Government to ramp up research and development

May 3rd, 2017, Published in Articles: EngineerIT

 

The government aims to double the investment in research and development (R&D) from the 2014/15 figure of 0,77% to 1,5% of gross domestic product (GDP). Minister of Science and Technology, Naledi Pandor, said that this means doubling the 2014/2015 investment of R29-billion to roughly R60-billion each year until. Pandor was speaking at the launch of the reports of two national surveys: “SA National Survey on Research and Experimental Development for 2014/2015” and the “SA National Survey of Intellectual Property and Technology Transfer at Public funded research institutions: Inaugural baseline study”.

Naledi Pandor, Minister of Science and Technology.

The Minister said that the business enterprise expenditure on R&D, which contributed most to the increase with the bulk of the increase coming from the manufacturing industry, was surpassed by the financial and business services industry which includes software development. However, the R&D spending in mining and quarrying has declined by 20% and this is an area of concern given the current interventions under the Operation Phakisa initiative to help revitalise the economy, she said.

The surveys reveal that government was the largest funder of R&D, funding 43,9% of the gross domestic expenditure on R&D followed by the business sector with 40,8%, foreign sources with 12,2% and other local sources with 3,1%.

An important trend to note is the increase in the number of scientists and researchers. The number of R&D personnel increased to 38 465 in 2014/15. About 84% of the increase in R&D personnel were postgraduate students. The Department of Science and Technology (DST) attributes this to the Research Chairs Initiative and postgraduate bursaries, which are helping to expand the pipeline of researcher workforce. All in all, the most important trend to observe from the R&D survey is that the business sector has replaced the higher education sector as the lead contributor to the increase in R&D spending, said Pandor.

This has a direct and immediate impact on economic growth because the private sector is more likely to embrace related commercial opportunities by creating new and improving existing products, services and production technologies. These activities can impact directly on the creation of new enterprises, new industries, and new jobs. Another trend the survey reveals is that between 2011 and 2014, on average 100 new technologies were added each year to the portfolio managed by universities and science councils. There has been a quadrupling in the actual number of licences executed per year in the period.

To encourage the private sector to invest in R&D, the government introduced the R&D tax incentives in 2006. The initial uptake was less than government had hoped for. So the incentive was modified by the Taxation Laws Amendment Act in October 2012. The subsequent increase in applications caught government by surprise and additional resources have had to be secured to deal with the increase and the backlog that has resulted.

Minster Pandor said that the government is working to attract international R&D and to take better advantage of our integration into global R&D value chains. One mechanism that is popular is an “equity-equivalent arrangement” whereby multinational companies that do business with government are required to earn BEE points through a once-off equity equivalent funding contribution. A company can earn points for making investments towards skills and training support, enterprise development, and R&D, she explained.

To support the level of activity from the small and medium enterprises (SMEs) sector, the Technology Innovation Agency (TIA) has now been repositioned as an agency whose funding instruments will better enable innovators, entrepreneurs and SMEs to commercialise their technology innovations.

There is a need for a venture capital fund for high-technology SMEs as well as startups. Pandor said that government encourages South African venture capitalists to facilitate joint investments in commercial science, technology and public-benefit projects as well as to assist with developing a new generation of venture capital companies through mechanisms such as Treasury’s Venture Capital Company Tax Incentive scheme. Treasury announced last year that a Small and Medium Enterprise Fund is being established, with over R1-billion already committed and complemented by mentoring by seasoned business leaders for start-ups.

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