Funding falters
Two years ago Hans Pietersen’s innovative blanket to treat newborn babies suffering from jaundice looked like a winner.
Then the Support Programme for Industrial Innovation (SPII), a government scheme involved in funding local innovations in the pre-commercialisation stage, cancelled a special commitment to spend R5m commercialising the blanket. It also cancelled similar commitments it had made with nine other projects.
The programme had already ploughed about R1m into testing and other development costs for the blanket, produced by Pietersen’s company, Infant Trust. The new funding could have helped cover the R250 000 cost of getting a CE mark (signifying that a product meets European legal requirements) so it could be sold overseas.
Pietersen has since had to put on hold the development of the blanket, which could replace lighting often used to treat infants in developing countries.
The SPII’s annual funding allocation was exhausted by November 2013, forcing it to close to new applications for the next four months. In that year R75,4m was disbursed to 31 companies (against R52m in 2012/2013).
A recent review of the programme, and another of the Technology & Human Resources for Industry Programme (Thrip), have found government wanting in its commitment to funding innovation. Both programmes fund research in the precommercial phase and fall under the department of trade & industry (DTI).
SPII was relaunched in August by trade & industry minister Rob Davies after having previously been managed by the Industrial Development Corp. In April Thrip had been moved from the National Research Foundation to Davies’ department.
The department’s media liaison officer Bongani Lukhele says SPII’s requirements remain unchanged. There has also not been any increase in SPII’s allocation for the current financial year he says, adding that the department has requested additional funding for both SPII and Thrip.
Both programmes were transferred to the department in a bid to bolster the Industrial Policy Action Plan.
The SPII review, undertaken by Genesis Analytics and completed in March last year, found the scheme (launched in 1993) to be one of SA’s more effective innovation incentive schemes. It covered the period from 2000/2001 to 2012/2013, over which time a total of R622,6m was disbursed by the programme.
But the review found that the fund’s small, overburdened post-investment team had consistently reported that a lack of funding prevented the scheme from meeting its objectives. The review suggested consideration be given to running limited funding rounds at defined points in the year and that the fund take a more targeted marketing approach.
In its review of Thrip, completed in March, the University of Pretoria (UP) said the programme could “absorb more than twice” its current allocation, which has remained at about R150m for the past 10 years.
Thrip paid out R155,5m to 335 projects in the past financial year, with industry contributing a further R220m.
UP says it means that, in real terms, government’s contribution is now around half of what it was 10 years ago.
The programme started in 1992 and allows companies to cover part of their research costs by teaming up with universities.
Despite this, the review found the programme to have substantially lower overheads than comparable overseas programmes, while it offered considerable value for money in terms of developing technology and skills (by engaging 1 450 postgraduate students a year).
More than a quarter of the businesses that accessed the scheme said they would not have undertaken their projects had it not been for Thrip support (47% of respondents who received SPII support said the same).
The reviews also reported on the impact the two funds have had.
UP found that on average annually (between 2002 and 2014), Thrip supported 2 290 jobs, generated about R508m in value for the economy and produced about 50 patents (but about 27 a year in the last three years of this period).
On average, projects generated about R24m in revenue five years after conclusion and R224m 10 years after completion.
The SPII review revealed that more than 133 applications were reviewed each year, of which an average of 66 (49%) were funded.