Companies and Intellectual Property Commission (CIPC) Quarter 2 performance

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Trade, Industry and Competition

01 November 2017
Chairperson: Mr A Williams (ANC) Acting)
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Meeting Summary

The Companies and Intellectual Property Commission (CIPC) briefed the Committee on its Second Quarter financial and non-financial performance reports. For the first time in its history, and that of its predecessor CIPRO, CIPC had achieved a clean audit. CIPC had met 70% of its targets. The IKS target had been put on hold while the new IKS Bill was being developed by the Department of Science and Technology. Although the Intellectual Property target had not been met, the CIPC had produced a world leading manual in enforcement, anti-pirating and anti-counterfeiting and was training the South African Police Services in Intellectual Property. The target for registration of cooperatives had not met the target of a two-day turnaround, but had been reduced from a 21-days registration period to a three-day turnaround. CIPC referred to a number of highlights in the presentation. The CIPC billing and payment system that had caused so many difficulties in administration had been overhauled and the Commission now operated on an electronic payment system. The Commission had been awarded first prize in the “Innovating using technology to improve service delivery” category at the Award Ceremony for Public Service Excellence. CIPC had been Runner-Up in GovTech Technology Awards organised by the State Information and Technology Agency (SITA) Awards for Technological Innovation. Challenges and risks identified included the issue of salary disparities as raised by Organised Labour. A recent agreement signed with NEHAWU, which was the major union in CIPC, made it possible to move forward with a review of the organogram. Moving power outages, delayed roll-out of the Eastern Cape Service Centre and documents storage issues challenged efforts to improve service delivery to customers.

Noting a team of three gentlemen, the Committee was concerned about equity in the Commission. Recognising the importance of cooperatives, members were concerned about the footprint of CIPC in rural areas where cooperatives were invaluable in addressing poverty. Members understood the drive of CIPC towards efficiency in the workplace, but the unutilised, but funded posts, was a concern when there were so many unemployed people in the country. The Chairperson drew attention to the expenditure of R57.5 million on IT consultants and suggested that was an area that CIPC should address.

Meeting report

Brieifng by Companies and Intellectual Property Commission (CIPC)
Adv Rory Voller, Commissioner, CIPC, introduced his team consisting of Lungile Dukwana, Chief Strategy Executive and Muhammed Jasat, Chief Financial Officer.

The Commissioner stated that CIPC had met 70% of its targets but noted that it was important to understand the context of the underperforming KPIs. The first target that it had failed to meet was the IKS (Indigenous Knowledge System) which was being managed by two Portfolio Committees and the CIPC had been advised not to do any further work until the Department of Science and Technology had completed its work on a new Bill, after which CIPC would have to align with that Bill. The funds for IKS had been re-allocated. CIPC had approached the Minister to remove IKS from the Annual Performance Plan.

Work was taking place in respect of Intellectual Property and CIPC had produced a world leading manual in enforcement, anti-pirating and anti-counterfeiting. Several countries had requested copies of the document. Currently CIPC was training the South African Police Services. The under-performance in Intellectual Property would be addressed in events that had been planned for the third quarter. The turnaround time for the registration of cooperatives had been reduced from the 21-day turnaround but the 2-day turnaround was a stretch target. So far, they had managed to do it in three days but the Commissioner had reallocated resources from the Companies unit and expected the target to be reached in the third quarter.

Adv Voller addressed the highlights. For the first time in history, CIPC had received a clean audit. The Minister was very pleased. CIPRO, which had existed prior to CIPC, had also not received a clean audit. Another highlight was the new billing and payment system. CIPC had been bogged down with its payment system. The Commission was using card centres and electronic means of payment. People could pay immediately online using credit or debit cards. The system had been developed in-house and now processed 300 to 400 applications a day. CIPC was also moving into the next phase of collaboration with the banking system and people now also get a BBBE certificate from Nedbank, along with other services.
The Call Centre was moving upward. The Commission had filled management posts in the Centre and had increased staff. The improved payment system would also drastically reduce the number of calls received by the Call Centre. CIPC was also active on social media. If people were talking about CIPC on social media, management could now monitor it. CIPC had 18 000 followers on Facebook.

CIPC had hosted an inaugural Corporate Registers Forum Technical Workshop with the theme of “Efficiencies and learnings of a modernised registry, from a registration office to being a regulator”. Fifteen countries from across the globe were represented at the workshop, although it had had a particularly African focus.

CIPC had received two awards the previous week. The Minister for the Public Service and Administration had presented CIPC with the first prize in the “Innovating using technology to improve service delivery” category at the Award Ceremony for Public Service Excellence. CIPC had also been Runner-Up in GovTech Technology Awards organised by the State Information and Technology Agency (SITA) Awards for Technological Innovation. The Minister was very pleased.

Challenges and risks identified included the issue of salary disparities as raised by Organised Labour, and which had been revisited by CIPC’s EXCO. An agreement had been very recently signed with NEHAWU, which was the major union in CIPC, making it possible to move forward with a revision of the organogram. Moving power outages, delayed roll-out of the Eastern Cape Service Centre and documents storage issues challenged efforts to improve service delivery to customers. In the Trade Mark area, there was a backlog due to the file storage issue, but it was being managed through regular interactions with all relevant stakeholders.

Mr Dukwana focused on targets that had not been achieved and he also spoke to the stretch target of completing registration of cooperatives within two days. The reduction from 21 days was significant.

Mr Jasat noted that most of CIPC’s income would come in towards the end of the year. The cost of employees was low because not all positions were filled. Bank charges were high because of the increased number of companies and cooperatives registered and CIPC paid per transaction.

The Chairperson indicated that the 2017/18 report on Financial Performance had not indicated the amounts accurately and an additional “000” needed to be added to all the figures on the page. He stated the CFO had to ensure that the figures were accurate or that a legend indicated the additional figures to be added.

The Chairperson thanked the Commissioner and his team for the presentation and invited the Members to engage with CIPC.

Ms C Theko (ANC) noted that the Minister had asked if the banking processes could be improved and that had been done. She was happy overall. People thought that one needed so much money to start a cooperative but the new system would show people how easily it could be done. She hoped that cooperatives in rural areas would be fully serviced.

Ms P Mantashe (ANC) appreciated the good work but she was concerned about the call centre and the runners. She understood that there was a self-service centre in Cape Town. What about all of the other provinces? Did they have self-service centres, and if not, would they be established? She had heard the Commissioner speaking about outsourcing a service. She asked the Commissioner to elaborate on this.

Mr S Mbuyane (ANC) sought clarity on a few things. He had heard about how cooperatives could work with Nedbank but there were no facilities in the rural areas. How were people in rural areas to be serviced if they wanted to open a cooperative? It was a big thing for the people. Which vacancies had been filled and what was the equity ratio in the Commission? What was the variance? As far as bogus business registration was concerned, what had been done about the people who stood on street corners selling bogus companies?

The Acting Chairperson congratulated the CIPC on the excellent audit as well as the awards. ITC governance and finance controls had been raised as areas of concern in the auditor’s report. On Finances, he noted that R57.5 million had been budgeted for ICT services. What was the reason for such high expenses relating to ICT? He also asked about risks, especially in ICT, and how they were mitigated.

Mr D America (DA) asked how the increased salaries to address disparities would impact on the budget position at CIPC.

The Commissioner replied that the footprint with the banks meant that there were 1,500 branches across the country where registration was possible. People could also transact in the provincial self-development offices where CIPC also had a presence. Self-service centres had been set-up in all provinces and CIPC was adding offices in each province. For example, there was a self-service centre in East London but CIPC would shortly be opening another branch in Port Elizabeth. In December a new self-service centre was being opened in Limpopo, with the Minister in attendance. CIPC had started a process called the “going home” strategy. The strategy was not popular with everyone but those who chose to make use of the opportunity were happy. The strategy involved placing staff in offices outside of Gauteng. The Commission was giving trained staff the opportunity to move back to a more rural area, particularly where their family lived, because that was a good way of getting experienced, trained staff to work in more areas and to share their skills and knowledge outside of the urban areas. Because technology allowed them to do it, the education and awareness staff who went out to rural areas and small towns were able to register companies and cooperatives from the venue in which they were doing the training or awareness work. The staff sent out an invitation for people to go and register their companies while staff were training and the registration could do be done there and then.

The Commissioner said the call centre was still a problem so he had increased the number of call centre operators. The billing and payment system had been extremely problematic as payments had not been attached to the correct accounts, people sent payments with incorrect account numbers etc. All of those problems would be resolved with the direct banking system. Most calls had been about the payment and allocation of payment to the correct account and so he was confident that the number of calls to the call centre would drop significantly. That, together with the management staff that had been appointed and additional staff who had been transferred from other units, he anticipated a huge improvement in the call centre in the third quarter. As far as runners were concerned, there were none in CIPC. They used to stand on the street corners, and even had an internet café at DTI but that had closed down. Runners were people who had bought businesses and sold them illegally. They had found space because it had taken so long to register a company. However, there was no longer a need for runners as the process of registering a business was so quick, taking a maximum of 48 hours. Members could come to see IPC and they would not see any runners anywhere around.

On staff vacancies, the Commissioner said a strategy was in place and work on the new organogram could begin as the NEHAWU agreement had been signed. CIPC had a practice of never filling all the posts because he believed that efficiency was important and the Commission strove for efficient practices in every aspect, which meant that as one process became more efficient, he could move staff to another process that require efficiencies. CIPC had 634 staff posts but had never employed more than 485 people. The impact of technology meant that they did not need more staff. When it came to 14:00 to 15:00, the staff had was completed their work as a result of efficiency gains and he had to find additional work for them to do. As far as Equity was concerned, CIPC had more women than men; there was a 50-50% split in the Executive Committee. The Commission had far more black employees than white employees.

Because the CIPC was so heavily reliant on ICT and that was where the risk lay, the Risk Committee had been rescoped as the ICT Risk Committee. The two major risks were ICT and personnel. New employees took time to train and when trained, they were quickly snapped up by legal offices, banks and so on. ICT governance and security was paramount because the CIPC system had up to 5 000 malware or hacking attempts daily. Only once had the CIPC had a virus on its system and that was when there was an internal virus that had damaged large systems around the world. A staff member had opened an email and that had allowed the virus into the system.

The Commissioner explained that the Commission made use of consultants in two areas – ICT and Company and trademark storage, so they had two service providers. The Commission was steadily reducing its reliance on service providers. Sword Systems had been the IT service provider to CIPC for 25 years. CIPC was currently engaged in litigation against them as they had a stranglehold on the IT system at CIPC. The Commission made allowances for outages because an outage of even one day impacted negatively. He wanted to bring companies’ registration down to one day. In terms of the budget, he had made savings from which he could pay the increased salaries to address salary disparities. He could also re-allocate some of the funding without having to report irregular expenditure at the end of the year.

Ms Mantashe congratulated CIPC as it had moved forward, but she noted that she did not see equity in the team sitting before her. The other Committee Members concurred.

Mr Mbuyane noted that CIPC had 125 vacancies and wanted to know if the posts were funded. It concerned him, as South Africa had such a high unemployment rate and CIPC was sitting with vacant posts but not employing people.

In response to the equity issue, the Commissioner stated that he had two female Executives on his executive team, one was the Head of ICT and the other was the Head of Compliance. Unfortunately, he did not bring them with him to Parliament as they did not work in the areas in which CIPC generally reported to Parliament, but, feeling somewhat embarrassed, he thought that he might bring them with him in the future. He began to give the names of female staff but was interrupted by the Chairperson who asked him to send an organogram instead of him reeling off names.

The Commissioner said the vacancies were budgeted for and he would not lose manpower by not filling those posts. He wanted an efficient organisation. Although the additional posts were budgeted for under personnel expenditure, he would request that the funds be reviewed so that he could shift the funds into another programme where he could use the money.

Mr Dukwana explained that CIPC would be undertaking a review of the organogram.

Ms Mantashe asked about the awareness campaigns. She had not seen CIPC in the rural constituencies. As a member of the ANC, she believed that cooperatives were the only way out of poverty. She invited the Commission to work in her constituency.

The Commissioner agreed to make an arrangement to that effect.

The Acting Chairperson congratulated the CIPC once again and thanked the team for the presentation. He explained to the Committee that a sub-Committee meeting would commence in a matter of minutes.

Meeting was adjourned.



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