Consultancy Cova Advisory has called on government to boost its support for research and development (R&D) in South Africa to help weather the economic storm that Covid-19 has brought about.
Director Tumelo Chipfupa on October 1 hosted a webinar about the impact of the pandemic on the R&D landscape in South Africa, pointing out that R&D plays a key role in industrial development and job creation.
This follows after the Department of Science and Innovation (DSI) announced that its main R&D funding incentive, the new Innovation Fund – formerly the Sovereign Innovation Fund – had been scaled back owing to the overall squeeze on government finances.
Chipfupa believes the country needs to promote faster and better sustained growth and says investment in innovation enables this.
He warns that, during times of economic hardship, the erosion of business confidence means that companies often cut on their R&D spend and skills development, but governments can help promote continued investment in R&D.
“Some countries have increased the generosity of R&D incentives. For example, Germany and Ireland introduced new tax incentives [in the last few months].”
In South Africa, 80% of innovation funding comes from within firms themselves, whereas the global trend is for just less than half of all funding to be found through external injections.
“It is clear that we are underusing incentives or we have insufficient incentives for R&D,” Chipfupa suggests.
However, he also argues that there are several programmes that support science and innovation and says firms undertaking research should look more widely for support.
“There is a broad range of government funding opportunities,” he points out.
During the webinar, Chipfupa praised the DSI for its responsiveness to the private sector and its effective communication with grant applicants.
Government participants in the webinar confirmed that private sector R&D has gone down as a proportion of overall innovation investment.
The government’s main R&D tax incentive has a sunset clause and is due to end in October 2022.
Work is under way to assess its effectiveness and to see what support should be continued after the expiry date, with a decision expected early next year.
“Some form of support must continue as the economy will remain frail for a long time, and R&D is one area which will help to trigger and sustain recovery,” says Chipfupa.
“It is not in dispute that State incentives do lead to an increase in R&D by firms."