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R&D is the key to economic growth – now’s the time to use it

Home Business Management Finance & Investment R&D is the key to economic growth – now’s the time...

ALLOCATING a portion of gross domestic product (GDP) spend to research and development (R&D) can improve a country’s economic growth as a result of innovation, invention and progress. However, in South Africa, the percentage spent has declined for the second consecutive year, largely due to decreased expenditure by the business sector.

Considering the tougher economic climate that both South Africa and abroad are faced with, it is crucial for businesses to rethink their R&D expenditure when compiling their 2023 budgets to ensure that their business and the country as a whole can remain competitive.

This is according to founder and CEO of Skynamo, Sam Clarke, who says that R&D provides businesses with powerful knowledge and insights that can lead to improvements on existing processes, boosted efficiency and reduced costs, not to mention the development of new products and services. “Introducing new business offerings results in increased revenue and a competitive edge in the market and can benefit other organisations too if the business services other businesses.”

“Unfortunately, it won’t be possible for all businesses to increase R&D spend considering the looming global recession, but this is why it’s so important for businesses that can afford to invest to do so,” he points out. “This is because R&D investment in one business helps to create innovation in adjacent businesses i.e., suppliers or customers. For example, a bank that introduces electronic bond applications creates an opportunity in bond originators that didn’t exist before. This has a positive ripple effect on the whole economy.”

“Now is the time for everyone to play their part by boosting our economy and growing South Africa’s businesses as much as possible,” adds Clarke. “Today’s world is fraught with constantly evolving current affairs issues such as the war in Ukraine, mounting global inflation, fuel hikes, wage strikes and loadshedding, so businesses need to keep their finger on the pulse and navigate an uncertain landscape.”

“When we started Skynamo in 2012, ‘there’s an app for that’ seemed to apply to every other industry, except for field sales where people were still juggling a combination of paper forms, Excel and instant messaging to do their jobs. Armed with R2 million earmarked for R&D, we built a solution specifically to streamline these operations and help businesses in the small and medium manufacturing, wholesale and distribution sectors to grow. This investment 10 years ago formed the basis of our business which now employs over 100 people and has enabled our 1 000 customers to innovate in their businesses.”

“Today, we have increased our R&D spend to R25 million annually to improve the way we are able to support our current stable of 11 000 users across a wide range of industries in increasing their revenue,” he explains.

Clarke says that this is just one example of how R&D can grow businesses across the country and why investing in it is so crucial. “Compared with other countries, expenditure on R&D in South Africa is relatively low, but this will need to change  – and fast – if businesses and the economy are to recover from the upheaval of the past few years and be able to withstand those events yet to come.”

“When it comes to government support, we welcome the increased R&D tax incentives beyond December 2023, however it is also essential for government to consider increasing spend on R&D and introducing stronger incentives. We all have a part to play when it comes to reviving our economic landscape, business operating environment and overall competitiveness,” Clarke concludes.

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