The ABS Compliant Biotrade in South(ern) Africa Project

(2018-2021)

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Objective: The fair and equitable sharing of the benefits arising from the utilization of genetic resources, including by appropriate access to genetic resources and by appropriate transfer of relevant technologies, taking into account all rights over those

resources and to technologies, and by appropriate funding, supports national sustainable development, the livelihoods of rural people, the conservation of biological diversity and the sustainable use of its components.

Cook Islands

Samoa

COMIFACSICA

Silvamed

ASEAN Center for Biodiversity

African UnionCommission

SPC, SPREP

SADC

CARICOM

Seychelles

Palau

Micronesia (FSM)

Bahamas

ABS capacity development support

ABS Initiative – ACP countries

ABS Initiative w / bilateral DC

ABS only in bilateral DC (out of ACP)

Biological / Genetic resources -a tremendous potential under threat

Facts:

• only approx. 2 of30 Mio speciesknown

• ~ 26.000 species / annum extinct

• hotspots:Developing Countries and emerging economies (80 %)

First signed 1992 during UNCED in Rio de Janeiro

Since then 193 Parties (192 states and the EC)

Integrates for the first time environmental and development issues

Three objectives of equal standing: Conservation of biological diversity

Sustainable use of its components

Fair and equitable sharing of benefits arising from the utilization of genetic resources

Convention on Biological Diversity (CBD)

Prov.User

„resource-rich„ countries shall facilitate theaccess to genetic resources

„technology-rich“ countries shall share benefits arising from GR; facilitate the access to technologies and means important for

conservation and use

“Logic” of CBD regardingAccess regulations

PIC / MAT

Objective

“…. the fair and equitable sharing of the benefits arising from the utilization [R&D] of genetic resources, including by appropriate access to genetic resources and by appropriate transfer of relevant technologies, taking into account all rights over those resources and to technologies, and by appropriate funding, thereby contributing to the conservation of biological diversity and the sustainable use of its components”

Nagoya Protocol on ABS

PICCompetent National

Authority

MAT-Terms of Use (e.g. Commercial or non-commercial; IP; 3 party)

-Benefit-sharing (monetary or non-monetary)

Permit

PROVIDING

COUNTRY

Checkpoints:

-Research publishing houses

-Research institutions subject to public funding

-Patent examination offices

-Authorities providing regulatory or marketing approval of products

Provide information on PIC, MAT, source of GRs, use of GRs

Utilization of GRs

USING COUNTRY

GRs+IRCC

Compliance Mechanism of the Nagoya Protocol

International Certificate of Compliance (IRCC)

Notified to ABS Clearing-House

Benefit-sharing +communiqué

The ABS Compliant Biotrade in South(ern) Africa Project

(2018-2021)

Title: ABS Compliant Biotrade in South(ern) Africa

Timeframe: 3.5 years commencing Q1 2018, 6months inception

Amount: CHF 3 million

Country focus: South Africa with support toregional sector (70:30)

Management: GIZ ABS Capacity DevelopmentInitiative contracting local expert/institution

Governance: ABS CDI Steering committee plusinvestment committee

Status: Inception phase started 2 / 2017

Project Summary

Main components Outcomes Intervention approach

Component 1: Technical assistance to South(ern) African and Regional ABS compliant biotrade value chains

Outcome 1: SMEs access new global markets for biotrade products based on national and transboundary value chains with strong participation of IPLCs.

Project providing technical assistance to SMEs and IPLCs

Component 2: Financial assistance through the innovation facility

Outcome 2: SMEs use financial assistance designed specifically for biotrade innovation and growth whilst leveraging own resources and/or government incentive schemes.

Project innovation facility providing financial assistance through grants to SME to implement selected proposals

Component 3: Policy dialogue and enabling environment

Outcome 3: Improved ABS implementation framework supports the biotrade sector development in South Africa and the (sub-) region.

Policy advise and technical support to Government and BSOs

Project components

Provides technical assistance to South African and regional ABScompliant value chains including supporting new market accessby addressing selected non-tariff barriers that bottleneck thegrowth of the sector, supporting the strategic and constructiverole of IPLCs in these value chains, and assisting SMEs to improvetheir investment readiness through improved financial andbusiness planning

Sub-component 1.1: Market access and development

Sub-component 1.2: Supporting the role of IPLCs in biotrade value chains

Sub-component 1.3: Business planning support to SMEs

Component 1

Provides financial assistance to SMEs for innovation andgrowth through the establishment of a dedicated biotradegrant funding facility that works in coherence with, buteffectively independently of, other relevant incentiveschemes, and ensures financial, technical and humanresources engagement by the SMEs, and will be governedwith the support of an Investment Committee.

Sub-component 2.1: Facility design and set up

Sub-component 2.2: Operation of facility

Component 2

Supports the development of an enabling regulatory environmentthrough policy advice and technical support to the DEA for therevision of NEMBA and BABS, supports sector organisations todevelop and implement industry best practices related to ABS, andknowledge management and sharing of best practices and lessonslearned at a regional and global level including through cooperationwith UNCTAD BioTrade.

Sub-component 3.1: Policy improvement through NEMBA andBABS amendments

Sub-component 3.2: Industry/sector organisation best practicesand alignment

Sub-component 3.3: Knowledge management and sharing

Component 3

Component 1: 978,075

Component 2: 1,216,914

Component 3: 568,199

Project management: 236,812

Total: 3,000,000Rand 36,000,000

Budget CHF

Limited funds suitable for biotrade product innovation and commercialisation, low levels ofcoordinationSouth Africa has a good range of incentive schemes for SMEs to participate in the processes from research through to commercialisation. In particular, the DTI has a number of well-regarded incentives at the commercialisation end of the spectrum.

Financial assistance through the innovation facility (Component 2)

In 2015, the Department of Performance Monitoring and Evaluation (DPME) in the Presidency carried out a review of two relevant incentive schemes – the Technology and Human Resources for Industry Programme (THRIP) and the Support Programme for Industrial Innovation (SPII). Conclusions included:• Fragmented landscape – government departments not well connected;

• Lack of business skills especially in small businesses; and

• Lack of angel financing or venture capital to fill the gap and fund the project to commercialisation.

• Limited attention to incentives to address global market access challenges / non-tariff barriers highly relevant to ABS/ biotrade;

• No dedicated incentives specifically targeting the specific economic and ABS compliance challenges related to ABS compliance / biotrade / natural products derived from indigenous plants.

Financial assistance through the innovation facility (Component 2)

Component 2 provides financial assistance to SMEs for innovation and growth through the establishment of a dedicated biotrade grant funding facility that works in coherence with, but effectively independently of, other relevant incentive schemes, and ensures financial, technical and human resources engagement by the SMEs, and will be governed with the support of an Investment Committee.

Financial assistance for innovation and growth

• Open to SMEs and their support organisations

• Must be ABS compliant, or significantly on the way to compliance

Sub-component 2.1: Facility design and set-up [Inception phase = 6 months]

Dialogue with key informants including sector organisations, IDC and government departments with relevant incentive schemes to understand the up-to-date needs of the sector, current and future gaps in funding schemes, and collaboration possibilities Round table being prepared for 13 March 2018

Preparation of a document describing the facility design including scope of planned intervention, proposed funding amounts, targets, M&E requirements, objectives, principles and criteria for review, assessment and selection of proposals, an objective score card against which selection of proposals will be assessed – including how SME “skin in the game” will be assessed, and how the overall sustainability of the SME’s business is supported by the grant, draft terms of reference for the investment committee, draft of confidentiality agreements and “conflict of interest” statements to be signed by investment committee members, and presentation of document(s) to SECO for approval

Identification and appointment of investment committee members

Examples of the types of activities / projects the facility could support include:

• Studies exploring the biological activity of a natural product (or a group of products) to add value to the marketing proposition of a selected value chain, and bring effect to aTK (dossiers);

• Studies to understand national and regional variation in key phytochemical compounds in selected biotrade ingredients in a way that supports SMEs to define their product specifications, and to innovate in product development;

• Development and commercialisation of more competitive processing technologies for key natural product ingredients, and supporting SMEs to adopt the technologies, including setting up and implementing the required operating procedures, and establish the required product documentation;

• Identifying and solving key quality control and assurance issues for actors along selected value chains, and supporting the implementation of higher quality practices and traceability;

• Preparation of marketing and promotional materials to support market development, industry awareness and consumer uptake, including market differentiation through promotion of industry best practices UNCTAD / UEBT;

• Support to the launch of products to new markets and territories including product testing, packaging and labelling requirements, and customer/agent/distributor identification and acquisition.

Government Incentive Scheme

Example of potential coordination

DTI’s Export Marketing & Investment Assistance Scheme (EMIA)

Strategic planning with CECOSA, DTI, SIPPO and CBI with SMEs in the biotrade sector to better promote biotrade, target trade events, buyer missions, and other marketing activities with the plans and strategies for the new market territories to be opened up with Component 1.1, and the products and technologies to be developed through Component 2.2. Some of the grants allocated to SMEs could be earmarked to support CECOSA to run a country pavilion, for example.

DTI’s Sector Specific Assistance Scheme (SSAS)

Work with support organisations, councils, and associations to develop proposals that leverage SSAS and make use of the product and technology development opportunities through the facility / Component 2.2, and aligned with new territories / market opportunities to be accessed through Component 1.1.

SEDA’s Technology Programme (STP)

As above focused on technology transfer, enterprise development and process and quality development/industry standards.

TIA’s Technology Development Fund and CommercialisationSupport Fund

Support SMEs to access funding from either the Development Fund, or the Commercialisation Support Fund, and provide complimentary support so that the SME can have a more seamless process moving through the different “technology readiness levels” TRL 3 through to TRL 9.

Coherence with other incentive schemes

The scale of funding, and the number of grants, will be defined in the facility design phase.

Possible range of an average of R450,000/grant

12 proposals, executed in two phases (potentially 24 grants in total)

An upper limited of R1,350,000 is seen as appropriate as long as the funding is matched, reaches multiple SMEs, and a minimum of 24 grants in total can be supported by the facility

Targets/criteria to include:

• Compliance with ABS require-ments across transboundary supply chains

• Job creations including at seasonal primary production level through to permanent skilled jobs;

• Increase in business turnover within specified timeframes;

• Evidence of sustainable practices and traceability;

• Localisation of value-addition;

• Skills development and training;

• Other data determined during the establishment if the M&E baseline and system.

Inception phase (02/2018-07/2018)

• Hire South African long-term expert, support staff, set up office

• Engage, agree with SA partners / stakeholders on role, modalities of grant/innovation facility

• Innovation Facility Operations Manual(roles, procedures of investment committee and facility)

• Engage and further define partnerships and collaboration

• Selection of high-impact value chains

• Establish M&E methodology,

• Confirm baseline data, incl. biotrade market status information

• Logframe verification, incl. indicators

• Budget revision if, necessity shown in inception phase

• Preparation of detailed work plan for Year 1

High Impact ABS-compliant Value Chains

Building a Common Understanding and Gathering

Information for SelectionConceptual Framework and Questionnaire for Stakeholder Consultations at the

3rd Biodiversity Economy Indaba

East London

8-10 March 2018

High-Impact Value Chain Selection• Starting point: DEA/BioPANZA list, plus other obvious candidates• Already ABS compliant, or able to comply quickly• Key considerations:

Critical threshold of support – existing or achievable Market potential, industry interest, commercial/industry

momentum (not starting from scratch) Prospect of TK making strong positive contribution – relevant and

useful TK, with organised TK holders and/or support organisation(s)

GIZ/SECO project interventions likely to enable success within project timeframe

Job creation potential (rural, factory, white coat…) Number of SMEs to benefit Supporting trade association or council Coherence with other projects (UNDP GEF6; SECO-UNIDO, …) Evidence of sustainable resource use (e.g. SANBI assessment) Cluster or grouping potential – also for skills legacy

Agathosma betulina buchuCyclopia intermedia honeybushCyclopia genistoides honeybushHarpagophytum procumbens devil’s clawAloe ferox African aloeAdansonia digitata baobabSclerocarya birrea marulaAgathosma crenulata buchuAspalathus linearis rooibosBulbine frutescens burn jellyErisema kraussianum bangalalaHelichrysum odoratissimum golden everlastingHoodia gordonii hoodiaHypoxis hemerocallidea African potatoKigelia africana sausage treeLippia javanica Lippia

Trichillia emetica mafuraTylosema esculentum marama beanWarburgia salutaris pepperbark treeXimenia americana sour plumXimenia caffra sour plumPelargonium graveolens etc rose geraniumMyrothamnus flabellifolius resurrection bushCitrullus lanatus Kalahari melonElephantorrhizae ephantina elands boontjieGalenia africana kraalbosMoringa oleifera moringaLobostemon fruticosus pyjama bushPelargonium reniforme kidney leaved pelargoniumPelargonium sidoides kalwerbossieSceletium tortuosum kannaSiphonochilus aethiopicus wild gingerSutherlandia frutescens cancer bush

Initial list of potential species

Value chains selection process

• Clear criteria, stakeholder feedback and project rationale “fit”• Maximum of 24 grants – can’t do everything for every value chain• Biological and socio-economic sustainability non-negotiable• “Plug the gaps” – ensure value chains supported from other sources have

essential support at crucial points• Regional perspective: help SADC value chains that will also benefit SA

(and vice versa)• Some initial flexibility: shortlist, but also consider additional suggestions

and applications in first round• Select 5-10 value chains and clusters to support• Current thinking: 2 clusters (indigenous seed oils and indigenous

essential oils), plus some single species (aloe ferox, devil’s claw, marula, baobab, moringa, … ?)

• Some ability to change – can be responsive to market developments during first round of implementation

“A chain is only as strong as its weakest link”

Value chains connect primary resources with final consumers:- Laws of supply and demand apply at all stages- Top-down and bottom-up analyses provide different insights

into “weak links” [= potential intervention points]

Primary resource

Cultivation &

harvesting

Post-harvest processing

Raw material

collation & trade

Extraction/ ingredient

Primary VC links

Quality specificatio

n and control

Ingredient trade

Product formulation

Manufacture &

packaging

Regulatory compliance

Secondary VC links

Marketing strategy

Wholesale distribution

Advertising &

promotionRetail sales

Post-market follow-up

Tertiary VC links

“The map is not the territory”

This is a simplified model:- Not every value chain has every link; some have additional links- Some links involve multiple value chain actors; some value

chain actors control many (even all) links

Primary resource

Cultivation &

harvesting

Post-harvest processing

Raw material

collation & trade

Extraction/ ingredient

Primary VC links

Quality specificatio

n and control

Ingredient trade

Product formulation

Manufacture &

packaging

Regulatory compliance

Secondary VC links

Marketing strategy

Wholesale distribution

Advertising &

promotionRetail sales

Post-market follow-up

Tertiary VC links

ABS Compliance

Points?

Potentially useful top-down value chain analyses

• Target markets: Local > SA > SADC > Africa > Europe > US > China > RoW• Market sectors: Industrial ingredients > Cosmetic ingredients > Flavours

and fragrances > Food and beverage > Functional Foods > Dietary supplements > Herbal remedies > Natural pharmaceuticals

• Niche markets: Natural > Sustainable > Organic > Fair Trade > Conservation supporting > Empowerment of key groups

Verification and certification schemes• Regulatory compliance issues and NTBs in specific markets segments:

Range from very easy to extremely difficult, e.g.: Traditional products in local markets: very low barriers Unregulated industrial ingredients: consistent quality specifications Cosmetic ingredients into EU: INCI registration, REACH, Cosmetics

Directive, allergy and mutagenic testing etc. Pharmaceuticals into US: proven efficacy in 3rd stage clinical trials,

acceptable safety and tolerable side-effects, FDA approval

Potentially useful bottom-up value chain analyses

• Abiotic, bio-geographic, ecosystem and infrastructural factors: Climatic variability (seasonal reliability of production), soil fertility (agronomic potential), land use patterns (competition from more profitable uses), topography (plains are easier than mountains), local biodiversity (ecosystem restoration and diversification potential), roads, storage, factory space, access to technical and financial services, …

• Individual species level: Distribution status: Endemic, transboundary/regional, African,

naturalised or cosmopolitan (effect on comparative and competitive advantage), part of potential cluster?

Conservation/sustainability status: common, rare, threatened, domesticated/cultivated, resilient/susceptible to harvesting impacts (leaves > seeds > tubers > bark > roots)

Production economics, livelihood impacts: Will people harvest or grow sufficient quantities as prices market can sustain? Potential poverty trap? Compatible with rural livelihoods calendar?

Socio-economic and cultural factors; value chain actors

• Traditional knowledge: Directly useful TK (e.g. history of safe use to support EU Novel Foods compliance)? Research leads? Clearly identified legitimate TK holders? Sustainable harvesting practices?

• Biocultural factors: Clear ownership/tenure/usufruct rights? Ability to control access and prevent unsustainable harvesting by outsiders? No cultural barriers to harvesting/cultivation? Gender roles?

• Socio-economic factors: Opportunity costs? Alternative livelihood options? Income expectations? Long-term planning? Working capital?

• Value chain actors: Organised producer groups: Enforce sustainable practices, collate

harvested material, primary quality assurance, traceability, … Community-owned enterprises: Resource access rights,

organisational capacity, management skills, able to extend reach, ... SMEs: Reliable access to raw material? Appropriate business skills?

Technical skills? Capital? Access to markets? Trade Associations: Can benefit numerous members

Questionnaire

• Taking into account as many selection factors as you can -• Based on your existing knowledge of a particular value chain,

or value chain cluster -• Being as precise as possible –

a) Please identify and propose potential intervention points (“buttons and levers”) in specific value chains

b) Please quantify and describe the potential impact(s) of a successful intervention at the points you have proposed

Responses by email to

abs-biotrade-sa@giz.de

please

For more information on ABS please visit:

http://www.abs-initiative.info/

Thank you for your kind attention!