Nurturing Tanzania’s fledgling bioentrepreneurs

© Wikipedia Commons, Photo: Muhammad Mahdi Karim, Sisal plantation on the outskirts of Morogoro. Tanzania is the world’s second-biggest producer of sisal after Brazil. The conversion of sisal waste into biofuels has been boosted since 2008 by Tanzania’s Electricity Law authorizing private energy generation and distribution.

In December 2010, the United Republic of Tanzania published two key national policies, one on research and development (R&D) and the other on biotechnology. To mark the event, UNESCO’s Dar es Salaam office commissioned a report from the Ifakara Health Institute on Biotechnology and Bioentrepreneurship in Tanzania, in order to help the government plan ahead in these areas. Published in July 2011, the study went beyond its strict reporting mandate to incorporate a one-day encounter in the capital on 9 February 2011 between public and private players to identify the obstacles preventing them from taking science from the laboratory to the market. The final report describes this encounter, the first of its kind in Tanzania, within a broader analysis of the country’s efforts to develop a bioeconomy. The following article is adapted from Biotechnology and Bioentrepreneurship in Tanzania.

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Introduction

 

Until the mid-1980s, Tanzania followed a socialist model of economic development. This model was supplanted in the early 1990s by a multiparty parliamentary democracy. An economic adjustment programme followed to reduce state economic controls and nurture the private sector. Supported by the World Bank, the International Monetary Fund and bilateral donors, this programme has contributed to average annual growth in GDP over the past decade of 6%.

Agriculture is the mainstay of the economy, accounting for 45% of GDP, compared to 17% for industry. The agriculture sector accounts for two-thirds of merchandise exports and employs 80% of the labour force. The manufacturing sector remains underdeveloped, with services characterized mainly by public administration, tourism and finance. With GDP per capita at just US$551 per year for a population of 43.7 million, Tanzania remains one of the world’s least developed countries; in 2010, it ranked 148th out of 169 countries in the UNDP’s Human Development Index.

One objective of the government’s Vision 2025 document adopted in 1998 is to ‘transform the economy into a strong, resilient and competitive one, buttressed by science and technology’. The government plans to utilize science, technology and innovation (STI) to enhance the country’s four main drivers of growth: agriculture, manufacturing, mining and tourism.[1]

Biotechnology can play a key role in this endeavour. To thrive, however, a bio-economy needs a strong science base with excellent universities and technology platforms, binding government policy, public and private long-term financial investment, technology transfer and an intellectual property rights regime. How many of these key ingredients can Tanzania call upon today?

[1] Second National Strategy for Growth and Reduction of Poverty (MKUKUTA II, 2010)

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Getting beyond proof of concept

 

There are 47 public research institutes in Tanzania, many of which date back to the early 20th century. Research is also conducted by the country’s 18 universities and 15 university colleges and institutes, some of which are privately owned. A number of research institutes are conducting demand-driven research but few of their products and services get beyond the proof of concept stage or that of small local production (see table).

One reason for this is the inadequacy of production facilities, often for lack of funding. This prevents upscaling. Both the public and private sectors also suffer from a lack of fiscal incentives and funds earmarked for product development. A third failing relates to the poor interface between researchers and market professionals, resulting in the absence of a sustainable business plan based on market research.

Research institutions have also voiced the need for formal national accreditation systems which acknowledge excellence in product testing and development. At the University of Dar es Salaam, for example, samples had to be sent to the UK for fine chemical analysis at great cost, even though they could easily have been analysed locally. During the one-day encounter between public and private players in February 2011, participants also argued in favour of an accreditation system, or quality label, for certain biologicals and other high-quality products developed through R&D, to favour their commercialization.

Among the challenges posed by technology transfer, the report cites the ‘many cases’ in which expensive infrastructure supplied by vertical donor-funded projects is out of order, owing to a lack of long-term planning. The report suggests that local and regional technology hubs could provide equipment upgrades, supplies and maintenance services.

In this connection, the report observes that the three Ministries of Health and Social Welfare, Agriculture and Industry, Trade and Marketing benefit, via their affiliated research institutions, from technology transfer systems deployed throughout the country. These research institutions provide end-users with sector-related products, such as improved seeds, biopesticides and agricultural machines, although on a relatively small non-commercial scale. They also collect information regarding demand. These channels could be used as preferential points of entry for the introduction, testing and piloting of more innovative products, the report suggests, as well as for the purposes of outreach, dissemination and awareness-building.

The report stresses the important influence on potential markets of the public’s attitude towards biotech products. It recommends incorporating an effective communication policy into any scheme to commercialize products that may not benefit from high public acceptance.

Last but not least, a majority of Tanzanian researchers are unaware of issues related to intellectual property protection. There is also a lack of enforcement mechanisms and no clear national or institutional policy on the issue of ownership of intellectual property rights generated in academia.

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Changing the game in the university sector

 

The first academic degree courses in biotechnology and industrial microbiology were introduced at Sokoine University of Agriculture in 2004 and at the University of Dar es Salaam in 2005. The majority of graduates are subsequently employed in research institutions. Tanzania nevertheless still lacks a critical mass of researchers with the skills to carry out research in biotech-related fields like bioinformatics. Even when scientists have been sent abroad for critical training, the lack of adequate infrastructure has prevented them from putting their newly gained knowledge into practice upon their return.

In addition to technical skills, students also need complementary training in bio-entrepreneurship and exposure to collaborating with the private sector. The current lack of collaboration leaves academic research disconnected from both market needs and additional private funds. The University of Dar es Salaam has made an effort to expose students to the business world by creating a Business Centre and setting up the Tanzania Gatsby Foundation’s project to fund student research proposals of relevance to small and medium-sized enterprises. However, both of these schemes are of limited geographical scope and uncertain sustainability.

The lack of adequate training to promote entrepreneurship among scientists was one of the most hotly debated topics at the one-day encounter in February 2011. UNESCO consultant Hasa Mlawa advocated changing the university structure. He recalled that some universities now had Deputy Vice-Chancellors of Research and Innovation and urged universities to train as many students as possible, not only in biotechnology but also in manufacturing. Juma Shamte, Director of Development at Katani Sisal Ltd, a private Tanzanian company which grows and transforms sisal[1] into rope, cloth, bioethanol, animal feed, pulp for paper, biogas and other products, heartily agreed. ‘It is important to encourage students to take a business course,’ he said. He did wonder, though, whether the support structures in place since the 1960s would suffice for a more capitalist economy. [1]

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Patent and perish?

 

At the one-day encounter with stakeholders in February 2011, Juma Shamte and Kenneth Hosea from the University of Dar es Salaam discussed the challenges in taking research to the commercialization stage. Juma Shamte recalled the difficulty his company had experienced in convincing the university to allow its knowledge to be turned into a commercial product in partnership. He recommended focusing on research for the development of products for the local market. ‘Public partners need to identify how they want to come in and dictate what piece of the pie they want’, he said.

Kenneth Hosea observed there was no clear policy for the university to engage in such a venture. ‘There is a lack of incentives for collaborating with the private sector,’ he said, ‘as having patents on one’s curriculum vitae does not give any benefit on the academic ladder. Commercializing research findings at the moment is not really attractive,’ he said. In Tanzania, obtaining a patent or developing a product does not affect an academic’s remuneration; nor is it taken into account in a researcher’s evaluation, which is based solely on academic credentials and publications.

Kenneth Hosea suggested that an agency might be better equipped than academic researchers to negotiate with people from the business world, act as an intermediate and ensure follow-up. He explained that the university had recently appointed a patent officer to assist in dealing with the private sector. ‘Researchers are now advised that, when any negotiations are ongoing, to avoid speaking with business people and to contact the patent officer,’ he said.

Gabriel Mergui concurred. ‘If you leave a researcher in front of development problems, he is not formatted for that,’ he remarked. ‘Full-time project managers are our solution at Genopole®.’ Gabriel Mergui is Managing Director of the International Department of Genopole®, a biopark in France grouping university laboratories and biotech companies which fosters technology transfer to industry.

This brought the discussion round to intellectual property rights. Gabriel Mergui observed that, although intellectual property had to be protected, it was not always necessary to own intellectual property. ‘Some seeds are public,’ he said, ‘and one threat not mentioned so far in the discussion is Tanzania’s great mining potential. Mining means pollution. Soil remediation has lot of biotechnology behind it but you can use biotech-based tools that are not necessarily based on intellectual property.’ What was essential was ‘know-how,’ he stressed.

Some discussants recalled that current biosafety regulations (dating from 2005) prevented the use of genetically modified organisms in Tanzania, including vaccines. Chanasa Ngeleja from the Central Veterinary Laboratory in Tanzania added that ‘the problems encountered in diagnostics and vaccinations stemmed from the reliance upon biologicals produced elsewhere. This is inefficient for detecting our local pathogens. Producing biologicals for us should mean using our own local strains.’

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The threat foreign competition poses to fledgling industries

 

At the one-day encounter in February 2011, participants from the private sector appealed for tax regimes that would support ideas developed domestically. They also called for the provision of loans and incubation structures to allow them to compete against foreign products. Foreign companies, they observed, could benefit from a tax holiday of up to five years. They cited the example of the closure of a local fermentation plant with the loss of 1000 jobs following the importation of fermented ethanol from South Africa.

For Juma Shamte, it was important to provide both a favourable tax regime and an environment that was more protective of local industries and more supportive of their growth. He suggested removing value-added tax from locally produced raw materials, in order to allow local industry to produce more; the finished product could then be taxed.

Wilson Marandu from the Alpha Seed Company in Tanzania cited inertia as another problem for the ‘made in Tanzania’ brand. He observed that imports could represent a threat to the successful commercialization of domestic products. ‘For example, tomato seeds imported from overseas are not adapted to this climate,’ he said. ‘Now, even foreign companies are packaging these local seeds because they are the best.’ The participants recommended legislating to prevent imports whenever Tanzanian companies could manufacture the same products.

At this point, Klaus Plate cautioned that the idea of developing biotechnology by protecting its development for a given period in Tanzania might work in a particular

niche area but that no national strategy could protect biotechnology over the long term. A lawyer by training, Klaus Plate is former Chief Executive Officer of the Heidelberg Technology Park in Germany.

Juma Shamte described how his company had attempted to interact with the Tanzania Industrial Research and Development Organization, Small Scale Industries Development Organization and Tanzania Engineering and Manufacturing Design Organization, only to find their production capacity too low. They simply could not keep up with the pace of development in the commercial sector, he said. Machines were sometimes outdated and the raw materials procured were insufficient. In the end, Katani Sisal Ltd had been obliged to build its own internal production capacity using equipment imported from China.

Note: Tanzania is the world’s second-biggest producer of sisal after Brazil. Traditional methods use only about 2−4% of the sisal plant but sisal waste can be used to make automobile parts, roofing and panelling in construction, woven goods like carpets, organic fertilizer, biofuels, pharmaceuticals, pulp and paper. Sisal waste can also be used to reinforce plastics and other resins. The conversion of sisal waste into biofuels has been boosted since 2008 by Tanzania’s Electricity Law authorizing private energy generation and distribution.

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Shortfalls in funding

 

At the one-day encounter in February 2011, public and private players were united in lamenting the lack of seed funds for R&D-based projects. Most research in Tanzania is donor-funded via bilateral agreements, with the percentage of donor funds varying from 52% to70 %. Research has benefited greatly from these funds but the approach does have its limitations. For one thing, the research topics are preselected, thus limiting the number of research lines. Secondly, government funds for R&D are insufficient. Despite the pledge in 2007 to increase R&D funding to 1% of GDP, current funding remains at 0.18%, according to Dr E. Mbede, Director of Research at the Tanzanian Ministry of Communication, Science and Technology.

Julie Makani from the Muhimbili University for Health and Allied Sciences pointed out that, unlike in Northern countries, there was no national funding scheme to promote research in Tanzania. ‘Nor does the private sector support research,’ she said, ‘as there is no link between industry and academia. Although the commercialization of products and services is slowly happening, the issue of funding remains. If you bring a UK grant for £2.2 million to Tanzania, the government does not match it,’ she said. ‘This lack of funding does not motivate academic research.’

Gabriel Mergui observed that, in the USA during the late 1990s, only 5% of funding for innovation came from venture capital. The bulk came from the public purse. ‘It is imperative to have access to more R&D funding than what the government is currently contributing,’ Juma Shamte add

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Will the new policies address bioentrepreneurs’ concerns?

 

A number of flagship projects were under way in 2011 as part of implementation of the biotechnology and R&D policies adopted the previous year. These include the opening of the Nelson Mandela Institute of Science and Technology, the establishment of Academic Networks of Excellence and the creation of the Life Science Convergence Centre.

These projects are being spearheaded by the Ministry of Communication, Science and Technology and by the Commission for Science and Technology (COSTECH), which serves as the implementation arm for national policies and is responsible for mobilizing and supervising R&D funding. Interviews by the author with the Ministry and COSTECH revealed a close alignment of objectives between these two bodies.

The main priorities of the National Biotechnology Policy are to:

  • create infrastructure for research, development and commercialization in biotechnology;
  • optimize coordination in the application of biotechnology;
  • set up priority areas for biotechnology in relevant sectors;
  • foster public−private partnerships and linkages;
  • increase public perception and awareness;
  • promote conservation and utilization of genetic resources;
  • Improve protection of intellectual property rights;
  • Increase funding.

Biotechnology and Bioentrepreneurship in Tanzania (2011) observed that the conditions for export and business incubation had definitely improved in recent years, thanks to the adoption of an export policy and Programme for Business Environment Strengthening for Tanzania (BEST) in 2009.

Despite these recent improvements, biotech companies did not appear to benefit from any specific status at the Ministry of Industry, Trade and Marketing in 2011. Nor was there yet any link between the National Biotechnology Policy and the Small and Medium-sized Enterprises Policy dating from 2002, although the latter was under revision in 2011. No fiscal incentives had been envisioned for the biotechnology sector as of 2011. Although regulatory policies do address biotech-related issues directly, business-promoting measures do not yet take this sector into account. Resource limitations are given as the principal cause.

The report observed that the communication and coordination between the relevant ministries might also need to be optimized, in order to provide the necessary resources for policy implementation. As an example, the 2011 report suggested that the lack of coordination between COSTECH and the Ministry of Health and Social Welfare and that of Industry, Trade and Marketing appeared to be hindering potential implementation and exploitation of patent exemptions related to the agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS).

Malaria clinic in Arusha. © Jeffrey Gluck/Wikipedia Commons

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