ATC240328: Report of the Portfolio Committee on Higher Education, Science and Innovation on its Consideration of the 2023/24first, Second and Third Quarter Financial and Non-Financial Performance of the Department of Science and Innovation, Dated, 27 March 2024

Higher Education, Science and Innovation

Report of the Portfolio Committee on Higher Education, Science and Innovation on its Consideration of the 2023/24first, Second and Third Quarter Financial and Non-Financial Performance of the Department of Science and Innovation, Dated, 27 March 2024.

 

The Portfolio Committee on Higher Education, Science and Innovation, having considered the 2023/24First, Second and Third Quarter Financial and Non-Financial Performance of the Department of Science and Innovation, reports as follows:

 

1. Introduction

To give effect to the requirement of Section 5 of the Money Bills Act, the Portfolio Committee on Higher Education, Science and Innovation (the Committee) on 16 February 2024, considered the 2023/24 first (1 April to30 June 2023), second (1 July to 30 September 2023) and third (1 October to 31 December 2023) quarter expenditure and performance of the Department of Science and Innovation (the Department or DSI).

 

In addition, as agreed with the Office of the Auditor General when the Committee considered the 2022/23 Annual Reports of the Department and its entities, the Committee considered the progress made by the Department, Human Sciences Research Council (HSRC) and the Technology Innovation Agency (TIA) with the implementation of the audit action plans that sought to address the findings of the 2022/23 audit of their financial statements.

 

1. Vote 35: Science and Innovation
   1. Policy and Strategic Context

The National Development Plan (NDP) states that South Africa’s National System of Innovation (NSI) needs to be expanded as well as be more effective and aligned with the sectors that will realise the country’s growth objectives. This requires that:

• South Africa invests more in research and development (R&D).
• The science, technology and innovation (STI) institutional arrangement improve the link between innovation and the productive needs of industry.
• Government should collaborate with the private sector to raise the level of R&D in companies.
• Public investments in research infrastructure should be focussed on and fulfil the needs of a modern economy.

 

The Department’s focus and commitments are mainly on Priority 2 (Economic transformation and job creation) and Priority 3 (Education, skills and health) of the 2019-2024 Medium-Term Strategic Framework (MTSF), which represents the second five-year phase of implementation for the NDP.

 

The 2019 STI White Paper sets the current long-term policy direction for the NSI and seeks to ensure an increasing role for and use of STI to accelerate inclusive economic growth, increase the competitiveness of the economy and improve the livelihoods of South Africa’s citizens. The STI Decadal Plan, approved by Cabinet on 30 November 2022, is the implementation plan of the 2019 STI White Paper and serves as a government master plan. The STI Decadal Plan identifies:

• Five System Goals related to ensuring an inclusive and coherent NSI; expanding and transforming the research system; increasing and developing future-proof human capabilities; enabling an innovation driven environment; and significantly increasing funding for the NSI.
• Three Societal Grand Challenges related to climate change and environmental sustainability; future-proof education and skills; and the future of society.
• Six STI Priorities related to modernising the manufacturing, agriculture and mining sectors of the economy; new sources of growth within the digital and circular economies; health research and innovation; energy research and innovation; innovation to enable a capable state; and innovation in support of socioeconomic progress.

 

The Department, seeking to ensure that the NSI expands its positive impact on reducing poverty, inequality and unemployment as envisioned by the 2019 STI White Paper, identified the following six outcome goals for the period 2020-2025. Selected policy initiatives and/or interventions for the remaining term of the current MTSF are also listed.

 

Outcome 1:     A transformed, inclusive, responsive and coherent NSI

• Finalise the Transformation Framework that aims to expand, through ten key dimensions, the transformation agenda in all strategic STI focus areas.
• Continue to support grassroots innovators and new entrants to the economy via targeted research, development and innovation (RDI) instruments.
• Modernise the manufacturing, agriculture and mining sectors of the economy so that these sectors are competitive and can contribute to higher GDP growth.
• Implement the 2019 STI White Paper policy thrusts/intents through the STI Decadal Plan’s STI Priorities, Societal Grand Challenges, and the High-level coordinating structures (Annual Presidential STI Plenary and Inter-Ministerial Committee (IMC) on STI) for STI agenda setting across government.

 

Outcome 2:     Human capabilities and skills for the economy and for development

• Continue to implement the Postgraduate Funding Policy that provides full-cost bursaries to students that are exceptional academic achievers, financially needy and/or disabled.
• Support the development of critical high-end skills in technology areas important for building a knowledge society, such as foundational digital capabilities, bioeconomy, space science and technology (S&T), energy, intellectual property (IP) management, nanotechnology, robotics, photonics and areas of technology convergence.
• Support the development of University of Technology (UoT) and Technical and Vocational Education and Training (TVET) college graduates, artisans and technicians by offering experiential learning opportunities through employment in the energy, space and bioeconomy sectors.

 

Outcome 3:     Increase knowledge generation and innovation output

• Increase South Africa’s research output/productivity and its world share of publications to 1% of global output.
• Measure and track the number of outputs that are commercialised due to support provided in designated areas.
• Establish the Indigenous Knowledge Bio-innovation Institute.
• Introduce a new funding instrument; namely, the National Institutes for Research, Development and Innovation. The intention is for these institutes to consolidate and enhance the RDI capacity emerging from the South African Research Chairs Initiative (SARChI) and the Centres of Excellence (CoEs).

 

Outcome 4:     Knowledge utilisation for economic development in (a) revitalising existing industries and (b) stimulating R&D-led industrial development

• Work with National Treasury to leverage additional monies for the Innovation Fund, which is a funding instrument that aims to commercialise locally developed technologies.
• Continue to participate in the development of sectoral master plans for agriculture, energy, mining and health.

 

Outcome 5:     Knowledge utilisation for inclusive development

• Continue to facilitate the commercialisation of grassroots innovations.
• Continue to facilitate access to publicly available IP to enablethe deployment of locally developed technology solutions to improve access to basic services, strengthen the capacity of the state and promote the inclusion of women, youth and persons with disabilities.

 

Outcome 6:     Innovation in support of a capable and developmental state

• Continue to promote the expansion of pilot projects that improve access to basic services, such as water and waste management, housing, sanitation and energy provision.
• Deploy locally developed technology to support basic education, e-Health and infrastructure project scoping.

 

The Department further supports its six strategic outcome goals through science diplomacy. Managed by Programme 3: International Cooperation and Resources, science diplomacy is the use of scientific collaborations among nations to address common problems and to build constructive international partnerships.

 

1. 2023/24 Budget Allocation

Over the medium-term, the Department will strengthen research infrastructure and innovation capabilities by continuing to fund the South African Research Infrastructure Roadmap (SARIR), which is allocated R3.9 billion for this purpose. The key areas of focus in relation to strengthening research capability is the development of the National Space Infrastructure Hub and the expansion of the Square Kilometre Array (SKA) radio telescope, which are allocated R1.2 billion and R1.3 billion respectively over the medium term. The Department continues to support human capital development to ensure that the NSI remains globally competitive and supports South Africa’s skills needs, which is allocated R8.7 billion over the medium term. Furthermore, the Department plans to advance innovation and address key competitiveness challenges, including market sustainability and facilitating access to new export markets. Hence, the Department will support 15 commercial outputs in designated areas such as health care and 85 technology demonstrations, prototypes, products and services to the amount of R6.8 billion over the medium term.

 

The Department’s 2023/24 budget allocation increased by R1.8 billion from R9.1 billion in the 2022/23 financial year to R10.9 billion(Table 1). When adjusted for inflation, this represented a real increase of 13.4%. However, in the two outer years of the Medium-Term Expenditure Framework (MTEF), the Department’s allocation is expected to decline to R10.5 billion and R10.1 billion respectively. This marked increase in the Department’s allocation was due to the additional monies allocated for the National Space Infrastructure Hub and SKA. Hence, the subsequent decline in the Department’s budget allocation in the two outer years of the MTEF is also due to the decline in funds allocated to these two infrastructure projects. Overall, transfers for capital expenditure on infrastructure amount to R1.3 billion in 2023/24.In terms of economic classification, the percentage apportionment of the Department’s 2023/24 budget allocation of R10.9 billion remained the same as in previous years. Hence, the budget allocation comprised Current payments of R578 million (5.3% of total allocation), Transfers and subsidies of R10.3 billion (94.6% of the total allocation and a significant R1.7 billion increase from 2022/23) and Payments for capital assets of R10.4 million (0.09% of total allocation).

 

Table 1: 2023/24 Budget summary of the Department of Science and Innovation

Programme	2022/23 Adjusted appropriation (R’million)	2023/24 Budget allocation (R’million)	Nominal percentage change in 2023/24	Real percentage change in 2023/24 (inflation-adjusted)[1]	Number of performance targets for 2023/24
1. Administration	352.1	344.1	-2.3	-6.8	7
2. Technology Innovation	1 907.0	2 568.4	34.7	28.4	18
3. International Cooperation and Resources	149.4	149.9	0.3	-4.4	9
4. Research, Development and Support	4 979.2	6 046.0	21.4	15.8	17
5. Socioeconomic Innovation Partnerships	1 757.6	1 765.9	0.5	-4.2	22
Total	9 145.3	10 874.2	18.9	13.4	73

 

The Department’s budget funds five programmes, namely:

• Programme 1 – Administration
• Programme 2 – Technology Innovation
• Programme 3 – International Cooperation and Resources
• Programme 4 – Research, Development and Support
• Programme 5 – Socioeconomic Innovation Partnerships

 

These programmes fulfil the Department’s mandate of realising the full potential of STI in social and economic development. The percentage budget allocation to the Programmes remains essentially the same as in previous financial years and Programmes 2, 4 and 5 that are responsible for the transfers to the Department’s entities, receive 95.5% of the Department’s total budget allocation. Furthermore, only Programmes 2 and 4 are allocated, when adjusted for inflation, real increases of 28.4% (Space Infrastructure Hub) and 15.8% (SKACapital Contribution to Research) respectively. The allocations to Programmes 1, 3 and 5 all decrease in real terms, despite Programme 5 having an additional 12 performance targets.

 

For 2023/24, the Department translated its planned performance into 73 annual performance indicators and targets (Table 1).

 

1. 2023/241st, 2nd and 3rdQuarter Expenditure and Performance

At the end of Quarter 1, the Department had spent R1.2 billion (10.8%) of the available budget of R10.9 billion; whereas, the Department had planned to spend R3.4 billion, causing actual expenditure to vary from planned expenditure by 65.7%. The slower than projected spending was mainly due to projects not achieving the required 90% spending threshold on previous tranches before the next tranche of funding could be released. Programmes 2 and 4 are responsible for effecting the transfers to these projects.[2]

 

At the end of Quarter 2, the Department had spent R5.5 billion (50.7%) of its total budget against a projected expenditure of R7.4 billion. The slower than projected spending was mainly due to delayed payments under Programmes 2 and 4 for projects where contracts had not been finalised.[3]

 

At the end of Quarter 3, the Department had spent R7.5 billion (71.4%) against a projected expenditure of R8.2 billion. The slower than projected spending was mainly due to delayed payments under Programmes 2, 4 and 5 for projects that were in the process of contracting.[4] Furthermore, with the Medium-Term Budget Policy Statement (MTBPS) and the Adjusted Estimates of National Expenditure (AENE), tabled in October 2023, the Department’s total budget allocation was reduced by R311.2 million (exclusively from Transfers and subsidies) to R10.6 billion.[5] These reductions comprised:

 

• R72.4 million from Programme 2: Technology Innovation; the adjusted allocation is R2.5 billion. The main reductions were R38.96 million from Space Science, which comprised a R35 million cut from the R775 million allocation for the Space Infrastructure Hub; and R32.2 million from Innovation Priorities and Instruments.
• R934 000 from Programme 3: International Cooperation and Resources; the adjusted allocation is R146.1 million.
• R197.9 million from Programme 4: Research, Development and Support; the adjusted allocation is R5.8 billion. The main reductions were R52 million from Human Capital and Science Promotions, and R126.7 million from Basic Science and Infrastructure.
• R39.976 million from Programme 5: Socioeconomic Innovation Partnerships; the adjusted allocation is R1.73 billion. The main reduction was R38.7 million from Sector Innovation and Green Economy.

 

The allocation to Programme 1: Administration increased by R83.1 million through virements and shifts to R427 million; where R69.6 million of the R83 million was allocated to Goods and services, specifically for operational costs, computer services and property payments. Programme 4 accounted for R80 million of the R83.1 million and these funds were moved from Basic Science and Infrastructure. Hence, with the 2023 AENE, the budget for the Basic Science and Infrastructure sub-programme was reduced from R1.24 billion to R1 billion. A notable virement is the R25 million moved from the CSIR: Cyberinfrastructure allocation in Programme 4 to Programme 2 for Indigenous KnowledgeSystems projects in theagriculture, health andwater sectors.

 

The changes to the baseline allocations (parliamentary grant) of the science councils comprised:

 

• TIA: reduced by R700 000, from R460.1 million to R459.4 million.
• South African National Space Agency (SANSA): reduced by R210 000, from R163.1 million to R162.9 million.
• National Research Foundation (NRF): reduced by R50.1 million, from R1 billion to R951.2 million.
• Council for Scientific and Industrial Research (CSIR): reduced by R34.7 million from R1 billion to R971.4 million.

 

For Quarter 1, the Department had 42 performance targets; achieved 30 (71%) of these targets and did not achieve 12 (29%) targets.[6]For Quarter 2, the Department had 53 performance targets; achieved 44 (83%) targets and did not achieve 9 (17%) targets.[7] For Quarter 3, the Department had 43 performance targets; achieved 31 (72%) targets and did not achieve 12 (28%) targets.[8]

 

Spending on Compensation of employees by the end of Quarter 3 was R277.8 million against an adjusted budget of R389.5 million (original allocation was R370.5 million). The Department had a first quarter headcount of 403 posts (382 posts in the first quarter of 2022/23), which was four more posts than the projected target for the first quarter. The headcount remained the same in Quarters 2 and 3.

 

Table 2 provides a summary of the 2023/24 adjusted appropriation for each programme, Quarter 3 expenditure, and quarterly programme performance of the Department.

 

Table 2: Summary of the 2023/24 adjusted budget and quarterly performance of the Department of Science and Innovation

Programme	2023/24 Main appropriation (R’million)	2023/24 Adjusted appropriation (R’million)	Quarter 3 Expenditure	Performance targets achieved
				Quarter 1	Quarter 2	Quarter 3
1. Administration	344.1	427.2	325.7	1 of 3	3 of 5	3 of 4
2. Technology Innovation	2 568.4	2 490.5	1 155.7	2 of 5	6 of 6	3 of 6
3. International Cooperation and Resources	149.9	146.1	99.7	9 of 9	8 of 9	6 of 9
4. Research, Development and Support	6 046.0	5 767.9	4 610.5	6 of 11	13 of 15	10 of 10
5. Socioeconomic Innovation Partnerships	1 765.9	1 731.4	1 346.6	12 of 14	14 of 18	9 of 14
Total	10 874.2	10 563.0	7 538.2 (71.4%)	30 of 42 (71%)	44 of 53 (83%)	31 of 43 (72%)

 

1. Programme 1: Administration

In Quarter 1, the Programme spent R106.1 million against the projected expenditure of R87 million. The higher than projected spending was mainly on Goods and services due to the Department implementing expendituremonitoring and budget control measures towards the end of the 2022/23 financial year. These measures delayed payment ofcertain invoices due to insufficient funds under the relevant Programme.Consequently, some of these invoices were processed in April 2023 (the new financial year) and exceeded the planned expenditure for Quarter 1. Programme 1 exceeded planned expenditure by R11.3 million in Quarter 2, mainly due to advertising, and travel and subsistence; resulting in the Department instituting stringent measures to ensure adherence to the cost containment measures issued by National Treasury. By the end of Quarter 3 the Programme had spent R325.7 million against a projected expenditure of R312.4 million. The higher than planned expenditure was mainly on property payments, external audit costs, and travel and subsistence.

 

Performance steadily increased across the quarters and ranged from 33% to 60% to 75%. The targets that were not achieved were:

 

PROGRAMME 1: ADMINISTRATION
PERFORMANCE INDICATOR		TARGET	VARIANCE	REASON FOR VARIANCE	PLAN TO ADDRESS NON-ACHIEVEMENT
QUARTER 1
1.	Annual IMC (scheduled for 31 October 2023) on STI between DSI and STI-intensive government departments, clusters and enabling government departments hosted by 31 March 2024.	Invitations sent to IMC members.	Invitations were not sent to IMC members.	The DG requested that certain activities need to take place before the IMC. These are tabling the two enabling policies of the STI Decadal Plan at Cabinet; namely the STI Budget Coordination Mechanism and STI Strategic Management Model.	Ensure that the activities that must precede the IMC are concluded on time.
2.	Annual Presidential STI Plenary between government, business, academia and civil society.	Finalisation of the STI Plenary terms of reference and the draft agenda.	The draft agenda was not finalised.	The request was sent to Minister’s office on 31 May 2023; however, the President’s availability has not yet been confirmed. The agenda will be drafted in conjunction with the Presidency.	Beyond the Department’s control.
QUARTER 2
1.	Annual IMC (scheduled for 31 October 2023) on STI between DSI and STI-intensive government departments, clusters and enabling government departments hosted by 31 March 2024.	Preparation of concept notes and/or briefing notes.	The responsible DDGs were still working on the concept and briefing notes.	These concept notes are cross-departmental and the DSI DDGs are dependent on their counterparts in other departments for dates of meetings, etc.	The DG had a meeting with DDGs on 4/10/23 to expedite the finalisation by 20/10/23.
2.	Annual Presidential STI Plenary between government, business, academia and civil society.	Inaugural STI Plenary hosted.	The inaugural STI plenary has not been hosted.	The DSI is still waiting for a date for the meeting from the Presidency.	The matter is beyond the DSI's control. It will wait for direction from the Presidency
QUARTER 3
1.	Annual Presidential STI Plenary between government, business, academia and civil society.	Consolidate and facilitate engagements on the STI Plenary report and recommendations.	Engagements on the STI Plenary report and recommendations were not consolidated or facilitated.	As the President was not available before then, the STI Plenary was held very late in the quarter, on 12 December 2023. The consolidated report and recommendations were therefore not finalised.	The report will be consolidated in quarter 4 and routed to Exco for approval.

 

1. Programme 2: Technology Innovation

In Quarter 1, the Programme spent R242.2 million (36.8%) of the projected expenditure of R658 million. The variance in spending was mainly on Transfers and subsidies and attributed to payments not madefortheNational Earth Observation and Space Secretariat because the 2023/24 implementation plan and 2022/23 fourth quarter report had not been finalised. Furthermore, the payment to SANSA had not been made because the conditions attached to the budget facility for the National Space Infrastructure Hub were still being addressed. The conditions require SANSA to disburse theallocated funds according to the construction schedule; confirm the fulfilment of gaps identified in theappraisal report and explore blended finance options with development financeinstitutions such as the Development Bank of Southern Africa (DBSA). Planned expenditure was also not achieved in Quarter 2, mainly due to delayed payments for the NationalEarth Observations and Space Secretariat, and the Africa Group on Earth Observations projects. These payments were not processed as contract agreements were not yet finalised. By the end of Quarter 3, Programme 2 had spent R1.2 billion of its R2.5 billion allocation. The lower than planned expenditure was mainly due tothe Strategic Industrial Bio-Innovations Programme under the BiotechnologyStrategy that did not meet the required 90% spending threshold on previous tranches before the next tranche of funding could be released. Furthermore, payments to the Strategic Health Innovation Programme (SHIP), Bio-Photonics projects and the One Foodprojects were delayedbecause service level agreements had not been finalised.

 

Quarterly performance varied from 40% to 100% to 50%. The targets that were not achieved were:

 

PROGRAMME 2: TECHNOLOGY INNOVATION
PERFORMANCE INDICATOR		TARGET	VARIANCE	REASON FOR VARIANCE	PLAN TO ADDRESS NON-ACHIEVEMENT
QUARTER 1
1.	Number of trainees upskilled in IP management and technology transfer.	50 trainees upskilled in IP management and technology transfer.	0 trainees upskilled in IP management and technology transfer.	WIPO-NIPMO IP Innovation Policy workshop which was planned for quarter 1 was postponed to quarter 2 on request from WIPO.	WIPO-NIPMO IP Innovation Policy workshop planned for July 24 to August 04.
2.	Number of new disclosures received from publicly financed R&D institutions by NIPMO.	120 new disclosures received from publicly financed R&D institutions by NIPMO.	107 new disclosures received from publicly financed R&D institutions by NIPMO.	This indicator is outside NIPMO’s control. Deviation could be due to lack of R&D funding resulting in lower disclosures.	NIPMO had workshops on new disclosures and its link to the IP Fund during quarter 1. Further awareness will be raised during quarters 2 and 3 onthe importance of recording new disclosures and how to do it on the required system.
3.	Number of disclosures received from publicly financed R&D institutions by NIPMO and licensed for the first time.	8 disclosures licensed for the first time.	7 disclosures licensed for the first time.	This indicator is outside NIPMO’s control.	NIPMO is supporting Technology Transfer activities through the OTT Support Fund, which should see the number of disclosures licensed for the first time increase in quarter 3.
QUARTER 3
1.	Number of trainees upskilled in IP management and technology transfer.	130 trainees upskilled in IP management and technology transfer.	121 trainees upskilled in IP management and technologytransfer.	There were fewer participants in the WIPO SA Summer School than anticipated.	The shortfall from quarters 1 and 3 will be made up in quarter 4 through WIPO distance learning courses in January/February2024 and the Technology and Innovation Support Centres workshop in March 2024.
2.	Number of new disclosures received from publicly financed R&D institutions by NIPMO.	115 new disclosures received from publicly financed R&D institutions by NIPMO.	113 new disclosures received from publicly financed R&D institutions by NIPMO.	This indicator is outside NIPMO’s control. Deviation could be due to lack of R&D funding resulting in lower disclosures.	NIPMO will have a workshop on IP forms and compliance with the IPR Act during quarter 4. It is hoped that this workshop will encourage institutions to report new disclosures.This indicator will not be included in the next APP as it is outside of NIPMO's control.
3.	Number of disclosures received from publicly financed R&D institutions by NIPMO and licensed for the first time.	7 disclosures licensed for the first time.	3 disclosures licensed for the first time.	This indicator is outside NIPMO's control.	NIPMO is supporting Technology Transfer activities through the OTT Support Fund, which should see the number of disclosures licensed for the first time increase in the next reporting period.

 

1. Programme 3: International Cooperation and Resources

Across all three quarters, the Programme spentless than planned due to delayed payments to several initiatives because of issues around the finalisation of contracts with the entities responsible for implementing these initiatives. In Quarter 1, payments were delayed for the CSIR, and the Agricultural ResearchCouncil for the Science Diplomacy for Africa and Peer Review COVID‐19 Call. In Quarter 2, payments were delayed for theGlobal Science for African Multilateral Agreement for the Southern African Network of WaterCentres of Excellence and Southern Africa Network for Biosciences. In Quarter 3, payments were delayed for the Global Science for International Resources on European Union Co-investment initiatives. By the end of Quarter 3, Programme 3 had spent R99.7 million of its total adjusted allocation of R146.1 million.

 

Performance steadily declined over the quarters and ranged from 100% to 89% to 67%. The targets that were not achieved were:

 

PROGRAMME 3: INTERNATIONAL COOPERATION AND RESOURCES
PERFORMANCE INDICATOR		TARGET	VARIANCE	REASON FOR VARIANCE	PLAN TO ADDRESS NON-ACHIEVEMENT
QUARTER 2
1.	Number of South African students participating in international training programmes.	50 South African students participating in international training programmes as part of co-operation initiatives facilitated by the DSI.	17 South African students participated in international training programmes as part of co-operation initiatives facilitated by the DSI.	Fewer international partners were able to report than anticipated.	It is anticipated that reporting will stabilise as the year progresses, as the reporting structures within the partnership between the DSI/NRF and DHET on international post graduate training support matures.
QUARTER 3
1.	Number of South African students participating in international training programmes.	50 South African students participating in international training programmes as part of co-operation initiatives facilitated by the DSI.	29 South African students participated in international training programmes as part of co-operation initiatives facilitated by the DSI.	Fewer international partners were able to report than anticipated.	It is anticipated that reporting will stabilise as the year progresses, as the reporting structures within the partnership between the DSI/NRF and DHET on international post graduate training support matures.
2.	Number of STI initiatives supported targeting the objectives of the SADC Regional Indicative Strategic Development Plan (RISDP).	9 STI initiatives supporting the SADC RISDP.	2 STI initiatives supporting the SADC RISDP.	Several activities that were planned for quarter 3 were delayed due to reasons outside of the DSI’s control.	It was not clear whether the target will be achieved as it is dependent on SADC.
3.	Number of international STI initiatives focused on SDGs supported by South Africa.	5 international STI initiatives focused on SDGs supported by South Africa.	3 international STI initiatives focused on SDGs supported by South Africa.	Several engagements planned for quarter 3 have already taken place.	The annual target (8) has already been achieved owing to additional engagements in previous quarters.

 

1. Programme 4: Research, Development and Support

During Quarter 1, the Programme significantly underspent by R1.8 billion. This was mainly on Transfers and subsidies and attributed to not achieving the required 90% spending threshold on previous tranches before the next tranche of funding could be released. Hence, planned payments under Astronomy,Cyberinfrastructure, and the Basic Science Development and Support subprogramme were delayed. Furthermore, contracts for certain initiatives still needed to be finalised. In Quarter 2, spending improved, despite being lower than planned. Payments to the NRF for Science Awareness and Inter‐Bursary Support, the CSIR, SANSA and the Agricultural Research Council were delayed due to contracts that still needed to be finalised. By the end of Quarter 3, Programme 4 had spent R4.6 billion of the adjusted allocation of R5.8 billion. Spending was lower than planned and mainly on Transfers and subsidies to the NRF’s SKA infrastructureproject funded through the Budget Facility for Infrastructure. The Department was awaiting communication fromNational Treasury on how to proceed with the funds. Furthermore, there were various Transfers still at the contracting stage.

 

Performance steadily improved over the quarters and ranged from 55% to 87% to 100%. The targets that were not achieved were:

 

PROGRAMME 4: RESEARCH, DEVELOPMENT AND SUPPORT
PERFORMANCE INDICATOR		TARGET	VARIANCE	REASON FOR VARIANCE	PLAN TO ADDRESS NON-ACHIEVEMENT
QUARTER 1
1.	Number of pipeline postgraduate students awarded bursaries annually as reflected in the reports from the NRF and other relevant entities.	2 000 pipeline postgraduate students awarded an annual bursary.	1 983 pipeline postgraduate students awarded an annual bursary.	The nature of the target is that it cannot be accurately forecasted on a quarterly basis (but can be estimated) as it depends on the number of applications received and the outcomes of the adjudication processes.	N/A
2.	Number of researchers awarded research grants through NRF-managed programmes as reflected in the NRF project reports.	1 200 researchers awarded research grants through NRF-managed programmes.	1 169 researchers awarded research grants through NRF-managed programmes.	This was due to a slower than usual claim rate by researchers.	This issue will be discussed as this is a shared indicator between the DSI and the NRF.
3.	Number of strategic and technical engagements with the NRF, SACNASP and ASSAf to ensure alignment with national priorities.	3 bilateral engagement reports.	1 bilateral engagement report.	Meetings with ASSAf and SACNASP could not take place in quarter 1 due to the unavailability of members for the meeting.	The meetings with ASSAf and SACNASP were planned for quarter 2.
4.	Revised Palaeosciences Strategy aligned with the STI Decadal Plan priorities.	Revised draft Palaeosciences Strategy.	No draft.	The listed process in quarter 1 was captured incorrectly as it reflects the same output as in quarter 3.	The draft strategy will be presented in quarter 3.
5.	South African High-level All-Atlantic Ocean Research Forum Report.	DG approval of the proposed theme for the All-Atlantic Ocean Research Forum.	Draft theme developed for the All-Atlantic Ocean Research Forum but not approved by the DG.	Awaiting presentation of the Africa AAORIA Forum Workshop to EXCO.	Presentation of the AAORIA Forum Workshop to Exco planned for 10 July 2023.
QUARTER 2
1.	Revised Palaeosciences Strategy aligned with the STI Decadal Plan priorities.	Stakeholder engagement report on the revised Palaeosciences Strategy.	Stakeholder engagement report not developed.	Stakeholder availability not established due to conflicting and competing priorities.	Reprioritisation of human resources.
2.	Number of communities benefitting from IKS-based smart villages programme in Nyandeni in the Eastern Cape.	Inception report, including the development of a smart village in Nyandeni approved through the Office of the Director: IKS.	The inception report was developed. The service provider has moved beyond the inception and presented the DSI with a master plan. The goal of the Nyandeni Smart Village Master Plan is to provide a conceptual series of plans that can describe and guide the development and growth of the Nyandeni Smart Village and other rural settlements in the Nyandeni Local Municipality.	The milestones of the project, which are the building blocks to the processes have all been achieved, however they are not aligning to the reporting targets as stipulated in the TID in the APP.	The only plans in place are to proceed with the project and try to adopt systems that will comply to the reporting template.

 

1. Programme 5: Socioeconomic Innovation Partnership

Across all three quarters, the Programme spent less than planned due to delayed payments to several initiatives because of issues around the finalisation of contracts with the entities responsible for implementing these initiatives. These include payments to the TIA for a range of projects, the Water Research, Development and Innovation Roadmap, for information and communication technology, mining R&D, implementation of the Advanced Manufacturing Technology Strategy, and local manufacturing capacity research and technical support. By the end of Quarter 3, Programme 5 had spent R1.3 billion of the adjusted allocation of R1.7 billion.

 

Performance steadily declined over the quarters and ranged from 86% to 78% to 64%. The targets that were not achieved were:

 

PROGRAMME 5: SOCIOECONOMIC INNOVATION PARTNERSHIPS
PERFORMANCE INDICATOR		TARGET	VARIANCE	REASON FOR VARIANCE	PLAN TO ADDRESS NON-ACHIEVEMENT
QUARTER 1
1.	Number of instruments funded in support of increased localisation, competitiveness and R&D-led industry development.	Annual workplans or contracts approved for 2 support instruments of increased localisation, competitiveness and R&D-led industry.	Annual workplan or contract approved for 1 support instrument of increased localisation, competitiveness and R&D-led industry.	The current TID APP enable only 1 instrument to be counted.	A proposed update to the TID definition had been sent to M&E, internal audit and PPGME for comment before a formal revision is requested.
2.	Turnaround time for providing preapproval decisions on projects for the R&D Tax Incentive.	Preapproval decisions provided within 90 days on 80% of projects for the R&D Tax Incentive	Preapproval decisions provided within 90 days on 0% (0 of 21) of projects.	The period during which applications were received for this APP target was 23 Nov 2022 to 22 Feb 2023. Challenges include reduced number of meetings due to quorum issues, delays in signing of final documentation, and issues with the online system where documentation could not be generated.	Continued engagements to ensure speedy appointment of new committee member and prioritising of final documentation, and coding fixes to deal with the online system issues.
QUARTER 2
1.	Number of innovation intermediaries supported through DSI funding instruments for inclusivity.	1 innovation intermediary supported through DSI funding instruments to achieve innovation for inclusivity.	0 innovation intermediaries supported.	Delays in the process of evaluating proposals.	Process is advanced. The deliverable will be realised in the next quarter.
2.	Implementation of strategies to address water security and waste management.	2 new research grants, 2 technology demonstrators and 2 technical assessments supported.	2 new research grants, 2 technology demonstrators. 0 technical assessments.	WRC halted the DSI contract without informing the DSI. A meeting was held with the WRC CEO to discuss, and the matter was resolved with the WRC restarting the contract. However, the assessments can only be completed once a demonstrator is completed.	An extension was granted to the WRC to complete the outstanding work to ensure that the contractual obligations are met.
3.	Number of Sector Innovation Fund (SIFs) interventions implemented to support the development of human capacity and skills as well as knowledge and innovation outputs for socio-economic development.	Annual contracts approved for 3 of 6 SIF interventions to support the development of human capacity and skills as well as knowledge and innovation outputs for socio-economic development.	0 contracts approved	Funding not yet received from National Treasury and unclear if request for funds has been submitted by ICR and/or DSI Finance.	Continuous follow-ups regarding progress on funding.
4.	Turnaround time for providing preapproval decisions on projects for the R&D Tax Incentive.	Preapproval decisions provided within 90 days on 80% of projects for the R&D Tax Incentive	Preapproval decisions provided within 90 days on 19% (8 of 42) of projects for the R&D Tax Incentive.	The period during which applications were received for this APP target was 24 Feb 2023 to 26 May 2023. Challenges include the reduced number of meetings due to quorum issues (for last 2 quarters) and the online system not being available during last quarter due to generator issues.	Continued engagement with IT to move online system to Cloud. Continued monitoring of all other aspects having intermittent impact on turnaround time, including ensuring quorums for meetings, prioritising of final documentation, coding fixes to deal with online system issues and signoff of batches.
QUARTER 3
1.	Number of localised facilities (e.g. living labs) supported through DSI funding instruments to increase the footprint of innovation in rural and township communities.	5 localised facilities (e.g. living labs) supported through DSI funding instruments to increase the footprint of innovation in rural and township communities.	4 localised facilities (e.g. living labs) supported through DSI funding instruments to increase the footprint of innovation in rural and township communities.	One localised facility was finalised in the first quarter, bringing the total facilities localised to 5.	N/A
2.	Number of district municipalities supported with systemic solutions to advance innovation-driven local economic development (LED).	3 district municipalities supported with systemic solutions to advance innovation-driven LED.	2 district municipalities supported with systemic solutions to advance innovation-driven LED.	There was a delay in the signing of the contract with implementing agency.	The process for signing the contract is under way. The target will be met in quarter 4.
3.	Number of statistical reports and policy briefs approved by Exco for publication and/or submitted to Cabinet and/or disseminated to policy audience.	3 statistical reports approved by Exco for publication and/or submitted to Cabinet and/ordisseminated to policy audience.	No statistical report was approved by Exco for publication.	The National Survey on Research and Experimental Development was delayed because the data audit committee could not meet. The annual report to Parliament on the R&D Tax Incentive was delayed owing to the time taken to obtain stories from the applicants (a new request). The Report on Government-Funded Scientific andTechnological Activities was delayed due to time taken to finalise the report.	All 3 reports will be finalised in quarter 4.
4.	Number of knowledge and innovation products added to the industrial development and green economy IP portfolios through fully funded or co-funded research initiatives.	20 industrially relevant knowledge or innovation products added to the industrial development and green economy IP portfolios.	2 industrially relevant knowledge or innovation products added to the industrial development and green economy IP portfolios.	The quarterly target was not met because entity reports were received late.	The entities will submit their reports in quarter 4. This will address the quarter 3 shortfall and it is expected that the annual target will be exceeded.
5.	Turnaround time for providing preapproval decisions on projects for the R&D Tax Incentive.	Preapproval decisions provided within 90 days on 80% of projects for the R&D Tax Incentive	Preapproval decisions provided within 90 days on 20% (4 of 20) of projects.	The period during which applications were received for this APP target was 24 May 2023 to 22 Aug. 2023. Challenges include online system issues and the carry-over from previous quarters,as well as staff movement, and delays in the finalisation of sign-off letters.	The online system was moved to the Cloud during this quarter, which should negate the impact of loadshedding. A new assistant is being trained on the system and all processes are now up to date. It is important to ensure that the online system is updated as soon as possible so that applications received in quarter 4 can be processed through the online system.

 

In summary, the Department’s performance ranged from 71% to 83% to 72%, with spending amounting to R7.5 billion of the total adjusted allocation of R10.6 billion. The main reasons provided for performance targets that were not achieved included factors that were outside the control of the Department; capacity issues; delays in finalising contracts; delays with completing the required work needed; as well as issues around the technical indicator descriptors (TIDs) for targets. Furthermore, most cases of lower than planned spending were ascribed to delays in finalising contracts; or not reaching the required spending thresholds before more funds could be transferred. In relation to the SKA and Space Infrastructure Hub, spending delays were ascribed to waiting for National Treasury to provide direction on how funds could be spent.

 

With the AENE, the Department’s 2023/24 allocation was reduced by R311.2 million, which was taken exclusively from Transfers and subsidies, and R83 million, which was moved within and between programmes. Concernedly, R206.7 million, comprising a R126.7 million budget cut and a R80 million shift/virement, was taken from the Basic Science and Infrastructure subprogramme under Programme 4.

 

For the period 1 April to 31 December 2023, the Department’s procurement expenditure amounted to R85 million, where 62.5% was spent on small, medium and micro enterprises and 70.1% on black-owned companies.The Department also paid 98% of all invoices within 30 days.

 

1. Audit Action Plans

The Department, HSRC and TIA reported good progress with the implementation of the audit action plans, with the Department having resolved all its audit findings. The HSRC had made significant progress in relation to its 14 audit findings. Of key import in relation to the material irregularity, was that all capital debt was in the process of being recovered, the investigation on the matter was completed, no current HSRC employee was responsible for the R2.6 million interest portion of the debt that was classified as fruitless and wasteful expenditure, and the HSRC’s Board approved that this fruitless and wasteful expenditure be written off. Furthermore, the HSRC had resolved all findings related to its audit report and 89% of the findings related to administration. The remaining findings will be concluded by 31 May 2024.The TIA had six audit findings, with five findings having been resolved by 31 January 2024. The remaining finding will be concluded by 31 March 2024.

 

1. Committee Observations

The Committee welcomed the presentations and commended the efforts of the Department and its entities. In deliberating on the information presented, the Committee:

 

1. Expressed satisfaction with the Department’s achievement of its quarterly performance targets, which for the three quarters ranged between 71 and 83 percent.
2. Expressed satisfaction with the progress made in implementing the audit action plans of the Department, HSRC and TIA, as well as the assurances that procedures have been implemented to ensure that these issues do not re-occur..
3. Expressed concern about the cost containment measures and budget cuts prescribed by National Treasury, and the effect this would have on the Department’s overall performance.
4. Asked which performance targets would be affected and possibly not achieved during the fourth quarter of 2023/24 because of the budget cuts.
5. Furthermore, in relation to the budget cuts, asked how the Department’s R&D support instruments/initiatives, programmes and newly planned funding instruments had been affected.
6. Noted that most of the funds that were cut or moved was taken from the Basic Science and Infrastructure subprogramme and asked how this would affect planned infrastructure projects. They also inquired what informed the movement of these funds from the Basic Science and Infrastructure subprogramme.
7. Requested an explanation for the reallocation of R25 million from Cyberinfrastructure to Indigenous Knowledge Systems.
8. Requested an explanation for the slow spending under good and services.
9. Noted the Department’s organisational review and realignment plans and inquired about the funding and capacity needs to operationalise this process.
10. Noted that the inaugural STI Presidential Plenary was held in December 2023 and requested information on who the key private sector and civil society stakeholders were, as well as any commitments made by these stakeholders.

 

1. Recommendations

Having concluded their deliberations, the Committee recommended that or resolvedto:

 

1. Continue to monitor the progress and finalisation of the implementation of the audit action plans of the HSRC and TIA.
2. The Department provide a report on the outcomes of its organisational review once the process is finalised.
3. The Department provide a report on the outcomes of the inaugural STIPresidential Plenary, which was held in December 2023.

 

 

Report to be considered.

 

---

[1]The calculations were based on a projected inflation rate of 4.9% (in April/May 2023).

[2]National Treasury – 2023/241st Quarter Expenditure Report to the Standing Committee on Appropriations.

[3]National Treasury – 2023/24 2nd Quarter Expenditure Report to the Standing Committee on Appropriations.

[4]National Treasury – 2023/24 3rd Quarter Expenditure Report to the Standing Committee on Appropriations.

[5]National Treasury, 2023. Adjusted Estimates of National Expenditure.

[6]Department of Science and Innovation, 2023. 2023/24 First Quarter Performance Report Final 1 April – 30 June 2023.

[7]Department of Science and Innovation, 2023. 2023/24 Second Quarter Performance Report Final 1 July – 30 September 2023.

[8]Department of Science and Innovation, 2024. 2023/24 Third Quarter Performance Report Final 1 October – 31 December 2023.