South Africa to set up a 'sovereign innovation fund'

11th September 2018 By: Rebecca Campbell - Creamer Media Senior Deputy Editor

The Department of Science and Technology (DST), in its recently released draft White Paper on Science, Technology and Innovation (STI), stated that a “sovereign innovation fund” is to be created. “There is a need for increased commercialisation funding,” said section 6.2 of the draft White Paper. “A sovereign innovation fund will be formed to leverage co-investment by the public and private sectors to address gaps in technology commercialisation.”

“The fund will be designed to complement and enhance existing funding instruments, and to provide large-scale funding for the development and maturation of radical innovations and emerging industries,” it added. “Within the public sector, agencies such as the Technology Innovation Agency, the Industrial Development Corporation and the Development Bank of Southern Africa, in cooperation with the National Treasury, can contribute to this fund.”

This is part of the government’s aim of increasing the country’s investment on research and development (R&D). South Africa’s gross expenditure on research and development (GERD) increased only slightly in recent years – in the country’s most recent national R&D survey (covering 2015/16), it came to 0.8%, in comparison to the 0.73% and 0.77% recorded in the previous four such surveys. “This improvement is significant, however, since it took place in the context of slowing GDP [gross domestic product] growth, which stood at 2.5 per cent in 2013, 1.7 per cent in 2014 and 1.3 per cent in 2015,” stated the draft White Paper (section 6.1).

Nevertheless, South Africa’s global R&D share fell by 25% from 2007 to 2013, while India’s share rose by 18% and China’s rocketed by 92%. And South Africa’s “relatively” low GERD, and the almost stagnant level of GERD as a proportion of GDP, “is a concern”.

However, there are some encouraging trends. Business has increased its R&D spending in the past few years. And the R&D budgets of all the government departments that form part of the National System of Innovation have increased in real terms. In particular, DST funding has risen by nine times since 2005/06. Public sector investment in R&D is also taking place through specialised science councils, including the Agricultural Research Council, Mintek and the South African Medical Research Council.

“The Government recommits to the target of increasing the intensity of R&D investment in the economy so that GERD reaches 1.5 per cent of GDP in the next decade, and an aspirational 2 per cent a decade later,” affirmed the draft White Paper (section 6.2). “Provincial and local governments will actively contribute more to STI funding and, over time, will set appropriate targets for investment in STI as part of their growth and development strategies. … National STI-intensive government departments will set appropriate targets for STI in their budgets.”