Programme Director
Distinguished guests
Ladies and gentlemen
It’s an honour and a pleasure to be here today.
According to the research firm, BMI-Techknowledge, the information technology (IT) market in South Africa grew by over 10% to R68.7 billion in 2010.
The largest percentage growth was in IT services (larger than in software or in hardware), as business looks for greater efficiency and increasing productivity, and looks to expand into the 1 billion strong African market.
Ten years ago Africa was the “hopeless continent” and Afro-pessimism was rife in international media.
It’s a very different story now.
Today Africa is growing faster than ever before and faster than most other regions in the world. In fact, the global management consulting firm, McKinsey and Company, tells us that the rate of return on foreign investment in Africa is greater than in any other developing region.
There is growing recognition that Africa cannot and should not be left behind in the fastest developing areas of world trade - in technology and knowledge products. Many African countries are putting science high up in their development priorities and investment in science and technology is increasing rapidly. In fact, there are at least 100 African companies that have revenues greater than $1 billion.
Innovation and knowledge – rather than capital and labour - are the drivers of economic growth and societal change in all countries.
The current affluence of high-income countries has been massively increased by their investment in innovation and new technologies.
What does the Department of Science and Technology (DST) do for South Africa in this regard?
In general terms, our role in the DST is to invest in, to promote, and to catalyse innovation in South African national priorities.
First, the DST invests in the building blocks of innovation by funding basic research in our universities and public entities (including science councils), so that they can train scientists, engineers and technologists and can also produce publications and patents – which is how we measure the impact of our investment in research and development. (In fact we transfer nearly 60% our annual R4.4 billion budget to our public entities, like the Technology Innovation Agency, the Council for Scientific and Industrial Research, the Human Sciences Research Council, and the South African National Space Agency.)
By the way, the largest share of the annual overall research and development (r&d) spend is in the natural, medical, and health sciences. However, IT is the largest share of the business r&d spend.
That does not mean that South Africa is reaping ‘first-mover’ dividends from r&d. In fact, quite the contrary. Most of the IT r&d spend is for second-hand innovation. We are not on the frontier of IT innovation. We import technologies from abroad and adapt them for local use.
But that is what Korea did and what China is doing now.
We used to think of China as the low-cost manufacturing centre of the world. But not any more. China is capable of being far more innovative than they are at the moment. Imagine what will happen when they move on to the frontier of IT innovation and start reaping “first-mover” dividends!
We also invest in infrastructure in laboratories and cyber networks.
The DST’s major investments are in the Centre for High Performance Computing (CHPC) and the South African National Research Networks (SANReN).
The CHPC fosters research that is complex and large-scale. Since its inception in May 2007, CHPC has provided computational resources to flagship projects. For example part of the batteries of Joule, the first electric vehicle designed in South Africa, were designed and tested virtually at the centre.
SANReN is a high-speed network that enables and supports scientific and technological research. SANReN will quite soon provide broadband access to all universities, Science Councils, National Research Facilities.
The roll-out of SANReN is also critical for South Africa’s bid for the Square Kilometre Array (SKA) project. SANReN Phase I commenced in 2007 and, when complete, will connect at least 60 university campuses and research institutions across the country at very high speeds.
Second, the DST promotes private-sector innovation, maintains competitive markets, and nurtures entrepreneurs.
We do this primarily by offering a r&d tax incentive. I think it’s well known that many more companies could apply for the tax credit than do at the moment and that we in the DST can do more to make it easier for small and medium companies to apply.
We are working on it.
We know that the Australians and the Canadians have set the bench mark. In Canada it’s a $4.5 billion a year tax credit and it’s tweaked and expanded each year – not without controversy. In Australia it’s even bigger. In South Africa it’s only a R200 million a year tax credit. (1) We are working on improving the credit and Treasury is working on improving it in tandem with a new venture capital regime – announced in the budget this year.
We are working across government - in the economics cluster - to improve the financial and legislative environment for small and medium companies. We can do more to encourage start ups and it’s in the IT and high tech sector that we see most of these developing. Earlier this week we launched a partnership with Nokia – the specific mobile projects are very exciting.
Third, the DST acts as a catalyst for innovation in national priority areas. We chose in 2008 five specific areas (we called them “grand challenge” areas) in which we aim to catalyse leading-edge innovation: global change, renewable energy, space science, the bio-economy, and the human sciences.
Other countries have done the same or similar. The United States chose space applications, clean energy, biotechnology, and educational technologies. The Canadians chose the environment, natural resources and energy, health sciences, and information and communication technologies. The United Kingdom chose energy, the environment, lifelong health and global security as their “grand challenges”.
You can see the similarity in concerns. And it’s not that there are vast differences between countries in the north and the south, although of course there are vast differences in our development agendas. These are not simply grand challenges. They are global challenges that we all need to collaborate on and cooperate in solving – Conference of Parties (COP 17) is just around the corner.
Countries vary in the amount of budget allocated to these grand challenge focus areas, but they are typically a fifth to a quarter of science budgets.
You will see that IT is not one of the areas we chose. The reason is partly that business is very active in this sector of the market and the role of government is often to work in those areas where the market does not work, for example, in the rural areas.
So for example our Meraka Institute, based at the Innovation Hub, works with a wireless mesh network technology to provide rural broadband connectivity. The project forms part of the government-wide IT infrastructure rollout.
Or the Digital Doorway project that provides terminals in rural locations that are loaded with content and applications, which include science software, HIV and AIDS information and learning material, games, mathematics tutor, open-source software and music programmes. Currently, more than 200 units have been deployed across the country, mainly in rural areas where access to computers is still a big challenge.
But the main reason that we did not choose IT as a grand challenge focus area is that IT is intrinsic to all five of the areas we chose. It is a cross cutting technology – like the other three major technologies that make the world go around: nano-technology, bio-technology and eco (or green) technology.
Our aim in the DST is to catalyse investment in key multi-disciplinary areas that will drive innovation in all sciences. Nano-technology is a key example, as its impact is felt in widely disparate fields, from medicine to electronics to IT.
In closing, I hope I have shed a little light on how the DST sets about helping you position South Africa and the African continent as leaders in IT in the 21st century. And it is therefore my sincere hope that this summit will bring us closer to realising your and our goal.
Thank you.
