"Finding Sustainable Innovative Solutions for Challenges in the Public Sector"

Good morning and thank you for inviting me.

It’s a singular honour and one that I cherish. I want to talk about specific skills challenges in the public sectors in health and education. One of our country's concerns at the moment is the shortage of doctors, and in particular the shortage of doctors who come from disadvantaged backgrounds.

Although we have made remarkable steps towards equity and social justice since 1994, a stark reality remains. That reality is the limited quality and provision of healthcare, infrastructure, and services in our poorer communities.

South Africa has a world-class health-care sector with outstanding medical experts, working in well resourced hospitals and undertaking cutting edge research. Yet far too many of our citizens do not receive adequate healthcare.

Over the last ten years there was a significant unregulated expansion in university student enrolments, but not in enrolments in our eight medical schools which is why there is such competition for admission.

The proportion of black medical graduates has increased in comparison with whites, but the small number of newly trained African doctors is still a cause for concern. Any future growth in our universities has to be planned to take into account our development goals and our scarce-skills requirements. It takes a long time, as you will know, to become a doctor.

All universities with medical schools provide bursaries for medical students and provincial government and other institutions and organisations do the same. But it’s not enough. We can’t train enough doctors for our needs (even with our Cuban programme) and some of those we do train go off to work in OECD countries.

As you know our medical model is heavily dependent on doctors and nurses in hospitals and not on communities or clinics. Our clinics are often inadequate and don’t do enough to prevent illness. Of course, what this means is that many illnesses go untreated. I should say immediately we are proud of the impact of our change in policy on the impact of HIV and AIDS.

Still we know that the work done in the public sector is hamstrung by the unequal distribution of staff between the private and the public, between the rural and the urban, and between specialist hospitals and first-level hospitals.

Only one in three of the medical practitioners registered with the Health Professions Council (HPCSA) work in the public sector.

We must act to keep health workers in rural areas. If trainees are selected from, and trained in rural areas, they are more likely to stay. We must improve management support for rural health professionals. Understandably, many rural professionals feel abandoned and unsupported in practising in isolated and low-resource settings.

At the moment there are not enough specialists in provincial and regional hospitals and inadequate support for them for district hospitals. We must create provincial and regional specialist positions, which should encompass both clinical responsibilities (in provincial and regional hospitals) as well as support for district hospitals. We must prioritise specialist training - which has been slow to adapt to the challenges of rural public sector care.

The proposed NHI is bold and ambitious and offers a new mechanism for bridging the huge and unacceptable funding gap between private and public sectors. Our main challenge is to attract our medical practitioners into the public sector and to retain them there.

The majority of medical practitioners in many public-health hospitals and in specialist areas are young doctors or community interns or immigrant doctors. There is a general migration of medical practitioners from rural health centres to urban areas, from the public to the private sector and from South Africa to abroad.

Although emigration can be a constructive dynamic in terms of international exchange and skills development we continue to be on the wrong end of an unequal exchange in terms of international labour mobility.

Another of our country's concerns in the public sector at the moment is the high cost of imported drugs.

In the Department of Science and Technology we have what we call the Farmer to Pharma Grand Challenge. It's an ambitious plan to becoming an emerging world leader in biotechnology and pharmaceuticals, based on the country’s indigenous resources and expanding knowledge base. We believe we will be able to achieve this by integrating our rich natural biodiversity, indigenous knowledge and applied biotechnology to deliver on key socioeconomic benefits for the country, such as new and improved drugs, diagnostics and treatments for infectious and non-communicable diseases amongst other things.

The South African government has committed itself to the establishment of the necessary initiatives and infrastructure that will assist in the drug development value chain. This includes medicinal chemistry, high-throughput screening, preclinical testing facilities and capabilities and the manufacturing of active pharmaceutical ingredients (API’s).

Over the past five years, the department of Science and Technology has also established a number of platforms and centres of competence aimed at stimulating and coordinating research activity and managing drugs, diagnostics and vaccine development projects particularly in the areas of HIV and AIDS, Malaria and Tuberculosis (TB). These initiatives are still in their infancy and they use a virtual model of drug, vaccine and/or diagnostic development that is intended to minimise overhead costs and harness existing but fragmented capacity in South Africa.

We are hoping these initiatives will allow us to revitalise our pharmaceutical industry by contributing towards the development of essential medicines for diseases that affect the majority of the people in Africa. Not only is the pharmaceutical sector vital to our economy and science base but it will continue to be a key component in the enormous health challenges which will dominate our research and development agenda for the foreseeable future.

It is programmes like these that make South Africa an innovative middle-income country. Take another country that ranks higher than we do in international comparisons of innovation, and on which we modelled our innovation policy. Korea.

What did South Korea do that we wanted to copy?

Korea started small in the 1960s. At the time Korea was emerging from war. It was a typical developing country but without natural resources. It was an agrarian country with a small industrial base. There was little or no science and technology to speak of. It had two public research entities and one was the Korea Atomic Energy Research Institute. It had about 5,000 scientists and engineers. From that modest beginning Korea transformed itself, within 30 years, into one of the world’s most dynamic modern economies.

In the beginning, in the 1960s, scientific research played second fiddle to industrial development.

But by the 1980s industrial development began to stall and Korea’s government concluded that Korea needed to develop its own indigenous r&d capacity. It launched an r&d programme in 1982 and provided incentives to companies to improve their export performance.

And it was on the back of that investment in r&d that Korea developed high-tech industries for which it is now famous. Korea is now a world leader in semiconductor memory chips, cellular phones, and liquid crystal displays, as well as establishing themselves in the world market in shipbuilding, home appliances, auto manufacturing, and telecommunications.

A key reason why Korea was able to increase R&D investment so rapidly was because it had an abundant pool of highly educated workers who could meet the increasing demand for R&D services in both private and public sectors.

What do we learn from this?

This is what we learn: Korea recognized that R&D investment is more constrained by the lack of human resources than by financial resources. In other words, education was the most important government activity of all.

South Africa was in a far better position in regard to science and technology in the 1990s than Korea in the 1960s. Apartheid had skewed development but certain areas of our economy had thrived under apartheid-laager conditions (oil to coal; defence-related industries). Once those restrictions were removed and our economy was opened up to global competition, there was a massive expansion in our science and innovation system.

We invested heavily in r&d.

In real terms, R&D expenditure in 20012/13 was approximately 3 times the level of expenditure in the middle of 1990s. In particular, the role of the business sector in financing R&D activity has substantially strengthened vis-à-vis those of the government and the higher education sector. These important trends have consolidated and enhanced the foundation of South Africa's national innovation system.

We have opened up our universities to change so that they also become part of the national transformation project, and thousands of black students and women today enjoy state supported access to higher education. We have substantially re-organised the sector to erode its past racial character, and in line with our desire to promote growth, especially in the areas of science and technology, and in regard to research and development.

Yet there is still much work to do. South Africa is short of skills. We are concerned about numbers of graduates leaving South Africa, both black and white. We know that the only way to entice them back is to offer them better work, pay and opportunities.

South Africa is, like many developing and developed countries, in the grip of a skills shortage. Globally the market for people with portable skills in engineering, finance, marketing, construction, healthcare, management and technology is exploding.

Companies operate in dozens of countries, requiring complex technologies and a massive pool of highly skilled people able to navigate tricky international waters. Low-income developing countries like China and India are spending billions on infrastructure, creating enormous demand for skilled workers. All these things are creating a fierce competition for talent. It’s a competition we’re not winning.

In closing, there is often a mismatch between what is taught in universities and what is required in the public sector.

In the Wealth of Nations, published in 1776, Adam Smith complained that the “greater part of what is taught in schools and universities ... does not seem to be the most proper preparation”for “the business which is to employ [the students] for the remainder of their days.”

So the complaint about a mismatch between training and the skills that a society requires to prosper is not a new one. Let me leave you with this thought: we are held back in the public sector more by our people than we are by a lack of funds.