Building Capacity in the Right Places: How to Make the Newton Fund Effective

If you were going to use aid to improve weather forecasting, where would your money be best spent? One choice would be sub-Saharan Africa, where about half of the population is engaged in agriculture, and weather forecasts are a vital economic tool. The region sees some of the world’s least reliable forecasting, in part because there has been limited research into better weather models for Africa, and limited local capacity to develop and maintain those models. Another choice would be to use the aid to support Chinese climate and weather forecasting. But only a quarter of the country’s labour force is engaged in agriculture and, perhaps more importantly, China has a significant domestic weather and climate forecasting capacity already, including more than 4,000 weather stations (for comparison, the UK has 200), and a fleet of 17 weather satellites. With all of this in mind, it is disappointing that UK official development assistance (ODA) is being used to finance cooperation with China’s Meteorological Administration, rather than to support meteorological offices in Africa.

This example illustrates a larger problem with the £735 million Newton Fund, a significant channel for UK ODA financing for research and development, including a grant supporting the China Met Office. Advertised as a tool to build capacity for R&D in developing countries, the Newton Fund could help ensure new and existing technologies are applied to some of the most pressing problems in the poorest economies—problems like inaccurate weather forecasts in sub-Saharan Africa. Sadly, though, that is a long way from how the Newton Fund actually operates today. It is focused neither where it is needed most, nor on what partner countries prioritize. A pivot to the development challenges of lower-income countries—particularly in Africa—would help the Newton Fund to live up to its potential.

The Newton Fund—A good idea...

The Newton Fund is a pot of UK aid managed by the UK’s Department for Business, Environment, and Industrial Strategy (BEIS), and fosters research partnerships with developing countries. Aid is channelled through “delivery partners,” primarily UK research councils, and is used to fund research and capacity-building programmes in partner countries. According to the fund’s website, capacity-building is key to all Newton Fund activities.

The Fund delivers aid within three pillars: one specifically devoted to capacity-building, one with a research focus, and one that aims to establish cooperation between industry and academia, to promote translation from ideas to products. The Fund’s model requires that partner countries match the aid provided with their own funds, with officials citing evidence that this makes interventions more effective and sustainable.

Technology developed in one country can’t necessarily be transferred wholesale to other countries: it is often necessary to adapt it to local conditions. That suggests R&D frequently needs to be context-specific, meaning it is important that countries develop their own research capacity. The Newton Fund is directed towards that goal, and tries to ensure that financing is prioritized on specific topics of importance to developing countries through co-financing. What’s not to like?

...But with the wrong focus

The Newton Fund was originally born as the Emerging Powers Opportunities Fund, part of the Foreign & Commonwealth Office (FCO)-led “Emerging Powers Initiative.” In the words of the FCO, this initiative focuses on “where collective resources can yield the most significant benefits to UK prosperity,” and the Fund wasn’t classified as ODA. Later rebranded and put under BEIS, the Newton Fund was given a new ODA-compatible primary purpose of meeting the development needs and priorities of its partner countries. But, according to a scathing report by Independent Commission on Aid Effectiveness (ICAI),“the Fund is poorly designed to deliver development goals,” with the interests of British researchers “the main driver of its choice of partnerships, research themes and approaches.”

The ability of UK partners to quickly scale up funds shaped much of the early spending, leading to concerns about whether or not many projects were even ODA-eligible. (It should be noted ICAI did acknowledge improvements, with approaches becoming more recipient country-oriented over time.)

The Newton Fund’s origin outside of the ODA system is also reflected in the countries chosen for partnerships. A few have been dropped for not being ODA-eligible, and Kenya was added (currently the poorest country by some distance). But the Fund retains an explicit focus on middle-income countries. Three specific criteria are used (listed in order):

• Identified under the Foreign Office Emerging Powers Initiative as countries with whom the UK should be increasing its efforts to engage;
• On the OECD’s Development Assistance Committee (DAC) list of ODA-eligible countries;
• Demonstrated a strong willingness to work with the UK to increase their ability to use research and innovation for economic and social goals.

These criteria give the impression that the goal is to maximise benefit to the UK subject to the constraint that partners must be ODA-eligible, rather than maximising the potential impact on poverty subject to the UK also benefitting. That impression is strengthened if you follow the money. Nearly two-thirds of Newton Fund resources are spent in the “BRICS” countries. And the average income of Newton Fund recipients is not far off the world average in PPP terms, considerably higher than the average among ODA-eligible and more than double the average among even lower-middle-income countries (Figure 1).

Figure 1. Average GNI per capita (PPP $) by group

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Source: World Bank Data

The UK is right to be proud that it focuses its aid spending on the poorest countries, but the Newton Fund is a notable exception.

Of course, the BRICS still contain many people living in poverty. India is the second-biggest recipient and still has over a quarter of the world’s people in extreme poverty (living on under $1.90 a day). But if development impact was the primary goal, it is hard to imagine that China would be by far the largest recipient of Newton Fund financing, expected to receive over a quarter of funds disbursed, or around £169 million. Not only does China already have some of the highest ranked universities in the world–one of only five countries with a university in the top 20–its estimated annual spend on R&D is nearly $300 billion, an order of magnitude bigger than even the UK’s R&D spend. It seems unlikely that the Newton Fund contribution is going to significantly either increase China’s R&D capacity, or enable it to address problems it couldn’t already. (Even in terms of national interest, it seems likely that there are more effective ways to build ties with China than by matching 0.01 percent of their R&D budget.)

The pivot to Africa

If the Newton Fund started with a focus on where need was greatest, then the composition of recipients would look very different. Sub-Saharan Africa is the region with the fewest researchers per capita, the lowest government spending on research and development, and consequently lags behind other regions in research outputs.

And with regard to specific research issues, Newton funding decisions would be guided by problems which, if addressed, would dramatically reduce poverty and would have a high marginal impact of additional research spending. Those decisions would be made in formal collaboration with partner countries.

There are a number of examples of potential research topics of particular significance to African countries where collaboration could be of immense benefit: we’ve seen in the specific case of forecasting, weather models can dramatically improve agricultural productivity and help farmers avoid shocks. Similarly, the “green revolution” famously increased agriculture productivity in Asia. Such gains have been maintained by continual research and testing. But agricultural R&D in Africa has lagged far below other regions. This goes beyond developing some grand “technology” that can then be transplanted on Africa. What is needed is continual testing and improvement, requiring a long-term research focus, as has been available elsewhere in the world. The most effective way to carry out this research is clearly in situ, with local researchers having the necessary skills and equipment. Again with climate adaptation: World Bank researchers found little transfer of new knowledge to low-income countries, despite the fact that such countries are almost certainly in the most need of it.

Delivering results

Previous capacity-building programmes in the region have been hamstrung by being driven by external funders, being spread too thinly, and suffering limited engagement with local researchers. The Newton Fund is supposed to foster genuine partnerships, and fund research programmes shaped by local needs. The co-financing requirement is seen by the UK government as a key element of an improved partnership approach. It may be that lower-income countries would not be able to support a 50-50 financing requirement, but thankfully the Newton Fund has already shown flexibility in this regard according to ICAI: many partners providing matched funding “in-kind” and “equivalent effort” is acceptable. Lower-income countries should be held to a requirement to provide substantive resources into the partnership as a method to ensure the particular research topics and capacity building are of high value to them.

The fact that BEIS assess countries’ research and innovation excellence before engaging, suggests that there is also the concern that research quality might suffer if it is carried out in countries too far from the technological frontier. But, it is perverse for a capacity-building programme to focus on countries near the technological frontier (perhaps in particular on a country that applied for more international patents than any other worldwide last year). Furthermore, the reason for lower research capacity in LICs is not a lack of smart, talented people in those countries: it is either lack of necessary equipment to carry out research, or lack of training. In the former case, the Newton Fund should be able to address the problem by moving researchers to the equipment through mobility grants and fellowships, or shipping equipment to the researchers (hopefully ending the obscene current practice that only “matched” funding is spent in partner countries, with all UK funding spent domestically). If the problem is lack of training, this should be a key part of the Newton Fund’s capacity building efforts.

Finally, a pivot to countries in greater need does not imply that the UK needs to give up on (what should be) the Newton Fund’s secondary objective of developing ties with emerging actors. As the UK government has recognised, Africa is a region with some of the fastest growing, and largest countries, suggesting that there is plenty of overlap between development objectives and national interest in forming partnerships with future powers. Take Nigeria: its research and development spending is low even compared to countries of its income level, yet its GDP places it just outside the G20, and with one of the World’s largest populations it is surely destined to be a global player. If Nigeria received the same amount from the Newton Fund that China did, then instead of increasing its research spend by 0.01 percent (as in the case of China) it would be an increase of more like eight percent. The former figure might be appreciated as a goodwill gesture, but the latter demonstrates a real willingness to assist and engage. At the same time, Nigeria may soon have more people in extreme poverty than any other country.

Making Newton proud

It is a shame that the International Development Select Committee judged the government to be “dragging its feet” in efforts to reform the Newton Fund. But removing the explicit middle-income focus, including criteria on poverty-reducing potential of research and explicitly engaging with lower-income countries on research priorities and partnerships, would allow for considerably greater impact. When Newton made his incredible contributions to the world’s stock of knowledge, the UK’s income per person was about the same as Tanzania’s today. There are talented, innovative people in countries rich and poor alike. The only difference is in the opportunity to use talent in world-class research. UK ODA should help provide that opportunity in the countries where it is most scarce.

More UK research cooperation with China and other middle-income countries is a very good thing, of course. Research, which produces a global public good, is increasingly global itself, involving cross-continental collaboration. Both the UK and China have immense R&D capacity and the opportunities for fruitful cooperation are surely legion—including in the area of weather and climate. But that collaboration doesn’t need to use scarce aid resources. ODA should be focused on the development challenges of the world’s poorest people and regions, and the mechanisms that distribute it should be designed accordingly.