The Department of Science and Technology briefed the Committee on the Technology Innovation Agency (TIA) Review Report. The Minister had a legal responsibility for the governance and resourcing of a set of national public entities including the Technology Innovation Agency. In TIA’s case, and as recommended by the Ministerial Review Committee, the Minister decided to initiate the first review to be of a developmental and formative nature and to consider both the fitness for purpose of TIA operations and the fitness for purpose of the TIA in the national system of innovation. In November 2012, the Minister appointed a panel to conduct an external institutional review of the TIA. Within the scope of the review, the original motivation for the establishment of TIA was to address the challenge of the low level of commercialisation of promising ideas that emerge in South Africa, particularly from universities and publicly-funded research organisations. The review panel was required to assess whether the organisational structures, policies and programmes of the TIA were fit for this purpose. The better part of the briefing was spent on elaborating on the recommendations that had come out of the review process.
On the way forward, the Department and TIA agreed on a joint action plan and the recommendations were accepted.
After having gone through the Review Report the Committee identified certain questions that required answering. How was the TIA to transform itself into a technical hub and how did regionalisation call for the TIA to be a hub. Another issue was how the TIA was to be positioned in the innovation sphere. Of interest to members was how the TIA was to deal with the return on investment issue.
Questions had also been asked as to what had prompted the review and would legislative amendments be on the books. It was further asked why there was a poor relationship between the DST and the TIA. What were the operational problems that the TIA was experiencing?
The Department briefed the Committee on the reconstitution of the Human Sciences Research Council Board. The Committee was given insight into the term of office of the HSRC Board, its composition, the legislative process of reconstitution of the HSRC Board, the progress to date and the names of shortlisted candidates which the Committee was requested to approve.
The current four year term of office for the Human Sciences Research Council (HSRC) Board expired on the 31 October 2013. The new Board should be appointed for four years from the 1 November 2013 to the 31 October 2017. The Minister initiated the process of reconstituting the Board as outlined by the HSRC Act and appointed a panel of experts to compile a shortlist of candidates. The DST received 49 public nominations and 8 members from the current HSRC Board were available for reappointment. A shortlist of 20 candidates was compiled from the received nominations. However, Prof Amanda Lourens a statistician who had served on the Board previously had informed the DST prior to the present meeting that she was no longer available to serve on the Board. Hence the shortlist was reduced to 19 candidates. Members were provided with the 19 names of shortlisted candidates. It was therefore recommended that the Portfolio Committee on Science and Technology consider and approve the shortlist of candidates presented in line with section 5 of the HSRC Act.
The Committee approved of the 19 shortlisted candidates for the HSRC Board and adopted the Committee Report in this regard. It was pointed out that none of the candidates were disabled persons but the response from the DST was that it was not for a lack of trying on their part. Another issue raised was why a Board member could not serve two terms if the person was doing an excellent job.
Briefing by the Department of Science and Technology (DST) on the Technology Innovation Agency (TIA) Review Report
Dr Phil Mjwara, Director General, DST, informed the Committee that the Minister of Science and Technology had a legal responsibility for the governance and resourcing of a set of national public entities including the Technology Innovation Agency. In TIA’s case, and as recommended by the Ministerial Review Committee, the Minister decided to initiate the first review to be of a developmental and formative nature and to consider both the fitness for purpose of TIA operations and the fitness for purpose of the TIA in the national system of innovation. In November 2012, the Minister appointed a panel to conduct an external institutional review of the TIA. Within the scope of the review, the original motivation for the establishment of TIA was to address the challenge of the low level of commercialisation of promising ideas that emerged in South Africa, particularly from universities and publicly-funded research organisations. The review panel was required to assess whether the organisational structures, policies and programmes of the TIA were fit for this purpose. The better part of the briefing was spent on elaborating on the recommendations that had come out of the review process:
The learning from the establishment of the TIA must be codified to inform future establishment of entities by the DST. The Minister of Science and Technology should request the Director-General of the DST to provide his full assessment on the role played by the Department in establishing the TIA, including a critical reflection of the weaknesses that have compromised the ability of the TIA to appropriately execute and discharge its mandate. The Minister should make a similar request to the Chairperson of the TIA Board to provide an assessment on the role played by the Board and Chief Executive Officer in those activities that were within their sphere of control.
The DST was responsible for setting up and overseeing the Trusts that governed the Biotechnology Regional Innovation Centres (BRICS) and the reported Public Finance Management Act (PFMA) transgressions had occurred while the Trusts were under the watch of the DST.
The TIA had commissioned a legal services provider to advise it on a legal framework to enable the investments inherited from the BRICs and the Innovation Fund to be condoned by the Ministers of Science and Technology and Finance. This was based on the provisions of Sections 51, 52 and 92 of the PFMA. It was envisaged that the framework would enable the Ministers of Science and Technology and Finance to endorse the investments that had been audited by KPMG on behalf of the Auditor General and had been shared with parliament. It was recommended that the Minister of Science and Technology consider the framework under development and used it, as appropriate, to approach his counterpart at National Treasury to complete the process of condoning the transgressions.
The poor state of the relationship between the Director- General and his senior Executives and the CEO of the TIA and his senior Executives was undermining the ability of the both the DST and the TIA to appropriately discharge their respective mandates. The Minister of Science and Technology and the Board of the TIA should declare the prevailing environment as unacceptable and hold the Director-General and the TIA CEO accountable to ensure an environment conducive to cooperative governance prevailed between the DST and the TIA. The formal bilateral meetings between the DST and the TIA should take place regularly and with representation of both parties at the appropriate senior level.
Formal report backs to the Ministry and the TIA Board should take place to ensure that the bilateral arrangements created to ensure effective and efficient working relationship between the two entities, were regularly monitored.
In view of the marginal position of the Technology Stations within the TIA, the TIA Board should investigate ways to protect and enhance their core function of support to Small, Medium, Micro Enterprises (SMMEs) to access the specialised technological services and expertise in the universities of technology. The investigation should include consideration of relocating the Technology Stations to the CSIR.
A regionalisation strategy and plan should be developed for adoption by the TIA Board. The strategy should, inter alia, clarify the role and scope of operation of regional offices and should be developed in consultation with key stakeholders. There should be a moratorium on the regional expansion of the TIA until the Board adopts the strategy.
The lodging of ring-fenced projects by the DST within the TIA should be discouraged. In cases where a project or programme initiated in the DST fits best within the mandate of an entity governed by the DST, proper negotiation should take place between the DST and that entity to agree on transfer of such a project or programme. Ideally, the ownership of the project or programme should be transferred as well and a proper reporting framework agreed upon to enable the DST to satisfy itself that the intended objectives were being met.
The Review Panel had identified a number of key operational areas that required attention, including the following: turn-around times for enquiries and applications, drawdown of project funding, overhead costs, and communication with stakeholders. Plans to address these, and to ensure radical improvement, should be put into place by the TIA Management. Such plans had to include measurable targets and the Board should monitor progress towards the achievement of efficiency goals
The TIA Act was recognised as being an enabling Act with a broad mandate. The Review Panel recommended that a properly structured Shareholder Compact be entered into between the Minister of Science and Technology and the Board of the TIA to agree on the scope of the mandate of the TIA, within the broad mandate enabled by the Act. Once the Shareholder Compact was concluded, the Board of the TIA should have the authority to govern the TIA without undue interference from the DST. The enabling TIA Act would still allow the TIA to engage in activities that may be beyond the scope of the Shareholder Compact, but within the scope of the Act. However, the explicit agreement of the Minister of Science and Technology should be a prerequisite in such cases.
The TIA must be given a mandate to be a “hub” where, inter alia, the following entities interface with the objective of converting ideas into commercial activities:
Publicly funded R&D entities (higher education institutions, science councils and national laboratories)
Large and small commercial and industrial businesses
Innovative private individuals
Non-Governmental Organisations and Community-Based Organisations
The TIA role should be that of a granting agency receiving funding from the National Treasury for the purpose of facilitating an efficient and effective national innovation ecosystem. The agency should understand Return on Investment accruing not in the Balance Sheet of the Agency but rather in the benefits to the national economy and jobs created from the commercialised innovations.
People were at the heart of innovation. Innovation required people with the skills and attitudes to be entrepreneurial in their professional lives, whether by creating their own companies or innovating in existing organisations in both the public and private sectors. Although South Africa had made progress towards encouraging a more favourable culture and environment for innovation based on entrepreneurship, much remained to be done. The TIA could promote an entrepreneurial culture, for example by encouraging events that highlighted entrepreneurial role models and supporting the integration, by relevant education departments, of entrepreneurship into the education system.
The Review Panel was well aware of the challenge of inter-departmental coordination in government. In fact, the Review Panel was informed that silos existed even inside government departments that made intra-departmental coordination just as challenging. The Review Panel nevertheless implored the Minister of Science and Technology to foster some high-level inter- departmental forum to coordinate innovation across the National System of Innovation. This high-level forum should ideally be at Ministerial level but could also be at the level of Directors-General. At the very minimum, in order to strengthen coordination across the National System of Innovation, the TIA Act should be amended to allow for the Director-General of DST, Director-General of DTI, President/CEO of the CSIR, President/CEO of the National Research Foundation and a nominee of the Industrial Development Corporation to be appointed as ex-officio, non-voting members of the Board. In appointing the new Board of TIA, the Minister should include individuals who had a track record of involvement in innovation in the private sector (large companies, SMMEs and parastatals), as well as individuals from universities and science councils.
On the way forward The DST and TIA agreed on a joint action plan and the recommendations were accepted.Some of the recommendations were already being implemented and others were being investigated further in order to develop appropriate implementation plans. The recommendations would form part of the DST/TIA bilateral meetings.
The Chairperson said that the Committee had identified some key issues to consider after it had been through the Review Report:
How could the work of TIA and the CSIR be co-ordinated? Should technology stations sit with the TIA or CSIR?
How was the TIA supposed to transform itself into a technical hub?
How did regionalisation call for TIA to be a hub? What mechanism did the TIA intend to put in place to close the gap? The question was whether to diversify or reduce technical innovation. There was a Swedish model that could perhaps contain an answer to the question.
How was the TIA going to be positioned in the innovation sphere? Should its focus be on profits or on bettering the lives of South Africans?
How was the TIA to rectify the Return on Investment issue?
Dr Mjwara said that the transformation of the TIA would be the efforts of the Ministry, the DST, the Board and Executive of TIA. In the recommendations there were things that could be done by the Minister, the TIA and its Board. On the issue of regionalisation and the hub, his personal view was that the hub could still have spokes. The Review Panel asked the DST and the TIA Board to clarify what the hub was going to be. This included the relationship of the hub with spokes.
The Chairperson asked if any of the bodies mentioned had immersed themselves into transforming the TIA into a hub.
Dr Mjwara said that the Chairperson had earlier quoted the Singapore model. He had encouraged the Board to look at other international models and had suggested the Malaysian model. Within the management of TIA there was someone that had been seconded from France. Closing the innovation gap could not be resolved by the TIA alone. The DST realised that there was a government policy package of instruments. The first instrument was the IPR Act encouraged the setting up of offices of technical transfer. The idea was to help universities to identify ideas for commercialisation. The second instrument was the National Intellectual Property Office to support growth for commercialisation. The third instrument was the TIA. He agreed with the Chairperson that it took the efforts of more than one instrument or agency. The TIA could however play a leading role. The original thinking was that the TIA should be an enabler. The DST agreed with the recommendation to provide funding. The expectations were that the return on investments should not be more than that was received by banks. There would be financial returns in some cases and not in others.
Mr P Smith (IFP) asked what exactly prompted the review. Was there a general feeling that the TIA was failing? What was the reason? He pointed out that it would have been useful if in the briefing the findings had been included before dealing with recommendations.
Mr Smith asked whether legislative amendments were required. Furthermore, he did not understand Recommendation 2. He was under the impression that the issue it was dealing with had been settled.
Recommendation 3 spoke about the poor relationship between the DST and the TIA. What was the nature of the relationship and why was it the way it was? He referred to Recommendation 4 and asked what was meant by,” marginal position of technology stations within TIA”. On Recommendation 6, he presumed that it was referring to the problem of the DST lodging ringfenced projects with TIA. About Recommendation 7, he asked what operational problems had been identified. He further asked what Recommendation 8 spoke to and why was it a recommendation. Recommendation 9 was perhaps alluding to the fact that the fundamental role of the TIA was inappropriate and that its secondary role was more appropriate. The Recommendation also spoke about the TIA requiring a skills set of for example engineers. Was the Recommendation saying that the TIA should have access to a skill set or should have it in house? If it was the latter, then how was it to work? Lastly, he referred to Recommendation 10 he asked to what extent was the current approach of the TIA in terms of its legislative mandate. In order to refocus on what it did it had to be done in terms of law.
Dr Mjwara acknowledged that the briefing had not addressed the findings but he would forward these to the Committee. He was concerned about the rapid movement of the TIA into the regional side of things. It should be done in a phased approach because of the costs involved. His personal view was that regional offices should be aligned to the TIA mandate. The purpose of the review was because the community had felt that the Agency could do better. How the focus of the TIA was unfolding needed to be considered. There might be some things that were not working. The question was whether the original intent was the right one. The review was really driven by the observations of the community. He noted that no legislative amendments were expected. On the relationship between the DST and the TIA, he noted that the former tried to play its role. The DST was of the view that resources had not been used in line with the Agency’s focus. Its view differed from that of the TIA, that legislation was broad. The DST had a bilateral meeting scheduled with the TIA Board in October 2013. On the issue of ringfencing projects there were two concepts to consider. The first was the operationalisation of ringfencing. There were instances where the DST wished to ringfence projects. The question was about how to do it. The second aspect was where the DST felt that the TIA needed to ringfence a project. This was where the TIA did it on behalf of the DST. The issue was about how the process was to be handled. How strategically to decide on ringfencing money? A mechanism was needed to do this.
Mr Smith said that the recommendation in the briefing stated that ringfencing was not good. “Sometimes it could be good”.
Dr Mjwara said that part of the recommendation would be accepted and part would be rejected.
On the issue of skills sets, he noted that many organisations had a base skills set and could draw skills from outside the organisation when needed.
The Chairperson addressed the issue of a hub versus regional entities and pointed out that TIA had been an amalgamation of regional bodies. Now the move was back to regions. It was possible to look at a regional innovation system versus a national innovation system.
Dr Mjwara said it was the very reason why the TIA Board had recommended that a balance was needed between what a hub system did and what a regional system did. He noted that there was a package of concerns around a regional system.
Ms P Mocumi (ANC) asked several questions. Firstly, she referred to Recommendation 5 and asked when the TIA Board was expected to adopt a regionalisation strategy and plan. Secondly, she referred to Recommendation 8 and asked when the Shareholder Compact to be entered into by the Minister of Science and Technology and the TIA Board was to happen. Thirdly, she noted that Recommendation 9 spoke to a bilateral between the DST and TIA and queried how regularly would bilateral meetings take place.
Dr Mjwara replied that sometimes opportunities emerged after shareholders compacts had been signed. He noted that once the new Board had looked at the recommendations and the investigation was completed things could move forward. A regional strategy could be finalised by the end of the financial year. A shareholders compact had to be finalised by the end of the financial year. Bilateral meetings were held quarterly.
Ms J Kloppers-Lourens (DA) referred to page 10 and asked why was specific mention made of Finland in the TIA Review. On page 6, mention was made of the strengths of TIA, what were they? On page 11, mention was made that the Review Panel could include other areas that were relevant to the intentions of the review. Were there other areas? She asked for more information on technical stations which were mentioned on page 14. On page 19, it was stated that there was poor relations between the TIA and the DST. What was the relationship and why was it negative? Page 30 spoke about the required skills set of TIA i.e. scientists and engineers. Did TIA not have skills currently? What skills did they have currently? Page 33 made reference to entrepreneurship in education. What was TIA’s current interaction with the Department of Basic Education? Did its curriculum focus on entrepreneurship?
Dr Mjwara addressed the issue of technical stations and stated that the feeling was that the main activity of the TIA was to stimulate innovations. The TIA provided assistance to small medium sized enterprises in order to improve productivity. If technical stations were to stay with the TIA, other ways needed to be found to better them. The responsibility was that of the TIA Board and the Minister of Science and Technology. Finland had been specifically mentioned because it had always been a model of a country that achieved a close working relationship with public funded institutions and those in industry. Finland was ranked number one in innovation. On strengths and weaknesses it was better to provide the Committee with a report on the findings as promised earlier. He noted that the role of the Review Panel was all encompassing. They did not go beyond their scope. There was no harm in including entrepreneurship in school curricula. Perhaps it did not fall within the mandate of the TIA. Perhaps the DST could have a bilateral with the Department of Basic Education to make provision for it. The TIA needed to stick to its core mandate.
Ms Christina Pinto, Chief Director: Innovation Instruments and Planning, DST, stated that most organisations had an Office of Technology Transfer (OTT) or OTT functions at universities.
The Chairperson asked how it was organised.
Ms Pinto said that legislation made provision for an Office of Technology Transfer. Of the 32 plus organisations two thirds of them received funding.
The Chairperson asked whether OTTs were regionally based. Were OTTs a help?
Ms Pinto responded that they were regionally based at universities. They were helpful and served a purpose.
Mr Smith suggested that the Committee receive a briefing on OTTs.
The Chairperson said that he had received complaints about the TIA but had suggested that the persons complain via structures that were in place. He asked whether the Chief Executive Officer (CEO) of TIA had been suspended.
Dr Mjwara said that the CEO had taken voluntary leave. The current Board had received allegations that there were breakdowns in governance procedures. It was agreed that the allegations should be tested and that a forensic investigation was needed. The investigation was currently ongoing.
The Chairperson asked whether the CEO of TIA was still on voluntary special leave.
Dr Mjwara confirmed that he was.
Mr Thulani Mavuso, Chief Operations Officer, DST, said that the CEO of TIA had offered to step aside whilst the investigation was ongoing. In addition, he informed the Committee that he had also received operational complaints.
Briefing on the Reconstitution of the Human Sciences Research Council (HSRC) Board
The DST briefed the Committee on the reconstitution of the Human Sciences Research Council Board. Mr Mavuso briefly provided the Committee with insight into the term of office of the HSRC Board, its composition, the legislative process of reconstitution of the HSRC Board, the progress to date and the names of shortlisted candidates which the Committee was requested to approve.
The current four year term of office for the Human Sciences Research Council (HSRC) Board expired on the 31 October 2013. The new Board should be appointed for four years from the 1 November 2013 to the 31 October 2017. The Minister had initiated the process of reconstituting the Board as outlined by the HSRC Act.
The Minister informed the HSRC Board that their term expired in October 2013 and requested the members to indicate their availability for reappointment. An advert was published in the national newspapers and Government Gazette. The Minister appointed a panel of experts to compile a shortlist of candidates.The DST had received 49 public nominations and 8 members from the current HSRC Board available for reappointment. A shortlist of 20 candidates was compiled from the received nominations. However, Prof Amanda Lourens a statistician who had served on the Board previously had informed the DST prior to the present meeting that she was no longer available to serve on the Board. Hence the shortlist was reduced to 19 candidates. Members were provided with the 19 names of shortlisted candidates.The appointment process of the new Board was in line with the prescripts of the Act; and it was therefore recommended that the Portfolio Committee on Science and Technology consider and approve the shortlist of candidates presented in line with section 5 of the HSRC Act.
The Chairperson noted that the HSRC Act provided that the members of the Board would be appointed by the Minister “in consultation with”.
Mr Smith pointed out that the actual appointment of the Board members was up to the Minister. The “in consultation with” provision was in regards to the list of possible candidates.
He was happy with the list and even suggested that the Committee approve the list of candidates.
Ms Mocumi asked why no provision had been made for disabled persons on the Board.
Mr Mavuso responded that the DST was unable to find a candidate that was disabled who was willing to serve on the Board and hence chose someone with a social sciences background.
Mr Mocumi said that in the future provision should be made for disabled persons even if it meant that the DST needed to approach the Committee for assistance. She pointed that out that there were a great deal of disabled persons in the legal field.
The Chairperson stated that Ms Mocumi had been appointed as the National Chairperson of Disabled Persons in South Africa. She could have assisted the DST.
Ms Kloppers-Lourens complained that she had to struggle through the compilation document containing the curriculum vitaes of the candidates. The document had been sloppily compiled.
She asked whether the process of approval of the shortlist of candidates was so simple. What did it entail? Who checked on the list of candidates? What did it mean that the process had to be “transparent” and “competitive”? She further asked why a member of the Board could not serve two consecutive terms. She pointed out that the loss of Professor Amanda Lourens from serving on the Board meant that there was no statistician on the Board.
Mr Smith asked why the Committee could not approve the list of candidates in the present meeting.
Mr Mavuso said that the process of calling for nominations should be transparent. The process also needed to be competitive hence the expertise of candidates was looked at. The panel of experts looked at what expertise was needed on the Board.
The stipulation that no member could serve two terms was an example of good corporate governance.
It needed to be appreciated that the Board might not have all the skills. The Board could source skills from outside if needed. It was a loss not having Professor Lourens on the Board but all was not lost.
The Chairperson placed the list of nominations of candidates for the HSRC Board before the Committee for approval.
The Committee approved the list of candidates and adopted the Committee Report in this regard.
The meeting was adjourned.
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