The investment decline in SA’s science, technology and innovation ecosystem is discouraging, and its continuation will have grave repercussions.
So says Dhesigen Naidoo, National Advisory Council on Innovation(NACI) council member, reflecting on the findings of the 2021 South African Science, Technology and Innovation (STI) Indicators Report.
Compiled by NACI on behalf of the Department of Science and Innovation, the recently released annual report offers insight into the state of STI in SA over the 2018/19 period.
Similar to last year, the latest findings show lack of funding for various science and innovation projects. In 2018/19, the gross expenditure on research and development (GERD) as a percentage of GDP declined from 0.83% in 2017/18 to 0.75%.
Furthermore, business expenditure on research and development (BERD) recorded a significant decline – over 12% – in 2018/19 compared with the previous year. In 2018/19, BERD was lower than at any other point in the last decade, according to the report.
Over the last decade, BERD stagnated at around R10.5 billion (2010 constant values) before dropping to R9.3 billion in 2018/19. The BERD as a percentage of GERD declined from 53.2% in 2009/10 to 39.3% in 2018/19.
Says Naidoo: “One of the key points we used to herald in all of the international discussions is that while the numbers were low in the South African environment, the relative share between the private and public sector was very positive, with the business sector expenditure on R&D [BERD] being a little bit higher than government expenditure on R&D. We are far from that now.”
He believes reversing this trend will require an injection from the public purse, to serve as the leverage behind which the business sector gains the confidence to increase spend on R&D.
In terms of foreign direct investment (FDI) inflows and R&D spending by companies in SA, it’s shown to also be on the low side.
The report highlights a significant decline in the business sector’s share of foreign-funded R&D in the country. While a decade ago, some 60% of FDI for research and development in SA was destined for the business sector, in 2018/19 this was only 10%.
Foreign business expenditure on R&D in SA requires attention, states Naidoo. “The numbers have never been incredibly high, but they’re not exactly small either. We’re moving from 2009/10 of R1.5 billion, to R400 million in 2018/19 – that is a drop of two-thirds.
“This squeeze may well go on for a little while. The data shows that South Africa’s stated aspiration to be a preferred destination for science, technology and innovation is not giving us the dividend that we need to see.”
The 2021 STI indicators report is compiled with the latest available data from various public and private organisations, and institutions mandated to collect the data. It also includes indicators that are critical in the monitoring and evaluation of the health of the country’s National System of Innovation (NSI) and its impact on achieving the country’s set national objectives.
Some of the report’s main findings focus on areas such as R&D expenditure, STI human capital, STI funding, support innovation and entrepreneurship, and scientific publications and patents.
In the case of South Africa’s human capital development (HCD) pipeline in STI, Naidoo says it is in trouble.
The World Economic Forum defines HCD as the formal education of the next-generation workforce and the continued upskilling and reskilling of the current workforce.
To address the HCD challenges, Naidoo calls for high focus, intensive action and investment, adding that developing the human capital pipeline needs to start off in schools.
“Even before the pandemic, we’ve seen that the percentage of kids that actually went into the science, engineering and technology fields was less than 35%. Out of the pandemic, we’re going to see numbers even lower than that, which means the pipeline is in trouble.”
Naidoo notes that even though the country has key fundamentals in the STI ecosystem, some of which still function, it is falling short on its ambitions and aspirations.
“The NSI clearly needs some structural renovation, and the white paper project and the consultations around the white paper is a very important start.
“There is emergency action that is required immediately, and upping our game in science, technology and innovation is key,” he concludes.
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