption and diffusion activities. Diagram 6.1: IVC for The Peanut 100 Machine Peanut Farm; No social benefit; purely to improve profit Invention of The Peanut 100 Machine Invention of The Peanut 100 Machine AB Construction: (engineering company) No social benefit; purely to improve profit 2 3 Adaption: Improved on a Ripper on the land, added markers to draw lines on farm land (2012) Adoption of a new tractor, internal GPS system to improve harvesting processes (2012) 1 The Peanut 100 Machine Innovation Value Chain in the North West Province Adaption of The Peanut 100 Machine worked in collaboration with Peanut Farm and Other Farm (2012) 3 Diffusion of The Peanut 100 Machine (2012) Diffusion of The Peanut 100 Machine (2012) 4 Other Farm; No social benefit; purely to improve profit 4 Adoption of The Peanut 100 Machine (2012) 26

37 The IVC invoked can be traced due to the referral methods being used to their full extent. The referral method created a kind of innovation trail, which could trace the various actors/ enterprises involved in the invention, adoption, adaption and diffusion of the innovation. By following the innovation trail of The Peanut 100 Machine a clearer picture of the IVC is portrayed. This approach could also offer the possibility of finding out where the trail starts and where it ends, if it ends. One could also consider the time factor related to ideas, invention, adaption and diffusion and possibly see if further adaption takes place. In Section 7 we go on to exploring the innovation value chains (IVC) even further, most evident from the sampled enterprises in Dr. Ruth Mompati District. This is done by using two case studies of innovating enterprises, one of which is the Peanut 100 Machine Innovation activities in DR. Ruth Mompati District ( ) Table 6.3 presents a summary of innovation activities in 2011 and 2012 by enterprise type. The column of valid observations indicates the overall participation of sampled enterprises in innovation activities during both years. In both years the rate of adoption was the highest followed by adaption. Adaption was followed by diffusion. Invention is the least common innovation activity undertaken by enterprises in the sample. It is important to note that all types of innovation activities made progress from 2011 to Table 6.3: Share (%) of Enterprises engaged in innovation activities by enterprise type, 2011 & 2012, (N = 122) Public Private Non- profit Innovation Valid enterprises enterprises organisations activity observations (n= 31) (n=57) (n= 34) Invent Yes No Adopt Yes No Adapt Yes No Diffuse Yes No Note: Valid observations refer to the number of non- missing values; n = the total number of observations/enterprises (individuals or companies) In both 2011 and 2012 the rate of adoption was higher followed by adaptation of innovation. In 2011 NPO sector come out as a leaders in adopting innovations, with 76% of enterprises adopting innovations. It 2012 the lead was taken by private enterprises, with 84% of respondents adopting 27

38 innovations. Adaption, on the other hand was mostly driven by private enterprises (28%) in 2011 and in 2012 (37%). In conclusion, this section has focused on the three themes of IVC in the DRM district. The first main theme identified is adoption of processes, products and organisational arrangements. The second emphasised that diffusion is a part of the IVC and that it usually occurs in conjunction with another activity in the IVC, such as adoption. The third theme identified is the importance of adaption of innovations to ensure greater success within the enterprises. The section then provided an alternative approach to studying IVC in a rural context by suggesting that we take a look at the innovation trail established through the referral process to ensure a more in- depth understanding of the IVCs. Lastly, less than 5% of enterprises engage in inventive activities in Dr. Ruth Mompati district. Adoption is the most common type of innovation, dominated by NPOs in 2011 and private enterprises in Adaption is the second most common type of innovation whereby the number of enterprises that engage in adaption activities increased by about 10% from 2011 to Only one of five enterprises in our sample engages in diffusion of innovation. 7. TWO ILLUSTRATIVE EXAMPLES OF INNOVATION IN DR RUTH MOMPATI 7.1 INTRODUCTION This section presents the innovation value chains that occurred in two selected enterprise examples when they engaged with a specific type of innovation. The section concludes with a comparison of the two examples, highlighting the similarities and differences. In the process of selecting examples of enterprises for this section, the enterprises had to be from different economic sectors. These illustrative examples highlight a variety of innovation activities and innovative patterns within enterprises. In so doing, they illustrate the overall innovative performance of these enterprises, the nature of the innovation activities carried out, the different knowledge bases underlying the innovation processes, and the different patterns of interaction through which enterprises generate, interact and diffuse innovations. 7.2 EXAMPLE 1: WILDSILK Wildsilk is a non- profit organisation that innovated between 2011 and The objective of this enterprise is to harvest and process silk produced from cocoons of the silk- producing moth, commonly called the silkworm. These cocoons are collected, cleaned and degummed by community members by hand. Cocoons are commonly found in mopani and acacia trees as gonometa moth larvae (silkworms) consume the leaves of these trees. The primary economic sector in which Wildsilk operates is the manufacturing sector. 28

39 7.2.1 Description of the enterprise and innovation activities Wildsilk was founded in 1997 by community members. However, a number of stakeholders came together to develop the organisation and the production of wild silk. Currently, Wildsilk is not fully registered as a business and consequently also not registered with South African Revenue Services (SARS) for tax purposes. However, they are in the process of registering. The produced yarn has not yet been taken to large commercial markets but was only been sold in the local market. Prior to the establishment of a gumming plant, community members in the village spun yarn by hands from African wild silk moth cocoons. This process was not that efficient and highly time- consuming. Consequently, the Council for Scientific and Industrial Research (CSIR) got involved in researching the quality of the actual silk fibre produced, skills transfer, the creation of a viable market for the silk and a commercial pilot. At the CSIR offices in Port Elizabeth, natural fibres such as wild silk are being used to create exciting new fabrics. It was inevitable that the various stakeholders would notice the economic potential of this NPO and provide the necessary support structure Innovation value chain Wildsilk is working closely with the Department Trade and Industry, North West Province Department of Economic Development and Tourism, Northern Cape Department of Economic Affairs, Dr. Ruth Mompati District Municipality and Kagisano Local Municipality, local community, the Tlou le Tau and Ba Ga Mariba tribal authorities and the CSIR. In the past two years stakeholders agreed that CSIR from Port Elizabeth office will lead and manage Wildsilk. CSIR was involved in acquiring the new building and equipment for the project. The current manager of the enterprise is also appointed by CSIR. Other stakeholders contribute to the success of the Wildsilk enterprise. North West Province Department of Economic Development and Tourism was the first stakeholder to fund Wildsilk. The tribal authorities manage and control the fields; therefore, they grant permits to community members for the right to harvest cocoons. Adoption process: Wildsilk adopted an innovation process of producing or turning hatched cocoons into yarn. Yarn is further used to produce fabrics. In 2011 Wildsilk obtained buildings and equipment for a more efficient production of yarn and other fabrics. Furthermore, the necessary local management system together with general project management was provided. The enterprise adopted a degumming plant from CSIR. CSIR s Textile Technology Division from Port Elizabeth office implemented technologies for the harvesting, cleaning and degumming of the wild silk cocoons, which are found in acacia or mopani trees. The degumming process includes hand spinning, hand weaving, sewing and dyeing. CSIR further trained personnel on how to operate the machinery. The degumming plant is a chain of machines performing different functions. These include producing sliver web (performed by card opener), spinning single ply yarn (performed by spinning machine), packaging single ply yarn (performed by assembler winder) and other functions. 29

40 7.3 EXAMPLE 2: PEANUT FARM The Peanut Farm, briefly mentioned in Section with its complete IVC, is a registered private enterprise established in This enterprise in the agricultural sector is considered a family business, the land has been passed from father to son for many decades, with its main activities to grow, produce, harvest and sell agricultural products to a variety of people and organisations. Some of the key types of products are corn, peanuts, horses and beef Description of the enterprise and innovation activities Peanut Farm is a good example of an enterprise that innovates regularly for the purpose of increasing its profits. Amongst many innovation activities, the invention of The Peanut 100 Machine stands out. The Peanut 100 Machine is machinery developed to improve the efficiency of harvesting peanuts. The idea to develop The Peanut 100 Machine was conceptualised by the owner of Peanut Farm. This idea was taken to AB Engineers. This is a light engineering/manufacturing enterprise that collaboratively developed this idea into a final product in the rural setting of the local municipality in This invention was created to reduce the size of the workforce in the farm s harvesting process and to reduce the harvesting time. The designers insisted that the less amount of contact between the peanuts and human hands the better it would be for the overall quality of the produce. The Peanut 100 Machine is attached to the rear of a tractor and improves the harvesting process of peanuts by sucking up the harvested peanuts and depositing them in the trucks that drive alongside The Peanut 100 Machine. The news of The Peanut 100 Machine was spread locally by both the designer and manufacturer, following which other farms became interested in this implement. This interest provided the opportunity to diffuse the machine. However, the prerequisite for the distribution of the machine was that Peanut Farm had to illustrate its ability before other farms would be interested in purchasing the product. As a result, approximately a year after the invention of the product other farms ordered and adopted the machine and one, Other Farm, adapted The Peanut 100 Machine by changing the angle of the delivery pipe that blew the peanuts into the collection containers that follow machine as the peanuts are picked up from the ground and then blown, through this adapted pipe, to the peanut capturing containers Innovation Value Chain The Peanut 100 Machine is an example of the IVC that consists of various innovation activities. It started with the invention of the product (an innovation activity seldom found in the rural setting). Not only is it rare to find an example of invention in a rural district, it is even less common to find an example of IVC which can be traced across multiple enterprises. The invention of The Peanut

41 Machine resulted from the collaboration between two enterprises from different sectors, one being from agricultural and another from engineering/manufacturing sector. This same innovation was then adopted by other enterprises, after the diffusion of the innovation by Peanut Farm and after successful adaptation to the innovation by Other Farm. The IVC in this instance contains all types of innovation (invention, adoption, adaption as well as diffusion). This IVC can be illuminated through the tracking of a single innovation in multiple enterprises. This would be a new approach of tracing innovation and serves as a good example of how an IVC of a specific innovation can be understood when multiple enterprises are involved. 7.4 COMPARISON OF THE ILLUSTRATIVE EXAMPLES Do rural people benefit from innovations? Based on the two examples presented above, the answer is Yes and No. In one example we find a strong theme of social innovation, however the other example uses innovation for economic profit. In the first example of Wildsilk an innovation activity of organisational arrangement occurred and rural residents appear to have benefitted from this activity. More in depth research may illustrate differences in how and in what ways people benefitted. Wildsilk adopted an innovation process of producing or turning hatched cocoons into yarn instead of doing it manually as previously. This innovation was achieved with financial and managerial support of various government and non- government organisations. However, it still relies on this support. In the second example an invention has occurred, followed by adoption, adaption and diffusion. The invention of a product rarely happens in rural settings and the invention of The Peanut 100 Machine is indeed one of the very few we identified. This product did not benefit the community at large; however, it did benefit the production value chain of peanuts in the local and neighbouring communities through quicker harvesting and delivery of apparently better quality of peanuts to the market. The key difference between the two examples is the sector of innovation activity. Given that the first example is that of a non- profit organisation, innovation mostly benefited the local community as expected. However, the intention is sustainable harvesting and processing of better quality wild silk in a shorter period by using locally available natural fibre. Through this action it is expected that part- time and permanent jobs will be created and the manufacturing value chain expanded, improved and localised. On the other hand, the second example is that of a private enterprise - thus, not surprisingly, the invention of the product, followed by its adoption, diffusion and adaption, was motivated by direct economic benefit such as increase in market share or profits. Here the purpose was to improve quality, mechanise the harvesting process and reduce costs. As such it is possible that some seasonal unskilled labour may be lost. 31

42 8. MICRO OR INTERNAL ENVIRONMENT OF THE ENTERPRISE This section provides a glimpse of the internal organisational environment of public, private and non- profit enterprises sampled in the DRM District Municipality. Internal factors, such as the access to basic services including water and electricity as well as access to resources such as infrastructure, scientific knowledge, educational facilities and skilled personnel are deemed likely to influence and enable the ability of enterprises to engage in innovation activities. Some enterprises, particularly those situated near the major towns, are likely to have access to a range of facilities even though they might not have ownership of these facilities, i.e. enterprises and organisations close to towns are able to access libraries and through libraries or the local post office they might access fax machines, copiers, computers and the internet. The study was also interested in where enterprises most often carried out their innovation activities INNOVATION ENABLING ENVIRONMENT The internal environment is composed of the elements within the organisations, including current employees and the basic services which are available to the enterprises (specifically referring to energy, information and communications technology (ICT) and transport) and which could have an important role to play in the innovation abilities of enterprises. The research was specifically interested to find out if the internal organisational environment was conducive to the innovation activities identified in the various enterprises. Here we provide a table and a basic description of the internal organisational environments which provided the opportunity for innovation activities. It is evident from Table 8.1 that most innovation activities take place in the community/at home (47%) or on the business premises (29%). Smaller shares are conducted on farmlands or fields (13%), followed by factories or workshops (7%) and very little in higher education institutions (2%) and primary or secondary schools (2%). Most enterprises have explained that they have access to basic facilities such as running water, toilets that work and electricity. This access to basic resources is deemed valuable for the innovation activities of the enterprises. When the organisations have access to the basic resources, their innovations are less sporadic and more controlled. When basic services are provided, the enterprises in the DRM district are able to invest more money into more aspects of their innovation activities, including further skills development. There is a correlation between the ability to invest in innovation activities and the access to basic services. With regards to ICT- related or educational resources, less than half of our sample has access to libraries and less than 10% has access to science laboratories. The cell phone is the most utilised ICT device in all types of enterprises (97%). However, this device is not used exclusively for innovation activities; only 54% of the enterprises use a cell phone for innovation purposes. Other resources like computers and internet are available for most of the enterprises of the sample. Similar to cell phones, although more than 70% of the enterprises have 32

43 access to computers only less than 50% utilise them to access the Internet. Roughly one out of three enterprises is connected to the Internet. Table 8.1: Share (%) of enterprises with direct access to resources and facilities for innovation, (N = 122) Valid observati ons Share (%) Public enterprises (n= 31) Share (%) Private enterprises (n= 57) Share (%) Non- Profit organisa- tions (n= 34) Share of Total (n=122) Main place of carrying out innovation activities Farmland or field Business premises Community/Suburb/Home Factory/Manufacturing/Workshop Higher education institutions Primary or secondary school Direct access to resource Plumbed running water Flushing toilets Electricity Library facilities Science laboratory Computer Landline Cell phone Internet ICT devices most used for innovation activities Cell phone Landline ICT hardware to access Internet Computer/tablet Smart/cell phone Don't have either Internet connecting device for innovation activities Own 3G/cellular network Own satellite Own ADSL Note: Valid Observations refer to the number of non- missing values; n = the total number of observations/enterprises (individuals or companies) 8.2 THEME 1: INNOVATION AS NEW IDEAS AND CREATIVE THINKING IN AN ENTERPRISE The first theme that is typical of the DRM district is based on responses which include phrases such as new ideas and creative thinking in the self- learning sections. The respondents have shown that they have learnt that innovations are about new ideas - whether they are products, processes, 33

44 marketing strategies or organisational arrangements - which have been considered when wanting to make improvements in the enterprise or community. The new ideas are understood as the end result of the creative thinking process. This process involves being aware of what the enterprise entails, through basic skills development and sector- specific skills development training, in order to establish where the new ideas can be introduced into the enterprise to ensure the innovation. One response that stands out is Thabo s furniture manufacturers. This private furniture manufacturing enterprise started in Thabo explained that he had learnt that innovation is about [being] creative and [to] come up with new ideas. I now realise that [I] am also innovative because [I] am using waste products to create something new. Thabo was able to understand that the activities within his business could be understood as innovation and that the reason for his innovation was the result of a process of creative thinking and the introduction of the new idea. Thabo adopted a new product in 2011, when he started making furniture from waste products. Thabo started the interview process explaining that he had no idea about what innovation meant. This is a good example of how enterprises are able to associate the concept of innovation to the activities of the enterprise. If innovation is going to be explained in the district it should be done from the perspective of the enterprise. Innovation terminology should reflect the activities of the enterprises rather than defining innovation from the start. The self- learning component offered an opportunity for the participant to express what they now understood to be innovation in the enterprise. The self- learning component encouraged the participant to engage with the terminology and make sense of it in terms of the enterprise s activities. The self- learning component has revealed that enterprises are internalising the concepts of innovation and are able to link them to the everyday activities of the enterprise. The enterprises that express this awareness of innovation do not make specific reference to any particular type of innovation but rather express that enterprises can identify with the concept of innovation in broad terms. The self- learning component revealed that individuals use the idea of innovation as new ideas and as having importance in the day- to- day activities of the business. 8.3 THEME 2: INNOVATION IS MORE THAN INVENTION, IT IS A CONTINUOUS PROCESS The second theme that can be seen in the DRM district self- learning responses includes responses that make references to the idea that notions of innovation have been broadened. The term innovation has been understood in a new light, one which includes multiple types of innovation. Innovation is not limited to being defined as purely invention. The broadening of the definition is important when identifying enterprises in the district, as well as ensuring that enterprises are not subjected to a single category of innovation activity. The broadening of the definition of innovation to include multiple activities and types of innovation is said to offer more opportunities for innovation within the enterprise. One enterprise, Sunrise Farm, explained that they could now give a name to it [innovation] and formulate a better understanding of what they are doing on a daily basis [with regard to the variety of innovations]. The enterprise found value in understanding the various types of innovation which meant that they could make sense of the activities carried out in 34

45 the day- to- day activities as the processes of innovation. The responses have shown that invention as understood from the perspective of anything new or improved in the enterprises activities allows for an understanding of innovation as more than invention. This ensures that enterprises are aware which of their activities are innovation activities. The definition has offered the room for people to position their innovations into the process or value chain. Enterprises appreciate the broad understanding of innovation and can better associate with the idea of innovation. Other comments made that fall into the same theme include thought about the scope of innovation, making reference to the fact that there is a broader scope of innovation. 8.4 THEME 3: NETWORKS AND NEW CONNECTIONS ARE IMPORTANT The third theme that is clear in the DRM district is the acknowledgement that networks of innovation are important and that if networks do not exist then they should be considered if the innovation process is going to continue. This theme consists of response that make references to: 1) the established network that may be accessible for innovators and will assist in the innovation process; 2) in order to achieve things (develop) enterprises should be willing to consider inputs from the right people; and 3) channels should be in the networks to ensure more access to information. One example of such a response was by Ben s Glasswork, who explained that the interview provided us with some information on innovation and the usefulness of networks either formal or informal. The response shows that networks of innovation are not always clearly understood in the local context and that the networks may be valuable in the innovation process. If enterprises are not aware of the networks then getting assistance will be a problem. Enterprises are not adverse to the idea of using a network to achieve their innovations, with many explaining that cooperation would ensure greater development for the local enterprises, with a typical response such as I learnt that cooperation with other organisations through a network facilitates and improves development processes in local areas. The need for a network is explained as a possible means for ensuring better innovation within the local areas. The enterprises explain that with the establishment or association with a network, the innovation process may be made easier. Many enterprises seem to be in agreement that networks which relay information, insight and resources would encourage greater innovation. These responses have shown that innovation networks are a possible space where innovation knowledge and processes can be improved. 8.5 TRAINING AND SKILLS DEVELOPMENT Skills and training opportunities within the enterprises are considered necessary because of the local opinion that these are important in the innovation process. The skills that are important for innovation are defined as basic educational skills, technical or sector- specific skills and professional skills. Interviewees noted that the most needed skills, in relation to increasing and continuing 35

46 innovation activities, are basic skills. Enterprises usually explain that language, writing and communication skills are crucial to the innovation process. The basic skills are understood by respondents as the key indicator of whether or not the business has the capacity to innovate. Many enterprises expressed a desire to have their workforce trained in order to ensure greater innovation within the specific sectors. The enterprises describe that there are particular skills that are essential to the innovation process. These skills are not necessarily sector specific, although there are examples where skills training in specific sector- based activities are mentioned as crucial to the innovation process, such as a fairly comprehensive understanding of the core knowledge and practices of the sector. The majority of skills mentioned by the enterprises are related to interpersonal skills, some of which are basic skills such as reading, writing and communication as noted above. An example of the sector specific skills required for innovation is that from Diamonds of the North, an enterprise in the mineral and mining sector. The enterprise adopted new machinery in 2011, this machinery included tippers, caterpillars and more powerful loaders. These machines are described as highly technical, requiring special skills to operate them. The enterprise explained that the adoption was only possible due to the knowledge of the digging process and knowledge of diamond mining. They also explain that skilled workers are vital in the implementation and adoption of the equipment. These sector specific skills are needed for the effective adoption of innovations as well as the continued application and maintenance of the innovations. Of the 49 employees in the enterprise, 24 were enrolled in skills development programmes. These skills development programmes, focusing on safety and assisting workers to get their driver s licence, had a positive effect on the innovation activities of the enterprise and are explained as assisting in skills on how to do the job [mining] successfully. The key message in this example is that the adoption and diffusion activities require skills to ensure successful innovation. Without the skills required to use highly- technical equipment as well as prior experience in using similar machinery along with previous knowledge of diamond mining/digging, the adoption will fail and the diffusion will not be able to take place. 9. MACRO CONTEXT - BROADER INSTITUTIONAL AND REGULATORY ENVIRONMENT This section provides a description of the institutional environment of the DRM district and considers the regulatory, external support and resource environment that is evident in the DRM district. An understanding of whether or not enterprises experience the legal, policy and standards regulatory environment as supportive of innovations in the internal organisational environment is also important when making sense of the internal organisational environment, and is also presented in this section. There is also a brief discussion on the role players within the innovation environment. The purpose of this section is to establish what resources are available, who supplies the resources, 36

47 who has access to the resources and what resources would encourage future innovation in the DRM district? The concluding remarks include possible areas of consideration that could ensure an increase in appropriate innovation within the district. 9.1 THE LOCAL AND NATIONAL LEVEL OF INSTITUTIONAL SUPPORT The DRM district has innovation activities which primarily involve the adoption of products and processes. These adoptions entail both low as well as high technological innovations. As mentioned above the adoptions usually take place to ensure greater success within the enterprise. These innovations are usually adopted from a variety of enterprises situated at the local, national as well as international level. The innovations adopted are usually attributed to the external support and resource environment in the DRM district. The adoptions which are introduced are also subject to the regulatory environment of South Africa. The adoption process is inextricably linked to the external environment which provides resources and assistance to innovation adoptions in the DRM district. This section will begin with a description of the role players, support structure and resource provision involved in the adoption process within the district. The diffusion of innovations usually only occurs after the successful adoption of an innovation. Diffusion is usually influenced by both local and national role players. The adaptation of innovations will be discussed in relation to the local external environment. In essence, this section will provide a description of the institutional environment of the DRM district. Established locally based organisations, such as the local municipality, and national research and support agencies, such as SEDA (Small Enterprise Development Agency) with a presence in the province are key role players in the macro- institutional environment. These organisations are said to offer much needed assistance to informal and formal enterprises in the DRM district. This assistance is not always directly linked to the process of innovation, but they do assist in ensuring the enterprises that receive assistance continue to have the opportunities to innovate in the future. This is achieved by offering platforms for interaction: employee training; provision of permits to operate according to sector standards; by ensuring that enterprises continue to look for new ventures (innovations within the sector); and the financial incentives which are a necessary but not exclusive driving force of innovation. While local municipalities are listed as a part of the innovation network of some enterprises in the DRM district, there is also a large amount of criticism of the local municipalities and their inability to provide basic services such as water, electricity and sanitation, which are crucial for many innovation activities. The contribution of local municipalities is usually limited to their financial contributions to the operational activities of the enterprises that collaborate with the municipalities. One example of limited local municipal involvement in the innovation process is Jet s Training School, mentioned above. The enterprise adopted a new 12 month internship programme and started offering mobile 37

48 training. The enterprise started providing courses in the various villages and towns rather than on their main premises. This cut out the cost of travel for the people enrolling in the courses. The enterprise is associated with various locally represented government departments such as the Department of Higher Education and the Department of Labour. The support provided was financial support in the form of accreditation and subsequent subsidies for learners, rather than skills development or assistance in identifying the needs of the community. Despite a lack of support (such as training for skills development and planning associated with the innovation implementation and adoption) in these areas, the municipality was mentioned as being important in getting the mobile training idea incorporated into existing structures in the district. One example is assisting in getting the mobile training started in the already established government environment. An example of assistance provided, which is not directly related to innovation but offers opportunities for future innovation, is skills training. This may not be aimed at developing innovative thinking as such but rather aims to improve basic skills. Once the basic skills have been learnt, the enterprises and individuals are believed to be in a position to innovate in the future because they have an understanding of the basic skills required in their sector which can improve the ability to adopt new innovations. Important to the local enterprise innovation activities are the collaborations between different private sector enterprises. One such example is The Peanut 100 Machine mentioned above. There was collaboration between AB Construction and Peanut Farm to develop an innovation for the local peanut farming sector. This collaboration is viewed as essential in the macro- institutional support environment and is seen in a number of instances where enterprises come together to innovate successfully and appropriately, by sharing knowledge, skill sets and other resources. One of the reasons for this local collaboration is the awareness of and access to these enterprises in the district or in adjacent districts. Such awareness may not exist of enterprises further afield. The diversity of enterprises that are innovating and can contribute to innovation is important in the DRM district. Innovations within the DRM district are not restricted to actors within a single sector, such as agriculture. There is some amount of inter- sector collaboration within the district and this can be seen in the case of the The Peanut 100 Machine - the two sectors involved in the innovation are the agriculture sector and the engineering/manufacturing sector. If this collaboration did not take place the invention of The Peanut 100 Machine would not have been possible. This demonstrates that innovations can result from inter- sector collaboration. 9.2 REGULATORY ENVIRONMENT An understanding of whether or not enterprises experience the legal, policy and standards regulatory environment as supportive of innovations in the internal organisational environment is also 38

49 important when making sense of the internal organisational environment. The majority of enterprises express that they view the legal, policy and standards regulatory environment as supportive of innovations. With such satisfaction it almost seems as if no change is needed. However, while the respondents suggest that the legal, policy and standards regulatory is supportive, they qualify responses with comments such as [we need] regulation of contracts and cooperation or [there needs to be] consistent follow- ups on the progress that is done. The enterprises are satisfied with the legal, policy and standards regulatory environment of South Africa but express dissatisfaction with their implementation, application and enforcement. The problem seems to be not with the regulations, but with the implementation of the various regulations; which is a point that has to be borne in mind when researching innovations. There has to be an appropriate application of these legal, policy and regulatory standards in South Africa, including those that are concerned with innovation activities. There is also a lack of awareness of broad innovation regulations in some instances, noted when enterprises were asked to define innovation. They are often unable to make reference to the legal, policy and standards regulatory environment. There has to be a focus on making enterprises aware of this support structure in South Africa; currently too many enterprises lack the knowledge of the policies and cannot benefit from the support that is available. Similarly, they are unaware of the limitations of what they can do and how they can adhere to standards or go about registering new innovations. When enterprises explain that the legal, policy and regulatory environment are not supportive; they indicate that information sharing and coordination should, at least, be improved. The enterprises explain that if people are made aware of the support structures they will then be able to attempt to make use of the support. When enterprises express that there is a lack of support from the legal, policy and standards regulatory environment their responses are not associated with policy specifically dealing with innovation, but make reference to policy that is sector- specific, which is seen as negatively impacting innovation activities. For example, an enterprise in the agriculture sector called ABC Potato Farmers indicated that agricultural sector labour laws are forcing them to innovate in a way that discourage them from supporting innovation that is more labour intensive and encourages greater employment of local workers. 9.3 REASONS WHY INNOVATIONS ARE NOT INTRODUCED Some of the more common reasons why innovations are not introduced into the enterprises need to be discussed in some detail. First we give insight into the explanations provided by the enterprises as to why innovation may not always be possible or introduced. In the DRM district innovations are usually introduced; however, there are instances where introducing innovations encounter some challenges. This may have been an interruption in the IVC or rather an obstacle which needed to be overcome prior to the innovation being introduced. In some cases these innovations are successfully introduced into the enterprise while in other cases this process of innovation is slowed down, put on 39

50 hold or even prevented. The reasons provided span across the capabilities of the enterprises (socio- economic factors) and the enterprises relation to the supportive environment. Enterprises are restricted to the innovations that can be effectively assimilated or adopted due to the level of capability within the enterprise. These missing capabilities are usually explained as meeting standards of the head office, cash flow problems and as too expensive to maintain. These responses emphasise that innovation, to a certain extent, is not only attributed to the enterprise s internal desire to innovate. The innovations may be dictated by external institutions such as government departments (local and national) and sector specific regulatory bodies which are actively involved in the enterprises activities (farmer s associations, head offices of franchisers, or suppliers of innovation- specific resources) which influence when, why and how innovations may or may not be introduced. These external institutions directly impact on the internal capabilities, flexibility and resources available for the enterprise. While money is not the only factor innfluencing innovation, it may just offer insight into one of the possible difficulties in the innovation process. Some of the day- to- day obstacles include the cost of travelling within the district, transport of goods and services, the high cost of basic amenities (water, infrastructure and electricity) and developing staff capacity (basic training of employees). While innovation may not be directly related to all these factors, they do influence the final decision making process on whether or not to innovate. One of the bigger stumbling blocks in the introduction of innovations is the lack of coherent support for innovation in the rural district by the various government representatives. The government is mentioned on several occasions when unpacking the reasons why innovations may be difficult to introduce. There is specific reference to the lack of coherent and easily accessible innovation policy and the government does not have sufficient mechanisms in place to ensure enterprises (both commercial as well as individual) have a platform to engage with their requirements for innovation. With comments ranging from access to information by [the] municipality to having financial support it is clear that there is a need for the government s active involvement in the introduction of suitably desired innovations. Another difficulty experienced by enterprises with regards to the government is the highly bureaucratic funding process. The funding available usually only provides enough to start the enterprises and in many instances financial support does not continue to ensure that the enterprises grow. This may be more clearly understood as simply starting an innovation by funding limited funding and not seeing the idea through to fruition and even further dissemination. This approach is often ineffective when trying to get enterprises to innovate. Table 9.1 below substantiates some of these points. One out of four enterprises reported to be familiar with South African STI Policy, where most of the respondents (48%) are from the public sector. Although the majority of the enterprises (58%) reported to be aware of the state support for innovation, only one out of four enterprises actually applied for this support. By unpacking even further, it becomes evident that out of 74% of public enterprises, who are aware of the state 40

51 support, only 16% applied for the support. Similarly, out of 46% of private enterprises who are aware of government support, only 9% applied. In contrast, out of 65% of NPOs, 56% applied for government support. Table 9.1: Share (%) of enterprises familiar with STI state policies by enterprise type, (N=122) Innovation support Aware of SA STI policies Valid observations Public Enterprises n = 31 Private Enterprises n = 57 Non- profit Organisations n = 34 Yes No Aware of state support for innovation Yes No Applied for state support for innovation Yes No Note: Valid Observations refer to the number of non- missing values; n = the total number of observations/enterprises (individuals or companies) These results highlight the importance for the government to educate enterprises on South African STI policies as well as on when and how to apply for government support and engage in innovation activity. Table 9.2 below presents crucial information about enterprises participation in innovation systems and networks. More than 85% of the enterprises are part of an innovation system, whereby all NPOs of the sample are part of the innovation system followed by public enterprises (97%) and private enterprises (70%). Another interesting finding is most of them engage in formal innovation systems, whereby NPOs lead with 92% of the enterprises, followed by public enterprises (87%) and lastly private enterprises (53%). Additionally, between 35% (public and private sector) and 59% (NPO sector) of enterprises reported to be part of systems that are locally based. However, the remainder reported to be part of a system that is not locally based - and here the public sector takes the lead. Lastly, less than 5% of the enterprises could report whether the innovation system they are part of is part of the NSI; this may be related to the question from Table 9.1 where there is little awareness of STI policies - and thus there may be little awareness of NSI generally. 41

52 Table 9.2: Share (%) of enterprises participating in innovation networks and system by enterprise type, (N= 122) Public Private Non- profit Valid Innovation system Enterprises Enterprises Organisations observations n = 31 n = 57 n = 34 Part of innovation system Yes No Type of innovation system Formal Informal System mainly locally based Yes No Innovation system part of NSI Yes No Note: Valid Observations refer to the number of non- missing values; n = the total number of observations/enterprises (individuals or companies) Enterprises have also expressed dissatisfaction with the financial framework within the district; explaining that financial incentives are not provided for innovation or hard work, and that the funding and regulations should be supportive of enterprises that are proactive and show creative and innovative drive. The second most influential institutional group includes sector specific regulatory bodies which are actively involved in the enterprises activities (farmer s associations, head offices of franchises, or suppliers of innovation- specific resources). In some instances an obstacle to innovation in the DRM district are manner in which these regulatory bodies interact with enterprises in the district. On the other hand, enterprises are restricted by the legal, policy and standards regulatory environment in South Africa. Respondents explain that the policies are not implemented correctly and are usually not considerate of the situation in the local setting. They explain that in some instances innovation was a laborious task which took months for approval before any form of action was taken. One such example is of Consideration Farm established in This enterprise adopted a new process of breeding drought resistant cattle. The process adopted is known as In Vitro Fertilisation (IVF). This is a process by which an egg is fertilised by sperm outside the body. This process allowed the breeder to match the genetics needed to create a cattle breed which may be more resistant to drought in the district. This process was started in 2011 and required the importation of semen from Australia. This is one of the few farms, in South Africa, that is equipped for the procedure of collecting the embryos and then carrying out the IVF in a fully equipped laboratory which is situated on the farm premises. The enterprise explained that the prevailing policies do not allow for faster introduction of the 42

53 innovation, which meant that their innovation process was delayed as a result of the regulatory environment, including importation and quarantine regulations. 10. CONCLUSION AND LESSONS This report provides preliminary findings on using the Rural Innovation Assessment Toolbox to map innovation activities among a purpose- built sample of 122 enterprises in Dr. Ruth Mompati District Municipality. To contextualise the findings and motivate some local development possibilities that investment in innovation might be able to increase, this report started with a brief overview of pertinent demographic and socio- economic information of Dr. Ruth Mompati District. About 13% of the provincial population lives in Dr. Ruth Mompati District, with more than 65% of these residents located in rural areas cross this district. Human wellbeing indicators (poverty rates, inequality measures and the Human Development Index) of the district generally fall below the provincial averages for the same indicators, suggesting relatively lower quality of life and living standards than the average person living in North West Province. The district is largely a cattle producing district in the country, known by many as the Taxas of South Africa. Looking at the sectoral composition of the district s economy, it is worth noting that tertiary services (73%), followed by primary activities (particularly agriculture), dominate gross value added and economic growth. It is against this backdrop that this report has begun to explore the potential of innovation activities as a catalyst for human wellbeing enhancing local development. Several high- level insights flow from the assembled evidence and deserve to be underscored as a helpful step towards thinking about appropriate policy recommendations. Based on technical criteria about registering with an enterprise authority and for income tax purposes with SARS, approximately 75% of all sampled enterprises could be classified as so- called formal sector enterprises. This does not mean that the kinds of economic transactions these enterprises undertake are always strictly formal contractual arrangements; for it is well- known that officially and outwardly formal organisations are active in multiple informal economic relationships and vice versa. Another striking feature of these enterprises is that they are predominantly involved in tertiary services, with the largest share of enterprises found in community and social services, and trade and finance. Little is known about innovation in Dr. Ruth Mompati District, as an exhaustive and coherent picture of localised innovation actors and activities in this rural district does not exist. This study is an initial attempt at filling this knowledge gap and the authors are mindful of the fact that the documented evidence of innovation in this report makes up a tiny fraction of what might be occurring in reality. Nevertheless, it is a repository of policy- relevant information which did not exist prior to this study and can serve as a useful guide to policy interventions aimed at boosting local innovative performance, which ought to begin with knowledge capabilities and what enterprises within the district actually know (or do not know) about innovation. 43

54 In the sampled enterprises, almost all respondents equated innovation with hard technologies, creativity, and bringing something new into the enterprise. The conventional idea of innovation was fairly well known among participating enterprises. Almost 90% of private organisations engage in innovation activities for direct economic benefit. Not surprisingly, 75% self- report no awareness of the restricted meaning of social innovation. On the other hand, a substantial share of sampled public and non- profit enterprises pursue innovation activities with the explicit or implicit goal to improve human and social wellbeing, yet no more than one out of four of these organisations reported an awareness of the restricted definition of the concept social innovation. This fact, if coupled with increased government support to social innovation may well increase the prospects for new ideas and practices to directly uplift the living standards of large numbers of people. Alongside what enterprise representatives knew about innovation, a more pressing concern has to do with poor localised awareness of national innovation policies and government assistance to promote innovation at grassroots level. Approximately 30% of enterprises self- reported an awareness of national Science, Technology and Innovation (STI) policies - heavily skewed in favour of public enterprises. A significant share of the enterprises considered institutional support (policies, laws and agencies regulating and supporting innovations) an important contributor to innovation activities. However, what reduces an appreciation of the need for institutional support is the disproportionately negative perception of institutional support prevalent among private enterprises in our sample. Why private enterprises would be averse to institutional support for innovation is difficult to answer and would probably begin with an in- depth case by case investigation of their opinions. A novel framework to comprehensively document the nature and extent of innovation activities (invention, adoption, adaption and diffusion) in Dr. Ruth Segomotsi Mompati underpins this report. With the aid of this approach and its related methodology, the study was able to uncover patterns of rural innovation that can potentially overcome rural underdevelopment and raise the living standards of rural communities. Very few enterprises in this district are pioneering creators of new products, processes, organisational or marketing arrangements coupled with intensive research and development for new knowledge production. This traditional notion of innovation, or simply invention, did not exceed 2% for the years 2011 and The virtual absence of invention is not surprising because the critical drivers of original knowledge and artefact creation are generally missing - as shown by the low- levels of self- reported access to scientific labs and libraries for innovative activities. Sampled enterprises rarely had or used a specialist R&D division, self- experimentation or tapping into discoveries of tertiary and scientific agencies as platforms for invention. Adoption activity was far more prevalent among enterprises and this stands in sharp contrast to invention. Over 85% of enterprises adopted innovation in 2011 and/or

55 Although the lack of appropriate infrastructure as well as other explicit and transaction costs might be typical barriers to adoption, the findings show that knowledge sharing and networking facilitate the adoption and use of innovations. In fact, more than 85% of sampled enterprises are actively involved in knowledge sharing networks which adopters are most likely to benefit from. Among the enterprises participating in self- reported networking for innovation, interactions with partners are predominantly formal rather than informal. Moreover, although most examples have suggested how technological activity has been fundamental to the success of the enterprise, some case studies illustrate the adoption of highly technical innovation which required great skills level. With regards to skills and training development, it was argued that basic education skills such as language, writing, interpersonal and communication skills are most important for innovation activity to take place. Government could provide necessary infrastructure and support to stimulate the development of these skills. The Dr. Ruth District Municipality sample results expressed a new aspect of the innovation value chain that has previously been unacknowledged in the earlier pilot phase, and that is innovation trail. Innovation trail or the referral method is the tracking of innovation activities which cut across sectors as well as enterprises. An example of such innovation was illustrated through a case study of The Peanut 100 Machine. The last two sections of the report looked at the internal and external environments which also influence innovation activity in the district. Although the socio- economic data suggests poor access to resources such as basic services, the respondents of the selected sample indicated having access to basic resources such as running water, electricity, toilets, libraries, etc. The majority of enterprises express that they view legal, policy and regulatory framework as supportive of innovation; however, many are dissatisfied with their implementation, application and enforcement. In addition, many lack knowledge of the policies and thus cannot benefit from the support simply because of a lack of awareness. While there is some evidence of innovation activity in the district, improved government support could largely improve the environment for innovation. One of the reasons identified by the sampled enterprises is the lack of coherent support for innovation in the rural district by the government. Also, the highly bureaucratic funding process is discouraging for most enterprises. At the enterprise level, lack of capacity is another reason for the low level of innovation. This factor could also be improved through government support. To sum up, findings of this pilot study in Dr. Ruth Mompati District support a basic proposition: In order for innovation to be a catalyst for rural development, with an emphasis on enhancing human 45

56 wellbeing, then the costs hindering innovative performance must be cut. In practice this means enabling the ability of enterprises based in Dr. Ruth Mompati District to adopt and adapt innovative products, processes, organisational and marketing arrangements. Even though the cost of scaling up innovative activity is a major concern, the non- profit and private commercial enterprises that actively adopt and adapt rarely applied for government support for the dominant innovation activities. Reasons for this ought to be further investigated and must begin with aggregating the total value of government investment in innovation activities across this district. Strengthening learning capabilities of actors in the local innovation space, especially knowledge of STI policies and the National System of Innovation, combined with effective institutional coordination, are urgent interventions needed to successfully harness innovation for broad- based quality of life enhancement in rural Dr. Ruth Mompati District. 46

57 11. REFERENCES Global Insight (IHS Global Insight Regional explorer Data) South Africa. Accessed: 10 May Gault, F Innovation strategies for a global economy: Development, implementation, measurement and management. Ottawa, Canada: International Development Research Centre (IDRC). Hart, T., Jacobs, P.T. and Mangqalaza, H Key concepts in innovation studies Towards working definitions. RIAT Concept Paper Series Concept Paper 2. Pretoria: Human Sciences Research Council. Mhula, A., Jacobs, P.T. and Hart, T Innovation methods Indicator development. RIAT Concept Paper Series Concept Paper 6. Pretoria: Human Sciences Research Council. DRM (Dr Ruth Segomotsi Mompati District Municipality Integrated Development Plan Third Generation ) Accessed 20 May Integrated Development Plans/ /03. District municipalities/dc39 Dr Ruth Segomotsi Mompati/DC39 Dr Ruth Segomotsi Mompai - IDP pdf YF/SIX (Young Foundation / Social Innovation exchange) Study on social innovation. A paper prepared by the Social Innovation exchange (SIX) and the Young Foundation for the Bureau of European Policy Advisors. Obtained from the South African National Council for Innovation (NACI), August

58 APPENDIX ONE: RURAL INNOVATION ASSESSMENT TOOLBOX (RIAT) FEEDBACK SESSION TO DR. RUTH MOMPATI DISTRICT DR. RUTH MOMPATI DISTRICT MUNICIPALITY, VRYBURG, NORTH WEST 5 September :30AM 14:30PM 8: Registration and tea 9.00 Opening and introductions Proposed Workshop Agenda 9:30 Rural Innovation Assessment Toolbox [RIAT]- Overview of RIAT, Concepts & Methods Discussion Engaging with RIAT Evidence - Presentation & Open Discussion 11:00-12:30 Self- reflection & Horizon Exploration How to harness Innovation for development in Dr. Ruth Mompati? Out- of- box thinking about localized innovation activities 12:30-13:15 Enhancing Rural Innovation Networks/Systems Learning from the evidence to fine- tune our rural innovation vision Where do we go from this point forward? Evaluation 13:15-14:00 Lunch 48