SA: Blade Nzimande: Address by Minister of Higher Education, Science and Innovation (27/09/2022)

28th September 2022

Programme Director;
Dr Audrey Verhaeghe, Chair of the SA Innovation Summit;
Mr Buntu Majaja, the CEO of the SA Innovation Summit;
Mr Ketso Gordhan, CEO of the SA SME Fund;
Ms Matsi Modise, Chair of the Technology Innovation Agency board;
Mr Patrick Krappie, Acting CEO of TIA; 
Mr Lucky Pane Acting Executive Head of Research at the Public Investment Corporation;
Dr Phil Mjwara, Director-General of Science and Innovation;
Alderman JP Smith, City of Cape Town Councillor;
Representatives of the Embassies of Switzerland and Finland;
Early-stage funders at Newtown Partners, Tiger Brands, Imperial, and the Mineworkers Union Investment Fund, to name a few;
Founders and co-founders of various start-ups, especially Mr Lungisa Matshoba of Yoco and Mr Lyle Eckstein of Ozow; 
Angel investors;
Innovation ecosystem players;
Distinguished guests;
Ladies and gentlemen:

There is a growing realisation among scientists, innovators and policy makers that innovation is a key factor in stimulating faster economic growth, industrialisation and inclusive development.

In line with the theme of this occasion, I wish to make a few brief points relating to the investments that the Department of Science and Innovation continues to make with the aim of placing innovation at the centre of our national development efforts.

The first point relates to using innovation as an instrument to address our socio-economic challenges as a country.  This means that, in the South African context, we need to view innovation through the prism of the triple challenge of poverty, inequality and unemployment. 

In this sense, it is necessary for policy makers to plan and implement interventions aimed at significantly upscaling the impact of innovation in addressing these interlinked challenges, optimising innovation's contribution to improving the quality of life of citizens.

One of the best ways to do this is by ensuring that all the key actors in our national system of innovation, such as the government, higher education, business and civil society, work together to enhance the capacity of the system to realise our socio-economic priorities.

The actors I have referred to must set a joint agenda, through which they purposefully develop synergies between programmes, pool their skills and financial resources, and evaluate progress so that, if necessary, the course of these initiatives can be corrected.

The second point relates to how our White Paper on Science, Technology and Innovation intends to enable business innovation support.  Our White Paper outlines a policy agenda in which science, technology and innovation play a catalytic role in the development of South Africa. 

The White Paper emphasises the important role of the "quadruple helix" approach, involving collaboration between business, academia, government and civil society, to ensure the relevance and impact of STI interventions. 

As it relates to business innovation support, the White Paper articulates the following policy intents – 

Innovation beyond research and development to address the needs of the business sector through a demand-side focus.

Increased support for and collaboration with the business sector, focusing particularly on support for the private sector (business); needs-based research and development; technology development to support companies, including technology localisation; support for technology transfer and absorption; and specific support for SMEs.

Support for the commercialisation of publicly funded intellectual property.

The exploitation of new sources of growth through support for emerging industries and innovation to revitalise existing sector.

The third point I wish to highlight is the high-level conceptualisation of the innovation compact as one of the proposed Decadal Plan system enablers to support a whole-of-society approach to innovation.

As some you may be aware, the Decadal Plan is our implementation framework for the White Paper on Science, Technology and Innovation.  The plan identifies several STI priorities and system enablers aimed at improving the national system of innovation's performance.

We believe that enhanced innovation performance, in particular, requires collaboration and synergy regarding various policy issues across departmental boundaries. 

In light of the complexities associated with driving a coherent national system of innovation, our Decadal Plan puts forward the following system enablers – 

A whole-of-society innovation compact.

An innovation skills compact.

A budget coordinating mechanism.

A revised strategic management model.

Of the four system enablers identified above, I would like to expand a little on the innovation compact.  At a high-level, the compact seeks to facilitate collaboration among government departments and other actors for the following reasons: 

To ensure policy coherence and certainty related to innovation, the absence of which negatively affects business and foreign investment in South Africa.

To avoid the duplication of initiatives and, in particular, innovation incentives, which is a waste of resources and negatively influences the contribution of innovation to addressing South Africa's priorities.

To ensure that the relevant actors are committed to working together to enhance innovation performance and therefore pool their resources (funding, knowledge and systems).

The innovation compact scope and focus areas include the following: 

Strategies for a more innovative and entrepreneurial culture in South Africa.

Measures to address the leakage of intellectual property resulting from South Africa's publicly funded research and development.

Legislation to support South African innovation, for example, the public procurement of locally developed technologies, tax incentives, competition policy, immigration regulations, and the setting and enforcing of standards.

Programmes to collaborate with and support business, including small, medium and micro-enterprises and co-operatives.

As I have indicated, both the 2019 White Paper and the draft Decadal Plan provide for the establishment of high-level coordinating platforms and instruments to facilitate the required whole-of-society approach to science and innovation in South Africa.

The last point I wish to make regards some of the business support instruments that the Department of Science and Innovation is supporting, and the progress that has been made.

In line with the innovation compact strategic focus, we have developed several policy instruments over the years to support business innovation.  These include the Seed Fund, which is implemented by our entity the Technology Innovation Agency.

Let me talk about the Seed Fund first.  This is an early-stage funding instrument aimed at assisting innovation actors such as higher education institutions, science councils and small, medium and micro-sized enterprises to advance their research outputs and ideas, and to develop prototypes, proofs of concept and business cases.  

The research and development (R&D) tax incentive is another relevant Department of Science and Innovation initiative.  It is an indirect business support instrument aimed at promoting private sector investment in R&D in the country.  R&D is required in order to boost innovation in the business sector, improving South Africa's ability to improve existing products and processes and develop new ones.  

To date, almost 3 000 tax incentive applications have been processed, and applications worth an estimated R46 billion in R&D expenditure have been supported. 

The third support initiative I would like to mention is the Innovation Bridge Portal.  This is a digital innovation showcasing instrument that partners the Department of Science and Innovation with the World Bank Group and the Department of Small Business Development.  

The portal seeks to build an innovation ecosystem by providing relevant information to accelerate connections and collaboration within the national system of innovation and to encourage greater interaction between innovators, industry, and government in support of commercialisation.

The fourth initiative is the Innovation Fund.  Work towards the Innovation Fund – a separate, standalone public-private funding partnership aimed at harvesting and commercialising South African tech innovations – began in the 2019/20 financial year.  

It serves as a new national financing instrument, involving formal equity finance funded by investments from the public and private sectors to de-risk early stage technology development phases and create opportunities for later stage investments from the private sector. 

What makes the Innovation Fund different from other funding instruments is its focus on supporting tech innovation and commercialisation in high-risk technology development initiatives, such as the early development and expansion stages of technology-based South African start-ups or fledgling firms, including SMMEs.

The Innovation Fund is expected to deliver on the following high-level performance indicators: 

Products and technologies commercialised (local and exports).

Offtake agreements and orders.

Number of spin-outs created.

Number of jobs created.

Leveraging of the fund.

The growth in revenues and/or sales of companies supported.

The Innovation Fund is currently in the pilot phase and is being implemented in partnership with the Public Investment Corporation, the Technology Innovation Agency, the South African SME Fund and Anza Capital.

Although the Innovation Fund has been operational for less than 18 months, let me tell you about some of the progress that has been made. 

The co-investment figures indicate that the fund has thus far leveraged three times the initial investment.  In other words, for every R1 invested by the fund an additional R3 has been leveraged from other sources.

Twenty-four businesses have been supported so far.  Over 50% of these projects are in the commercial stage. 

Of the total businesses supported to date, 70,2% are black-led or owned, and of the black owners, 49,5% are women.

Projects have been supported in five provinces – 44% of the total in Gauteng, 22% in the Western Cape, 17% in Limpopo (17%), 13% in KwaZulu-Natal and 4% in Mpumalanga.

These are just some of the investments that we as government have made as part of developing the appropriate policy and institutional mechanisms to place innovation at the centre of our efforts to build a more equal, humane and technological advanced country.

I look forward to your ideas and suggestions on how we can improve the work we are doing as government.  I wish you a productive summit.

Thank you.