Producer Funding of R&D in Africa: An Underutilized Opportunity to Boost Commercial Agriculture

ASTI/IFPRI-FARA Conference Working Paper 4

This review points to three major conclusions.

First, Africa has immense potential in commercial agricultural production but has missed out significantly in the commodity boom of the early 2000s. Low productivity due to low investment in R&D is one of the main reasons. This can be reversed. Indeed if it is not, imports are likely to rise rapidly to meet a rapidly expanding domestic market due to growing population, incomes, and urbanization.

Second, collective action to levy commercially oriented industries, both for exports and domestic markets, can potentially provide more funding for research. The review of 10 industry-funded research institutes indicates relatively high research intensities in most cases. However, this outcome is not guaranteed. Levies need to be set high enough, and where possible be dedicated to R&D. Matching funds from government can provide a powerful incentive to an industry to impose a reasonable levy on itself. Matching funds can also be justified by externalities associated with research that go beyond the specific industry. Finally, matching funds that are legislated guarantee a place in the national budget. Despite these advantages, there is still no example of matching funds in Africa, although Côte d’Ivoire tried.

Third, levy-funded research can deliver more efficient and demand-oriented research but works best where strong producer and/or industry associations ensure an important or even controlling interest in the governance of the funds collected. This is probably the largest impediment to rapid scaling up of levy systems in Sub-Saharan Africa. There are some short-term opportunities, such as cotton in Francophone West Africa, but elsewhere the development of strong producer organizations is by nature a long-term process. A second best is a reformed parastatal with increasing producer influence, such as provided to cocoa research in Ghana.
The bottom line is that greater use of industry funding offers much promise to enhance the funding of R&D in Africa and the effectiveness of the R&D carried out with that funding. Combined with an improved policy and business environment, increased R&D on commercial crops could allow Africa to regain competitiveness and tap a major opportunity for growth. The Forum for Agricultural Research in Africa (FARA) in partnership with other regional and international bodies could take a lead in encouraging stronger industry associations and improved awareness of the role of investing in research. Even so, industry funding through levies needs to be combined with other options for promoting R&D on commercial crops, including public funding, enhanced regional collaboration, liberalized seed markets to encourage spill-ins, and technology transfer through foreign direct investment.

Author: 
Derek Byerlee
Published date: 
2011
Publisher: 
International Food Policy Research Institute (IFPRI); and Forum for Agricultural Research in Africa (FARA)
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