DSI Q1-3 2023/24 Performance; DSI, HSRC & TIA briefing on the implementation of the Audit Action plans

Meeting report

The Chairperson welcomed all the attendees to the meeting and commenced the meeting.

Apologies

The Chairperson noted apologies from the Minister of Higher Education, Science and Technology, Dr Blade Nzimande, Dr Phil Mjwara, Director-General (DG), Department of Science and Innovation (DSI), Mr S Ngcobo (DA), and Dr W Boshoff (FF+).  

Department of Science and Innovation Q1 – Q3 performance 2023/24

Mr Daan du Toit, Deputy Director-General (DDG): International Cooperation and Resources (ICR), DSI, reported that the DSI’s performance highlights were based on communication and outreach events, human resources and skills for economic development, increased knowledge generation and innovation outputs, knowledge utilisation for economic development, knowledge utilisation for inclusive development, and international cooperation and resources. In Q1, 71% of targets were achieved, 83% in Q2 and 73% in Q3.

Programme 1 dealt with administration. In this programme, most targets were not achieved due to the unavailability of the President. Programme 2 dealt with technology innovation. In this programme, there was a variance of about -73 for reasons that included fewer participants than expected in the World Intellectual Property Organisation (WIPO) South Africa (SA) summer school initiative. Programme 3 dealt with international cooperation and resources. In this programme, there was a variance of about -35 for reasons that included fewer international partners being able to report than anticipated.

Programme 4 dealt with research development and support. This programme showed the most improvement compared to the others, with a variance of about +2 334, and most of the targets were achieved. Programme 5 dealt with socio-economic innovation partnerships. Most targets were not achieved in this programme with variances caused by reasons including Sector Budget Support (SBS) funding having not yet been received from National Treasury, with there being no clarity if the DSI’s request for funds had been submitted by the ICR and/or DSI finance.

Mr Robert Shaku, Chief Financial Officer, DSI, said that the budget allocated to Q1 summed up to R10 874 221 000, and the actual spending for the period amounted to R1 177 billion, resulting in 63.6% of planned expenditure. More funds were allocated to the Transfer and Subsidies programme, with a planned expenditure of R3 085 928 and an actual expenditure of R998 640.  

The budget allocated to Q2 amounted to R10 562 991 000, with the planned spending of R7 371 billion and a variance of 25% of planned expenditure. Payments of capital assets were allocated a budget of R10 412 000, resulting to an actual expenditure of R5 157 000.

In Q3, there was a budget allocation of R10 562 991 000, with an actual spending of R7 519 billion and a variance of 21% of planned expenditure. There was over expenditure on compensation on employees, with an actual expenditure of R277 783 billion over the planned expenditure of R276 999 billion.  

(See attached presentation for further details)

Human Sciences Research Council Progress on Audit Action Plans

Prof Sarah Mosoetsa, Chief Executive Officer, Human Sciences Research Council (HSRC), said that the HSRC had made significant progress in the 14 findings which the Audit and Risk Committee had made. The recovery plan for money that was used for unintended things had been implemented and there was an inflow of money, despite the challenges that the Audit and Risk Committee had noted. The HSRC had been able to implement controls in their systems to ensure that they increase their efficiencies and that there is no recurrence in the audit findings. The HSRC had a comprehensive consequence management and procedure for the first time, and there was good progress in its implementation. The HSRC was confident that the organisation would comply.

Ms Jacomien Rousseau, Chief Financial Officer (CFO), HSRC, said that as of 31 December 2023, 66.1% of material irregularities had been recovered and all capital debt was in the process of recovery from current and former staff members. The circumstances leading to material irregularities no longer existed and the payroll system had been corrected in September 2020.

64% of the audit findings were administrative and 89% of those have been resolved. 29% were other important matters, and there was an 80% resolution. 7% were related to matters affecting the audit report and all of them have been resolved.

(See attached presentation for further details)

Technology Innovation Agency presentation

Ms Matsi Modise, Chairperson, Technology Innovation Agency (TIA), noted that from the Unqualified with Finding Audit Report for the year 2021/2022, the TIA had six audit findings, five of which had been resolved and 1 of which was still in progress.

Mr Ismail Abdoola, CFO, TIA, said that the risk areas recognised by the TIA were the quality of the submitted financial statement and performance information, supply chain and human resource management, financial health, and information technology. All the other findings made by the Audit and Risk Committee had been resolved except for one regarding the recognition and payment of expenses incurred in respect of an external platform outside of terms of funding agreements. This was due for completion on 31 March 2024. Management had implemented relevant controls including quality review to ensure relevant compliance and reporting in line with the Standards of Generally Recognised Accounting Practices (GRAP).

(See attached presentation for further details)  

Discussion

The Chairperson appreciated the presentations and acknowledged the money that the HSRC had recovered after the material irregularities had been found. She appreciated the assurance from the institution and that the employees who were involved in those irregularities were no longer with the institution. She asked the DSI to indicate which performance targets would not be achieved in Q4 due to budget cuts and if any financial support instruments had been affected by these cuts. If so, what had been the impact of these budget cuts on these instruments? The National Institute for Research Development and Innovation was to be established with the intention of consolidating and enhancing capacity emerging from the South African research chairs initiative. What has been its progress, and what was the effect of budget cuts on this?

Ms C King (DA) echoed the Chairperson’s sentiments on HSRC and TIA and commended them for their efforts. She asked the DSI for an update on the Postgraduate Funding Policy and how National Treasury introduced cost containment measures that affected the DSI’s 2023/24 performance. Why were some of the funds moved from the basic science and infrastructure programmes and what informed the reduction of funds from these initiatives, considering that there has been a R50 000 000.00 cut from the amount allocated to the Council for Scientific and Industrial Research (CSIR) cyberinfrastructure programme?

She asked who the implementing agents for the Indigenous Knowledge Systems (IKS) project in the agricultural health and water sector was, and why there were funds of R25 000 000.0 moved from the CSIR cyber Infrastructure programme to this project. What necessitated the slow spending on goods and services? Were there any measures put in place to ensure the spending on goods and services was in line with what was budgeted for and what critical areas the DSI needed to improve on to ensure that there was a successful integration with the DSI decadal plan?  

Ms J Mananiso (ANC) appreciated the presentations and the progress made by the respective entities, and noted that they take the committee’s recommendations and implement them. She said their audit outcomes showed they were moving in the right direction. She asked who attended the inaugural presidential Science, Technology, and Innovation (STI) plenary held on 12 December 2023, especially from the Civil Society Stakeholders. What were the resolutions of the event? She encouraged the DSI to promote good governance and appreciated the inclusion of disabled individuals in their programmes.

Response by Human Sciences Research Council and Technology Innovation Agency

Ms Modise and Prof Mosoetsa thanked the Committee for its engagement, encouragement, and support. They assured the Committee that they would continue to work hard to be exceptional individually and fulfil their respective mandates as entities.

Response by Department of Science and Innovation

Ms Gugulethu Zwane, DDG: Institutional Planning and Support, DSI, said that they were still drafting a report about the inaugural presidential STI plenary, and that the DSI would share it with the Committee after the Executive Committee had approved it. She assured the Committee that the event was successful, despite the time allocated for presentations and that almost all sectors attended it. The DSI was at the end of the structural review process. It was left with one more session where they would look at the service delivery model that would be submitted to the Department of Public Service and Administration (DPSA). The DSI was mindful to accommodate the decadal plan. The DSI was going into detail with and consolidating elements such as, agenda setting, institutional planning, policy development, resource mobilisation, prioritisation, and coordination.

The international cooperation and resources had no changes thus far and other elements were to be reconditioned, while research development and support were also still in place. The DSI kept a format where different entities would report to different programmes, and it was looking at introducing the 6th programme, which focused on public sector socio-economic innovation and would be called strategic programmes. This was however subject to change pending finalisation, innovation for industrial development and other programmes. She assured the Committee that in their next meeting, they would be giving a structured update on the progress of submission of the service delivery model at the DPSA.

Mr Imraan Patel, DDG: Research Development and Support, DSI, said the budget cuts were broad-based and impacted all other competitive instruments such as research chairs and the infrastructure. DSI had spent a lot of time trying to navigate how to deal with that by looking at the different research infrastructure they supported and phasing things over a long period of time. The DSI had had an opportunity to spare some items where consequences would have been more dire and had the flexibility to take advantage of including elements that emerged after the Covid-19 crisis. The DSI foresaw a growing problem because the plans developed in the South African Research Infrastructure Roadmap were supposed to be 15–20-year programmes, and it was now at a stage where the DSI had to deliver value despite the shortage of resources.

The DSI had spared research infrastructures a bit more than others over the next two years and was hoping that over the next three-year period, the DSI would be able to have strategic engagements on how to treat infrastructure differently. The DSI was more concerned about its human capital budget, and it was planning to delay the appointment of a new research chair by one year and reduce some of the performance targets. The National Institutes were going to become significant over the next five to 15 years and there was a need for more thought and scoping to get them in place. Two facilities had migrated to the kind of institute concept that they had, one being the National Institute for Theoretical Physics (NITP) and another being the National Institute for Pandemic Preparedness and Preventions (NIPPP). Several other institute ideas had come up over the last 15 years of which some of them had been reflected in the decadal plan, but because of the budget cut, the DSI would not be pursuing them further and it had put to bed the idea of the NIPPP now that the NITP was in place.

He observed that the DSI trusted and believed that these institutions would become big contributors to scientific enterprises and that the level of cooperation among universities would shape them into becoming attractive for third party funding. He noted that the DSI was open to providing full details about the movement of funds to the IKS project and said that a lot of these projects were related to getting the Act approved by Parliament. The DSI did not want to lose momentum on these projects as they were maturing in a desirable manner. Therefore, the DSI would work towards enhancing and supporting that portfolio. The Postgraduate Policy was developed by the Department of Higher Education and Training (DHET), and the DSI made inputs on that to strengthen postgraduate funding and develop a fundraising strategy. With the Minister making provision for a seed fund of R1 billion through the DHET, DSI had a task to grow it into R5 billion.  

Dr Mmboneni Muofhe, DDG: Socio-Economic Innovation Partnerships, DSI, reported that the impact of the budget cuts was felt throughout all programmes, and that the DSI had tried to minimise the impact by looking at it only for this financial year, but this was impossible as it would be felt in years to come. The DSI would be reducing targets and planning to reduce the uptake of students. Hugely impacted areas included the Foundational Digital Capabilities Programme and the new strategy for technology stations.

Dr Koni Rashamuse, Chief Director: Innovation Priorities and Instruments, DSI, said that the Technology Innovation Programme had been able to cushion the impact of the budget cuts from a performance point of view and the impacts would be realised in the next financial year, especially on the Innovation Fund Programme and the Light Scale Innovation Programme. The budget cuts would affect the TIA because less money would be allocated to the bioeconomy as the entity was implementing them on behalf of the DSI.

Mr du Toit noted that from his programme perspective, the budget cuts had impacted the DSI’s ability to co-invest with international partners, in light of the DSI’s ambition for Pan-African South collaboration. The DSI was looking for alternatives, but the impacts of the budget cuts would be felt in the long run.

Mr Robert Shaku, CFO, DSI, reported that the goods and services budget of the DSI was running, and that the DSI had spent 40% more than planned. The DSI was mitigating that by putting other activities on hold, especially those in travel and events management.

The Chairperson thanked the officials for the presentations and responses, and appreciated the work being done. She thanked Members for their attendance and contributions.

The meeting was adjourned.