There are approximately 700 state-owned enterprises in South Africa. They operate across sectors such as transportation, energy and utility, some of which are the largest employers in those sectors.
Such entities are created and managed by the government of the country to provide important services and promote economic development. It was formed in South Africa in the 20th century when governments recognized the need for government to support local industries by providing services such as rail transport, financing and electricity.
As the country became industrialised, more state-owned enterprises were established to serve businesses and communities and create jobs. In the early 21st century, they were also tasked with generating state revenue.
But when South African state-owned enterprises are mentioned in civil society discourse, it is often for all the wrong reasons. They are plagued by allegations of lower service delivery, financial difficulties and corruption. Their performance has deteriorated significantly over the past 15 years. One reason is the unclear obligations, poor management, and inadequate infrastructure and resources.
This obscures the potential to contribute to research, development and innovation that can support economic growth.
The Human Sciences Research Council's Science, Technology and Innovation Indicator Centre conducted research to identify what state-owned companies need to do to enhance research and development (R&D) and innovation.
Three state-owned enterprises were used as case studies. They operate in a variety of sectors, including forestry, aviation and energy. They were chosen for their obvious innovation through R&D or other activities. We have identified five ways to assess whether state-owned enterprises are ready. You can achieve your goals through R&D and innovation. Its human capabilities, technical capabilities, collaboration and partnerships, research infrastructure and governance.
The three organizations integrated R&D and innovation into their strategy. However, improvements were needed in areas of capacity, resources and organization.
While state-owned enterprises are unique entities, the framework developed using these five areas has helped us to understand innovative characteristics as players within a particular sector. It is a valuable assessment tool that can guide individual state-owned enterprises and policy makers to improve corporate research and development and innovation outcomes. Ultimately, this could contribute to economic growth and the development of certain sectors.
Case Study: Forest of Opportunity
Founded in 1992, SoC Limited, a South African forestry company, was one of three organizations that we learned. There is a double mission. One is commercial and focuses on wood harvesting, processing and related activities nationally and internationally. The second is socioeconomics. It delivers returns to the public ministry, which is its shareholder, and promotes rural economic development.
In South Africa, the company manages 189,760 hectares of forest, including 121,585 hectares of commercial plantations. In Mozambique, it manages 82,547 hectares of forest. 15,258ha of this is a commercial plantation. It processes around 10% of South African logs and produces over 10 million seedlings per year.
Below is how the organization performed in 2022 (the year the research was conducted) in five evaluation areas.
Human Capability: The R&D team accounts for less than 1% of the approximately 5,000 workforce. The organization's training academy offers a wide range of programs for employees and communities that are close to their operations. Supports sector capacity building through graduate scholarships.
Technical Capabilities: An organization's ability to use R&D and technology to achieve business goals spans the entire wood value chain. This organization also has non-state functions. These include community-based forestry, training and ecotourism.
Collaboration: There is strong collaboration with universities, research councils, communities, and global and local organizations. This helps to build capacity and solve a variety of operational problems. It will also expand its relationship with the community.
Research Infrastructure: The company conducts R&D at its nursery in Tweefontein, Western Cape, at its R&D center in Sabi, Mpumalanga. For example, wood tissue culture studies are conducted centrally to improve timber yield over time. The center has state-of-the-art equipment and even more are sourced.
Governance: Organizations recognize the importance of R&D and continue to invest. The innovation portfolio is part of the executive structure. However, they have not achieved their capital investment targets. There are also no intellectual property management or technology transfer strategies.
Availability for improvement
All three of our case studies have made R&D and innovation activities part of our strategic planning. There were also clear examples of innovative performances, which worked well when it came to collaboration.
Still, there was a lot of room for improvement. All three entities needed to hire more researchers and engineers. All three face the challenge of using the technical knowledge and systems they have developed over the years to generate income from innovation. This can be done by commercializing intellectual property.
Research infrastructure is an area of concern for all three entities. They need a more long-term investment. I also found out that I need to update my long-standing R&D program. A more proactive approach to innovation and commercializing intellectual property could be useful.
from now on
We believe our analysis and the resulting indicators can assess what is needed to achieve more R&D and innovation for use by all South African state-owned enterprises. They are tools to become more innovative and track progress beyond the delegation of core service delivery.
