Stimulating innovation to address global problems

One of my great passions is travel to new places; I’ve just returned from a trekking holiday in Nepal and in recent years have had the good fortune to visit a number of African countries including Mali and Zambia. These trips always provide stunning scenery, cultural highlights, lots of wildlife and an opportunity to rise to some physical challenges. However, the memory that always stays uppermost in my mind is the people – they live in extremely difficult circumstances but they always exhibit a real zest for life, are incredibly welcoming of visitors and demonstrate an astounding capacity for inventiveness and innovation to address day to day problems with none of the resources that we take for granted available to them.

Whilst the conventional aid programmes to developing countries have helped to a certain extent to address issues of poverty and inequality etc., there is clearly much more that needs to be done. I can’t help feeling that what is required are mechanisms that allow the local people in these countries to couple their capacity for innovation with external resources through programmes that are managed at the local level rather than being driven by external forces.

One approach to addressing these issues is social innovation, which uses public-private partnerships to transform the way public services are provided, by tapping the ingenuity of people in the private sector, especially social entrepreneurs. A social entrepreneur is, in essence, someone who develops an innovative answer to a social problem (for instance, a business model for helping to tackle poverty). A decade ago the term was scarcely heard; today social-entrepreneurship conferences are apparently the best attended events for students at leading business schools.

The idea behind social entrepreneurship is that fresh, businesslike ideas will bring about a productivity miracle in the “social sector” (public services plus charity) similar to the one that began in business in the 1990s. Already, a growing number of social entrepreneurs have made a mark. The best known is probably Muhammad Yunus, the Bangladeshi founder of Grameen, a microfinance bank (www.grameen-info.org), and winner of a Nobel peace prize.
In a recent manifestation of social enterprise the British Government is testing the idea of Social Impact Bonds. A Social Impact Bond is a contract with the public sector in which it commits to pay for improved social outcomes. On the back of this contract, investment is raised from socially-motivated investors. This investment is used to pay for a range of interventions to improve the social outcomes. The financial returns investors receive are dependent on the degree to which outcomes improve. This idea is being tested to pay for a project which aims to cut re-offending by prisoners in Peterborough.

One of the main proponents of social enterprise is Sir Ronald Cohen, a private-equity tycoon and philanthropist who was a founding investor in Social Finance (www.socialfinance.org.uk), which developed the social-impact bond. He believes that financial innovation of this sort has great potential in both rich and poor countries. “How about a social impact bond to fund literacy programmes in Africa?” he suggests. Those of you of a certain age may recall that Sir Ronald used to run Apax Capital, which was a leading UK venture capital investor in biotech companies in the 1990’s.

Social enterprise is being used to stimulate improvements in African agriculture through the application of biotechnology. One example is the recent development by researchers in Uganda of disease-resistant banana plants by inserting genes from green pepper plants into them (www.soci.org/Chemistry-and-Industry/CnI-Data/2010/16/Biotech-bananas-combat-bacteria). The genetically modified plants are resistant to Banana Xanthomonas Wilt, which costs farmers in east and central Africa about $500m/year. The work is part of a private-public partnership between the International Institute of Tropical Agriculture (IITA) and the National Agricultural Research Organization (NARO) of Uganda – one of a growing number in sub- Saharan Africa aiming to deliver GM crops to small-scale farmers to tackle specific African problems.

In another example, Uganda is one of five African countries that is part of the Water Efficient Maize Program for Africa (WEMA), a private-public partnership coordinated by the African Agriculture Technology Foundation (AATF). The aim of the programme is to release royalty-free, drought-tolerant GM maize to small-scale farmers in sub-Saharan Africa by 2017 (http://ofabafrica.net/userfiles/Wema-Summary-Collaboration.pdf). Access to technology was a key challenge for WEMA but its work was made possible thanks to an AATF-coordinated gene sharing deal with the Academia Sinica in Taiwan. However, a key feature of the initiative is that it is researchers in Africa that are developing solutions to the agricultural problems in Africa as this builds capacity in Africa for research. The technology rights will be owned by the IITA, NARO and the AATF.

In 2005, Joel Cohen at the International Food Policy Research Institute found that developing countries relied heavily on public institutions to provide GM innovation (Nature Biotechnology, 2005, 23, 27). Locally developed GM crops were more likely to benefit African farmers by targeting their problems, he said. Despite promising R&D results, few locally developed GM crops have made it from confined field trials to pre-commercial testing. Cohen found ‘the public sector to be a competent, but largely unproven, player for GM crop production in developing countries’.

The use of social enterprise may address the barriers identified by Cohen and a recent McKinsey & Company report predicts that African agriculture could go from generating $280bn today to $880bn/year by 2030.

Social enterprise is also making use of another tool for stimulating Innovation - innovation prizes. Such prizes are not new. The Longitude Prize was set up by the British government in 1714 as a reward for reliable ways for mariners to determine longitude. And in 1795 Napoleon offered a prize to preserve food for his army, which led to the canned food of today. In more recent times incentive prizes have fallen out of favour but, in the last decade there has been a surge in incentive prizes as a range of charities, including the Gates Foundation, have started offering their own prizes. An industry is now growing up around them, with some firms using InnoCentive (http://www2.innocentive.com), an online middleman, to offer prizes to eager problem-solvers.

Governments are now offering prizes. Britain, Canada, Italy, Russia and Norway, in co-operation with the Gates Foundation, are funding the Advanced Market Commitment (AMC) to develop vaccines for neglected diseases in the developing world. The AMC is offering $1.5 billion to drugs firms that can deliver low-priced vaccines for pneumococcal disease, a big killer of children. GlaxoSmithKline plans to deliver such vaccines to Africa next year.