Minister touts innovation-active economy to grow SA

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 21 Apr 2022

Innovation will aid South Africa’s economic growth, says higher education, science and innovation minister Dr Blade Nzimande.

The minister has hailed the potential of science and innovation to unlock the country’s economic prospects and new business opportunities.

Compounded by the COVID-19 pandemic, the South African economy has chugged along over the past two years, without any significant growth gains.

The International Monetary Fund (IMF) this week revealed the economic outlook growth forecast for SA remains at 1.9% in 2022. However, there’ll be a slight drop to 1.4% in 2023, the IMF predicts.

On the employment front, the outlook is also gloomy. South Africa’s unemployment level now stands at 35.3%, up from the 34.9% previously reported by Stats SA’s Quarterly Labour Force Survey (QLFS). The current unemployment level is the highest since the start of the QLFS in 2008, notes Stats SA.

Referencing the Business Innovation Survey (2014-2016), Nzimande says it shows innovation was pervasive across all sectors, especially in engineering and technology, manufacturing and trade.

According to the minister, more than two-thirds of South African businesses were innovation-active and took some scientific, technological, organisational, financial and commercial steps towards the implementation of innovation-related projects.

“Innovative South African businesses engaged in the four types of innovation measured in almost equal shares: product innovation (48.2%), organisational innovation (42%), marketing innovation (41.7%), and process innovation (34.6%),” he states.

“The engineering and tech, manufacturing and trade sectors reported the greatest concentrations of innovation in 2014-2016.”

Nzimande adds that through government-led programmes and projects, more innovation-active South African businesses accessed national and global markets than their counterparts with no innovation activity.

Higher education, science and innovation minister Dr Blade Nzimande.
Higher education, science and innovation minister Dr Blade Nzimande.

“Fifty-eight percent of businesses with innovation activity were more likely to have sold their goods and services on national markets, when compared to 37.7% of non-innovation-active businesses. In addition, more innovation-active businesses accessed global markets, including markets in the rest of Africa, Europe, Asia and other countries, than non-innovation-active businesses,” he points out.

Nzimande isn’t the first government official who has been vocal about innovation and the digital economy being key enablers of the country’s economic growth prospects post-COVID-19.

Communications minister Khumbudzo Ntshavheni recently pointed toinnovation’s importance, urging support of local innovators. “We need to promote our own platforms throughout the African continent to reach scale and develop our economies.”

In 2020, trade, industry and competition deputy minister Nomalungelo Gina said South Africa’s post-COVID-19 economy must be centred on stimulating innovation and the digital economy.

The deputy minister noted that old economic methods are dying a natural death, and the digital economy, whose bedrock is innovation, is taking over.

Leading the change

Turning to the Department of Science and Innovation’s (DSI’s) efforts to bolster innovation, Nzimande says it has successfully implemented initiatives and surveys.

These include the sector innovation fund (SIF), the agriculture bio-economy innovation partnership programme (ABIPP), the R&D tax incentive, the business innovation survey and the agricultural business innovation survey.

The department’s funding contribution into each SIF is about R182 million, from 2014 to 2021. The industry contribution is about R108 million, he states.

Through the SIF programme, the DSI partnered with organised industry associations to implement research, development and innovation programmes aimed at meeting the industries’ competitiveness challenges.

The DSI implemented six multi-stakeholder programmes in the agriculture sector through the ABIPP, in partnership with the private sector.

In addition, more than 100 projects across different SIF programmes maintained and improved their competitiveness, says the minister.

“These projects include an online phytosanitary certification tool that enabled the citrus and other horticultural sectors to access and retain export markets; alternative pest and disease control mechanisms that allowed the citrus industry to overcome the European Union’s citrus black spot barriers to entry; new packaging and transportation protocols and methodologies that contributed to significant cost savings; and the plantation management systems that assisted emerging forestry growers and processers to improve their operational efficiencies.”

Nzimande further notes that an average of 291 taxpayers received the benefit of the R&D tax incentive for the first three fiscal years of the implementation of innovation projects.

“Of these, 101 taxpayers are from the manufacturing sector, 68 from the financial intermediation, insurance, real estate and business services sector, and 50 from the agricultural sector.”

He indicates the SIF programme has contributed to high-end, industry-relevant skills development, through supporting at least 438 students and interns. Eight percent of students are currently employed as a result of the support received from the fund.

At least 66 knowledge products have been produced, at least half of which have been transferred to industry partners, including small or emerging players.

“About 51% of the students supported are female (with about 27% being black females), and about 55% of the students are black,” he concludes.