DSI Portfolio Audit Outcomes; DSI, TIA & SANSA 2022/23 Annual Reports

Meeting report

The Chairperson welcomed everyone and acknowledged the presence of the Auditor-General South Africa (AGSA), the Department of Science and Innovation (DSI), the Technology Innovation Agency (TAI), and the South African National Space Agency (SANSA) as the entities were in attendance to brief the Committee on their 2022/23 annual reports.

Apologies were noted for the Minister and Deputy Minister of Higher Education, Science and Innovation, and Ms K Khakhau (DA).

The Chairperson stated that the Committee would be sitting in for three briefings, and she added that she hoped all engagements would be fruitful. The platform was then handed over to the Director-General of the Department of Science and Innovation.

Dr Phil Mjwara, Director General, DSI, stated that the Department was grateful for the opportunity to engage with the Committee as it has always shown its support to DSI through the allocation of resources. He said that, hopefully, the Committee would be able to see that the allocated resources had been used well. He acknowledged that there had been improvements in some areas, while in others there were none, and stated that it was desired that the Committee provides guidance in such matters.                                                                                                                                      

Mr M Shwikwambana (EFF) raised a concern and stated that the Minister always issues apologies and does not attend meetings. He inquired why the Committee did not vote on whether to accept the apologies given to them.

The Chairperson agreed that there should be more effort from the Executive to attend Committee meetings.

The Auditor-General Budgetary Review and Recommendations Report

Ms Mbali Tsotetsi, Deputy Business Executive, AGSA, thanked the Committee for the opportunity to present the audit outcomes. She said that she hoped the outcomes would help the Department going forward. She mentioned that everyone has a role to play in the accountability ecosystem to ensure that South Africans have a democratic and transparent government. This, she said, was also the responsibility of the Auditor-General (AG). She assured the Committee that if people did not do what needed to be done, the AG would use enforcement procedures against them. 

Ms Nozipho Nekhofhe, Senior Manager, AGSA, presented the 2021/22 recommendations and noted improvements in terms of the audit outcomes with the Human Sciences Research Council (HSRC).

2021/22 recommendations

• The Portfolio Committee should obtain and actively track the commitments made, specifically concerning the HSRC Accounting Authority (AA), on implementing action plans to address shortcomings in the leave system and other corrective measures, to improve audit outcomes.
• The Portfolio Committee should monitor the culture of consequence management and the accountability ecosystem to ensure that the audit outcomes are sustained and improved at the HSRC.
• The Portfolio Committee should ensure that the best practices and preventative controls implemented by management in the key risk areas should be maintained and improved at the HSRC.
• The Portfolio Committee should request regular feedback from the HSRC board on the finalisation of the long-outstanding causes concerning the implementation of consequence management concerning HSRC irregular expenditure and monitor the action that the HSRC board is taking to resolve material irregularities.

Regression in audit outcome over the administration

• There has been a slight regression.
• The Department of Science and Innovation (DSI), the Council for Scientific and Industrial Research (CSIR), and the National Research Foundation (NRF) have maintained a clean audit that shows solid internal controls, and this is a good foundation for service delivery. Management and leadership should make sure that indicators support their core mandates.
• The Human Sciences Research Council had unqualified findings.

Irregular Expenditure

Performance against targets

• The DSI and the NRF did not achieve 20% of their targets.
• The CSIR did not achieve 9% of their targets.
• The HSRC did not achieve 19% of their targets.

Key insights: Skills and unemployment – Recommendations

• The NRF and the DSI should consider tracking their funded student’s study and career progression and the impact of employment, thus contributing to eradicating poverty, unemployment, and inequality.
• The funded researcher’s output and its impact should be measured to assess how it benefits South African citizens.
• The portfolio committee should consider tracking the investment made in science and innovation to measure its contribution to the lived experiences of the citizens. 

MI process implanted and MIs identified – Recommendations.

•  The portfolio committee should continue to engage the accounting authority to determine the progress made in recovering the remaining potential losses, the requirements to determine whether recovery is not feasible and the action to be taken when recovery is not possible, especially relating to interest paid.

The overall financial health of the Department is good.

Compliance with key legislation

• The DSI, CSIR, and the NRF complied with key legislation.
• The HSRC did not comply with key legislation.

There has been a slight increase in annual irregular expenditure.

Portfolio committee message.

• The Portfolio Committee should oversee the implementation of the audit action plan and track progress made with the controls to address the underlying root causes of the findings.
• The Portfolio Committee should oversee the HSRC board's action plan to resolve material irregularity.
• The Portfolio Committee should continue to provide oversight to ensure that best practices and preventative controls are implemented by management in the key risk areas.

[For the full presentation see attached document.]

DSI: 2022/23 Annual Report

Mr Daan du Toit, Deputy Director-General: International Cooperation and Resources, DSI, stated that the vision and mission of the DSI is for science and technology to serve the country. He highlighted that the Department was not able to achieve all its targets. However, this was viewed as a serious matter and there were plans to address such.

Outcome goals

• A transformed, inclusive, responsive, coordinated, and efficient NSI.
• Human Resources and Skills for Economic Development.
• Increased knowledge generation and innovation outputs.
• Knowledge utilisation for economic development in (a) revitalising existing (traditional) industries and (b) stimulating R&D-led industrial development.
• Knowledge utilisation for inclusive development.
• Innovation in support of a capable and developmental state.

Human resources and skills for economic development

The National Development Plan sees human capital development as central to addressing South Africa's unemployment, poverty, and inequality challenges. 

• 302 trainees underwent intellectual property (IP) management and technology transfer training.
• A nationwide IP4 kids/teachers training program was launched in collaboration with the National Intellectual Property Management Office (NIPMO), promoting intellectual property awareness and innovative thinking among educators and students.
• A three-year partnership with the Media, Information, Communication, and Technology Sector Education and Training Authority (MICT SETA) was forged.
• Minister Nzimande's official launch of the TVET study report on green hydrogen skills in December 2022 marked a significant milestone.
• The DSI, via NRF-managed programs, awarded 3,321 research grants to researchers and provided 21 annual research infrastructure grants.
• The UNESCO International Year of Basic Sciences for Sustainable Development in 2022 highlighted the vital role of basic sciences in advancing the Sustainable Development Goals (SDGs).
• The South African Basic Sciences Platform conducted strategic activities, underlining the significance of basic sciences in global development.

Increased knowledge generation and innovation outputs

• The UNESCO International Year of Basic Sciences for Sustainable Development in 2022 highlighted the vital role of basic sciences in advancing the Sustainable Development Goals (SDGs).
• The South African Basic Sciences Platform conducted strategic activities, underlining the significance of basic sciences in global development.
• The National Intellectual Property Management Office (NIPMO) collaborated with international organisations and institutions to host events such as the WIPO-South Africa Summer School on Intellectual Property and Technology Transfer. They organised the 2023 Technology and Innovation Centre (TISC) workshop, focusing on patent, trademark, and design search tools in South Africa.

Benefits of commercialisation

• Revenue generation
• Job creation
• Consumer Access
• Food Security
• International recognition

Scaling up Production

Construction of a production facility to enable Setsong Tea Crafting to meet the scaling up demand by the Food Lovers’ Market from the current production capacity of 1000 units per month to 5000 units. This intervention will further move Setsong Tea from its current breakeven position to profitability.

Knowledge utilisation for inclusive development

The Spatial Monitoring project was launched in collaboration with the Council for Scientific and Industrial Research (CSIR), to advance inclusive development through innovation.

Targets that were not achieved – Reasons.

• process delays
• ineffectiveness of implementers
• target formulation deficiencies

Overall Financial Performance

• The Department planned to spend R9,145 billion by the end of the financial year.
• The actual spending for the 2022/23 financial year amounted to R9,121 billion (99.7% of the total budget of R9,145 billion).
• This translates to a variance of R24,4 million or 0.1% of planned expenditure.

[For the full presentation see attached document.]

TIA: 2022/23 Annual Report Presentation

Ms Matsi Modise, Chairperson of the Board, TAI, thanked the Committee for the opportunity given. She echoed that for the past three years, South Africa continued to rank as number one in Sub-Saharan Africa for the ability to lead in technological innovations. She added that the country had the ability to innovate, and is competitive in this area and is also globally recognised. She said that the organisation had faced challenges; however, they were on the right path.

Mr Patrick Krappie, Acting Chief Executive Officer, TAI, said that the entity’s objective is to support the state in stimulating and intensifying technological innovation to improve economic growth and the quality of life of all South Africans by developing and exploiting technological innovations.

2020 – 2025 Strategic Plan

• Outcome 1: Commercialised Innovations - Contributes directly to TIA’s mandate, which emphasises supporting the development and exploitation of technological innovations by translating knowledge into market-ready innovations. There is a focus on supporting advancements in the revitalisation and transformation of key industry sectors of the economy and new-venture creation through commercialising TIA’s maturing investment portfolio.
• Outcome 2: Delivering on the Bio-economy Strategy - TIA implements the Bio-economy Strategy, which aims to translate South Africa's knowledge resources into sustainable bio-based solutions. These solutions address societal challenges and contribute to sustainable economic growth.
• Outcome 3: SMMEs supported through strategically informed and regionally distributed technology stations - The aim is to enhance access to SET knowledge, expertise, and high-end equipment for innovators and SMMEs. This support in technology innovation, process improvements, and product development bolsters growth and competitiveness.

APP Output Achievement

• 17 of the 18 targets met (94%).

Technology Stations Programme

• The Program enables academia and industry to participate in technology transfer and development by facilitating interaction and reducing barriers to market access through subsidised services.
• Eighteen Technology Stations across SA contribute towards improving industry competitiveness through applying SET interventions and facilitating interactions between industry and academia.
• Supported 2 938 SMMEs (incl. nine NGOs and 34 cooperatives).
• Of these, 1 555 (58%) are youth, 1 252 are women, and 11 (0,3%) are persons with disabilities.

2022/23 External Audit Outcome

The external audit outcome was unqualified with findings.

[For the full presentation see attached document.]

Discussion

Ms D Sibiya (ANC) highlighted that the DSI mentioned 324 students who had undergone training, and she asked about the number of women who had been chosen, and the criteria used to select those who would undergo the training.

The Chairperson commended the good performance of the Department and its entities. She mentioned that the HSRC remains a concern because of its irregularities and that oversight is important to ensure that such irregularities are reduced. She asked the Department to give the Committee insight into what is being done to assist the organisation.

She stated that the Committee welcomed the Department's experimental learning and acknowledged the challenges faced. She asked that the Committee be provided with the reasons why targets were not met for the research infrastructure grants. She added that the reasons given for funding honours, masters, and PhD students were understood, however, the Committee would appreciate it if the Department unpacked the matter and explained it more in a simple way.

The Chairperson said that she supports the monitoring of timely completion of qualifications. She raised concern about the rating of black female academics. She said that it is important that they be able to publish peer-reviewed journal articles on time because these articles contribute to people being given credibility.

She stated that the problem surrounding vacancies was not new but reoccurring and that it is important to strengthen the work and regulation around it. She welcomed the task team set up between DSI, the Department of Planning, Monitoring and Evaluation (DPME), and the National Treasury. She asked that the Committee be provided with a breakdown of the researchers included in the Hydrogen Epoch of Reionization Array (HERA) radio telescope project to see if there is inclusivity in the project.

She asked whether the planning of Astro tourism had been completed.

She asked about commercialisation and highlighted that the Department needed to present a plan on how to overcome the difficulties with commercialisation. She added that this was necessary for the economy to thrive, and a further meeting would be necessary to achieve such.

She emphasised that the Committee welcomes investment toward women-led tech enterprises.

South African National Space Agency 2022/2023 Annual Report

Ms Charlotte Segage, Member of the Board, SANSA, appreciated the opportunity given to SANSA to present and said she would speak on behalf of the Chairmen who could not attend the meeting.

The Chairperson asked the Chairman to formally apologise to the Committee for being unable to attend the meeting.

Ms Segage stated that SANSA had been able to maintain a clean audit outcome and that the entity was committed to maintaining the status quo. She said that the TSI and National Treasury approved a new business model and that SANSA had launched the Deep Space Network. She added that the latter was an opportunity for South Africa to expand its space network and enter the international sphere of space exploration.  

She thanked the Department of Education for their assistance and said that SANSA is committed to improving its shortcomings.

Mr Humbulani Mudau, Chief Executive Officer, SANSA, said that the entity’s mission is to provide leadership in unlocking the potential of space for the advancement and benefit of humanity. He highlighted that the organisation's impact statement states that SANSA is a sustainable South African space sector that contributes meaningfully to socio-economic development across the African continent.

Strategic Outcomes

• Increased space-relevant knowledge that supports the developmental agenda.
• Growth of the space sector through SANSA space-related industry expenditure.
• Increased human capacity for the implementation of key space initiatives.
• SANSA is positioned as a key enabler of government’s space-related policies.
• Appropriate infrastructure developed to support the local space sector.
• Increased market share of the global space operations market.

2022/2023 Performance Highlights

• The launch of the Space Weather Capability by the Minister of Higher Education, Science, and Innovation.
• The SANSA Hermanus Site was declared a National Key Point (NKP).
• A new Deep Space Network ground station in Matjiesfontein (MTJ).
• Space Operations Internationalisation efforts with the construction of 3 projects and the conclusion of 22 mission support initiatives for international clients.
• The Digital Earth South Africa (DESA) platform was launched in beta form in October 2022.
• Over forty-two thousand youth across South Africa were reached through Science Engagement, igniting their passion for space.
• SANSA supported the Jagersfontein Dam flooding disaster in the Free State by providing satellite imagery to illustrate the extent of the damage caused.

Key Challenges

• Inadequate human resources to ensure implementation of Infrastructure Projects
• Scarcity of space science, space engineering and technically skilled individuals both locally and internationally.
• Utilisation of infrastructure to support clients with required products and applications.
• The need for a pipeline of prospective students to enable continued support of the National Space Programme.
• Need to increase efforts to generate the SANSA story and drive awareness and brand equity through the alignment of programmes and projects.
• Slow progress in gathering Space Infrastructure Hub (SIH) Earth Observation (EO) user requirements for the acquisition of the SIH EO space system.

He mentioned that the future focus of the entity is to be responsive to current societal challenges and government imperatives through the provision of innovative products and services, whilst creating an environment that is conducive to industry development and knowledge generation.

[For the full presentation see attached document.]

Discussion

The Chairperson mentioned that the Committee has been committed to ensuring transformation in innovation. She said there should be a reassessment of the investment in Small, Medium, and Micro Enterprises (SMMEs) because it seems they are over-achieving. She asked if it would be too early to increase targets, which applied to targets in terms of the support given to municipalities and whether there could be an uptake in investments when overachieving.

She highlighted that there is a task team within the DPME, and asked how it relates to the South African Local Government Association (SALGA). She stated that she was concerned about the service delivery innovations and said that maybe this concern is related to the issues of commercialisation.

She asked why the Chief Financial Officer (CFO) of SANSA did not present the financial findings, but did mention that the presentation had been well received and the linking of targets to the achievements well welcomed.

She mentioned that the Committee appreciated the support given to students, and said that she welcomed collaborations with academia and industry. She sought clarity on what was meant by “academia”.

She stated that the country needed to have its own rocket capacity from a safety and security perspective and asked for an updated presentation that contained more information.

The Chairperson raised a concern about the programme on space engineering only meeting one indicator and asked if the audit action plans were met.

Ms C King (DA) said she was happy with how the Department and its entities are performing. She highlighted that she was concerned about the regression from 92 to 80% but said she was hopeful that this would be better in the following year.  

She inquired about the measures put in place to achieve the set zero emissions target.

She asked whether the Department's plan was going to help ensure that the budget and expenditure were increased, and how the 1.1% on RMD would be realised.

She asked if the National Science Program had been submitted to the Cabinet by the Minister.

She asked the TIA how successful they are in tracking market success after the commercialisation process.

Ms King raised a concern about the energy crisis, and asked how it affects investments in commercialisation and if the entity would still be able to achieve its set goals.

She inquired about the measures in place to help the organisation deal with the SAIE.  

Responses

TIA

Ms Modise welcomed the questions and constructive input.

Mr Krappie apologised for the lack of adequate detail in the presentation and explained that graphs were put in place for easier viewing and time constraints. They were, however, willing to provide more detailed information.

He stated that the idea of academics and collaborations was a challenge, but the organisation was willing to work with academia as they are the most appropriate group to market and give a better chance at commercialisation. He added that academia also has money to supplement the resources in TIA. He said that the private sector's interest in investment was not impressive which is why South Africa is losing competitiveness as a country, and the entity tries to force this investment by partnering with universities.

He highlighted that technology stations are expensive to establish and there are no funds for such, but the TIA alternatively assists entrepreneurs in opening such stations in Technical Vocational Education and Training (TVET) colleges. A service provider has been appointed by the Department which is assisting in developing a strategy to see how the programme will be rolled out as not all universities will form part of it. He added that the primary customer for TIA is the research community but the organisation acknowledges that upcoming entrepreneurs require support and this is where intervention is needed through different models, and conversations are ongoing regarding this. He explained that after investing in these entrepreneurs, the Department does not simply drop them but continues to support people who have been actively involved and they also use proximity to the markets to the advantage of the entrepreneurs.

He stated that energy remains important and that the TIA is seeing this as an opportunity as there are more applications of funding for projects that will help deal with the problem of load-shedding. He affirmed that TIA was hardly affected by load-shedding.

Dr Vuyisile Phehane, Executive: Bio-Economy, TIA, said the entity sourced innovations from enterprises that are led by women. He explained that a lot of women perform better than men in biological sciences and that TIA had the capability to find innovative women. When identified, these individuals are supported and their projects are brought onto the market for commercialisation.

Ms Modise indicated that more financial information would be sent to the Committee at a later stage.

SANSA

Ms Segage clarified that an official apology had been sent to the Department and would be forwarded to the Committee.

Mr Mudau said that the CBIA money was allocated but not released because there was an outstanding cost-benefit analysis submitted and acknowledged by Cabinet.

He emphasised that the Assembly Integration and Testing (AIT) facility is critical and has the potential to support the growth of the domestic space industry. He mentioned that the Department of Public Enterprises (DPE) and DENEL have been running the facility but there has been an ongoing discussion with DENEL to get a task team to allow for the move of the facility to SANSA. So far, there is notable progress, and SANSA has received letters from DENEL on their allowance by the National Treasury to transfer the property. He stated that the DSI is working on creating a Memorandum of Understanding (MoU) between the three ministers and this process is required by the Public Finance Management Act (PFMA). He further elaborated that there is a shift in Geopolitics, therefore access to space is critical, and the decision to build national capacity to launch is also critical. To address such, the organisation is working hand-in-hand with the University of KwaZulu-Natal to achieve the task.

He explained that SANSA wants to develop a spaceport, given the geographical location advantage that the country has, and this has the opportunity to host South African space stations and those of other countries. He said this would be strategic in terms of cost and generate income for the space industry and the country. As this is capital intensive, he said that SANSA requires the support of the Committee to mobilise the necessary resources.

He said that the space system for Space Infrastructure Hub (SIH) could not be achieved but the user requirements, important for mission specifications, have been finalised. He said that the entity hoped that the system framework would have been finalised and approved by the board when funding had been acquired.

Mr Mudau said that SANSA has two national key points which are operational 24/7 and these should not be subjected to load-shedding as such would pose huge operational risks. He mentioned that 36

antennas on these facilities belong to international clients and any issues that may occur, due to load-shedding, would affect the country’s reputation and result in a loss of customers. He also said that load-shedding increased pressure on the entity’s budget as the systems in use are very sensitive and high maintenance costs arise due to breakdowns. He mentioned that SANSA is, however, looking into renewable energy and is asking to be exempt from load-shedding. He explained that at the highest stage of load-shedding, R1.2 million is spent each month and this money could be invested elsewhere.

DSI

Ms Gugulethu Zwane, Deputy Director-General: Institutional Planning and Support, DSI, said that what is normally done when conducting oversight for the HSRC is that a plan is created and issues are then addressed. The Department then monitors if the said issues are addressed, and in the following planning stage, deliberations are made to make changes.

Mr Imraan Patel, Deputy Director-General: Research Development and Support, DSI, said that the Department failed to reach the research infrastructure target because budget cuts needed to be managed. A decision was taken to not fund projects in January but push the funding to the following financial year which commenced in April of the current year. There was no real implication on the budget, and funding could be redirected.

He stated that the Department welcomes the proposal for commercialisation, and the Committee would be provided with more written information.

Mr Koni Rashamuse, Chief Director: Innovation Priorities and Instruments, DSI, stated that the over-achieving by the Department was a result of an unexpected uptake of the innovation fund. The plan is to use the current target as the baseline moving forward in an accumulative way. He assured the Committee that the target had been met, however, there was no evidence to illustrate such.

Mr du Toit said the tax incentive return is also a problem for the Department and the programme would be shared with the Committee. He mentioned there are several interventions the Department is currently working on to deal with the matter.

He highlighted that challenges with service delivery relate to a lack of capacity, and the lack of support for students was because of the delay in adequate funding.

He said that the science policy was submitted to Cabinet, and agreed that the decrease to 80% is disappointing.

The Chairperson thanked all the Departments for their responses. She said that the Committee had noted all the presentations and they hoped that all entities heard the recommendations and appreciated the clarity. She stated that the Committee would wait for the data to be sent by the Departments, as promised.

She wished the departments well and said she hopes to see progress in coming reports. She commented that the Committee had noted all the challenges raised such as load-shedding and funding.

The meeting was adjourned.