9 June 2008
A key report launched at the World Economic Forum on Africa last week shows that effective IP (intellectual property) strategies can raise African producers’ incomes by up to 320%, compared with traditional aid models, which raise incomes by only about 1.6% a year.
Called “Distinctive values in African Exports: How intellectual property can raise export income and alleviate poverty“, it was produced by an organisation called Light Years and funded by the Department for International Development in the United Kingdom.
“In sub-Saharan Africa, something quite new is happening with intellectual property,” the report states, adding that intellectual property is increasingly being used in business strategies to boost the export incomes of large numbers of African producers.
Light Years IP studied 14 product sectors, had found that these sectors have the potential to increase export income from US$1.1-billion per year, to between $2.5-billion and $3.5-billion per year.
If applied properly to sub-Saharan exports, which earn an estimated $9-billion per year, these strategies would increase the export income in this region to between $20-billion and $27-billion per year.
The report notes the dramatic increase in the intangible value of products over recent decades, finding that this has now overtaken the physical value of products as the main source of corporate income.
Now, with the value of intangible assets at the top end of the value chain, intellectual property strategies are more important than ever.
The report states that Africa could develop business strategies with IP built-in when exporting to developed country markets where value is dominated by IP, arguing that at the moment, “valuable returns from IP are being captured in the importing country and not in the African country of origin”.
Up to now, the authors argue, strategies for export development in Africa have relied too heavily on increasing the production of commodities and establishing new processing or manufacturing plants.
This has put African countries in “intense competition” with other developing countries that are also increasing production and manufacturing.
The report outlined a number of areas where African countries could receive more of the value from their products. For instance, Ethiopian coffee, it says, is recognised as being among the best in the world.
“However, the significantly high retail prices for these coffees were being enjoyed by foreign coffee distributors and retailers, while the producers were compensated at very low levels – around five percent to 10% of the retail price.”
In one sign of success, the report pointed to a successful IP-based business strategy initiated by cocoa farmers in Ghana.
A cooperative set up called Kuapa Kokoo – which in turn helped to establish the Fairtrade chocolate marketing company Divine Chocolate Ltd – now brands its product, which is becoming well known in developed country markets and allowing the producers to receive a major share in the brand and a significant share in the profits.
When it came to modern technology, the opportunity for trading on more equal terms was now better for Africa, says Light Years IP chief executive officer Ron Layton.
“Transmission of digital products has dramatically levelled the playing field for Africa, a change unprecedented in world trade.”
More than 800 participants from around 50 countries engaged with each other in the 18th World Economic Forum on Africa, which ended last Friday.