Department of Science and Technology on its 2015/16 Annual Performance & Strategic Plans

Meeting report

Department of Science and Technology (DST) on its 2015 Strategic and Annual Plans

The Chairperson noted the apologies of the Minister and Deputy Minister.

Dr Phil Mjwara, Director General, Department of Science and Technology, commented on the National Development Plan (NDP) and the role of Science Technology and Innovation (STI). He said that the NDP acknowledges that economic development was a longer-term project and that innovation should grow in importance over time. The Department of Science and Technology (DST or the Department) plan had been able to identify three phases for growth:

• The  first phase (2012-2017),where the focus would be on 'intensifying research and development (R&D) spending, emphasising  opportunities linked to existing industries‘ 
• the  second phase (2018-2023), where the country should lay the foundations for more intensive improvements in productivity' where 'innovation across state, business and social sectors should start to become pervasive‘; and
• the  third phase (2023-2030), where the emphasis should be on consolidating the gains of the second phase, with greater emphasis on innovation, improved productivity, more intensive pursuit of a knowledge economy and better exploitation of comparative and competitive advantages in an integrated continent'

 In translating these NDP intentions into Science, Technology and Innovation (STI) implementable actions, the following was being proposed:

• Phase one (2012-2017):Use of knowledge for efficiency gains in the economy-  Drawing on progress achieved thus far, the National Science Innovation (NSI) would expand research capacity (human capital development) and institution building, build on what it had learnt about commercialising ideas from research, and continue to support existing economic sectors (such as agriculture, forestry,  agro processing, aquaculture, manufacturing and mining) and emerging sectors (such as minerals beneficiation, greener energy (hydrogen and fuel cells), and active pharmaceutical ingredient manufacturing) through technological innovation.
• In Phase two (2018-2023): Industrialization enhanced by knowledge, the NSI would continue to accelerate the transformation of the STI sector (i.e. demographic representivity) and enhance efficiency in the economy through knowledge. The government would continue to increase R&D investment and commercialisation, and optimise the utilisation of inbound technology.
• In Phase three: (2023-2030): Knowledge-based economy-The number of knowledge workers and high-technology industries would have increased and boosted exports and increased the capacity to commercialise indigenous or local technologies.   Efforts would be directed at sustaining and expanding this progress.

He also highlighted what the NSI was doing to contribute to the reduction of inequality, poverty and unemployment, showing tables to illustrate the point (see attached document for full information)

He said that the role of Science and Technology in socio-economic development was recognised internationally.  STI was seen as a source of new and sustainable growth and competitiveness and engine for addressing social challenges. STI could hold the key to job creation and enhanced productivity.  The Organisation for Economic Cooperation and Development (OECD) sees innovation as central in lifting economies out of the global economic crisis.  Both developed and developing countries were prioritising innovation in response to the 2008 global economic downturn. This had led to stimulus packages for investment in infrastructure and extended support for research, development and innovation, human capital development, green technology and the fostering of entrepreneurship. He further stated that NDP’s vision for 2030 took a similar approach. 

On knowledge generation, Dr Mjwara said that the targets for publications and students had increased, as a result of Research Chairs, bursary values and Centres of Excellence (COEs) There was now a productive and efficient researcher community.  However, there was still a need to deepen and scale-up implementation of successful  programmes  (Chairs, COEs),  mobilise  resources for infrastructure (equipment and cyber) – which included access to international infrastructure - and strengthen efforts to grow the next generation of researchers, especially black and women researchers. Overall DST would implement revised strategies to build the pipeline for research and innovation, and put in place new arrangements for scaled-up research efforts (building focused large-scale initiatives).

He outlined the four dimensions of exploitation.   These included the capability to build new industries, strengthen the competitiveness of existing industries (like mining and agriculture), support localisation opportunities and support priority social outcomes (education, health, rural development).

A high level critical review had been done by the Department. In response to this, Dr Mjwara said knowledge exploitation had been highlighted and so DST had substantially strengthened the Knowledge Exchange (KE) through the Intellectual Property Rights Act (IPR Act), the Technology Innovation Agency (ITA) and National Intellectual Property Management Office (NIPMO) architecture (IPR Act, TIA, NIPMO). It also focused on important large-scales pilot/ demonstrator initiatives that could support new industry development, and Further Education Institutions, Titanium, HySA, Bioeconomy were introduced. DST had built its reputation as a strategic and credible economic partner with industry, the Industrial Development Corporation (IDC) and Department of Trade and Industry (dti). DST had generated significant learning on R&D-led industrial development and S&T for social impact. He however stated that this initiative had not always packaged the Department's work in the most effective way.

The way forward for knowledge exploitation was to build and learn from experience on how to commercialise ideas from R&D. The DST intended to introduce an Emerging Industries Action Plan to consolidate efforts to build R&D led new industries. It was developing stronger partnership with industry and other government departments, especially existing industrial areas such as agriculture, mining, and forestry. It was giving targeted innovation support for key social impact such as education and health, and was also prioritising innovation for inclusive development initiatives.

Dr Mjwara then addressed international partnerships, noting that since the STI was an international enterprise the Department wanted to continue to secure international and national STI funds in support of the NSI. It would be looking to increase South Africa's international exposure to knowledge and STI networks, and   use science diplomacy to represent South Africa’s interests as well as support STI capacity in the rest of the African continent and increase South Africa’s participation in international human capital development opportunities.

The main policy documents guiding the Departments work were the STI White Paper, R&D strategy and Strategic Management Model.

Dr Mjwara then described the strategic outcomes-oriented goals. The first goal was to build on previous gains in building a responsive, coordinated and efficient NSI. In order to achieve this, Cabinet approval was secured for the first comprehensive decadal plan for STI, aligned to the NDP. This anticipated that by 2019, a number of measures should be prepared. Budget coordination and legislative instruments should be in place. By that date there should also be improved systems in place for a more rational and strategic deployment of public funding for STI activities. By 2019, a 300% increase in the rand value of investment by government and the private sector in R&D partnerships should be seen, as compared to 2013.

The second goal aimed to maintain and increase the relative contribution of South African researchers to global scientific output. To achieve this, 22 032 researchers would be supported by 2019; there would be publication of at least 33 700 ISL-accredited research articles supported and the number of articles co-published with researchers on the African continent would be doubled.

The third strategic goal was to increase the number of high-level graduates and improve their representivity. To achieve this, 70 960 postgraduate students would be supported and 4 200 graduates and students placed in science, engineering, technology and innovation (SETI) institutions by March 2019. DST also hoped to reach 5 521 160 people through science engagement activities by 2019. Three times the numbers of Master's and PhDs should be seen in areas of priority identified in the National Research Development Strategy and TRDS and Technology and Youth Innovation Partnerships.

The fourth strategic goal was to derive a greater share of economic growth from R&D-based opportunities and partnerships. This would ensure that, by 2019, new commercial and industrial financing of R2 billion would be secured for a portfolio of R&D-led industrial development initiatives funded by the DST. Another target related to additional revenue of R500 million to be generated from firms and companies that are or had been in receipt of support from DST-funded instruments since 2010. By 2019, performance of 10 000 Small and Medium Enterprises (SMEs) would be improved through technology interventions.

The fifth strategic goal was to accelerate inclusive development through scientific knowledge, evidence and appropriate technology. By 2019, decision-making support would be provided that strengthens or improves the delivery of at least 10 government services or functions. Between 2014 and 2019, contribution of technology-based opportunities for local economic development should have been introduced or strengthened in at least five distressed municipalities. Opportunities for improving the standard of living of at least 500 000 people in South Africa and/or 12 communities would be unlocked through S&T interventions funded by the DST.

He also highlighted the disembodied and embodied technologies. For the disembodied technologies, there were TBP (royalties and licensee fees). The TBP balance, as a percentage of total current account balance, stood at 9.7% (2012). For the embodied technologies, there were high-technology manufacturing imports and exports which stood at 3.4 % of GDP in 2011. However a critical limitation for the purpose of TBP as an innovation indicator, was that the data was aggregated and did not separate between technological and non-technological components.

The South Africa technology balance of payments revealed the amount of money paid to those from whom the Department was buying technology. South Africa was a net importer of technology, and thus the  gap between imports and exports had been increasing. This pointed to increasing local demand for technology. However, South Africa technology exports had also been increasing. This pointed to growing capacity in the knowledge sectors of the South Africa economy. Hence there was potential to boost South Africa’s exports and support local industry with locally grown technologies.

Dr Mjwara said that South Africa’s growing trade deficit in the manufacturing sector remained a structural concern for the economy. However, the rate of trade deficit growth differed depending on the industry, and he highlighted the following examples:

• Electronics sector 14.5% per year
• Pharmaceuticals 12.7% per year
• Scientific instruments 11.0% per year
• Office, accounting and computing machinery 10.7% per year.
• Aerospace 3.5% per year

The current account deficit was mostly seen in the areas of agriculture; current account deficit, aerospace, manufacturing, electronics sector, office equipment, accounting and computing machinery and pharmaceuticals.

He also shared with Members some of the initiatives carried out by the Department. One particular programme: HySA, was aimed at hydrogen fuel cell technology, and was fully detailed in the attached slides (see document for full details). Other initiatives include the cheaper titanium powder and SIF.

The goal of the Technology Localisation Programme (TLP) was to improve the technological capability of local firms leading to increased competitiveness (quality, cost, and customisation), expanded capability (new products, services) and expanded market (local and global).

He said that South African industry was in need of technology renewal catch-up. Foundries were known to retain and improve competitiveness, reclaim and market share. There was also an effort to create and sustain skills pipelines. He also highlighted the overall impact of Technology Innovation Partnerships (TIPs) which had managed to create 136 jobs and achieved export capability.

The Innovation Local Economic Development (LED) initiative was working with NGOs and private initiatives to turn the host communities to profit benefits from mangoes, and develop dried and agro processing products.

Dr Mjwara also spoke on the value derived from the Sumbandila Satellite Programme. The SumbandilaSat and Earth observation microsatellite was launched in 2009, at a cost of about R63 million. It represented South Africa's re-entry into an active space programme. It was primarily a technology demonstrator satellite, which carried a number of experimental payloads from the research community. The direct value or quantifiable portion of the return on investment for the Sumbandila programme indicated financial savings and gains amounting to about R136.4 million through the following:

• Developing the satellite locally (saved at least R44.6 million).
• Gains through the postgraduate degrees obtained (estimated as being worth R45 million).
• Acquiring imagery from SumbandilaSat instead of purchasing images from other countries (R35.6 million).
• Job creation and earnings of suppliers (R11.4 million).

Selected APP performance indicators and targets (MTEF) with performance indicators and MTEF targets as well as the DST MTEF Budget estimates were then shown. (See attached document).

He concluded that the DST needed to build, grow and strengthen a National System of Innovation that was efficient, productive and beginning to be responsive to national priorities. It also needed to engage public entities and university to orient them on its approach to intended outcomes. He summarised that the DST would also enhance efforts at transformation and the building of a strong academy as well as institutional plans to accommodate and support young researchers. It would be deepening implementation of lessons learned in the past, through moving pilots to semi pilots and full plants and supporting government in areas requiring technology solutions. The DST would also communicate more strategically and develop and enhance planning, analytical and evaluation capability. 

Discussion

Mr O Sefako (ANC, North West) commented that the presentation was very informative. He referred to the gap between the red and the green indicators for technology in the presentation, and wanted to know whether there was a need to put a time frame on the narrowing of the technology gap and importing knowledge. 

He advised fellow Members to spend less time in the office, and go out around the country. Members of this Committee were representatives of the Provinces, and he suggested there should be comparative studies across the country. He suggested the need to find out what might be suitable in a rural area in a particular corner of South Africa, and how best it could be utilised amongst rural provinces, particularly for agriculture.

He referred to the technology which could be used in the local municipalities and liked this idea. He asked if there was inter-departmental collaboration and to what extent all the other departments were aware of the technology that could assist them. He also asked if information was made accessible to all the other departments.

Mr A Nyambi (ANC, Mpumalanga) raised his questions in form of a proposal. He advised the Department that in future the DST should present details of its activities in the provinces, which would make it easier for Members to assess what was relevant to their provinces. He had only been able to identify, from this province, two projects, but more would have made it easier for the Committee to go and check developments in certain places and engage more fully. There might well be things happening in Mpumalanga, but this presentation was more "national" relevant to the National Assembly, and not to this Committee, who were unable to gauge what work the Department was really doing in those places.

Mr Nyambi stressed that the NCOP Members' intention was to help in constructive engagement. He asked for an explanation on the collaboration of the DST and the Department of Higher Education and Training (DHET). He wondered if the programmes of this Department should stand as they are, or needed to be amplified or reduced. He however expressed appreciation to the Department for this detailed presentation, whilst stressing again that it should ideally have a provincial outlook.

Mr J Parkies (ANC, Free State) was more interested in the export capabilities and STI benefits to the community. He asked how the Department was making an impact on the communities, and how this related to the five top priorities of the government. He wanted to know if the Department was really engaging in partnerships and strengthening the existing industry.   Black Empowerment was a policy issue, and in that context he wondered how the DST was penetrating existing industries and perhaps diversifying their activities, their outcomes and benefits.   He also asked if there was anything the Department was doing to follow upon the challenges that were facing the SMEs.

Ms C Labuschagne (DA, Western Cape) asked for an indication of the Department's efforts at checking inequality. Her questions also went to upgrades on sanitation technology and if the Department had a plan of expanding this to other Provinces. She asked how many Research Chairs are currently available, and how exactly are they funded, and whether the funding was sufficient to ensure that the knowledge and technology had been created to these Chairs.   She wondered if the knowledge and technology was also being converted to productive services.

Ms Labuschagne referred to slide 27 and asked what numbers were going to be used as a baseline for 2019, to be able to indicate the growth identified. 

She also referred to the technological innovation on slide 40, and asked the Department to give some indication of a time frame as regards the indicators on the current account deficit. 

Ms Labuschagne referred to page 23 of the presentation, relating to contribution to GDP, and wanted to know why there was no indication of the contribution to GDP for the mining and minerals processing sector. She asked if the Department could inform Members on the industrial transformation, and whether there was any development on the energy sector. 

The Chairperson wanted to know the Department's role in the creation of jobs. She asked for some indication on the perception of technology in the form of machinery. She asked if the Department had the total number of scientists created by National Research Foundation (NRF) assistance.

Dr Mjwara told Members that there was to be a target for the time frames to deal with export and import challenges and narrow the gap. The Department had already been working on this for around three months. There was no definite answer to when it would be completed, but he anticipated that probably within the next six months, the Department would have analysed those sectors where the export-import ratio was growing faster than the others. The Department would analyse what was being imported and exported, what it was that was available, in terms of the capacity in the country, and whether it was possible to redirect that capacity towards reducing imports. In his visit to one of the pharmaceutical companies in Port Elizabeth, Dr Mjwara had asked where that company was sourcing imports that it needed for the drugs that it manufactured. The answer was from China; because the chemicals needed to produce the tablets and medicines in South Africa were cheaper in China. This particular company had agreed to work with DST to target a manufacturing capacity in South Africa that would supply all pharmaceuticals. He used this example to illustrate the need to understand each of the areas in the different sectors. Whilst the Department anticipated and was asking for around six months to get a full and precise response to this concern, it could start to make a few assumptions in the meantime on the export side.

Dr Mjwara welcomed suggestions that Members may wish to go out and look at the initiatives of the Department. In relation to inter-departmental collaboration, he said this was an area in which there was huge investment to use all government structures. There were Departmental initiatives seen in part of the outcomes that had been operating in other Departments.   When some of the Departmental innovations were showcased in events, other Ministers would be invited.  He also solicited the cooperation of the Committee to help to ensure some of these initiatives were being sold and driven in the areas where the Members had influence. The Committee could help in advocacy, as this was a big challenge for the Department. 

Dr Mjwara said that the DST would be happy, in its next presentation, to give the Provincial breakdown and geographic spread and share the initiatives for inclusive development space, and this would help the Committee to identify which projects it might wish to visit. He explained that when Department chooses pilots, the fact that they might be chosen in a particular Province did not mean that such pilots would not be done in other Provinces; sometimes it was a matter of a contextual nature, but sometimes the geographic location was chosen because that location might be better suited to run tests in order to determine if the problem was readily scaleable to other provinces also. Receptiveness of local government to the idea was also a factor taken into consideration.

Dr Mjwara spoke to the question of researchers and partnership with the DHET. DHET had agreed to fund a certain number of researchers in the University, and see if they could be promoted to higher positions. Here, DST was partnering with the DHET; the latter to fund salaries and teaching cost, while DST would be happy to fund research costs and money to ensure these young researchers were given the infrastructure and the funding to help them to do research, if they were freed up from some of their teaching loads. Secondly, if DHET was wanting to expand the numbers of Masters and PhD graduates being trained, no matter how matter promoters were available, it had to be understood that DST alone may not be able to reach the target needed, and so students may have to be sent abroad. DST would still have to partner with DHET to determine the numbers of students to be sent abroad and there  were some initiatives already.

In relation to export capabilities, Dr Mjwara noted that the DST partnered with Department of Trade and Industry (dti). He said that if DST was successful in its attempts around the development of titanium powder, this would be of great interest to the aerospace industry and so there was definitely large export potential in this area. 

The DST's contribution to communities was evident in the innovation and economic development activities. These activities were funded directly from the fiscus, via the DST budget, but had been able to attract funds from the European Commission through the general budget support and the sector budget. 

The DST was of the opinion that the pilots that had been done were ready for roll out outside what the DST had been doing. The Department would look at the initiatives of other Departments. For partnerships with the industry, the Sector Innovation fund was a classic example. However, there were many examples where work was ongoing in the industry. The relationship was less than ideal as yet, but a start had been made on getting the private sector to work with DST. DST was currently working on three areas in the industry which the Department would develop conceptually.

On the question around black economic empowerment, Dr Mjwara said that the Department was penetrating and diversifying the activities of the economy. In relation to work done to commercialise ideas from research, he reminded Members that the government entity The Technology Innovation Agency took equity into these companies which they were getting into the market place. It was possible for the government to say, by the time the company was up in the market place, which DST may or may not support them, further.

There was no time frame to check the graduates, because the DST was currently working with the service providers helping the Department, and Dr Mjwara estimated that it might take about 18 months to 24 months to be able to have a system that would be able to check the graduates.

The Department was doing a study on the interventions to attract black and women students in the social environment to become involved in research. The numbers available were based on funding of the Department. The numbers could be expanded, subject to the availability of funding and potential pipeline students that could be taken into the programme. This target would then be included into all the Department's APPs. 

Dr Mjwara acknowledged that the DST could always expand but it was limited by the budget. There was a strategy of engaging others in the initiatives of the Department. He suggested that the Committee should be the advocate in taking these ideas and pilots that were ready for roll out.

Dr Mjwara said that the numbers of Chairs of research were growing and they were funded through the Fiscus. The funding was a programme the universities would like to see expanded, and the Department would liaise with the National Treasury to see if the programme could be expanded. DST did not get programmes and services directly from all the Chairs, but their work was in support of the broad issues of government.

Dr Mjwara explained that most of the numbers being presented as proxy indicators were over and above the current baselines. There were new sets of funding that it would attract in this strategic period from 2014 to 2019. 

Dr Mjwara confirmed that the targets for PhDs were aspirational targets based on a calculation that if the country was to be a truly knowledge based economy, it needed to produce 5 000 PhDs. The Department may not be able to produce this with the capacity available in a supervisory capacity. The Department was thus in partnership with Department of Higher Education and Training in looking at what that limitation would be, and therefore how the Department could use its international relationships to expand that capacity.

Dr Mjwara conceded that there were some tricky questions around whether technology displaced workers. The DST had done some analysis in the manufacturing sector globally, and the conclusion was that if technology was introduced, it tended to have a multiplier effect in terms of the supply industries that had to work in making sure that that there was such technology available. The corollary was that work might be lost in the areas where technology was introduced, but the fact that there was a supplier who supplied this technology meant there was a job created for someone. The system may not be able to absorb all the jobs that had been displaced in that particular area. 

In South Africa, there was a need to solve a multi-faceted problem. In the early days in government, there was a proposal suggesting that the country had to look at introducing a portfolio of interventions that looked at labour absorbing sectors. In some instances, the Department continued to do that.   It was aware that the issue of technology could not be avoided. Industrialisation could not have been stopped by anybody, least of all in agriculture, and it was a case of accepting this reality and managing the transition in a way that minimised the unintended consequences. 

The Chairperson wanted to know what the Department was doing concerning cyber warfare and security in the country.   She also raised the issue of the ostrich industry, which had the potential to create a lot of opportunities.

Mr Parkies suggested that a summary of the pilot projects should be sent, in condensed format, to the Committee. He wanted the Department to clarify the presentation on food security and localisation, and asked whether it was accepted by the Committee as presented.

Mr Sefako expressed concerns that since the Department's programmes would be a costly and expensive exercise, building up technological experience and expertise, and wondered if there was any mechanism to ensure that there was no "brain drain" from the projects. He wanted to know the Department's programme to instill a sense of patriotism, as well as recognize the socio-economic sphere of what was being built.

Mr Sefako expressed appreciation for the scientific innovation in the agricultural sector, where mechanisation was easing the laborious activities where humans had been used.

Dr Mjwara said that another Department, not DST, was charged with responsibility of developing cyber-security solutions. In relation to state security, the DST had always looked at what technologies could be used, and funded research in this area. He said the country had a centre that was always monitoring cyber-attacks in the country.

Dr Mjwara confirmed that in relation to the opportunities for the ostrich industry, the DST could speak to dti about the potential areas for development. 

Dr Mjwara suggested that another day be set aside for a presentation on food security and localisation, to be presented by experts in an area.

Dr Mjwara conceded that there had been losses through "brain drain" in the past, but a few years ago, there had also been attraction of brains to South Africa. It was one of those challenges that had to be managed. People would always leave, but the priority was to attract in more than those who left. Some of the initiatives the Department was doing had actually helped, such as the Square Kilometre Array (SKA), which had brought people into South Africa. This Research Chair initiative had also attracted a large number of people. The Department was requesting National Treasury for more money for bilateral research. The Department would try its best to keep those whom it had trained in the country. 

Consideration and adoption of Minutes of meeting

Members adopted the minutes of 18 March 2015 and 22 April 2015

The meeting was adjourned.