Islam Analysis (16): Specialist R&D funds need rethink

By:Athar Osama

Specialist R&D funds levied on business must build organisations that offer short-term benefits through a clear strategy, says Athar Osama.

Just under a decade ago countries in the Organisation of Islamic Cooperation (OIC) signed a science vision 1441 (which coincides with year 2020). Collective spending on research and development (R&D) in the Islamic World was a mere tenth of what the developed world spent. Since then, some progress has been made to increase investment.

But the strong political will needed to undo science under-funding in the Muslim world has been extremely hard to find.

Most OIC members suffer resource constraints that are exacerbated by policy instability, poor governance, and endemic corruption. Faced with the challenge of choosing between the ‘real’ needs of healthcare, literacy, and social welfare, and the ‘promised’ benefits of science, the latter has often cut a sorry figure.

For some time now, several countries have been experimenting with using dedicated R&D funds to get around this problem. But the funds’ performance leaves much to be desired. It’s time for a re-think.

Pot of money

These specialist funding vehicles ‘ring fence’ (assign) a certain portion of a country’s tax revenues for investment in R&D.

Perhaps the oldest such instrument in the Islamic world, created in 1976, is the Kuwait Foundation for Advancement of Science (KFAS). It receives 1 per cent of annual net profits from all Kuwaiti shareholding companies. In 2008, total assets stood at 580 million Kuwaiti Dinars (US$2 billion).

KFAS has invested in promoting science and research in areas such as water, energy, and environment by organising a host of grants, prizes, and conference programmes. The Kuwait Prize, for example, awards a US$100K prize, a gold medal, and a shield to two recipients each year.

The KFAS has also sought to initiate international collaborations with institutions such as the US Massachusetts Institute of Techonology, and the UK’s Oxford University, and London School of Economics.

In Pakistan, similar funding vehicles have existed for some time now. In 2005, the government established a dedicated fund for information and communication technology (ICT) — the National ICT R&D Fund — through a tax contribution equal to 0.5 per cent of gross revenues from telecommunications companies in the country.

With the telecommunications boom during the past decade, the fund has acquired a sizeable kitty for investment in R&D. In a country where research funds have often been in short-supply and research effort sub-optimal, this could make a difference.

A similar initiative in UAE — the first of its kind in the Arab world — created the National ICT Fund requiring the two cellular phone providers (Etisalat and du) to contribute 1 per cent of net annual profits.

Governance challenges

While creating these dedicated funds solved the problem of political will, they created their own challenges and questions — about governance and strategy.

It is here that both Pakistan’s National ICT R&D Fund and the UAE’s ICT Fund have faltered. Both funds initially struggled to find the right management to execute the vision but also, more importantly, to determine what that vision should be.

In Pakistan, for instance, a founding CEO was hired without a proper strategy in place. As a result he quickly found himself ensnared with organisational politics and bureaucracy.

The fund started with a ‘scatter shot’ approach to project selection, and took upwards of a year to set up and streamline a peer review process, losing credibility as a result. And no real strategy to deliver demonstrable results was in sight even when the first CEO’s three year tenure ended.

The fund hit rock bottom a couple years ago, when it was left without a CEO for more than a year, lost more credibility with key stakeholders, and was sued by contributors.

Greater oversight by the fund’s board has now begun to address these issues and, hopefully, produce a more streamlined solicitation and decision process. However, bigger strategic questions still remain.

Crucial ingredients for success

So what should these specialist funds be doing in the first place? They need to focus on near-market opportunities — research that is likely to find commercial applications in one to three years.

Rooted in a culture where private sector funding for basic and applied research is minimal, the contributors simply may not have the patience to wait for longer term investments to deliver. However demonstrable benefits in the short-term might create a self-perpetuating cycle of success.

The funds could create a portfolio of instruments — from university–industry partnerships to incubation and seed programmes — but with a very tight measurement and evaluation framework to demonstrate results. Doing so could stave off criticism that benefits are lacking, and create broader support for scientific investment in these societies.

Above all, to become successful, special funding vehicles need four key ingredients which are interlinked: a clearly defined set of objectives, and a structure geared towards achieving them; a realistic strategy, including in-depth technical understanding; a leader with relevant experience; and systems and processes that allow the fund to achieve its objectives without getting bogged down in bureaucracy.

Creating an evidence-based case for greater investment in science is not a one-shot game of securing the political will to do the right thing, but a slow and painstaking process of creating an institution with all the necessary ingredients to deliver the goods.

Athar Osama is a London-based science and innovation policy consultant. He is the founder and CEO of Technomics International Ltd, a UK-based international technology policy consulting firm, and founder of localhost/muslim.