SA increases R&D spending

1 June 2007

South Africa’s spending on research and development (R&D) has increased by about R4.5-billion over the last five years, an indicator of the growing competitiveness of the country’s economy.

Delivering his department’s budget vote in Parliament in Cape Town last week, Science and Technology Minister Mosibudi Mangena said the country’s target of spending 1% of gross domestic product (GDP) on R&D by 2008/09 was now “well within sights.”

According to the latest Human Sciences Research Council survey of R&D spending, SA businesses, universities, science councils, government research institutes and non-governmental organisations spent R14-billion, or 0.91% of GDP, on R&D in 2005/06.

This was up from R12-billion, or 0.87% of GDP, in 2004/05, Mangena said.

Over the same period, the private sector’s share of R&D activity rose from 56% to 59%. “As our business sector engages in innovation and R&D, their returns contribute to economic growth,” the minister said. “We are delighted with this trend.”

SA firms score for innovation
Earlier this year, the Human Sciences Research Council released the results of the first official South African Innovation Survey – modelled on the survey used in all European Union countries in 2005/06 – showing that more than half of SA’s companies engaged in the development of new products and processes between 2002 and 2004.

“Our rate of innovation is well above that of the European average of 42% for 2004,” Mangena told Parliament last week.

According to the survey, SA companies spent in the region of R27.8-billion on innovative activities in 2004, representing about 2.4% of the total turnover of all business covered in the industrial and service sectors.

While the bulk of this expenditure was devoted to the acquisition of new machinery, equipment and software, in-house research and development (R&D) expenditure accounted for about 20% of total innovation expenditure.

“In addition, some 10% of successful innovators in industry received public funding for innovation activities,” Mangena said. “That shows that the funding programmes of government are having a penetrating effect in the private sector.”

R&D incentives
The Department of Science and Technology also worked with the National Treasury and SA Revenue Service over the past year to introduce enhanced tax incentives for R&D.

“I must, however, report a concern that few business leaders appear to be aware of the new incentives,” Mangena said. “We urge businesses to carefully examine their production processes, correctly identify their R&D activities, and increase their investments further.”

Mangena reported that the lion’s share of the department’s budget over for 2007 through 2009 – about R323-million – would go to developing South Africa’s human resources in science, engineering and technology.

The department has also allocated R178-million to provide modern research facilities and infrastructure for the country’s research community.

Source: BuaNews