Department of Science & Technology; National Advisory Council on Innovation; National Research Foundation on their 2014/15 Annual Reports; Audit outcomes by Auditor-General

Science and Technology

13 October 2015
Chairperson: Mr M Goqwana (ANC)
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Meeting Summary

The Auditor-General South Africa (AGSA) briefed the Committee on the Annual Reports of the science sector, reporting that none of the entities had material findings in their financial statements. There was a decrease in the reliability and usefulness of some of the performance reports. Supply chain management concerns were the most serious, and compliance with legislation, particularly for the National Research Foundation (NRF) and the Department of Science and Technology (DST).  The AGSA recommended better controls and consequence management to deal with irregular expenditure, which amounted to R24 million. AGSA also recommended tightening of the oversight function by the Committee. The DST was operating well as a going concern, the human resource management report was sound, and ICT controls had improved. There was no unauthorised expenditure at the DST, but there was irregular expenditure, mostly from the previous year, and better controls were in place. At the Council for Scientific and Industrial Research there was irregular expenditure caused by human error in double=counting VAT. At the NRF there was one instance caused by miscalculation of days. Human Sciences Research Council also had some errors. Any fruitless and wasteful expenditure was properly disclosed and consequences were followed. It noted that AGSA did not audit all the entities in this field but would oversee the auditors who did, to ensure consistency. Oversight responsibilities could do with improvements, but the Minister had a plan to address the errors and it was being followed.  The Committee urged AGSA to work with entities throughout the year and not only at audit times.

The Department of Science and Technology (DST) presented its annual report, showing an  upward trend since 2011/12 and it had increased to 85% achievement of targets for the 2014/2015 year, largely due to the Performance Information Management System. Reasons for variances were explained, due to some unforeseen variables or process delays, or administration difficulties on joint projects. Some targets had been poorly drawn. The DST had developed five new centres for excellence, published research articles and introduced new research initiatives. I had also developed four decision support instruments or municipalities as a planning tool and a disaster recovery management tool. Key achievements for each programme were highlighted.  92% of the budget was transferred to the entities and the Department spent 98% of its budget. The bulk of the money was returned from Technology Innovation Agency because of restructuring. For the next financial year, DST would be making a bid for substantially more funding, in particular to modernise the research infrastructure. Members asked if consequence management was being enforced, and commented that the oversight visits had been impressive. They were concerned about lack of markets for some of the innovations, and thought that other departments with whom it was working should be charged. Members urged that all start ups be considered equally for funding. They urged the issues around supply chain management to be addressed Some Members felt that there was too little transformation in certain areas, particularly the Centre for High Performance Computing. They urged DST to cooperate and share its knowledge on aquaculture to really develop this industry in the Eastern Cape. The Department said it would do a separate presentation on transformation.

National Advisory Council on Innovation (NACI) was partly a board and partly a council, and was one of very few similar structures worldwide. It  continuously advised government on how to make the innovation value chain shorter. NACI was not performing all functions in the desired manner yet, as it was only inaugurated at the end of the year. The Council needed to reflect on and define its purposes. There had been some delay in appointing the Chief Executive Officer and transitioning but areas highlighted would be addressed. It had finalized the 2014 South African Science, Technology and Innovation (STI) Indicators booklet. It was used to provide advice on the state of innovation in the country. The report would go to Cabinet who would soon also be briefed on the booklet. A draft framework for central repository of STI data was approved and it was now engaging stakeholders.  NACI completed a study on biomass sustainability. A future technology foresight framework was developed. It had fallen short on other targets. It did not have its own finance and human resources portfolio, it was managed by the DST. It had fallen short on the spending, having been allocated R18 million but was unable to spend R6.8 million. It would be concentrating on advice in water and sanitation, food security, and energy. Members asked how it  it would report the benefit of the research and technology in the economy and how it ensured that research became a tangible benefit to the economy. NACI conceded that there was a need for better transformation of data into activities.

The National Research Foundation (NRF) presented its annual report, saying that the incoming board joined the NRF in October 2014 and a new Chief Executive Officer would start in January. An overview of the strategic objectives for vision 2015 was presented. The organization showed significant gains over the past five year period. Income sources were the Parliamentary grant, ring-fenced grant and designated income. She said the NRF would reduce contracts to use the money on priority areas. NRF reported a 2% overall decrease in income. There was investment in the Square Kilometre Array, geographic advantage areas and NRF was planning to increase  investment in bio-economy, energy security, global change, and human and social dynamics. NRF presented the first Centre of Excellence in human development and gained 44% research chairs in social science and humanity. It had succeeded well on cost containment, and had received its third consecutive clean audit. Although there was irregular expenditure of R22 million, the NRF had received value for the money and there was no corruption. Staff turnover was low, and although race representation targets were missed, this was due to the very specific skills sets that it needed. The targeted number of educators and public members was exceeded in promoting science and research. It was trying to track learners, but less than a quarter from initiatives were going into science. Community radio partnerships were outlined. The manner in which budgets were leveraged was outlined, including efforts towards transformation. 52% of publications globally were co-authored by South Africans and there was strong growth within Africa. Future focal areas included transformation, closer working relationships with universities, restructuring of the research funding, rolling out of astronomy as effective sub-agency and delivering globally competitive science. Members noted that some initiatives had not been mentioned and it was important to put them on record. Members asked that NRF increase its monitoring and evaluation controls, but were impressed by the indicators. They asked where the intellectual property of work done by students resided.   

Meeting report

Auditor-General of South Africa (AGSA) on 2014/15 audit outcomes in the science sector 
Mr Faizel Jogee, Senior Manager, Auditor-General South Africa, noted that there was generally an improvement from both the Department of Science and Technology (DST) and its entities in the audit performance. Three of the entities in this field had completely clean opinions. It was note that AGSA itself did not audit all of the entities, but an overview of all would be given.

After the Africa Institute of South Africa (AISA) was incorporated into Human Sciences Research Council (HSRC), there were no errors in the financial statements and the performance reports were found to be useful and reliable.
 
He explained that the audit had six focus areas: financial statements, performance information, compliance with legislation, financial health, human resource management, and information technology.

All entities submitted their financial statements and were free from material errors. This was an improvement from the prior year when the Department of Science and Technology (DST or the Department) and AISA submitted financial statements with material errors, resulting in an unqualified audit but with errors.

Performance reports are audited for reliability and usefulness. The AG found a decrease in quality in Department of Science and Technology (DST) and National Research Foundation (NRF) reports. The reports had to be adjusted. Without the adjustments, the reports would have been qualified.

When looking at compliance with legislation, the AG was concerned about NRF and DST. The AGSA found supply chain management issues, although they were not significant. There were improvements with irregular expenditure. In the previous year DST was found to be non-compliant but had instituted improved controls this year and all quotes and deviations were appropriately dealt with. The AGSA still had some concerns for this year but saw improvement as the supply chain management issues were properly disclosed as irregular expenditure.

The DST is operating as a going concern, was able to pay its debts on time, and the balance sheet was sound. It was in good financial health.

The auditors were happy with the human resources management report.
 
The audit of the Information Technology controls revealed an improvement from the previous year. The IT governance framework was still being implemented. In respect of general controls there were no significant areas of concern.

Mr Jogee then went into detail about some of the findings. In the area of compliance with legislation, the AGSA looked whether there were adequate controls to prevent irregular, unauthorised and fruitless expenditure (IUF expenditure). AGSA was satisfied that there were enough controls to limit IUF expenditure. As the Department was correcting prior findings, it wold find more IUF expenditures and reported any instances. There was no unauthorised expenditure but irregular expenditure amounted to R24 million. It decreased by 52% from the previous year. 50% of DST’s expenditure was from the previous year and it had good controls in place for the current year. The main concern was specifically with quotations. Where there were not three quotations obtained, there was insufficient motivation why this had not been done.

At the Council for Scientific and Industrial Research (CSIR), irregular expenditure was caused by one incident of human error where there had been double inclusion of VAT, therefore, awarding the quote to the wrong supplier. HSRC mostly had emergency procurements that were not properly explained. The NRF irregular expenditure amounted to R22 million, R17 million of which relates to the previous year. R9.9 million was attributed to one contract. The contract was only advertised for 18 days instead of 21 days without approval.

AGSA recommended that the DST management should provide oversight to the supply chain management functions and roll them down to lower levels of purchasing staff. AGSA also recommended proper consequence management of repeat offenders. Some recommendations had already been implemented.
 
Fruitless and wasteful expenditure was properly disclosed. HSRC fruitless and wasteful expenditure increased due to staff missing their flights and getting speeding fines. The management was recovering costs from the responsible people. The NRF's fruitless expenditure was due to penalties and fines and it too would recover from those responsible.

He moved on to discuss the drivers of key controls. Oversight responsibilities by managers at the NRF and DST were found to be “stagnant” due to the supply chain management issues. There was also not a full contract management system in place. Weaknesses were found in monitoring, policy development and procedures. Action plans and IT governance committee were also not fully implemented or put in place.
 
The AG’s concerns with governance at NRF were due to the vacancy for the internal audit chief audit executive. A director was currently acting in the position, which did not provide sufficient independence – and that position had been reversed since pointed out.

Mr Jogee outlined what best practice would be to maintain a clean audit. Firstly, the senior management’s positive attitude and commitment must be consistently reinforced in their daily responsibilities. Secondly, there must be effective leadership based on a culture of honesty, ethical business practice, and good governance.
 
Mr Jogee also showed a combined assurance model on which the entities are audited. Management assurance was the first level. The second level was an external oversight level of assurance and the third was oversight by independent service providers. The third level should be done quarterly; this was where the Portfolio Committee came into the picture. The AG’s assessment of the assurance providers found that there were supply chain management issues and slow responses in addressing prior year findings by senior management. Consequence management was irregular but proactive preventative measures were in place.

Mr Jogee gave an update on the Minister of Science and Technology's commitment to address root causes. All of the Minister’s commitments were implemented and the key controls were updated. The Performance information monitoring programme had some issues during its testing phase in the current year but the issues are being looked into. The Minister is now receiving updates and feedback. The supply chain management checklist was implemented and assisted a lot in the current year. As a result, there had been no findings in new contracts. For the current year, the Minister requested the DST to provide action plans for the findings to avoid repeat findings and the internal auditors would be assisted in dealing with the findings. The Minister would be meeting with Academy of Science South Africa (ASSAf) to derive a turnaround strategy and expected the DST to provide the necessary support with compliance and financial statements.
 
The entities not audited by AGSA were: Technology Innovation Agency (TIA), Academy of Science South Africa (ASSAf) and South African National Space Agency (SANSA). In respect of these, the AGSA would simply check the independence of the audit firms and attend their audit committee meetings. ASSAf received an unqualified audit with findings. TIA and SANSA had unqualified audits with findings but showed significant improvements in their findings.

The audit firm previously did only an audit of the financial statements and not the performance information and compliance. In the new financial year, the firm had looked into other areas and had to make material adjustments. The results showed non-compliance findings regarding supply chain management regulations. Predetermined objectives were not disclosed according to the framework, affecting the usefulness and reliability of the objectives were sufficient. All the entities had irregular expenditure although TIA had decreased. SANSA irregular expenditure stemmed from supply chain management issues.

Ms Lydia Motla, Audit Manager, AGSA added that most of the concerns were from the Department’s irregular expenditure, although this had been decreased, and there were roll overs. The DST was using the same contracts but had disclosed properly. The AGSA had identified that there was no fraud involved. Management had failed to follow the prescripts properly. AGSA was happy with consequence management post audit.
 
Discussion
The Chairperson remarked that this Department seemed to be exemplary, but good audits did not often “make the news”
 
Mr N Paulsen (EFF) said he was not surprised by the audit outcomes as this portfolio had a competent Minister. He encouraged the AGSA to look at how transformation was taking place. He had visited science and technology facilities and was happy with the CSIR but the Centre for High Performance Computing was not representative. He believed science and technology could be a game changer in the economy if given its rightful place.

The Chairperson agreed that this was an area of concern but it was not within the function of the AGSA to respond.

Ms L Maseko (ANC) suggested that the AGSA office should look at red flags quarterly, not wait until there were problems. She asked if there were findings suggesting that management were inconsistent with their responsibilities. She also asked if Parliamentary committees could be held accountable as the third level assurance role players.
 
Mr Jogee explained that the third level assurance provider only had an oversight function and checked the accountability of the first level assurers – namely, management, to ensure that policies were rolled down and implemented. AGSA did pick up that a lot of work was done by management to deal with issues, especially supply chain management. It suggested that this continue and that management should not rest on its laurels. Best practices and governance structures were in place to ensure that continued good results would be achieved. AGSA was
starting to engage with the Department on improving its non-financial performance especially in the human capital development area, and would be working closely with DST.

The Chairperson cautioned that officials should not become arrogant but maintain a good attitude.
 
Ms Motla added that AGSA had quarterly interactions with management, checked on the progress of implementations and discussed significant deviations. It also sent letters to the Minister to keep her on track.
 
Department of Science and Technology Annual Report briefing
Dr Phil Mjwara, Director General, DST, noted that the five  departmental programmes were: Administration, Technology Innovation, Research Development and Support, Socio-economic Innovation Partnerships, International Cooperation and Resources.
 
An overview of the DST performance showed an upward trend since 2011/12 and it had increased to 85% achievement of targets for the 2014/2015 year. 9% of targets were partially achieved and only 6% were not achieved. He attributed the improvement to the Department’s Performance Information Management System (PIMS) implementation. Detailed notes of performance per programme were set out on slides 23 and 24).

Dr Mjwara briefly highlighted the reasons for variances detailed in slides 26 to 29. He explained that there were instances of target formulation deficiencies where there were unforeseen variables at formation of the targets. In other instances there were process delays outside the Department’s control. He also cited administration delays, which, although an internal process, were inevitable. Also, the effectiveness of the target implementers may be flawed.
 
Dr Mjwara explained that the DST did not get to its targets of 90% alignment with the national planning documents. The targets were only 71% aligned. Sometimes finalisation would be done in consultation with the National Treasury and projects may not be concluded on time.
Public participation programmes did not meet their targets due to a change in political heads of the Department. 13 of the 18 oversight instruments were developed, the rest were not developed due to a delay in reviewing certain documents. The post- graduate student support target was missed by 1%. He said the Department had engaged with AGSA and the Department of Planning, Monitoring and Evaluation to be able to give the exact number of students. It was also working out the materiality of the variance.

Three MeerKAT antennas were installed. There was a mistake in planning this target where the target was indicated as four new antennas instead of a cumulative target of four. This was an example of careless formulation of targets. Sometimes targets were not formulated at all because the information at the time of development was not clear. There were no trademarks in strategic areas but given the nature of research and development, it was impossible to know which trademarks will be granted. The target of developing a new technology was badly formulated.
The Bill for Protection, Promotion, Development and Management could not be tabled at Cabinet as DST was still dealing with another department to get information.

DST had a target for knowledge generation. The Department published research articles, developed .five new centres of excellence and aimed to fill more research chairs. The DST research chairs incumbents were 23% women and 30% black. Infrastructure initiatives in 2014/2015 included the Centre for High Performance Computing, South African National Research Network, Data Intensive Research Initiative of South Africa, and acquisition of broadband connectivity on the West African Cable Systems.

Economic and social development included contributions to government unemployment, inequality and poverty initiatives and portfolios in the local economic development sphere.
Four decision support instruments were developed for municipalities as a planning tool and a disaster recovery management tool.
 
Dr  Mjwara highlighted the key achievements per programme. Programme 1 embarked on initiatives to inform the public on science and technology impacts. The DST hosted six public participation programmes and oversights of science councils.

Programme 2 supported bio-economy related research and development. The initiatives generated four publications and journals and obtained the copyright for Moringa Vitamin water. Another highlight was the memorandum of understanding between Pfizer Incorporation and North West University for clinical trials of genetically modified animal models. The programme had produced and supported a number of post-graduate students and trainees. Three patents were granted and the innovations were being tracked.

Programme 3 implemented various overseas bilateral cooperation initiatives with USA and Russia and hosted a number of workshops. DST had also strengthened partnerships with other African countries.

Programme 4 continued its human capital development by offering bursary support and student support. DST students enjoyed a high graduation rate of more than 50%. Astronomy strategy realised returns in its investments. 4  064 NRF research grants were awarded. The Marine Research project was approved and this contributed to Operation Phakisa, as it supported environmental affairs. The Department’s Green Technology report was issued.

Under Programme 5, the student support in niche targets areas was exceeded.

Dr Mjwara outlined the financial performance of the DST. Programme 4 takes the bulk of the funding (54%). 92% of the budget was transferred to the entities and the Department spent 98% of its budget. The bulk of the money was returned from Technology Innovation Agency because of restructuring. He concluded that the DST is making progress in knowledge production.

Dr Mjwara then presented the DST's bid for Medium Term Expenditure Framework (MTEF) 2016
The MTEF guidelines stipulated no new money for the first two years and funding for year three was for projects and up-scaling only. There were possible cuts where wage increases are higher than budgeted. Reprioritisation is a condition for bids and no increases in the wage bill were allowed.

The National Treasury had new processes. The Economic Affairs Function Group was now included as a sub-functional group. There was also funding pressure from human capital development to modernise South Africa’s research infrastructure, amongst other things. The baseline funding from National Treasury was not stable and the Department relied on external funding. The aim was to use Information Communication Technologies (ICT) to address national challenges. There was a need for continuous investment in the Square Kilometre Array (SKA). He said that SANSA was underfunded and cannot play its proper role but it may be increased.
 
National Intellectual Property Management Office (NIPMO) was strategically important to the science and technology function. The Department was bidding for an increase in its baseline funding. The request was for R150 million by 2018/2019 and the bid sought a higher-than-inflation baseline increase of R145 million. The ICT research development and innovation roadmap requested R 280 million in 2018/2019. For infrastructure, the bid was for survey upgrades, and a new/upgraded building for HSRC. The total bid is for R 998 million.

The DST also bid for a continuation of the Economic Competitive Support Package (ECSP). ECSP funding would come to an end in 2017/2018. Generally National Treasury was happy with its deliverables and may review the funding as it was beginning to bear fruit for innovation. The Department would like to bid a further R900 million for ESCP.
 
Discussion
Ms Maseko asked whether consequence management regarding irregular expenditure was enforced. She asked if the senior management kept a positive attitude and were reinforcing it daily. She asked if the accounting officer had good governance practices and was ensuring consistency and morality for optimal performance. She commented that the oversight visits were very impressive and eye-opening. However, she was concerned about the products that were incubated that did not have a market – for example, she had looked for the Moringa mineral water and found it only once in Pretoria and never again. She asked the DST to really try to open up the market for innovative products. She asked the Department to confirm if the incentives were different for the projects, as it could cause tension within incubated members if there was unfair treatment. She said she realised that the Department does a lot of work for other departments but this affected the DST's budget, and she felt that work should be charged. She asked what the optimal budget would be. Internationally, massive budgets were granted for science, and South Africa was trying to use very little yet trying to compete in the international space. Lastly, she asked whether all the meerKAT dishes were up and running.

The Chairperson reiterated the concern for unequal funding. He said the Department should not look down on traditional technologies.

Mr C Mothale (ANC) referred to the issues raised by the AGSA about supply chain management procedures not being appropriate. The department must improve on it. He identified a problem that the Department gives monetary support without proper capacity, so the entrepreneurs are destined to fail. He said the Department needed to fully arm those receiving assistance; for instance, to check whether those manufacturing items were able to transport them to market. He noted that the DST increased post-graduate bursaries. He asked it to look into offering an allowance that could still allow the students to support their families back home, so that the advantages of working were emphasised, and the same approach of bursaries should be applied to innovators. They needed to have all equipment to assist them effectively.

Mr Paulsen stated that science and technology was seen as a domain for the few, as not everyone had exposure yet. The Centre for High Performance Computing (CHPC) resembled Heineke Meyer’s team with very few black people and that did not resonate well with making science and technology accessible to all. A plan for transformation was needed. The Committee, during an oversight visit on the agriculture, forestry and fisheries industries in the Eastern Cape, learned of two aqua-culture projects that failed. DST also had a aqua-culture project that was successful. He said there was great potential for aqua-culture in South Africa as only 1% of aqua-culture fish was consumed in the country. He asked why the DST did not have collaborations with other departments to advance such projects. Lastly, he noticed that the annual report listed 68 targets for 2014/2015 yet a previous report listed 65 targets. He asked for clarity on the total.
 
Dr Mjwara requested that the Department should do a separate presentation about transformation, as it had many problems like the number of students not progressing to post-graduate level, low numbers of black and female students, problems with lecturer pools, and others. The DST was making interventions.

Ms Nombuyiselo Mokoena, Deputy Director General: Corporate Services, DST said she fully agreed that compliance mistakes, no matter how small, must be attended to. The AGSA audited the Department’s consequence management and some items were explained in the report. The DST had to provide explanations where it had a directive from contractors run outside of regulations. Some transactions were lawfully done, but not concluded according to the rules. The responsible employees had been disciplined. The leadership had dealt with the culture of bending rules by putting a programme in place and hope the benefits would be visible in about a year.

Ms Precious Tsolo, Deputy Director General: Governance, DST, added that the Department had added controls for a turn-around strategy for the supply chain management issues. It had also enhanced policy and was remapping processes. Problems that arose from contract management were now monitored properly. The Department also enhanced internal controls and dealt with consequence management to align with human resource policies.
 
Mr Imraan Patel, Deputy Director General: Socio Economic Partnerships, DST, explained that the Programme 5 targets appeared as having additional targets, but they were reported as composition indicators on the National System of Innovation surveys and reports as compared to being listed specifically in the Annual Report. He explained that the Department would work with all government departments that were willing to work with it and it was presently working with the Department of Agriculture, Forestry and Fisheries and looking at aquaculture as a sustainable process, making the necessary technology available. Operation Phakisa was now making aqua-culture a big driver. He reiterated that the DST was ready to supply support where it is needed. He said that sometimes the scope could go beyond science and technology so it could work closely with other entities to provide innovation, and then transfer the project to more appropriate  partners.

Mr Patel said DST supported the notion of having a legislative instrument to coordinate research and development funding. He said National Treasury agreed to ensure better coordination of Research and Development (R&D) expenditure. He said the Department needed to increase the three sources of funding: public funding, Department science and technology budgets, and private sector funding. Joint funding with the private sector had proved successful.
 
The Chairperson said unanswered questions could be addressed through discussions with entities.
 
National Advisory Council on Innovation Annual Report briefing
Mr Dhesigen Naidoo, Council Member, National Advisory Council on Innovation, noted that this body (NACI) was partly a board and partly a council. There were less than 20 countries that had  NACI like structures. They continuously advised government on how to make the innovation value chain shorter.

Mr Mlungisi Cele, Acting Chief Executive Officer, NACI, presented the Annual Report. He noted that NACI was not performing all functions in the desired manner. In the strategic plan presented to Parliament, the intention was to review the vision and mission, but NACI was only inaugurated at the end of the year. The Council needed to reflect on and define its purposes.

Mr Cele said the impact factors on performance were the delays in transitioning from the previous Council to the new Council, the delayed appointment of the CEO (his appointment was less than a month ago), poor planning, monitoring and evaluation, and operational inefficiencies. The Council was seeking remedies and the AGSA alerted that it would pay particular attention to these areas in the coming audit.

Performance highlights included finalisation of the 2014 South African Science, Technology and Innovation (STI) Indicators booklet. It was used to provide advice on the state of innovation in the country. The report will go to Cabinet who would soon also be briefed on the booklet. A draft framework for central repository of STI data was approved and it was now engaging stakeholders. The rationale was that it was for the Ministerial Review Report, to understand how the country was performing. NACI completed a study on biomass sustainability. He said it is an important niche area in the economy, recognising challenges and identifying ways to contribute to the solution. The Minister was currently considering the report. As part of building capacity, a future technology foresight framework was developed. It would be used to identify what future technology the country could use and can also be utilised by stakeholders to address economic and social challenges.

He presented the Council’s performance against predetermined objectives. The report on coordination with the NSI was not achieved because further engagement between the parties was necessary. The targeted number of booklets published was achieved. The study on the sustainability assessment on bioeconomy opportunities was not completed. The advice letter on medical technologies infrastructure was not completed. The Annual Report outlined more objectives on slides 12-14.
 
In the expenditure report, Mr Cele explained that NACI did not have its own finance and human resources portfolio, it was managed by the DST. He said expenditure could be better. NACI was allocated R18 million but was unable to spend R 6.8 million. NACI had a commitment to utilising funding appropriately.
 
NACI would endeavour to ensure implementation of its legislative mandate and Ministerial guidelines. The three areas of priority would be water and sanitation, food security, and energy. It would strive to produce quality advice. It would improve performance and strengthen planning, monitoring and evaluation functions. NACI had commenced the drafting of its communication plan. Lastly, it would improve internal operational efficiencies and governance.

He then showed the composition of the Council and how it represented different areas of expertise to avoid the use of consultants (see full names on slide 18).
 
Discussion
Mr Paulsen stated that he understood that the NACI was in a transition phase. He believed that research and technology contributes to the economic mandate. He asked how it would report the benefit of their research and technology in the economy and how it ensured that research became a tangible benefit to the economy.
 
Ms Maseko said she understood that the Board consisted of busy individuals but the number of  predetermined objectives that were not achieved exceeded those that were achieved. She advised that the set objectives should be achievable.
 
Mr Cele stated that NACI could help with moving the country to a new level of development. He said it had a project to track progress and impact of the work, but it was hard to identify impact indicators, and measuring impact was a global challenge. NACI had to ensure that in the monitoring and evaluation function, it would assess impact areas. He said the important role of STIs had to be recognised. He was looking forward to welcoming progress where the role of science and innovation was increasingly improving. For example, areas like state security could benefit.

He welcomed the turn-around strategy proposed and said this would be implemented with the support of the Committee and the Department. NACI would ensure the DST reputation was not dented. Mr Cele believed that human resources were essential to the economy and addressed social and structural challenges. He said that, in order to ensure the majority of people are able to access development opportunities, the Department should invest heavily in education and improve education outcomes. He said this was where there were bottlenecks which impacted on the progress of post-graduate students being absorbed into the economy.
 
Mr Naidoo said there was a direct relationship between the turn-over rate of innovation and the trade balance of a country. Those countries with positive trade balances were net suppliers of technology solutions and high knowledge base turnover. Developing the new strategy of the national system was a big task as it not only required monitoring but also developing mechanisms to make tasks easier.

He admitted that the country was struggling with “demographic dividend”, but pointed out that other places showing success took a long time to do so. For instance, India, a powerhouse of STI, took four generations of educating people to get there. South Africa still had many households where the current batch of matriculants were first-time matriculants in the family. He agreed that transformation should be expedited but said it was necessary to consider the achievements. He observed that successful countries all had one team, not private sector efforts and government efforts. He said South Africa had a government and private sector obstacle with a huge race base to it and this was a problem that needed to be fixed at broad sociological level. South Africa had to resist the temptation to find easier ways to certification, but genuinely build on education instead.

He conceded that  South Africa was not good at converting data to information. He said the county’s intelligence services had to resort to off-the-shelf products for basic services. He believed this needs attention. He acknowledged that large investments in ICT brought with them a burden of threats like cyber crime and cyber terrorism. For example, if the automated system in dams were to be hacked, a town could be flooded. Science and technology must be continuously astute in dealing with new threats.
 
The Chairperson emphasised the need for the government agenda and private industries to meet. He believed that science and technology could bring back the dignity of black people.
 
National Research Foundation Annual Report
Board Member Mr Murray Leibrandt introduced the incoming Chief Executive Officer, Mr Molapo Qhobela, whose term had not commenced but who was sitting in on the meeting.
 
Dr Beverley Damonse,  Acting Chief Executive Officer, NRF,  presented the Annual Report of the National Research Fund (NRF). March 2015 represented the end of a five year strategic plan. The NRF had started engaging on a Strategy Vision 2020 plan. The incoming board joined the NRF in October 2014 and the previous CEO left at the end of January.

She presented an overview of the strategic objectives for vision 2015 and explained that some were direct targets and others were systemic intervention targets designed to benchmark the organisation against international universities.

The organisation showed significant gains over the past five year period. Income sources were the Parliamentary grant, ring-fenced grant and designated income. She said the NRF would reduce contracts to use the money on priority areas. NRF reported a 2% overall decrease in income.

She presented the investment trends in astronomy and explained that the SKA telescope figures were presented separately as the large numbers distorted the graph. Geographic Advantage areas had a steady increase in investment, included funding homo- Naledi research.

The ten year innovation plan had set out these grand challenges or knowledge areas. NRF aimed to increase investment in bio-economy, energy security, global change, and human and social dynamics. NRF presented the first Centre of Excellence in human development and gained 44% research chairs in social science and humanity.

She then spoke to the performance highlights. NRF had succeeded in cost containment,  developed business intelligence systems, and overheads remained below the target. The NRF received its third clean audit certificate and was mindful of pressures to keep it up.

The irregular expenditure amounted to R22 million. It had interrogated this figure and was confident that it was not wasteful as the NRF did obtain the services. NRF had seen a decrease in the number of transactions but the value remained high. One particular transaction worth R10 million was for the purchase of research equipment. The process dictated that a bid should be opened for 21 days, but this one was only opened for 18 days; the reason was that it was during February so the employee counted the days differently. The organisation developed consequence management systems and disciplinary action was instituted.
 
Staff turnover was 8.94%, well below the national average. The race representation target was missed, as the target was 75% representation and NRF achieved 68.5%. The challenge was that the SKA telescope project needed a particular skills set. However, NRF would continue to strive to have more inclusive staff. Senior management services had 31% black representation. Ms Damonse said the organisation had work to do at the senior management level.

Science engagement related to initiatives where NRF raised public awareness and appreciation of science and technology The income for this programme was growing as the emphasis for its importance was also growing. The targeted number of educators and public members was exceeded. The target for learners was narrowly missed.

NRF was tracking the learners from these initiatives to see if engagements result in the decision to enter the sector. It was able to track some but the NRF did not have a sophisticated tracking system. It had found that less than a quarter were going into the field of science, mostly into engineering, medicine, information communication technology and finance. The early pilots were saying that engagements are helping. Another highlight was the community radio partnership in Limpopo and print newspapers discussing science and technology issues in tshiVenda and proving to be successful.

Dr Damonse went over the performance highlights of programme 3. Most of the budget allocation, 62%, was for RISA, the funding instrument for research. NRF leveraged the value of investment from different programmes, contract incomes and other government departments. The leverage value was over R 800 million from basic funding. Next generation research support investments came largely from free standing scholarships and grant holder-linked bursaries. There was a sizable 87% growth in student development programmes over the past five years. There was also an increase in female and black honours and masters students. The NRF was looking at ways to retain black females beyond the masters level. 63% of the supported students were black. The number of graduations had increased. The PhD completion was lower than average and the time to completion was increasing. NRF also invested in emerging researchers going to post doctorate levels. It had established research supervisors. Investments were made in Centres of Excellence and research equipment.

Internationalisation and growing knowledge eco-agreements had seen 52% of publications co-authored by SA authors globally. There was also a strong presence of growth in Africa with eight active agreements and continued growth. Abroad, partnerships with United Kingdom and Canada were established to develop eight other NRF grants.

In Programme 4: National Facilities the facilities were stable. This experienced a significant increase in users of platforms and the number of women supported and trained. The number of publications increased by 25%. She said the programmes performance highlights were the production of isotopes increasing tremendously. A new director at the iThemba Labs was appointed.

Programme 5 was dedicated to astronomy. It had a sub-agency that took a multi wavelength approach to astronomy. The sub-agency shared corporate services with the NRF and so had achieved economies of scale in setup. It was a year into implementation and was busy submitting an implementation plan for the multi wavelength astronomy strategy. This programme's performance was good and more coordinated. Highlights of the programme were that by March 2015 four satellite dishes were installed. They were in the testing phase and by June 2016, it should have 16 dishes. The 2017 target was 22 dishes. There was a three month lag but Dr Damonse was confident this could be made up. Delivery of the full meerKAT array was scheduled for 2017.

Dr Damonse presented the focus areas going forward, which were to achieve transformation in the staff; closer working relationship with universities; restructuring RISA; roll out astronomy as effective sub-agency and delivering globally competitive science.
 
Discussion

Mr C Mothale (ANC) said he was comforted by the explanation on the irregular expenditure amount. He thought the collaboration with iLwandle School and community radio initiatives of science conversations in tshiVenda should be mentioned more specifically for purposes of the record .

Ms Maseko  noted that the Umhlobo Wenene radio programme was also not mentioned. She reminded NRF that these documents would go through to archives and it was important for research that all these important milestones were mentioned. She wanted to know when vision 2020 will be finalised. She requested that the increase in number of students supported at different levels be shown in tabular format to see the progress over five years. She said the NRF needed to increase the monitoring and evaluation controls that would have avoided the irregular expenditure caused by the three day miscalculation.

Mr Paulsen complimented the NRF on the transparency of their 2015 indicators. He wanted to know how much was budgeted for post graduate students and if there was valuable research coming from them. He asked who owned the intellectual property of the research outcomes.

The Chairperson asked why the incoming CEO was already at the meeting, when he was only starting in January next year.

Mr Qhobela explained that he was still serving at UNISA until the closing of the academic year. He had been accounting to Parliament, as part of the Council of Higher Education the previous day and decided to sit in on this session to prepare for his transition. He had made time to work with the Board to ease his transition.

Dr Damonse said vision 2020 was approved by the Board but it was a dynamic strategy so it still was being interrogated and the entity as also making space for the incoming CEO to make changes. She agreed with the comments on the irregular expenditure error which was simply a counting error. Consequence management was being enforced. She said the intellectual property of the student’s research was not owned by NRF.

Mr Bishen Singh, Chief Financial Officer, NRF, explained that the IP still resided with the student’s university who had their own IP policy. Where research was done  by an NRF employee the IP was shared between the NRF and the employee. Where research was funded by a university, it was in the university domain. He noted that the NRF could again start attaching the details on the schools by province, to avoid any being missed out.

The Chairperson was pleased but not surprised by the fact that the NRF was performing well. The Committee would suggest where it thought the institutions needed more funding and the Committee knew that the NRF would be able to use the money where it is needed. He thought that in general, science and technology was underfunded and need to be supported by increased allocations.

The meeting was adjourned.

 

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