Innovative mechanisms must be found to fund agricultural research in Africa

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 (R&D), human resource development and agricultural R&D itself, are crucial for the successful take-off of the agricultural sector in Africa.

However, investment in agricultural R&D remains the most pressing need, because appropriate agricultural innovation can come up with coping mechanisms, even with limited infrastructure and natural resource endowment.

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.

The results of agricultural R&D may fall under patent or intellectual property protections – some excludability (userpay) incentivises private sector agricultural R&D investment. Furthermore, knowledge from basic R&D may have wide potential applications beyond the narrow objective of the research that spawned innovation, rendering basic R&D a public good.

In both developed countries and developing countries, agricultural R&D is largely funded by the public sector. However, this 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 (R1 404) 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 such as 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 aforementioned 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, which has the potential to increase the human resources allocated 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 approaches should be complementary to direct government allocations, because they 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 level and regional level.

◆ Commercialisation of research products in the form of contract research, and the 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 R&D. 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 and 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 about 2 percent of total public and private spending in 2000, for example.

◆ 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 carry 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 are needed to manage significant global challenges efficiently. 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 in 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 they depend on the specific nature of research and funding sources. In addition, better targeting and use 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.