A Case Study on Egypt:
The effects of external funding on biotechnology transfer
Bram de Hoop

Keywords:  Technology transfer; Egypt; Public institute; Cell-/Tissue culture; Genetic engineering; US Agency for International Development (USAID).
Correct citation: Hoop, B. de (1996), "The Effects of External Funding on Biotechnology Transfer. A case study on Egypt." Biotechnology and Development Monitor, No. 28, p. 18-22.

Biotechnology receives increasing attention in special development projects of international donors. External funding of biotechnology research could, however, adversely affect the sustainability of national research, national research priorities and relations between the different research institutes. To fully benefit from external sources, developing countries need to develop a strategy based on a thorough understanding of the relationship between the transfer of foreign technology and the development of a local technological capability.

Biotechnological innovations have become more protected due to changing intellectual property rights, the interests of the private sector, and the increased technical complexity of advanced biotechnologies. The consequent privatization of the benefits from biotechnological R&D requires new mechanisms of technology transfer. External funding of biotechnology research, as part of a cooperation agreement with the donor agency, might assure access to more advanced technology which would otherwise be inaccessible to researchers in developing countries.
External funding of research activities typically involves interference of the donor to some extent. Apart from the obvious positive effects, however, this can also have considerable negative consequences, as the Egyptian case shows.

ODA to Egypt
Worldwide, Egypt is the largest recipient of Official Development Aid (ODA). The aid of the member countries of the Organisation for Economic Co-operation and Development (OECD) to Egypt reached a total of US$ 3.7 billion in 1992-3. 35 per cent of this amount was provided by one donor: the USA.
Egyptís R&D expenditure is among the highest in the Middle East, amounting to a total of US$ 142 million, or 0.34 per cent of its gross domestic product in 1992. R&D in Egypt is almost exclusively publicly funded: less than 1 per cent of the R&D expenditures comes from the private sector. Foreign donors are important contributors, as is illustrated by Egyptís National Agricultural Research Project (NARP). This project is coordinated by the Egyptian Ministry of Agriculture and entirely funded by the United States Agency for International Development (USAID). From 1989 to 1995, NARP annually provided US$ 40 million, i.e. 28 per cent of Egyptís entire research budget, to various agricultural research institutes in Egypt. Approximately US$ 10 million of the NARP budget was spent on 15 biotechnology sub-projects
External funding of biotechnology research
In Egypt, activities in biotechnology can be found in virtually all relevant sectors: agriculture, fermentation industry and medicine. Egyptís human resources in biotechnology are considerable, as 14.5 per cent of the total of 27,500 scientists are active in biotechnology-related fields, of which many have been educated at European and US universities. Conventional biotechnologies, such as fermentation and plant tissue culture techniques are well mastered in Egypt.
Many foreign donors, of which USAID is the most important, support biotechnology research projects in Egypt. Next to funding NARP, which is the largest US-supported project in Egypt, USAID has also been a major donor of biotechnology projects in other sectors than agriculture, including medicine (DNA diagnostics for cancer) and the fermentation industry (biotreatment of agro-industrial wastes and enzyme production).
Technology development and transfer mechanisms are dependent on the nature of the technology. Established technologies are more easily turned to benefit than advanced technologies. The influence of external funding on the development of an established biotechnology (plant tissue culture) and a more advanced biotechnology (genetic engineering of plants) will be explained in more detail below.

Plant tissue culture research
One of the projects funded by NARP proved to be extremely beneficial for the emergence of two private Egyptian companies working on plant tissue culture. Both companies were established in 1990, which coincides with the start of this NARP project conducted from 1990 to 1994. The project was executed by the Plant Cell & Tissue Culture Department of the National Research Centre (NRC). It consisted of establishing protocols for the production of virus-free seed potatoes through tissue culture techniques. Viral diseases constitute the most notorious problem of potato production in Egypt. The financial assistance of USAID and technical support of the International Potato Centre (CIP), Peru, ensured the international technology transfer of the required set of techniques. Subsequent adoption of the biotechnology by the two private companies took place because of the individual initiatives of staff members of NRC, who were hired as private consultants by both companies. One private company also established plant tissue culture protocols for the micropropagation of banana, strawberry and ornamentals. Sale figures of this company exceeded US$ 2.5 million in 1995.
Apart from the removal of financial barriers by USAID, the development and domestic transfer of the technology was successful mainly because of factors outside the control of the involved donor agency, notably:

After the NARP project ended, the NRC department involved in the project fell back to its core annual budget of approximately US$ 15,000 including salaries. This amount equals the salaries of two senior researchers in Egypt. Obviously, the NRC department is not in a position to continue the same quality of research as performed during the NARP project cycle.

Genetic engineering of plants
The influence of foreign donorsí aid on biotechnology development and transfer becomes more apparent with advanced biotechnologies such as plant genetic engineering. Only a few countries in the Middle East have established facilities for molecular biology research. Of those countries, Egypt and Kuwait have undertaken genetic engineering research for crop improvement, whereby only Egypt succeeded in genetically transforming a plant by transferring virus resistance into potatoes in 1992.
In Egypt three public research institutes are active in attempting genetic engineering of plants (see box). All three institutes have been dependent on financial and technical aid from foreign sources. The Agricultural Genetic Engineering Research Institute (AGERI), which is part of the Agricultural Research Centre (ARC), has received most support, currently provided through the Agricultural Biotechnology for Sustainable Productivity (ABSP) project of the USAID. As well as to providing funding for equipment and building, the ABSP project ensured training of Egyptian researchers at US universities, visits of US scientists to AGERI, the involvement of US private companies, and an international workshop on intellectual property rights and biosafety, held in Egypt in 1993.
The involvement of USAID guaranteed access to more advanced molecular biology techniques and even to proprietary technologies through USAID mediated collaborations with patent holders in the USA. USAID stimulates AGERI to seek patent rights protection on its research findings in Egypt. Because of the involvement of USAID, AGERI has become the most reputable biotechnology research institute working on genetic engineering in the Middle East. In addition, the project has made a considerable impact on Egyptís biotechnology network, as AGERIís 17 senior scientists are affiliated with other institutes of the ARC and with six Egyptian universities.
The involvement of USAID resulted in such an expansion of AGERIís research capacities that the institute has been discouraged from collaborating with other national research institutes in order to achieve its objectives, as several examples demonstrate. The most illustrative case is about transferring Bacillus thuringiensis (Bt) endotoxin genes to fight the major pest of cotton: bollworm. All three research institutes active in genetic engineering of plants are working in this research area without collaboration. AGERI can tackle this research well on its own, but the other two institutes may benefit considerably from AGERIís expertise. In addition, alternative strategies for controlling the cotton bollworm or biotechnologies for producing Bt endotoxins sprays by fermentation, have not been considered by any of the Egyptian research institutes due to fixed collaboration agreements with the respective donor agencies.
A second example is a programme on genetic improvement of lentils for which AGERI received US$ 30,000 from the International Center for Agricultural Research in the Dry Areas (ICARDA), Syria in 1993. In this programme, AGERI failed to establish a wide cross between short- and long-season lentil varieties. The failure could have been prevented if AGERI had made use of the services of the Crop Research Institute, which is also part of the ARC and located near AGERI. The Crop Research Institute employs Egyptís most experienced plant breeder of wide crosses in lentil. The donor ensured the growth of AGERI resulting in a position in which it was self-reliant in financial resources and research capacities covering different scientific disciplines related to biotechnology. Because of this position, AGERI preferred to execute the project entirely by itself.
A third example of problematic collaboration, is that AGERI depletes other institutes of staff by hiring their talented researchers working on genetic engineering. One of the examples is the Genetic Engineering and Tissue Culture Center of the Menoufiya University, of which the only one researcher trained in molecular biology left to AGERI. The Menoufiya University is working on the incorporation of Bt endotoxin genes into cotton as well. The project also receives a (small) grant from USAID, but through a different programme. The centreís main difficulty is to find and keep trained manpower.
Egyptian public research institutes working on plant genetic engineering
Institute Start Main research objectives Foreign donor
Agricultural Genetic Engineering Research Institute (AGERI), Agricultural Research Centre 1989
  • Genetic transformation research on potato, tomato, cucurbits, maize and cotton;
  • Genome mapping of tomato, rapeseed and Bacillus thuringiensis (Bt) toxin genes;
  • Developing micropropagation protocols for potato and tomato;
  • Sexual hybridization of rapeseed;
  • Identification of biotypes of white fly.
(a) UNDP, 
US$ 1.5 million. 
(b) USAID, 
(c) USAID, 
Genetic Engineering and Tissue Culture Center, Menoufiya University 1990
  • Genetic transformation of Bt genes to cotton.
US$ 0.25 million
Genetic Engineering Centre, Faculty of Agriculture, Cairo University  1995
  • Genetic transformation of Bt genes to Egyptian clover;
  • Developing micropropagation protocols for faba bean, wheat and Egyptian clover.
US$ 1.2 million
Source: United Nations (1996), Inter-Agency Task Force Meeting Biotechnology Applications and Technology Transfer: Survey of biotechnology activities in Egypt. Mission Report Egypt visit 16-21 December 1995. Amman, Jordan: Technology Section - SIPD, ESCWA (restricted). 

Involvement of other actors in priority setting
In the case of genetic engineering research, the downstream effect of technology transfer within the country is even more significant as the relevant actors have not been involved in priority setting of research when AGERI started its operations. These actors include technology producers (industry), technology distributors (marketing channels) and technology users (farmers). For instance, the Egyptian private companies that are mass-producing virus free potatoes have made no attempt to make use of the genetically engineered virus free potato lines, developed by AGERI in 1992.
Early 1996, USAID committed itself to support AGERI for an additional three years. During this period relations are to be established with other Egyptian research institutes, private companies, seed distributors and end-users to assure national technology transfer. However, genetic engineering research at AGERI is already well underway, leaving little room for participation of the other actors in the technology transfer process. The available expertise of AGERI thus provides "supply-push" biotechnology instead of reacting to problem demands from the agricultural sector in Egypt.

Conclusions from the Egyptian case
The cases above are illustrative of the effect external funding can have on biotechnology transfer and development in Egypt. Whether the following observations can be extrapolated to other developing countries depends on many factors, such as the proportion of received external funds; national research policies; national scientific and technological capabilities; and the role of recipients (e.g. industry, farmers, consumers) of the technology. In the case of Egypt, external donor support of research activities affects biotechnology development and transfer in four ways:
Firstly, foreign donors can facilitate access to technology and assist in establishing contacts with counterpart institutions in industrialized countries, especially in case of more advanced biotechnologies like genetic engineering.
Secondly, research depending on the support of foreign donors is in danger of being unsustainable for two reasons: (a) As long as donor funds are available, the level of research is reasonable or even high in the case of AGERI. However, as soon as donor support ceases at the end of a project cycle the level of research tends to decrease because of reduced funds. The Plant Cell & Tissue Culture Department of NRC finds itself in this position. The USAID-AGERI project aims at future financial self-reliance by the sale of their research results. Revenues from both products for sale at present, ELISA test kits and DNA primers, are not sufficient to reach this goal. In between two project phases, when financial support was suspended for two months, AGERI staff indicated their concern about falling back to common government support; (b) Despite the generally high level of training of Egyptian scientists in biotechnology, institutions cannot rely on their human resources, as they move from institution to institution within the country, depending on the available external financial resources.
Thirdly, local researchers tend to copy topics of international advanced research onto the situation in Egypt, because of considerable say of the foreign donors in the direction of research. The interference of donor consultants into the research agenda of recipient research institutes may increase the technological soundness of a project, but will also interfere with the identification of the "problem" as experienced by domestic researchers. Local researchers easily comply with the suggestions of these consultants as in most cases they cannot compete with their impressive data and the potential they offer for access to additional financial resources. An example is the transfer of Bt genes to crops of economic importance in Egypt. The dominance of one major donor, in this case USAID, and the sponsoring of several biotechnology projects through different programmes, has resulted in duplicated research agendas.
The relevance of AGERIís research agenda for Egypt has not been open to debate for other interested actors of the technology transfer chain in Egypt. Therefore, the likelihood that AGERIís current research topics will be relevant for Egypt is small. Instead of copying fashionable research topics, research institutes should try to explore research niches that are relevant to Egypt. In order to stimulate equal links with international research, national institutes should encourage researchers to publish in international journals.
An example of a more daring research agenda is the attempt to transfer Bt to Egyptian clover, planned by the Genetic Engineering Center of Cairo University. If successful, this would reduce the number of cotton bollworms at the beginning of the cotton season, as they feed on clover in the absence of cotton. Seemingly, this different research agenda is the result of the involvement of a different donor, in this case the Japanese International Cooperation Agency (JICA).
Fourthly, there is no fair competition between research institutes, because of the created disparity among institutes regarding the amount of support and conditions. Some research institutes, such as the Genetic Engineering and Tissue Culture Centre of Menoufiya University, receive small grants for which they had to fight hard in order to win the tender. Other institutes, such as AGERI, receive complete financial and technical support, including salary incentives for many years. Obviously, this results in the absence of national competition which would stimulate research institutes to develop their own research agenda.
Bram de Hoop

Associate Expert at the Economic and Social Commission for Western Asia, United Nations, c/o Ministry of Foreign Affairs/DGIS (ESCWA, Amman, Jordan), PO Box 20061, 2500 EB The Hague, the Netherlands. Phone (+962) 6 672963; Fax (+962) 6 694981/2.

A. Postlewait and D.D. Parker (1993), "The Advent of Biotechnology and Technology Transfer in Agriculture." Technological Forecasting and Social Change, No. 43, pp. 271-287.

United Nations (1996), Inter-Agency Task Force Meeting Biotechnology Applications and Technology Transfer: Survey of biotechnology activities in Egypt. Mission Report Egypt visit 16-21 December 1995. Amman, Jordan: Technology Section - SIPD, ESCWA (restricted).

C. Brenner and J. Komen (1994) International Initiatives in Biotechnology for Developing Country Agriculture: Promises and problems. Paris: OECD.

Personal communications with Taymour N. El-Din (Deputy Director AGERI), Hanaiya A. El-Itriby (Head of Research AGERI), John H. Dodds (Managing Director ABSP Project), Hamdy A.A. Moursy (Vice-President Academy of Scientific Research and Technology, Egypt), Nabiel A.M. Saleh (Vice-President for Research, NRC, Egypt), Michael Baum and Franz Weigand (Research staff, ICARDA, Syria) and Kathleen Abdalla (ESCWA).

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