DTI & National Regulator for Compulsory Specifications on Quarter 3 performance

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Trade and Industry

14 February 2017
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The highlights of the Department of Trade and Industry (DTI) achievements included the official opening of upgraded workshop facilities by MTU South Africa in Cape Town (where local assembly of diesel engines for 232 diesel locomotives for Transnet took place); formation of the Commercial Aviation Manufacturing Association of South Africa to drive export in the aviation sector; provision of capacity for castings of large valve at Yellow Star Foundry (YSF); Inter-Ministerial Committee prioritisation of 40 top investment projects; opening of the Yangtze Optics Africa Cable plant in Dube Trade Port in KwaZulu-Natal in December 2016; hosting of the foreign direct investment (FDI) promotion workshop for provincial investment promotion agencies; forging a formal relationship with the World Bank to improve business processes; reduction of vacancy rate from double to single digits; and the submission of a strategic plan to open more markets in Europe due to Britain’s exit from the European Union. Financial performance at 31 December 2016 recorded year to date (YTD) spending of R7 billion of the YTD budget of R8.3 billion. Spending by DTI was 52% (incentive payments), 33% (other transfers), 9% (compensation to employees) and 6% (goods and services).

During the discussion, the Committee asked about action taken to address the Auditor-General’s concerns about DTI’s unreliability of performance report information and the poor record keeping of its human resources department. Questions were asked about steps DTI had taken to ensure that its beneficiation strategies for companies such as YSF resulted in opportunities to expand and employ people; industrial parks; activities of Investment South Africa; negotiations with National Treasury on new allocations for the 2017/18 financial year; if DTI had a specific strategy development programme in place with government agencies as companies that received DTI incentives did not get contracts from other government agencies; if DTI had plans to minimise dumping of poultry products under Economic Partnership Agreements (EPA) with Europe; how it had addressed the challenges for companies’ incentive claims that could not be processed; DTI’s performance on its target for people living with disabilities; the names of the 40 priority investment projects endorsed by the In­ter­ Min­is­te­rial Com­mit­tee on In­vest­ment; what happened when a letter of commitment was withdrawn; and solutions for challenges observed at Saldanha IDZ during an oversight visit by the Committee.

The DG was asked to address why 51% plus black owned companies infringed the B-BBEE Codes of Good Practice as set up by the DTI, the rumour that SA chicken industry would not survive without imports, why the due diligence on industrial parks were just being implemented. The Committee asked DTI to give written responses on why sub-contracts had been awarded to another foundry company, name the company who was producing the wheels, which company received the tender and explain why the wheels were not locally produced and give an update on the designation of production of wheels.

Achievements of the National Regulator for Compulsory Specifications (NRCS) included the conduction of 10 694 inspections consisting of 5988 food and 4706 automotive, electro-technical, chemical, materials and legal metrology products inspections with the main impact being to stop the sales of non-compliant products (NCP). In addressing the Auditor-General’s findings, NRCS reported that the modernisation of its operations was used to pursue internal control improvements that included enterprise resource planning (ERP) system implementation and information sharing with South African Revenue Service (SARS). NRCS had committed to reduce the letters of authority (LOAs) backlog and introduce an LOA validity period. Legal options available to NRCS were amendment of the NRCS Act or engaging the DTI on the Act and meetings had been held with the Auditor-General in February 2016 to resolve the issues. Key challenges for NRCS were operational (high transportation and confiscation costs for confiscated goods), outdated regulations for compulsory specifications (VCs) and technical regulations (TRs), inadequate capacity, border enforcement and revenue challenges.

Members asked about the vacant posts and the person dismissed; if NRCS was working with the Auditor-General to resolve revenue collection because appropriate systems were not in place yet; compulsory specification/ technical registration (VC/TR) of electro-technical LOA approvals; which automotive company was involved in importing fake brake friction materials; a time frame for the completion of the modernisation process; percentage of applications approved within 120 days; why there were variations between the three and ten month periods; and why it was difficult to approve applications within 120 days; concern about the large amount of non-compliance; if it monitored repeat offenders and what it was doing to curb the trend of non-compliance; confirm if the lighters inspected were for braai purposes because lighters had caused serious burns to people; the costs incurred on abandoned goods and why goods were abandoned.

The Committee mandated the NRCS to give written responses on lighters and other pertinent issues. In addition the Committee stated that NRCS had received frequent summons due to the challenges that NRCS had not addressed. In addition, the Committee was concerned about the delay in LOA approvals that exceeded 120 days and the five General Manager vacancies that had not been filled. It asked the DTI Director General to note this because the filling of the GM vacancies was a challenge for NRCS.

Meeting report

The Chairperson welcomed the Committee from its oversight visit. She remarked that Members received briefings so as to better assimilate the quarterly reports. She observed that written responses were received from DTI and NRCS after the oversight visit but the Yellow Star Foundry (YSF) report was outstanding.

Department of Trade and Industry (DTI) on its Third Quarter 2016/17 performance
Mr Lionel October, DTI Director General, noted the objectives of DTI and then highlighted its key achievements. These included the official opening of upgraded workshop facilities by MTU South Africa in Cape Town geared to locally assemble diesel engines for 232 diesel locomotives for Transnet as part of the 1 064 locomotives build programme; formation of Commercial Aviation Manufacturing Association of South Africa to drive export in the aviation sector and providing capacity for castings of large valve at YSF which resulted in the factory supplying AVK Premier valves; providing capacity for business processing outsourcing that resulted in South Africa being named the winner of the Annual Outsourcing Destination for 2016 at the Global Sourcing Association in the United Kingdom; improved growth in retail sales of cosmetics, toiletries, pharmaceutical and medical goods in August 2016 based on Stats SA; creation of support for green industry by conducting South African Bureau of Standards (SABS) first test at the Thermal Test Chamber in December 2016. DTI made progress in industrial development by finalising agreements on local manufacture and assembly of electronic devices, smart meters for export markets and export of marine services; the submission of a designation proposal to the Minister which resulted in the publication and circulation instruction notes for firefighting vehicles, SABS local verification and appointment of three companies in the first phase; acquired financial benefits from Gauteng Department of Economic Development for the South African Minerals Processing Cluster in November 2016; and visited the second deepest mine in the world Tau Tona to observe AngloGold prototype reef boring equipment that uses non-explosive extraction methods.

The DTI facilitated the Inter-Ministerial Committee (IMC) on investment meeting in October 2016 were 40 top investment projects were identified; opening of the Yangtze Optics Africa Cable plant in Dube Trade Port in December 2016; the technical task team for the IMC on investment to France, Germany and Netherlands; hosted the foreign direct investment (FDI) promotion workshop for provincial investment promotion agencies; and a formal relationship with the World Bank to improve business processes.

DTI attended the Continental Free Trade Area (CFTA) Negotiating Forum in October and November 2016 and enhanced cooperation between Kenya, Nigeria and South Africa, implemented the Economic Partnership Agreement (EPA) which included agricultural market access between European Union and the Southern African Customs Union (SACU) and participated in the SIAL Paris, the Food Trade Fair, which recorded high export sales.

DTI noted progress in the special economic zones for the economic transformation of provinces such as in Eastern Cape where the Coega Industrial Development Zone (IDZ) signed an investment for motorised vehicles with Beijing Automobile International Corporation (BAIC); Dube Trade Port signed agreements with Chemical, Industrial & Pharmaceutical Laboratories (CIPLA) for production of bio-similars (cheap cancer drugs); Saldanha Bay IDZ in the Western Cape has letters of commitment for 34 investments; and there are horticulture and metal refining investments for Oliver Tambo IDZ in Gauteng. It noted the allocation of a 1000MW gas-to-power plant to an Independent Power Producer (IPP) in Coega and the launching of two industrial parks at Isithebe industrial park in KZN and Queendustrial industrial park in Eastern Cape in the third quarter.

Other achievements by DTI were the certification of the Performers’ Protection Amendment Bill by State Law Advisors and its tabling in Parliament; the finalisation and submission of the Copyright Amendment Bill to State Law Advisors; reduction of its vacancy rate from double to single digits with 49% women been employed in senior management positions and surpassing the benchmark for the employment of people with disability; and the payments of all eligible creditors within 30 days with 99% processed within 15 days.

Financial performance at 31 December 2016 recorded year to date (YTD) spending of R7 billion of the YTD budget of R8.3 billion. The R7 billion spend by DTI was 52% (incentive payments), 33% (other transfers), 9% (compensation to employees) and 6% (goods and services). The incentive payments were used to facilitate the transformation of the economy by promoting DTI’s key objectives. R4.1 billion (78%) was disbursed to companies but the variance of 22% was as a result of outstanding claims from applicants (due to outstanding compliance documentation, claims not yet received from applicants and claims that were not compliant with guidelines). However, some of the claims have been paid in January and February. The other transfers represented funds disbursed to public corporations, departmental agencies, non-profit organisations, foreign governments and international organisations to achieve DTI objectives and 99.32% of the YTD projections were disbursed. The Department expended R706 million (96%) of its YTD expenditure for compensation of employees. However, only 88% of its YTD projections for goods and services were expended due to late receipt of invoices from service providers.

The DTI had a total of 31 targets for the third quarter however only 27 were met or exceeded while four were not met or fully achieved. The four unachieved targets were: support of ten black industrialists, support for 800 jobs, export and investment facilitation. DTI could only support six the black industrialists to access new markets and only 614 jobs could be supported from approved enterprises (see DTI third quarter report).

DTI highlighted programmes to improve resource efficiencies, labour productivity and the meeting of environmental obligations by certain companies.

Discussion
Mr A Williams (ANC) thanked DTI for the presentation. He observed that the Auditor-General report had highlighted two main challenges: the unreliability of report performance information when compared with source information on industrial development, and the poor record keeping of the DTI human resources department. He asked what DTI has done to address these two challenges. During the oversight visit to YSF, the Committee observed that the beneficiation to the foundry had not been implemented as YSF had not received requests from Transnet which had resulted in retrenchments. He asked DTI to state steps taken to ensure that its beneficiation strategies to companies such as YSF resulted in opportunities to expand and employ people as result of sales on its finished products.

Mr G Hill-Lewis (DA) asked DTI to give an update on the activities of Trade and Investment South Africa in the provinces of KZN, Gauteng and Eastern Cape.

Mr D McPherson (DA) asked for an update on industrial parks with respect to the work done and progress in securing rebates from local municipalities and provinces. What new investment has been undertaken with industrial parks? He asked if Eskom had signed agreements to buy the power generated by the IPPs and whether the contracts for the 2000MW of power awarded under the Gas IPP in Richards Bay IDZ had been secured. He asked DTI to give updates on the progress with the European Maritime Safety Agency (EMSA) and on its negotiations with National Treasury on new allocations for the 2017/18 financial year.

Mr N Koornhof (ANC) asked if DTI had a specific strategy development programme in place to fill the gaps in trade agreements with government agencies (GAs). He asked the DTI to state whether it would ensure that Transnet had a trade agreement with Eskom.

Ms P Mantashe (ANC) expressed concerns on whether the DTI had working relationships with government agencies such as the Department of Energy (DoE). During the oversight visit, Members had observed that entities that received DTI incentives did not get contracts from other government agencies and these contracts are later given to other companies.

Ms S Van Schakwyk (ANC) congratulated the DTI for successful payment of creditors within 30 days. He asked if DTI had plans to minimise dumping of poultry products under Economic Partnership Agreements (EPA) with Europe.

The Chairperson asked DTI to state the challenges why company applicants’ incentive claims could not be processed and how DTI had addressed the situation. She asked DTI to state its targeted employment rate for people living with disabilities and to confirm its performance on that target. She asked for an update on the timeframes for solutions to challenges observed at Saldanha IDZ during the Committee oversight visit. She asked the DG to state what happens when a letter of commitment is withdrawn. She requested the list of the 40 priority investment projects identified by Investment South Africa and endorsed by the In­ter­ Min­is­te­rial Com­mit­tee on In­vest­ment.

Mr October replied that the DTI had organised skills training for its staff on performance reporting but funds from the skills fund was not received by DTI in that quarter so DTI could not capture this training under its achievements but it had planned a performance information reporting symposium during the 2017/18 financial year. The company incentives of DTI did not include sourcing government agencies that can be supplied with a company’s finished products. DTI played the role of facilitator to assist the company raise its competitiveness and assist with machinery and equipment but the company must sell its products. He explained that even though the economy is experiencing a downturn DTI can assist companies with incentives on the supply side of the economy. However DTI actively participated in Transnet’s activities and had insisted that Transnet should implement its programme despite the economic downturn. DTI was having collaboration with DoE and would be having a 15 February meeting with DoE to address issues of IPP on demand for finished goods. On the status of investors, DTI would be launching the Investment SA one-stop shop in Western Cape soon while the KZN and Gauteng offices would come later.

Mr October reported that the role of DTI was to stimulate interest in these industrial parks but the provinces and the development agencies had the bulk of the work. However DTI had completed security enclosure and fencing upgrades. The second phase would be to support the provinces and the development agencies with basic infrastructure such as roads and the upgrade of the facilities of the industrial parks. In addition, at a stakeholder workshop in November 2016 DTI asked the provinces to put up a structure that allowed cheap rentals as a contribution of the provinces to these industrial parks. A full detailed report would be given to the Committee on this project during the course of the year. In addition DTI had given Parliament a position paper on the implementation strategy that would apply to Britain’s exit from EU once the exit is complete. The DTI is following up on this and would explore enhanced relationships with Europe, Germany and Britain for opportunities for markets in agriculture and other sectors.

Mr October said DTI was working actively with Department of Small Business Development to implement the clause on 30% buying power that must be allocated to small business enterprises. DTI was working actively to coordinate the 40 top targeted investment projects identified by Investment South Africa and endorsed by IMC and DTI would give a written response on this. The DTI was working on strengthening procurement from government agencies such as PRASA, Eskom, and Transnet and they are being encouraged to buy products from local agencies. In the same vein, ProudlySA is encouraging consumers to buy products from local agencies and the Buy South Africa (SA) campaign is being re-launched. Tariffs had been raised for imports from Brazil, however tariffs cannot be increased for Europe boned chicken (BC) because of the EPA between the two of them. The Minister introduced a safeguard (because SA industries are under threat) for SA boned chicken with a 12.5% duty on BC from Europe in November 2016 so that demand from local poultry supplies would not be lost as local poultry suppliers cannot compete for BC with Europe due to the higher production costs in SA. Therefore negotiations between Europe and SA are ongoing to convince Europe on why SA has introduced the safeguard duty.

Mr October said there are delays in paying incentives to local companies because the local companies did not meet the document requirements. The Saldanha IDZ was designated for oil and gas investments but due to the recession, companies had reduced their investment based on market trends. Since companies had low returns on investments they had closed some lines. However, DTI convinced these companies that return on investment might be received on a long term basis; therefore DTI had received letters of commitment from these companies.

Ms Malebo Mabitje-Thompson, DTI Deputy Director General: Incentive Development and Administration, reported that DTI was presently having discussions with National Treasury on both the competitiveness package and tax incentives on EPA. Minister Davies had proposed an investment of R1.3 billion for the competitiveness package.

Mr Shabeer Kahn, DTI CFO, replied that the employment target for people with disability was 2% but DTI had achieved 3.3%.

Mr Williams asked DTI to state if it had mechanisms to address government agencies that did not follow-up on tenders. The Committee had learnt during its oversight visit to YSF that another company was supplying Transnet with wheels despite the tender awarded to YSF. He also asked the DG to outline the expenditure captured under goods and services as this should be shown.

Mr Hill-Lewis asked the DG to address why ‘51% plus black owned companies’ infringed the Codes of Good Practice set up by the DTI in the Broad Based Black Empowerment (BBBEE) Amendment Act. He asked if the small business enterprises sought permission from DTI and, if yes, why was permission given because it was against the BBBEE Amendment Act.

Mr Koornhof asked for comment on the rumour that SA chicken industry would not survive without imports yet the percentage of imported chicken was 14%.

Mr McPherson expressed concern about the funds spent on industrial parks when a long term strategy would have given better results. He asked why the due diligence on industrial parks was only just being implemented as this late implementation would impact negatively on employment.

The Chairperson observed that although the Foundry project was a core agent for industrialization, the sub-contracts had been awarded to another company. She asked the DG to forward in writing the company who was producing the wheels, which company received the tender and why the wheels are not produced in SA. The Committee understood that the wheels should be produced in SA. She asked about the DTI designation for production of wheels.

The DG reported that the DTI had introduced the designation mechanism to increase buying power. This involved researching the sector, identifying a local industry to achieve the goals set out by DTI, and then making recommendations to the Minister. Since SA was in a free market economy, DTI could not insist that a particular company should supply finished goods to government entities. DTI did not follow up on each tender either it is a local or foreign company that manufactures in SA. For instance in the case of AVK of Denmark, the company insisted that they would not invest in valve manufacturing here until there was an absolute commitment on local buying but we had to convince AVK that we could only designate buying power. In the case of Transnet there appears to be non performance in terms of local content as some companies have complained. Therefore, Transnet needs to answer these questions. Based on this we addressed the Portfolio Committee on Public Enterprises to persuade state owned companies to sanitise their procurement procedures and we liaised with the AG to audit companies on procurement beaches. DTI was working with local textile manufacturers and the South African Congress of Trade Unions who monitor all procurement requirements to see that all non-compliance is addressed.

The DG stated that DTI lawyers were looking at the BBBEE Amendment Act to address any breaches. However DTI is presently enforcing a 30% level of black employment empowerment (BEE) on government procurement for small companies and the Minister insists on certain codes for procurement. The DTI is committed to working on specifying a BEE code level for good practice rather than using the ownership formula for awarding contracts.

The DG observed that SA’s biggest protein intake came from poultry. While SA could compete on whole chicken, the country could not compete with Europe on boned chicken (BC) because of Europe’s low production costs and high demand for BC by SA. Based on lack of competitive ability, most local companies have moved capacity from BC lines to other parts of chicken and the challenge is from the sub-sector.

The DTI has decided to revitalise the industrial parks because during the apartheid era the industrial parks were not upgraded. Therefore DTI is playing the role of facilitating catalysts. The view of DTI is that industrial excellence can only be achieved when the country builds world class infrastructure. However the provinces want to charge market related rates if they have to invest in the industrial parks. The DTI has however advised the provinces to charge cheap rates rather than market rates while constantly improving the quality of the infrastructure so as to attract investors. The economy must bear the cost of building infrastructure because SA is still transitioning from a third world country.

Mr Kahn replied that the goods and services part of the budget covers the operational costs of DTI which include payments for professional commitments, information technology infrastructure and IT network, advertising and communication service costs.

Ms Thompson reported that the proposed investment of R1.3 billion was to assure investors of programme certainty. DTI was presently negotiating with National Treasury on the tax and grant incentives so that DTI would have a working capital that serves as a self-generating fund that is not affected by fiscal allocations.

The Chairperson resolved that DTI should provide written responses about the 40 investment projects prioritised by the IMC and the other issues raised. According to DTI’s responses the tender was from Transnet and the purpose of the designation was interpreted as localisation. The Committee needed an assurance that this purpose was pursued. The Committee would request correspondence on this from National Treasury, the Auditor-General and Transnet itself. She congratulated DTI for exceeding its employment target for people living with disabilities, and almost meeting the target for gender employment in senior management positions.

National Regulator for Compulsory Specifications on its Third Quarter 2016/17 performance
In his highlights on the period under review, NRCS Acting CEO, Mr Edward Mamadise, noted that NRCS had conducted 10 694 inspections which consisted of 5 988 food and 4 706 automotive, electro-technical, chemical, materials and legal metrology products inspections. The main impact of NRCS was to stop the sales of non-compliant products (NCP). NRCS had found NCPs estimated at R69 million with food (prawns and canned fish) having the highest value of R47.9 million mostly from pathogenic vibrio species, legal metrology R17.4 million, automotive R2 million (brake friction materials), electro-technical R0.987 million and chemical, materials and mechanical (CMM) R0.832 million.

He gave a status report on the commitments NRCS had made previously to the Portfolio Committee. These were ongoing implementation of separation of administration and technical process and ongoing manual implementation of checklists for low and medium risk. In addition, 6 636 applications were processed, 2 075 letters of authority (LOAs) were signed and issued. However, because the NRCS was dealing with LOA backlogs, the number of capturers were increased from three to seven and 2 716 applications above 120 days were processed. Responses from industry led to the delay in issuing LOAs as NRCS was sympathetic to the plight of the companies. He reported that modernization and enterprise resource planning (ERP) were finalised in November 2016 but would be advertised at the end of February 2017.

The actual performance statistics showed that out of the four compulsory specifications/ technical regulations (VC/TR) only one was submitted to DTI for approval. This was due to inadequate capacity within the regulatory research development area (RRDA) therefore the NRCS would be increasing the capacity in the RRDA. The target for administration of review board was met. To date five VC/TR has been submitted to DTI they are: VC 8076 (safety of lighters), VC 8054 (chemical disinfectants), VC 8056 (pneumatic tyres for passenger vehicles and their trailers), VC 8059 (pneumatic tyres for commercial vehicles and their trailers) and VC 8013 (hydraulic and clutch brake fluids). The number of inspections conducted on automotive, electro-technical, chemical, materials and legal metrology products exceeded the target as more retail inspections were conducted due to the need to respond to non-compliant products in the marketplace. On declared produced canned fishery and meat products 100% inspections were conducted however the actual inspections on locally produced frozen products were exceeded because of additional requests.

Only 47% (1 742 out of 3 739) of approval applications were processed within the set timeframes. This was due to higher volumes of applications and backlogs from electro-technical products, inadequate capacity, applications that were submitted without the required documents and delays in implementing dormant VCs under CMM products. The target of three NRCS consumer education events was surpassed, the NRCS recorded a vacancy rate of 9.62% as at 31 December 2016 as resignations and retirements were employed to manage human resource costs. It developed, approved and implemented the ICT master system plan (MSP). The NRCS budgeted for 29 vacant posts, prioritised the appointment of the Deputy CEO and Chief Financial Officer and awarded bursaries to employees to commence studies at higher institutions. The actual expenditure for the year was lower than the budgeted amount because NRCS has not been spending on goods and services such as advertising. The quoted compensation of employees will be reviewed upwards because it currently does not reflect actual living conditions for the financial year. NRCS had realised a surplus of R15 million against a deficit of R28 million.

Mr Mamadise reported that in the third quarter, NRCS generated 55% of its revenue from levies from compulsory specifications, 33% from levies, 15% from interest income and 6% from DTI transfers. The expenditure allocated was determined by its strategic goals: 65% of revenue generated was expended on the strategic goal to maximise compliance with all specifications and technical regulations, 18% was expended on the strategic goal to ensure an optimally capacitated institution, 13% on administration while 2% each was spent on strategic goals one and three (see report).

Modernisation was key in addressing the Auditor-General’s findings. On internal control improvements, the NRCS modernisation plan included ERP system implementation and information sharing with SARS. In addition the NRCS is committed to reduce the LOA backlog and introduce a LOA validity period. However, the legal options available to NRCS were amendment of the NRCS Act or engaging the DTI on the Act. Meetings had been scheduled with the Auditor-General in February 2016 to resolve the issues. Key challenges for NRCS were operational (high transportation and confiscation costs for confiscated goods), outdated regulations on VC/TRs, inadequate capacity, border enforcement and revenue challenges.

Discussion
The Chairperson asked for clarity on the vacant posts and about the person dismissed. Was NRCS working with the AG to resolve revenue collection because the system was not in place yet? She asked for more information on the VC/TR of electro-technical LOAs approvals.

Mr Williams asked the NRCS to clarify which automotive company was involved in importing fake brake friction materials. He asked if the R2 million would be enough to inspect automotive cars (brake friction materials). He asked for a time frame for the completion of the modernisation process that the AG authorised NRCS to comply with due to delays in fulfilling the NRCS mandate.

Mr MacPherson asked the NRCS to state the percentage of applications approved within 120 days because within ten months NRCS approved 29% applications yet within three months NRCS approved a further 47%. He asked why there were output variations between the three and ten month periods and why it was difficult to approve applications within 120 days. Despite the interventions he was not convinced that the challenges of the NRCS were being resolved.

Ms Van Schakwyk expressed concern about the large amount non-compliance (R69 million). She asked if NRCS was monitoring repeat offenders, what the NRCS was doing to curb the trend of non-compliance and if the NRCS was enforcing stricter punishment for repeat offenders.

Mr Mamadise replied that NRCS would provide the name of the company that imported fake brake friction materials in writing. Only R2 million automotives were confiscated concerning the fake brake friction materials. The modernisation project has picked up slowly – the specifications have been finalised and adverts would be released at the end of February 2017. NRCS had budgeted for 29 vacant posts and some of the positions included general managers (GM) in automotives, CMM, national building regulation and research. However, NRCS was undergoing a structural re-organisation to ensure it was well placed and capacitated to deliver on its mandates. It was also cautious about appointing staff who would not be relevant after the re-organisation to ensure that NRCS performs at optimal levels. NRCS wanted to engage with the AG on the measures proposed for modernisation process. It had made progress in resolving LOAs despite the electro technical backlogs and delays due to sympathy shown to the industry. He committed to increase performance percentages by the end of the year.

Mr Mamadise replied that the NRCS Act confined the organisation to either return the products to the country of origin or destroy the product. Some of the non-compliance cases did not capture the interest of law enforcement agents. However the NRCS is trying to educate law enforcement officers on these issues.

The Chairperson congratulated NRCS on the LOAs granted on tyres but wanted the name of the officer dismissed. She asked for confirmation if the lighters inspected were used for braai purposes. She observed that NRCS mentioned costs incurred on abandoned goods and wondered why goods were abandoned.

Mr Mamadise replied that an assembler was dismissed for fraud. The lighters inspected included cigarette and braai lighters.

The Chairperson wanted to know the type of lighter because lighters had caused serious burns.

Mr Mamadise replied that the NRCS had discovered two types of lighters: cigarette and wax lighters. The trend by importers was to abandon products they noticed were up for inspection for fear of prosecution

The Chairperson mandated the NRCS to give written responses on lighters and other pertinent issues. She remarked that the Committee wanted to see less of the NRCS team but the frequent summons were due to the concerns that NRCS had not addressed. The Committee was concerned about the delay in LOA approvals that exceeded 120 days so that the Committee could respond on NRCS commitments to the people of SA. She raised concerns about the five GM vacancies that had not been filled and asked the DTI DG to note the concern because the filling of the GM vacancies was a challenge to NRCS. The Chairperson congratulated the NRCS on its achievements and discharged the team.

The Chairperson addressed utilising a Friday for meetings.

Mr MacPherson advised the Chairperson to consider Wednesday because of Members’ other engagements but Ms Van Schakwyk stated that she had another Committee meeting on Wednesday.

The Chairperson asked Members to inform her of any party engagements by email and promised to make a case for Members as she had done in the past.

The meeting was adjourned.

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