How can countries and communities’ benefit from their rich genetic and biological resources?
30 Jul 2019
Seven things to keep in mind when adding value to Africa’s genetic resources and stimulating investments in its bio-economies.
In the spirit of a true Accelerator Lab, the 2nd edition of the Pan African Community of Practice Series for ABS brought together development practitioners and other experts to design innovative solutions and prototype practical tools to stimulate investments in Africa’s bio-economies and trigger broader development co-benefits to accelerate the progress towards achieving the Sustainable Development Goals (SDGs).
It is estimated that Africa needs about USD 500 billion – 1.2 trillion annually to meet its development targets by 2030. Obviously, this demand cannot not be met by public finance alone, pointing towards the need to attract substantive investments, which translates into return of financial flows mainly from private financing.
Ironically, Africa is endowed with abundant natural resources. In fact, from the blue economy to the wildlife economy, Africa’s bio-economies can have a transformative impact on its development – if managed correctly.
For biological and genetic resources to become development accelerators in Africa and elsewhere, we need to make a strong business case to change the current paradigm, where natural resources are extracted often in raw forms with little local benefit and move towards higher value-added products which benefit the communities and countries directly.
So far, various valorization (enhancing the value of a product or commodity) initiatives are underway. Actionable tools such as the Gender Toolkit featuring the MIND Your Step! Gender Tool and the Valorization Workbook featuring the Time for ACTION! Valorization Tool have been prototyped to support several countries in their endeavors to co-design knowledge-based and bottom-up value chains that add value to their biological and genetic resources and associated traditional knowledge.
While doing so, here are seven things to keep in mind:
- Value addition is a holistic approach, it is only by developing sound valorization strategies, that are clearly articulated and integrated across all economic sectors using biological and genetic resources, that domestic bio-economies can attract robust business investments.
- To walk the talk of their domestic valorization strategies. A challenge facing several countries is to leverage critical business investments. To do so, countries need to consider meaningful ways to improve their Doing Business ranking as business-friendly partners to establish bio-discovery partnerships along value chains using biological and genetic resources. Countries need to be proactive and cannot solely rely on the legal frameworks provided to potential users to generate benefits arising from the utilization of such resources but can also develop a blended approach combining other meaningful incentives.
- Typically, the valorization of biological and genetic resource generates non-monetary and monetary benefits. Monetary benefits include license fees, up-front payments, payments per sample, milestone payments, and royalties generated from the commercialization of products derived from genetic resources. However, often the initial development of the value chain of biological and genetic resources requires a complementary, coherent and comprehensive suite of finance solutions to engage the public sector, private sector and communities. The BIOFIN Workbook 2018 provides an innovative, stepwise and adaptable approach that will enable countries to identify the most suitable finance solutions. Example of finance solutions could include:
- Tax exemptions or abatement for private companies willing, for instance, to outsource part of their R&D in the countries providing the biological or genetic resources or the associated traditional knowledge, to equip or enter into joint ventures with local laboratories, to hire local workforce, train local professionals on the use of new technologies, invest in production units on-site, or commercialize and supply the end product at the national or regional markets.
- Robust financial instruments: for example, research grants disbursed through national trust funds such as Seychelles Conservation and Climate Change Adaptation Trust Fund (SeyCATT) or the Madagascar Biodiversity Fund to encourage research in the fields of biotechnologies, blue bonds to add value to biological and genetic marine resources which in return will support the blue economy and the conservation of marine areas. Or by establishing ABS dedicated impact investments or challenge funds such as the Malawi Innovation Challenge Fund to stimulate bio-discovery partnerships.
- The development of effective financing mechanism to ensure that revenues generated through ABS contracts are transferred back to the providers of bio-resources as is currently being tested in one pilot state in India under a joint initiative of BIOFIN and PAGE.
- Other forms of innovative financing, such as solutions based on distributed blockchain technology such as cryptocurrencies to prototype, for example Cedar Coin or a Bio Coin, to promote biodiversity conservation. In the same spirit, we can prototype an ABS Coin and launch an initial coin offering to raise funds critical for the financing cycle of life-science and biotech start-ups to boost domestic R&D capabilities.
This is how the synergies established between BIOFIN and the UNDP-GEF Global ABS Project are striving for impact on the ground to shape meaningful valorization strategies in a number of countries including Rwanda, India and the Philippines.
For example, in Rwanda, a national valorization strategy is being developed to guide the country’s efforts towards reaping the benefits of its bio-economy based on genetic resources and associated traditional knowledge. In support of this, ABS and BIOFIN country teams are working together to design an action plan using a blended approach by combining the monetary and non-monetary benefits arising from biodiscovery deals with other biodiversity financing solutions to support the implementation of the national valorization strategy.
With that in mind, we believe there is much more we can achieve if we adopt a 2-step approach by supporting countries to first, develop meaningful #NextGen valorization strategies that are integrated and cross-sectoral to add value to biological and genetic resources, and second, blend the benefits arising from the utilization of such resources such as royalties and up-front payments with additional biodiversity financial solutions to de-risk investments and stimulate financial flows into Africa’s bio-economies.
We are still at the very beginning of the journey to achieving ABS value addition in Africa, and there are often more questions than answers. If you are a business representative, a development practitioner or a stakeholder, if you would like to join us to contribute to this dynamic and emerging area, get in touch with the authors.
Fouad Bergigui and Herve Barois
Fouad Bergigui is a Regional Specialist for Africa for the UNDP-GEF Global ABS Project. Herve Barois is a Technical Advisor for Africa in UNDP’s Biodiversity Finance initiative (BIOFIN).