Growth in South Africa’s expenditure on R&D

November 7th, 2019, Published in Articles: PositionIT

Spending on research and development (R&D) in South Africa continues to increase, although at a slower rate than before. This is the key finding of the 2017/18 National Research and Experimental Development Survey, which was published in October 2019.

South Africa’s gross expenditure on research and development (GERD) amounted to R38,725-billion at current rand values in 2017/18, translating to a nominal 8,5% increase over the R35,693-billion recorded in 2016/17. At constant 2010 prices, GERD grew by 3,1% year-on-year to reach the level of R25,963-billion. Although this was the seventh consecutive year in which South Africa’s GERD has increased, following a contraction in 2009/10 and 2010/11, the growth in real terms shows a declining trend, especially when compared to the peak of 8,3% reported in 2014/15.

GERD is an aggregated measure of in-house R&D expenditure performed domestically in five sectors, namely government, science councils, higher education institutions, the business sector, and the not-for-profit sector. GERD as a percentage of the country’s gross domestic product (GDP), an indicator of R&D intensity, remained relatively unchanged, moving up one basis point from 0,82% in 2016/17 to 0,83% in 2017/18.

Conducted annually on behalf of the Department of Science and Innovation (DSI), the National R&D Survey provides statistics on the country’s performance in terms of key indicators of R&D expenditure, investment and human resources. It is undertaken by the Centre for Science, Technology and Innovation Indicators (CeSTII), which is located within the Human Sciences Research Council (HSRC), with support from Statistics South Africa.

The headcount of R&D personnel in the country increased by 4233 (5,3%) to 84 262 in 2017/18, from 80 029 reported R&D personnel in 2016/17. According to the report, the increase in R&D personnel reported since 2011 is mainly due to the net intake of researchers.

The ratio of full-time equivalent (FTE) researchers per 1000 employed was 1,8, a modest shift from the 1,7 reported in 2015/16 and 2016/17. There is concern over the headcounts of technicians and other R&D staff, which have remained constant at around 11 300 and 11 600 respectively since 2012/13. The number of technicians, in particular, needs to expand given the requirements of the fourth industrial revolution.

There have been important shifts in the structure of South Africa’s R&D system over the past decade and a half, notably with respect to the composition of R&D funding sources, R&D performing sectors, the role of R&D in the services sector, and the types of research being conducted.

With regard to sources of funding for R&D, the government continued to be the largest source of funding, contributing 46,7% of total investment in 2017/18, a trend that started in 2007/08. The business sector is now in second place, contributing 41,5% of the country’s GERD. Foreign sources provided 10,2%, with other local sources accounting for 1,6% of GERD.

While the business sector remained South Africa’s largest R&D performer in 2017/18, at 41%, its role has reduced compared to 2006/07, when it conducted 56% of R&D nationally. Over the same period, the higher education sector has increased its contribution from 20% to 37%.

The composition of business R&D has changed over time per major industrial category, mostly in line with broader changes in the structure of the economy. There have been increases in business expenditure on R&D (BERD) attributed to the services industries, while manufacturing and mining-related R&D has declined. R&D in the financial intermediation, real estate and business services sector now dominates, contributing about 48,8% of BERD in 2017/18. This sector’s R&D spend has surpassed that of the manufacturing sector since 2011/12.

The National R&D Survey provides valuable information for understanding the trends in a vital part of the country’s economic system. The DSI will undertake a deeper analysis of the results, and facilitate discussions with the relevant stakeholders, in order to identify what can be done to maintain and improve the situation, especially given the intents of the 2019 White Paper on Science, Technology and Innovation.

Contact Dr Glenda Kruss, CeSTII, gkruss@hsrc.ac.za

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