South Africa’s creative economy cannot scale without stronger digital systems

The authors find that digital services trade and sectoral development play a significantly stronger role in boosting IP revenue than patent registrations. They warn that without expanding access to reliable broadband, closing the digital divide and strengthening commercialisation frameworks, South Africa risks losing economic opportunities within a global creative market increasingly powered by AI, digital platforms and cross-border innovation flows.

South Africa’s creative sector, celebrated globally for its cultural richness and artistic talent, faces a growth ceiling unless policymakers strengthen digital infrastructure, expand funding access and develop clear pathways for innovation commercialisation, according to a new long-term study, “Funding and Innovation Pathways for Creative Entrepreneurship: Evidence from South Africa’s Creative Economy,” published in World, that examines 24 years of data to determine what drives intellectual property (IP) monetisation and overall performance in the country’s creative industries.

The analysis spans from 1999 to 2023 and evaluates how patent activity, digital infrastructure, AI-driven transformation, sectoral maturity and funding systems influence the commercial success of creative outputs. The research uses an Autoregressive Distributed Lag (ARDL) model to assess both short- and long-term relationships between key variables, shedding new light on the factors shaping the economic performance of creative entrepreneurs.

The authors find that digital services trade and sectoral development play a significantly stronger role in boosting IP revenue than patent registrations. They warn that without expanding access to reliable broadband, closing the digital divide and strengthening commercialisation frameworks, South Africa risks losing economic opportunities within a global creative market increasingly powered by AI, digital platforms and cross-border innovation flows.

Digital trade and sector maturity outperform patent activity as drivers of growth

The study found that digital infrastructure and trade in ICT-related services have a powerful and measurable impact on IP commercialisation. The authors observe that as South Africa’s digital services export capacity expands, creative entrepreneurs gain broader access to international markets, digital distribution systems and global audiences. This integration enables creators to monetise their work more effectively through digital platforms, licensing arrangements and cross-border partnerships.

Conversely, patent activity, one of the traditional indicators of innovation, shows only a marginal effect on IP revenue within the creative sector. The researchers argue that this reflects the informal nature of South African creative industries, where innovation often takes the form of artistic expression, cultural production and non-patentable outputs. As a result, the patent system does not capture the true extent of creative innovation.

The study also identifies the importance of creative sector maturity. A growing and increasingly structured creative ecosystem improves the visibility, competitiveness and professional networks of creators. Industries such as music, film, gaming and fashion benefit directly from stronger institutional support, regulatory clarity and market infrastructure.

The long-term econometric analysis reveals that sectoral development, digital capabilities and broader ICT integration tend to move in the same direction as IP monetisation. When digital services trade rises, creative entrepreneurs achieve stronger revenue outcomes; when trade is constrained, the sector’s commercial performance weakens. This relationship suggests that South Africa’s competitive position depends on building a digitally connected creative economy capable of participating in global value chains.

The authors note that digital infrastructure is unevenly distributed in the country, with urban areas benefiting from higher connectivity while rural and township communities remain digitally excluded. This digital divide reduces the potential contribution of thousands of creators whose work cannot reach markets because of inadequate access to digital tools or broadband.

Funding pathways remain fragmented, undermining innovation and commercialisation

While the study set out to evaluate how funding affects creative entrepreneurship, the authors encountered a major constraint: funding data in South Africa is poorly consolidated and inconsistently reported. This makes it difficult to quantify the precise relationship between funding mechanisms and creative sector performance. However, the lack of reliable financial data itself emerges as a key finding, revealing systemic weaknesses in how creative industries are supported and monitored.

The research highlights multiple institutional and operational barriers that limit funding efficiency. These include fragmented grant programs, unclear criteria for innovation support, limited integration of creative entrepreneurship into national innovation systems, and inconsistent reporting across government departments and agencies. The absence of a coordinated funding framework results in duplication, inefficiencies and missed opportunities for scaling creative ventures.

The authors reveal that funding challenges are compounded by the complex nature of creative entrepreneurship. Unlike traditional industrial sectors, creative work often mixes formal and informal economic activity, making it harder to classify, measure or regulate. Many creators operate independently or through micro-enterprises that lack the administrative capacity to navigate funding applications or track financial performance.

Without coherent funding pathways, South Africa’s creative industry cannot effectively transition from innovation to commercialisation. Digital platforms provide global reach, but creators need strategic investment in marketing, production, intellectual property protection and digital skills to maximise economic returns. Without funding ecosystems that support these activities, digital tools alone cannot deliver long-term growth.

Government agencies, development institutions and private funders must collaborate to create integrated support mechanisms, the study recommends. These should include creative hubs, incubators, digital literacy programs, AI-assisted production facilities and transparent funding models that specifically address the needs of creative entrepreneurs.

AI, digital platforms and structural inequality shape the future of creative entrepreneurship

While emerging technologies offer new opportunities for content creation, distribution and monetisation, they also intensify competition, raise intellectual property concerns and amplify existing inequalities.

The authors emphasise that South Africa’s creative economy cannot thrive in a global AI-enabled marketplace unless it addresses structural barriers, particularly digital inequality. They argue that the digital divide limits the potential for inclusive growth. Creators in rural areas, informal settlements and underserved communities face obstacles in accessing online platforms, digital tools and global markets. Without targeted interventions, the shift toward digital and AI-driven creative production risks reinforcing inequities rather than reducing them.

The research shows that South Africa possesses strong creative assets, from cultural industries to emerging digital sectors. However, these strengths are diluted by weak IP enforcement, limited digital penetration in disadvantaged regions and the absence of long-term digital innovation strategies. The authors stress that robust broadband expansion, modernised IP frameworks, accessible AI tools and coordinated ecosystem development are essential for the country to remain competitive.

They also call for policy reforms that support informal creators, who often contribute significantly to national cultural output yet remain excluded from official statistics and financial systems. Strengthening links between informal creative communities and digital infrastructure could unlock new economic value for the sector.

The study further recommends exploring AI as both a creative tool and a productivity enhancer. AI-generated content, digital editing tools, automated workflows and data-driven marketing platforms can help creators scale their work, reach new audiences and diversify revenue streams. However, without adequate governance, AI could undermine copyright frameworks, facilitating content appropriation and weakening legal protections for creators.