INCREASING S&T FUNDING IN AFRICA

This entry in this blog is for my colleague, Akin Adubifa. It addresses his question, of what funding mechanisms can be found to increase funding for science and technology in Africa.

The first question is whether S&T funding should be increased, and if so whose funding for what kind of science and technology.

There is a saying about “throwing good money after bad”. Where S&T funding is not being used well, and where the results of S&T efforts do get applied to achieve the purposes for which the funds were given, adding funds does not make sense. This is true for governments, the private sector and donors. In a lot of African contexts, adding funding for S&T would be throwing good money after bad. Thus one good way to increase funding for S&T in Africa would be to improve the efficiency with which such funds are used, and to improve the utilization of results of the S&T activities for social and economic development. Situations like that in South Africa, in which a government will not move forward with anti-retroviral therapies against AIDS certainly do not encourage the private sector to invest in the development of such therapies for the African market.

There are basically three sources of funding for S&T activities:
· Government
· Philanthropy
· Business
In theory government and philanthropic funding are appropriate to and required for public goods, while business funds S&T as part of its profit making activities.

I would note other, or mixed forms of financing. Of course there can be direct partnerships, as when government and industry jointly fund S&T efforts. Tax financing is said to take place when the government grants exemptions from taxes in return for S&T activities by the private sector. Governments can also use their purchase power, for example subsidizing the sales of medicines so that the firm that did the R&D to develop the medicine can recoup its investment via increased sales of its product.

I think the possibility of donors agreeing to build markets in Africa for successful innovations helping to alleviate poverty is very interesting. If governments and donors would agree to support large scale public health programs where new technologies become available to fight those diseases, companies might well find it much more attractive to fund the development of new pharmaceuticals.

Similarly, developed nations could stimulate their firms to do more R&D to benefit Africa by introducing policies such as simplified reviews such as are used for orphan drugs, or by tax financing – giving tax breaks for R&D with strong humanitarian applications. In some sense such funding is easier to support politically than is direct foreign aid.

Almost all funding of R&D in and for Africa is in the public sector. In part this is because of the nature of African economies, that are heavy on agriculture and services. The desired products of S&T are those to improved agricultural and public health technologies; these are public goods and generally can not be sustainably supported by the private sector.

To the degree that people in government, civil society and business do not recognize the value of S&T, public education is an important vehicle for increasing such funding. Similarly, to the degree that institutions are inefficient, institution building is important. Thus building venture capital institutions in the United States has been important in increasing funding for innovative technological development.

There may be ways to increase private spending on S&T. I note that there is now a lot of R&D funding in the private sector going into India and China. The Internet makes it possible, even desirable for multinationals to outsource this work. But India and China have gotten this funding because they built the human and institutional resources first. It may be possible for Africa to attract such interest, especially South Africa with its more advanced S&T capacity.


Are there ways to encourage more government spending on R&D other than simple persuasion? Policy dialog or challenge grants from international donors might work.

I think more has to be done regionally, as opposed to within specific countries. Thus the European Union is now considering creation of a European institution to support fundamental research somewhat similar in concept to the U.S. National Science Foundation but serving the continental science community. The CGIAR is a pioneer of such regional institutions, but many donors are afraid of following its example in creating a long term obligation to support scientific institutions in developing nations. Many other examples of regional scientific organizations, such as those serving the nations of Central America and Panama have had great difficulty retaining the financial support of the countries served. Moreover, the big donors have not developed policies that promote regional scientific and technological efforts. Perhaps NEPAD could break through this policy barrier, and create at least a few new regional centers in Africa.

I don't know how much has been done with the private sector as a donor. Firms emphasize in kind donations. But in kind donations of staff time, equipment, equipment use, etc. might make cash donations by funders of core activities look much better.

And I think perhaps more could be done with new arrangements for the foundation community. One of the key problems has been transaction costs. Foundations in the past have had to spend a lot of money to run a project in Africa, in terms of development, monitoring, and troubleshooting. While large foundations could afford these costs, or could achieve some economies of scale, small foundations simply found it inefficient to fund African work. To some degree the advances in communications technology may help resolve these problems. So too, partnerships among foundations, simple processes to enable small foundations to work internationally, more involvement of corporate foundations, and partnerships among bilateral and multilateral donors and foundations may help more foundations work in Africa.

One might also think about IPR. Inventions made in Africa are generally not exploited. In the past, inventions made in the U.S. academic sector were similarly not exploited, but after changes in US law, universities have made IPR a good source of funding. Similarly, changes in law and policy have helped increase the rate of exploitation of inventions made in U.S. federally funded research labs. Perhaps some help to African institutions in obtaining and managing intellectual property rights might result in more support for S&T through revenues from intellectual property.