Unlocking innovative ideas
Inkumbi said innovation has three key values which are: improvement of enterprise efficiency, resource utilisation and improved social indicators.
“Innovation unlocks enterprise efficiency in the form of economies of scale and competitive differentials that strengthen individual enterprises. This secures the future of enterprises, their ability to create and retain employment, as well as their ability to grow. This may be on the basis of an individual enterprise or an entire industry sector,” he said. “In terms of resource utilisation, enterprises will significantly use resources more effectively, reducing costs and improving sustainability. However, this facet is also expected to improve local value adding, a key component of national economic self-sufficiency through import substitution and trade,” he added. Thirdly innovation will improve social development indicators, not just as a byproduct of job creation and income generation, but also through development of direct approaches to enterprise such as the growing field of social entrepreneurship. Inkumbi said in order for Namibia to progress economically, and prosper, it has to adopt an accommodating approach to innovation. “An accommodating approach to innovation entails, firstly acceptance of inherent risk and secondly, management of that risk. Innovation typically entails a risk to the innovator as well as the financier,” he said.
Said Inkumbi, “The innovator has to risk personal resources to develop the innovation, which is usually ‘untried’. There is a significant, potential lost opportunity cost if the innovator could focus on a tried and tested form of enterprise, or if he or she opts for income from employment. This risk is a major barrier to development of innovations by innovators.” “By creating an environment which fosters innovation, through finance and institutional support, innovators can be encouraged to develop ideas, and the potential of more innovation can be unlocked,” he added. “The financier at the same time also experiences a barrier in the form of financial risk. Faced with a derivative fund model that expects returns in line with an optimum investment basket, the financier will be hesitant to retain the potential lost opportunity cost. However a closer look at traditional structuring of investment strategies shows that there is room for risk capital in the high risk portion of the investment portfolio,” he added.