CSIR on impact of Covid-19 on its operations

Meeting report

Covic-19 impact on CSIR

The presentation on the operations of the Council for Scientific and Industrial Research (CSIR) and the impact of COVID-19 was given by Dr Thulani Dlamini, the Chief Executive Officer (CEO), Prof Thokozani Majozi, the Chairman, and other members of the CSIR team.  

In the overview of the presentation, Prof Majozi said that the CSIR was implementing a new strategy that was geared to deliver on the mandate and specifically to support industrialisation. However, the organisation operated in a resource-constrained national system of innovation (NSI). The CSIR was tasked with conducting directed multidisciplinary research and technological innovation. The idea behind this was to foster scientific and industrial research, with the ultimate goal being to improve the lives of ordinary South Africans. The CSIR was mindful of the strong industrial and scientific research component which was integrated into the new strategy, but it would need more government investment to implement the strategy. If the strategy was well implemented, the CSIR would be self-sustainable in the future.

Dr Dlamini said that the CSIR had celebrated 75 years on 5 October. What set the CSIR apart from academic institutions had been its ability to foster industrial and scientific development, but over recent years, this had been lost and not enough was being done. As a result, it felt that it needed to do more, especially in terms of industrial development. Everything that was done by the CSIR must contribute to improving lives. It wanted to accelerate socio-economic prosperity according to its vision by collaboratively innovating and localising technologies, reducing dependence on imported technology. It had also contributed greatly to government and society through knowledge and research.

Dr Dlamini took the Committee through the organisation’s mandate, vision, mission, values, strategic intent, the strategic objectives and the value propositions that were driven by its key performance indicators.

Technology sector clusters

He identified nine areas that underpin the priority sectors in which technology could bring change, drive South Africa’s industrialisation and have the most impact on the country’s economy. These nine areas also informed the new strategy of the CSIR, and were underpinned by cutting edge technology and infrastructure. They were:

• Advanced agriculture and food
• Future production - chemicals
• Next generation health
• Future production - manufacturing
• Future production - mining
• Defence and security
• Specific, measurable, achievable, relevant and time-bound (SMART) places
• SMART mobility
• Next generation enterprises and institutions.

The work of the CSIR was also aligned with government priorities, the medium-term strategic framework (MTSF) priorities and the Science, Technology and Innovation (STI) domains. It informed technology and it informed policy.

Organisational statistics

The CSIR currently had 2 099 employees, a total science, engineering and technology (SET) base of 1 427 437 publication equivalents, 317 journal articles, 21 patents, 37 new technology demonstrators, and supported 116 small, medium and micro enterprises (SMMEs). Historically, the CSIR had contributed significantly to SA’s research, development and innovation. It had supported universities and medical and industrial research. 105 companies had been created, with 51% of those still operating today, which was a very good success rate in its view.

Regarding the licensing of intellectual property (IP) during the period between 2004 and 2014, it had signed 105 licenses -- which was a coincidence, and not directly linked to the number of companies created by the CSIR. In the period between 1990 and 2014, 54 companies had been created, with 31% of them still being operational, including Tellumat, Thermaspray, UVICRO Technologies, etc. This was testament to the quality of the IP that was generated within the organisation, which had enabled these companies to be sustainable.

CSIR Strategy Implementation Plan

The implementation plan guided the investment of the Parliamentary grant received by CSIR. The key pillars of the plan were strategic clusters, capability development, human capital development and strategic infrastructure. These encompass the nine areas that underpin the new strategy. The drivers for the successful implementation of this plan were business development and commercialisation, technology transfer and diffusion, governance, values, ethics, people, culture, the fourth industrial revolution (4IR) and emerging technologies.

To implement CSIR’s strategy, there had been a total investment of R4.72 billion allocated to the four pillars to implement the strategy. The investment would support the development of new capabilities and the strengthening of existing capabilities, to ensure the CSIR remained globally competitive and relevant. It would also support the investment in infrastructure and the development of human capital.

Funding trends and constraints

Mr Ashraf Dindar, Chief Financial Officer (CFO), CSIR, said that the expenditure on research and development as a percentage of gross domestic product (GDP) was significantly lower in SA in comparison with other countries. South Africa had a target of R46.9 billion worth of investment, but was currently spending only R35.96 billion as a country on research and development.

The CSIR received the bulk of its income from the local public sector and core Parliamentary grants. 11% of funding came from private and international sectors, and 2% from royalties, licence income and other income. The key for CSIR had been to diversify more into local private sectors and international sectors, and to commercialise technologies in order to balance the public and private sectors.

Ten years ago, the Parliamentary grant had made up 29% of CSIR’s income. In 2020, this amount was at 26%. There had been a move from a reliance on the Parliamentary grant, but there was still a lot more that the CSIR could and needed to do.

Impact of lockdown and parliamentary grant reductions                                 

On the negative side, the parliamentary grant had been reduced, as had the in-contract research and development income. The CSIR had been unable to deliver on commitments and earn income on contracts. The level of productivity had been reduced, and there had been additional costs in order to comply with the Department of Labour’s return-to-work regulations.

On the positive side, there had been a reduction in operating costs. It had been rethinking ways of working to reduce the impact on the cost of doing business, and there were now new opportunities that were not in the business plans. Overall, the projected net loss for 2020 was R83 million.

The impact on cash flow had not been as traumatic as expected. It had expected R1 billion in cash, but had around only R900 million available for cash flow. The programmes affected by the R8 million Parliamentary grant cuts were innovation, commercialisation, technology transfer and diffusion. Support portfolios had been impacted by R29.2 million.

Public sector procurement challenges

The Public Finance Management Act (PFMA) requires all government entities to maintain an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost effective. The CSIR had not been able to convince the National Treasury of the need for preference, and exemptions were requested without success. CSIR exemptions for core mandate services would be in the national interest.

CSIR interventions in fight against Covid-19

Dr Rachel Chikwamba, Group Executive: Chemicals, Agriculture, Food and Health, CSIR, presented the organisation’s solutions and interventions undertaken in the fight against Covid-19 in advanced agriculture and food. This had included making non-invasive ventilators and identifying areas to connect students to the internet. It had tried to make local kits for Covid-19 detection, looked at potentially more effective ways of delivering pulmonary medicines, and looked at other control programmes involving the quality of water, food, and food security.

Dr Motodi Maserumule, Division Executive: Mining, Manufacturing, Defence and Security, CSIR, presented the organisation’s interventions.  These included:

Manufacturing:

• High speed 3D printing system for titanium (TI) metal parts;
• New system monitors for TransNet locomotives;

Mining:

• RockPulse, which was used for safety in mining;
• Re-entry and life extension of coal mines;
• Rock engineering investigation in gold and platinum mines, which was currently being commercialised.

Defence and security:

• The Meerkat Wide Area Surveillance System had been in operation in the Kruger National Park since 2017, and its effectiveness for detecting and tracking rhino poachers had been confirmed by South African National Parks (SANParks).

Mr Andile Mabindisa, Group Executive: Human Capital and Strategic Communications, CSIR, presented the interventions for next generation (NextGen) enterprises and institutions. He said the organisation worked closely with other government departments and entities such as the Department of Home Affairs, South African banks and the South African Social Security Agency (SASSA).

SMART mobility interventions had involved the investigation of the varying utilisation of taxi ranks in Gauteng, and a contribution to the response plans of the Gauteng Department of Roads and Transport. The CSIR had also developed energy-saving green tyres for trucks, in collaboration with the Universities of the Witwatersrand and Cambridge, and tyre manufacturer Michelin, for savings in operational costs.

SMART places interventions had involved the development of Phycoremediation technology to deal with pollutants in waste water, and the implementation of this technology in the Sekhukhune district, Mossel Bay Municipality and by the African Development Bank in other countries.

Conclusion

Dr Dlamini said that the CSIR was facing challenges in its ability to deliver on its mandate through the constraints that it experiences with regard to public procurement, the Parliamentary grant and the need for its recapitalisation and investment requirements.

Discussion

Ms D Peters (ANC) commended the CSIR for the work it had done and that they would still do within their limited budget. It was important for the Committee to know what the ideal percentage of GDP spent on research and development should be in order to enhance South Africa’s global competitiveness. She asked what the input of the CSIR was to the Brazil-Russia-India-China-SA (BRICS) think tank. She also wanted to know how the CSIR’s industrial innovation and research contributed to South Africa’s drive to create necessary jobs. She saw there was potential through the companies created by the CSIR, but the jobs were very few and the CSIR should be capacitated financially in order to look at innovation and industrial-scale types of innovations to help SA create the much-needed jobs.

Ms Peters said that the country could look at different ways of intervening to ensure that the country could come up with capabilities to protect the nutritional value and shelf life of food, as there were people going hungry. If institutions such as the CSIR were not being adequately funded, this meant that the interventions particularly needed in fighting poverty and malnutrition would not be helped.

With CSIR’s 75 years of capability and looking at their abilities, why was the government -- through other departments -- not investing in the innovations and interventions of the CSIR?

She said that the Committee needed to engage the National Treasury with regard to the 0.83% of GDP spent on research and development, because South Africa depended on proven innovation to move into the “new normal.” It was important for the Committee to look at how it could help the CSIR to secure the funding it needed. She also asked why the CSIR was not fighting back to get back the patent for the solar technology that had been sold to Germany.

Mr O Mathafa (ANC) agreed with the points made by Ms Peters. He said the CSIR required protection, but argued that the government should also consider privatising it. The worldwide trend was that the most industrial countries produced the highest research output, and was reflected in their being the world’s largest exporters and having the biggest economies. All of these countries spent around 30% of their GDP on research and development. He said the reduction of the Parliamentary grant was not assisting. The economies of these countries were stable and strong, and since South Africa was looking at turning its economy around, it needed to consider the issue of providing the necessary resources to the CSIR. He suggested that the CSIR may not be presenting itself as an entity that could contribute to economic improvement.

He asked where the CSIR was representing South Africa on international bodies and in other countries. He believed that research and development had a contribution in international relations in order for South Africa to be competitive in the global space. Between the CSIR and other institutions, how did the country interface with the work happening at that level, and with other institutions that were not necessarily funded by the CSIR or the government?

He asked for clarity on how much the private sector spends on research and development in relation to what the CSIR spends. He also asked about the constraints on public sector spending. Parliament had insisted on introducing the Public Procurement Bill, and he asked whether the CSIR had made contributions to the Bill and tried to ensure that their frustrations were mitigated. If so, could they indicate the changes that would be consistent with the constitutional requirements and their competitiveness as far as the public space and increment of their revenue base was concerned?

He asked how the CSIR protected intellectual property (IP) from the concept stage before it reached the output stage. Were there any clauses or contracts, like non-disclosure agreements (NDAs)? He said that some information could be leaked.

Ms N Ntlangwini (EFF) said that the CSIR had been complaining about its budget for a very long time. The onus was on the Committee, as Members of Parliament, to consider how seriously they saw the research work within the country, and their role that was now being seen during the pandemic. The Committee should fully scrutinise budget and ensure that the entities got the funding they require. There was committed leadership, but not enough funding. Why would such an important entity get budget cuts while funds were being added to non-important initiatives during Covid-19?

Mr D Joseph (DA) said that science and research must underpin the vision of government, meaning there would be evidence-based government decisions in the future. He asked what the key differences were between the CSIR’s old strategy and the new strategy. He asked what plans it had to manage the R83 million loss.

He had been pleased to hear about food security, health, human science and animals, but he was concerned about climate change and the basic education and technology needed for the fourth industrial revolution. He asked what Denel could do -- whether there was collaboration between the CSIR and Denel, or if the expertise was no longer there. He asked what the experience of the team was with desalination plants, and whether there was any research into alternative housing models.

Mr Z Mlenzana (ANC) asked Prof Majozi what his view was on the many parastatal institutions, particularly their collaboration and perhaps way of working and approach, and the CSIR’s relationships with other departments and institutions.

He asked if the CSIR could speak about their youth involvement programmes. How was it bringing the youth into their programmes? Despite the budget constraints, could the CSIR not have directed the youth programme especially towards research? He said that in the Committee’s next session with National Treasury, the issue of youth unemployment and budget had to be raised, as the same thing could not be spoken about year in and year out.

The Acting Chairperson welcomed the presentation of the CSIR, saying it should have been allocated more time in order to have enough engagement. Now that there were talks about rebuilding the economy and the economic recovery plan, he would like the CSIR to be able to show how industrialisation could assist in the economic recovery, and how previously disadvantaged people could benefit in the process.

He said it was not right that the contribution of the private sector was so small. It was imperative that the issue of investment took into account the general view of the private sector to boycott investment. He could not understand why the interest of the private sector was so small when such good work was being done.

The Committee should have a closer look at the Public Procurement Bill and ensure that it advanced the interests of entities that were previously disadvantaged, and should intervene on their behalf.  It should engage Treasury to correct this anomaly. There was good work being done, but the funding was limited. However, the Committee was willing to support the CSIR.

CSIR’s response

Prof Majozi thanked the Committee for its comments, and said that the overriding message, which was very important, was that an entity such as the CSIR was relevant in the national system and should be supported and protected. Funding must be sourced, and institutions should be sustained.

He said that the current value of gross expenditure on research and development (GERD) as a percentage of GDP was currently very low as compared to other countries. The higher the value, the higher the impact on the economy. The target of the CSIR was 1%, and while this figure was to blame for the low income of the CSIR, contrary to other countries, the investment of the South African government surpassed that of the private sector. In South Africa, the private sector had taken their foot off investment in research and development, and institutions should be encouraged to come on board.

He referred to the difference between the new and old strategies, and said the CSIR felt that it had dwelled too much on science at the expense of industrialisation. CSIR now had to do more about industrialisation on two fronts -- building new industries and using scientific knowledge to support existing industries.

Prof Majozi said that collaboration was a pertinent issue. There was no system of innovation -- rather an element of duplication of efforts -- but South Africa was too small and could not afford this. There were loose ends and not enough collaboration, not only with institutions of higher education, but with other research frameworks. There was a need for a broader strategy to heighten collaboration with all relevant sectors, and even outside the country.

The CSIR had in fact raised the issue that it should not be expected to tender for work numerous times. He felt encouraged by the Committee’s commitment to look into that, as it was hindering the performance of the CSIR and it was losing a lot of money as a result.

The CSIR had not adequately positioned itself and had to make the institution more accessible. He identified the youth as a key stakeholder that needed to be more involved. He said that there was a commercialisation strategy that was being looked at to address the protection of IP, and also to generate revenue.

Dr Dlamini said that when the CSIR was benchmarked with similar institutions in other countries, it was at the bottom in terms of its funding, sitting at a 30% grant while others were around 65%.

He said that there was no participation in the BRICS think tank, but the CSIR would welcome the opportunity to participate.

CSIR enterprises were small, but they were major contributors to employment in the country. The CSIR did not so much create companies that employed more people, but they created enterprises instead.

The commercialisation of IP was expensive. There were no resources to take technology to commercialisation and there was no venture capital, and these were the systemic issues that also needed to be addressed.

The CSIR had not been involved in the development stage of the IP sold to Germany. South Africa had developed the IP for lithium battery technology, but the country had been unable to protect the IP as it did not have the financial muscle protect its rights.

Dr Dlamini said that the CSIR had submitted an 11-page document as its contribution to the Procurement Bill, which could be shared with the Committee. It was not right that entities created by the government were subjected to processes to compete with the private sector. The difference between the strategies was the fact that the CSIR had evolved between late 1990s to today, where the focus was on scientific development, overriding everything else. However, the focus now was on striking a balance between scientific and industrial development.

He said that there were a lot of projects to address water shortages. Desalination technology was available, but there was an energy problem. The CSIR had been tasked with finding the most energy efficient way to carry out desalination in order to ensure water prices remained low.

Dr Maserumule said that there was security of infrastructure, a strong capability, and the CSIR supported the state on defence. It had brought a security solution to the Kruger National Park and the same could be done for the Passenger Rail Agency of South Africa (PRASA) and TransNet, but the challenge was procurement. The quality of solutions was very high, but the issue of procurement remained. The link between Denel and CSIR was historically strong, as CSIR had sub-contracted Denel and vice versa.

CSIR had a strong international footprint and strong business relationships with China, Brazil and Korea, and these were highly differentiated world class systems. The level of CSIR excellence, its experience and unique system, brought it to these tables. The pipeline of technologies that could bring in sizeable investment was very strong, and could lead to the building of companies that would hire thousands of people. The CSIR also had a high-skilled youth pipeline with a growing number of leaders who were women.

Dr Chikwamba said that the CSIR was focusing on rural economic development and small enterprise creation. There had been experts deployed to assess the economies and assist the business development plans in underprivileged areas such as in Musina Makhado, Richard’s Bay, Koega and in the North West. The capability was there, but it was sometimes hindered by tender requirements.

She said that food security, preservation and nutrition were all a part of the required capital. Technologies to improve the preservation of food were being worked on, such as the natural, organic, anti-fungal oil and food packaging.

The CSIR was supporting SMMEs in creating small companies that were job intensive. This would grant access to infrastructure, offer equipment and skill, but would require someone to manage and expand it.

Ms Khungeka Njobe, Group Executive: Business Excellence and Integration, CSIR, said collaborations with universities were part of the strategy required by the mandate of the CSIR. Collaborations covered the entire value chain of research, development and innovation and commercialisation. There was still more to be done in terms of international collaboration. The necessary resources had been put together to drive collaborative relationships. The CSIR collaborated with universities on research and development, knowledge generation, knowledge application and bilateral agreements. Relationships with new universities were still being explored. The CSIR also wanted to improve its collaboration with historically black universities, as it aimed to channel more support development into impoverished areas as they drove human capital development, particularly among young black scientists.

The CSIR had noted that it had quite a strong co-publishing record, particularly with certain universities, and wanted to advance that to other universities. The Minister had pressed it to create relationships with technical and vocational education and training (TVET) colleges, and this was already under way. The CSIR was also funding students through universities.

Mr Mabindisa said that the CSIR organisation included 35% youths, with 30.4% of them being black South Africans. There were a number of activities to engage the youth, to develop and impart skills and ensure the SET base was very strong. He said that 519 bursaries had been awarded -- 157 for PhDs, 216 for Masters, and 146 for Honours and undergraduate studies. There was a student programme which was more than just a bursary, as it offered fixed term contracts and opportunities to experience the work environment, contribute to research and exposure to mentors, all while studying. The graduate and training programme was geared towards engineers to improve industrialisation. The CSIR partnered with other organisations to provide mentors and proper career direction for these engineers. Other programmes offered by the CSIR that were geared towards the youth were vacation work, internships and in-service training. It had also gone further with corporate social investment (CSI) projects, going to previously disadvantaged schools, ensuring students got into the bursary programme, and imparting necessary skills to high school learners

He said that the IP and technology transfer policy was supported by contracts issued to staff. Clauses covered IP issues. During the induction of new employees, IP benefits for the employee and the CSIR were emphasised, and was supported by its legal department.

Dr Dlamini requested that the Committee support the CSIR’s efforts to secure government contracts without having to go through the tendering process, as this would make a huge difference to its ability to deliver on its mandate and on its sustainability.

The Chairperson said that the many issues raised cut across other departments that may be able to assist. The CSIR should find a way to engage with other departments and entities to resolve their security issues, particularly PRASA and MetroRail.

The Committee had taken note of the under-resourcing and under-funding of the CSIR, and there was a need for engagement with National Treasury.

Committee matters

Revised Committee Programme: Term Four

Members were taken through the programme for term four. Due to the postponement of the tabling of the Medium Term Budget Policy Statement (MTBPS), the entire programme had been pushed back by a week. The programme was adopted.

Committee Minutes dated 6 and 7 October 2020

The minutes of both meetings were adopted.

Announcements and correspondence

The proposed date for the Public Service Commission (PSC) round table discussion was 28 October 2020, but this coincides with the lock-up session. Members were asked to decide whether to join the round table and leave before the lock-up session.

Mr Joseph suggested that Members should join the round table if they could, as it would be held on a virtual platform, and then join the lock-up session afterwards.

The Chairperson said that Members should indicate to the secretary whether they would be attending the round table or not.

The meeting was adjourned.