The Department of Science and Technology (DST) has, in its recently released draft White Paper on Science, Technology and Innovation (STI), stated that a “sovereign innovation fund” is to be created. “There is a need for increased commercialisation funding,” states Section 6.2 of the draft White Paper. “A sovereign innovation fund will be formed to leverage coinvestment by the public and private sectors to address gaps in technology commercialisation.

“The fund will be designed to complement and enhance existing funding instruments, and to provide large-scale funding for the development and maturation of radical innovations and emerging industries,” it added. “Within the public sector, agencies such as the Technology Innovation Agency, the Industrial Development Corporation (IDC) and the Development Bank of Southern Africa (DBSA), in cooperation with the National Treasury, can contribute to this fund.”

This is part of government’s aim to increase the country’s investment on research and development (R&D). South Africa’s gross expenditure in research and development (GERD) increased only slightly in recent years – in the country’s most recent national R&D survey (covering 2015/16), it came to 0.8%, compared with the 0.73% and 0.77% recorded in the previous four such surveys. “This improvement is significant, however, since it took place in the context of slowing gross domestic product (GDP) growth, which stood at 2.5% in 2013, 1.7% in 2014 and 1.3% in 2015,” states the draft White Paper (Section 6.1).

Nevertheless, South Africa’s global R&D share fell by 25% from 2007 to 2013, while India’s share rose by 18% and China’s rocketed by 92%. And South Africa’s “relatively” low GERD, and the almost stagnant level of GERD as a proportion of GDP, are “a concern”.

However, there are some encouraging trends. Business has increased its R&D spending in the past few years. And the R&D budgets of all government departments that form part of the National System of Innovation (NSI) have increased in real terms. In particular, DST funding has risen by nine times since 2006/07. Public-sector investment in R&D is also taking place through sector-specific science councils, including the Agricultural Research Council, Mintek and the South African Medical Research Council.

“Government recommits to the target of increasing the intensity of R&D investment in the economy so that GERD reaches 1.5% of GDP in the next decade, and an aspirational 2% a decade later,” affirmed the draft White Paper (Section 6.2). “Provincial and local governments will actively contribute more to STI funding and, over time, will set appropriate targets for investment in STI as part of their growth and development strategies . . . National STI-intensive government departments will set appropriate targets for STI in their budgets . . . Development finance institutions – the IDC and the DBSA – will scale up funding for industrial innovation activities.”

Further, the Department of Trade and Industry’s Trade and Investment South Africa initiative will seek to attract foreign direct STI investment to South Africa. And new types of funding will also be used, including crowdfunding and corporate social investment, as well as collaborations between partners from different sectors and/or different countries. Government will encourage such developments by introducing matching funding instruments and undertaking awareness campaigns.

In addition to these initiatives, current funding activities will be optimised, by means of better coordination between government departments and between government and the private sector, reducing duplication and increasing synergies. Where appropriate, there will be efficiency improvements in State NSI agencies. Further, the current complex system of multiple R&D and STI funding agencies will be simplified by the harmonisation of the functions and funding instruments of the National Intellectual Property Management Office, the Technology Innovation Agency and the applicable sections of the IDC, the National Research Foundation, the Small Enterprise Development Agency, the Support Programme for Industrial Innovation and the Technology and Human Resources for Industry Programme, among others.