Sovereign Innovation Fund: Uptake of Locally-developed Technologies Strategy: Department progress report

Meeting report

Progress update – increasing the uptake of locally developed Technologies: briefing by the Department of Science and Technology

Mr Imran Patel, Deputy Director-General (DDG): Department of Science and Technology (DST) said the proposal to Cabinet on seven key work packages had been approved. A working definition of a locally developed technology was provided as fulfilling two criteria:

-Intellectual Property (IP) generated by South African researchers (alone or in partnership with international collaborators); and

-Significant local exploitation (manufacture, creation of a service sector)

Comprehensive 10-year strategy

-Systematically work through the full range of opportunities;

-Determine the current level of use of locally developed technologies, green shoots, and barriers preventing the further uptake of locally developed technologies;

-Define performance indicators (proxy outcome as well as output indicators): and

-Propose high-impact policy proposals and government actions.

Mr Patel said that there were Action Plans for Health, Social Infrastructure and Defence, Security and Surveillance.

Some of the challenges in the Health Action Plan:

-Lack of detailed data on health procurement needs (product volumes, minimum performance standards); and

-No formal commitment by the sector to use locally developed technologies

Some of the challenges in the Social Infrastructure Action Plan:

-Lack of detailed data on procurement opportunities;

-Decentralised delivery of social infrastructure;

-Lack of capacity and capability at provincial and local levels; and

-Indirect influence by government on technology choice.

Challenges in the Defence, Security and Surveillance Action Plan

-Lack of detailed data on procurement opportunities; and

-Formal commitment to locally developed technologies in the Border Management Strategy and the cyber-security strategy.

In conclusion Mr Patel said that in addition to maintaining the momentum on existing short-term initiatives, the work underway would feed into the proposed decadal plan.

(See attached document on increasing the uptake of locally developed initiatives)

Briefing by the Department of Science and Technology on the DST Concept Note: Sovereign Innovation Fund

Mr Mmboneni Muofhe, DDG, DST said that the Sovereign Innovation Fund (SoIF), (endorsed by Cabinet and announced in SONA 2016), was envisaged to bridge gaps and to accelerate the development of a much higher proportion of export orientated technology-based South African firms.

The Three functions of the SoIF:

1. Early stage – including pre-commercial, seed, start-up, fledging companies support, and/or larger scale R&D technology development initiatives;
2. Market development and launch – to enable the expansion of formalised business activities including launching into new markets; and
3. Growth and expansion – support for scaling large industrialisation activities, such as accelerating production, the development of new production lines, launching into international markets and support for IPO (initial Public Offering) listings.

Mr Muofhe said that National Treasury had set aside funding of R2.1 billion over the medium term expenditure framework (MTEF) to support the Fund. A new fund was to be established in government that would allocate funding to selected intermediaries for disbursement as debt, equity or grant funding. Governance and technical evaluation structures were to be established to guide and manage the Fund.

Parallel to the finalisation of the SoIF business case development, the intention was to support the work of the DSBD towards the establishment of the SME Innovation Fund in 2018/19 in order to maximise opportunities and leverage funding across the NSI. (See attached Sovereign Innovation Fund Report)

Discussion

Mr N Koornhof (ANC) said that the two presentations were linked to each other. On the Sovereign Innovation Fund – from a DST point of view – he asked if they would like that fund to be a new entity in the DST, and if not what was Treasury pushing for in terms of running the fund. What would eventually happen there?

Mr Muofhe replied that there were conditions that had been put in place in the discussion around this matter. One of them was that agility was needed in the management of the fund because one did not want the process of availing the funds to take a long time. In terms of the skill set of the people that were needed, one wanted knowledge of business incubation and commercialisation. Small Business and the DST had forwarded their preferences for the persons needed and they were looking at a model for who was going to be the best entities for this.

Mr Koornhof said that a Council for Scientific and Industrial Research (CSIR) retail store had developed a recyclable paper bag; the retail sector was waiting for this bag but nothing was happening. He asked if the Department had any knowledge about this. He asked further if maybe the CSIR could make direct contact with the Ackerman Foundation and with Pick ‘n Pay about this.  

Mr Patel replied that the Department had been alerted to this. He had sent a letter to CSIR executives to find out if they knew about this and if they did could they provide more information about his. He acknowledged the Committee’s advice that it was important for the CSIR to make contact with the Ackerman Foundation and Pick ‘n Pay. The Department would keep oversight over this as part of their oversight over the CSIR. The Department would keep the Committee informed about this matter.  

The Chairperson asked about the extent of the relationships that the DST had with other departments like the Department of Defence, the Department of Home Affairs and the Department of Social Development. This included Small Business. The issue around Small Business went as far back as to the area of incubation of the CSIR and others.

Ms C King (DA) said that this was a good initiative proposed for both funds. Her concern was that it took quite a while for things to be processed. The business case was not even developed properly on this fund, and there was no secure funder as yet to allow for the funding to be test driven. Her concern was that it took so long for development in science and technology and things should happen quickly because the Department was seen as very progressive. An added concern was also that Cabinet had not seen this yet. Where was funding going to come from? 

Mr Patel said that he wanted to respond to the Chairperson in relation to what the Honourable Kind had said about things taking a long time. With the Sovereign Innovation Fund one needed a big ticket item to take it forward – so this required a lot of work. The two funds that he was talking about could be kind of piloted in small ways. Some funds became sub funds of the Sovereign Innovation Fund and the Department would be able to look at that a bit later.  The Department shared the concern that it took time to do these things. It was partly because the environment was a constrained fiscal environment. This was linked to the relationship with other government departments because many of these required not just looking at new funding for science and technology, but reprioritising funding within existing budget envelopes for more innovation. The Department spent at least half of their time with other government departments and entities like the South African Local Government Association (SALGA) for example. Each of the sectors was different and dynamic in their own respect. As an example he isolated the recent work with local government departments like COGTA or SALGA with whom the Department was doing joint work in a much deeper way with service delivery projects. In each of these sectors there were different structures and ways of working together, so this of course necessitated different strategies. With small business development there was a lot of support for the DST’s work. There was a growth in strength and diversity as a result of working with other departments.

The Chairperson asked if the other departments with whom the Department worked were paid.

Mr Patel said no, they did not necessarily look for funding from the DST. What they would look at was co-funding for projects that it funded. Projects with local government looked for a small portion of funds from local government. Those departments were also dispersers of funds. The Department was hoping for progress with its work on the municipal infrastructure grant.  

Ms A Tuck (ANC) referred to page 5 of the report on the Sovereign Innovation Fund and asked why the Department was not scaling up and taking a small number of technologies and nurturing them.

Mr Patel replied that where the Department found opportunities to scale up, it did so. Scaling up was very dependent on funding. Some of it was as a result of financial constraints, but hopefully with time some programmes could be scaled up like Saatchi.

Ms Tuck referred to page 7 on the Small Business Innovation Research Grant and asked why the Department had not identified the particular technologies it was interested in developing.

Mr Patel said that it should be noted that here the Department was trying to localise something it had picked up from the United States and Germany. One first had to find a public procurement need then it could be opened up. So the technology depended on the need that one intended to express. What the Department was trying to do with all the funds was providing the space to allow the best technology to emerge.

The meeting was adjourned.