South Africa Should Lead on Intellectual Property Rights

Conventional wisdom holds that where South Africa goes, other African nations eventually follow, and this has generally been a good thing: over the last two decades South Africa's successful transition to democracy, economic expansion, and progress fighting disease have all foreshadowed similar achievements elsewhere.

Now another wave of change is underway, driven by new technologies and innovative businesses, with the potential to raise millions more out of poverty.

That's why it's disturbing to think South Africa might lead the continent in the wrong direction by weakening the intellectual property protections that underpin our economic development.

Most readers will have heard about the recent controversy surrounding pharmaceutical industry lobbying against South Africa's proposed National Policy on Intellectual Property. Leaked documents rarely cast a flattering light on their subjects, and this case is no exception.

But when the South African health minister starts throwing around words like "satanic," he puts himself in company with Iran's Ayatollahs and the late Hugo Chavez, who both vilified their enemies as evil incarnate. Surely we can do better.

Let's take a deep breath and look at the facts. The South African government is undoubtedly right to be concerned about the availability of HIV drugs, which is a heavy focus in the draft policy: despite some good news, including a one-third drop in new infections from 2004-2012, millions still do not have access to antiretroviral treatments -- and millions more across the continent will need new drugs as the virus continues to mutate, forming drug-resistant strains.

That's why it's dangerously shortsighted to weaken IP laws as this policy would do. Each new drug takes around 11 billion Rand and 12 years to develop, and threatening drug makers with compulsory licenses-- which would allow another company to cheaply reproduce the original drug at any time -- jeopardizes investment into future drug research.

Meanwhile recent studies suggest ARV-resistant HIV is on the rise in East Africa, where the drugs first became available. Last year ARV shortages in South Africa also raised questions about the ability of generic firms to provide a steady supply of HIV drugs, further increasing the risk of drug resistance. And it's not just HIV: the rise of multi-drug-resistant tuberculosis also requires powerful new drugs backed by formidable research efforts.

However the IP issue goes beyond healthcare, as weak IP laws also threaten to undermine Africa's broader development. Simply put, IP is the key to moving beyond commodity-based economies.
Like many African countries, South Africa has benefited from abundant natural resource wealth, with extractive industries currently contributing around 6 percent of total GDP, similar to Ghana, where they contribute around 8 percent. Both countries rely on commodities exports as a key source of foreign trade and investment, but recent downturns have shown that commodities alone can't provide long-term prosperity. This is why the Presidents of Ghana and South Africa are calling for investment in high-growth industries, like information technology and green energy.

There's plenty of good news here: both countries have already produced continental champions in tech-driven industries, and many start-ups. But all these companies, large and small, rely on IP laws to protect their businesses, which in turn benefit economic development. Telecom, media and IT firms like Ghana's SOFTtribe and South Africa's MTN, Naspers, and Datatec don't just employ people and pay taxes -- they're also speeding up regional economic integration. According to a recent World Bank estimate, a 10 percent increase in broadband coverage could produce a 1.4 percent increase in economic output across Africa.

By the same token, Africa will find it difficult to become a world center of innovation if academics and researchers have no incentive to produce. There are already plenty of challenges on this front: over the last few years South Africa's research and development spending has slipped to under 1 percent of GDP -- far below the government's stated goal of 2 percent of GDP by 2018. Business-funded and foreign-funded R&D, which previously contributed over half the total, have both dropped. Even more ominous, the number of patent applications originating from local South African industry has declined over the last decade.

Africa stands on the threshold of a new era, but still faces a number of challenges. In addition to controlling and someday defeating HIV, we need sustained economic growth to raise standards of living, foster the continent's growing middle class, and anchor new democratic institutions. This will require developing new areas of talent and expertise, creating more value-added businesses, and moving the continent's economies away from a dependence on commodities. Strong IP laws will form the foundation for the investment and innovation we need to achieve these goals.

It's alarming to think South Africa might choose to set a damaging precedent with the National Policy on Intellectual Property and point Africa in the wrong direction.

Source: Franklin Cudjoe