Africa’s potential to flourish in the coming years is enormous. The newly-minted African Continental Free Trade Area(AfCFTA) is set to immediately get rid of 90 percent of tariffs on goods traded between member states upon its July 1 implementation, which will dramatically ramp up trade and add billions to the continent’s economy.
Already, 29 of the 55 African Union (AU) nations have ratified the agreement. But to truly reap the potential benefits of this new trade area, African states must drastically reform existing intellectual property laws in order to allow and encourage innovation among their citizenry.
Patents in Africa
A recent report from the Brookings Institution found that in 2017, African countries registered a mere 1,330 patents. This amount is a fraction of the 592,508 patents registered in Asia and the 116,359 registered in Europe in the same year. What’s more, the majority of patents in Africa are registered by non-residents—and that’s not the case in the rest of the world. As a continent with a young and increasingly educated population, it’s vital that Africans are free to innovate and reap the rewards for doing so.
As Francis Gurry, Director General of the World Intellectual Property Organisation, notes:
Africa has a great tradition of innovation and creativity and has extraordinary creative resources but has often struggled to realize their full economic potential.
The main reason this potential is hindered is because of the hefty costs of patent registration. Indeed, Africa has some of the steepest registration costs in the world.
In two of the continent’s fastest-growing economies, Kenya and Ethiopia, patent registration fees are a whopping 13 and eight times the national average income respectively. To put that in perspective, in the U.S., patent registration costs equate to just 0.1 times average incomes, and in Germany, just 0.3. African innovators, who are mostly young with either no job, or a low-paying job, therefore struggle to afford these exorbitant fees.
Structural Barriers to Entry
To make matters worse, in some cases, new technologies are required to be registered in every single country they enter, meaning further costs for entrepreneurs who are often already facing significant financial challenges. Making it easier for Africans to obtain patents would help the states’ and the overall region’s economies, as it would boost the production and export of higher-value goods, rather than having nations primarily reliant on exporting commodities.
Today, many African economies rely heavily on exporting raw materials. And for three-quarters of African nations, commodities (which are typically exported outside of the continent) account for at least 70 percent of their exports. This is bad news for African nations, as raw materials are especially prone to price fluctuations, so reliance on commodities risks economic volatility, and creates unstable business environments.
By reducing the costs of patents, African innovators will be free to reap the rewards of their innovations without being crippled by burdensome regulations.
However, when African states trade with one another, the goods traded are almost three times more likely to be higher-valued manufactured products, when compared to the goods that leave the continent. And as one of the main aims of the AfCFTA is to increase intra-regional trade, the enormous barriers to entry posed by large patent registration fees must be reformed in order for the continent to harness the talents of innovators and boost the trade of such manufactured and technological goods.
Indeed, the benefits of lowering the cost of patent registration have already been demonstrated in a variety of outliers across the continent. Botswana, Tanzania, and South Africa, for example, all have patent registration costs far below the African average, and partly as a result, have a much more diverse export market, which helps create a more stable business environment.
Phase I of the AfCFTA negotiations, which largely focused on removing concessions for goods traded intra-continentally, are coming to a close. The AU is now starting to look ahead at Phase II, which will largely focus on competition policy and, perhaps most importantly, intellectual property rights.
As Phase II draws closer, the AU must focus on reducing the overbearing costs of intellectual property across the region. Without a universal set cost, or unilateral lowering of patent registration fees, it seems the AfCFTA’s goal of drastically boosting intra-regional trade will be harder to achieve.
By reducing the costs of patents, African innovators will be free to reap the rewards of their innovations without being crippled by burdensome governmental regulation. If the AU fails to address this growing problem, intellectual property rights on the continent will remain something typically enjoyed by wealthy foreigners, and that’s not a future Africa should strive for.