Innovative mechanisms must be found to fund agricultural research in Africa
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By Thulasizwe Mkhabela
IT IS common knowledge that the majority of African nations are heavily reliant of the agricultural sector for their economic development, livelihoods and food security.
Conventional wisdom posits that sustained and increased investment levels are indispensable for agriculture to continue on its positive trajectory.
Investments in infrastructure such as irrigation, capital goods for agricultural research and development, human resource development and agricultural research and development itself are crucial for the successful take-off the agricultural sector in Africa.
However, investment in agricultural research and development remains the most pressing need as appropriate agricultural innovation can come up with coping mechanisms even under limited infrastructure and natural resource endowment.
Research and development (R&D) produces knowledge that can be used repeatedly thus, it can be considered non-rival and a necessary precondition for agricultural development and improved economic contribution of the sector.
Results of agricultural R&D may fall under patent or intellectual property protections – some excludability (user-pay) incentivises private sector agricultural R&D investment. Furthermore, knowledge from basic R&D may have wide potential applications beyond the narrow objective the research that spawned innovation rendering basic R&D a public good.
In both developed and developing countries, agricultural R&D is largely funded by the public sector, however such funding has been on the decline for some time now. Research intensity ratios are often used to understand the level of R&D funding. For high-income countries – for every $100 (R1406) of agricultural gross domestic product (GDP), $3 is spent on research by public and private sector funders while for low-income countries – for every $100 of agricultural GDP, $0.54 is spent on research.
Honing in on the situation in Africa reveals that agricultural R&D remains highly dependent on direct government allocations, albeit the allocation being a minuscule portion of the budget.
African agricultural R&D is also highly dependent on donor contributions, but these have been declining and not all African countries receive donor funding. For example, countries like South Africa receive negligible donor funding for R&D, if any, because they are considered middle to high-income countries that are in a position to fund their own development endeavours.
The afore-mentioned scenario clearly calls for an immediate need to find alternative agricultural R&D institutional funding mechanisms. Such alternatives include:
Greater participation and collaboration with the higher-education sector with has the potential to increase human resources to research, but teaching remains focus of faculty staff in African universities. To further compound the situation, research budgets at Sub-Saharan Africa universities are often small or non-existent.
Competitive funding mechanisms that aim to optimise performance of agricultural R&D by promoting collaboration and improving accountability and flexibility are another alternative. Such an approach should be complementary to direct government allocations as they are often fund specific (short-term) projects and often only operational costs. These mechanisms inherently have high transaction costs and do not work in small agricultural R&D systems. However, these approaches are becoming more common in Africa both at national and regional levels.
Commercialisation of research products in the form of contract research, sale of improved seeds, and technologies is a potential alternative avenue of generating additional funding for agricultural R&D. A caveat here is that this approach may contradict public-good nature of research output. It lends itself more readily to applied research as opposed to basic research. It currently comprises a small share of the budget for agricultural R&D institutions in Africa but it is on the rise as more organisations realise they cannot continue to rely solely on public investment to remain viable and sustainable.
Levies on production are becoming common as an attempt to raise funding for agricultural research and development. Commodity associations often raise these levies by collecting a small percentage from the sale of produce in order to conduct their own research or to fund research at other research organisations. Levies can result in more demand-driven systems and increase total financial resources available for agricultural research. Levies are mainly imposed, although voluntarily, on exports crops such as citrus and other fruits, field crops (South Africa), coffee, tea, cotton (Kenya, Tanzania and Uganda).
Stimulating more private-sector involvement is an appealing, yet often difficult, approach to increasing agricultural R&D. This is mostly suited for countries with liberalised markets and proper intellectual property rights regimes. Private sector investment could be stimulated by offering tax concessions and providing a favourable policy environment. Private sector involvement remains small in Africa, accounting for approximately 2 percent of total public and private spending in the year 2000, for example.
Lastly, the establishment of public-private partnerships to create opportunities to improve efficiency of entire research systems by developing interactions between both sectors or cross-pollination is widely recognised as another solution. However, it is easier said than done. The objective of the private sector is profit-making and so partnerships with the private sector carries the risk that attention may be diverted away from the needs of smallholder farmers, and this is an important focus in the debate on African agricultural research, emphasising the role of public funding. Few public-private partnerships in effect exist mostly with multinationals.
In conclusion, improved harmonisation of funding and execution levels is needed to efficiently manage significant global challenges. Investments in agricultural R&D yields high returns, and agricultural R&D plays a major role in the provision of food and employment for large and expanding populations.
Therefore, increasing the quantum spend on public R&D in developing countries that are heavily reliant on agriculture is prudent, but difficult because this competes with essential non-agricultural sectors such as health, education and social security.
In Africa specifically, growth rates in agricultural R&D spending have been decreasing, donor dependency remains quite high, and the government sector remains the main provider but declining quantum. More resources for agricultural R&D are needed in Africa as well as many other developing nations.
In addition, innovative funding mechanisms are required to develop more effective and efficient research systems. A number of combinations of these mechanisms are possible, but depend on the specific nature of research and funding sources. In addition, better targeting and usage of the available resources is critical to make agricultural systems more effective.
A number of countries have implemented successful reforms of their research systems resulting in greater client orientation through a more demand-driven approach, thereby increasing diversity in funding sources, and growing collaborations at national, regional, and international levels, which include execution as well as funding of joint research activities.
Dr Thulasizwe Mkhabela is an agricultural economist and is currently the group executive: impact & partnerships at the Agricultural Research Council; [email protected]
*The views expressed here are not necessarily those of IOL or of title sites