National Research Foundation 2007 Business Strategy: briefing

SCIENCE AND TECHNOLOGY PORTFOLIO COMMITTEE
27 February 2007
NATIONAL RESEARCH FOUNDATION 2007 BUSINESS STRATEGY: BRIEFING

Chairperson: Mr E N N Ngcobo (ANC)

Documents handed out:
National Research Foundation Business Plan 2007/08-2009/10: Presentation to the Parliamentary Committee for Science and Technology.

Audio Recording of the Meeting

SUMMARY
The National Research Foundation presented a business strategy which included designs to create 6 000 PhDs a year by the year 2024. Also highlighted in the presentation was the need to understand that quality scientific research takes many years and that the benefits take time to be realised. There was also a focus on the South African Large Telescope or SALT.

In the discussion, the Committee showed reservations about investing large sums of money into the PhD-driver as well as big projects that seem to have no real and immediate benefits. The Foundation made it clear that South Africa needs to keep increasing its level of research in order to be globally competitive.

MINUTES

National Research Foundation (NRF) presentation
Prof M P Mangaliso (President) presented the NRF’s Business Strategy to the Committee. His opening remark was that the NRF’s work was hard to quantify given the nature of its undertakings, but that does not mean it does not contribute to South African society. It was easier to quantify the work of the Council for Scientific and Industrial Research (CSIR) and the Human Sciences Research Council (HSRC). The NRF acts more like a catalyst that gets scientific research going and since it does not create any specific product it is thus difficult to measure its work. There is no link between the NRF and the quality of life of South Africans; however its catalyst function should not be taken lightly.

Prof Mangaliso stated that the NRF has many cross-cutting strategies in their Business Strategy. Their primary aims were to promote equity and equality; focus on Africa and be the engine of research in South Africa. Another key element in the NRF was the principle of transformation. This included aims to affect business; produce internationally recognised benchmarks; constantly improving the high quality of their work; addressing problems in human resources, such as gender and race issues; and meeting financial standards such as the Generally Accepted Accounting Principles (GAAP).

Prof Mangaliso then turned his focus to the NRF’s aim of creating more PhDs for South Africa. He specifically referred to it as the “PhD driver.” With the aid of a graph displaying global growth in PhDs, he asserted the NRF’s view that South Africa needs to promote and “drive” the creation of PhDs in order to ensure a higher quality of research and thus increase South Africa’s global competitiveness. He broke the graph into two categories as follows, which were the China/India category and the Japan/USA category. China and India produce about seven and ten PhDs respectively per year per million of population, while Japan and the USA produce 114 and 140 respectively. He asked which category South Africa would like to be in, which currently has 23 PhDs per year per million. He added though that the figures in the graph were from 2003. He apologised for this and said that it was very likely that China by now had a much higher figure. South Korea had also been on the low end of the scale, but due to highly effective mobilisation of resources and the recognition of the dire need for PhDs made a dramatic improvement. South Africa should not be satisfied with its figure and in order to get to the level of Japan and the USA, the country would have to have a five-fold increase by 2024.

Multiplying the target figure for PhDs by the South African population gave 3000 PhDs per year by 2024 or 1500 per year if South Africa instead aims for only 50% of its target. The target of 100% or 3000 PhDs per year by 2024 would mean an investment of R22, 5 billion. If current investment trends continue, there will be no increase in the number of PhDs whatsoever. This was serious as it impacted on South Africa’s global role via our ability to innovate and eventually market, through South Africa’s entrepreneurial spirit, competitive products.

The challenge now is to get more students studying for PhDs by making studying at a higher level more attractive. Part of this would be to make Honours and Masters programmes more attractive and affordable as well. He called the process of going through all the various steps in order to get to the PhD level, the PhD pipeline. There were many problems that hindered the progress of a student, including pressure from the family to work since an undergraduate degree has been obtained and also a lack of funds. The NRF along with the Department of Science and Technology (DST) have undertaken to work together to achieve the goal of 6000 PhDs per year by 2040. They have been looking at obtaining more funds.

Prof Mangaliso also said that white people were responsible for about 94% of the research in the country and this needs to change. The number of black people in research positions has only risen modestly and that was clearly not good enough. He was however optimistic about black women researchers who would see the biggest rise in the future.

The second focus of the NRF – the first being the aim of producing more PhDs – is research quality development. There are research proposals which are worthy of being funded, but because of a lack of funds, research did not commence. The NRF needs to receive more funding in order to keep being an integral part of South African research. There is a need to strike a balance between the number of grants and the grant research itself. There are always trade-offs which hinder the development of good quality research. Moreover, Indigenous Knowledge Systems or IKS research funding had fallen by R500 000 because of structural funding issues. Currently there was only one manager in charge of a huge fund portfolio, which also slows the rollout of funds.

Prof Mangaliso placed emphasis on the “Innovation Fund: High Risk Investments.” It is often the case that tremendous amounts of investment need to take place before any gains can be seen. It usually takes years before scientific research produces economic benefits and during that research period money often has to be poured in without any immediate results. Once gains are being made and the potential of the research work can be seen, there is a “sweet spot” which see the entry of private capital which ensures the commercialisation of the product. Because of the long-term nature of scientific research, it means that it is not unusual for years to pass before results can be observed.

Another focus for the NRF is its SAASTA project which seeks to communicate research findings to the public. The South African Agency for Science and Technology Advancement (SAASTA) makes science and technological research issues more interesting for school children and thus has an integral role in producing more South African scientists. SAASTA’s current projects include the launch of an observatory in Johannesburg as well as a life sciences centre in the Pretoria zoo.

Prof Mangaliso said that another important area for the NRF is the National Facilities Infrastructure. The nation invests in this of pool information and research which makes it available to everyone. The NRF ensures that everybody adheres to the highest international standards. Prof Mangaliso described the infrastructure as a “critical mass of equipment.” If South Africa was award the new SALT (South African Large Telescope), it would mean an injection of 1.5 billion euros into the country’s infrastructure. The South Africa Astronomy Observatory (SAAO) would be the entity that SALT would operate under. SALT would enhance the programmes that are already in operation, such as studies in astrophysics and space science. He stressed that these projects combined with SALT would have a positive impact on getting students to study science. He noted with particular concern though that there would have to serious developments in IT infrastructure to ensure maximum operation of the Virtual Observatory by increasing the bandwidth. This Committee would best understand the importance of this. The rest of the world would want to see the pictures that are being taken with SALT and the high-level of work.
 SALT’s equipment will be all custom-made and none of it would be available to purchase, thus it would be valuable work in itself.

The iThemba LABS (Laboratory for Accelerator Based Sciences) was one of the NRF’s most important partner projects. iThemba LABS provided South African not only with nuclear research facilities but also the ability to interact with other international projects such as the European Organisation for Nuclear Research (CERN) and the Continuous Electron Beam Accelerator Facility (CEBAF). iThemba was very costly and that no single university could afford such an endeavour. Part of the iThemba challenges would be to identify new markets and develop new products.

Transformation with regard to gender and race was already well under way at the NRF. The nature of the NRF means that they have to employ high-powered staff. Recruitment is of the highest standards and it is a challenge to ensure that they can keep their employees away from lucrative careers in private industry. It boiled down to a question of salaries. More and more black scientists are being trained and thus would find their way into the ranks of the NRF. They are currently having an internal debate about the new culture and orientation of the NRF which would most probably see some changes. He would notify the Committee when it has concluded.

Prof Mangaliso then moved on to a brief presentation of the NRF’s financial position. Funding had increased by 12% and the core grant fund from the DST has grown by 70%, while the contract funding has grown by 30%. The NRF does not want to “ring-fence’ funding and needs to engage with the DST when it comes to assigning funding.  They had a post-retirement medical benefit (PRMB) liability, which was reduced from R89m to R41m, and further discussions on the matter will take place with the Treasury. Another problem was that there was a shortfall of R1, 5m on the SALT rent. The rent cost is R4, 5m and they only received R3m.

In summary, the NRF wants to increase interaction with IKS and work with the DST via its 10-year plan to reach the goal of 6 000 PhDs per year. There would be a mid-year assessment of the NRF with the help of an external indicator. He also stressed the importance that the NRF plays in the economy through its role in the Innovation System Value Chain. He concluded that there is going to be structural changes at the NRF so that it could better serve universities, researchers, current projects and society at large.

Discussion
Mr S N Nxumalo (ANC) asked what the NRF intended to do to combat poverty.

Prof Mangaliso replied that the NRF, as mentioned, acts as a catalyst. It does not do any of its own research but funds initiatives that aim to reduce poverty and increase the quality of life. The NRF is at the forefront of this through its mandate to grant funds. Poverty would not be eradicated in one year and it was important to remember that scientific research means that investments have to be high over a few years before any tangible benefits can bee seen. This lag time did not discourage the NRF from assessing and providing funds for proposals that show they are worthy have being supported. It will take time for the broader masses to see benefits but when they do come it should be recognised that it may have started with NRF funding.

Mr C Morkel (PIM) said that he was new to this Committee but that he was very interested in today’s topic. He was concerned that South Africa may not be training enough people with technical skills, rather than research skills. His question referred to the management of NRF and specifically if it was managed in a “silo” style or if it had an overarching hierarchal system.

Prof Mangaliso said there are three organizational pillars within the NRF and they are going to be creating a fourth soon, which shows that there is a “silo” system in place but they do have clear direction and purpose. There is also ample room for each pillar to discuss issues and communicate with the others to ensure a healthy relationship and information is shared while there is no duplication of research. SAASTA works across all bodies and from time to time debriefings take place which are beneficial to all. Furthermore, the DST has created regular meetings between all the chairs of the science councils wherein, again, research is shared and duplication avoided as well as clear direction and purpose given.

The Chairperson raised the issue of investing so much money in the creation of 6 000 PhDs per year when there is the possibility that the investment could be lost. He cited an example of South Africans who earned PhDs at US institutions but were of no use to the CSIR. Also, it was a problem that they could not see the benefits of research immediately. He was aware that South Korea had quickly increased their PhD output and saw quick results.

Prof Mangaliso said that he was aware of South Korea’s situation and that he knew that one of the biggest problems is how to quickly translate research into benefits for the broader masses. It would take a convergence of scientists and the convincing of all stakeholders and others that there is a need for funding research the way they did. The NRF as well as the DST have undertaken this initiative of creating a better understanding and awareness of the benefits of scientific research and breakthroughs. He stressed the need for the NRF and DST to check themselves every step of the way so as to ensure that they are contributing to the bigger picture.

The Chairperson mentioned that in Canada they are also realising that they have a shortage of science-based students at the undergraduate level and have begun enrolling idle social science students in accelerated science degrees. It was easier than training a science student from scratch and it was showing very good results.

Prof Mangaliso said that he was not aware of the programme, but thought that it was a very good idea and he would look into it further.

The Chairperson asked what was being done about the skills shortage problem.

Dr Romila Maharaj (Executive Director, NRF Institute for Capacity Development) answered that their Thuthuka programme was in the process of creating more qualified black researchers.  The programme had been initiated in 2001 with the aim of assisting black researchers at predominantly white universities who had not received funding. The programme has had many successes and thus has grown beyond its original scope and now focuses also on the creation of PhDs; getting more black women at the post-doctorate level; and lastly more black men at that level as well.

Dr Eugene Lottering (Executive Director, NRF Innovation Fund) took the opportunity to elaborate on a simple project that has no international comparison. The Nguni cattle project studies the poorly understood characteristics of the animals to survive in very harsh conditions. Understanding this would have a huge impact on other cattle farmers and would surely decrease poverty levels and allow cattle owners to have access to better milk. The benefits of understanding the animals’ resilience would have benefits for agriculture in general as well as for game parks and consequently tourism.

Mr J P I Blanche (DA) was concerned about creating too many PhDs. He noted that the US seemed to have reached a level of stagnation after a while. The focus should be on creating products and not on research. He gave Bill Gates as an example of a person that dropped out of college in order to create Microsoft. South Africa developed world-class mining equipment without the use of PhDs and by looking at the graphs, he could see no reason for ensuring more students reach the PhD level.

Prof Mangaliso acknowledged that there is literature that indicates that more PhDs does not mean that there will be increased productivity. He gave examples too of people that had no formal training but in research were excellent managers. The example of Bill Gates and also of Steve Jobs, CEO of Apple Inc., were exceptions. They have to recognise the field of work that they are in which requires an increased level of understanding of various scientific areas. The NRF has to be part of the system that ensures that South Africa is part of the global community that is at the forefront of advanced scientific research. This was not only for the goals of the research, but also for the important secondary products and spin-offs that come with better research and an enhanced understanding of our world. He gave the example of the Nguni cattle, which may seem unrelated, but if successful would mean that South Africa has an advantage in this area of biological science.

Dr Lottering also replied to Mr Blanche’s question and said that we are faced with trying to address to legacy of apartheid and simultaneously tackle other major problems as well. The process of transformation to a knowledged-based economy was very difficult and it would require quality research to get the kind of innovative products and solutions for today’s market. He gave examples of South Africa’s current work in the development of the photovoltaic cell or solar cell which would increase energy efficiency, research into bio-diversity which would help rural communities, and medical research into cervical cancer.

Dr Lottering stressed the importance though of playing at such a high-level especially if there is no Intellectual Property Rights (IPR). Engaging in a globalised world means that it is crucial to have strong IPR protection.  The NRF had a Patent Support Fund which recognises where there is a valid claim to IPR and provides funds for that. They assist with 50% of funding and also ensure that researchers and investors get protection on a global scale. They have found that small to medium black owned businesses cannot afford to have proper IPR protection and they are addressing the problem.

Mr M P Bhengu (IFP) asked about the problem with the NRF’s PRMB liability. It was good that it was reduced from R89m to R41m, but what other measures would be taken?

Mr Bishen Singh, Chief Financial Officer (CFO), replied that the new NRF board does not want to keep the NRF’s post-retirement healthcare liability any longer. They have been in talks with the Director-General of the DST and they have made some funds available and the NRF has also managed to secure partial funding. Progress was being made and they recognised the need for finding a solution. They hoped to resolve it in about three years with the help of the DST and Treasury.

Mr Singh also explained the shortfall in the SALT rent money. MTN gave them R3 million which was enough at the time, but after commissioning of the project they found themselves needing a further R1,5 million. They are also talking with the DST about this and the increase in the SALT levies. They were already engaging the DST and he stressed that they understood the reason for the Committee being worried about this.

Dr Albert van Jaarsveld, NRF Vice President, added that the skills shortage was no more critical than in the nuclear research field. Wits University and the University of Stellenbosch have programmes for nuclear science which is important because students learn to work with radio isotopes, which is the basis for all nuclear medicine. iThemba LABS have been collaborating with two or three doctors to enroll more students and also to increase the quality of work. There was such a shortage of qualified nuclear scientists that posts have often been vacant for years. The University of Cape Town has been searching for a head of nuclear research for the last year or two. When it came to certain areas of the science there were only two or three people with enough training and experience. The government should take a hard look at reversing its policy on foreign professionals and give amnesty for those who would like to take up the positions in South Africa.

The Chair said that the Dean of the University of Pretoria wanted to address the Committee on the issue of weakening demand to study veterinarian science. The Dean said that it was such an important field of study for South Africa because of tourism and rural communities that depend on the well-being of their animals. He saw the importance of the need to address the shortage of skills in the sciences. However, the public read in the newspapers that there are huge sums of money being put into government funded projects that do not seem to be reaping any benefits for them. That was the challenge for the NRF.

The meeting was adjourned.