Date: 13/09/2005
Source: Department of Trade and Industry
Title: Mpahlwa: Technology and Human Resources for Industry Programme Annual Awards
Keynote address by Minister of Trade and Industry Mandisi Mpahlwa, Technology and Human Resources for Industry Programme Annual Awards
Dr Khotso Mokhele, President of the National Research Foundation
Chairperson of the THRIP Advisory Board
Honoured Guests
Ladies and Gentlemen
“Knowledge can make the difference between sickness and health, between poverty and wealth. Governments that adopt policies to make the most of knowledge will have a major advantage in improving the lives of their citizens.”
I welcome you with this quote from the World Development Report to underscore the dti’s commitment to this important programme. The rapid pace of global change cannot be ignored by any country.
In South Africa, we have to play catch-up simply because previous policies for research and development supported a system built for 5-8 million people and which must now grow and develop to support all our people. One of the benefits of Technology and Human Resources for Industry Programme (THRIP) is that it can assist in increasing the capacity and effectiveness of our human capital in technology and thereby contribute to stem any loss of competitiveness in the world economy on our part.
We believe that science and technology is an enabler of improvement of quality of life and sustainable economic development and will position us as a full player in the global knowledge economy. In this regard, South Africa has the best developed and capacitated national research and innovation system on the continent but more effort is required to prevent us from losing ground internationally. This can be achieved by a co-ordinated response to national development priorities, equity imperatives and taking the approach of “growing our own timber” in the development of a research community.
To succeed, a knowledge-based economy must generate, spread and apply new knowledge. We must therefore invest in education and training, research and development and adopt new managerial approaches. Your objective of boosting South African industry by supporting research and technology development and enhancing the quality of appropriately skilled people is therefore very appropriate and continues to be aligned to national needs.
Ladies and Gentlemen, a critical success factor for industrial nations is technology-based economic development. To facilitate competitiveness, governments and business the world over are accelerating the creation and expansion of technology-based businesses leading increasingly to the development of high performance economic clusters. Consequently, the future of the South African industry is highly reliant on our ability to upgrade our current manufacturing competencies and reposition certain segments in an advanced manufacturing industry.
Research and development provides the crucial platform for ”Cutting Edge Interventions” and plays and important role in the creation of a conducive environment for innovation and productivity in the economy. Importantly, research and development spending in South Africa increased from 0.76 percent of GDP in 2002 to 0.81 percent in 2004, hence moving closer to the national target of 1% by 2008.
We must reach and even exceed this target as world trade is increasingly dominated by high value manufactured products driven by emerging technologies with increased knowledge intensity. South Africa’s future competitiveness will depend on the capacity of the manufacturing sector to master advanced technology domains, to innovate and to meet the changing needs of customers.
An analysis of “dynamic products” by the dti demonstrates convincingly how through these high value products, the developed world and multinational companies dominate the increasing share of the world trade in these high technology areas. South Africa has a relatively low share in these fast growth or dynamic products, with a ranking of 24 amongst developing countries and it is essential that “Cutting Edge Interventions” are defined to ultimately enable South Africa to take an increasing share of this trade.
In this regard, the future manufacturing industry is not seen as a creator of large numbers of direct jobs and advanced manufacturing industry is the key to unlocking the potential of the expanding services industry and to ensure the beneficiation of natural resources and also to ensure that a healthy and growing resource based industry can exist. The expectation is that the contribution of manufacturing will remain at the level of 20% to the GDP, but will be crucial to growth in other industries. For instance within Europe manufacturing represents approximately 22 percent of the European Union (EU) GNP, yet it is estimated that on total, 75% of the EU GDP and 70 percent of employment in Europe is related to manufacturing. I.e. - that each job in manufacturing is linked to two jobs in manufacturing related services.
“Cutting Edge” interventions are therefore increasingly important and necessary as it allows for the modernisation or transformation of the manufacturing base through the creation of a stronger link with research and innovation and achieving increased knowledge intensity in products and processes.
Specifically, within the context of an increasingly competitive global climate manufacturing companies will in future depend even more on flexibility and speed, as well as on localised production. Manufacturing is also becoming more service intensive and this orientation of manufacturing and increased customer demand will have consequences for the organisation of production and supply-chain management and customer relations.
Secondly, rapid advancements are taking place in science and technology, in the fields of alternative sources of energy, such as hydrogen and nuclear power, nanotechnologies, materials science, electronics, mechatronics, Independent Complaints Directorate and biotechnology. These clearly identify technology platforms that need to be carefully understood and strategically invested in, to ensure sector specific industries benefit. The development of new production processes based on research outcomes, and the integration to separate technologies exploiting the converging nature of scientific and technological developments will radically change both shape and scale of manufacturing.
Thirdly, environmental challenges and sustainability requirements dictate that industrialisation is confronted with stricter environmental regulations and will continue to do so in the future. This will further stimulate the adoption of energy and resource saving technologies.
Finally, socio-demographic aspects determine that manufacturing will continue to be called on for new solutions to meet societal needs and impact on the mobility, size of the labour force and customer requirements. In the South African context matters of redress and equality need to be taken into consideration to ensure the availability of the necessary skills sets required for manufacturing and research.
Ladies and gentlemen, we are in many respects already taking up these challenges. An example is the re-positioning of the South African Aerospace Industry as a future growth industry. Included in this is the integration of the domestic supply chains (e.g. Airbus, Boeing, Embraer), creating supplier parks/clusters with well defined and internationally recognised areas of competence in composite materials and avionics. Alternative sources of energy will in the near future have a significant impact on the South African industry. The significance of the potential “hydrogen economy” and the impact of the emerging nuclear industry as an alternative to “coal generated” supply will require the type of which in the case of the PBMR project, is currently being provided by government.
It is important that these science and technology related investments and resulting research and development (R&D) is unpacked and that these contribute to the acceleration of growth, the creation of new/high value industries and skills and ultimately contribute to the challenge of employment.
Ladies and Gentlemen, we can look forward to the future with confidence, because collectively we have achieved what some call an economic miracle during the last decade. In its annual report released recently, the Reserve Bank reported that the economy is in the longest upswing in history growing at an average annualised rate of 3.5 percent during the past 23 quarters, inflation is at historically low levels and domestic financial markets are flourishing. Growth in South Africa’s gross domestic product quickened to 4.8 percent in the second quarter, the increase from the previous quarter being driven by our manufacturing sector. The performance of our manufacturing sector is significant as confirmation that the South African economy is moving up the value chain from being an exporter of primary commodities to value add manufacturers. Advanced manufacture is therefore not only desirable but possible. THRIP will have to play a role in these developments and I look forward to future discussions between the dti and THRIP on how this can be done.
Given the vision that I have outlined, it is important to also understand that our micro-economic initiatives seek to build an economy that is competitive and integrated in order to contribute to growth, employment and equity. It is well understood that sound fiscal and monetary policies, a trusted and efficient legal system, stable set of democratic institutions, and progress on social conditions contribute greatly to a healthy economy. As expressed in the Global Competitiveness Report these factors, provide the opportunity to create wealth but do not themselves create wealth. Wealth is actually created in the microeconomic level of the economy, rooted in the sophistication the operating practices and strategies of companies as well as in the quality of the microeconomic business environment in which a nation’s companies compete. Unless these microeconomic capabilities improve, macroeconomic, political, legal and social reforms will not bear fruit.
Ladies and Gentleman, to conclude, we must invest heavily in skills development and improve our technological capabilities to assist us in achieving higher levels of growth. This programme today confirms to all of us that we are not tilting at windmills. I once again congratulate the winners here today and all of those who have competed, for not only their achievements but for showing leadership, for enhancing our material well being and for creating a wealth of ideas upon which, together with the efforts of other South Africans, our future prosperity relies.
I thank you.
Issued by: Department of Trade and Industry
13 September 2005
Source: Department of Trade and Industry
Title: Mpahlwa: Technology and Human Resources for Industry Programme Annual Awards
Keynote address by Minister of Trade and Industry Mandisi Mpahlwa, Technology and Human Resources for Industry Programme Annual Awards
Dr Khotso Mokhele, President of the National Research Foundation
Chairperson of the THRIP Advisory Board
Honoured Guests
Ladies and Gentlemen
“Knowledge can make the difference between sickness and health, between poverty and wealth. Governments that adopt policies to make the most of knowledge will have a major advantage in improving the lives of their citizens.”
I welcome you with this quote from the World Development Report to underscore the dti’s commitment to this important programme. The rapid pace of global change cannot be ignored by any country.
In South Africa, we have to play catch-up simply because previous policies for research and development supported a system built for 5-8 million people and which must now grow and develop to support all our people. One of the benefits of Technology and Human Resources for Industry Programme (THRIP) is that it can assist in increasing the capacity and effectiveness of our human capital in technology and thereby contribute to stem any loss of competitiveness in the world economy on our part.
We believe that science and technology is an enabler of improvement of quality of life and sustainable economic development and will position us as a full player in the global knowledge economy. In this regard, South Africa has the best developed and capacitated national research and innovation system on the continent but more effort is required to prevent us from losing ground internationally. This can be achieved by a co-ordinated response to national development priorities, equity imperatives and taking the approach of “growing our own timber” in the development of a research community.
To succeed, a knowledge-based economy must generate, spread and apply new knowledge. We must therefore invest in education and training, research and development and adopt new managerial approaches. Your objective of boosting South African industry by supporting research and technology development and enhancing the quality of appropriately skilled people is therefore very appropriate and continues to be aligned to national needs.
Ladies and Gentlemen, a critical success factor for industrial nations is technology-based economic development. To facilitate competitiveness, governments and business the world over are accelerating the creation and expansion of technology-based businesses leading increasingly to the development of high performance economic clusters. Consequently, the future of the South African industry is highly reliant on our ability to upgrade our current manufacturing competencies and reposition certain segments in an advanced manufacturing industry.
Research and development provides the crucial platform for ”Cutting Edge Interventions” and plays and important role in the creation of a conducive environment for innovation and productivity in the economy. Importantly, research and development spending in South Africa increased from 0.76 percent of GDP in 2002 to 0.81 percent in 2004, hence moving closer to the national target of 1% by 2008.
We must reach and even exceed this target as world trade is increasingly dominated by high value manufactured products driven by emerging technologies with increased knowledge intensity. South Africa’s future competitiveness will depend on the capacity of the manufacturing sector to master advanced technology domains, to innovate and to meet the changing needs of customers.
An analysis of “dynamic products” by the dti demonstrates convincingly how through these high value products, the developed world and multinational companies dominate the increasing share of the world trade in these high technology areas. South Africa has a relatively low share in these fast growth or dynamic products, with a ranking of 24 amongst developing countries and it is essential that “Cutting Edge Interventions” are defined to ultimately enable South Africa to take an increasing share of this trade.
In this regard, the future manufacturing industry is not seen as a creator of large numbers of direct jobs and advanced manufacturing industry is the key to unlocking the potential of the expanding services industry and to ensure the beneficiation of natural resources and also to ensure that a healthy and growing resource based industry can exist. The expectation is that the contribution of manufacturing will remain at the level of 20% to the GDP, but will be crucial to growth in other industries. For instance within Europe manufacturing represents approximately 22 percent of the European Union (EU) GNP, yet it is estimated that on total, 75% of the EU GDP and 70 percent of employment in Europe is related to manufacturing. I.e. - that each job in manufacturing is linked to two jobs in manufacturing related services.
“Cutting Edge” interventions are therefore increasingly important and necessary as it allows for the modernisation or transformation of the manufacturing base through the creation of a stronger link with research and innovation and achieving increased knowledge intensity in products and processes.
Specifically, within the context of an increasingly competitive global climate manufacturing companies will in future depend even more on flexibility and speed, as well as on localised production. Manufacturing is also becoming more service intensive and this orientation of manufacturing and increased customer demand will have consequences for the organisation of production and supply-chain management and customer relations.
Secondly, rapid advancements are taking place in science and technology, in the fields of alternative sources of energy, such as hydrogen and nuclear power, nanotechnologies, materials science, electronics, mechatronics, Independent Complaints Directorate and biotechnology. These clearly identify technology platforms that need to be carefully understood and strategically invested in, to ensure sector specific industries benefit. The development of new production processes based on research outcomes, and the integration to separate technologies exploiting the converging nature of scientific and technological developments will radically change both shape and scale of manufacturing.
Thirdly, environmental challenges and sustainability requirements dictate that industrialisation is confronted with stricter environmental regulations and will continue to do so in the future. This will further stimulate the adoption of energy and resource saving technologies.
Finally, socio-demographic aspects determine that manufacturing will continue to be called on for new solutions to meet societal needs and impact on the mobility, size of the labour force and customer requirements. In the South African context matters of redress and equality need to be taken into consideration to ensure the availability of the necessary skills sets required for manufacturing and research.
Ladies and gentlemen, we are in many respects already taking up these challenges. An example is the re-positioning of the South African Aerospace Industry as a future growth industry. Included in this is the integration of the domestic supply chains (e.g. Airbus, Boeing, Embraer), creating supplier parks/clusters with well defined and internationally recognised areas of competence in composite materials and avionics. Alternative sources of energy will in the near future have a significant impact on the South African industry. The significance of the potential “hydrogen economy” and the impact of the emerging nuclear industry as an alternative to “coal generated” supply will require the type of which in the case of the PBMR project, is currently being provided by government.
It is important that these science and technology related investments and resulting research and development (R&D) is unpacked and that these contribute to the acceleration of growth, the creation of new/high value industries and skills and ultimately contribute to the challenge of employment.
Ladies and Gentlemen, we can look forward to the future with confidence, because collectively we have achieved what some call an economic miracle during the last decade. In its annual report released recently, the Reserve Bank reported that the economy is in the longest upswing in history growing at an average annualised rate of 3.5 percent during the past 23 quarters, inflation is at historically low levels and domestic financial markets are flourishing. Growth in South Africa’s gross domestic product quickened to 4.8 percent in the second quarter, the increase from the previous quarter being driven by our manufacturing sector. The performance of our manufacturing sector is significant as confirmation that the South African economy is moving up the value chain from being an exporter of primary commodities to value add manufacturers. Advanced manufacture is therefore not only desirable but possible. THRIP will have to play a role in these developments and I look forward to future discussions between the dti and THRIP on how this can be done.
Given the vision that I have outlined, it is important to also understand that our micro-economic initiatives seek to build an economy that is competitive and integrated in order to contribute to growth, employment and equity. It is well understood that sound fiscal and monetary policies, a trusted and efficient legal system, stable set of democratic institutions, and progress on social conditions contribute greatly to a healthy economy. As expressed in the Global Competitiveness Report these factors, provide the opportunity to create wealth but do not themselves create wealth. Wealth is actually created in the microeconomic level of the economy, rooted in the sophistication the operating practices and strategies of companies as well as in the quality of the microeconomic business environment in which a nation’s companies compete. Unless these microeconomic capabilities improve, macroeconomic, political, legal and social reforms will not bear fruit.
Ladies and Gentleman, to conclude, we must invest heavily in skills development and improve our technological capabilities to assist us in achieving higher levels of growth. This programme today confirms to all of us that we are not tilting at windmills. I once again congratulate the winners here today and all of those who have competed, for not only their achievements but for showing leadership, for enhancing our material well being and for creating a wealth of ideas upon which, together with the efforts of other South Africans, our future prosperity relies.
I thank you.
Issued by: Department of Trade and Industry
13 September 2005
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