National Advisory Council on Innovation (NACI); Tshumisano Trust Strategic Plan & Budget 2008/09

Meeting report

National Advisory Council on Innovation Corporate Business Plan
Dr Steven Lennon (Chairperson: NACI and Managing Director: Corporate Services, Eskom) opened the presentation by reviewing the context in which NACI operated. NACI was a statutory council that advised the Minister of Science and Technology on various issues pertaining to the National System of Innovations (NSI) in the NACI Act. They issued advice on requests and inputs from the Minister and those topics selected by NACI. He said the Minister had appointed the current NACI council until March next year, contingent on the NACI review and the upcoming elections. He reported that NACI was focused on achieving their objectives in one year, to create a foundation for the future council.

He briefly introduced NACI’s standing committees and their key deliverables for 2008/9. Their work programme for 2008/9 consisted of work in progress, which included the NSI peer review, research and development (R&D) expenditure tracking and advice to the Minister on the dynamics of competitiveness. They were finalizing advice to the Minister on the NSI, attempting to quantify the benefits of R&D to South Africa and developing performance indicators. On their new initiatives, they were investigating what benefits the bilateral and multilateral agreements in Africa had as well as how to maximize added value from them. Quick advice focused on the national electricity supply problem, the risk faced by the NSI and the management of risk.

The longer-term goals of the Indicator Reference Group included the development of a South African innovation index. The Science, Engineering and Technology for Women (SET4W) programme would be developing a best practice guide for industry on women’s participation, changing perceptions of women in SET, Facing the Facts, a quantification of women’s participation and an overview study of completed SET4W programmes. The National Biotechnology Advisory Committee (NBAC) was to focus on the impact of biotechnology on South Africa, the funding environment and comparative case studies on biotechnology capacity.

Referring to the Budget he noted that the biggest allocation was to advice development at R4,642 mil. He also referred specifically to the transfer from the DST for NBAC as a specific allocation for the work of the NBAC. The total budget allocation was R 10, 687 mil and their PFMA compliance was specifically referred to. He commented on the need to strengthen the secretariat and said that NACI would have further discussions with the Minister after the review is tabled on this.

Tshumisano Trust
Dr David Phaho (CEO) outlined the Trust aimed to provide world class technology solutions and training to SMEs to enhance economic growth in South Africa. He spoke about envisaged outcomes of their business plan which included continued improvement to mitigate structural inefficiencies within the Trust. The reasons for SMEs being targeted was discussed and then the scope of each of their technology stations. The financial year 2006/7 figures were discussed. Dr Phaho reported that the 2007/8 was currently being audited but final figures would be forthcoming and referred the committee to the slide dealing with percentage allocation for the first six months. They had assisted 1083 SMEs in the 2006/7 financial year. The provisional figure on 2007/8 was 570 SMEs assisted and they projected 2600 SMEs assisted for the 2008/9 financial year.

He discussed the SWOT analysis. Dealing with the critical skills shortage in key economic sectors, he said they were hoping to place 230 interns in organisations to expose unemployed graduates to industry. He referred to their technology stations' purpose being to ensure the advice enterprises receive is in their best interest. He discussed the 4 components of the technology stations.

On the income statement, he highlighted the core grant from the Department of Science and Technology (DST), approved deferred income and total projected income for 2008/9. They projected no funds would be carried over into the 2009/10 financial year. He said that the launch of the Technology Innovation Agency (TIA) spoke directly to what Tshumisano has done. He reviewed the anchor tenants within TIA and concluded that Tshumisano would be part of TIA from next year.

Discussion
Mr P Nefolovhodwe (AZAPO) wanted to know how many innovations had been developed since democracy and how these had benefited the poor and the extent to which these solved South Africa’s problems. He also asked about the funding of innovations. He said that ordinary people could generate technical innovations. He asked how these people could be linked to funding to develop and commercialise their innovations.

Dr Lennon responded that innovation should become a way of life in South Africa and that it should not be restricted to academia. He said NACI would pursue this and will take this forward. He said that he did not have information on the number of innovations and their effect on society.

Mr Nefolovhodwe requested the number of SMEs Tshumisano had grown.

Dr Phaho responded that innovation was new ideas that created value. He said this was a challenge in the market place. He reported that they had assisted well over 5000 SMEs in conducting impact assessments and have had successes where SMEs have gone into major manufacturing partnerships.

Mr Nefolovhodwe wanted to know what the benefits of agro-processing were and if it was purely commercial. He said he wanted to see beneficiation for poor communities.

Dr Phaho responded that they were working at all levels to gather information to serve poor communities. They were engaging with local government to support them as well as emerging farmers.

Mr Nefolovhodwe asked what the criteria were for SMEs to gain access to or qualify for assistance. He said he was concerned that this was concentrated at universities and not accessible to ordinary people.

Dr Phaho responded that any SME with a technology base would qualify for assistance. He said he would follow this up and provide feedback on their return. He added that they had interacted regionally and internationally to benefit poor communities.

Mr A Ainslie (ANC) asked if NACI had developed performance indicators to track its own work.

Dr Lennon replied that NACI had mechanisms on tracking advice adherence on a case by case basis. They could only determine its success and did not have a mechanism to see to what extent advice is implemented.

Mr Ainslie asked to what use NACI’s advice is being put in policy and implementation.

Dr Lennon replied that NACI was an advisory body and this was a question about what happened to their advice. He said the transparency of NACI was being discussed and their advice could be distributed further than the Minister of Science and Technology in the future.

Mr Ainslie wanted to know if Tshumisano was able to track how SMEs derived benefit in terms of growth, production and sustainability.

Dr Phaho responded that Tshumisano was conducting a five-year impact assessment. The participation of women was a focus of this assessment. Other areas of focus included SME growth, job creation, and the awarding of big contracts. He said this assessment looked at the difference made as well the failures

Mr Ainslie was concerned that TIA seemed to function at the high level of the first economy. He referred to a number of successful pilot projects (such as essential oils, trout farming) and said that the problem was that the DST was not an implementing agency and not able to roll out such programmes. He assumed TIA’s job would be to massify successful projects. From the presentation, there seemed to be an inadequate focus on the second economy.

Dr Phaho referred to the BRIC (Brazil, Russia, India and China) countries and said that the second economy could benefit from TIA innovation and thereby move into the first economy. He added that they were focussed on giving assistance on all levels.

Mr Imraan Patel, General Manager (Science and Technology for Economic Impact): DST, responded that the TIA would be looking at technology with public benefit in mind and take these innovations forward.
He said the DST was developing a strategy for massifying successful pilot projects with other departments. These were bilateral agreements. He said the directors general met on a regular basis. He noted the abalone project as such a success. In addition he mentioned the knowledge economy forum, where experiences were shared and common areas of focus between departments were discussed.
The DST was very conscious of the need to massify and added this was done at project level on an ongoing basis. He said they would document examples of this to avail stakeholders of information. This was an ongoing challenge.

Mr J Blanché requested more detail on their advice on the electricity supply problem and the energy crisis.

Dr Lennon responded that they had given high-level advice to the Minister on measures to reduce the demand on electricity by government buildings. The DST could facilitate energy savings and should co-ordinate with the DME to assess the impact of these energy savings.

Prof Mohamed asked NACI how spending on R&D compared with international counterparts. He was of the opinion that South Africa had fallen behind in this area. He suggested that more should be spent to attain the target of 1% of GDP, to help South Africa compete internationally.

Dr Lennon said that NACI hoped that the proposed tax incentives would allow R&D to catch up. He said that R&D in the private sector was a major driver of innovation and they were currently quantifying that value.

Prof Mohamed requested more detail on the innovation index, specifically, on how it is was determined and measured.

Dr Lennon replied that the innovation index would probably be a composite index and therefore difficult to measure. He mentioned factors like patents and publications playing a role. He said there were questions as to which factors should be included and added that they were still investigating how the index would be compiled. This was for long term delivery and would not happen this year.

Prof Mohamed referred to the representation of women in science and technology and mentioned NACI’s SET4W programme. He had expected more women to be represented in the delegation. He had personally observed a majority of women in his own teaching experience. He wanted to know why the position of women had fallen back so much.

Dr Lennon commented on evidence that representation of women had decreased through the levels of education and finally to industry. He said that activities for women were a challenge. NACI had suggested a policy mechanism and policy recommendations had to be followed up. Perceptions were important and NACI was working on profiling women role models to encourage positive perceptions and they must ensure that the policy environment is correct for sustainability. He added that none of the women of NACI were able to attend.

Dr Phaho responded that 50% of Tshumisano’s executive committee were women and they were not paying lip service on this front.

Prof Mohamed said that he was very impressed with TIA’s proposed role of developing innovation for use in industry and providing opportunities to compete internationally. He queried the innovation index with relation to TIA.

Dr Frank Petersen, NACI board councilor, responded that the fundamental aim of TIA was commercialisation, specifically, the link to development of public goods for society at large. The DST was not an implementing agency and the challenge was to define that space of to whom the advice should be going.

Prof Mohamed referred to Tshumisano and noted the decline of the textile industry due to the competitive advantage of China. He asked what was being done to resuscitate this industry.

Dr Phaho responded that the textile industry was a bugbear for Tshumisano. The main challenge they faced was how to compete with the BRIC countries. South Africa could not compare because of labour conditions and that the answer could be low volume, high quality products on which South Africa would have a competitive advantage. TIA could assist in this.

Ms B T Ngcobo (ANC) asked how sustainable the SET4W programme was.

Ms Ngcobo wanted to know what the expectations were around the upcoming Organization for Economic Co-operation and Development (OECD) review.

Ms Ngcobo asked if the DST transfer of R1,2 million was ring-fenced and wondered from where the other funding came.

Dr Lennon replied that the R 1,2 million was the only item approved and that the other additions were not yet approved.   

Ms Ngcobo asked if interns received a stipend and wanted to know how many interns went into the public sector.

Dr Phaho responded that interns received a stipend of R5000 a month to cover their living expenses. Interns were mostly absorbed into industry though he had no official record of their entering into industry.

Ms Ngcobo queried the number of SMEs that were run by women and how many had fallen by the wayside with reference to sustainability.

Dr Phaho replied that there had been an increase in enterprises run by women and that they rose and fell on a level with other SMEs. They were working on outreach to SMEs run by women so that they could benefit from assistance. There was still room for improvement and that black owned enterprise would also be a focus.

The Chairperson said that technology diffusion was not adequately articulated. He wanted to know who was supposed to do this and why it was not being done.

Dr Phaho replied that the short-term needs of SMEs were at odds with lon- term research objectives. Universities have a bias against interacting with SMEs. Universities do however have a community development imperative through initiatives such as community-based research.

Mr B Mnyandu (ANC) remarked on the fact that the DST boasts the highest number of researchers and reporting agencies, reporting directly and indirectly. He asked if NACI was deployed correctly for technology diffusion as the DST was supposed to be central in development.

Mr Nefolovhodwe referred to TIA concentrating on the innovation of public goods and the National Research Foundation’s Innovation Fund did not include public goods innovation. He asked how the process of public goods evaluation would take place. He called for a need to redefine the Innovation Fund to include the matter of public goods

Dr Lennon responded that NACI had not considered this in detail. His personal opinion is that innovation should not be put into boxes and that it was all about doing things differently to create value and benefit. He said it was not just economic, it was also social and environmental. He said that this was a useful suggestion that would be looked into.

Dr Petersen said the PBF was already looking at the public side and that the criteria were skewed toward the private sector. They would develop an evaluation process on public goods outcomes.

Mr Nefolovhodwe asked if there would be retrenchments when Tshumisano was transferred to the TIA.

Dr Phaho responded that Tshumisano had an assurance from the DST that jobs and contracts would be preserved. TIA had an expanded mandate and therefore had room to expand, rather than retrench.

Mr B Pule raised the issue of the declining market of the textile industry and improving the competitiveness of South Africa. He asked what NACI and Tshumisano's take was on this. He referred to indigenous innovation which he said was not the same as conventional scientific innovation. He asked Tshumisano how indigenous innovation was going to be linked to scientific innovation.

Dr Phaho replied that he was of the opinion that some of the best innovation came from ordinary people. He said that Tshumisano would give relevant advice to advance indigenous innovation to create wealth.

Mr Pule asked how NACI's advice was located in the DST

Dr Lennon responded that they had been grappling with that for some time. Their role was as an advice giver to the Department of Education and the Department of Trade and Industry through the Minister of the Department of Science and Technology. He said the Minister's feeling was that NACI's advice was cross cutting and that they were not optimally deployed. A review panel had looked at this and would be making recommendations on how to locate the advice function correctly and how to have greater transparency in this.

The meeting was adjourned.