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The Minister of Science and Technology, Naledi Pandor, says South Africa has a great deal to do to address its low economic growth, enhance its competitiveness and create new products and services.

The Minister was speaking at a symposium attended by the business sector and science councils in Pretoria today, and her warning comes amid concerns of slowed business expenditure on research and development (BERD) over the past five years. From 2009/10 to 2013/14, BERD grew by only 5,7% compared to 21,4% from 2004/05 to 2008/09.

Organised by the Department of Science and Technology (DST) and the National Advisory Council on Innovation (NACI), the symposium is expected to facilitate dialogue between the two sectors on the factors affecting investment in science, technology and innovation (STI) by business in the current period of low economic growth, which is projected to grow by only 0,6% this year, after expanding by 1,3% in 2015.

Government measures R&D expenditure as a percentage of GDP and has set a target for gross expenditure on research and development(GERD) to be 1,5% of GDP by 2019. However, the latest survey showed that expenditure remained flat at 0,73% between 2011/12 and 2013/14.

Addressing the symposium, Minister Pandor said expenditure on research and innovation activities undertaken by business had a more direct and immediate impact on GDP growth, exports and employment than did innovation expenditure and activities in other sectors, such as government, tertiary education and NGOs.

"Accordingly, from a developmental and growth perspective, the decline in BERD is a major concern," said the Minister, saying, however, that there was some improvement in business R&D as shown by the latest R&D Survey.

For its part, the Minister said the DST would maintain and hopefully increase its levels of R&D investment in the government, higher education and science council sectors. It would also maintain policy stability with regard to government assistance for R&D for the business sector.

The Minister promised that government would also maintain continuity and certainty on the R&D Tax Incentives and other direct R&D-support instruments as a way to encourage both local and foreign investment in the R&D performed by business.

Government would also maintain the Department of Trade and Industry's Technology for Human Resources in Industry Programme (THRIP), which has inter alia supported 296 projects and produced 45 patents. This includes funding for SMEs, particularly in bio-manufacturing and nanotechnology projects.

"We should actively engage South African venture capital to encourage and facilitate joint investments in commercial STI and public-benefit projects, as well as to assist with developing a new generation of venture capital companies through mechanisms such as National Treasury's Venture Capital Company Tax Incentive Scheme," said Minister Pandor.

Similarly, government should make special efforts to offer the Technology Innovation Fund opportunities to international venture capital companies that command large resources. Such a move would improve South Africa's access to second-stage financing, and local innovation would benefit from these companies' experience and expertise.

Vice President of Strategic Research & Technology at Sasol, Dr Thulani Dlamini, told the symposium it could not be argued that innovation added greatly to economic growth and shareholder value, saying the oil and gas company was investing R1, 5 billion annually in R&D development to sustain growth and business.

"Both government and the private sector need to ensure collaboration on R&D, as this was relevant to the sustainability of sectors that contributed towards growing the economy," said Dr Dlamini, adding that collaboration with government should not be treated as some form of corporate social investment.

Issued by Department of Science and Technology