T Essop: Technological innovation dialogue speech at Protestant Academy
of Tutzing

29 September 2007

Minister Muller
Mr Jurgen Heike
Dr Mertz
Dr Greiner
Professor Botman
Ladies and gentlemen

Thank you very much for affording me the opportunity to address you this
morning as part of what has now has become a very strong and developed
relationship between the Provincial Government of the Western Cape and the
Bavarian government and underpinned by equally close relations between the
Protestant Academy of Tutzing and the Ecumenical Foundation of South Africa.
Minister Sinne and Minister Muller, I think that we are starting to witness the
very positive results which this dialogue has brought and I would like to
believe that part of our success has been that people from civil society, the
sub-national level and national level of government are engaging each other on
the very real challenges which our constituents and humanity face everyday. I
also bring very warm wishes from our Premier, Ebrahim Rasool.

Our challenge over the next few days is to exchange views and deliberate on
the fascinating world of technology innovation and how human endeavour must be
harnessed to render the world a better place. We should commit to each other
that this interaction must be premised on the principles of inclusivity of all
of the world's citizens and their very disparate needs. On 17 February this
year our Premier, Ebrahim Rasool, when addressing the Ecumenical Foundation of
South Africa gala dinner, spoke of the 'material roots of what creates
exclusivity' and asked how do we create the 'politics of inclusivity'. In his
opinion the critical cause of global inequality was the economy.

Over the last 25 years we have witnessed how the rapid changes, brought by
the winds of globalisation, have impacted on our markets and societies. We
should also have the courage and frankness to say that while globalisation has
in certain instances made a positive contribution to the world, in many
countries especially in the developing world globalisation has been a negative
phenomenon and in certain cases has caught societies unprepared.

I would like to propose that our discussion on technological innovation
should be framed in the context of the political and economic evolution of our
globe. It would be critical for us as government to have this as a perspective
to inform our responses to the challenges of technological innovation in
today's world. The central thrust of my argument will be that the history of
economic development and technological advances has led to a global structural
exclusivity between the developed and developing nations. Access to technology,
knowledge, innovation and development remain critical divides in our globe
today.

For many people in the developing world colonialism and industrialisation
served to entrench inequality and underdevelopment. Public and economic policy
went to grave lengths to entrench this and was maintained through sub-standard
education, a lack of access to technology and in many African countries the
economy was stratified and largely primary sector driven serving mainly the
needs of the wealthier industrialised nations.

This global inequality continues during the second wave of technological
advancement through the introduction of Information and Communication
Technology, the so-called digital revolution which as we know also led to the
so-called Digital Divide between rich and poor nations. So while our developed
nations are racing towards the technological future it is clear that for a
large majority of developing nations we are still in the starting blocks of the
industrialisation phase.

I think that it is safe to say that in this multi-polar world that we live
in there remains a global inequality that needs to be addressed. If we fail to
engage on these matters then we will see a rise in exclusion and its corollary
- heightened feelings of marginalisation. It is bearing this context in mind
that our government has had to frame its response. How do we ensure that we
remain globally competitive in a world that is rapidly changing, moving towards
strong technology, knowledge and innovation-based economies while at the same
time ensuring that we are getting the basics right in dealing with the key
challenges of poverty and underdevelopment? How do we meet the demands of this
new globalised world while at the same time meeting the objectives of the
Millennium Development Goals (MDGs)?

Since the advent of democracy in 1994 the South African government has
maintained that economic and social development is our key policy tool for
ensuring greater equality amongst our people. However, we have also
acknowledged that development is a constant process of social change that
requires the participation of all stakeholders. We also realised that should we
fail to deal with the divisive politics of exclusion, which we had inherited
from the dark days of Apartheid, then we would witness the rise of
marginalisation and our lofty ambition, which is codified in the preamble to
our Constitution and states that 'South Africa belongs to all who live in it,
united in diversity,' would never see the light of day.

In our first ten years of democracy it became evident that the global
economy had taken on new levels of sophistication which we were really not
aware of. We knew that our domestic market was commodity rich and that we had
pockets of excellence which we believed could grow and become globally
competitive once the political, economic and cultural isolation which was
imposed on us was lifted.
At this time we most probably underestimated the global reach of corporations,
we also did not fully understand the sheer pervasiveness of international
banks, the complex nature of the global financial system and we missed the
early warning signs of the eminent technological revolution of the 1990's.

However even though we were faced with both these international complexities
together with the very real need to rebuild and unite our country, we can be
proud of the record of achievements both socially and economically of our new
democratic government. We have achieved macro-economic stability with growth
rates averaging at 4,5% over the past years as well as a strong social delivery
programme which has seen millions of people gain access to basic services such
as water, electricity and sanitation.

When we came into government in the Western Cape in 2004 we managed, through
research, to identify new economic opportunities that were being created by
globalisation and the search for cost arbitrage, in a sense trying to harness
the winds of globalisation! It became evident to us that the global environment
had transformed into a knowledge economy and we realised that our economic
success would rest on our ability to compete in these new knowledge
sectors.

We also knew that Cape Town and the Western Cape had rapidly emerged as a
centre of excellence in design, creativity and innovation. An important finding
that repeated itself in our research was that our province was blessed with a
number of substantial talent pools. We have a high number of secondary school
leavers, most of whom had English either as a first or second language, and
four Higher Education Institutions with strong research capacity.

These findings were important because they helped us realise through sector
development in our clusters and with the correct skills development programmes
we could train a number of these talent pools and match them with the new
economic opportunities we had identified. Using the sector clustering
methodology and prioritising key sectors, we were able to create new economic
opportunities in the oil and gas services, call centre and business process
outsourcing (BPO), information and communication technology (ICT), creative and
design sectors.

We have also laid the foundation in partnership with the national Department
of Science and Technology for the biotechnology and tooling sectors. These
successes have validated our approach and deepened our understanding of how to
identify, through solid research, new opportunities which play to our
comparative advantages in the Western Cape. A number of years ago our research
indicated that more investment was being directed to the offshore oil fields
off the west coast of Africa. As a result of this, the demand for new rigs
outstripped the capacity of established yards to build and service them. We
have now positioned Cape Town as a major service hub for oilrigs and our
coastal port of Saldanha, approximately 100 kilometres from Cape Town, will
begin to construct new rigs this year.

Last year we witnessed a significant investment of R1,7 billion, by a German
company called MAN Ferrostaal, for the construction of a fabrication yard in
Saldanha and this will be a critical catalyst for our nascent oil and gas
sector. So we set about embracing the concept of business accelerators and
incubators and we have witnessed remarkable success in our biotechnology,
medical devices and information and communication technology (ICT) business
incubators. We have also strongly encouraged product and process (TPP)
innovations which seeks to implement new products and processes and significant
technological improvements in production of goods and service as well as their
production processes

However, if one were to take software development as an example it became
evident that many of the systems and software products operated on a source
code that is deemed proprietary and copyrighted. So it becomes extremely
difficult to develop new programmes or enhance that software product if you do
not even have access to the language or source code. Cape Town has also
experienced this difficulty and the ICT sector has begun to embrace free open
source software (FOSS) and is now developing very interesting products,
especially those applications that can operate on both PCs and mobile
phones.

If we turn to the biotechnology sector we acknowledged that our province has
a rich indigenous floral and fauna biodiversity, coastal and marine systems as
well as a genetically diverse human population which is crucial to medical
discovery. The Western Cape is also home to a very special floral kingdom which
is recognised under United Nations Educational Scientific and Cultural
Organisation (UNESCO) Treaty as common property of all human kind and I refer
to the unique Cape Floral kingdom and Succulent Karoo kingdom. We believe that
new scientific discovery resulting from the eco-prospecting our biodiversity is
very real.

Most plants in the Cape Floral Kingdom cannot be cultivated outside of our
province and to date much work is being done in this regard. However, the
majority of private sector biotechnology companies in the Western Cape are
heavily reliant on donor funding, the reasons for this are numerous but the
most apparent are high acquisitions costs of technology, the long lead times to
the production of revenue generating products or services and especially the
high risks associated with this sector.

So as a government we have committed ourselves to mobilising domestic
capital, establishing private-public-partnerships and are keen to enter into
co-operative agreements, knowledge sharing and funding programmes with foreign
states and organisations. We recently witnessed the launch of the International
Centre for Genetic Engineering and Biotechnology (ICGEB) at the Groote Schuur
Hospital. This centre is the first of its kind on the African continent and is
one of only three international biotechnology laboratories in the world and
aims to conduct innovative research in life sciences for the benefit of
developing countries.

The centre, is dedicated to advancing of research and training in molecular
biology and biotechnology, it aims to strengthen the research capability of its
members through training, funding programmes, advisory services and represents
a comprehensive approach to promoting biotechnology internationally.
Technological transfers from more developed states and the lack of strength in
our national innovation system remain serious challenges. We have witnessed a
shift in thinking around innovation and cluster of partnership programmes have
been identified.

Our national flagship project is the Co-operation Framework on Innovation
Systems (COFISA), which aims to strengthen South Africa's national system of
innovation and is the product of a bilateral agreement with Finland, who will
contribute R30 million to the project.

Ladies and gentlemen, I have tried to illustrate how our province has
responded to the changing demands for new technologies, innovation and
technological innovation and in so doing, using this as a platform to address
our critical challenges of poverty and unemployment and to bring greater
inclusivity in our province to realise our vision of the Western Cape as "A
Home for All!". It is clear that the Western Cape government has positioned
itself to deal with both the new global challenges as well as simultaneously
dealing with the legacies of colonialism and Apartheid.

We have tried to generate economic growth in our province while at the same
time ensuring that the benefits of this growth are shared by all. We are
confident about achieving our national Accelerated and Shared Growth (AsgiSA)
objectives and the target of 6% growth by 2014. However, our attempts at
ensuring sustainable and shared growth will be undermined by the stalling of
the global trade negotiations and the removal of crucial trade barriers. Added
to this, the sophistication of the global capital market has brought the
development of new financial instruments and new risks (such as the recent
sub-prime lending crisis), we have also been eclipsed by the technological
revolution and we struggle to make gains on the digital and technological
divide and we also struggle to find solutions to new diseases.

This remains a challenge for South Africa and the rest of the continent. To
give you a sense of the enormity of the problem let me share some statistics
relating the nine Southern African Development Community (SADC) countries. Out
of a total population of 134 million people, and with a total GDP of $288
billion only 20,5% of these people have access to cell phones and 3,3% have
access to landlines. This clearly demonstrates the reality that poorer nations
find themselves at a dramatic technological disadvantage and will certainly not
be able to cross the digital divide without assistance.

So we have to ask the fundamental question: How do these people access the
internet, which has become so basic to the everyday lives of citizens in the
developed world? How do we compete in a knowledge-based global economy with
this inability to access and share information. How do the poor do business in
such a disadvantaged environment? And how can we expect innovation if basic
access is not available?

Added to this all nine countries, and one can apply this to the rest of
Sub-Saharan Africa, are dependent on importation of capital goods, machinery
and equipment from the developed world which illustrates a dependency for
technology from outside of these countries. Amidst these complexities of
technological discrimination a new challenge has arisen which will place a
further burden on the developing nations.

Climate change has become one of the most important agenda points on the
global stage, dominating the discourse at every level of the world's
multilateral institutions such as the United Nations, the G8 and the World
Economic Forum.
While the largest emitters of greenhouse gases come from the developed nations
the greatest impacts will be felt by the poorer nations. And therefore we must
assert that Climate Change is a Poverty issue!

Sir Nicholas Stern, Adviser to the British Government on the Economics of
Climate Change and Development stated in his report, that was released in
October 2006 that "our actions over the coming few decades could create risks
of major disruption to economic and social activity, later in this century and
in the next, on a scale similar to those associated with the great wars and the
economic depression of the first half of the 20th century."

The challenge therefore for poorer nations and the African continent
specifically is enormous. It has been acknowledged that the African continent
will not have the capacity to respond the challenges that climate change will
bring. Access to technology is critical to both mitigation and adaptation
strategies. We are therefore facing the third and new wave of the technological
divide.

While the Kyoto Protocol commits developed nations to technology transfer
and the use of the Adaptation Fund to assist developing nations, very little of
these commitments have been fulfilled. Only three percent of the Adaptation
Fund has been spent on the African continent and very few technology transfer
commitments have been realised. The Western Cape government has done research
into the impacts on Climate Change in our province. The findings indicate that
the Western Cape will be one of the most vulnerable provinces in South Africa
and will experience and in fact have already started experiencing drought,
flooding and fires.

We have responded by developing a Climate Change Adaptation and Mitigation
Plan which we have begun to implement. A critical priority is the promotion of
Renewable Energy and we have set a target of 15% by 2014. The challenge however
for us to be able to implement our programme is dependent on our ability to
develop and access new technologies. Our study has also pointed out that we
could face a number of new economic challenges!

Should countries in Europe, which are also adapting to climate change and
who rank as our largest trading partners, begin to move towards selling
products with a carbon-neutral status, i.e. reducing the food-miles, then a
large segment of our export market could be lost and significant job losses in
the agri-processing sector. Similarly should the developed world introduce the
notion of a carbon tax on air travel, aimed at discouraging long-haul tourists
then we could lose a sizeable number of tourist and their tourist dollars and
the associated job multiplier that is so important in this sector.

We understand that there are risks and challenges, but the government of the
Western Cape has adopted an approach of looking at the new economic
opportunities that Climate Change can bring and we call this the Environmental
Economy. It embraces areas of intervention such as the promotion of a recycling
economy, renewable energy, Clean Development Mechanism (CDM) opportunities,
etc. Current estimates are that by 2050 the global market for low-carbon energy
products is likely to be worth at least $500 billion.

As the Stern Report asserts 'The transition to a low-carbon economy will
bring challenges for competitiveness but also opportunities for growth. For the
economy as a whole, there will be benefits from innovation that will offset
some of these costs.' Very often the public sees the utilisation of renewable
energy sources as a cumbersome act of compliance. Our strategy is to create the
incentive on the demand side by stimulating the supply side. In this next year
we will announce an exciting package of interventions that will catalyse the
renewable energy sector.

We know that the impacts of climate change are not evenly distributed; they
will strike the poorest and most vulnerable countries and communities the
earliest. So we have said that climate change is a poverty issue that requires
us to act now and act decisively!

Conclusion

In concluding I would like to encourage participants in this Dialogue
session to debate the challenges of the technological divides I have addressed
in this input. How do we find solutions to these problems? How do we forge new
partnerships that help us close the gap and ensure that we achieve the goals of
universal access? How do we mobilise resources and knowledge to those countries
and regions that require assistance?

How do we deal with the challenge of achieving our Millennium Development
Goals while laying the basis for the emergence of the new knowledge and
technology-based economies? How do we use technological innovation to deal with
poverty and to improve the quality of life of all of our people? And finally,
is there an opportunity for us to use technological innovation to build a truly
inclusive world - a Home for All!

I would like to thank the Protestant Academy of Tutzing and the Ecumenical
Foundation of Southern Africa and the Bavarian government for providing this
critical platform for dialogue and solution-finding. I am certain that the
participants present will enhance the discourse and find exciting and
innovative solutions to some of our challenges. I look forward to the
engagement.

Thank you.

Issued by: Department of Environment, Planning and Economic Development,
Western Cape Provincial Government
29 September 2007
Source: Western Cape Provincial Government (http://www.capegateway.gov.za)