The year 2013 ended with a downward revision of South Africa’s economic growth to 1.9 percent, making 2014 a pivotal year for the country. We are not doing enough to boost the economy in the medium term, or to provide the quality of life needed for sustained expansion.
How then might we enable positive, workable solutions to this challenge – and how might Cape Town lead the way?
For starters, we need to embrace the concept of the Cape region as a “living lab” where multinational corporations can easily base themselves. There is good infrastructure – schools, health care, lifestyle factors – and a largely emerged market that benefits from immediate access to emerging African markets.
Much is made of the east African entrepreneurial environment and the growing economy of Nigeria, but Cape Town – aspiring to be Africa’s global city of innovation and inspiration – stands on the cusp of a great opportunity: to be the city and region where African solutions are developed for African challenges.
Business needs to lead. The time for inaction has passed if we are to retain the high ideals of 1994. We must recognise our strengths and play to them, rather than lament the poor state of national politics and the perceived lack of effective leadership in the country.
One of the key constraints to economic growth appears to be a lack of clarity vis-à-vis defining what the ideal nature of the relationship (national) government needs to have with multinationals.
The government clearly wants and needs foreign direct investment. As such then, the government must be willing to grasp the fundamental reality that multinationals seek out favourable investment climates: political and economic certainty, quality infrastructure, proximity to knowledge generating institutions and a flexible and seamless labour environment.
More than ever before the government needs to follow the example of a country such as Singapore, where multinationals were welcomed at a time when newly independent countries often viewed them as neo-colonial. South Africa needs a similar attitude adjustment so that local businesses and global multinationals are embraced, rather than treated with a degree of scepticism.
In the same way that Singapore embraced multinationals for its own economic advantage, Cape Town can be the place where these companies bring their skills to design and develop solutions for Africa – and then export them continent-wide. All of this can be done at the same time as creating jobs and transferring skills. More than that, it can be done in a way that fundamentally plays to Cape Town’s strengths in innovation and design, a services and knowledge-led economy and our global orientation.
Africa is acknowledged as the “next frontier” in the global economy. Yet there are significant challenges to overcome if the continent’s economic potential is to be realised and translated into wholesale improvement in quality of life. Each year, 1 million Africans die from malaria-related diseases, the continent is the world’s HIV/Aids epicentre and tuberculosis continues to be a scourge (often closely related to conditions of poverty). These endemic disease burdens are a major challenge we must tackle head-on. How?
The Singapore reference is not accidental. In Cape Town, many of the disease challenges are being met by teams of scientists at higher education institutions in the Western Cape. Within the context of developing potential new drugs to tackle Africa’s disease burden, UCT’s Drug Discovery and Development Centre, H3-D, is an excellent example.
H3-D was founded in 2010 as a UCT-accredited research centre and officially launched in 2011 as Africa’s first integrated modern centre to discover and develop drugs. In four short years, H3-D has had some notable achievements.
H3-D scientists are collaborating globally to develop drugs for Africa – thus attracting talent, investment and skills from around the world to Cape Town.
This will create a critical mass of African scientists with the capabilities of developing pre-clinical drug candidates, with a unique focus on the diseases afflicting sub-Saharan Africa. Put simply, Africa needs to reduce its reliance on global pharmaceutical drugs and focus on developing medicines for African patients whose population is set to double by 2050.
The establishment of H3-D has the potential to lead to seeding a pharmaceutical industry that will seek to address the challenges of diseases endemic to Africa – and for which there is a paucity of effective drugs.
This echoes the Singapore experience, where several pharmaceutical companies have chosen to locate their Asia operations, developing solutions tailored to their demographic requirements.
Drug companies have been active across Africa for a number of years, mostly fighting infectious diseases. However, the commercial opportunity is not limited to that. The African pharmaceutical market is expected to grow to $45 billion (R471bn) by 2020, with an annual growth rate of 10.6 percent.
As the established markets of Europe and North America continue to experience low growth, Africa becomes increasingly attractive. Similarly, as the African middle class expands and disease profiles change, the need for appropriate drugs will grow. In that context, positioning the Cape as Africa’s pharmaceutical research and development centre is commercially and socially in line with the aspirations of the National Development Plan. More importantly, it gives substance to addressing real world issues in a commercially sustainable way – while at the same time growing local jobs, skills and expertise.
One of H3-D’s key strategic partners is Novartis. On February 28 last year it was announced that Novartis had signed a collaboration agreement with UCT for H3-D to work with the Novartis Institutes for BioMedical Research to bridge the gap between basic science and clinical research to advance innovative medicines that treat African patients, with a key emphasis on training staff. There is an opportunity to expand significantly on this initiative to achieve several outcomes, including:
- Galvanising the collective brainpower of the Western Cape research institutions to include University of the Western Cape, Cape Peninsula University of Technology and Stellenbosch University.
- Bridging the gap between discovery and clinical strengths.
- Addressing regulatory issues.
- Providing career development opportunities for talented and well-trained young South Africans – thus reversing the brain drain and delivering economic development and creating jobs.
The ultimate goal – establishing the first for-profit drug discovery company in Africa, based at the Cape Health Technology Park through a private-public venture – dovetails directly with developments in the Twin Rivers Urban Park in Ndabeni near Pinelands. The site benefits from good public transport and houses medical facilities, an urban farm and the head office of the Square Kilometre Array (SKA) telescope project – thereby creating the bedrock for Cape Town to become the knowledge centre of South Africa.
To make this vision a reality, there is much work to be done. A new model of collaborative engagement between business, the government and academia is critical. Partnerships such as the H3-D/Novartis one need to be expanded through increased long-term funding, with a focus on capacity building, skills development and job creation. Similarly, the four higher education institutions in the Cape, collaborating around key socio-economic challenges – including the burdens of chronic poverty-linked disease – have a central role to play in aligning the supply of skills to demand.
Although the SKA’s projected exaflop processing capacity – the equivalent of 100 million PCs processing simultaneously – will have a massive impact on maths, science and technology, general telecommunications connectivity remains deeply problematic. This needs to be addressed if the country is to attract global skills to collaborate with and connect to research institutions and companies globally. And the government’s attitude towards multinationals needs to change in order to encourage firms to invest in South Africa.
While cynics may point to the continent as big pharmaceutical’s ‘Next Big Thing’, the reality is that we have the opportunity to make Cape Town the African equivalent of what Singapore is to the Asian economy. We need to seize the opportunity to address African health issues and employment challenges – which the World Economic Forum estimates will run to 122 million new job seekers by 2023.
We have an opportunity to make this city the destination of choice for researchers, developers and problem-solvers from South Africa, Africa and the world. Together we can take South Africa forward – let’s do it!
* Chris Whelan is the chief executive of Accelerate Cape Town and Kelly Chibale is a professor of organic chemistry at UCT.