By Carl Pray, David Gisselquist, and Latha Nagarajan. Presented at the ASTI-FARA conference Agricultural R&D: Investing in Africa's Future: Analyzing Trends, Challenges, and Opportunities - Accra, Ghana on December 5-7, 2011. http://www.asti.cgiar.org/2011conf

1. Private Investment in Agricultural
Research and Technology Transfer in
Africa
Carl Pray, David Gisselquist, and Latha Nagarajan

2. The purpose of the paper
• Document the amount of private sector R&D and technology
transfer in SSA
• To describe its impact (not in presentation)
• To suggest government policies - options to encourage the
private sector to play a larger and more constructive role in
the future
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3. Based on project “Measuring Private Research and Innovation
in South Asia and Sub-Saharan Africa” Gates Foundation
(2009-2011)
Kenya – Hannington Odame, Elsie Kangai & David Spielman
Senegal - Gert-Jan Stads and Louis Sène
South Africa - Johann Kirsten, Ruan Stander & Choolwe
Haankuku
Tanzania – Hannington Odame, Elsie Kangai/Oscar Okumu
Rose Matiko Ubwe, and David. J. Spielman
Zambia – Mick Mwala and David Gisselquist
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4. The Industries that introduce new agricultural
technologies and conduct agricultural research
• Agricultural Inputs
– Seeds
– Pesticides
– Fertilizers
– Animal genetics
– Feed
– Veterinary pharmaceuticals
• Large scale agriculture – tea and coffee plantations,
floriculture
• Processing industries – sugar mills, tobacco
companies
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5. Sources of innovation from Private Sector:1/3 own
R&D, 10% public R&D, ½ imported
Activities # of Source of innovations (number of organizations with each source;
organizations organizations may have >1 one source)
reporting Developed in-country Imported from
innovations Own R&D Other R&D* Parent firm Other source
A. Inputs supply
Seeds 31 12 4 12 10
Fertilizers 4 2 1 1
Pesticides 12 3 6 5
Ag Machinery 7 3 3 3 1
Livestock, 9 4 3 4
fisheries inputs
B. Large scale production
Crops 6 2 2 3 2
Livestock
Fisheries
C. Processing
Crops 5 3 2
Livestock 3 2 1
Fisheries 3 3 1
Totals 80 34 11 28 25 5

6. Cultivars primarily from private sector in South Africa, Tanzania & Zambia;
from public in Kenya and Senegal
Number of cultivars registered 2000 to 2009
Crops Kenya Senegal South Africa* Tanzania Zambia
Private Public Private Public Private Public Private Public Private Public
A. Cereals
Maize 67 70 2 8 482 16 37 10 105 8
Rice 7 16 0 0 5 2
Wheat 7 61 20 5 13 4
Sorghum 1 7 67 4 2 1 3
Barley 1 12 1 2
Finger 1 0 0 1
millet
Pearl millet 3 0 0 3
B. Other food crops
Sweet 5 ? ? 6 5
potato
Cassava 9 0 0 5 4
Potato 66 15 3
Sunflower 3 3 61 5 2 3 6 0
Soybeans 5 84 8 11 2
Cowpea 1 3 0 2 1 1
Groundnut 7 2 11 4 1
Common 12 95 16 8 6 4
bean
Sugar cane 10 1 37 ?
C. Fibres, drinks, drugs
Tea 1 4 ? ?
Coffee ? ? 9
Tobacco 10 11 3 6
Cotton 2 33 3 1
Total# 71 146 8 31 1010 92 44 54 155 39 6

7. Private R&D Expenditures SSA, South Asia
Measures Kenya Senegal South Tanzania Zambia Bangla India
Africa Desh
Private R&D 1.6 -3.2 3.6-4.7 41.0 – 0.9 -1.8 1.3-2.5 10-20 251.0
(In 2008 50
Mill.US$)
Private R&D 0.25- 0.18- 0.49- 0.015- 0.05- 0.07- 0.12
as % of Ag 0.05 0.24 0.60 0.03 0.09 0.13
GDP
# of 12 61 201 32 25 119 2190
Scientists
– Seed industry about 40% of R&D
– Processing industry 30% of R&D
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8. What explains patterns of private research?
South Bangla
Kenya Senegal Africa Tanzania Zambia desh India
Priv R&D (In 2008 Mill.US$) 1.6 -3.2 3.6-4.7 41.0 – 50 0.9 -1.8 1.3-2.5 10-20 251.0
Market Size Ag GDP (2008 Bill.US$) 6.3 2 8.3 6.2 2.8 15.1 218.1
Policies
Nom. rates of assistance to Agric.
(2000-04) 9.3 -7.5 -0.1 -12.4 -28.5 3.9 15.8
IPR Index(2005) 3.22 2.93 4.25 2.64 1.94 1.87 3.76
Ease of doing business (2009) 98 152 34 128 76 107 134
Government research
Govt. scientists (2002) 704 116 677 513 120 1610 5103
University Scientists (2002) 180 22 137 84 22 197 8045
Public R&D (2002 Mil.US$PPP) 263 50 585 78 197 218 2713
Public R&D intensity 1.22 1.21 2.16 0.28 0.44 0.36 0.37
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9. South Africa, Tanzania, and Zambia fit economic models,
Kenya and Senegal do not
• South Africa has most private R&D the biggest markets, does
not tax agriculture, has strong IPRs and business climate, and
substantial public sector research
• Tanzania and Zambia has least because markets
smaller, heavy taxation of ag, weak business climate and IPR
and relative small public sector R&D.
• Kenya have much less R&D than expected. It has a
substantial market, it supports agricultural sector, business
climate and IPRs are middle of these countries and public
sector is relatively large
• Senegal has more R&D than expected since its ag sector is
so small, it taxes agriculture, has poor business climate and a
small public sector research program.
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10. Historically gradual growth in R&D until recent
spurt
• Got rid of colonial monopolies and monopsonies but
sometimes replaced them with government
monopolies
• Liberalization
– Trade barriers
– Allowing entry of new firms and foreign firms
• Increased government support of agriculture….
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11. Examples of growth – Seed Industry
• Liberalization starts in 1990s –
– 1990s government monopolies on improved seed sales broken
– 2000s Parastatals dissolve in Tanzania and Zambia, not Kenya
– Gradual reduction in trade barriers to seed imports
• Support for seed companies and research
• Impact of changes
– Industry grows
• Spread of regional multinationals like Seedco and Pannar,
• National companies Western Seed and East African seed company.
• MNCs get serious about Africa
– Many new varieties available
– Increased seed trade
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12. Examples of Growth of Innovation and R&D
Processing
• Same stages of colonial to nationalization to
privatization as seed
– Breakup of regional markets reduces market size
• Impacts differ by country
– In Senegal privatization of cotton and groundnut industries
has shifted research from the public to private sector
– In Kenya liberalization has created more competition in
some processing industries which is good for farmers but
may initially lead to less research
– Privatization in Zambia &Tanzania led to increased foreign
investment in some industries like sugar where Illovo has
bought government mills and is bringing in new technology
• Regional multinationals --- Illovo, Kenya Breweries,
SABMiller
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13. Could African agribusiness research accelerate
like India since the mid 1990s?
Indian Agribusiness R&D Expenditure
Industry 1984-85 1994-95 2008-09
Millions of 2005 US$
Seed and Biotechnology 1.3 4.9 88.6
Pesticides 9 17 35.7
Fertilizers# 6.8 6.7 7.9
Agricultural Machinery 3.7 6.5 40.5
Biofertilizers & Biopesticides na na 1.3
Poultry and feeds na 3.5 7.8
Animal Health 0.9 2.7 18.6
Sugar 0.9 2.5 10.8
Biofuels 0 0 13.1
Food, Beverages & Plantations 1.3 10.3 27.0
Total 23.9 54.1 251.3
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14. It is possible that growth will accelerate
• Currently Agribusiness in 5 African countries spend as much
as $62 million: > the $54 million India spent in mid 1990s
• Market for new technology is growing:
– Harmonization and regional integration has helped to open up bigger
markets but they still are limited relative to India’s
– A few African firms are globally competitive – SABMiller in beer, SAPPI
and Mondi in paper & forestry, South African citrus – but are not
exporters like Mahindra and Mahindra in tractors and UPL in pesticides
– Regional and national companies are competitive – Tropicasem,
Seedco, Pannar, Illovo.
– Some investments by science based MNCs (which account for 40% of
India private R&D) – Pioneer and Monsanto.
– Investments by MNCs land-based or generic technologies from South–
Indians investing in sugar mills & tea plantations; Brazilians in biofuel,
Indians & Chinese in generic pesticides and machinery
• Appropriability (IPRs) getting stronger but still weak outside
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South Africa

15. Policy options – Some more general policies –
some Science and Technology Policy
• Further reductions of trade barriers to technology introduction and trade
leads to larger markets and more incentive to invest in innovation and
research
• Development of universities, public research, and training of scientists is
essential
• Privatization along with anti-trust increases competition, technology transfer
and eventually technology development
• Public private partnerships can stimulate the development of appropriate
research and technology development
• Gradual strengthening of IPRs when agriculture and agribusiness have
started to grow is important
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