Impacts of South Africa’s biodiversity legislation on innovative product development and small players

All images credit: Ulrich Feiter/Parceval.

02 Aug 2024 --- Even though South Africa’s Biotrade and Bioprospecting legislation aims to promote biodiversity and fair and equitable benefit-sharing with communities in raw materials’ sourcing areas, Parceval worries that the system’s rigidity may limit innovation and the use of natural resources. In addition, the South African-based distributor and manufacturer of herbal medicines and botanical extracts warns that the system inadvertently favors larger companies, who can deal with its elaborate requirements.

In the last installment of our series on South Africa’s Biotrade and Bioprospecting regulation, Nutrition Insight examines how the country’s legal system affects companies and innovation with Ulrich Feiter, Parceval’s CEO, and Avril Harvey, its special projects manager.

The country’s legal system governs access to indigenous biodiversity and associated traditional knowledge. It requires companies to obtain permits for Discovery, Biotrade and Bioprospecting. Feiter and Harvey have termed the system rigid and cumbersome in earlier parts of this series, although they say it provides more clarity than in other countries.

Based on the international Nagoya Protocol, the permit system aims to ensure fair and equitable benefit-sharing with communities in the raw materials’ sourcing areas, as set out in Access and Benefit Sharing agreements.

“Although the legislation wants to favor the small guys and the communities, I think it’s not in favor of them,” cautions Feiter. “Because you have to deal with too many entities, you create a different supply chain instead.”

He notes that companies may become discouraged from using indigenous natural resources due to the complicated legislation and permit system.

“You look for alternatives, either in terms of alternative substances or bigger suppliers who can give you a one-stop-shop and cultivate that resource. You avoid working with communities, wild harvesting, benefit-sharing and FairWild or UEBT certification for all of this because this is a lot of work.”

Impact on innovation
Harvey expects that companies working with large-volume resources, or resources with very visible benefits, properties and characteristics, will continue because there will always be interest in them. “But it will prevent people from being interested in new resources or anything novel.”

She laments that the legislation will disable rather than enable more interest, business and commercialization.

Endemic to South Africa, Protea cynaroides or the king protea is the country’s national flower.“I don’t think international companies will go through all of this effort to look at something they’re not really sure about. There needs to be some certainty, initial research or traditional knowledge that gives them confidence.”

For example, Nektium obtained a Biotrade permit for honeybush earlier this year, which contains a bioactive health-promoting compound that research has linked to anti-diabetic, anti-obesity and immunomodulatory properties.

“From a local point of view, we’ve certainly seen local companies being approached now to get a permit,” Harvey continues. “They’re using small volumes of something and may say we will get the permit, but we won’t use that local, indigenous ingredient anymore. We’ll substitute it out because this is too much effort. We don’t know what we’d have to do. There’s a cost and risk involved, so we won’t do it.”

Favoring larger players
Staying up to date with permits is a continuous process, explains Harvey. The current system favors larger companies because they can handle its requirements better.

“There are annual reporting requirements, or you need new permits when we suddenly start working with a new resource, and it’s not on our permit, so we have to add it.”

Another aspect is when a company suddenly becomes a compliant supplier of a specific resource, meaning that Parceval needs to amend the permit for that resource to work with the new supplier. “It’s a constant trickle of things that needs to be done.”

“Parceval is lucky to have someone administering that, but most companies don’t, especially the smaller ones,” she highlights. “They don’t have someone dedicated to keeping track of everything that needs to be done, added or amended.”

As part of the newly formed South African Botanical Products Association, Parceval and its partners are working to obtain a sector-wide benefit-sharing agreement for Sceletium (Sceletium tortuosum or Kanna). The association aims to develop this sector, says Feiter.

“We’ve started the process as an association, and we will also have support from the DFFE (Department of Forestry, Fisheries and the Environment).”

“The honeybush association has also been working on that, so we hope to have that in parallel because it looks like there’s an overlap of traditional knowledge holders. Although you cannot roll it into one negotiation, you can talk about honeybush today and Sceletium tomorrow,” he adds.

Growing governmental ambition
The Parceval experts note that South Africa’s government’s ambition in Biotrade and Bioprospecting is growing.

“We’ve seen development in terms of benefit sharing,” illustrates Feiter. “Initially, it was very focused on money, paying an extra percentage for the resource as benefit-sharing.”

“More recently, there have been questions about non-monetary benefits, such as skills training and knowledge sharing. You get into a bit of a tizz here as a company because how on earth are you going to do this if you need 10 kg from a community? What am I supposed to do here?”

Research suggests that Kigelia africana contains anti-inflammatory and analgesic properties.Moreover, the professionals have also seen a publication around conservation as a benefit chain partner, adding another layer on top of monetary and non-monetary benefits that need to be shared.

“As a small user of 10–50 kg, what meaningful work can you do with US$100 that you put there for benefits? Because it’s a small amount you’re using,” highlights Feiter. “That type of approach is splintered; it splits it into 1,000 small efforts instead of one big conservation effort.”

Proposed legal changes
Feiter explains that Parceval recently received a proposed review of South Africa’s National Environmental Management: Biodiversity Act (NEMBA) legislation, which has been submitted for public comment. Among others, this act regulates the use of biodiversity for commercially valuable indigenous genetic and biological resources.

“What’s being presented there is a major step backward,” says Feiter. “According to this, we have to apply for permission to apply for a permit.”

“For certain permits, we have to put in a plan for the prior informed consent and already have a benefit-sharing agreement in place. That will be approved, and then you can put an application in. It’s adding another step, another time loop.”

In addition, he notes that the proposed changes mean that foreign entities wanting to do research in South Africa, even taxonomic research, have to have a complete benefit-sharing agreement in place. “It just makes it worse.”

System review needed
Feiter says that when South Africa started reviewing NEMBA’s chapter six, covering Access and Benefit Sharing, Parceval proposed a new benefits-sharing model.

“Years ago, we put forward a model that foresaw paying benefits, substantial benefits, as close at the source as possible. After that, materials should move freely through the system, meaning anybody can use it because the benefits have been shared.”

“Another idea would be to get away with all these benefit-sharing contracts and instead add a levy. That way, everybody would be dealing with it like a Value-Added Tax,” he proposes.

However, he underscores that these types of proposals have been completely ignored. “Unless there is a proper revision, there are just too many small players that need a benefit-sharing agreement and access.”

By Jolanda van Hal

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