Corporate-funded R&D is a major opportunity for Science in Africa
Early adopters will have a head-start on the top talent, best partners and first crack at the estimated $280 billion opportunity.
It’s well known that the current research and development (R&D) spend in Africa is low, in terms of % of GDP and especially in absolute terms. Leaders in Africa have agreed to increase their investment in R&D to 1% of GDP, but even Africa’s science leader (South Africa) has not managed to reach this target, currently investing 0.7% of their GDP in R&D.
One of the key opportunities that we feel has been undervalued to reach the ambitious (but achievable) target of 1% of GDP is increasing the extremely low level of corporate investment in R&D in Africa. We feel this is an excellent opportunity today, given the breadth of available talent, the number of willing university partners and the opportunities to use modern technology to integrate research teams set up in Africa with teams in the rest of the world.
Some numbers. The table below, with statistics courtesy of UNESCO, shows us the current status of investment in R&D in Africa and other parts of the world.
The gap between the world’s R&D leaders and Africa’s R&D leaders is stunning. The USA out-invests South Africa 95:1 and Nigeria 330:1. As a % of GDP, South Korea and Israel (not pictured) are investing heavily in R&D, investing more than 4% of their GDP in R&D, essential for driving their innovation-led economies.
We see two major opportunities:
- Governments, universities and other research institutions in Africa should focus on engaging with corporates to increase their R&D investment in their countries. This can have the effect of dramatically increasing R&D investment levels in their countries towards reaching the stated investment target of 1% of GDP. Consider the gap between Nigeria, Africa’s largest economy, which invests USDPPP$1.3 billion in R&D, slightly more than 25% of South Africa’s figure of USDPPP$4.8 billion. The biggest gap comes from the share of this funding that comes from the corporate sector, with South Africa industry providing 44%, or over $2.1 billion USDPPP. Nigerian industry, by comparison (and according to the information we could find, which could admittedly be underreported) contributes about $10kUSDPPP to R&D in Nigeria. Were industry in Nigeria to contribute at the same %age as South African industry, Nigeria’s R&D spend could increase by $608 million, increasing Nigerian total R&D to $1.9B and 0.3% of GDP.
- Corporates who move to increase their investment in R&D in Africa now will have the opportunity to select from among the best of the current academic class in Africa and the diaspora, and to work with ready, willing and able partner universities and institutions across the continent. Programs operating across the continent in countries including Senegal, Rwanda, Ethiopia, Tanzania, Uganda, South Africa, Kenya, Cote d’Ivoire and many others are actively seeking to build new partnerships with corporates and to offer excellent conditions. We propose to view this in a new way, not as the ‘usual’ view of Corporate Social Responsibility in Africa (donating some money to support deserving students) but rather as a strategic investment in R&D in Africa, supporting PhD students and researchers to perform research work of interest and strategic interest to the company itself. McKinsey’s recent Lions on Move 2 estimates the size of the additional Africa-wide R&D driven market-size unlocked by this sector as over $280 billion USD annually, a huge market opportunity.
Having worked with both sides (universities/governments and industry), we know that there are potential partners that are ready to engage. Some great examples:
- IBM Research’s Lab in Africa working closely with (among others) Wits have been able to attract top scientists from Africa and the rest of the world doing work which is both relevant to their science and business mandates.
- The Philips Africa Innovation Hub was created in Nairobi to enable innovation of social relevance that reaches customers. This lab uses in-country resources coupled with global R&D expertise in a disciplined innovation process to lead to new health and social innovations including a wind-up fetal doppler, an automated breathing monitor and a new model for community and holistic health.
- The PASET program, launching in 2017 (a partnership between the Governments of Senegal, Rwanda, Ethiopia, Kenya, Cote d’Ivoire, the World Bank and others) is another great example of this.
In 2017, we’re going to be working hard with our partners on making this happen. If you know of people who want to work on this, contact us and let’s figure out how to work together.
