Making the Invisible Visible : Informal Innovation in South Africa

Informal innovation has been investigated in numerous countries, but its incidence in developing countries, and relationship with informal business development, has been unexplored. This study explores 1. the nature of informal innovation in a developing country (South Africa), 2. its relationship with informal business development, 3. the ecosystem for informal innovation and entrepreneurship, and policy implications.Key findings are that 2.5% of the South African citizens are informal innovators. Many of their innovations are children- and education-related, and relatively often developed with the help of others. Dissemination of informal innovations is better than elsewhere: around 50% of the informal innovations are directly shared with peers, and over 10% is commercialized (in other countries this is usually 25% and 5%).In South Africa, informal business ownership is more widespread than formal business ownership. It seems that official statistics under-record informal business ownership. We find a strong relationship between Informal innovation and informal business development. We find that especially in low-income communities (including townships), informal innovators start informal businesses to generate income with their innovations. In contrast, for formal business owners, we find more informal innovations that are unrelated to their business and that they share for free.Policy interventions are merited to address lack of dissemination incentives, and commercial barriers. As in other countries, many South Africans are not incentivized to broadly disseminate their innovations. Next, informal businesses that are started to commercialize informal innovations face challenges related to growth barriers like finance and infrastructure. Down-to-earth innovation policies are merited, to address these basic problems