technology innovation agency economic impact assessment...

Technology Innovation Agency

Economic Impact Assessment

2016/17 Financial Year

July 2017

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Celebrate Development Diversity

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Document Information

Document title: Technological Innovation Agency Economic Impact Assessment 2016/17 Financial Year

Prepared by: Urban-Econ Development Economists

Contact details: First Floor Lake View Office Park

137 Muckleneuk Street (c/o Melk Street) Brooklyn Pretoria

0075 Republic of South Africa

Tel: (012) 342 8686 e-mail: [email protected]

Contact Person: Mr Ben van der Merwe Email: [email protected]

Prepared for: Technological Innovation Agency (TIA)

Contact details: TIA House 83 Lois Avenue

Menlyn Gauteng

0181 Republic of South Africa Tel: + 27 (12) 427 2700

Contact Person(s): Dr Johan van Dyk

mailto:[email protected]


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Table of Contents

Table of Contents ................................................................................................................................... iii

List of Figures .......................................................................................................................................... v

List of Tables .......................................................................................................................................... vi

List of Abbreviations ............................................................................................................................. vii

Glossary ................................................................................................................................................... x

Executive Summary ................................................................................................................................ xi

1. Project Orientation ......................................................................................................................... 1

1.1. Study Purpose and Scope ....................................................................................................... 2

1.2. Report Outline......................................................................................................................... 3

2. TIA Overview ................................................................................................................................... 4

2.1. TIA Divisions Background ........................................................................................................ 6

2.1.1. IFPCS ................................................................................................................................ 6

2.1.2. IES .................................................................................................................................. 13

2.2. Stakeholder Engagements .................................................................................................... 22

2.2.1. Impacts .......................................................................................................................... 22

2.2.2. Performance.................................................................................................................. 26

2.2.3. Challenges ..................................................................................................................... 29

2.2.4. Budget ........................................................................................................................... 30

3. Global Approach to Technology Innovation ................................................................................. 32

3.1. Technology Innovation in Developed Countries ................................................................... 33

3.1.1. Broad Technology Innovation Strategies and Policies .................................................. 34

3.1.2. Impact of Technology Innovation ................................................................................. 34

3.1.3. United States of America – Case Study ......................................................................... 35

3.2. Technology Innovation in Emerging Economies ................................................................... 36

3.2.1. Broad Technology Innovation Strategies and Policies .................................................. 36

3.2.2. Challenges ..................................................................................................................... 38

3.3. International Lessons for South Africa and the TIA .............................................................. 38

4. Economic Impact Analysis ............................................................................................................. 40

4.1. The Modelling Process .......................................................................................................... 40

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4.2. Model Input .......................................................................................................................... 41

4.3. Economic Modelling Results ................................................................................................. 42

5. Conclusion and Recommendations .............................................................................................. 50

Works Cited ........................................................................................................................................... 52

ANNEXURE 1 ......................................................................................................................................... 56

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List of Figures

Figure 1: Methodological Study Approach ............................................................................................. 3

Figure 2: Distribution of TIA Technology Platforms .............................................................................. 15

Figure 3: Parliamentary Grant Funding, Rm, 2010/11-2017/18 ........................................................... 31

Figure 4: Relationship Between Technology and Development, 2016 ................................................. 33

Figure 5: Impact of Capital Investment/Operational Expenditure ....................................................... 41

Figure 6: TIA Unit Multipliers vs Total Multiplier .................................................................................. 47

Figure 7: Total TIA Sectoral Impact, 2016/17 ....................................................................................... 49

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List of Tables

Table 1: TIA Strategic Initiatives .............................................................................................................. 6

Table 2: Advanced Manufacturing Unit Outline ..................................................................................... 7

Table 3: Agricultural Unit Outline ........................................................................................................... 7

Table 4: Energy Unit Outline ................................................................................................................... 9

Table 5: Health Unit Outline ................................................................................................................. 10

Table 6: ICT Unit Outline ....................................................................................................................... 11

Table 7: Natural Resources Unit Outline .............................................................................................. 12

Table 8: Technology Stations Unit Outline ........................................................................................... 14

Table 9: TPP Unit Outline ...................................................................................................................... 16

Table 10: YTIP Unit Outline ................................................................................................................... 17

Table 11: ISDP Unit Outline ................................................................................................................... 18

Table 12: Seed Fund Unit Outline ......................................................................................................... 19

Table 13: TIPs Unit Outline ................................................................................................................... 21

Table 14: GCIP Unit Outline .................................................................................................................. 22

Table 15: Job and Internship Opportunities ......................................................................................... 24

Table 16: ISDP Unit 2016/17 Programmes ........................................................................................... 24

Table 17: Socio-economic Benefits from TIA support .......................................................................... 25

Table 18: Highlights on Project Commercialisation .............................................................................. 26

Table 19: Co-funding on TIA projects .................................................................................................... 28

Table 20: Model Input Data, Rand Thousand, 2016/17 ........................................................................ 42

Table 21: IES Division 2016/17 Impact .................................................................................................. 42

Table 22: IES Division Multipliers .......................................................................................................... 44

Table 23: IFPCS Division 2016/17 Impact, R Million ............................................................................. 45

Table 24: IFPCS Division Multipliers ...................................................................................................... 46

Table 25: TIA Operational 2016/17 Impact ........................................................................................... 46

Table 26: TIA Multipliers ....................................................................................................................... 47

Table 27: Sectoral Multiplier Comparison, 2016/17 Values ................................................................. 47

Table 28: TIA Production Multipliers 2010/11-2016/17 Comparison .................................................. 48

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List of Abbreviations

ACCI African Centre for Crop Improvement

AMTS Advanced Manufacturing Technology Strategy

BEE Black Economic Empowerment

BIDR Bioprocessing and Institute of Diagnostic Research

BRICs Bio-technology Regional Innovation Centres

CAPEX Capital Expenditure

CCDI Cape Craft and Design Institute

CPGR Centre for Proteomic and Genomic Research

CPUT Cape Peninsula University of Technology

CSIR Council for Scientific and Industrial Research

CUT Central University of Technology

DAFF Department of Agriculture, Forestry, and Fisheries

DFI Development Finance Institutions

DST Department of Science and Technology

DUT Durban University of Technology

ECDC Eastern Cape Development Corporation

EIA Economic Impact Assessment

EWSETA Energy and Water Sector Education and Training Authority

FDI Foreign Direct Investment

FTI Foundation for Technological Innovation

GCIP Global Cleantech Innovation Programme

GDP Gross Domestic Product

GM Genetically Modified

GR Genomic Research

HEIs Higher Education Institutes

HR Human Resources

ICT Information Communication Technology

IDC Industrial Development Cooperation

IES Innovation Enabling and Support

IF Innovation Fund

IPs Intellectual Properties

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ISDP Innovation Skills Development Programme

MADCaP Men of African Descent & Cancer of the Prostate

MMV Malaria Medicines Ventures

MTEF Medium Term Expenditure Framework

MUT Mangosuthu University of Technology

NDP National Development Plan

NECSA South African Nuclear Energy Corporation

NEF National Empowerment Fund

NMMU Nelson Mandela Metropolitan University

NRF National Research Foundation

NSI National System of Innovation

NWU North-West University

NYDA National Youth Development Agency

OECD Organisation for Economic Co-operation and Development

OPEX Operating Expenditure

OTTs/TTOs Offices of Technology Transfer/Technology Transfer Offices

PDI Previously Disadvantaged Individual

PIC Public Investment Corporation

R&D Research and Development

Rm Rand in Million

RU Rhodes University

SA

SAENSE

South Africa

Screening Applications and Exploring Novelty in Specialised

Environments

SAM Social Accounting Matrix

SANEDI South African National Energy Development Institute

SARIMA South African Research & Innovation Management Association

SEDA Small Enterprise Development Agency

SFP Seed Fund Programme

SHIP

SIC

Strategic Health Innovation Partnerships

Standard Industrial Classification

SMME Small, Medium and Micro Enterprises

SPV Special Purpose Vehicle

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SSRC Strategic Stakeholders Relations and Communications

STA Strategic Technology Area

STEM Science, Technology, Engineering, and Mathematics

TDF Technology Development Fund

TDM Tool, Die, and Moulds

TIA Technology Innovation Agency

TIH The Innovation Hub

TIPs Technology Innovation Programmes

TPP Technology Platforms Programme

TRL Technology Readiness Level

TSP Technology Stations Programme

TUT Tshwane University of Technology

UCT University of Cape Town

UFH University of Fort Hare

UFS University of the Free State

UJ University of Johannesburg

UK United Kingdom

UKZN University of KwaZulu-Natal

UL

UNIDO

University of Limpopo

United Nations Industrial Development Organisations

UNISA University of South Africa

UNIVEN University of Venda

UNIZULU University of Zululand

UP University of Pretoria

USA United States of America

UWC University of Western Cape

VC Venture Capitalists

VUT Vaal University of Technology

WIPO World Intellectual Property Organization

WITS University of the Witwatersrand

WSU Walter Sisulu University

YTIP Youth Technology Innovation Programme

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Glossary

Economic Impact Assessment “Economic impact assessments provide a quantitative

method to estimate the economic benefits that a

particular project or industry brings to the economy and

surrounding communities where the specific project or

industry is located” (Plumstead, 2012)

Economic Model A simplified representation of how the economy works.

Employment1 Those aged 15–64 years who, during the reference week,

did any work for at least one hour, or had a job or business

but were not at work (temporarily absent).

Gross Domestic Product The total market value of all final goods and services

produced in a national economy over a given period,

usually one year.

Production Production is defined as the process in which labour and

assets are used to transform inputs of goods and services

into outputs of other goods and services.

Social Accounting Matrix An economy-wide database that contains information

about the flow of resources associated with all

transactions that take place between economic agents in

an economy during a given period (usually one year).

1 Statistics South Africa, 2017. Quarterly Labour Force Survey. Retrieved: http://www.statssa.gov.za/publications/P0211/P02111stQuarter2017.pdf

http://www.statssa.gov.za/publications/P0211/P02111stQuarter2017.pdf

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Executive Summary

Project Orientation

The Technology Innovation Agency has commissioned Urban-Econ Development Economists to

conduct an economic impact assessment (EIA) for the financial year 2016/17 in order to determine

the contribution of the Agency to the South Africa economy, the National System of Innovation (NSI),

as well as to national development priorities.

The overall purpose of the study is to determine whether the Agency is realising its mandate, and to

what extent. The study therefore assesses the economic impact and performance of the Agency

through its operations. Lessons learnt and recommendations on how the Agency can optimise its

impact to better achieve its intended goals are also provided. The objectives of the study are:

Table A: Study Objectives

Primary Secondary

Determining: • if the Agency’s intended socio-economic outcomes,

effects, and impact are being realised; • the people or groups that have been affected by the

Agency’s activities (with a focus on youth, women, Black people, and rural and peri-urban communities); and

• the extent of the Agency’s impact.

Determining Agency related: • outputs and outcomes; • project/programme beneficiaries; • impact on South African social and economic

landscape • unintended/non-anticipated effects; and • contribution to national agendas, particularly the

improvement of South Africa’s triple challenge of poverty, inequality, and unemployment.

TIA Overview

TIA Divisions Background

The Agency implements its different strategic roles through two divisions, with their various sub-

programmes/Business Units; they are highlighted in the following table:

Table B: TIA Divisions and Business Units

Innovation Funding and Pre-commercialisation Support (IFPCS) Division

Innovation Enabling and Support (IES) Division

• Advanced Manufacturing;

• Agriculture;

• Energy;

• Health;

• Information and Communication Technologies (ICT); and

• Natural Resources.

• Technology Stations Programme (TSP);

• Technology Platforms Programme (TPP);

• Youth Technology Innovation Programme (YTIP);

• Innovation Skills Development Programme (ISDP);

• Seed Fund Programme (SFP);

• Technology Innovation Programmes (TIPs); and

• Global Cleantech Innovation Programme (GCIP).

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The IFPCS Division generally assists the Agency in fulfilling its strategic roles as an ‘Active Funder’ and

‘Facilitator’, that is it:

• provides funding and expertise; and

• facilitates commercialisation support for local established enterprises.

The Strategic Technology Areas (STAs) or Business Units, which focus on technology specific to key

sectors of the country, are:

Table C: IFPCS Division - Business Units Outline

Unit Description Non-Financial Support Type Geographical Focus

Advanced Manufacturing

The Unit funds high-tech advanced manufacturing technology projects, as well as technology development in line with the Department of Science and Technology (DST) Advanced Manufacturing Roadmap Initiative.

• Thought leadership – as an example, some representatives of the Unit sit in several committees related to the local advanced manufacturing space.

• Facilitate funding – the Unit assists innovators in developing applications for funding.

Mainly South Africa.

Agriculture The Unit assists both financially and non-financially towards the development of high-impact technologies, particularly in the agriculture industry. The Unit’s role is largely to de-risk the supported agricultural projects for them to attract next round funding and to eventually commercialise successfully.

• Facilitates the identification of investment opportunities and building of the agriculture pipeline.

• Interacts with research communities, other partners, and investors.

• Building of fundable opportunities. • Project management on investments. • Validation and advisory services. • Facilitates commercialisation. • Facilitates co-funding or next round of

funding.


Energy The Unit funds innovative energy technologies from the moment a concept is proven up to pre-commercialisation.

• Facilitates – i.e. links its investees with next round funders such as the Industrial Development Cooperation (IDC).


Health The Unit mainly funds innovative projects in health management, that is, in prevention, diagnosis, and treatment. The Unit focuses largely on human health.

• Links projects to other service providers who would assist with specific areas of technology development.

• Connects projects with potential customers and/or downstream funders to facilitate third party funding.

• Links distressed companies up with service providers who would engineer turn around strategies.

South Africa and the greater Africa region.

Information and Communication Technologies (ICT)

The ICT Unit pursues the Agency’s mandate around inventions in ICT. The Unit focuses on diverse project areas encompassing the following technology areas: • Electronics - programmes (for

retail industry). • Internet space – including

artificial intelligence; protection of currently unvalued digital assets (e.g. logos); and identity and customer management.

• Advisory role. • Validation. • Operational support. • Facilitating third party funding.

Global reach.

Natural Resources The Unit supports the development of technologies within the Agency’s mandate until they become

• Plays a facilitative role. • Facilitating funding.


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commercially viable. The Unit focuses largely on technologies applicable in mining, water resources, and all-natural resources outside the areas covered by other IFPCS Units.

• De-risking business and enabling other investors to feel comfortable to bring in their money.

• Developing commercialisation plans for some of the projects.

The IES Division provides thought leadership and an enabling local environment for technology

innovation in collaboration with other NSI players. This is achieved through the Division’s functions of:

• Enabling and stimulating a culture of innovation in South Africa.

• Facilitating access to key infrastructure and expertise for technology innovation.

• Lowering the barriers for others to participate in technology innovation.

The Divisions Business Units are as follows:

Table D: IES Division - Business Units Outline


Technology Stations Programme (TSP)

The Unit looks to enabling academia and industry, particularly SMMEs, to participate in technology transfer and innovation by supporting universities to become relevant and responsive to the needs of industry, while simultaneously enabling industry to benefit from the specialised knowledge and innovative technologies of the local universities.

• Training. • Developing prototypes. • Technical assistance

(technological improvements). • Feasibilities for Technology

Development Funds (TDFs).

• South Africa and the greater Africa region.

• Kenya (capacity building). • Namibia (strategic and

infrastructure level). • Botswana and Egypt.

Technology Platform Programme (TPP)

The Unit was formed to assist in developing a vibrant biotechnology sector in South Africa in response to the objectives set out in the Biotechnology Strategy. The purpose of Technology Platforms is to develop human capital, facilitate access to infrastructure, and ultimately provide value addition to external stakeholders.

• Technical support. • Advisory services towards

technology commercialisation, e.g. in the areas around biosafety.

• Creating linkages with players that might help advance the successful commercialisation of a project.

• Thought leadership. • Training of SMMEs and

individuals.

• South Africa and the greater Africa region.

• Biosafety Technology Platform - Sudan, Namibia, Swaziland, and Zimbabwe.

• The Screening Applications and Exploring Novelty in Specialised Environments (SAENSE) Technology Platform -Lesotho.

• The H3D Technology Platform - Sub-Saharan Africa.

Youth Technology Innovation Programme (YTIP)

The YTIP Unit is aimed at creating an enabling environment that stimulates the development of technologically innovative ideas amongst young people (aged between 18 and 30 years) into viable technology based businesses. It funds young scientists up to R1 million, for activities such as intellectual property (IP) registrations and management, own stipend, prototype development, and product development.

• Facilitating partnerships in areas such as incubation, product development, funding, patent support.


Innovation Skills Development Programme (ISDP)

The ISDP Unit is responsible for strengthening critical thinking capabilities within the NSI (including the Agency’s IFPCS Units and other IES programmes) in order to facilitate the smooth progression of technologies from the proof of concept

• Training support. • Technology support. • Networking. • Creating opportunities for

students and interns, e.g.


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stage through to pre-commercialisation (i.e. Technology Readiness Level (TRL) 3-8.

facilitating their participation in science weeks.

Seed Fund Programme (SFP)

A de-risking instrument aimed at assisting Higher Education Institutes (HEIs), science councils, and SMMEs to advance their research outputs and ideas to develop prototypes, proof of concept, and business cases that could be used for further development.

Mainly financial support for technology development milestones.


Technology Innovation Programmes (TIPs)

The TIPs Unit is a cluster initiative (active fund) based on a national need to create a stimulus within a particular

industry/sector. The Unit has the

following two pillars: • Technology development: where

the Programme stimulates the development of products and services; and

• Enabling: where the Programme creates community and cohesion in order to avoid duplication of efforts.

• Funds the cluster. • Adding intellectual capital. • Government lobbying. • Awareness creation. • Day-to-day programme

support to ensure the objectives are achieved.


Global Cleantech Innovation Programme (GCIP)

The GCIP is aimed at developing innovative clean technology SMMEs in South Africa, implemented by the United Nations Industrial Development Agency (UNIDO) and hosted by the Agency. The Unit operates as a business accelerator and offers a competition-based approach to identify suitable local SMMEs.

• Programme (accelerator and competition).

• Workshops. • Training. • Mentoring. • Networking - some get to

travel to San Francisco for a global summit for a week.

• Agency staff are also capacitated through the Unit.

• Mainly South Africa. • Mauritius.

Stakeholder Engagement

Impacts

One of the main points discussed in the consultations was the challenge of accurately exhibiting the

Agency’s impact on the economy (in terms of its support in development of technologies). This is

because supported projects often have delayed effects on socio-economic aspects due to the nature

of the industry. Only once projects have successfully reached market, or have been established

businesses, can actual impacts be derived.

This is a significant issue as it means that the Agency’s true impact is not being documented, and

therefore it is likely contributing more to economic growth through its successful projects. As the main

aim of an economic impact assessment is to determine the effect of an intervention on the economy,

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it would be beneficial to consider a specific study focused on assessing the impact of all the Agency’s

successful projects on aspects such as Gross Domestic Product (GDP), job creation, and income.

The main impacts that were observed through the consultations are:

• Employment/Internships

Information pertaining to the number of direct jobs created within the projects supported by the

various Agency IFPCS and IES Units is not readily available. There have not been any assessments

to deduce such information; but, the Agency is now initiating some exercises and practices to

gather such statistics going forward. The information currently available is with respect to the

following Units and the projects they support:

o Health: Nine permanent jobs plus one intern.

o Technology Stations Unit: 243 permanent and temporary jobs plus 120 internships.

o TPP Unit: 103 permanent and temporary jobs plus five interns.

• Skills Development

The Agency is also actively involved in skills development initiatives, a role that is largely

spearheaded by the Agency’s ISDP Unit. Some of the key highlights pertaining to the Agency’s

contribution towards educational support and skills development in South Africa are from the

ISDP Unit, where it supported 10 595 individuals and/or learners. Other notable examples include:

• The Technology Stations Unit provided both short-learning programmes and tailor-made

training to individuals and industry.

• As part of the TPP Unit:

o The Centre for Proteomic and Genomic Research (CPGR) runs four specialist

technical courses open to anyone from across the country.

o The biosafety platform provides research grants in biosafety research.

• Some of the programmes in the TIPs Unit offer research grants.

• Skills development is one of the core aspects characterising the Global Cleantech

Innovation Unit. As earlier alluded, entrepreneur innovators are provided with extensive

mentoring support through the accelerator programme for a period of four months.

• Other Socio-Economic Implications

Regardless of most of the Agency’s supported projects that have not reached full

commercialisation, it is critical to note that there are certain socio-economic imperatives that can

be drawn from the work of the Agency. These encompass key aspects such as:

Table E: TIA Impact on Socio-Economic Aspects

Socio-economic implications

Examples of the TIA’s Contribution

Economic Growth, Poverty, and Inequality Alleviation

• The TPP Unit, through the Bioprocessing and Institute of Diagnostic Research (BIDR) Technology Platform, supported two cooperative projects in rural KwaZulu-Natal on quality control. Such support assisted the cooperatives to place their agro-processed products on the market and begin to generate income.

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Socio-economic implications

Examples of the TIA’s Contribution

• Through the TPP Unit’s support, four novel technology products were created and placed in the hands of small companies (SMMEs) to assist them in becoming profitable. Should these SMMEs succeed, then this will assist in economic growth as new jobs will be created and income realised.

• The Health Unit assisted in poverty alleviation in rural Hluhluwe through the establishment of an agro-processing plant by Enzyme Technologies (Pty) Ltd – a company that it supported. The Health Unit also contributed towards poverty alleviation and economic growth in Upington through the establishment of a Microalgal Technology Demonstration and Incubation Centre, which is expected to facilitate the establishment of algal technology based SMMEs and companies.

• The Youth Technology Innovation Unit is assisting with the introduction of previously disadvantaged individuals (PDIs) into the mainstream. Through its focus on the youth, and previously disadvantaged universities, the involvement of previously marginalised groups such as the youth and blacks into the innovation space could assist in lessening the income inequalities in South Africa.

Improved Quality of Life

• The Health Unit supported companies and projects, such as CPT Pharma Pty (Ltd) and the University of Cape Town (UCT) antimalarials project, are expected to result in the improvement of the quality of life of both South Africans and other Africans at large and will prevent loss of productivity through illness.

• The TPP Unit supported a relatively large number of projects in health that could help in the improvement of the quality of life of South Africans should they be successfully commercialised. One example is the CPGR’s Men of African Descent & Cancer of the Prostate (MADCaP) project, conducted in collaboration with the University of Pennsylvania and Stellenbosch University, and entailing a large-scale prostate cancer genotyping study. Should the project be successful, it could yield the successful development of precision medicine for chronic diseases such as prostate cancer.

• Projects such as the smoke-free cook stove, developed through support from the Global Cleantech Innovation Unit, minimise the incidence of respiratory diseases in poor communities as a result of their reliance on traditional forms of energy, such as firewood, for cooking purposes. Such projects are also imperative in reducing carbon emissions, thus, contributing towards climate smart living in South Africa.

Other • The Agency receives royalties from projects that are now running and such an income has multiplier effects on the work of the Agency and the respective projects it supports.

Performance

Most of the Agency Units achieved their indented outcomes set for the 2016/17 financial year. Some

of the key achievements realised by the various Agency Units are:

• New Technology Development and Commercialisation

The next table provides a snapshot of how the Agency has assisted various projects to generate

Intellectual Properties (IPs), advance towards commercialisation, and leapfrog products into the

market.

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Table F: TIA Highlights on Project Commercialisation

Unit Commercialised Projects New Technology Development/IPs

IFPCS

Agriculture • Three of the Agriculture Unit’s projects have reached the market: o Regulatory Registration with Department of Agriculture, Forestry and Fisheries for

Beonics Feed Supplements (Pty) Ltd.

o Sweet Sterm Sorghum – eThala BioFeuls partnership proposal with African Centre

for Crop Improvement (ACCI) (University of KwaZulu-Natal (UKZN)).

o Fynbos certificate on grant of community plant variety rights – received for

increasing marketing and protecting new varieties.

Energy • Five technologies are ready for commercialisation, i.e. they are entering the commercialisation phase and have not yet made any sales.

• There are IPs generated for some of the supported projects.

Health • BioDx (Pty) Ltd made sales of their green biocide products to industry clients.

• Enzyme Technologies (Pty) Ltd sold its bromelain product to a farmer.

• All the nine actively disbursing projects are developing new technologies.

• BioDx patents are being processed.

• UCT Antimalarials patent: United States of America (USA) patent granted for Novel Anti-Malarial Agents.

Natural Resources • N/A. • The four actively disbursing projects are patented.

IES

Technology Stations Programme

• N/A. • 84 official disclosures supported through the Technology Stations Unit: o Inventions/Patents: six. o Design: 14. o Journal accredited articles: 20. o Non-journals articles and

conferences: 44.

Technology Platform Programme

• Five technologies reached the market: o Shareholders Agreement between

Phantomax, Johannes Francois Marais and North-West University (NWU).

o Shareholders Agreement between NWU, Heinrich Fouche and Always Around.

o Collaboration Agreement between Lancet and Next Biosciences.

o Shareholders Agreement between NWU and Kemajon Innovations.

o Shareholders Agreement between LeaveldTrust and Lumegen Laboratories (Pty) Ltd.

• There are also considerations for another project (the Newborn Screening) to be commercialised through a joint-venture between a dedicated spin-off company and an established private company.

• Number of innovation products: 20.

• Patents successfully granted: three.

Global Cleantech Innovation Programme

• Some of the projects supported are now at a stage where they are piloting, with some already having pilot customers set up.

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• Leverage funding

The Agency has been relatively successful as a de-risking institution, investing in risky technology

innovation projects and transforming such projects into investable opportunities. Following the

Agency’s financial and non-financial investments, other investors are able to inject their investments

into bankable technology innovation projects.

Challenges

There are certain constraints that impede the Agency from operating effectively and realising its full

potential. Such constraints or challenges affect both Agency beneficiaries and the respective Units.

These can further be categorised into systemic or non-systemic aspects:

• Systemic challenges:

o The Agency operates in a complicated space, particularly considering that the

country’s system (i.e. NSI) is not yet fully matured to accommodate the type of

support the Agency provides, as, according to one of the Unit Heads, South Africa is

not a ‘discovery’ country, and the culture to spin-out companies from local R&D

outputs are not yet fully inculcated in the practices of local researchers.

o Some Agency Units experience limited involvement of PDIs. It appears as if the PDIs

are not actively involved in the technology innovation space. The involvement of PDIs

is mostly on the receiving end, where a relative number of projects are targeted at

benefiting PDI communities.

• Non-systemic challenges:

o The non-systemic challenges are mainly around capacity constraints, particularly of

the budget and human resources (HR). Most of the Agency’s Units currently rely on

minimal HR and funding resources, where most are operating below capacity.

o Lack of integration amongst Agency Business Units.

o Inconsistent and inflexible internal Agency procedures, systems, and processes.

Economic Impact Analysis

The next table provides the Social Accounting Matrix (SAM) model outcomes for the IES Division.

Table G: IES Division Impact, 2016/17

Direct Indirect Induced Total

Production (R Million) 394.04 735.29 259.45 1 388.78

GDP (R Million) 86.59 217.53 102.25 424.67

Employment (Number) 102 883 379 1472

Income (R Million) 26.53 99.42 44.36 198.39

Tax (R Million) 59.11 9.62 5.16 64.10

Source: Urban-Econ Calculations, 2017.

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According to the above table, the largest impact on total production is seen to come from the

Technology Stations Unit (R459.53 million), Platform Support (R272.47 million), then the Seed Fund

Unit (R266.87 million). This trend is similar for the other economic indicators. As a whole, the IES

Division’s injection of R394.04 million created indirect production of R735.29 million and induced

production of R259.45 million. The indirect effect is seen to be higher than direct, which means that

the supporting industries to the Division’s operations generate greater activity. This makes sense as

the Division is mainly a funding agent, which requires input from other industries in the development

of technologies.

The next table shows the IFPCS Division’s impact on the national economy.

Table H: IFPCS Division Impact, 2016/17


Production (R Million) 127.01 191.28 96.16 414.46

GDP (R Million) 44.20 80.42 40.57 165.20


Income (R Million) 25.15 35.97 17.60 78.72

Tax (R Million) 19.05 3.52 2.05 24.62


The total production impact of specific IFPCS Units largely originate from the Agriculture, ICT, and

Natural Resources Units. This is the same for the other economic indicators across the board. The

IFPCS total impact shows that a direct production injection of R127.01 million produced a total of

R414.46 million. This increased: total GDP by R165.20 million; employment by 544 jobs; income by

R78.72 million; and tax by R24.62 million.

The Agency’s operational impact is provided in the following table:

Table I: TIA Operational Impact, 2016/17



GDP (R Million) 42.31 18.05 26.66 87.02


Income (R Million) 33.19 6.96 11.56 51.72

Tax (R Million) 9.12 1.04 1.34 11.50


The overall Agency multiplier, i.e. the multiplying effect of the IFPCS Division, IES Division, and Agency

operations, is provide in the following table.

Table J: TIA Multipliers


Production 1.00 1.66 0.72 3.38

GDP 0.30 0.54 0.29 1.16

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Employment 0.56 2.16 1.08 3.98

Income 0.15 0.24 0.13 0.57

Tax 0.15 0.02 0.01 0.17


During 2016/17, a R1.00 spend by the Agency, either through its operations or investment, had a total

multiplying effect on the national economy of 3.38. Most of the Units have a lower multiplying effect

than the Agency as a whole, ranging from 2.5 to 3.60 with an average of 3.40. The weighted average

multiplying effect of all sectors in the national economy is 3.60, which means that the Agency is just

below the average national norm. The current total production multiplier is compared to the previous

years in the following figure.

Figure A: TIA Multipliers 2010/11-2016/17 Comparison


Overall, the Agency’s impact on the economy has been relatively constant from 2013/14, and has

improved in the latest year. The trend in the Agency’s impact is seen to be higher in the latest year,

which is likely due to the more accurate approach in the SAM modelling, based on the latest national

SAM, engagements with Unit managers, as well as more detailed financial data. Furthermore, the

Agency’s spending by sector was likely more diversified, and as certain sectors have greater

multiplying effects than others, this may have caused a considerable change in the multiplier.

Other than the technology innovation sector, the Agency also stimulated the following sectors, which

are according to Statistics South Africa’s Standard Industrial Classification (SIC): Business Services;

Transport and Communication; Trade and Accommodation; and Finance. The relationship between

the technology innovation sector and other sectors such as these is based on the backward and

forward linkages in the economy. Therefore, the Agency’s impact is not limited to the NSI only, but it

also creates ripple effects (or benefits) in multiple sectors outside this space. The Agency’s activities

2,87 2,942,73 2,8 2,83 2,82

3,38

0

0,5

1

1,5

2

2,5

3

3,5

4

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

xxi

stimulate production, employment, and income in these sectors in addition to the NSI, therefore

contributing to economic growth and living standards overall.

Conclusion and Recommendations

Overall, it can be concluded that the Agency is well into achieving its mandated goals, as it stimulates

economic development through its activities that enhance products, services, and processes, in

addition to increasing production and income, and creating job opportunities. Not only does the

Agency provide funding support to innovations, but it also offers significant non-monetary support

services in addition to the services related to its strategic roles. These services include validation and

advisory services; skills development (particularly entrepreneurial); rural/peri-urban area

development; and operational support. Its main goal of enhancing the quality of life in South Africa is

also being realised through the growth in available incomes and through the technologies developed

that directly influence living standards (e.g. health improvement projects).

Based on the finding of the study the following measures are suggested to improve and maximise the

Agency’s performance:

• Drawing from the international review:

o Foster a stable economic and political environment that encourages foreign direct

investment (FDI) into technology innovation initiatives.

o Implement innovation policies across all sectors of the economy with a focus on

technology diffusion.

o Ensure that the regulation and restrictions on businesses is limited and that it

encourages competition amongst firms and industries.

• The stakeholder consultation provides the following recommendations:

o Conduct an additional study that determines the Agency’s successful projects lagged

impact on the NSI, local industries, and the economy.

o A cluster or integrated approach with clear goals for the country’s NSI, guided by a

clear overarching goal around what the country aims to achieve.

o Active engagement and possibly a programme that aims towards getting PDIs

involved in the country’s technology innovation space.

o Effective collaboration amongst Business Units and use of resources.

1

1. Project Orientation

The Technology Innovation Agency (herein referred to as ‘’the Agency”) has commissioned Urban-

Econ Development Economists to conduct an economic impact assessment (EIA) for the financial year

2016/17. The study will determine the contribution of the Agency to the South Africa economy, the

national system of innovation (NSI), as well as to national development priorities. As a public entity,

the Agency is required to assess whether it is achieving its objectives of pushing the national

technology innovation system, economic growth, and improvement in the quality of life. This is the

main motivation for the study. Overall, this assessment will aim to demonstrate the Agency’s

significance to the economy, and how it could potentially improve on its activities and contribution.

South Africa has an impressive record in the field of science, both pure and applied, with world-

renowned institutions. Since the dawn of democracy, it has progressively built science and research

support components of the NSI with consistency. Yet, although South Africa was developing into small

and medium-scale high-technology niche industries that export to world markets, the country still did

not have any large-scale high-tech industrial export sectors. To bridge this gap, the National Research

and Development Strategy proposed the development of a public agency in 2002 to stimulate the

technology innovation landscape, which was the Foundation for Technological Innovation (FTI) (DST,

2002). To begin this experiment, South Africa progressively set up a national innovation fund (IF) on a

trial basis. Later in the same year, this development was followed by the establishment of four Bio-

technology Regional Innovation Centres (BRICs), and a national support agency for plant

biotechnology based product development in the form of a trust called PlantBio.

Although, by 2004, South Africa's NSI had developed a significant fountain of local knowledge; this,

however, had minimal influence on the economy. This was worsened by a number of barriers to

productivity and technological innovation, including market influences; a lack of access to adequate

financing (mostly seed and first-stage financing); a relatively weak and uncoordinated intellectual

property (IP) rights framework; as well as a lack of institutional coordination and alignment within the

national system of innovation. These factors contributed to the development of a public-sector

innovation support system by the Department of Science and Technology (DST), the core of which is

the Agency that was established through legalisation in 2008 (Act No. 26 0f 2008) and fully

operationalised by 2010.

2

1.1. Study Purpose and Scope

The overall purpose of the study is to determine whether the Agency

is realising its mandate, and to what extent. This consists of

conducting an economic impact assessment and a review of the

Agency’s performance through its operations. As a whole, the study

will aim to provide lessons learnt and recommendations on how the

Agency can optimise its impact to better achieve its intended goals.

The specific primary study objectives, as detailed by the Terms of

Reference (ToR) include:

• Determining if the Agency’s intended socio-economic outcomes, effects, and impact is being

realised.

• Determining the people or groups that have been affected by the Agency’s activities (with a

focus on youth, women, Black people, and rural and peri-urban communities).

• Determining the extent of the Agency’s impact.

Secondary objectives that largely fall under the primary objectives, are:

• Determining the Agency’s outputs and outcomes.

• Determining the Agency’s project/programme beneficiaries.

• Determining the Agency’s impact on South Africa’s social and economic landscape, which

consists of determining:

o the net effect of the impact by providing information on aspects such as: jobs created,

skills developed, and taxes paid.

o the effect of the Agency on South Africa’s quality of life.

• Determining unintended/non-anticipated effects.

• Determination of the Agency’s contribution to national agendas, particularly the

improvement of South Africa’s triple challenge of poverty, inequality, and unemployment.

TIA Mandate To support the State in stimulating and intensifying technological innovation to improve economic growth and the quality of life of all South Africans by developing and exploiting technological innovations.

3

1.2. Report Outline

The report will take the following approach in obtaining the set objectives of the study:

Figure 1: Methodological Study Approach

The report will therefore be structured accordingly:

• Chapter 1: Offers a background to the study, its objectives, and a framework of the report.

• Chapter 2: A background on the Agency is provided, with a detailed overview of its divisions.

This section also includes structured feedback from consultations with Unit managers.

• Chapter 3: This chapter provides a contextual review of literature on the international

technology innovation scene, and discusses aspects such as legislation, impacts, and issues.

• Chapter 4: Contains the results of the economic impact of the Agency on the national

economy, conducted through the Social Accounting Matrix (SAM) model.

• Chapter 5: The main conclusions of the study are presented through an in-depth analysis of

the whole report, which also provides recommendations on how the Agency may improve on

its performance.

1. Project Orientation

2. Technology Innovation Agency Overview

3. Global Approach to Technology Innovation

4. Economic Impact Analysis

5. Conclusion and Recommendations

4

2. TIA Overview

The Agency was established on 8 of November 2008, through the Technology Innovation Agency Act

of 2008, as a public entity that functions as a key structural intervention strategy designed to support

government in stimulating and intensifying technological innovation; thereby enhancing the country's

capacity for local innovation and lessening its dependence on imported knowledge and expertise. This

Agency forms part of the DST’s Ten-Year Innovation Plan and provides the NSI with a new steering and

funding mechanism, with the DST being the policy-leading department in the system.

The Agency’s mandate is a derivative of the Technology Innovation Act (Act 26 of 2008), which is

focused on the promotion and stimulation of technological innovation, and specifically on the

improvement of the quality of life through economic growth contribution. The Agency aims to achieve

this through the exploitation of creative, new ideas; inventions; discoveries; and processes with the

potential for the development of new technology products and services derived from these. In other

words, the Agency is mandated to enable and support technological innovation across all sectors of

the economy to create socio-economic benefits for South Africa and to enhance the country’s global

competitiveness (TIA, 2015).

The Agency’s overarching goals, which are closely linked to the National Development Plan (NDP), are

presented as follows:

• Positioning the Agency as a thought leader in technological innovation in South Africa.

• Providing South Africa with appropriate and effective support for innovation with a high social

and economic impact.

• Supporting and enhancing technology innovation in Africa and globally to

support/establish/create partnership initiatives.

The Agency’s mandate positions it as one of the significant players within the NSI space, particularly

in the areas of technology funding. In addition to technology funding, where the Agency actively

provides risk funding and support for innovators to progress ideas towards market entry and

commercialisation, the Agency also assumes the connector, facilitator, service provider, and

technology innovation thought leader roles (TIA , 2016).

5

The following infographic outlines the Agency.

Technology Innovation Agency

6

2.1. TIA Divisions Background

The Agency implements its different strategic roles through two divisions, with their various sub-

programmes/Business Units; they are highlighted in the following table:

Table 1: TIA Strategic Initiatives

Innovation Funding and Pre-commercialisation Support (IFPCS) Division

Innovation Enabling and Support (IES) Division

• Advanced Manufacturing;

• Agriculture;

• Energy;

• Health;

• Information and Communication Technologies (ICT); and

• Natural Resources.

• Technology Stations Programme (TSP);

• Technology Platforms Programme (TPP);

• Youth Technology Innovation Programme (YTIP);

• Innovation Skills Development Programme (ISDP);

• Seed Fund Programme (SFP);

• Technology Innovation Programmes (TIPs); and

• Global Cleantech Innovation Programme (GCIP).

The succeeding paragraphs detail the focus and specific support provided by the aforementioned

Agency divisions and the respective Business Units managing the various projects.

2.1.1. IFPCS

The IFPCS Division generally assists the Agency in fulfilling its strategic roles as an ‘Active Funder’ and

‘Facilitator’, that is (TIA, 2016):

• The Division provides funding and expertise to enable the development of discoveries,

inventions, innovations, and improvements into technological solutions that have potential

for successful commercialisation.

• The Division facilitates commercialisation support for local enterprises that are established

to enable exploitation of supported technology solutions. In other words, the Agency, through

the IFPCS Division, assists innovators in securing the much-needed funding from various

sources, for example, venture capitalists (VCs) and development finance institutions (DFIs).

Such funding is critical for the commercialisation of the innovators’ products, services, and

processes developed through the Agency’s support.

The IFPCS’s activities are conducted through its six Strategic Technology Areas (STAs) or Business

Units, which focus on technology specific to key sectors of the country. Each of these are discussed in

the following sub-sections.

Advanced Manufacturing Unit

The Unit funds high-tech advanced manufacturing technology projects as well as technology

development in line with the DST’s Advanced Manufacturing Roadmap Initiative, that is, Advanced

7

Electronics, Aero-structures, Photonics, and Smart Automation. The following table provides a brief

outline of the Unit.

Table 2: Advanced Manufacturing Unit Outline

Aspect Description

Direct/Main Beneficiaries • Advanced manufacturing technology innovators.

Non-Financial Support Type • Thought leadership – as an example, some representatives of the Unit sit in several committees related to the local advanced manufacturing space.

• Facilitate funding – the Unit assists innovators in developing applications for funding.

Previously Disadvantaged Individuals (PDIs) Involvement

• The portfolio of direct beneficiaries has a noticeable disproportion, e.g., very few women. This is the case for many of the Units in this Division.

Geographical Focus • Mainly South Africa.

The following are the 2016/17 strategic objectives and annual performance targets set for the

Advanced Manufacturing Unit:

• To provide technology development funding and support in strategic high impact areas:

o Two technologies, products, processes, and services advancing by two or more

technology readiness levels (TRLs) or reaching TRL7 and higher.

o One technology, product, process, and service attracting commercial or industrial

application interest from external parties.

o R8.00 million from third party sources supporting technology development projects

in the Agency’s portfolio.

o R0.84 million received in the Agency’s bank account from external sources to support

innovation initiatives or programmes (including partnership agreements).

• To develop an effective and efficient internal environment to successfully execute the strategy:

o R6.43 million disbursements on committed funds.

o R15.00 million disbursements on new projects.

Agriculture Unit

The Unit assists both financially and non-financially towards the development of high-impact

technologies, particularly in the agriculture industry. The Unit’s role is largely to de-risk the supported

agricultural projects for them to attract next round funding and to eventually commercialise

successfully.

Table 3: Agricultural Unit Outline

Aspect Description

Direct/Main Beneficiaries • Agricultural related technology innovators.

8

Aspect Description

Non-Financial Support Type • Facilitates the identification of investment opportunities and building of the agriculture pipeline.

• Interacts with research communities, other partners, and investors.

• Building of fundable opportunities, for example, potential clients come up with ideas, which the Unit packages into fundable opportunities.

• Project management on investments. The Unit does not only fund, but provides key aspects of the project deliverables. If there is any change, it is also there to effect that change.

• Validation and advisory services.

• Facilitates commercialisation, i.e. the development of a commercialisation plan.

• Leapfrog the technology development stage into the market.

• Facilitates co-funding or next round of funding.


Key Collaborations • Industrial Development Cooperation (IDC), National Empowerment Fund (NEF), Department of Rural Development and Land Reform, Department of Agriculture, Forestry, and Fisheries (DAFF).

• Internationally, there are MoUs2 with Namibia and Botswana that the Unit envisages to develop.

Active Projects • 32 projects (17 are disbursing).

Completed Projects • Two (contracts ran out).

The following are the 2016/17 strategic objectives and annual performance targets set for the

Agriculture Unit (TIA, 2016):


o Three technologies, products, processes, and services advancing by two or more TRLs

or reaching TRL7 and higher.

o Two technologies, products, processes, and services attracting commercial or

industrial application interest from external parties.



o R22.90 million received in the Agency’s bank account from external sources to

support innovation initiatives or programmes (including partnership agreements).

• To develop an effective and efficient internal environmental to successfully execute the

strategy:



Energy Unit

Similar to the other IFPCS Units, the Energy Unit funds innovative energy technologies from the

moment a concept is proven up to pre-commercialisation. The Unit’s technology focus is primarily

around:

2 Memorandum of Understanding.

9

• Renewable energy;

• Clean coal; and

• Energy management.

The Unit’s outline shows:

Table 4: Energy Unit Outline

Aspect Description

Direct/Main Beneficiaries • Any South African, any province, but for some reason the Energy portfolio is skewed towards the Western Cape.

Non-Financial Support Type • Facilitates – i.e. links its investees with next round funders such as the IDC.

PDIs Involvement • The Unit does not receive a relatively large number of projects from previously disadvantaged areas. it is mainly interested in the idea, although it aspires to have more projects from the disadvantaged. There are generally few Black people involved; even with universities, where most projects are sourced (mainly Stellenbosch, Witwatersrand, University of Cape Town (UCT)), there is relatively little coming from “African” universities.


Key Collaborations • IDC, ESKOM, South African National Energy Development Institute (SANEDI), Public Investment Corporation (PIC), Universities, GICP/ United Nations Industrial Development Organisations (UNIDO), Science Councils, South African Nuclear Energy Corporation (NECSA).

Active Projects • 12.

Completed Projects • Eight.

The following are the 2016/17 strategic objectives and annual performance targets set for the Energy

Unit (TIA, 2016):


o One technology, product, process, and service advancing by two or more TRLs or

reaching TRL7 and higher.








strategy:



10

Health Unit

The primary objective of the Health Unit is to fund innovative projects in health management, that is,

in prevention, diagnosis, and treatment. The Unit focuses largely on human health, although some of

the supported investees can opt to begin with animal health products as a strategy to immediate

commercialisation and proceed to human health in the long term.

With respect to the Unit’s focus, the following are the three-broad health technology focus areas that

it concentrates on:

• Indigenous knowledge systems together with natural products and complementary medicine.

• Medical devices, diagnostics, and e-Health.

• Pharmaceuticals plus bio-pharmaceuticals (biosimilars, vaccines, drugs).

Table 5: Health Unit Outline

Aspect Description

Direct/Main Beneficiaries • Professors, researchers, technology developers/inventors in start-up companies/SMMEs.

Non-Financial Support Type • Links projects to other service providers who would assist with specific areas of technology development.

• Connects projects with potential customers and/or downstream funders to facilitate third party funding or commercial uptake of the technologies.

• In the case of distressed companies, the Unit links them up with service providers who would engineer turn around strategies.

PDIs Involvement • The Unit funds the Genomic Research (GR) Active project at the University of Pretoria, where one of the consortium members is the Mamelodi township based Mothong Trust. The final aim of the project is to establish a manufacturing company and plant in the Mamelodi Township where Mothong Trust will also have shareholding. The company would be commercialising technology derived through Agency funding.

• The Unit is also supporting the pineapple bromelain extraction project that is being implemented by the Durban based Enzyme Technologies (Pty) Ltd. The project has also established an agro-processing plant in Hluhluwe, which is a rural area with limited economic opportunities.

Geographical Focus • South Africa and the greater Africa region.

• The UCT antimalarials project is one example of the Health Unit’s contribution to the greater African region. The project is contributing to the African agenda by developing a drug that is addressing the Malaria disease prevalent in Sub-Saharan Africa, but not so prominent in South Africa. The project is part of a bigger consortium; and clinical trials are planned for execution in Ethiopia.

Key Collaborations • IDC, DST Strategic Health Innovation Partnerships (SHIP) programme, SEDA, EgoliBio, Swiss based Malaria Medicines Ventures (MMV).

Active Projects • Active and disbursing: nine.

• Active, but the disbursement cycle has already concluded: 12.

Completed Projects • One project, i.e. UCT antimalarials.

• The Unit also closed out the MARTI-SRP project which had been completed earlier.

The following are the 2016/17 strategic objectives and annual performance targets set for the Health

Unit (TIA, 2016):

11


o Two technologies, products, processes, and services advancing by two or more TRLs

or reaching TRL7 and higher.








strategy:



Information and Communication Technologies (ICT) Unit

The ICT Unit pursues the Agency’s mandate around inventions in ICT. The Unit focuses on diverse

project areas encompassing the following technology areas:

• Electronics - programmes (for retail industry).

• Internet space - artificial intelligence; protection of currently unvalued digital assets (e.g.

logos); identity management and customer management (e.g. Know Your Customer);

broadband; and actual development of software.

Table 6: ICT Unit Outline

Aspect Description

Direct/Main Beneficiaries • ICT technology related innovators.

Non-Financial Support Type • Advisory role - interrogating what potential clients are trying to achieve.

• Validation – getting to be part of the connectedness (interlinking).

• Operational support - regular reviews of investee projects every three months.

• Facilitating third party funding.

Geographical Focus • Global reach.

Key Collaborations • mLab Southern Africa.

The following are the 2016/17 strategic objectives and annual performance targets set for the ICT Unit

(TIA, 2016):


o One technology, product, process and service advancing by two or more TRLs or reaching TRL7 and higher.

o Three technologies, products, processes and services attracting commercial or industrial application interest from external parties.

12

o R8.00 million from third party sources supporting technology development projects in the Agency’s portfolio.

o R0.15 million received in the Agency’s bank account from external sources to support innovation initiatives or programmes (including partnership agreements).


strategy:



Natural Resources Unit

The Natural Resources Unit supports the development of technologies within the Agency’s mandate

until they become commercially viable. The Unit focuses largely on technologies applicable in mining,

water resources, and all natural resources outside the areas covered by other IFPCS Units.

Table 7: Natural Resources Unit Outline

Aspect Description

Direct/Main Beneficiaries • In terms of the technology developers – it’s mostly SMMEs.

• In terms of the technologies developed – it’s an array of beneficiaries e.g. mines, communities, etc.

Non-Financial Support Type • Plays a facilitative role – where the Unit mobilises companies to pool their resources to develop a particular technology.

• Facilitating funding – where the Unit brings other funders to assist in the industrialisation of projects.

• De-risking business and enabling other investors to feel comfortable to bring in their money.

• Developing commercialisation plans for some of the projects.

PDIs Involvement • The focus is mainly on the technology, but the Unit would like to catalyse and source technologies from diverse sources, including PDIs.


Key Collaborations • Mainly with universities.

Active Projects • Four.

Completed Projects • One.

The following are the 2016/17 strategic objectives and annual performance targets set for the Natural

Resources Unit (TIA, 2016):


o Three technologies, products, processes and services advancing by two or more TRLs or

reaching TRL7 and higher.

o Three technologies, products, processes and services attracting commercial or industrial

application interest from external parties.

o R13.80 million from third party sources supporting technology development projects in

the Agency’s portfolio.

13




strategy:



2.1.2. IES

While the primary objective of the IFPCS Division is to fund and facilitate commercialisation support,

the IES Division, on the other hand, provides thought leadership and an enabling local environment

for technology innovation in collaboration with other NSI players. This is achieved through the

Division’s below functions (TIA, 2016b):

• Enabling and stimulating a culture of innovation in South Africa.

• Facilitating access to key infrastructure and expertise for technology innovation.

• Lowering the barriers for others to participate in technology innovation.

The general key outcomes of the Division are as follows (TIA, 2016b):

• Increasing the number of innovation products developed, as well as the number of innovation

products progressing along the technology readiness levels towards commercialisation.

• Increasing investments in Agency funded/supported projects.

• Increasing sustainability of technology focused SMMEs as a result of technology and business

support from the Agency.

• Increasing participation of PDI owned SMMEs and their sustainability.

• Actioning an integrated technology innovation system.

Technology Stations Programme (TSP) Unit

The Technology Stations Programme Unit (herein referred to as ‘the Technology Stations Unit’) offers

sophisticated and effective technological solutions to targeted industry and communities (TIA, 2016c).

The Unit is perceived as a vehicle targeted at enabling academia and industry, particularly SMMEs, to

participate in technology transfer and innovation. The Unit is premised on the following two-fold

objective, that is, to support universities to become relevant and responsive to the needs of industry,

while simultaneously enabling industry (SMMEs in particular) to benefit from the specialised

knowledge and innovative technologies of the local universities.

There are 18 technology stations in all, and these are distributed as follows:

• Gauteng (6)

14

o Process Energy and Environmental Technology Station at the University of

Johannesburg (UJ).

o Metal Casting Technology Station at UJ.

o Electronics and Electrical Engineering at the Tshwane University of Technology (TUT).

o Chemistry and Chemical Engineering at TUT.

o Training and SMME Tool, Die, and Moulds (TDM) support at TUT.

o Materials and Processing Technologies at the Vaal University of Technology (VUT).

• Western Cape (4)

o Agri-food Technology Station at the Cape Peninsula University of Technology (CPUT).

o Clothing and Textile Technology Station at the CPUT.

o Adaptronics Technology Station at the CPUT.

o Research and development (R&D) and Technology Transfer at the Stellenbosch

University.

• Eastern Cape (3)

o Downstream Chemicals at the Nelson Mandela Metropolitan University (NMMU).

o Automotive Components Technology Station at the NMMU.

o Tool Design Technology Station at the Walter Sisulu University (WSU).

• Kwa-Zulu Natal (2)

o Reinforced and Moulded Plastics Technology Station at the Durban University of

Technology (DUT).

o Technology Station in Chemicals at the Mangosuthu University of Technology (MUT).

• Limpopo (1)

o Limpopo Agri-food Processing Technology Station at the University of Limpopo (UL).

• Northern Cape (1)

o Rural Sustainable Development Station in Northern Cape.

• Free State (1)

o Product Development Technology Station at the Central University of Technology

(CUT).

Table 8: Technology Stations Unit Outline

Aspects Description

Direct/Main Beneficiaries • SMMEs, researchers, and individuals (innovators).

Non-Financial Support Type • Training.

• Developing prototypes.

• Technical assistance (technological improvements).

• Feasibilities for Technology Development Funds (TDFs).

PDIs Involvement • 619 women.

• 1 302 Black people and historically disadvantaged.

• 1 555 SA nationalities (the Unit also assists foreign nationals).

• 1 167 youth.

• Three disabled individuals.


• The Unit drives the African Agenda, having been involved in Kenya (capacity building), Namibia (strategic and infrastructure level), as well as some interactions with representatives from Botswana and Egypt.

Key Collaborations • 96 projects done in collaborations.

15

Aspects Description

Active Projects • Around 2 250 people assisted.

• 611 SMMEs.

• 1 000 innovators and entrepreneurs.

• 639 researchers (techno-based entrepreneurs).

Completed Projects • 285 competitive improvements.

• 235 knowledge based products and prototypes.

The following are the 2016/17 programme-specific objectives and performance indicators set for the

Technology Stations Unit (TIA, 2016c):

• To enable industry, SMMEs in particular, to benefit from the specialised knowledge and

innovative technology of the universities:

o 2 200 SMMEs receiving technological support.

• To contribute towards universities being more responsive to the needs of industry:

o 15 knowledge innovation products supported: prototypes, technology

demonstrators, technology transfer packages and diffusion of local IP through

technology stations.

Technology Platform Programme (TPP) Unit

The TPP Unit was formed to assist in developing a vibrant biotechnology sector in South Africa in

response to the objectives set out in the Biotechnology Strategy. The purpose of Technology Platforms

is to develop human capital, facilitate access to infrastructure, and ultimately provide value addition

to external stakeholders. During the 2016/17 financial year, the TPP comprised of a network of nine

Technology Platforms, three internal to the Agency and six external.

Figure 2: Distribution of TIA Technology Platforms

Source: TIA, 2017.

16

The focus of the TPP Unit spans across various sectors, such as health, agriculture, environment,

mining, and industrial biotech; the intended outputs are primarily around technology and skills

development.

Table 9: TPP Unit Outline

Aspects Description

Direct/Main Beneficiaries • Universities, science councils, government departments, private companies, and other international entities.

• Projects hosted by the TPP in 2016/17 were distributed as follows: o Higher Education Institutes (HEIs): 37. o Science councils/research institutes: eight. o SMME: three. o Government: six. o Private: 43. o Other, e.g. hospitals: 22.

Non-Financial Support Type • Technical support.

• Advisory services towards technology commercialisation, e.g. in the areas around biosafety.

• Creating linkages with players that might help advance the successful commercialisation of a project.

• Thought leadership.

• Training of SMMEs and individuals.

PDIs Involvement • The TPP Unit has assisted certain projects from PDIs, or targeted at PDIs.

• The Bioprocessing and Institute of Diagnostic Research (BIDR) Platform has assisted two cooperatives involved in agro-processing with ensuring quality standards.

• The TIPs Unit has worked with PDI universities such as the University of Venda and the University of the Free State, where two of the Technology Platforms are stationed. The Technology Platform at the Free State University developed a bioreactor and easy-to-use water test technologies that are all targeted at rural areas, thus, improving the quality of life in such PDI communities.


• The Biosafety Technology Platform has been involved in capacity building work in the areas of Genetically Modified (GM) products regulations in Sudan, Namibia, Swaziland, and Zimbabwe.

• The Screening Applications and Exploring Novelty in Specialised Environments (SAENSE) Technology Platform based at the University of the Free State has been involved in remediation of waste water from a diamond mine in Lesotho.

• The H3D Technology Platform based at the University of Cape Town has worked on a project to combat Malaria, a disease that is quite prevalent in most parts of Sub-Saharan Africa.

Key Collaborations • The individual Technology Platforms engage in numerous collaborations locally and globally.

Active Projects • The TPP Unit supported 119 projects in total.

Completed Projects • 25 completed.


TPP Unit (TIA, 2017g):


17

o Five innovation project outputs taken up in the market.

o R58.20 million additional funding attracted into the Agency’s portfolio.

• To provide thought leadership and an enabling environment for technology innovation in

collaboration with other role players:

o 20 knowledge innovation products produced as a result of Agency funding and

support programmes.

o Eight knowledge innovation products produced by Agency supported programmes

receiving third party funding.

o 11 SMMEs receiving technology support.

o 15 technology innovation initiatives undertaken.

Youth Technology Innovation Programme (YTIP) Unit

The YTIP Unit is aimed at creating an enabling environment that stimulates the development of

technologically innovative ideas amongst young people (aged between 18 and 35 years) into viable

technology based businesses. It funds young scientists up to R1 million, for activities such as IP

registrations and management, own stipend, prototype development, and product development.

The Unit is focused mainly on Agency strategic objectives around the provision of thought leadership

and an enabling environment for technology innovation in collaboration with other NSI role players

(TIA , 2016d).

Table 10: YTIP Unit Outline

Aspects Description

Direct/Main Beneficiaries • Young people (18-35 years).

Non-Financial Support Type • Facilitating partnerships in areas such as incubation, product development, funding, patent support.

PDIs Involvement • The portfolio is roughly 95% PDIs. Young people from townships, rural areas, and previously disadvantaged universities are involved. To further reinforce the involvement of PDIs, the YTIP has been engaging these universities and running pitching sessions with students.


Key Collaborations • SEDA, Adams & Adams (law firm), National Youth Development Agency (NYDA), and EgoliBio.

Active Projects • Ten supported, but portfolio comprised of 67 projects.

Completed Projects • 11.


YTIP Unit (TIA, 2017h):





18


support programmes.

o Three knowledge innovation products produced by Agency supported programmes


o Three technology innovation initiatives undertaken – including the Critical Thinking

Sessions with UNISA, University of the Witwatersrand (WITS), and VUT.

• To develop an effective and efficient internal environment to successfully execute the

strategy:

o Three months and two days investment approval turnaround time.

Innovation Skills Development Programme (ISDP) Unit

The ISDP Unit performs a support function to the activities of the Agency. The Unit is responsible for

strengthening critical thinking capabilities within the NSI (including the Agency’s IFPCS Units and other

IES programmes) in order to facilitate the smooth progression of technologies from the proof of

concept stage through to pre-commercialisation (i.e. TRL 3-8). The work of the ISDP is premised on

three pillars, i.e.:

1. Future 500: aimed at developing South Africa’s top 500 young minds in innovation who need

not necessarily be entrepreneurs but rather innovation leaders in competency and practice,

and who can work in industry in managing innovation therein;

2. Next Generation 100 (Next Gen 100): aimed at getting technology start-ups up and running.

It targets South Africa’s top 100 minds in Science, Technology, Engineering, Mathematics, and

Innovation, who will develop next generation technology start-ups (enterprise development);

and

3. Systematic Level: aimed at capacitating the NSI at a systemic level.

Table 11: ISDP Unit Outline

Aspects Description

Direct/Main Beneficiaries • Future 500: youth.

• Next Gen 100: entrepreneurs.

• Systemic Level: government, academia, industry.

Non-Financial Support Type • Training support.

• Technology support.

• Networking.

• Creating opportunities for students and interns, e.g. facilitating their participation in science weeks.

PDIs Involvement • The Future 500 and Systemic Level pillars have a strong involvement of PDIs. The Future 500 focuses on PDIs as part of its internship programme.


Key Collaborations • All ISDP projects are collaborative in nature. The Unit has collaborated with entities such as Council for Scientific and Industrial Research (CSIR), EgoliBio, and the University of Basel.

19


ISDP Unit (TIA, 2017f):



o 14 knowledge innovation products produced (prototypes developed, patents

registered, technology demonstrators and technology transfer packages) because of

Agency funding and support programmes.

o Ten SMMEs receiving technology support.

o Eight technology innovation initiatives undertaken – including panel discussions and

pre-application workshops.

Seed Fund Programme (SFP) Unit

The Seed Fund Programme Unit (herein referred to as ‘the Seed Fund Unit’) is a de-risking instrument

aimed at assisting HEIs, science councils, and SMMEs to advance their research outputs and ideas to

develop prototypes, proof of concept, and business cases that could be used for further development.

The Seed Fund Unit, which offers a conditional grant with a limit guide of R650 000 per application, is

managed and implemented in partnership with HEIs and science councils, and provincial regional

development agencies and incubators; and supports the following technology development

milestones:

• Initial proof of concept;

• Prototype development;

• Sourcing of IP opinions;

• Production of market samples;

• Refining and implementing designs;

• Conducting field studies;

• Support of certification activities;

• Piloting and scale-up;

• Techno-economic evaluation;

• Detailed primary market research; and

• Business plan development.

Table 12: Seed Fund Unit Outline

Sub-Programme Aspect Description3

HEI Seed Fund Sub-Programme

Implementing Partners (HEIs, science councils, and NECSA)

• TUT, UP, UJ, VUT, WITS (Wits Enterprise), UNISA, NWU, CUT, UFS, DUT, UKZN, MUT, UNIZULU, WSU, NMMU, RU, UFH, UL,

3UP-University of Pretoria, NWU, North-West University, UFS-University of the Free State, UKZN-University of KwaZulu-Natal,

UNIZULU-University of Zululand, RU-Rhodes University, UFH-University of Fort Hare, UNIVEN-University of Venda, UWC-

20

Sub-Programme Aspect Description3

UNIVEN, CPUT, UWC, UCT, US (Innovus) and NECSA as science council pilot.

Beneficiaries • University researchers.

Applications Funded • 101.

Amount Funds Disbursed • R48.00 million.

SMME Seed Fund Sub-Programme

Implementing Partners (Provincial Development Agencies, Incubators, and Special Purpose Vehicle (SPV) Regions)

• TIH, ECDC, Invotech, Smart Exchange, Free State Development, Development, Limpopo Economic Development Agency, CCDI, SAVANT, Propella.

Beneficiaries • SMMEs, technology-based innovators and individuals.

Amount Funds Disbursed • R26.70 million.


Seed Fund Unit (TIA, 2017h):


o 20 technologies, processes or services advancing by two or more TRL levels.

o Six innovation project outputs taken up in the market.


o R10.00 million in income received.




support programmes.

o Four knowledge innovation products produced by Agency supported programmes


o Two technology innovation initiatives undertaken – including the pre-SARIMA (South

African Research & Innovation Management Association) conference workshop.

Technology Innovation Programmes (TIPs) Unit

The TIPs Unit is a cluster initiative (active fund) created in 2015 that is based on a national need to

create a stimulus within a particular industry/sector. The Unit funds technology development through

a value chain approach. Through this approach, collaborations are fostered amongst value chain

players, such as policy makers, public research institutions, entrepreneurs, companies, suppliers and

manufacturers, both competing and co-operating in a particular industry (TIA, 2017e). The focus of

the Unit is premised on the following two pillars:

University of Western Cape, TIH-The Innovation Hub, ECDC-Eastern Cape Development Corporation, CCDI-Cape Craft and Design Institute, and SARIMA-South African Research & Innovation Management Association.

21

• Technology development: where the Unit stimulates the development of products and

services; and

• Enabling: where the Unit creates community and cohesion in order to avoid duplication of

efforts.

As a result, the TIPs Unit circumvents situations in which different role players work in silos, yet

pursuing the same developmental agenda. The Unit is involved in four industry programmes and

functions across different technology focus areas, which include the following:

• Animal health – vaccines;

• Animal genomics – for breeding;

• Electric mobility;

• Electronic waste beneficiation; and

• Precision medicine.

Table 13: TIPs Unit Outline

Aspect Description

Direct/Main Beneficiaries • All players across the value chain; including researchers and SMMEs.

Support Provided • Funds the cluster.

• Adding intellectual capital.

• Government lobbying.

• Awareness creation.

• Day-to-day programme support to ensure the objectives are achieved.


Key Collaborations • TIPs are consortium in nature.


TIPs Unit (TIA, 2017h):


o One innovation project output taken up in the market.




o Four knowledge innovation products produced because of Agency funding and

support programmes.

o Ten knowledge innovation products produced by Agency supported programmes


o One technology innovation initiative undertaken – regional cooperation seminar.

Global Cleantech Innovation Programme (GCIP) Unit

The GCIP is a donor-funded programme, which is aimed at developing innovative clean technology

SMMEs in South Africa, implemented by UNIDO and hosted by the Agency. The Unit operates as a

business accelerator and offers a competition-based approach to identify suitable local SMMEs. Teams

22

that participate in the competition are selected every year and undergo a four-month mentoring

period. A minimum of two people per team is required. The idea is that participants intend on having

a life in entrepreneurship. They have to come into the Unit with a proof of concept.

The GCIP acknowledges good performers following an evaluation that is undertaken at the end of the

four months. Participants are evaluated based on their progress and various aspects of their business

model.

Table 14: GCIP Unit Outline

Aspect Description

Direct/Main Beneficiaries • Private innovators who are looking at taking their product into the market.

Support Provided • Programme (accelerator and competition).

• Workshops.

• Training.

• Mentoring.

• Networking - some get to travel to San Francisco for a global summit for a week.

• Agency staff are also capacitated through the Unit.

PDIs Involvement • Getting PDIs into the Unit is, to some degree, quite challenging. Nonetheless, there have been some improvements in PDI representation relative to the previous years. The distribution of PDIs out of the 26 teams that participated in 2016/17 is as follows:

o Five Black team leaders. o Five females (one Black and four White). o Seven youth (i.e. under 35 years).

Geographical Focus • Mainly South Africa. Nonetheless, the Unit hosted representatives from Namibia and Mauritius at its awards event. These were keen on understanding what the Unit entails.

Key Collaborations • The Unit works together with seven other developing countries running the Unit simultaneously every year, i.e., Morocco, Turkey, Armenia, India, Pakistan, Malaysia, and Thailand.

Active Projects • 26 teams.

2.2. Stakeholder Engagements

The previous impact study conducted a stakeholder engagement process with beneficiaries of the

Agency. This study looks at Unit managers, to obtain an internal perspective of the Agency’s

performance; its challenges; and possible improvement measures.

2.2.1. Impacts

One of the main points discussed in the consultations was the challenge of accurately exhibiting the

Agency’s impact on the economy (in terms of its support in development of technologies). This is

23

because supported projects often have delayed effects on socio-economic aspects due to the nature

of the industry. Only once projects have successfully reached market, or have been established as

businesses, can actual impacts be derived.

This is a significant issue as it means that the Agency’s true impact is not being documented, and

therefore it is contributing more to economic growth through its successful projects. As the main aim

of an economic impact assessment is to determine the effect of an intervention on the economy, it

would be beneficial to consider a specific study focused on assessing the impact of all the Agency’s

successful projects on aspects such as GDP, job creation, and income.

Employment/Internships

The information pertaining to the number of direct jobs created within the projects supported by the

various Agency IFPCS and IES Units is not readily available. There have not been any assessments to

deduce such information; but, the Agency is now initiating some exercises and practices to gather such

statistics going forward. The information currently available is with respect to some of the projects

supported by the Health Unit, where a total of nine permanent jobs were directly created in two of

the projects supported. The other employment-related information currently available pertains to the

number of jobs supported by the Technology Stations and TPP Units. The Technology Stations and TPP

Units employed 243 and 103 people within their networks of 18 technology stations and nine

technology platforms respectively. As a result, the Agency’s Technology Stations and TPP Units

employed a total of 346 people (both full time and part-time staff) in 2016/17.

With respect to the creation of internship opportunities, the Agency’s Technology Stations Unit

supported 120 interns while the TPP Unit, on the other hand, supported five interns and around 93

students. Student support was mainly through short-term training and learning opportunities. It is

imperative to note that the internship opportunities offered by the various Agency programmes, such

as the Technology Stations and TPP Units, in most cases enhance the employability of the supported

interns; with the Technology Stations Unit revealing that close to 99% of their interns are successful

in securing employment. Such employment opportunities could be within the programmes

themselves, or in industry. The following table provide a summary of job and internship opportunities.

24

Table 15: Job and Internship Opportunities

Unit Job Opportunities Internships Opportunities

IFPCS

Health • Three new permanent jobs created by BioDx (Pty) Ltd a result of Agency funding.

• Two permanent jobs created at Enzyme Technologies (Pty) Ltd in Durban and four jobs in the agro-processing plant in the farming community of Hluhluwe.

One intern (internal).

IES


243. 120 interns.


103. Five interns (and 93 students).

Skills Development

The Agency is also actively involved in skills development initiatives, a role that is largely spearheaded

by the Agency’s ISDP Unit. Below are some of the key highlights pertaining to the Agency’s

contribution towards educational support and skills development in South Africa.

The following table provides a snapshot of the skills development projects pursued by the Agency’s

ISDP Unit during the 2016/17 financial year:

Table 16: ISDP Unit 2016/17 Programmes

Future 500

Specific Projects CHUMA Energy and Water Sector Education and

Training Authority (EWSETA) Internships

National Research Foundation (NRF)

Internships

Duration 24 months 12 months 12 months

Number Supported 10 130 10

Next Gen 100

Specific Projects SWISS SA Tech Entrepreneur

GAP BioSciences Leaders in Innovation Fellowships UK Newton

Programme


Number Supported 250 70 15

Systemic Level

Specific Projects Foresight Leadership Innovation Programme

Community College and Integrated Rural

Development

Fast track e-Waste Masters Programme


Number Supported 80 10 000 learners 30 Masters students

The Health Unit exposes its clients/investees to training opportunities as well as the development of

know how or capacity in specific technology areas through collaboration with entities that have depth

in those areas and skills. One notable example pertains to the MMV’s provision of capacity building in

drug development to the local UCT antimalarials project. Other notable examples include:

25

• The Technology Stations Unit provided both short-learning programmes and tailor-made

training to individuals and industry.

• As part of the TPP Unit:

o The Centre for Proteomic and Genomic Research (CPGR) runs four specialist technical

courses open to anyone from across the country.

o The biosafety platform provides research grants in biosafety research.

• Some of the programmes in the TIPs Unit offer research grants.

• Skills development is one of the core aspects characterising the Global Cleantech Innovation

Unit. As earlier alluded, entrepreneur innovators are provided with extensive mentoring

support through the accelerator programme for a period of four months.

Other Socio-Economic Implications

Regardless of most of the Agency’s supported projects that have not reached full commercialisation,

it is critical to note that there are certain socio-economic imperatives that can be drawn from the work

of the Agency. These encompass key aspects such as poverty and inequality eradication, economic

growth, and improved quality of life – mainly through the introduction of PDIs into the mainstream.

The following examples can be cited from some of the support provided by the Agency’s IFPCS and IES

Units:

Table 17: Socio-economic Benefits from TIA support Socio-economic implications Examples of the TIA’s contribution

Economic Growth, Poverty, and Inequality Alleviation

• The TPP Unit, through the BIDR Technology Platform, supported two cooperative projects in rural KwaZulu-Natal on quality control. Such support assisted the cooperatives to place their agro-processed products on the market and begin to generate income.

• Through the TPP Unit’s support, four novel technology products were created and placed in the hands of small companies (SMMEs) to assist them in becoming profitable. Should these SMMEs succeed, then this will assist in economic growth as new jobs will be created and income realised.

• The Health Unit assisted in poverty alleviation in rural Hluhluwe through the establishment of an agro-processing plant by Enzyme Technologies (Pty) Ltd – a company that it supported. The Health Unit also contributed towards poverty alleviation and economic growth in Upington through the establishment of a Microalgal Technology Demonstration and Incubation Centre, which is expected to facilitate the establishment of algal technology based SMMEs and companies.

• The Youth Technology Innovation Unit is assisting with the introduction of PDIs into the mainstream. Through its focus on the youth, and previously disadvantaged universities, the involvement of previously marginalised groups such as the youth and blacks into the innovation space could assist in lessening the income inequalities in South Africa.

Improved Quality of Life • The Health Unit supported companies and projects, such as the CPT Pharma Pty (Ltd) and the UCT antimalarials projects, are expected to result in the improvement of the quality of life of both South Africans and other Africans at large and will prevent loss of productivity through illness.

• The TPP Unit supported a relatively large number of projects in health that could help in the improvement of the quality of life of South Africans should they be successfully commercialised. One example is the CPGR’s Men of African Descent & Cancer of the Prostate (MADCaP) project, conducted in collaboration with the

26

Socio-economic implications Examples of the TIA’s contribution

University of Pennsylvania and Stellenbosch University, and entailing a large-scale prostate cancer genotyping study. Should the project be successful, it could yield the successful development of precision medicine for chronic diseases such as prostate cancer.

• Projects such as the smoke-free cook stove, developed through support from the Global Cleantech Innovation Unit, minimise the incidence of respiratory diseases in poor communities as a result of their reliance on traditional forms of energy, such as firewood, for cooking purposes. Such projects are also imperative in reducing carbon emissions, thus, contributing towards climate smart living in South Africa. In a study conducted by the Global Cleantech Innovation Unit involving ten out of the 77 teams that have participated in their programme since its inception in South Africa in 2013, the technologies from the ten teams are estimated to having circumvented 65 000 tons of carbon emissions into the atmosphere. Furthermore, these ten teams are also estimated to having created 294 jobs, thus, contributing immensely towards curtailing unemployment and poverty in South Africa

Other • The Agency receives royalties from projects that are now running and such an income has multiplier effects on the work of the Agency and the respective projects it supports.

2.2.2. Performance

Most of the Agency Units achieved their indented outcomes set for the 2016/17 financial year. The

following paragraphs provide a high-level overview of some of the key achievements realised by the

various Agency Units.

New Technology Development and Commercialisation

Overall, the Agency has been successful in assisting numerous technology projects in advancing

towards successful commercialisation. Table 18 provides a snapshot of how the Agency has assisted

various projects to generate IPs, advance towards commercialisation, and leapfrog products into the

market.

Table 18: Highlights on Project Commercialisation


IFPCS

Agriculture • Three of the Agriculture Unit’s projects have reached the market:

• Regulatory Registration with Department of Agriculture, Forestry and Fisheries for

Beonics Feed Supplements (Pty) Ltd.

• Sweet Sterm Sorghum – eThala BioFeuls partnership proposal with African Centre for

Crop Improvement (ACCI) (UKZN).

• Fynbos certificate on grant of community plant variety rights – received for increasing

marketing and protecting new varieties.

27


Energy • Five technologies are ready for commercialisation, i.e. they are entering the commercialisation phase and have not yet made any sales.

• There are IPs generated for some of the supported projects.

Health • BioDx (Pty) Ltd made sales of their green biocide products to industry clients.

• Enzyme Technologies (Pty) Ltd sold its bromelain product to a farmer.

• All the nine actively disbursing projects are developing new technologies.

• BioDx patents are being processed.

• UCT Antimalarials patent: United States of America (USA) patent granted for Novel Anti-Malarial Agents.

Natural Resources • N/A • All four actively disbursing projects are patented.

IES


• N/A • 84 official disclosures supported through the Technology Stations Unit: o Inventions/Patents: six. o Design: 14. o Journal accredited articles: 20. o Non-journals articles and

conferences: 44.


• Five technologies reached the market: o Shareholders Agreement between

Phantomax, Johannes Francois Marais and NWU.

o Shareholders Agreement between NWU, Heinrich Fouche and Always Around.

o Collaboration Agreement between Lancet and Next Biosciences.

o Shareholders Agreement between NWU and Kemajon Innovations.

o Shareholders Agreement between LeaveldTrust and Lumegen Laboratories (Pty) Ltd.

• There are also considerations for another project (the Newborn Screening) to be commercialised through a joint-venture between a dedicated spin-off company and an established private company.

• Number of innovation products: 20.

• Patents successfully granted: three.

Global Cleantech Innovation Programme

• Some of the projects supported are now at a stage where they are piloting, with some already having pilot customers set up.

External Recognition (Awards)

There has been some recognition and appreciation of the significance of some of the Agency-

supported projects through various awards hosted and supported by externals. Such recognition, in

most cases, takes into account the respective projects’ impact on improving the welfare of the

targeted clientele and communities. About three projects from the YTIP Unit are reported as having

28

won some awards from external parties. Furthermore, the Agriculture Unit’s Agri-protein project

(sustainable protein supply) won an award from the Western Cape Department of Agriculture. The

project is being recognised for its contribution towards a sustainable environment. As part of the

project, waste is used to feed maggots that are processed into a high-protein animal feed. As a result,

the project has become a waste processor, with waste from restaurants that used to be landfilled now

being processed at the project.

Leverage Funding

The Agency has been relatively successful as a de-risking institution, investing in risky technology

innovation projects and transforming such projects into investable opportunities. Following the

Agency’s financial and non-financial investments, other investors are able to inject their investments

into bankable technology innovation projects. The below table highlights how some of the Agency

Units were successful in leveraging external funding into the projects they supported during the

2016/17 financial year.

Table 19: Co-funding on TIA projects

Unit Key Highlights for 2016/17

IFPCS

Agriculture • The Agriculture Unit leveraged an estimated funding of around R12.00 million from the sale of its assets (i.e. shares in previously supported projects).

• The Agriculture Unit received royalties totalling roughly R450 000 a month from two investee companies.

• One of the projects received a funding of R2.00 million from the IDC.

• The North-West Department of Agriculture extended R280 000 for a flower project supported by the Agriculture Unit. The project further managed to secure an international partner based in Holland for international distribution.

• The DST provided R1.50 million to support wool fibre projects.

• An additional R18.53 million was secured by other projects.

Energy • The Energy Unit’s projects secured R2.00 million.

Health • There were about R26.80 million in investments raised from the following:

• R7.73 million invested by the DST established SHIP programme into the UCT antimalarials project.

• R9.00 million for the CPT Pharma project.

• R10.00 million follow on funding for the Pheroid Technologies project, from the Department of Trade and industry (DTI).

• R13.00 million was invested by the DST into the GR Active project since 2015 over a three-year period.

Natural Resources • The Natural Resources Unit leveraged R39.19 million from other sources.

IES

29

Unit Key Highlights for 2016/17

Technology Stations • The Technology Stations Unit secured R70.00 million from the DST outside of its R33.00 million Medium Term Expenditure Framework (MTEF) allocation.

• The Technology Stations Unit leveraged R24.43 million4 from the private sector.

TPP • The TPP Unit secured R58.20 million, which came outside of the Agency (private and government).

YTIP • The YTIP Unit secured R1.05 million from SAB.

ISDP • Most of the ISDP Unit projects are co-funded.

2.2.3. Challenges

There are certain constraints that impede the Agency from operating effectively and realising its full

potential. Such constraints or challenges affect both Agency beneficiaries and the respective Units.

These can further be categorised into systemic or non-systemic aspects. The non-systemic challenges

are more Agency related, while the systemic ones relate more to the overall structuring of the

country’s NSI.

The following are the systemic and non-systemic challenges as identified by the Agency

representatives heading the Business Units.

➢ Systemic challenges:

• The Agency operates in a complicated space, particularly considering that the country’s

system (i.e. NSI) is not yet fully matured to accommodate the type of support the Agency

provides. It can be argued that the work and roles of the Agency have not yet been fully

embedded into the systems of the potential beneficiaries, that is, researchers in universities

and research councils as well as other innovator groups. According to one of the Unit heads

at the Agency, South Africa is not a ‘discovery’ country, the culture to spin-out companies

from local R&D outputs are not yet fully inculcated in the practices of local researchers. In

fact, local researchers, in most cases, are believed to be mainly interested in research and

do not place much value in pursuing technology commercialisation opportunities, an area in

which the Agency is actively involved. Even some of the recently introduced Offices of

Technology Transfer/Technology Transfer Offices (OTTs/TTOs) are believed to be adding

little or insignificant value in readying the R&D outputs from HEIs and research councils for

post R&D pre-commercialisation support from the Agency. Some of the projects (i.e.

applications) from some of these institutions can take up to six months to be ready and

approved by the Agency. There are also notable inconsistences amongst the level of support

and capacity to provide assistance on commercialisation, within the OTTs in different

4 The figure might slightly increase since it does not incorporate the amounts from three of the technology

stations.

30

universities. While some OTTs are effective and well capacitated, OTTs in other universities

lack the capacity and know how, thus, resulting in Agency support being skewed towards

certain universities.

• Some Agency Units experience limited involvement of PDIs. It appears as if the PDIs are not

actively involved in the technology innovation space. The majority of project proponents in

most of the projects supported by the Agency’s IFPCS Units are from within the historically

advantaged groups. The involvement of PDIs is mostly on the receiving end, where a relative

number of projects are targeted at benefiting PDI communities.

➢ Non-systemic challenges:

• The non-systemic challenges are mainly around capacity constraints, particularly of the

budget and human resources (HR). Most of the Agency’s Units currently rely on minimal HR

and funding resources, a situation that often inhibits their responsiveness to their respective

clients/investees. Furthermore, there are other critical Agency support units, such as Legal

and IP, that are also operating below capacity, thus, affecting the overall effectiveness of

certain Agency Units due to the resulting bottlenecks.

• The other key non-systemic challenges characterising the Agency are as follows:

o Lack of integration amongst Agency Business Units.

o Inconsistent and inflexible internal Agency procedures, systems, and processes -

examples include the relatively slow internal approval processes, process challenges

post-approval, and the laborious project management processes.

2.2.4. Budget

Every year the Agency receives a budget funding from parliament, the national revenue is then

appropriated to different departments where it is then distributed to different sub departments. The

parliamentary grant expenditure received by the Agency for 2010/11 to 2017/18 is presented in the

following figure.

The following possible solutions to help address the aforementioned challenges could be considered: i. A cluster or integrated approach with clear goals for the country’s NSI. In other words, the country’s NSI key

role players (stakeholders) should adopt a more integrated approach guided by a clear overarching goal around what the country aims to achieve.

ii. Active engagement is a solution towards getting PDIs involved in the country’s technology innovation space. In other words, the various TIA Units should actively engage the PDIs at every stage of the programme. This should commence from as early as the programme criteria development stage, where the responsible TIA authorities should see to it that the targeted PDIs understand the set criteria. The incorporation of other active engagement platforms such as the YTIP’s pitching sessions in previously disadvantaged universities should also be considered.

Effective collaboration amongst business Units and resourcing of the Agency are some of the possible solutions that could be considered to help address the aforementioned challenges.

31

Figure 3: Parliamentary Grant Funding, Rm, 2010/11-2017/18

Source: National Appropriation Bill, 2017; TIA, 2017.

The figure above shows that from its inception, the budget the Agency has been receiving has been

decreasing, with the lowest in 2014/15 financial year. By the financial year end in March 2017, the

Agency was faced with a budget deficit of R78.40 million. This was because it was not able to reach its

income target and budget investment expenditure. In addition, the Agency also disbursed R521.06

million towards its programmes and projects which was more than its budget investment expenditure

and the highest amount disbursed in its history. It also had a closing balance for the bank and cash of

R64.70 million, which was the lowest amount in the Agency’s history. The financial instability the

country has been facing could also have attributed to the decrease in the budget allocated to the

Agency in the 2016/17 financial year; however, it is expected to increase in the 2017/18 financial year.

-35,0%

-30,0%

-25,0%

-20,0%

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

20,0%

0

100

200

300

400

500

600

2010/11. 2011/12. 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Per

cen

tage

Ran

d M

illio

n

Budget Received (Rm) Compound Annual Growth Rate

32

3. Global Approach to Technology Innovation

The world is on the brink of the Fourth Industrial Revolution, where the future of technology

innovation will enter a new frontier based on digitisation, robotisation, the internet, and big data

capabilities. This revolution is likely to have disruptive impacts on both developed and middle-income

countries like South Africa, affecting not only how things are done in the economy but the whole

future of manufacturing.

The backbone and driving force behind this era of innovation across all fields of research is the digital

technological revolution, where traditional research tools have been made more powerful and it

allows for new and near-costless types of innovation that require little or no R&D effort. Examples of

these innovations include: the digitisation of existing products and processes, distributed

manufacturing, blockchains, and advertising-based “free services” as well as the prospect of more

“uberized” activities in multiple sectors, including transport, banking, entertainment, and education.

While developed nations are already at the frontier of these technological innovations, there is a

substantial gap between developed and developing countries. This gap can often be attributed to

lower levels of capital intensity and skills. Declining investment in R&D and patenting, coupled with a

lag in diffusion of technology innovations contribute to developing countries’ struggle to bridge the

gap.

This gap between developing and developed countries is illustrated in the following figure, where the

relationship between Gross Domestic Products (GDP) per capita and the level of high technology

exports in a country (proxy for the level of technology) is provided for a cross-section of countries

(World Bank, 2016). It shows that there is a direct correlation between technology and development

of a country, where more developed economies, with high GDP per capita, are also high exporters of

high technology products. Although correlation does not necessarily imply causation, the existence of

a relationship between technology and development is known from economic theory.

33

Figure 4: Relationship Between Technology and Development, 2016

Source: Urban-Econ Calculations, World Development Indicators, 2016.

The United States, Japan, and Germany are widely recognised leaders in innovation technology (as

shown in the previous figure), and according to Bloomberg’s Innovation Index (Coy, 2015), they rank

6th, 2nd, and 3rd respectively. A country’s ability to respond to rapid technological change greatly

depends on the availability of the right set of skills and well-functioning product and capital markets,

as these factors sustain an environment conducive to innovation and are receptive to new

technologies (OECD, 2000). The availability of these skills and capital markets is a hallmark of the most

technologically advanced countries and the advantage they have over developing countries.

3.1. Technology Innovation in Developed Countries

It is well known that in developed economies, advancement in technology is a key driver for economic

success. The relatively competitive markets in developed nations induce and facilitate innovation,

which occurs through firms competing to provide better goods and services at lower costs to meet

consumers’ needs. There is thus an incentive for firms to innovate to reduce costs and develop new

markets.

The determinants for what drives highly innovative countries is a subject for further research;

however, it is evident that these economies are largely market-driven economies, with high levels of

worker productivity and a highly skilled, post-secondary educated workforce.

In contrast to global leaders, South Africa ranks as 45th globally, with particularly poor ratings in the

level of post-secondary education and the strength of research personnel, which points to a shortage

of the skills required to advance technological innovation.

Burundi

Germany

Hong Kong SAR, China Japan

Morocco

Mozambique

United States

South Africa

0

2

4

6

8

10

12

0 5 10 15 20 25 30

Tech

no

logy

Exp

ort

s (c

urr

ent

US$

)

GDP per capita (currrent US$)

34

On the positive side, South Africa is ranked as the highest African economy in the Index, which means

that given the right approach and strategies to advancing technology innovation, South Africa has the

potential to benefit economically through technology.

3.1.1. Broad Technology Innovation Strategies and Policies

The aim of technology innovation strategies in developed economies is to enhance economic growth.

The broad strategies to achieve this are significant government expenditure in R&D, and a competitive

private sector which incentivises innovation. The OECD Innovation Strategy 2015, sets out five

priorities for policy makers that together provide the basis for a comprehensive and action-oriented

approach to innovation:

• Strengthen investment in innovation and foster business dynamism.

• Invest in and shape an efficient system of knowledge creation and diffusion.

• Seize the benefits of the digital economy.

• Foster talent and skills and optimise their use.

• Improve the governance and implementation of policies for innovation (OECD, 2015).

Furthermore, they found that innovation thrives on the following principles:

• A skilled workforce that can generate new ideas.

• A sound business environment that encourages foreign direct investment (FDI) in technology

and knowledge based capital.

• Policies that encourage innovation and entrepreneurial activity – refer to an efficient and

non-excessive regulatory environment, free markets, and minimal governmental

interference in the private sector.

• A strong focus on governance and implementation – refers to a trust in government action

and efficient implementation of policies.

According to World Intellectual Property Organization (WIPO) (2015), governments in developed

economies have therefore been supporting business innovation by offering various kinds of direct and

indirect support programmes, including loans, grants, tax incentives, and tax reductions.

3.1.2. Impact of Technology Innovation

The impact of technology innovation strategies that have implemented the type of policies that

developed countries adopt can best be analysed through the economic growth in the South-East Asia

economies (such as Taiwan and Singapore), where over a 30-year period from 1965-1995, these

economies had an annual average growth rate of six percent. According to the OECD (2013) roughly

three decades previous to 2013, these grew at a lower, but still significant, 5.4%. Using a Growth

35

Accounting Framework, Sarel (1997) found that although these countries accumulated capital and

increased labour participation at a much faster rate than other economies, growth in productivity

attributable to innovative technology accounted for a significant fraction of the overall economic

growth. More recent studies on South-East Asian countries support this positive relationship, having

showed that as spending on R&D increased, GDP per capita increased (Pernia, Clarete, & Padilla-

Concepcion, 2012).

To achieve this remarkable progress in technological innovation, these economies adopted the

technology from the leading economies at the time and adapted the processes to best suit the needs

of their economy. In other words, the diffusion of technology took place, which was facilitated by

implementing similar strategies and policies to the economies at the technological frontier.

3.1.3. United States of America – Case Study

The USA is a world leader in innovation, with a long history of innovation dating back to Henry Ford’s

innovations in the automobile industry, to massive 20 century advancements in information

technology - exemplified through companies such as Microsoft, Google, and Apple and even to

modern day social media technology, such as Facebook and Twitter.

The United States gained world leadership in a number of the technologies and industries (electrical

machinery, automobiles, and steel) of the "Second Industrial Revolution" through the development of

large-scale mass production techniques. World War II spurred several changes in U.S. innovation that

have impacts that are even felt now: a large federal role in supporting R&D, a focus on defence needs,

and the critical role of small entrepreneurial firms in commercialising new technologies.

Currently, the United States is at the forefront of cutting-edge science, technology, and innovation.

However, indicators, such as the business innovation surveys and data on the growth of multi-factor

productivity, suggest that the USA’s lead is narrowing in spite of its world-class universities and global

technology companies. In addition, R&D expenditure and output as well as patenting by businesses

have also grown less rapidly than in the past. This is most likely due to an increase in government

regulations imposed on small business, a weak economic recovery following the 2008 financial crisis,

and reduced spending on R&D (Brookings Institute, 2010).

To ensure its position as the global leader in innovation, The White House developed the 2009

Strategy for American Innovation: Driving towards Sustainable Growth and Quality Jobs, which was

36

updated in October 2015. It provides the strategic directions for government policies to further an

innovation-based economy (The White House_Office of the Press Secretary, 2015).

The strategy focusses on three core components:

• The importance of investing in research and development (R&D) and the other building

blocks of long-term economic growth, instead of locking in harmful sequestration cuts.

• Strategic areas from advanced vehicles to precision medicine where focused effort can

advance national priorities and help create shared prosperity.

• New efforts to make the federal government more innovative to improve performance

and create a better environment for innovation by the private sector and civil society.

3.2. Technology Innovation in Emerging Economies

Emerging (developing) economies face very different challenges than developed economies. While

economies at the frontier of the so called “Fourth Industrial Revolution” grapple with the challenge of

digitisation and clean energy technology, many emerging economies have yet to fully industrialise. In

other words, emerging economies have yet to reap the full benefits of the First Industrial Revolution

which began in 18 century Europe.

Subsequently, technological innovation in emerging economies has a very different role to play.

Technology innovation needs to occur in emerging economies as it has in the South-East Asian

economies mentioned above – which have more recently transformed to high-income economies

through technological innovation. This occurred through the effective adoption of existing technology

that was used to develop new technologies that advance sectors of the economy and develop

industries that sustain economic growth through increased production capacity created by new

technology.

3.2.1. Broad Technology Innovation Strategies and Policies

Technological innovation, or the lack thereof in emerging economies, is a significant factor in the gap

in income levels and living standards between developed and emerging economies. Achieving

technological innovation is not a simple task; however, there exists universal principles that emerging

economies can implement.

According to WIPO (2015) and supported by economic literature, national innovation success in

emerging economies can be achieved based on the following principles:

37

• Focus on maximising innovation in all industries: The McKinsey Global Institute (2010)

found compelling evidence that suggested that developing nations that implemented an

across-the-board productivity and innovation approach perform best. Similarily, Kucera &

Roncolato (2011) found that while manufacturing, generally, and high-tech

manufacturing, specifically, is an important component of innovation, maximising

innovation requires maximising innovation across all industries.

• Innovation policy should support innovation at all phases: Innovations can arise at many

different points in the development process, including conception, R&D, transfer (the shift

of the ‘technology’ to the production organisation), and deployment or marketplace

usage. Keeley & Waters (2013) argue that when it comes to business innovations there

are multiple types of innovation, including network innovations, business structure

innovations, service innovations, and channel innovations. It is therfore important for

policy makers to support innovation at all phases.

• Innovation policy should enable the creation of new markets: Innovation economist

Schumpeter emphasised the need for creative destruction. That is, to succeed in

innovation, nations need to do more than merely enable some value-added innovation to

supplement what is already going on in other, leading economies; they need to enable

disruptive innovation, which is often generated by new market entrants. According to

McKinsey Global Institute, no factor is more enabling of disruptive innovation and therby

technological innovation than competitive markets. Therefore, policies governing

competition and enabling the free market are as important, if not more important, as

policies enabling technovation and economic growth.

• Keep the price of capital goods imports low: The process of innovation requires

investment in machinery, equipment, software, and particularly ICTs. This makes robust

capital investment in machinery, equipment, and software a fundamental driver of

innovation and productivity growth. The impact on growth from investment in some

capital goods— notably ICTs—is amplified because these investments enable downstream

innovations in products, processes, marketing methods, and business efficiency (WIPO,

2015).

The importance of ICTs to modern technology and innovation cannot be underestimated – many

economists consider ICTs ‘a general purpose technology’ due to their application across all industries

and phases of innovation. Wang & Lin (2013) found that the contribution of ICTs to Chinese GDP

growth remained steady at approximately 20% from 2003 to 2007. Likewise, a World Bank (2010)

report found that ‘ICT has been the main driver of Kenya’s economic growth over the last decade’,

with ICTs responsible for roughly 25% of Kenya’s GDP growth during the 2000s.

Considering this empircal data, keeping the cost of ICTs and capital goods low is important for

developing nations. The most simple way of doing this is to limit tariffs and trade barriers. This strategy

for growth is supported by Miller & Atkinson’s (2014) Information Technology and Innovation

Foundation report which estimates yearly growth reductions to be between 0.7 percentage points

38

and 2.3 percentage points of GDP per capita for countries with the highest tax and tariff rates on ICT

products.

3.2.2. Challenges

Due to a reduced fiscal space, given their limited tax revenue, governments in emerging economies

have little room to manoeuvre when forming and implementing technology innovation policies and

initiatives. In contrast, developing countries have a wide range of instruments to stimulate investment

in R&D, innovation, and institutions that can develop new technologies as well as to stimulate demand

for new technologies. Considering these discrepancies between emerging and developed countries,

there exists a gap in in technological innovation. These gaps include:

• Funding – due to fiscal constraints, government financial assistance to sectors that

enhance innovation is limited.

• Communication and collaboration – cross-sector communication and collaboration is

minimal and often ineffective in emerging economies.

• Knowledge and skills base – emerging economies lag developed economies in the

knowledge and skills capacity, which is necessary to develop new technology.

• Infrastructure and institutions – post secondary education, R&D facilities, which are

lacking in emerging economies, are key inputs to technology innovation.

As an emerging economy, these gaps apply to South Africa. It is therefore more appropriate to

benchmark the objectives and impact of the Agency with the current emerging-economy framework.

3.3. International Lessons for South Africa and the TIA

South Africa and the Agency’s implementation of strategies to promote inclusive economic growth

through technological innovation can gain and learn from the international technology innovation

space.

As an emerging economy, the South African economy is behind the technological frontier. In

comparison with the developed world, South Africa has significant gaps in financing of technological

innovation, both in terms of private and public investment; the knowledge and skills base; institutions

and infrastructure; and a conducive business environment that promotes innovation.

Using the East Asian economies as an example, economic literature suggests that the Agency and

South Africa may be able bridge these gaps if the policies and strategies that are implemented have

the following principles and characteristics:

39

• Foster a stable economic and political environment that encourages FDI into technology

innovation initiatives.

• Ensure innovation policies are implemented across all sectors of the economy.

• Ensure the regulatory business environment is limited and that it encourages

competition amongst firms and industries.

In terms of policy arrangement, it must be noted that the Agency itself does not set policies but is

determined by the DST. Thus, the department should be involved in policy direction that uses global

experiences and trends to stimulate the technology innovation system.

40

4. Economic Impact Analysis

Economic impact assessments predict the economic effects of certain activities upon a regional,

provincial, or national economy; where the impacts refer to the effects on the level of economic

activity of some external intervention in the economy. Economic impact assessments are mainly

undertaken to serve as an objective motivation and rationale for decision-making regarding potential

investment and development options.

By using economic models that reflect the economy as a whole, it is possible to answer questions

concerning the impact the Agency has had on the national economy.

4.1. The Modelling Process

The economic impact modelling will be conducted by using an internationally and nationally accepted

Social Accounting Matrix (SAM). A SAM represents the flow of all economic transactions that take

place within an economy (regional or national); it is essentially a matrix representation of the national

accounts for a given country, which can be extended to include non-national accounting flows.

The core assumptions of the model, are:

• All the inputted data is sourced from information provided by the Agency.

• The total operating expenditure (OPEX) consists of grant funding expenditure and operation

expenditure (excluding grant expenditure) – the SAM will model the impact of each Division,

as well as the impact of the Agency’s operational activities.

• The expenditure figures reflect the real situation accurately enough for the purpose of the

impact assessment.

• Production activities in the economy are grouped in homogeneous sectors.

• The mutual interdependence of sectors is expressed in meaningful input functions.

• Each sector’s inputs are only a function of the specific sector’s production.

• The production by different sectors is equal to the sum of the separate sectors of production.

• The technical coefficients remain constant for the period over which forecast projections are

made.

• The different measures of economic impacts cannot be added together and should be

interpreted as separate economic impacts.

• The model quantifies direct and indirect economic impacts for a specific period of time.

Therefore, the estimates that are derived do not refer to gradual impacts over time.

• No structural changes in the economy are experienced during the period.

• One employment opportunity is the equivalent of one person employed full-time for one year.

41

The following figure illustrates the general impacts that an intervention will have on the economy,

such as those of the Agency.

Figure 5: Impact of Capital Investment/Operational Expenditure

Source: Urban-Econ, 2017.

As seen above, there are three types of economic impacts, namely:

• Direct impacts are generated when new businesses create new jobs and purchases goods

and services to operate the new facility. Direct impact results in an increase in job

creation, production, business sales, and household income.

• Indirect impacts occur when the suppliers of goods and services to the new businesses

experience larger markets and potential to expand. Indirect impact results in an increase

in job creation, GDP, and household income.

• Induced impacts represent further shifts in spending on food, clothing, shelter, and other

consumer goods and services as a consequence of the change in workers and payroll of

directly and indirectly affected businesses. This leads to further business growth/decline

throughout the local economy.

4.2. Model Input

The input data used in the SAM modelling exercise is provided in this chapter, which provides

expenditure information for the Agency. The data is presented by Division and Agency operations.

• Change in supply/demand

• change in sales,

• employment,

• income,

• Gross Domestic Product (GDP),

• etc.

Changes in:

• employment levels,

• household income,

• poverty,

• social wellbeing,

• etc.

Supply of Labour

Dire

ct Im

pa

ct

Change in the flow of intermediate

inputs, parts, accessories, supplies,

etc.

Supplier’s

production

affected

Intermediate Production

Businesses and households benefitted from

new expenditure

Changes in:

• demand,

• employment,

• income,

• Consumer

goods, etc.

Project Expenditure

Increased regional

production

Indirect Impacts

Induced Impact

Total

Impact

42

Table 20: Model Input Data, Rand Thousand, 2016/17

Unit/Programme Disbursements Share

Platform Support 78 960.64 20.0%

Biosafety 3 356.96 0.9%

Bioprocessing 6 185.81 1.6%

Genomics 3 006.06 0.8%

Technology Stations 126 044.87 32.0%

Seed Fund 74 072.74 18.8%

YTIP 17 068.02 4.3%

ISDP 21 740.34 5.5%

TIPs 42 279.90

10.7%

UNIDO 2 309.36 0.6%

Strategic Stakeholders Relations and Communications (SSRC) 17 699.90

4.5%

Executive/Operations 1 319.81 0.3%

IES Total 394 044.41 100.0%

Agriculture 26 239.62 20.7%

Health 18 888.97 14.9%

Advanced Manufacturing 15 760.77 12.4%

Energy 17 078.30 13.4%

ICT 25 266.43 19.9%

Natural Resources 19 062.63

15.0%

Operations 4 717.54 3.7%

IFPCS Total 127 014.25 100.0%

TIA Operations 60 777.98

Grand Total 581 836.64


A total of R581.84 million was spent by the Agency in the recent financial year. Of this the highest was

spent in IES operations (68%), followed by IFPCS (22%), then non-funding Agency operations (10%).

For the IES Division, the bulk of expenditure went to the Technology Stations Unit (32.0%), Platform

Support (20.0%), and Seed Fund Unit (18.8%). The majority of IFPCS spend came from the Agricultural

Unit (20.7%), followed closely with ICT (19.9%), then Health (14.9%).

4.3. Economic Modelling Results

The next section provides the SAM model outcomes, based on the expenditure of each leg of the

Agency. The IES Division impact per Unit is given next.

Table 21: IES Division 2016/17 Impact


Platform Support


43


GDP (R Million) 14.49 62.75 21.41 98.64


Income (R Million) 2.64 29.6 9.29 41.53

Tax (R Million) 11.84 2.56 1.08 15.48

Biosafety


GDP (R Million) 3.03 0.32 1.77 5.12


Income (R Million) 2.53 0.14 0.77 3.43

Tax (R Million) 0.5 0.01 0.09 0.61

Bioprocessing


GDP (R Million) 1.13 4.91 1.58 7.63


Income (R Million) 0.21 2.18 0.69 3.07

Tax (R Million) 0.93 0.22 0.08 1.22

Genomics


GDP (R Million) 2.72 0.28 1.59 4.59


Income (R Million) 2.27 0.13 0.69 3.08

Tax (R Million) 0.45 0.01 0.08 0.54

Technology Stations


GDP (R Million) 24.02 18.05 26.66 87.02


Income (R Million) 5.12 6.96 11.56 51.72

Tax (R Million) 18.91 1.04 1.34 11.5

Seed Fund


GDP (R Million) 12.93 59.27 19.2 91.41


Income (R Million) 1.82 27.11 8.33 37.26

Tax (R Million) 11.11 2.65 0.97 14.73

YTIP


GDP (R Million) 3.55 13.12 4.63 21.3


Income (R Million) 0.99 5.99 2.01 8.98

Tax (R Million) 2.56 0.56 0.23 3.36

ISDP


GDP (R Million) 8.25 13.09 7.3 28.65


Income (R Million) 4.99 6 3.17 14.16

Tax (R Million) 3.26 0.56 0.37 4.18

TIPs


GDP (R Million) 8.26 33.01 11.73 53.00


Income (R Million) 1.92 15.74 5.09 22.75

Tax (R Million) 6.34 1.42 0.59 8.35

UNIDO


44


GDP (R Million) 1.54 0.75 1.01 3.30


Income (R Million) 1.19 0.33 0.44 1.96

Tax (R Million) 0.35 0.03 0.05 0.43

SSRC


GDP (R Million) 6.19 11.16 5.01 22.36


Income (R Million) 2.65 4.89 2.17 9.71

Tax (R Million) 2.65 0.52 0.25 3.43

Executive/Operations


GDP (R Million) 0.46 0.83 0.37 1.67


Income (R Million) 0.20 0.36 0.16 0.72

Tax (R Million) 0.20 0.04 0.02 0.26

IES Total

Production (R Million) 394.04 735.29 259.45 1 388.78

GDP (R Million) 86.59 217.53 102.25 424.67


Income (R Million) 26.53 99.42 44.36 198.39

Tax (R Million) 59.11 9.62 5.16 64.10


According to the above table, as with the expenditure distributions, the largest impact on total

production is seen to come from the Technology Stations Unit (R459.53 million), Platform Support

(R272.47 million), then the Seed Fund Unit (R266.87 million). This trend is similar for the other

economic indicators.

As a whole, the IES Division’s injection of R394.04 million created indirect production of R735.29

million and induced production of R259.45 million. The indirect effect is seen to be higher than direct,

which means that the supporting industries to the Division’s operations generate greater activity. This

makes sense as the Division is mainly a funding agent, which requires input from other industries in

the development of technologies.

Overall, the IES Division has the following multipliers:

Table 22: IES Division Multipliers


Production 1.00 1.87 0.66 3.52

GDP 0.22 0.55 0.26 1.08

Employment 0.26 2.24 0.96 3.74

Income 0.07 0.25 0.11 0.50

Tax 0.15 0.02 0.01 0.16


45

The Division’s effect on employment is seen to be the largest impact at 0.26 jobs created per R1.00

spent. This is followed by impact on GDP, taxes, then income. In terms of multiplying effects of the

Units, while the three largest Units do contribute the most to expenditure and aggregate impact, their

multipliers fall in line with other Units, such as the Bioprocessing, YTIP, ISDP, and TIPs Units. The next

table shows the IFPCS Division’s impact on the national economy.

Table 23: IFPCS Division 2016/17 Impact, R Million


Agriculture


GDP (R Million) 7.55 18.15 7.8 33.5


Income (R Million) 3.61 8.13 3.38 15.13

Tax (R Million) 3.94 0.77 0.39 5.10

Health


GDP (R Million) 6.6 11.92 6.29 24.8


Income (R Million) 3.77 5.70 2.73 12.2

Tax (R Million) 2.83 0.56 0.32 3.71

Advanced Manufacturing


GDP (R Million) 6.10 9.37 5.24 20.71


Income (R Million) 3.74 4.15 2.27 10.16

Tax (R Million) 2.36 0.40 0.26 3.03

Energy


GDP (R Million) 6.39 10.41 5.52 22.31


Income (R Million) 3.82 4.49 2.39 10.70

Tax (R Million) 2.56 0.41 0.28 3.25

ICT


GDP (R Million) 6.84 17.90 7.22 31.96


Income (R Million) 3.05 7.83 3.13 14.01

Tax (R Million) 3.79 0.83 0.36 4.98

Natural Resources


GDP (R Million) 6.48 12.22 6.01 24.71


Income (R Million) 3.62 5.43 2.61 11.66

Tax (R Million) 2.86 0.52 0.30 3.68

Operations


GDP (R Million) 4.25 0.46 2.50 7.20


Income (R Million) 3.54 0.23 1.09 4.85

Tax (R Million) 0.71 0.02 0.13 0.85

IFPCS Total

46



GDP (R Million) 44.20 80.42 40.57 165.20


Income (R Million) 25.15 35.97 17.60 78.72

Tax (R Million) 19.05 3.52 2.05 24.62


As with the expenditure profile, the total production impact of specific IFPCS Units largely originate

from the Agriculture, ICT, and Natural Resources Units. Again, this is the same for the other economic

indicators across the board.

The IFPCS total impact shows that a direct production injection of R127.01 million produced a total of

R414.46 million. This increased: total GDP by R165.20 million; employment by 544 jobs; income by

R78.72 million; and tax by R24.62 million. The Division’s multiplying effect is given below.

Table 24: IFPCS Division Multipliers


Production 1.00 1.51 0.76 3.26

GDP 0.35 0.63 0.32 1.30

Employment 0.76 2.34 1.18 4.28

Income 0.20 0.28 0.14 0.62

Tax 0.15 0.03 0.02 0.19


The Division’s effect on the economic indicators follows that of the IES Division, but the effect on

employment creation is much higher at 0.76 jobs created for every R1.00 injected. The multiplier

effect for each Unit is along the same level as the Division. The Agency’s operational impact is provided

in the following table.

Table 25: TIA Operational 2016/17 Impact



GDP (R Million) 42.31 18.05 26.66 87.02


Income (R Million) 33.19 6.96 11.56 51.72

Tax (R Million) 9.12 1.04 1.34 11.50


A direct expenditure input of R60.78 million increased total production by R161.08 million, which

increased total GDP by R87.02 million, income by R51.72 million, and tax by R11.50 million. Around

300 employment opportunities were created through the Agency’s operations.

47

The overall Agency multiplier, i.e. the multiplying effect of the IFPCS Division, IES Division, and Agency

operations, is provide next.

Table 26: TIA Multipliers


Production 1.00 1.66 0.72 3.38

GDP 0.30 0.54 0.29 1.16

Employment 0.56 2.16 1.08 3.98

Income 0.15 0.24 0.13 0.57

Tax 0.15 0.02 0.01 0.17


During 2016/17, for every R1.00 investment or expenditure, a multiplier effect of 3.38 will be created

due to the production or new business sales generated. All Units’ and Divisions’ multiplying effects

are shown in the following figure. This shows that most of the Units have a lower multiplying effect

than the Agency as a whole, ranging from 2.50 to 3.60 with an average of 3.40.

Figure 6: TIA Unit Multipliers vs Total Multiplier


Specific sectors’ multipliers are provided next to give an idea of where the Agency is positioned in

relation to industry standard. The Agency is seen to have a greater impact when compared to relatable

industries such as Research (3.32) and Financial Intermediation (3.07).

Table 27: Sectoral Multiplier Comparison, 2016/17 Values

Sector Multiplier

Agriculture 3.56

Coal and Lignite 2.74

- 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00

2016/17 multipliers Total TIA Multiplier

48

Sector Multiplier

Metal Ores 3.30

Other Mining 3.19

Food 4.05

Beverages and Tobacco 3.60

Publishing 4.33

Glass 4.18

General Machinery 4.38

Electrical Machinery 4.73

Medical Appliances 4.33

Motor Vehicles 4.81

Electricity, Gas, and Water 2.70

Construction 4.07

Trade 3.34

Hotels and Restaurants 3.31

Transport 3.06

Telecommunications 3.47

Financial Intermediation 3.07

Insurance and Pensions 3.17

Auxiliary Financial 3.98

Real Estate Activities 2.53

Renting of Machinery 3.60

Research 3.32

Computer Activities 3.85

Other Community Activities 3.90

Education 3.50

Health and Social Work 3.72


The weighted average multiplying effect of all sectors in the national economy is 3.60, which means

that the Agency is just below the average national norm. The Agency’s 3.38 may seem high, but

compared to the rest of the economy, it appears to be in line. Regional multiplying effects differ from

national multipliers for the same sectors due to the difference in nature, composition, and extent

between the regional and national economies. The current total production multiplier is compared to

the previous years in the following table.

Table 28: TIA Production Multipliers 2010/11-2016/17 Comparison


2010/11 1.00 1.10 0.78 2.87

2011/12 1.00 1.11 0.83 2.94

2012/13 1.00 0.94 0.79 2.73

2013/14 1.00 1.01 0.79 2.80

49


2014/15 1.00 1.06 0.77 2.83

2015/16 1.00 1.01 0.81 2.82

2016/17 1.00 1.66 0.72 3.38

Source: Urban-Econ Calculations, 2017; TIA Economic Impact Assessment 2010/11-2015/16 Financial Year.

Overall, the Agency’s impact on the economy has been relatively constant from 2013/14, and has

improved in the latest year. The trend in the Agency’s impact is seen to be higher in the latest year.

This is likely due to the more accurate approach in the SAM modelling, based on the latest national

SAM, engagements with Unit managers, as well as more detailed financial data. Furthermore, the

Agency’s spending by sector was likely more diversified, and as certain sectors have greater

multiplying effects than others, this may have caused a considerable change in the multiplier.

The following figure shows that other than the technology innovation sector, the Agency also

stimulated the following sectors, which are according to Statistics South Africa’s Standard Industrial

Classification (SIC): Business Services; Transport and Communication; Trade and Accommodation; and

Finance. The relationship between the technology innovation sector and other sectors such as these

is based on the backward and forward linkages in the economy. Therefore, the Agency’s impact is not

limited to the NSI only, but it also creates ripple effects (or benefits) in multiple sectors outside this

space. The Agency’s activities stimulate production, employment, and income in these sectors in

addition to the NSI, therefore contributing to economic growth and living standards overall.

Figure 7: Total TIA Sectoral Impact, 2016/17


-

0,5

1,0

1,5

2,0

2,5

3,0Agriculture

Mining

Food

Chemicals

Furniture

Metal Products

Machinery/Medical appliances

Motor vehicles

Electricity, gas and water

Construction

Trade and Accommodation

Transport and Communiation

Finance

Business Services

Other community activities

Education

Health and social work

Other services

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5. Conclusion and Recommendations

Emerging economies have significant gaps in factors that drive innovation, such as funding,

infrastructure, human capital, and policies conducive to advancing innovation. Subsequently, these

countries are well behind the technological frontier, which is reflected through their inferior income

levels and living standards. Emerging economies should focus on the diffusion of existing technologies,

rather that the creation of new technology, which will assist in lowering the risk associated with

developing technologies. This method of technology diffusion has proven successful in the past in

economies such as South Korea, Malaysia, Singapore, and Hong Kong. The diffusion of technology and

integration of innovation into the economy occurs through strategies and innovation policies that

encourage FDI, invest in R&D facilities and personnel, invest in post-secondary education, enhance

the competitiveness of the business environment, provide financial and non-financial support to

innovative firms at all stages of innovation, and adopt overall policies that favour innovation.

The Agency clearly stimulates the NSI through the widespread innovations it supports by strategically

aiming to progress these products, services, and processes to higher stages in the development

process (with the ultimate aim of market entry). The Agency contributes heavily to the technology

innovation system. Not only does the Agency provide funding support to these innovations, but it also

offers significant non-monetary support services in addition to the services related to its strategic

roles. These services include validation and advisory services; skills development (particularly

entrepreneurial); rural/peri-urban area development (such as the establishment of the agro-

processing plant in Hluhluwe); and operational support.

In terms of issues observed through the consultations, one of the main drawbacks mentioned was the

challenge of truthfully assessing the impact of the Agency since many of the supported projects are in

the development stage and have yet to successfully contribute to the national economy. Thus, the

Agency’s actual impact cannot be accurately determined as projects will only come to fruition in the

future.

The space in which the Agency operates is not conducive for the support services it provides, making

it more difficult for the Agency to operate. There was also a noticeable disparity in terms of the types

of direct beneficiaries of the IFPCS Units, as the majority are older White males. This is mostly

attributed to a lack of ideas and skills from PDIs, such as Black people or women. Furthermore, it was

found that individuals in less advanced areas (rural and township communities) rarely apply for

51

support. From an internal perspective, it was reported that the Agency has a lack of integration

amongst its Business Units as well as inconsistent internal procedures, systems, and processes.

Overall, it can be concluded that the Agency is well into achieving its mandated goals, where it

stimulates economic development through its activities that enhance products, services, and

processes, in addition to increasing production and income, and creating job opportunities. Its main

goal of enhancing the quality of life in South Africa is also being realised through the growth in

available incomes and through the technologies developed that directly influence living standards (e.g.

the Health Unit’s UCT antimalarials project).

Based on the finding of the study the following measures are suggested to improve and maximise the

Agency’s performance:

• Drawing from the international review:

o Foster a stable economic and political environment that encourages FDI into

technology innovation initiatives.

o Implement innovation policies across all sectors of the economy with a focus on

technology diffusion.

o Ensure that the regulation and restrictions on businesses is limited and that it

encourages competition amongst firms and industries.

• The stakeholder consultation provides the following recommendations:

o Conduct an additional study that determines the Agency’s successful projects lagged

impact on the NSI, local industries, and the economy.

o A cluster or integrated approach with clear goals for the country’s NSI, guided by a

clear overarching goal around what the country aims to achieve.

o Active engagement and possibly a programme that aims towards getting PDIs

involved in the country’s technology innovation space.

o Effective collaboration amongst Business Units and use of resources.

52

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ANNEXURE 1

57

Stakeholder Questionnaire

Technology Innovation Agency Economic Impact

Assessment 2016/17

May 2017

58

Document Information

Document title: Technology Innovation Agency Economic Impact Assessment 2016/17: Stakeholder Questionnaire

Prepared by: Urban-Econ Development Economists

Contact details: First Floor Lake View Office Park

137 Muckleneuk Street (c/o Melk Street) Brooklyn Pretoria

0075 Republic of South Africa

Tel: (012) 342 8686 e-mail: [email protected]

Contact Person: Mr Ben vd Merwe [email protected]

Prepared for: Technology Innovation Agency

Contact details: 83 Lois Avenue Cnr Lois Avenue and Atterbury Road

Menlyn Pretoria

Republic of South Africa

Contact Person: Dr. Johan van Dyk [email protected]




59

Purpose

Urban-Econ Development Economists was appointed by the Technology Innovation Agency (TIA) to

conduct an economic impact assessment that will evaluate the effect of its activities, interventions,

and business for the latest financial year, 2016/17.

These activities will be assessed according to their qualitative and quantitative impacts, in an effort to

quantify the ‘real’ impact of TIA upon the current status quo. The stakeholder engagement process

will provide valuable information to the study, particularly from a qualitative perspective.

60

1. General

1) What were the intended outputs/outcomes of the unit for 2016/17? In terms of contributing to

technology innovation, the NSI, and the national economy?

2) In addition to the funding support provided to beneficiaries, what other non-funding support

services does the unit provide?

3) How many projects:

a) Are running currently?

b) Have been completed this financial year?

4) Who are the direct/main beneficiaries of the unit/projects? (e.g. professors, researchers,

mechanics, so on.)

a) Were any of these from townships or rural communities? If not, is anything being done on

increasing the unit’s reach (market visibility) to these areas/people?

5) How many government incentive/support schemes were accessed/mobilised? Which ones?

a) What was the Rand value of these granted?

6) How many collaborations were there?

a) With who?

b) Why?

7) Did any projects contribute to the greater African region? If so, which ones and how?

2. Impacts

1) How many jobs were directly created through the projects? Including interns.

2) Did the unit provide any type of educational support? i.e. bursaries, mentorship programmes,

skills development programmes, etc. If so, to which groups and in which sectoral areas?

3) In addition to the direct beneficiaries, who/which groups5 have benefitted from the unit’s

services?

a) How? 4) What socio-economic implications have been observed as a result of the unit’s/projects’

activities? (such as skills development, inequality eradication, poverty alleviation, economic

growth, leverage of funding, replication of successful projects, improved quality of life, etc.)

5) Other than the intended goals, what long-term sustainable benefits are anticipated from the

unit’s/projects’ activities?

6) Have there been any unintended/non-anticipated effects?

3. Performance

5 The different groups include youth, Black people, women, rural and peri-urban communities, students, unemployed people, etc.

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1) Has the unit fully achieved its intended outcomes for the 2016/17 year? If no, what has it not

achieved?

2) How many new:

• Technologies have been developed?

• Patent applications are being processed?

• Patent registrations have been made?

3) How many new products have reached the market?

• What are the estimated values of these projects?

• What about these projects assisted in their successful commercialisation? What can be

learned by TIA to ensure that other projects also reach the market?

4) In the previous study, beneficiaries stated that the major issues experienced included problems

with

• Uncoordinated processes/procedures - such as legal, patents, applications, funding, etc.

• Staff – inconsistent project liaisons, lack of expertise in technology innovation development

processes and markets, etc.

• Project procedures – target focussed instead of completion focussed, market changes not

considered, etc.

5) Were there any additional issues experienced by beneficiaries in terms of

developing/commercialising technology products/processes/services? (limited knowledge in

patent applications, etc.)

• Did the unit do anything to assist these beneficiaries? If so, what was done?

6) Has there been any additional funding/investment raised? If yes, how much?

7) Did any projects win an award? If, yes how many and which ones?

8) Are there any constraints or barriers which may be hindering the unit’s (and thus the TIA’s)

effectiveness?

9) What measures do you suggest may improve on these issues?

10) Are there any other aspects that you see as important to improving the effectiveness and

maximising the impact of the unit? Of TIA?

technology innovation agency economic impact assessment...

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