Is foreign aid a waste of money or a productive investment? How can development assistance make a sustainable contribution to national economic development? Nitsan Chorev’s painstakingly researched account seeks to answer these questions by investigating the impacts of foreign aid on the pharmaceutical industry in three East African countries which have been longstanding recipients of development funding. It shows how a pharmaceutical sector comprising small and medium businesses responded to opportunities created by the conjunction of foreign aid and national public health policies, paving the way for the emergence of a regionally competitive pharmaceutical industry.
Detailed attention to the steps along the way provides insights into the successful consolidation of the Kenyan pharmaceutical industry, and of the parallel paths taken by neighbouring Uganda and Tanzania. Chorev explores the intersection of foreign assistance on the industrial policies of newly independent East African states in the 1960s, the decimation of economies brought about by structural adjustment in the 1980s and 1990s, and how the financial flows generated through new aid paradigms in the 2000s created a promising ecosystem in which the regional pharmaceutical industrial sector could flourish.
Essential drugs packages, donor responses to the TRIPS patent regime and the need to provide millions of doses of anti-retroviral medication ensured a growing market for nationally manufactured medicines, while the requirements to meet global standards raised production quality, providing a pathway to international markets for the handful of companies who could successfully transform their manufacturing process.
A real strength of the book is the detailed insights into the pharmaceutical sectors in each country and their different trajectories, including attention to processes of segmentation. Smaller manufacturers unable to meet global standards choose to prioritise local markets where changing demographics accelerate demand for new products directed at a growing middle class whose increased life expectancy carries with it a greater risk of hypertension and diabetes. Industry leaders describe how they managed the transition from operating dispensing pharmacies to the high tech industrial manufacturing of combination therapies which meet the rigorous international standards set by the World Health Organisation via the importation and repackaging of basic drugs like aspirin and antibiotics.
The ability to respond to emerging opportunities depended on specifics of national industrial development, including the presence of an entrepreneurial community with the resources to invest in industrial capacity and on skilled pharmacists who could successfully orient production to local needs.
Kenya’s colonial positioning as prime beneficiary of industrial investment, including by foreign firms, together with its network of small scale industrialists fostered the evolution of a pharmaceutical sector which was well placed to pursue a strategy of regional expansion and to scale up manufacturing of complex drugs in response to the massive markets created through aid spending.
Foreign aid provides a route to the domestic and regional export markets for essential drugs packages and anti retroviral treatments which nurture the expansion of Uganda’s leading drug manufacturer. Strong state regulation in in formerly socialist Tanzania ensures that the drugs manufactured by its nascent national industry meet global standards, but the absence of an established community of entrepreneurial investors inhibits investment necessary for expanding production. A successful long term partnership between government and private investors in Uganda eventually leads to the creation of internationally competitive manufacturer of complex drug, but civil war and dictatorship slows the evolution of the small to medium companies manufacturing in country
The expulsion of Indian descended entrepreneurs has damaging long term impacts across the industrial sector during this period. It is particularly detrimental to the pharmaceutical sector because of the unique positioning of Asian descended communities who were able to access higher training overseas in dispensing and industrial pharmacy in the period before it was available at the limited number of newly established universities in the region. Access to international networks and capital acquired through trade enabled members of these communities to take initial steps into local packaging and processing of basic medicines which laid the foundations for manufacturing complex pharmaceuticals at scale.
Scaling up required wider networks and professionalisation made possible through the gradual expansion of higher education and targeted training and support from development funders. As the sector becomes increasingly sophisticated necessitating complex technical expertise, informal personal networks based on community ties are superseded by professional associations. Employment of pharmacists and participation in pharmaceutical trade and manufacturing gradually becomes more inclusive of East Africans from a variety of backgrounds.
The stories presented here encompass many strands, including colonial legacies of racialized economies, changes in drug pricing regimes and an unprecedented global pandemic. Presentation as a single story through the frame of foreign aid obscures the entangled contingencies which have generated the assemblage of relations and technologies which constitute the pharmaceutical industry in the region. Interpreted through the frame of foreign aid, pharmaceutical companies in East Africa and public health more broadly become exemplars of sectors in receipt of development funding in a sociology for development, rather than of it.
Foreign aid is most effective where it supports the development of local industries through locally targeted procurement. Effective aid should create or support markets, use mentoring to grow national technical capacity and raise standards so that nationally manufactured goods can compete in global markets. National political commitment and in country capabilities to improve in areas where aid investments are targeted also matter.
These insights are important. Kenya, Uganda and Tanzania have distinct colonial and entrepreneurial histories. The extent to which their experience offers lessons which are generalizable across foreign aid is not examined in relation to comparative examples. Debates about development and aid effectiveness are presented as grand narratives of success or failure epitomised in the writings of positions of Jeffrey Sachs and William Easterly.
Whether supporting private companies and the people who profit from them to capture larger market share is an optimal use of development aid depends, of course, on how aid is defined and its beneficiaries delineated, issues which are insufficiently addressed in this book. The absence of a more specific definition here perhaps explains the lack of fine-grained attention to the unevenness of development impacts for individuals and their families, rather than the countries or corporations that are the book’s primary concern.
The twin track maximisation of foreign aid and local industrial development is portrayed as such an obvious “win win” that the sociological concerns about who wins and who doesn’t and what winning means are left outside the equation. National industrial development is assumed to be developmental because it contributes to economic growth and the manufacture of goods used in national health systems. Information concerning the kind or quality of jobs such growth provides, or for whom, is lacking. The book is similarly silent on the concentration of wealth within a tiny commercial industrial elite in all three countries in a context of rising inequality. A national pharmaceutical industry may be indeed developmental in terms of national economic growth and it may make needed drugs available more cheaply. How the national basis of corporate ownership brings developmental benefits to a wider public is something which requires further explication if the argument for foreign aid as investment in private sector industrial capacity is to be considered truly developmental as opposed to merely constituting a publicly funded subsidy from one country for the private wealth of another.
