South African Business Sector Boosts R&D Investment Despite Government Shortfalls

The landscape of research and development (R&D) in South Africa is showing positive indicators of growth, as detailed in the latest National Survey of Research and Experimental Development by the Human Sciences Research Council (HSRC). This upswing in R&D expenditures comes primarily from the business sector, marking the first real increase the country has seen in the past four years.

The gross domestic expenditure on research and development (Gerd), which includes all spending on R&D within the country's borders and is financed both locally and internationally, experienced a significant 6.9% year-on-year increase in the 2021-22 fiscal year, reaching a total of R27.756 billion, adjusted to 2015 prices. This marks a steady progression from R25.965 billion in the previous year.

Despite these gains, however, South Africa still lags behind its set objectives. President Cyril Ramaphosa disclosed a target for Gerd to reach 1.5% of the country's GDP back in December 2023, yet the current figure hovers around 0.62%, a notch up from the 0.60% noted the year prior. This statistic falls not only short of national ambitions but also remains below the benchmark dedication of 1% agreed upon by African governments to propel the continent's development through research.

This laudable uptick, it is important to note, stems from a low base influenced by the economic contractions due to the Covid-19 pandemic. Yet, the resilience and investment displayed by the business sector point to an optimistic trajectory for R&D, independent of government budget allocations. Indeed, once governmental cuts to the science vote are considered in future surveys for the years 2022-23 and 2023-24, the true impact of these private contributions will be further illuminated.

Underlining the implications of these findings, Glenda Kruss, head of the HSRC Centre for Science, Technology and Innovation Indicators, emphasizes the critical role of R&D. It serves as the bedrock for scientific progress, job creation, productivity enhancement, and sustained economic expansion. Countries that prioritize such investments gain competitiveness on the world stage, excelling in various industries, including the crucial healthcare sector, where R&D is vital for new medical breakthroughs.

The significance of R&D extends to environmental solutions as well, offering pathways to sustainable development, clean energy, efficient resource use, and strategies for reducing the environmental footprint of human activities.

Funding for R&D does not rely solely on domestic coffers; it also includes international contributions. Despite recent budget cuts, data from the 2021-22 R&D survey highlight that the public sector remains the cornerstone for research financing, although the business sector's role is conspicuously growing.

Dr. Nazeem Mustapha, an HSRC chief research specialist and principal investigator of the R&D survey, expressed a cautious optimism. While acknowledging the growth in R&D expenditure, he recalled that the prior year's reduction represented a two-decade low in the metrics tracked by the HSRC surveys. The anticipation now turned towards upcoming results, offering a clearer picture of what trend lines could be expected in the future.