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Survey shows R&D funding decline in SA

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South Africa’s research and development statistics indicate a decline in expenditure during the 2019/20 period.

The National Survey of Research and Experimental Development (R&D survey), released at the end of last year, shows gross domestic expenditure on research and development (GERD) for 2019/20 amounted to R34.5 billion. In comparison, the country’s GERD for 2017/18 amounted to R38.7 billion.

GERD is an aggregated measure of in-house R&D expenditure performed domestically in five institutional sectors: Government, science councils, higher education, business and the non-profit sector.

In terms of the survey, GERD, based on constant 2015 rand values, fell from R31.4 billion in 2018/19 to R28.1 billion, which represents a year-on-year change of -10.3% in 2019/20.

Furthermore, GERD as a percentage of gross domestic product (GDP) at current prices was 0.62% in 2019/20, which is seven basis points lower than the 0.69% recorded in 2018/19.

Summary of key statistics and indicators (2017/18 to 2019/20)

Published annually by the Department of Science and Innovation (DSI), the R&D survey is compiled by the Centre for Science, Technology and Innovation Indicators (CeSTII) of the Human Sciences Research Council (HSRC) with support from Statistics South Africa.

The annual survey provides an update on SA's R&D statistics, measuring the size, growth and composition of R&D in terms of expenditure, funding and personnel.

It is published a year later because it covers actual expenditure and not projections.

While it has previously been a champion of R&D expenditure, the business sector has witnessed a sharp decline, notes the survey.

For the 2019/20 period, the R&D expenditure in the business sector decreased by R3.7 billion in nominal terms, compared to the R1.4 billion decrease seen in 2018/19, based on the survey’s findings.

“The business sector also shed 4 128 R&D personnel, of which 2 301 were researchers and 1 530 were other R&D personnel,” states the report.

According to the survey, the science council sector and higher education sector were insulated from the overall economic stagnation in the economy, and were the only sectors that registered a nominal increase in R&D expenditure in 2019/20.

On the other hand, the not-for-profit sector was unchanged from 2018/19 in nominal terms.

“The higher education sector increased R&D personnel by 2 369 headcounts. However, the science council sector lost 444 R&D personnel. Government departments, which include research centres, increased the level of R&D personnel employed by 247 in 2019/20.”

The survey indicates the main sources of funding for R&D in SA are the government and business sectors. “Whereas government (including science councils and university own funds) increased funding overall in 2019/20 by R1.9 billion, business decreased funding of R&D by R5.2 billion.

“Notable is funding from abroad, which increased funding by R664 million overall, mostly to the business sector with increased funding of R768 million, at the expense of the government sector and science councils with decreased overall funding of R274 million.”

Funding for R&D by source (2010/11 to 2019/20)

Within the business sector, the industries with the largest R&D expenditure have been the financial intermediation, real estate and business services sector and the manufacturing sector.

“The financial sector decreased R&D expenditure by R2.4 billion in 2018/19 to R4 billion, and the mining sector decreased R&D expenditure from R1.748 billion to R686 million.

“Manufacturing increased slightly by R290 million to R3.457 billion in 2019/20. The contribution of SOEs [state-owned entities] to R&D activity in the business sector increased by 1.9 percentage points to 19.2% in 2019/20, even though the R&D expenditure that SOEs contributed to the business sector decreased by R439 million.”

Reflecting on the survey’s findings, higher education, science and innovation minister, Dr Blade Nzimande, said urgent corrective action is required to prevent the decline in R&D funding.

"We have witnessed and continue see the value that past investment in scientific research and development has had for South Africa and the world in fighting COVID-19. Our genomic surveillance has led to the detection of two variants already, and this work has been praised and welcomed globally.”

Adds Nzimande: “In light of these huge advances, we cannot afford such significant declines in both the performance of R&D and the funding of R&D by the business sector. Failure to arrest the decline by all social partners will hamper our efforts to achieve economic recovery and reconstruction.”

The minister pointed out he’s requested the DSI, the HSRC-CeSTII and the National Advisory Council on Innovation to convene a roundtable engagement in February, where key role players including government, business, state-owned entities, universities, science councils and experts can reflect on the survey results and help formulate advice for consideration by Cabinet.

In terms of the National Development Plan, SA targets raising the level of R&D investment to 1.5% of GDP by 2030.

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