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Network Partners for Capacity Building and Knowledge Exchange in thre Telecommunications Sector


Title: Network Partners for Capacity Building and Knowledge Exchange in thre Telecommunications Sector Author: Gordon Oyomno Last modified by: Lucienne Abrahams – PowerPoint PPT presentation

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Title: Network Partners for Capacity Building and Knowledge Exchange in thre Telecommunications Sector

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Innovation System and InequalityThe Experience
of South AfricaPresentation 29 January 2010
  • Luci Abrahams, Wits LINK Centre Thomas Pogue,

  • Inequality has defined South Africas political
    economy historically and continues to be an
    intractable reality, with race, class, gender and
    geographic dimensions.
  • This paper traces trends in interpersonal and
    inter-regional inequality since the establishment
    of a democratic state in 1994.
  • Reviews key aspects of the co-evolution of the
    innovation system, side by side with current and
    historical inequality in the SET workforce and
    inequality in the benefits of innovation output.
  •  Poverty and inequality can be examined from at
    least five perspectives, namely income, assets,
    services, infrastructure and knowledge income,
    housing assets, health and education services and
    in knowledge infrastructure.

SA Gini Coefficient by District
GINI Co-efficient measures level of
inequality. Darkest districts are poorest
  • Source Craig Schwabe, HSRC, Census 2001

Percentages of Households with Telephones (by
district, 2003)
Source HSRC, 2006
of Households with Mobile Telephony (by
district, 2003)
Source HSRC, 2006
Source Statistics South Africa
NRD survey Table 1.4 Provincial split of RD 2005/06
  Business enterprise Business enterprise Government Government Higher education Higher education Not-for-profit Not-for-profit Science councils Science councils Total Total
 Province R 000 R 000 R 000 R 000 R 000 R 000
E Cape 242,692 2.9 84,071 10 214,701 7.9 6,589 2.9 123,956 5.9 672,008 4.7
Free State 476,346 5.8 41,856 5 146,823 5.4 3,687 1.6 50,197 2.4 718,908 5.1
Gauteng 4,643,864 56.3 291,639 34.5 1,030,801 37.7 104,002 45.9 1,103,284 52.5 7,173,590 50.7
KZN 843,499 10.2 72,131 8.5 379,681 13.9 35,036 15.5 201,811 9.6 1,532,158 10.8
Limpopo 84,187 1 15,917 1.9 43,564 1.6 5,329 2.4 48,058 2.3 197,054 1.4
Mpumalanga 187,934 2.3 36,001 4.3 58,549 2.1 10,238 4.5 48,051 2.3 340,773 2.4
North-West 180,227 2.2 20,857 2.5 73,457 2.7 3,547 1.6 45,751 2.2 323,838 2.3
N Cape 14,691 0.2 42,539 5 15,263 0.6 1,650 0.7 64,284 3.1 138,426 1
W Cape 1,570,336 19 239,630 28.4 769,378 28.2 56,436 24.9 416,702 19.8 3,052,483 21.6
Total 8,243,776 100 844,640 100 2,732,215 100 226,514 100 2,102,094 100 14,149,239 100
Table 1 Magisterial Districts with the Largest
Population (2001) Source Provincial Profile of
the Free State, Development Bank of Southern
Africa, May 2003
District Population (2001) of Provincial Total
Sasolburg 114 450 3.85
Botshabelo 202 661 6.83
Welkom 264 781 8.92
Witsieshoek 348 781 11.75
Bloemfontein 377 968 12.73
Odendaalsrus 104 262 3.51
Historical Patterns of Inequality
  • 49.3 million people living in more than 12
    million households, South Africas economic
    production concentrated in six urban centres
  • South Africa 129/182 countries HDI of 0.683
    (2007), lower country position for life
    expectancy at birth and stronger positioning on
    adult literacy, combined gross enrolment ratio
    and GDP per capita (UNDP, 2009). HIV/AIDS
    influencing population trends, est.5,2 million
    people living with the virus.
  • Approximately 70 of South Africas population or
    35 million people live outside the six
    metropolitan areas predominant economic activity
    is community services. Western Cape, Eastern
    Cape and KwaZulu-Natal very large rural town and
    village populations 6 million each KZN and
    Eastern Cape, living from agriculture,
    subsistence farming, informal tourism, social
    grants (StatsSA, 2009).

Interpersonal Inequalities income and
  • GDP ZAR2283.8bn GDP per capita ZAR46800
  • Income inequality is extremely high at a ratio of
  • Income inequality has risen in the period post
    democracy, signalling the rise of a relatively
    large black middle class and a continued rise in
    unemployment arising from job losses in mining
    and agriculture and by a shift in the sectoral
    earnings shares from manufacturing and trade to
    government, the FIRE and construction sectors, at
    lower average wage rates.
  • Bhorat, van der Westhuizen Jacobs (2009, p.57)
    increasing levels of wage inequality partly
    attributable to skill premium paid to highly
    skilled workers.
  • Of total employment 13.3 million (June 2009), SA
    has a very small informal sector of around 2,1
    million (excluding agriculture and domestic
    employment) or less than 16 of the total
    employed, significantly lower than either Brazil
    or India

Innovation-focused ST and RD activities and
  • Services sector dominant, then manufacturing,
    mining in decline
  • ..strengths and weaknesses of the provincial
    economy are apparent. The economic profile of
    Xhariep district is largely agricultural with
    further tourism potential to be exploited around
    the Gariep Dam and the Diamond and Wine Route.
    The Lejweleputswa district relies on gold mining
    with a contribution to GGP from agriculture and
    trade and a small contribution from
    manufacturing. Northern Free State has a largely
    manufacturing base, with the petrochemical hub at
    Sasolburg, a significant services sector and a
    contribution from agriculture. Motheo district
    relies largely on the services and government
    sectors, while the Thabo Mafutsantyana district
    has a high dependence on agriculture with a
    contribution from tourism that could be further

Consumption patterns
  • Most important asset class for SA majority is
    housing. In 2008, 73.5 of households lived in a
    formal dwelling, 10.5 in a traditional dwelling
    and 1,8 million h/h or 13.4 in informal
    settlements. (Government RSA, 2009, p.30).
    Significant demand for rental housing by
    individuals earning below R7500 per month (FFC,
    2009 p. 59).
  • Middle class chooses private schooling and
    healthcare, at a premium price, with innovation.
    Public sector provides economic and social
    infrastructure, as well as community and personal
    services, with extremely limited innovation.
  • Demand for innovation in services visible across
    income levels. Public sector most visible
    demand in health services (HIV/AIDS,
    tuberculosis, other), policing and crime
    reduction, public transport, energy and
    electronic communications with government.
    Private sector, demand most visible in banking,
    access to finance and mobile communications.

Interregional Inequalities
  • SA economy dominated by Gauteng, consistent share
    of 1/3
  • of GDP 2002 2007 as compared to share of 1/5
    of population
  • Decline in output inequality attributed in part
    to relatively constant share of output relative
    to increase or decrease in population size eg
    Gauteng constant output share (34) with increase
    in population share, Eastern Cape constant share
    of output (8) but population share declined 1995
  • Absolute exclusion of small towns from meaningful
    output, and innovation
  • Gauteng Western Cape consistently greater
    contributors to economic output relative to their
    population size. Five provinces North-West, Free
    State, Limpopo, KZN, and Eastern Cape
    consistently generating less output relative to
    their population shares explanation partly
    relatively higher concentration of urban
    populations for the former and rural populations
    for the latter provinces

Class, Race, Gender and Inequality
  • Inter-racial inequality historical and remains a
    factor for a large proportion of the population.
    However, decadal rates of change indicate that
    intra-racial inequality is also an increasingly
    important characteristic of income inequality
    post-1994 intra-racial inequality increased for
    all populations African, Indian, Coloured and
  • Increases in class and gender inequality within
    these historically racial groups, as new
    opportunities in high-income jobs and business
    ventures began to determine the shape of
    inequality in South African society on a class
    and gender basis.

Summative Remarks
  • Public policy seeks to increase per capita income
    and to reduce unemployment. Requires innovation
    in redistributive mechanisms, capacity of society
    to move towards sustainable livelihoods through
    distributive means over the next two to three
    decades, productive capacities need to be geared
    towards making the benefits of science and
    technology more broadly available to society. A
    greater proportion of the benefits of investment
    in innovation must go to the 40 of the
    population with the lowest income.
  • South African society requires political,
    business and community leadership to build
    sustained efforts to shift structural inequality
    as the only means of increasing income for the
    lowest quintile of the population and pushing the
    African mean income levels strongly towards the
    total mean income level.

Summative Remarks
  • Given the current shape and size of the South
    African economy and its relative positioning in
    the global economy, strategies to address
    structural inequality will require major shifts
    in economic policy, charting a direction away
    from reliance on low wage-labour resource mining
    towards medium-high technology production.
    Changing the history of centuries of
    dispossession and inequality will also require
    strategies to increase sustainable subsistence
    agriculture and to reposition South Africas
    rural provinces with respect to participation in
    the local and global knowledge economy.
  •  For each province, some potential for structural
    change exists. Though the change trajectory may
    occur over more than two decades, agendas can be
    set now eg Gauteng global city-region 2055 and
    KZN knowledge economy focus and ICT and
    electronics cluster. Comparative advantages of
    Limpopo, Free State and Eastern Cape in terms of
    their future positioning in the productive system
    must be assessed, theorised and strategised. The
    role of RD and innovation in this strategic
    positioning must come under scrutiny.

Summative Remarks
  • Comparative advantages of Limpopo, Free State and
    Eastern Cape in terms of their future positioning
    in the productive system must be assessed,
    theorised and strategised.
  • The role of RD and innovation in this strategic
    positioning must come under scrutiny.

  • Various elements of innovation in the production
    system and inequality mutually reinforce each
    other - private sector domination of RD and
    unequal access to the global production network.
    Market driven trade and investment under
    globalization are briefly examined.
  • Public sector orientation towards supporting SET
    innovation biased towards the production system
    for increased global competitiveness, limited but
    increasing ? support for research to support
    social objectives.

  • Dialectical relationship between relative
    strength and focus of the innovation system, and
    the state of inequality in South Africa Low
    levels of RD investment and the selective focus
    on innovation in manufactured goods over nearly
    three decades has contributed little to SME
    development, as the majority of SMEs operate in
    the broad services sector economic development
    amongst historically disenfranchised communities
    has moved at a slow pace, despite the presence of
    democratic government.
  • Policy emphasis (15 years), and also investment
    focus BEE model based largely in asset
    structuring and deal financing, rather than in
    promoting innovation in black-owned business, in
    small firms, in the informal sector or in social
    ventures. Inhibitors in education and health
    sectors poor progress towards fostering
    successive generations of researchers, knowledge
    workers and entrepreneurs.

National System of Innovation and Production
  • Large services sector 65 of sectoral value-added
    1999 - 2006. FIRE and business services 30 of
    service sector value-added. Between 1999 and 2006
    the sectoral value-added in services grew at a
    compound annual growth rate of 5.8.
  • During this period, agriculture accounted for
    three percent of value-added, the mining and
    quarrying sector was a further eight percent and
    manufacturing contributed 19. Secondary
    industries which consist of manufacturing,
    utilities, and the construction sector accounted
    for 24 of national value-added during this
    period. Secondary industries grew at an
    annualized rate of 5.2, less than that of
    services and the 5.5 annualized growth in the
    primary sectors of agriculture and mining.
  • Does local manufacturing need a stronger
    innovation push?
  • Does agriculture? And services is 5.8 good
    enough for who?

Formalised RD and innovation
  • CSIR, ARC, HSRC, AI - while a number of these
    agencies have initiatives in social innovation,
    there is no single agency focused on exploring
    RD and innovation for social development for
    services for the second economy
  • Six research-intensive universities have built a
    strong knowledge base in a wide range of
    disciplines and in multi-disciplinary areas
    feeding competitiveness and societal development
    what about the others? Not even social research
    or local applications/ideas?
  • R16,5 billion total innovation expenditure
    including RD around R27bn in 2004.
  • Formalised RD excludes the poor!

Formalised RD excludes the poor!
  • 87 of expenditure to the natural sciences,
    engineering and technology 12 to the social
    sciences and humanities.
  • Engineering sciences, medical and health
    sciences, and the ICT sector each receive
    relatively high shares (between 13 and 20)
    while the environmental, materials and marine
    sciences (less than 2) of RD expenditure.
  • By socio-economic objective, 62 relates to
    economic development objectives including
    manufacturing, mineral resources and commercial
    services (each receiving a share between 8 and
    13) expenditure on RD in key areas such as
    energy resources and supply, education and
    training, and environmental knowledge receive
    relatively low shares of total expenditure (5 or
    less in each case) (DST, 2007).
  • The e-fields (energy, education, environment)
    innovation in great demand yet investment
    consistently low over a long period.

  • The business sector is the dominant force in
    funding and performing RD. This is a positive
    factor from a business perspective, but it would
    appear that research efforts have not yet
    resulted in the increased development of medium-
    to high-technology goods and knowledge-intensive
    services (NACI, 2008)
  • The total number of researchers is 1,5 per
    thousand employed persons, comparable to Brazil
    and China, but low as compared to the Russian
    Federation at 6.8 per thousand
  • Majority of research producing universities and
    scientific performing/funding agencies in
    Gauteng, historically due to science system
    developing around the attractive forces of
    economic demand and the seat of government, this
    clustering may today play a part in stagnation in
    the contribution of RD to the local economies
    outside of Gauteng province.

  • Provinces such as KZN and the Free State seeking
    to reinvent their economies as knowledge-based
    economies and are accordingly making the
    requisite infrastructure investments or
    considering new economic strategies Innovation
    is not a quick fix, it needs sustained efforts
    (Lan Xue, 2009) nor is it a trivial exercise.
  • South Africa is generally an importer of know-how
    and technology
  • As regards technological innovation and original
    manufacture or process development, the
    contribution of innovation to economy and society
    has remained at the level of adoption of complex
    technologies by business and industry, as
    compared to innovation in government or the
    not-for-profit sector, according to National
    Experimental Research and Development survey data
    for 2006/7.

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And so
  • Historical competitiveness in the low-tech and
    medium-tech sectors slowly being enhanced by
    competitiveness in the medium-high tech sector,
    driven largely by a decade-long upward trend in
    the export of automotive components and fully
    built-up motor vehicles.
  • However, mining is still South Africas largest
    export sector.
  • Participation in the global high-technology
    production sector is minimal (3) and static.
  • Given the structure of the economy and employment
    in low and medium-low technology intensive
    sectors, the South African labour force has
    witnessed limited adoption of medium-high and
    high-technology tools and processes in the
  • But innovation funding focused in hi-tech and
    knowledge-intensive areas is this the right
    choice? Innovation also needed in lo-tech
    medium-lo-tech (mining, agriculture, SME),
    services, and society

Figure 2 Composition of exports 2003-2007
Source Calculations based on South African
Revenue Services Trade Data following OECD
guidelines (Hatzichronoglou, 1997).
Access to Health and Education
  • Quality of health and wellbeing of the general
    population and the level of participation in
    higher education are contributing factors to the
    capacity of people to engage in RD and
    productive innovation and to grow the countrys
    knowledge base
  • Why? low participation rate in higher education
    (15) (NACI 2008, p.6) and post-graduate studies,
    creates a major barrier to the ability of the
    current and future generations to participate in
    the evolution of an innovative productive system
    with the potential to increase household income
    and per capita GDP
  • Same applies with childhood poverty, including
    malnutrition and quality of education

Table 5 Household amenities
2002 2003 2004 2005 2006
Water in house or on site 61 68 68 68 70
2002 2003 2004 2005 2006
Access to Electricity 76 79 80 81 81
2002 2003 2004 2005 2006
Toilet in dwelling 36 37 37 37 38
Source Table derived from Statistics SAs
General Household Surveys.
Current and Future RD Capacity
  • Major factors race and gender OR gender and
  • While the proportion of female academic staff in
    universities increased for the period 1992 2001
    and the proportion of female RD staff in science
    councils increased in the period 1996 2001,
    both groups tended to be less qualified than
    their male counterparts, especially at the
    Doctoral level (DST NACI 2004, pp. 20 - 23).
  • Furthermore, the upward trend in womens
    participation was marred by the low proportion of
    African, Coloured and Indian women in
    universities (30) and science councils (33).
  • In particular, womens participation in the
    natural sciences and engineering was very low,
    from around 9 for instruction staff and 14 for
    research staff in engineering and engineering
    technology to around 35 and 29 respectively in
    the mathematical sciences. Only computer science
    and data processing showed reasonable levels of
    participation at 46 and 40 respectively (ibid.,
    p.26 - 27).

Current and Future RD Capacity
  • Female students constituted the greater
    proportion of all university enrolments and
    graduations for the period 1992 2001, and while
    the percentage of female postgraduate enrolments
    increased in the same period, womens
    participation at the upper postgraduate (Masters
    and Doctoral) levels remained below the 50 mark
    (NACI SET4W 2005, pp.8 - 19).
  • These observed trends appear to be changing with
    respect to the future SET workforce. Data for
    the period 2000 2005 (NACI SET4W, 2009)
    indicates that women are approaching 50 of
    enrolments and graduations at the upper
    post-graduate level
  • When viewed by broad field of study the
    proportion of female doctoral graduates increased
    most substantially in the Engineering Sciences
    and Applied Technologies (from 12 to 19) in
    Humanities (from 30 to 38) and in the Social
    Sciences (from 49 to 53). In the Health
    Sciences, the female share of doctoral graduates
    declined from 60 in 2001 to 57 in 2005 (ibid.,
    2009, p.16).

Access to Financial Infrastructure

Final thoughtsA few key features which
require the attention of policy-makers and
decision-makers in various spheres are
  • Promoting stronger articulation between
    innovation strategy on the one hand, and economic
    and social strategy directions on the other hand
    with respect to the services sector, in the
    secondary and primary industries and with respect
    to the SME and informal sectors.
  • Supporting current and future RD capacity in the
    higher education sector and science councils as
    far as the fiscus will reasonably stretch, while
    encouraging business to increase RD and
    innovation spend, as an investment in future
    economic growth and competitiveness.

Final thoughtsA few key features which
require the attention of policy-makers and
decision-makers in various spheres are
  •  Enhancing access to educational resources and
    improving the quality of the primary through
    tertiary education experience, particularly with
    respect to maths, science, technology and
    language capabilities and with due attention to
    closing the race, class and gender divides.
  • Promoting access to financial infrastructure and
    reducing the costs of technology adoption,
    particularly for promoting technology usage and
    related innovation in the small business and the
    informal sectors.

Thank you questions????
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