The Minister was speaking at a symposium attended by the business sector and science councils in Pretoria this week. Her warning comes amid concerns of slowed business expenditure on research and development (BERD) over the past five years. From 2009/10 to 2013/14, BERD grew by only 5.7% compared with 21.4% from 2004/05 to 2008/09.
Organised by the Department of Science and Technology (DST) and the National Advisory Council on Innovation (NACI), the symposium facilitated dialogue between the two sectors on the factors affecting investment in science, technology and innovation (STI) by business in the current period of low economic growth, which is projected to grow by only 0.6% this year, after expanding by 1.3% in 2015.
Government measures research and development (R&D) expenditure as a percentage of GDP and has set a target for gross expenditure on GERD to be 1.5% of GDP by 2019. However, the latest survey showed that expenditure remained flat at 0.73% between 2011/12 and 2013/14.
Minister Pandor said expenditure on research and innovation activities undertaken by business had a more direct and immediate impact on GDP growth, exports and employment than innovation expenditure and activities in other sectors, such as government, tertiary education and NGOs.
“Accordingly, from a developmental and growth perspective, the decline in BERD is a major concern,” the Minister said, noting that there was some improvement in business R&D as shown by the latest R&D Survey.
Minister Pandor said the DST would maintain and hopefully increase its levels of R&D investment in the government, higher education and science council sectors. It would also maintain policy stability with regard to government assistance for R&D for the business sector.
She said government would also maintain continuity and certainty on the R&D Tax Incentives and other direct R&D support instruments as a way to encourage both local and foreign investment in the R&D performed by business.
Government would also maintain the Department of Trade and Industry’s Technology for Human Resources in Industry Programme (THRIP), which has supported 296 projects and produced 45 patents. This includes funding for SMEs, particularly in bio-manufacturing and nanotechnology projects.
“We should actively engage South African venture capital to encourage and facilitate joint investments in commercial STI and public benefit projects, as well as to assist with developing a new generation of venture capital companies through mechanisms such as National Treasury’s Venture Capital Company Tax Incentive Scheme.”
