Nine Point Plan: Department of Science and Technology briefing

Science and Technology

14 June 2017
Chairperson: Ms L Maseko (ANC)
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Meeting Summary

The Department of Science and Technology briefed the Committee on its contribution to the Nine Point Plan. The Plan is a strategy to ignite growth through Science Technology and Innovation, which in turn catalyses in subsequent rounds of growth in the future. Key points within the programme are to combat electricity constraints, revitalising the agricultural sector, and supporting industrial marine innovation. Science Technology and Innovation will help in achieving long-term objectives through supporting and directing the National System of Innovation; mandating publicly funded science, technology and innovation institutions to support government priority outcomes; developing the required research capacity in the different stages of the Plan; and using knowledge and innovation for economic development. It is expected that the ratio from Gross Expenditure on Research and Development to Gross Domestic Product 2019 increases up to 1.5% by 2019.

Other aspects of Science Technology and Innovation capacity were outlined, particularly around topics that could bring market potential to South African Small and Medium Enterprises. The Department highlighted the importance of property rights for national revenue creation as it has defended in the past. A greater involvement of public authorities in defending private rights can create benefits nation-wide.

Another important strategy to promote growth across sectors is the group of Sector Innovation Funds, which intend to crowd-in private sector investment for research, development, and innovation that enhance competitiveness and modernisation. In 2016, the Department continued to mature seven Sector Innovation Funds (five in agriculture) that leveraged R54 million for the R135 million invested by Government.

The market value potential of mineral resources beneficiation was a key factor that could situate South Africa in a leading international position by applying Science Technology and Innovation in this industry. The Director General admitted that unfortunately in later stages of mineral beneficiation, for further scaling of mineral profitability through this process heavier investment and higher political commitment were required.

During discussion on the need for further intergovernmental coordination, Committee Members pointed out that Science Technology and Innovation would only become the drive of South Africa’s economic strategy if the Department moves from coordinating project liaising to greater national plans that are coordinated from the Department itself.

Meeting report

The Director General (DG), Dr Phil Mjwara briefed the Committee.
The Nine Point Plan is divided into three sections: Job Drivers, related to the areas here job creation would take place according to Government planning. For the consecution of job creation, the Department had identified three enablers: resolving the energy challenge, mediating workplace conflict and crowding in private sector investment. The cross-cutter departments where this strategy would take place are Science, Technology and Innovation, Transport Infrastructure, and Water and Sanitation.

Government has been feeling that certain key strategic areas needed a big push. However, Government does not need to address all impediments to growth simultaneously, and the Department needs to identify a small number of key constraints and decisively address these. The Department expected that this strategy would ignite growth which in turn catalyses subsequent rounds of growth in the future. The Nine Point Plan is designed around short, medium and long-term goals (slide 5), for which key points such as combating electricity constraints, revitalising the agricultural sector, and supporting industrial marine innovation are crucial towards long term objectives. The so-called enablers would be the tools to help moving from short-terms requirements to the long-term objectives as presented in slide 5.

Science Technology and Innovation (STI) will help achieving long-term objectives through supporting and directing the National System of Innovation (NSI); mandating publicly funded science, technology and innovation institutions to support government priority outcomes; developing the required research capacity in the different stages of the Plan; and using knowledge and innovation for economic development. The support provided along the process is targeting five areas, which include: building the Research and Development (R&D) led new industries; strengthening the competitiveness of existing industries (like mining and agriculture); supporting the localisation opportunities for small and medium enterprises SMMEs; and supporting priority social outcomes such as education, health, rural and development. All of this while planning how to make strategic use of local procurement opportunities. The Department generally aims to achieve competitiveness and the building of new industries, while supporting priority outcomes that contribute to science and technological developments.

The Nine Point Plan’s areas, Dr Mjwara outlined the different key points for each of the nine fields
- Revitalising agriculture and agroprocessing
- Unlocking the potential for SMMEs
- Implementing a higher IPAP
- Advancing beneficiation
- Growing oceans economy
- Resolving the energy challenge
- Crowding in private sector investment
- Broadband rollout
- Water and sanitation

He emphasised the importance of supporting the wheat breeding platform when revitalising agriculture and agroprocessing. For the unlocking of SMMEs, the support that has been provided to young entrepreneurs creating mobile phone apps is crucial; and regarding growing oceans economy, the agreements reached with the Cape Peninsula University of Technology (CPUT) and private Oil & Gas companies to monitor the exploration of oceans.

Dr Mjwara outlined the key points of the STI commitments which focused on Improving the Gross Expenditure on Research and Development (GERD) to Gross Domestic Product (GDP) ratio- 1.5% by 2019. It also intends to expand the Sector Innovation Funds (Economic Competitiveness Support Package) and enhance the uptake of locally developed technologies and innovations. Other relevant aspects are the acceleration of the establishment of a sovereign innovation fund and the development of a plan of action to manage the current intellectual property (IP) leakages from South Africa. The GERD, intends to help key investors increase their level of R&D investment focusing on three major investors: Government, private sector and international funders. In this regard, the developments that took place during the previous financial year were the operationalisation of the R&D tax incentive programme; the achievement of certain Co-funding arrangements with the private sector; and Cabinet approval for a budget coordination process for government funding. For the current financial year, the Department expects to accelerate engagements with sectors and provinces to set targets; to achieve the implementation of the budget coordination process; to continue the efforts to secure private sector partnerships and international funding; and to improve the turn-around times of applications for tax incentives.

On the Sector Innovation Funds (SIFs), Dr Mjwara mentioned that the Department intends to crowd-in private sector investment for research, development, and innovation that enhance competitiveness and modernisation. In 2016, the Department continued to mature seven Sector Innovation Funds (five in agriculture) that leveraged R54 million for the R135 million invested by Government. During this time, the Department identified opportunities for the development of additional SIF’s for manufacturing and in ICT. For the current financial year, the objective is mainly to secure funding in the long run.

When trying to increase the uptake of locally developed technologies, the Department intends to increase the use of locally developed technologies, which it is expected to create a virtuous cycle of increasing GERD, increasing firm activity, create new start-ups and firms and enabling South African technologies to compete internationally. The progress achieved in this area points to high-level strategic framework under development and to an Initial consolidation of available studies and data that has given great innovative results in relation to building technologies, fuel cells, water and waste management technologies, as well as in aspects related to security and personal identification. The technologies applied are inputs that have affected policies and strategies to support long-term efforts to increase the use of locally developed technologies. Future development would focus on building suitable institutional capacity to support the work that is already in place. This entails the support and participation of other role-players both public and private; supporting the collecting data and evidence for a long-term comprehensive strategy; and finalising 3 short-term action plans that focus on final products from public institutions and linked to government procurement on social infrastructure, defence and security, and public health.

The use of Sovereign Innovation Funds (Solf) establishes national public-private funding partnerships that have the aim of harvesting and commercialising South African technology innovations. The Department wants to support high technology firms that take from locally developed ideas. This is linked to the use of technologies of South African SMMEs through technology readiness levels from concept to market. In 2016, the departments involved in the allocation of Solfs had the intention to set aside R2 billion for innovation funding for SMME in 2018. A business case is expected to be developed in this field by the end of the current financial year, while the Department engages with the private sector to identify champions of the SoIF and secure private sector funding.

Regarding intellectual property (IP), the DG emphasised that it was a national priority to develop a funding model for enforcing intellectual property rights against third party infringers for IP developed through publicly financed research. He exposed the importance of this strategy with the example of the revenues Australia had received from defending the property rights of the company that developed the Wi-Fi protocol, which had been commercialised illegally by many companies around the world. In this area, progress was made last year when new funding models were investigated and presented to institutions. The plan for the next financial year is to draft and publish a guideline on the IP Fund, to do research and reporting on IP Valuation methods and to engage with funding institutions and insurance companies that might take part of securing intellectual property rights. Additional support by the DST would be given in its participation on the Economic Sectors, Employment and Infrastructure Development (ESEID) Cluster Project Management Unit that oversees implementation of the Nine Point Plan.

Dr Mjwara presented a number of examples the DST had contributed to. On Advancing Beneficiation, he pointed out the potential of Hydrogen Fuel Cells usage for Platinum Beneficiation for which the DST developed the National Hydrogen and Fuel Cell Technologies (HFCT) Research, Development and Innovation Strategy, approved by Cabinet in May 2007. The research institutions involved in this programme were the University of Cape Town (UCT), the University of the Western Cape (UWC), North West University (NWU) and the Council for Scientific and Industrial Research (CSIR). The main objectives were wealth creation through value added manufacturing and the development of hydrogen infrastructure that supported Beneficiation. The implemented programme had taken equity policies into account, providing some positive numbers while producing significant profit and more than 200,000 job positions. In slide 32, the DG showed how the application of beneficiation technologies upgraded the market value of platinum towards final products, in an international market where South Africa had a greatly advantaged position. Several public-private partnerships (PPPs) were established, particularly with Anglo American Platinum, Impala Platinum and the South African Post Office. Within the Advancing Beneficiation strategy, three additional programmes are taking place to achieve the highest market values of South African natural resources. Particularly, Titanium Metal Powder Production, given that South Africa has the second largest reserves of unbeneficiated titanium dioxide; but also, the expansion of Fluorochemicals beneficiation through Fluorochemicals Expansion Initiatives (FEI).

Revitalising Agriculture and the Agroprocessing value chain (RAAVC), includes the Eucalyptus Genome Programme (UP), which sequenced the Eucalyptus genome and Identified genetic markers for desirable traits, which speeds-up, and allows for more accurate, breeding. The economic benefits of Marker Assisted Breeding over conventional breeding will save R81million over 15 years, the Department estimates; taking into account that South Africa has 1.2 million hectares of total plantation the total benefit would sum up to R3.4 billion over this period of 15 years. The DST has invested more than R21 million in this project.

On its mission to unlock the potential of SMMEs, township and rural enterprises, the Department is focusing on Technology Localisation Programmes (TLP) that would increase the capability of local firms, not only by improving competitiveness and technology improvement, but also Maintaining and expanding indigenous knowledge base, and creating a sustainable skills pipeline for local businesses. The implementation of Technology Stations Programme, established in 2002, helped provide access to specialist knowledge and equipment that ultimately served with technology transfers and ensuring that TSPs assist universities to be more responsive to the needs of industry. Dr Mjwara explained that the TSP consists of 15 Technology Stations (TS) and 3 Institutes for Advanced Tooling (IATs), managed by TIA and that are sectorally focused and geographically distributed as per slide 47. Within this programme of stimulation for SMMEs, the Department had promoted the Casting Simulation Network which is intended to address the lack of access to simulation technology in optimising foundry processes, mould design and tooling seen as gap by most foundry industry members. The majority of South African foundries are small enterprises (SMEs), which are also family owned businesses. Thus, for them the cost of the simulation software, and the skilled experts to perform the modelling is outside their means. Globally, the DST has invested R6.3 million in the Casting Simulation Network so far. On top of this aid to SMMEs, Nanotechnology Innovation Centre (NIC) Clean rooms had been provided to these businesses. This technology consists of rooms where the concentration of airborne particles is controlled [ISO 14644] and minimise the introduction, generation, and retention of particles inside the room, preventing contamination to products produced or fabricated.

Lastly, a group of Industry Innovation Partnerships were presented (slide 52), which contributed to the development of capabilities and support of platforms for technology and manufacturing. The DG emphasised the worked carried at the Biomanufacturing Industry Development Centre (BIDC); the Nanomaterials Industry Development Facility (NIDF); the Biorefinery Facility; and the Photonics Prototyping Facility (PPF). In slide 54, demographic ownership is shown as the result of support to SMMEs, emphasizing that the majority were black and female owned. 

The Deputy Director General (DDG) Mr Imraan Patel, added that the initial focus has been in creating the facilities for further scientific development (industry development centres). He highlighted and referred to those members attending from the Department of Communications (spectrum allocation). Some of the centre were also partnering with large industries which will help faster its to growth. Overall, the strategy is to boost the development of technology and innovation to make initiative profitable in the market.

Regarding the Dynamic Spectrum Allocation, the DDG explained it is oriented to the efficient allocation of technologies, and likewise the role of CSIR in partnership with companies such as Microsoft that would further enlarge the reach of technological development in telecommunications.

Ms A Tucks (ANC) asked what progress had been made in relation to the Intellectual Property Enforcement Fund and second, if any additional industry development centres were planned and if so, how would they be funded.

Ms N Ndongeni (ANC) requested clarity on how many SIF are operational at this stage and what new industries are considered for these funds; and also, the status of the SOLFs in terms of the operations related to them.              
Ms C King (DA), requested further elaboration from the DG about the feasibility of the involvement of Provinces in the development of STI for SMMEs. She also asked whether the Department had been in contact with the Department of Social Development regarding the liberation of funds for this purpose as this Department had stated they would not be able to contribute in 2017.

Mr N Koornhof (ANC) asked in what provinces were the several reserves of the minerals mentioned during the presentation. He criticised that the division of industry areas, perhaps SMMEs development, was not well allocated across Department and that the intergovernmental communication lacked efficiency so far. He suggested that because of its central role, the DST should become the centre of coordination among Departments.

Ms Ndongeni also wanted more information on the broadband rollout and whether the Department was providing any assistance in this regard.

Mr Patel, on the industry development centres, said that currently there is fifth one that is being built, for the electronics sector, though it is in an early stage. The way these centres are funded is through CSIR initial funding, and funding for job creation had also been allocated, for which a second job application had been put in place. The funding requirements at the initial stage come because the initial key expenditure for construction work is very expensive, and the viability of the project needs to be convincing for National Treasury approvals.

Regarding the new-involved sector in project of STI, 36 sectors had been researched on to analyse innovation possibilities, and 9 sectors were considered to have good cases that could be subject of SIFs. Out of these 9, around 7 are close to be terminated. The Committee should bear in mind that many of these sectors such as Aquiculture, are struggling to keep going and co-funding along the way is required. In marine manufacturing the SIFs were allocated hoping that new projects would get different players to work together in precompetitive research, though it had not been completely possible. In the manufacturing sector, the Department received funding from the European Union up to € 6 million, but the goal is to be able to partner and work consistently with the Department of Trade and Industry (DTI). For the ICT sector, one of the beneficiaries of SIFs, a company called GoMetro is now trying to gain relevance internationally while also supporting students financially; compared to older and more rigid industries such as Agriculture, ICT presents itself as more dynamic and profitable industry. In biometrics, the CSIR had been involved in discussion regarding the allocation of SIFs and established a Memorandum of Understanding (MoU) with SASA for particular projects such as children and fieldworkers fingerprint recognition, yet funding is again an issue.

The DDG admitted he was not clear on where were the deposit of mineral resources were allocated specifically but committed to provide this information to Members. The DST can predict that there is more demand for Fluor now. Seven years ago, a Turkey multinational invested in the beneficiation of this resource but there was not enough demand then and the company moved away; a situation that has changed now.

On the issue of intergovernmental coordination, at project level there is close coordination with other departments. For example, the DST and the Department of Agriculture, Forestry and Fishery sited together, as well with the Department of Mineral Resources perhaps for the beneficiation of Titanium. This coordination also takes place at the industry development centres with SMMEs.

Dr Mjwara said there are two ways of addressing IPRI’s funding. One is to strengthen the existing regulations for the IPRI to ensure that all receivers of funding have mechanisms to assure Management is tracking the usage of funds. The second approach is for companies to actually receive funding, in an environment where Treasury is not eager to allocate public amounts knowing that there is potential for infringements. Thus, the DST has also moved to engage with private funders for IPs.

The way the DST plans on engaging with Provincial authorities is through the offices of the Premiers and innovation forums, creating the platform for public-private engagement and arguing on the value of promoting STI for economic development. The Department has also started to engage with the Local Government Association to dig into what areas can be subject of innovation. The difficulty in this engagement is that there is no legislation set in place and everything depends on the good will of the implicated parts. The DST is making some proposals on the white paper for intergovernmental coordination, though agreements exist at smaller scale between departments. However, in his view the Nine Point Plan in itself is a cluster of Departments and private players, and examples of that have been the coordination with the Department of Transport and South African ports to benefit and give special treatment to certain economic activities.  He proposed alternatives of perhaps incentivising financially the collaboration among Government departments.

On the beneficiation of mineral resources, the Dr Mjwara admitted that when businesses in partnership with the Department achieve certain level of beneficiation, the required financial resources are not within the capacity of the DST; thus, the rest of departments involved, perhaps Transport or the DTI, have been told by the DST to raise this matter to higher levels of Government.

The DDG, responding to The Chairperson, said that the DST partnership with the DDTS has improved substantially in the last 17 months; having worked in a variety of issues in the context of ST connects. However, for the Dynamic System allocation currently needs the DDTS to take the project forward.

Ms Tucks added that 80% of Manganese comes from the Province she represents: the Northern Cape. 

The meeting was adjourned

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