Council for Scientific and Industrial Research 2009/10 Annual Report

Science and Technology

26 October 2010
Chairperson: Mr N Ngcobo (ANC)
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Meeting Summary

The Chairperson of the Board and senior executives from the Council for Scientific and Industrial Research briefed the Committee on the organisation’s 2009/10 annual report.  The presentation included an overview of the performance against the organisational priorities of building and transforming human capital; strengthening the science, technology and skills base and maintaining financial sustainability and good governance.  Details of various research and development projects in support of Government’s economic development targets and strategic priority areas were included in the briefing.  The CSIR achieved an unqualified audit report from the Auditor-General. A net profit of R52.4 million for the 2009/10 financial year was declared.  Total operating income amounted to R1.68 billion.

Members of the Committee asked questions about CSIR projects such as the research into curbing the spread of tuberculosis; the Digital Doorway to provide internet access in rural areas; the sense-and-deploy technology used against cash-in-transit heists and the ongoing application of technology developed for the World Cup.  Members requested more detailed information on the demographic spread of employees and the employment of disabled persons.  Other questions were on the investments made from profits, the extent of royalty income, if funding provided for projects was ring-fenced, the reason for the increase in the provision for bad debts, the action taken to counter the budget cuts announced, the involvement of the CSIR in the Square Kilometer Array program, the protection of indigenous knowledge systems and the extent of collaboration with Government Departments.  Members suggested that a visit to the CSIR premises was included in the Committee’s oversight program.

Meeting report

Briefing by the Council for Scientific and Industrial Research (CSIR)
Prof Francis Petersen, Chairperson of the Board, CSIR introduced the delegates from the Council; Dr Sibusiso Sibisi (Chief Executive Officer), Dr Hoffie Maree (Group Executive Director: Operations), Dr Thulani Dlamini (Group Executive Director: Research and Development), Ms Khungeka Njobe (Group Executive Director: HCD, Outcomes), Mr Chris Sturdy (Chief Financial Officer) and Mr Raynold Zondo (Executive Director: Facilities).

The delegates took turns to brief the Committee on the annual report of the CSIR for the 2009/10 fiscal year (see attached document).

The presentation included an overview of the performance against the organisational priorities of building and transforming human capital; strengthening the science, technology and skills (SET) base and transferring technology and maintaining financial sustainability and good governance.

The CSIR achieved an unqualified audit report from the Auditor-General and declared a net profit of R52.4 million for the 2009/10 financial year.  Total operating income increased by 14.1% to R1.68 billion.

A selection of the research undertaken by the CSIR in the impact areas of the built environment; defence and security, health, the natural environment and energy was provided.  Examples included research into the design of hospital wards to limit the spread of tuberculosis; coastal engineering and port infrastructure; laser technology applications in the fields of industrial diamonds and power station cooling towers; the beneficiation of titanium; sense-and-deploy technology; optimising the utilisation of the Gripen combat aircraft; the inter-operable emergency response systems used during the FIFA Soccer World Cup, diagnostic malaria test strips; pollution in the upper Olifants River catchment area; the Southern Oceans Carbon-Climate Observatory programme; the Digital Doorway programme to provide access to the internet in rural areas; wireless mesh networking and assistance to rural rock lobster and snoek enterprises.

The briefing was concluded with an overview of the CSIR mandate and research impact areas in support of Government’s strategic priority areas.  A major strength of the organisation was its multi-discipline approach, which allowed research to be conducted on several aspects of a subject simultaneously.

Ms Dunjwa thanked the presenters for the informative briefing.  She explained that the Committee was responsible for conducting oversight and assessed the performance of the entity against the Executive’s five priorities for economic development.  She complimented the CSIR for simplifying the technical jargon so that the presentation could be easily understood by people who did not have a scientific background.

Ms L Jacobus (ANC) suggested that the Committee visited the areas referred to in the presentation, in particular where research into health-related matters was undertaken.  She asked the CSIR to provide a more detailed geographic breakdown of the investment made in developing human capital.  In the past, the investment had tended to be more in urban areas and the Committee would like to see more done in the rural areas of the country.  Referring to the sense-and-deploy technology used to deter cash-in-transit heists, she asked if South African companies were buying into the concept.  She remarked that poachers and smugglers were using private airstrips on farms and asked if the technology developed by the CSIR could be used to prevent attempts to ‘fly under the radar’.  She asked if the CSIR was working with the Department of Social Development and the disabled community in the Digital Doorway programme.  She suggested that the Committee visited the premises of the CSIR as well.

Mr M Nonkonyana (ANC) asked for an explanation of the acronym ISI and the abbreviation Ti used in the presentation.  He noted that there was only one woman on the CSIR Board.  He asked if any research was done on indigenous knowledge systems as no mention was made of this field of knowledge in the presentation.  He asked if any patents were registered where indigenous knowledge was used.  He wanted to know who the donors were to the Global Fund mentioned in the briefing.

Ms S Molao (COPE) asked which provinces benefited from the work done by the CSIR.  She asked how many disabled persons were employed by the CSIR.  She wanted to know how it was decided where a Digital Doorway unit would be installed and if the assistance of the mining companies operating in rural areas was sought.

Ms M Shinn (DA) asked how the return on investment (ROI) of tax-payers’ money was measured.  She asked if the funds provided were ring-fenced.  She noted that an amount of R500,000 was spent on the World Cup out of defence force funds and asked for more information on this item.  She asked how income from sources other than Government was accounted for.  She noted that an amount of R10.5 million was earned in royalty payments and wondered why income from this source was not greater.  She asked if the profit of R52 million would be invested in equipment and human resource development.  The CSIR was informed that its budget would be cut by R35.4 million in 2010 and by R31.6 million in 2011 and she wanted to know what the impact of the budget cuts had been on the Council.  She asked why the provision for bad debt had been doubled to an amount of R3.5 million.

Ms H Line (ANC) asked if the Northern Cape province would benefit from the work done to combat the spread of tuberculosis.  She asked if the CSIR was involved in the Square Kilometer Array (SKA) project.  She said that the town of Caernarvon, which was situated in the SKA area, had insufficient water resources and had to make use of unreliable boreholes.

Mr G Thibedi (ANC) congratulated the CSIR on achieving an unqualified audit report from the Auditor-General.  He observed that there appeared to be very few women employed by the CSIR.  He asked if the war against tuberculosis was being won.  He asked if the CSIR employed interns from the rural, Black universities.  He asked if South Africa had any titanium deposits and why it was such a difficult substance to process.  He asked if the technology used during the World Cup continued to be applied.

Ms Dunjwa observed that the prevalence of tubercular cross-infection occurring in hospitals was a major concern.  She asked if the research into curbing the spread of the disease was done by the CSIR in collaboration with the Department of Health.  She asked if Members of Parliament could approach the CSIR to obtain Digital Doorway units.  She asked if any research was done on the design of low-cost housing units.

Prof Petersen confirmed that there was currently only one female Board member.  He pointed out that the members of the CSIR Board were appointed by the Minister of Science and Technology and approved by Cabinet.  He undertook to bring the matter to the attention of the Minister.

Ms Njobe agreed to forward more information on the interns and the recruitment details requested by the Committee in the near future.

Dr Maree advised that a local company manufactured cash-in-transit vehicles and was considering exporting the vehicles.  The foam technology was used by certain local cash-in-transit companies but not all.

Mr Sturdy added that one of the entities that had applied the new technology was recently voted the best cash-in-transit company world wide by Lloyds of London.

Dr Sibisi explained that the radar technology developed by the CSIR allowed images to be seen in great detail, for example it was possible to detect the number of people and if a person was carrying a rifle.  The World Cup allowed for the emergency response systems to be tested.  The systems could be applied to other scenarios, for example border control and the monitoring of the entire country.  A more detailed briefing could be presented to the Committee on another occasion.  The Members of the Committee were welcome to visit the facilities of the CSIR and see the Digital Doorway installations and equipment at first hand. 

Dr Sibisi advised that a range of technologies was under development to aid the disabled community, for example a modified keyboard sensed the position of the pupil of the eye and allowed a person who was unable to type, to write on a computer.  He undertook to provide the Committee with a more detailed report on the number of disabled employees as well as the modifications made to the environment at the CSIR premises to accommodate disabled persons.

In response to Mr Nonkonyana’s query, Dr Sibisi explained that ‘ISI’ was the acronym for the International Scientific Index, which was used as a quality measurement in the scientific world.  Ti was the symbol for titanium.  With regard to the preservation of indigenous knowledge, there were many examples of the involvement of the CSIR, for example research in the use of plants by the San as an appetite suppressant.  The CSIR ensured that the contribution of the indigenous community was acknowledged and that benefit-sharing agreements were signed.  The Global Fund was an United Nations initiative and the funding access by South Africa was administered by the Department of Health.

Ms Njobe conceded that there were not enough disabled and black employees of the CSIR.  The Council had developed a focused employment strategy to address this issue and had implemented measures to ensure that the work environment supported disabled employees.

Dr Maree confirmed that the research in preventing the spread of tuberculosis involved hospitals in the Northern Cape as well.  The funding for the program was provided by the Global Fund and the Department of Health.

Dr Sibisi said that the CSIR would like to have closer relationships with Government Departments, such as the Departments of Health and of Human Settlements.  The support of the Committee in fostering improved relationships with Government entities was appreciated.

Dr Maree explained that the CSIR created guidelines from the research and pilot projects.  The guidelines could be used by other entities to implement projects on a much larger scale.

Dr Sibisi added that the CSIR conducted research but other Departments were responsible for implementation, for example making the Digital Doorway available to approximately 30,000 schools cannot be done by the CSIR.  Although the CSIR partnered with Government entities such as the Departments of Science and Technology and of Communication, the Council’s focus was on development rather than on large-scale implementation.

Mr Sturdy responded to Ms Shinn’s questions.  He explained that the operational units of the CSIR each had separate income statements and balance sheets.  ROI was not always a financial return, for example a return on investment could be in the form of trained people.  The different operational units were expected to be financially sustainable.  Funding for each project was ring-fenced, for example the research projects undertaken for the Department of Defence.  The expenditure on World Cup tickets were made from savings in overhead costs.  Certain projects had large profit margins and technology was sold to international clients.  The royalties on force-protection technology had declined as there were fewer wars being fought.  The CSIR would like to have more substantial earnings from royalties but this source of income tended to be ‘bumpy’.  The approach of the CSIR in budgeting for royalty income was conservative.

Mr Sturdy replied to the question on the investment of profits by referring to the information provided on page 120 of the annual report.  The total investment in property, plant and equipment had exceeded the amount of profit.  The CSIR had leveraged its balance sheet to generate sufficient cash flow for investments.  Not all profits were invested in equipment and a portion was saved.  The CSIR had been informed of the budget cuts in the following years and responded to the reduced income by implementing cost-saving measures, closing the sales gap and reducing the investment in equipment.  The reduced income was spread across all divisions but had not resulted in the cancellation of any projects.
Mr Sturdy explained that the bad debt provision totaling R3.5 million arose from an investment in a textile company.  The CSIR had a 20% stake in Brieftex Pty Ltd but the company had been negatively affected by the downturn in the textile industry and the importation of textiles from China.  The company had rented premises from the CSIR and had defaulted on its rental payments.  The unpaid rental could not be recovered and had to be written off.

Dr Sibisi pointed out that royalty income of 1% was acceptable, although 5% would be welcome.  The Council needed to carefully weigh up the benefits of investing in companies to generate royalty income against other investment vehicles.  Investment in patents could be risky and result in fruitless and wasteful expenditure.  Certain technologies developed for Armscor had generated sales to the United States of America.  Most of the developments related to the SKA did not involve the CSIR but the Council was involved in the provision of a large networking computer system.  The research undertaken in communications technologies could result in benefits for outlying communities.  He was unable to assess if the war against tuberculosis was being won and suggested that the question was referred to the Department of Health.  The CSIR would undertake any research necessary to curb the spread of the disease.

Dr Sibisi explained that South Africa had the second largest titanium deposits in the world.  The metal was technically difficult to produce and to work but there was a substantial demand for titanium and enormous potential income could be generated if South Africa had the ability to add value to the raw material.

Ms Njobe advised that the CSIR had a nation-wide presence, in particular at universities.  The CSIR sponsored a scholarship program at the University of the Western Cape and made bursaries available to students studying at the Walter Sisulu University in the Eastern Cape.

Ms Dunjwa noted that Members had suggested that the Committee included a visit to the CSIR in the oversight program.  Research could take a long time before results were shown and it would be useful for the Committee to see the CSIR in action.  She complemented the manner in which the delegates participated in the presentation and in answering the questions from members.  Although the CSIR reported to the Department of Science and Technology, the research done by the entity contributed to addressing the many social challenges of the country.  She said that science could no longer be considered to be the domain of the rich.

The meeting was adjourned.


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