Since establishing a democratic government, South Africa has made huge progress in recovering from the apartheid era, when the country was socially, economically, politically and largely geographically divided on a racial basis. The government has consistently pursued key priorities: build a single nation, accelerate economic growth, reduce unemployment, eliminate poverty, expand the sphere of the formal economy, and play a leading role in building a better Africa. Modern governance, co-ordinated and coherent policies, and taking government closer to the people are seen as instrumental to achieving these goals.

The review is based on a background document prepared by the South African National Advisory Council on Innovation (NACI), an advisory body to the Department for Science and Technology (DST), and on the results of a series of interviews with major stakeholders of South Africa’s innovation system by the OECD review team.11 Many people were very generous with their time and information in connection with both the background report and the visit (see Annex A). As a result, the review team was able to form a good picture of the parts of the innovation system that relate to government, the knowledge infrastructure and to a lesser extent of activities in large companies and relevant policies that lie outside the remit of the DST.

South Africa is one of the largest countries as well as the largest economy on the African continent. The country’s history, including its economic and social development, is exceptional in many respects. Since the watershed of 1994, marked by the end of apartheid and the beginning of democratisation, South Africa has undergone fundamental changes in political, economic and social terms. In the following years, South Africa’s new government implemented far-reaching reforms, liberalising domestic markets and foreign trade and thus creating a more open, market-oriented economy.

This chapter reviews the transformation of the South African innovation system since the early 1990s. It first recalls key features of the system as it was at the beginning of that decade and which must have seemed at the time to offer very limited prospects for meeting the goals of a radically changed society as it entered an unfamiliar international and rapidly evolving environment. It then turns to the present and highlights the considerable success achieved in broad areas of the system’s performance in spite of the unpromising initial conditions. It moves on to describe some of the sources of that success: recent policy developments, the structures developed for policy-making and implementation, and certain features of the main research and innovation performers. It concludes by noting some of the challenges still to be addressed.

The institutional focus of much policy thinking about innovation systems can easily lead to over-emphasis on the state institutions involved. This seems to have been the case in South Africa, as much description and discussion of the innovation system has focused heavily on components associated with government organisations and activities. Such a perspective downplays, or even ignores, some of the major roles played by business enterprises, not only in turning knowledge into improved livelihoods, higher incomes and delivered public services, but also in generating the knowledge and human capital to undertake those tasks. The well-known shortage of people with strong mathematical and scientific skills entering the higher education system and remaining there long enough to become research and development (R&D) workers affects industry as much as the knowledge infrastructure. Given the large number of non-R&D industrial innovation activities for which such people are needed, industry is arguably even more affected by this shortage. However, while industry suffers from this human resource problem, it is also a key part of the solution.

This chapter examines two components of the innovation system: education and research (or knowledge infrastructure) and the political system (or policy and governance). For the first of these, it focuses on research and development (R&D) by higher education institutions and public research institutes (the science councils). It draws on international experience to highlight the importance of balance in the system: first, between university R&D and business enterprise R&D; and second, between the different roles and activities of public research institutes. However, it is important to recognise that the latter is a variable that needs to be tuned to the particular structure of economic actors and activities in the economy.