Council for Geosciences; GODISA Trust: Strategic Plans & Budget: 2006/07

Science and Technology

15 March 2006
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report


15 March 2006

Mr E N N Ngcobo (ANC)

Documents handed out:
Council for Geosciences: presentation on Business Plan and budget
GODISA presentation on Business Plan and budget
[please email for documents]

The Council for Geosciences presented its business plan and strategic activities for the 2006/07 financial year. The Council was mandated to undertake systematic mapping, to undertake research on the nature and origin of rocks, to render geoscience knowledge and services to the State, to manage the national geoscience facilities, and to render commercial geoscience services to national and international organisations. Its seven main focus areas were geoscience mapping, mineral resources, engineering geosciences, water research, environmental geoscience and education and information. The Council detailed the prerequisites of its research projects and tabled details of those undertaken in the past financial year. Its funding for 2006/07 amounted to R145 million, and it did not budget for a surplus. The Council needed to address and improve the current ratio of 60% income from Treasury and 40% from commercial projects. Human resources were critical and much emphasis and funding was placed on training and staff retention. Members requested details of the Council’s work with municipalities. They queried whether mapping focused on agricultural potential, rural areas and new mineral identification and development. Several questions were raised on staff ratios and retention of staff.

GODISA Trust presented a business plan and summary of activities for 2006/07. GODISA Trust was established as a programme within the Department of Science and Technology in 2000 but would, from 1 April, be incorporated within the Small Enterprise Development Agency, reporting to the Department of Trade and Industry. It was set up to improve performance and productivity in small enterprises, to enhance technological innovation, increase access to technology, reduce enterprise failure rates and encourage competitiveness. It aimed to become the prime Centre of Competence for developing successful technology-based small, medium and micro enterprises on the African continent.

GODISA had turned around the failure rate, and currently 85% of small, medium and micro enterprises succeeded and grew their business in their first two years. 71% of businesses supported were black-owned, ranging across the bio and life sciences, chemical, agri-business and small-scale mining industries. In the current year, GODISA would create 4790 jobs, establish 65 new small, medium and micro enterprises and give support to 165 businesses, as well as support through the virtual network to over 850 others. It received funding of around R50 million from Treasury and had already disbursed all funding. It was confident that it had optimal systems in place to meet its mandate and achieve its aims, and had received three unqualified audits.

Members of the Committee asked how entrepreneurs were assessed. They queried the level of support given to rural communities and GODISA’s role in poverty alleviation and job creation. Details of the links between the Council for Scientific and Industrial Research’s projects in aerospace, ICT programmes and the essential oils industry were requested and given. Other questions addressed the number of black-owned businesses in life sciences, the composition and functioning of the new business centres, protection of clients’ ideas, and overseas sponsorship and marketing of South African products.

The Chairman welcomed the Council for Geosciences (CGS) and GODISA to the meeting and reminded them that their strategic plans should be based on the Medium-Term Expenditure Framework (MTEF) cycle of three years, but must be in line with corporate strategy over five years. The Committee wished to be see coherent plans showing clear links to the strategy. The information presented should be credible and technically sound and the objectives for the future should be appropriate, tenable, cost effective and measurable. Strategic plans should be aligned closely to the legal mandates, to Departmental priorities and should fully address the strengths and weaknesses of the organisations.

Council for Geosciences presentation
Mr Thibedi Ramontja (Chief Executive Officer) reported that the CGS’ mandate emanated from the Geoscience Act (No. 100 of 1993), the State of the Nation address and the priorities of the Ministers for Science and Technology, and Minerals and Energy. The Act mandated the CGS to undertake systematic mapping (onshore and offshore) and to undertake basic research on the nature and origin of rocks. CGS was to render geoscience knowledge and services to the State, to manage the national geoscience facilities, including libraries, the National Geoscience museum, and the national seismological network system. CGS could also render commercial geoscience services to national and international organisations.

Following creation of the new management and Board in 1993, CGS had achieved its short-term goal of structuring the organisation to ensure that it was secure, both scientifically and financially. The ten-year long-term strategy aimed to create long-term sustainability and meet the national objectives.

CGS tabled a list of key research projects in each of its six main focus areas. Every project needed to address the seven national imperatives of contribution to economic growth; eradication of poverty; innovation; African development; skills development; transformation; and key stakeholder issues. The areas and projects were summarised as follows:

-Geoscience mapping: included surveys with several stakeholders from the private sector, Ireland, and the USA into the deeper parts of the earth, and airborne surveys which researched new techniques and systems.
-Mineral resources: focussed on identifying undiscovered mineral resources, in partnership with an American geosurvey team and local universities. These would also look at small-scale mining. Two areas of development had already been identified to the Minister of Minerals and Energy.
-Engineering geosciences: activities centred around compiling a natural hazard identification system, which included research for commercial insurers on seismic activity and challenges.
-Water geosciences: research into uranium pollution of groundwater in the Northern Cape. There was close liaison with the Department of Water Affairs and Forestry (DWAF) in this respect.
-Environmental geoscience: the main area of focus was groundwater pollution in mines
-Education and information: this was vital not only within CGS, but the Council had also produced learner materials and had established a mapping school.

CGS presented a detailed analysis of maps thus far published, completed and planned. It hoped to complete the regional mapping of South Africa, on a 1:250 000 scale, within five years. Other maps included metallogenic maps, (indicating the source of minerals, vital for attracting investment), detailed 1:50 000 geological mapping (used for development, particularly in rapidly developing Gauteng), and geotechnical maps (indicating sink holes and rock types). CGS also undertook geochemical surveys to identify soil elements and potential areas for mineral development, and airborne geophysical surveys, which aimed to identify small but sustainable mineral deposits. The northern part of South Africa had better potential for mineralisation, and CGS activities therefore focused on this area. CGS also gave critical assistance to DWAF in identifying water resources, and CGS’ ten-year strategy called for more funding and personnel to expedite the water programme for economic growth. CGS maintained 23 seismic stations to monitor earthquakes, worked with the Department of Provincial and Local Government (DPLG) who were responsible for disaster management, and maintained an early warning system.

CGS was also involved in collaboration on a geological map of the Southern African Development Community (SADC) region, which had attracted great interest from the SADC water section. It participated in a tripartite programme, funded by the Department of Science and Technology (DST) with Botswana and Namibia in researching the Karoo Supergroup rock formations to identify potential coal and oil shales.

CGS and Namibia were also involved in a New Partnership for Africa’s Development (NEPAD) African Mining Partnership, which aimed to identify minimum standards for mineral information. CGS and Senegal were working on another project on offshore limitation areas. CGS was also involved in international collaborative projects with Mozambique, Morocco, Mauritania, Ghana, Gabon and India, with various funding from the World Bank, the European Union, French geological survey and the Indian government. CGS was involved with AfricaArray to develop seismic networks across Africa. It participated in a tripartite training programme with Penn State University and Wits.

The CGS received core MTEF funding from the government and had budgeted to receive around R40 million by way of contractual revenue – this figure was attainable as contractual funding in the past year had been R35 million, well over budget. Publication revenue remained fixed at R50 000, as CGS did not aim to commercialise the sale of maps. Sundry income was received from investment. R6 million had been budgeted for withdrawals from reserves, which would be invested in capital equipment such as geophysical survey equipment, a helicopter and acquisition and maintenance of buildings and equipment. The total revenue for 2006/07 was budgeted at R145 million, rising to R161 million for 2008/09.

Expenses were more or less equated to the income figures, but CGS did not budget for a surplus. Spending currently showed 65% going to mapping (the main mandate), 19% to mining development, 4% to engineering geoscience, 9% to education, 2% to water geoscience, 1% to environmental geoscience. 95% of the grant was spent on salaries.

The contractual income addressed other projects. 60% of CGS income currently emanated from Treasury and 40% from the commerce; CGS aimed at a ratio of 80% from Treasury and 20% from commerce. It believed that its researchers should not be burdened with trying to undertake research in a commercialised environment, and wished to reach a situation where the grant would fund the projects.

CGS regarded human resources as critical. Currently 42% of staff was black, and 39% female. New appointees in the past year had been 67% black and 53% female. Since CGS could not afford to attract scientists away from commerce, its bursaries were vital in bringing in new scientists. The annual intake had risen to 36 in the past year with a projected 40 for the next year. Bursary expenditure was currently at around R2 million and CGS had established a partnership with the South African Qualifications Authority (SAQA). Staff training was budgeted at R1.2 million.

Mr A Ainslie (ANC) asked whether CGS’ mandate was to render services to municipalities. Mr T Ramontja (CGS) replied that CGS did work closely with municipalities on a cost recovery basis and would like to enhance these relationships further.

Mr Ainslie asked whether stability was of particular concerns being raised in both long and short-term strategies. Mr Ramontja confirmed that human resources formed the core of CGS, and since training of scientists was a long-term investment, retention of their skills was crucial in order to train the next generation.

Mr Ainslie mentioned that the Department of Agriculture had satellite maps that indicated optimum planting areas. He asked if CGS undertook satellite mapping, and whether its maps could assess agricultural potential. He noted that most of the mapping took place in developed areas and enquired whether this addressed the needs of the second economy. The Chairperson asked for the main motivator in allocating areas to be mapped, and why certain regions were better covered.

Mr Ramontja replied that areas likely to give the best returns were prioritised to make best use of the limited funds available. The northern parts of South Africa were known to be richer in minerals than other areas and therefore the greatest impact would arise from those areas. When working with other departments, CGS was driven by priorities common to both partners. CGS could identify agricultural potential, although this was not its main focus area. CGS did undertake satellite mapping, but for agricultural purposes geochemical soil samples were more useful.

Mr Ainslie asked about the potential for small-scale mining. Mr Ramontja indicated that there was huge potential but the costs involved demanded some proof of sustainability. The Department of Minerals and Energy (DME) funded feasibility studies using CGS researchers. Even in the Eastern Cape, where there was no likelihood of finding large deposits, it was possible to mine industrial deposits used for building or the tourist industry, and several small-scale operations were already running.

Mr S Dithebe (ANC) asked whether the projects into mineral resources extended to previously unidentified minerals, provided that these were profitable to extract. Mr Ramontja replied that mapping aimed to locate known minerals and identify new minerals.

Mr Dithebe queried whether there was an established policy to ensure that reserves were not depleted through exploitation. He also queried what portion of the grant revenue was invested in increasing resources. Mr L D Matsepe (Acting Chief Financial Officer, CGS) responded that the Public Finance Management Act (PFMA) stipulated that CGS should not make a profit, and should use the full MTEF grants allocated. However, in view of its large staff costs, CGS had devised a "survival" strategy so its commercial projects were intended to replace the reserves not addressed by the grant. The purchases made were directly linked to fulfilment of the mandate.

Mr Dithebe noted that no mention had been made of the HIV/Aids challenges in relation to bursary holders. Mr Ramontja agreed that this was a shortcoming and undertook to investigate extension of staff awareness programmes to bursary holders

On the issue of staffing, Mr B Mnyandu (ANC) and Ms B Ngcobo (ANC) asked for details of the staff exodus and the retention rate of scientists. Mr Mnyandu requested details on whether the gender and race appointees had been in the senior and professional ranks. The Chairperson commented on a perception that black candidates were not attracted to the geological sciences.

Mr Ramontja reiterated that owing to a shortage of skilled geologists, retention of qualified staff was a problem, as the mining boom had created new opportunities for geologists. CGS was involved in a PhD programme with Penn State University, and it had recruited outside South Africa to replace specialist skills recently lost to industry. Black candidates were certainly entering this field of study.

Mr Mnyandu enquired whether the recent Mozambican earthquakes had been detected by the early warning system. Mr G Graham (Executive Manager: CGS) replied that the early warning system could merely identify risk areas, and the system was responsive only. Offshore earthquakes, which carried a tsunami risk, would be reported to the national disaster monitoring centre. Although Mozambique was situated in a high-risk area, it had not been possible to detect the land earthquake there in advance.

Professor I Mohamed (ANC) asked for more details on a particular dam project in Lesotho where there had been reports of the dam wall breaking up. He also enquired whether any identification had been done into potential flood areas.

Mr Graham responded that the dam had experienced normal settling problems that had been factored into the engineering calculations. Complex pumping stations within the dam wall had already filled and stabilised the cracks.

Professor Mohamed commented that spending by the CGS had exceeded the grant, and he suggested that DST should pressurise Treasury to spend more on the science councils.

Mr Ramontja replied that the 60:40 income ratio was not ideal and that in the long term CGS wished to reduce its dependence upon commercial activity and access greater funding from Treasury and its agency work with other departments.

Ms B Ngcobo (ANC) suggested that feasibility studies be done on building an underground railway system in Cape Town. She asked whether SADC had any plans to share water, and whether the studies on pollution would also determine the effects upon water supplies – she cited Ermelo as an example. She further asked if CGS had any poverty alleviation programmes, particularly offering employment in areas where research was done. These questions were not addressed individually.

The Chairperson believed CGS should be proactive in approaching government departments and educational and business institutions to "sell" its research. The Chairperson asked why there had been a focus on India, rather than other continents such as South America.

Mr Ramontja replied that CGS programmes were driven by availability of human and financial resources. India and South Africa had simply identified common research interests, and India funded its own researchers. CGS and Brazil were discussing possible programmes of mutual interest. In the private sector CGS could improve its relationships, but it had often found that private funding was linked to conditions such as preferential information, which CGS would not agree to.

The Chairperson asked if the National Research Foundation (NRF) was involved in any projects and if CGS had accessed any of the National Skills Authority reserves. In additional, he reported that the Water Research Commission (WRC) and the Council for Scientific and Industrial Research (CSIR) Hydrology Divisions apparently had funding available and were seeking partners.

Mr Ramontja reported that the WRC were funding four water projects and a staff member sat on CGS technical committees. Rural ground water was a focus area in the Eastern Cape. CGS and CSIR could work more closely together, and a meeting was already scheduled to investigate collaborative programmes.

Presentation by GODISA: "Turning eight in ten failures into eight in ten successes"

Mr Charles Wyeth (Chief Executive Officer: GODISA Trust) reported that GODISA (a Setswana word meaning "nurturing – helping to grow") was established as a programme within the Department of Science and Technology (DST) in 2000. It was registered as a Trust in 2003, with joint funding between DST, the Department of Trade and Industry (DTI) and the European Union (EU). It was listed as a Schedule 3A Public Entity in June 2004. With effect from 1 April 2006 it would be reporting to DTI, and would be incorporated into the Small Enterprise Development Agency (SEDA).

GODISA Trust was created to improve performance and productivity in small enterprises, to enhance technological innovation, increase access to technology, reduce enterprise failure rates and encourage competitiveness. It aimed to become the prime Centre of Competence for developing successful technology-based small enterprises (SMMEs) on the African continent, by identifying opportunities, and by providing an entrepreneur, SMME or the business sector with the necessary infrastructure, services and support to help to achieve defined goals and outcomes. All supported projects had clearly defined entry and exit criteria and a signed contract between "incubator" and "incubatee".

GODISA’s strategy for 2006/07 encompassed the following:
a) to identify and implement Technology Business Centres (TBCs) and to create technology based SMMEs in conjunction with local authority, provincial government and the private sector
b) to develop a resourcing strategy for GODISA, including work done for Botswana, Rwanda and Kenya on a contractual basis
c) to assist TBCs to overcome problems and increase delivery
d) to act as Programme Management Agency for DST and DTI projects
e) to establish GODISA as a Centre of Competence in Africa.

GODISA presented a table of TBC locations and focus areas. Strategic partners, including science councils, educational institutions, government departments and commerce were invited to contribute knowledge, skills and business acumen to achieve targets and delivery objectives. Focus areas included small-scale mining, the broad IT industry, biotechnology, floriculture, agriculture and construction. Nine new TBCs would be created during the year, and would include the automotive industry, a platinum incubator and plant oils.

During the last financial year GODISA had directly supported 254 small enterprises, bringing its total since inception to 1605. It also supported 850 SMMEs on its virtual network. GODISA currently focused on Information and Communications Technology (ICT) and small-scale mining. During the next financial year its focus, under DTI would broaden to emphasise the biosciences, life sciences and chemical sectors.

GODISA had turned around the failure rate of SMMEs (previously 80% failure within the first two years). In 2005/06 the success rate was around 85%, which had been achieved by identifying correct strategic partners and incubation of SMMEs – particularly those in the high-technology fields. The successes included 71% black-owned businesses, and ranged across the bio/life sciences, ICT, chemicals, agri-business and small-scale mining. The life and bio-science sectors were underrepresented as potential business owners preferred to take the available employment opportunities rather than establish their own businesses. GODISA’s support would, during 2006/07, result in creation of 4 790 jobs, establishment of 65 new SMMEs and direct support to 165 businesses. GODISA’s first level of support was offered to an entrepreneur or innovator who had an idea but no structured plan for development. Such "clients" were given assistance to turn their ideas into business plans. On completion of successful plans, SMMEs were registered and continued to receive support. GODISA aimed to give direct support to 340 clients and pre-incubation support to 440 clients.

GODISA also aimed to identify "star performers". Mr Wyeth described some of the success stories. The enterprises, all using technology as a core part of the business, ranged from horticulture, through ICT to medical technology. These aligned with GODISA’s aim to contribute to economic development at a number of levels and sectors.

GODISA had not yet received the MTEF indication over the next three years. DST had committed R24 million, and DTI R23 million in the 2006/07 year. An additional R18 million would be transferred to GODISA /SEDA when the DTI incubators were incorporated. DTI also contributed R10 million for the Industrial Centres of Excellence and Special Projects Programme (aerospace technology and sisal fibre production). SEDA contributed R3 million for the establishment of a Platinum Incubator. 90% of the GODISA budget would be transferred to the centres. Its operations budget of just over R5 million represented 9.9% of the total budget.

GODISA had already disbursed all its funding for 2005/06 and was satisfied that it had created the necessary systems, policies and procedures to operate to maximum efficiency, meeting its mandate. It had received two completely unqualified audits, and a similarly clean audit from the EU. GODISA was confident it could meet all challenges and enhance its role and performance in the following year.

Mr G Boinamo (ANC) asked how GODISA assessed entrepreneurs.

Mr Wyeth indicated that any entrepreneur approaching GODISA should have some idea of what they wanted to do. They were presented with a number of questions that were geared towards developing a business plan and helping them formulate ideas for a support strategy. Once those questions had been completed they would indicate if there was a viable business plan and strategy. Entrepreneurs were always asked to identify proven technology that would develop the ideas. GODISA would assist in the primary stages, but the entrepreneurs were responsible for all development work of the projects.

Mr Boinamo asked to what extent GODISA was linked to the rural communities.

Professor Mohamed asked what GODISA had done to create jobs amongst the poor.

Ms B Ngcobo (ANC) asked whether GODISA assisted in giving practical and marketing support to agri-business programmes, and whether it created employment in this area.

Mr Wyeth commented that GODISA had been criticised for having most of its centres in three wealthy provinces. However, in line with a DTI priority of geographic equity, future centres would be based in the poorer provinces and would have a mixed focus, rather than being sector-specific. There were already three chemical incubators in the rural Eastern Cape. Other projects in the Eastern Cape and Mpumulanga did reach rural communities. These links could and would be improved. Entrepreneurs in both rural and urban areas received support, and labour and input came from their communities. More direct impact arose through GODISA’s focus on black-owned business. Although GODISA did not focus directly on poverty-alleviation programmes it targeted poor people through individual and community businesses.

Professor Mohamed asked for further details on GODISA’s aerospace programme, and whether this linked to CSIR programmes.

Mr Wyeth reported that CSIR and GODISA were members of a consortium led by Wits University. GODISA had been asked by Wits University to assist in bringing all stakeholders on board, to identify how competencies could be pooled, to identify projects which would further the aerospace research and to manage DTI’s interests.

Mr S Dithebe (ANC) commented that although several "new millionaires" had been created, their businesses had not always given sustainable employment for others.

Mr Wyeth responded that the Key Performance Indicators (KPIs) for each centre included the number of jobs created, the survival rate of the enterprises, the SMME’s ability to create sustainable employment, and their growth and turnover. SMMEs in the ICT field were, by the nature of that sector, often unable to offer employment, but other projects such as mining and ceramics were labour-intensive.

Mr S Dithebe requested details of the relationship between GODISA and CSIR in their ICT programmes and in the CSIR’s essential oil project in Limpopo. He asked whether DST had provided any capacity and whether GODISA worked closely with DST.

Mr Wyeth reported that a member of Infotek served on the Board of Trustees of GODISA, and that there was a flow of information in the ICT programmes between CSIR and GODISA. The essential oil incubator in Limpopo had been approved by GODISA during the current year, but that project had received substantial support and funding from CSIR and the Agricultural Research Council (ARC). The experience gained from that project would be vital in creating other improved projects in the essential oil sector. That sector was labour intensive and held the possibility of creating two to three jobs per hectare planted. DST had insisted upon the creation of a Section 21 company for the essential oil project and DST and DTI would both be closely involved.

The Chairperson asked whether GODISA was placing sufficient emphasis on marketing.

Mr Wyeth elaborated that one of GODISA’s most important functions was to assist technically competent people to focus on access to the correct markets. Some projects – such as the Thembali incubator – undertook collective marketing.

The Chairperson asked for input on the apparent difficulty of recruiting and retaining black graduates in the life sciences areas.

Mr Wyeth agreed that this was a problem. Most MSc graduates were readily employed, and preferred employment to the risks of their own businesses. GODISA did tap into the DST database and the universities to try to identify and encourage entrepreneurs.

The Chairperson asked for details on the 54 centres, in particular their function and how they would differ from other Centres of Excellence.

Mr Wyeth stated that the centres aimed at being a "one-stop-shop" helping entrepreneurs in their district to access high-quality information. The new centres would not be sector-focused, and GODISA was aiming for representation across all sectors. Some mixed-focus centres had already been launched.

The Chairperson also asked how GODISA protected its clients’ ideas from being usurped by the very people who were supposed to assist them.

Mr Wyeth stated that although staff did see business plans and were exposed to innovation, all staff, trustees and centre staff were required not only to disclose their own interests but also to sign non-disclosure agreements. Entrepreneurs were assisted to register their intellectual property at an early stage for their own protection. There had been instances where GODISA staff members had resigned and had even become clients themselves, but this was part of the free market system.

The Chairperson enquired why Professor Alberts’ solar cell technology had not received local support. He also commented on a honey-wine project in the Eastern Cape, which had an American sponsor.

Mr M Myers (Trustee: GODISA Trust) explained that one of the biggest problems was seed capital, which was not readily available in South Africa. Regrettably, many local entrepreneurs, including Professor Alberts had found it necessary to market their ideas outside South Africa. Although CSIR and GODISA worked together to identify areas of synergy, and although the new centres would give better geographic coverage, and be able to tap into the SEDA network, it was a reality that their attempts were limited by the availability of funding in South Africa.

The meeting was adjourned.


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