Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Canada’s Productivity Depends on Intangible Tech Adoption
Economy | May 13, 2025
Image: Freepik
Canada Needs a National Strategy to Support Tech Adoption and Plug SR&ED and CDAP Gaps
Canada has a productivity problem. According to a 2023 OECD Productivity Dashboard report, Canada's GDP per hour worked is about 22 percent below the U.S. level and continues to trail other advanced economies. One key reason is the slow adoption of advanced digital tools, especially in sectors where Canada underperforms in productivity. These tools are not heavy machines or physical infrastructure. They are intangible technologies like software platforms, AI systems, proprietary data tools, and fintech infrastructure.
See: Reversing Canada’s Digital Economy Productivity Decline
While the federal government spends billions on innovation, most programs incentivize and reward the invention, not implementation. This leaves many small businesses without the supports the need to adopt new technologies that already exist. To improve Canada's productivity, we need a strategy that supports the adoption of intangible tech across sectors, regions, and company types and sizes.
The Adoption Gap Should Not Be Ignored
Canada’s largest innovation and tax incentive program is the Scientific Research and Experimental Development (SR&ED) that invests $3.9 billion annually in over 16,000 companies (largely SMEs) with federal and provincial tax relief, according to this government of Canada consultation paper. However SR&ED focuses on experimental development so it excludes most real world tech use cases, such as a company that wants to implement a fintech platform, automate business processes using AI, or strengthen its cybersecurity infrastructure.
See: Canada’s AI Competition Report Faces Big Tech Challenges
Although these investments would improve efficiency, reduce risk, and increase competitiveness, they are not considered 'innovation' under the current SR&ED criteria. It creates a large policy gap where most of Canada's economy relies on services and the businesses who run them depend on intangible tools like software and data systems but they get little help to actually implement the tools for use.
A 2024 report from Statistics Canada confirms that despite strong innovation capacity, Canada’s productivity growth has been trending downward since 2000, largely due to weak capital investment in 'non-residential capital or intangibles. Investment in intellectual property products in Canada has declined relative to GDP. Investment per worker in 2022 was nearly 20 percent below 2014 levels. The impact of not investing in patents, data systems, and other non physical assets that drive modern growth is workers have less access to modern tools, infrastructure and technology to work efficiently.
CDAP Only Helps With Basic Tools
The federal government launched the Canada Digital Adoption Program (CDAP) in 2022 to support digital adoption broadly, and announced $4 billion program spend over several years, aiming to help 160,000 businesses improve their capabilities. As of March 2025, Innovation, Science and Economic Development Canada (ISED) reports that CDAP reached 71,000 businesses with the program disbursing $1.2 billion in grants, loans, and wage subsidies.
CDAP has two streams:
- $2,400 micro-grant for e-commerce called 'Grow Your Business Online'
- $15,000 for digital adoption plans to 'Boost Your Business Technology', and up to $100,000 in zero interest loan via BDC
While CDAP has been helpful, its impact is limited to basic tech upgrades like website redesign, point of sale systems, and customer relationship management tools.
CDAP doesn't cover more advanced intangibles like integrating AI systems, embedding fintech solutions or cloud-based tools that help manage financial and operational risks.
See: Canada’s Innovation Paradox – Strong Start, Missing Impact
CDAP is also a temporary program (new applications are not currently being accepted).
There's also no permanent policy structure to support long term tech adoption across sectors, and as a result does not fill the policy gap created by SR&ED. It's worth mentioning that non-profits like NCFA does not qualify for CDAP unfortunately.
Canadian Government Should Accelerate Intangible Tech Adoption
OECD 2021 evidence from peer economies is clear. When governments support the adoption of intangible technologies, they get strong returns in productivity, exports, economic resilience, and a wider diffusion across sectors amplifies the benefits. Canada is a service driven economy with IP-rich capacity, so helping companies to adopt and use the tools that already exist is just as important as helping invent new technologies. Canada needs a national strategy that supports intangible tech deployment/adoption as a core driver of innovation and productivity. Below are some thought starters:
1. Create a Tech Adoption Credit for Intangibles
Introduce a refundable tax credit to help companies adopt advanced intangible tools. Eligible costs should include things like software licensing, cloud migration, AI implementation, fintech integration, training, and cybersecurity.
2. Modernize SR&ED to Support Deployment
Update SR&ED rules so that it recognizes process innovation and platform integration as eligible activities. This would help firms who solve real problems through adaptation and deployment, not just invention.
See: National Plan to Unlock Growth and Innovation
3. Use Public Procurement to Drive Market Demand
The federal government should act as an early adopter and buyer of Canadian fintech, AI, blockchain, and other advanced intangible technologies. This would boost firms and provide a path to scale while establishing best practice use cases that reduce adoption risk.
4. Build Talent and Support Infrastructure
Canada should fund training and educational programs, microcredentials, and regional adoption hubs (not just public ones) to help companies integrate intangible technologies into their operations. These supports are especially important outside major urban centres.
What Other Countries Are Doing
Other countries are already moving faster to close the adoption gap:
- Germany offers digital adoption grants through the Digital Jetzt program, supporting both technology and training. Over €3 billion has been committed to help SMEs adopt advanced software and integrate platforms into daily operations.
- South Korea launched the Digital New Deal, that will invest $44.8 billion USD by 2025 to help SMEs implement data platforms, AI, and cybersecurity tools.
See: Resources for Canadian Resiliency and Competitiveness
- Singapore provides targeted funding through its SME Go Digital program. It supports deployment of intangible assets like SaaS platforms and builds industry specific adoption roadmaps.
- United Kingdom launched a Technology Adoption Review to identify and address barriers businesses face in adopting digital and AI tools. The UK also funds adoption through programs like smart grants, knowledge asset grant fund, and scale-up innovation loans.
The above government examples are just a few of many where they are funding not just discovery but actively paying to accelerate the digital adoption because they know it improves productivity, economic robustness and growth, and creates long term national competitiveness.
Conclusion
Canada has the tools, talent, and innovation ecosystem to compete globally but risks continued productivity decline without targeted support for adopting intangible technologies. The Canadian government at all levels must close the adoption gap by creating permanent policy supports and investments, modernize outdated incentives like SR&ED, and recognize the deployment and adoption of intangibles as critical economic infrastructure.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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