NMISA & SANAS 2019/20 Quarter 3 performance

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Trade, Industry and Competition

26 February 2020
Chairperson: Mr D Nkosi (ANC)
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Meeting Summary

The National Metrology Institute of South Africa said it strived to consistently deliver outstanding, innovative and internationally comparable measurement solutions that support regional and international trade, improve people’s quality of life and enable environmental protection. It had achieved seven of its 15 targets for the third quarter, but it was envisaged that all targets, with the exception of the revenue target, would be met by the end of the fourth quarter.

The challenges it faced included aged infrastructure, a “fragmented” metrology service in South Africa, scientific and legal challenges, the misalignment of regulations to the quality infrastructure (QI), specifically the use of metrology, and inefficient implementation of regulations requiring measurements and metrology by regulators and government departments.

Members wanted to know how the problems with infrastructure and fragmented metrology were being addressed, as well as NMISAs plan to improve its revenue regeneration, because revenue was needed for the entity operational.

The South African National Accreditation System (SANAS) said its purpose was to provide an internationally recognised and effective accreditation and monitoring system for the Republic in order to ensure a well-functioning technical infrastructure that was aligned to international best practices, support the needs of local enterprises competing in a fast-paced global economy, and support public policy objectives in terms of health, safety and broad-based black economic empowerment (BBBEE) compliance issues

Highlights of the quarter included successfully hosting the 14th Organisation for Economic Cooperation and Development (OECD) training course for good laboratory practices (GLP) inspectors, which drew participants from six different continents. SANAS-accredited GLP conformity assessment data was accepted within the OECD member states.

Members wanted to know how SANAS was dealing with accreditation matters relating to the African Continental Free Trade Agreement, because it would surely be essential to controlling trade and economic activities across the continent as these activities continued to grow. They also agreed that there needed to be intervention with regard to infrastructure, and said public awareness should be promoted about the work the entities did.

Meeting report

National Metrology Institute of South Africa

Mr Ndwakhulu Mukhufhi, Chief Executive Officer: National Metrology Institute of South Africa (NMISA), presented the entity’s third quarter financial and non-financial performance report

He said NMISA was empowered by the Measurement Units and Measurement Standards Act, No18 of 2006, with the vision of being the leading metrology and measurement centre of excellence on the African continent. It strove to consistently deliver outstanding, innovative and internationally comparable measurement solutions that support regional and international trade, improve people’s quality of life and enable environmental protection.

The NMISA’s mandate requires them to provide for the use of the international system of units (SI), and to approve other units for use in South Africa; to develop and maintain primary scientific standards of physical quantities for SA; to compare those standards with other national standards to ensure global measurement equivalence; to perform reference analysis in the case of a measurement dispute; to maintain and develop primary methods for chemical analysis to certify reference materials for the country and the region; and to produce African-specific matrix reference materials to enable accurate analysis and conformity with assessment of food products.

NMISA had four strategic objectives:

  • Providing metrology for regulatory purposes and in support of government laboratories for compliance and development of regulations.
  • To provide metrology for industries which include assistance to small and medium enterprises (SMEs) to provide appropriate services in support of manufacturing and beneficiation.
  • To ensure metrology consolidation for state-owned enterprises (SOEs), to provide efficient shared services; and
  • To ensure the location of legal metrology under NMISA to effectively implement the legal Metrology Act.

Some of the highlights of the third quarter included proficiency testing schemes, such as mycotoxin in maize and aflatoxin in peanut butter. There were over 20 laboratories participating in these testing schemes. Five were local laboratories, 10 were from across the continent, and five were international laboratories. There was also new reference material now available on the NMISA online purchasing platform, such as aflatoxin certified reference standards and mycotoxin in maize matrix reference material.

NMISA had achieved seven of its 15 targets for the quarter. It was envisaged that all targets, with the exception of the revenue target, would be met by the end of the fourth quarter.

The challenges it faced during the third quarter included aged Infrastructure, a “fragmented” metrology service in South Africa, scientific challenges  (NMISA), legal challenges involving the National Regulator for Compulsory Specifications (NRCS), the misalignment of regulations to the quality infrastructure (QI), specifically the use of metrology, and inefficient implementation of regulations requiring measurements and metrology by regulators and government departments.

Mr Calvin Sehlapelo, Chief Financial Officer (CFO), NMISA, took the Committee through the financial report, and said the Institute had spent 100% of its allocated budget in the last five financial years. There had been no fruitless and wasteful expenditure incurred for the year, and no irregular expenditure. No small, medium and micro enterprises (SMMEs) had been affected by the late payment of invoices, and the majority of the 32 invoices paid later than 30 days from receipt of invoice had been related to large suppliers delivering goods regularly, where there were delays due to reconciliation processes.

In terms of the recapitalisation to provide for appropriate facilities, the current committed capital contribution received from the Department of Trade and Industry (DTI) of R139 million was insufficient to cover the construction of a new campus. The Medium Term Expenditure Framework (MTEF) allocation was continuously reduced year on year. The current capital contribution received towards the recapitalisation of NMISA was being used to cover the required continued upgrades, repairs and maintenance of the old facilities, as well as the costs to ensure operational readiness and implementation of strategy.

An appropriate level of funding was critical for NMISA to successfully fulfil its mandate.

Discussion

Mr S Mbuyane (ANC) sought clarity with regards to the aged infrastructure. If there was a problem with infrastructure, how would this be sorted out? How was the problem of fragmented metrology being addressed? What was NMISA’s plan concerning revenue regeneration, because revenue was needed for operational purposes. His last question was about the demographic make-up of NMISA, particularly with regard to gender.

Ms N Motaung (ANC) said she was impressed with the working relationship between NMISA and the South African National Accreditation System (SANAS), and appreciated the fact that this collaboration made things easier for the Committee going forward. She also wanted to know about the demographics of NMISA with regard to gender, and who was responsible for monitoring and maintaining standards between NMISA and other government entities.

Mr F Mulder (FF+) said that it was very important to have a standard measuring system in South Africa, and asked if the laboratories who partake in proficiency testing schemes were private or state owned. If these laboratories were private, did they pay well, and did they pay on time? How had the number of interns and in-service trainees hosted affected the budget? How did NMISA plan on solving some of the challenges faced by getting support from some of the other government departments? Finally, because NMISA and other institutions like it faced challenging times in the current economic climate, how sustainable would it be for these entities to co-exist alongside each other, or would it be possible for these institutions to merge and perform their different functions as one institution?

Mr M Cuthbert (DA) expressed similar concerns to those of Mr Mbunye with regard to recapitalisation and aged infrastructure. He said NMISA should look at ways to promote revenue regeneration, and expressed his appreciation for the fact that the chief executive officer (CEO) and the delegation knew exactly what was going on within their institution.

Ms J Hermans (ANC) said that it was good to see two well-functioning entities, but she also had concerns about the infrastructure of NMISA. As a Committee, this was one of the issues that stood out for them, and a solution had to be found because all the good work and international standing that NMISA had achieved could be undone as a result of poor infrastructure.

Ms Y Yako (EFF) wanted to know if NMISA continuously provided accreditation, or if it was a once-off process.

NMISA’s response

Mr Mukhufhi said that from an internal perspective, NMISA had picked up on the level of skill and the amount of resources needed to attend to the infrastructure issues, and this affected operational allocations, because even though they spent more time doing maintenance, it was not adequate. The DTI, together with National Treasury, had started working on a plan to recapitalise NMISA, and a profit and feasibility study had been done. This study had focused on many different areas to see which would be the best option for recapitalisation, and what it would cost.

The recommendation to build new infrastructure had been made, and the choice given was the innovation hub campus just across the road from the Council for Scientific and Industrial Research (CSIR). The Council had indicated that their plan now was to build the CSIR campus somewhere else, so they were open to the idea of NMISA taking more space, which was away from the road. The hope was that the DTI would approve the R139 million yearly allocation needed by NMISA for recapitalisation so that they could recapitalise old equipment and modernise its infrastructure and equipment.

On the questions surrounding fragmented metrology functions and whether the Committee could do anything to assist, Mr Mukhufi said that at moment there was a study that the DTI had commissioned, which looked at the quality of infrastructure at homes. The outcome was that hopefully NMISA could produce recommendations on how to deal with issues of fragmentation, so it was doing its part to ensure that these issues got consolidated.

There were more private laboratories which set up their testing processes in line with the standards set by SANAS to ensure that their methods of testing were done according to them. This was where the accreditation and SANAS came in. NMISA did not get involved with the checking of products

Regarding the gender composition at a management level, the executive of NMISA had six executives supporting the CEO, and three of them were women.  In respect of youth in the organisation, NMISA had taken the approach of recruiting young people who had received bursaries. 

South African National Accreditation System

Mr Lulama Mayedwa, Chairperson of SANAS, introduced his delegation to the Committee, and asked Mr Ron Josias, CEO of SANAS, to take the Committee through the third quarter performance report.

Mr Josias said SANAS derived its mandate from the Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Act, 2006 (Act 19 of 2006) (Accreditation Act). Its purpose was to provide an internationally recognised and effective accreditation and monitoring system for the Republic, in order to:

  • Ensure a well-functioning technical infrastructure that was aligned to international best practices;
  • Support the needs of local enterprises competing in a fast paced global economy;
  • Support public policy objectives in terms of health, safety and broad-based black economic empowerment compliance issues

SANAS was the sole national accreditation body for carrying out accreditation in respect of conformity assessment, which included accreditation systems for:

  • Calibration, testing and verification laboratories;
  • Certification bodies;
  • Inspection bodies;
  • Broad-based black economic empowerment (BBBEE) verification agencies;
  • A national body to monitor good laboratory practices, compliant with the principles adopted by the Organisation of Economic Cooperation and Development (OECD);
  • Any other body that may be added to SANAS’s scope of activity.

Among the highlights for the third quarter, SANAS had successfully hosted the 14th OECD training course for good laboratory practices inspectors in Cape Town in October. A total of 31 economies had participated in the training from six different continents. SANAS accredited good laboratory practice GLP conformity assessment data was accepted within the OECD member states.

As part of SANAS’s focus on awareness creation amongst students, a live studio interview was conducted at the University of Johannesburg’s radio station, and it had presented for the first time at the Post-graduate Research and Innovation Symposium.

SANAS was signatory to all existing International Laboratory Accreditation Cooperation (ILAC) mutual recognition arrangements (MRAs), and its accreditation was recognised within 104 economies that were co-signatories. SANAS was also a signatory to the existing International Accreditation Forum (IAF) MRAs, and its accreditation was recognised within the 93 economies that were co-signatories.

Mr Ismail Abdoola, Chief Financial Officer, SANAS, took the Committee through the entity’s financial report, and listed the following highlights for the third quarter:

  • Income generation was in line with budget;
  • Expenditure (operational and capital) had been managed within budget;
  • Only 2.7% of creditors were paid after 20 days, which was a positive achievement against the target of 5%. SANAS subscribed to the principle of ensuring that its target to pay suppliers, especially SMMEs, was shorter than the legislative target of 30 days;
  • No bad debt write-offs were recorded during the quarter;
  • No irregular or fruitless expenditure was incurred;
  • No material losses were incurred;
  • The entity was liquid and solvent, with no long term liabilities.

Discussion

Mr Mbuyane wanted to know why certain targets were not met, and how SANAS planned on ensuring that they would be achieved. Were there any plans looking at how they could bring in some revenue, because there could not be a sole reliance on the Department of Trade and Industry (DTI) for revenue? He wanted to know more about the accreditation and verification processes at SANAS.

Ms Hermans (ANC) asked how SANAS was dealing with accreditation matters relating to the African Continental Free Trade Agreement, because surely it would be essential to controlling trade and economic activities across the continent as these continued to grow.

The Chairperson said that he had picked up an issue with infrastructure, and it was obvious that there needed to be an intervention in this regard. One of the big issues across the entities was still transformation. He asked how public awareness could be promoted about the work that was being done, and how one could create a space where South Africans expressed an interest in participating and contributing to this work.

Finally, he referred to the state of institutes of higher learning, and said that the younger generation’s association and involvement needed to be looked at, and that they needed to see representation within these entities so that markers such as diversity within gender and race continue to be important points of consideration.

SANAS’s response

Mr Josias responded that the issue of accreditation was not only about the competence of the people involved. When considering the competence of an organisation to perform a specific task, a variety of factors were considered, which may include issues with the environment, the standards of the organization and the equipment etc. One did not get a blanket accreditation, only accreditation for what one could display in accordance with the standards which had been set by SANAS, and every four years the process happened again. One could lose one’s accreditation if one did not keep up one’s competence.

With regard to finances, SANAS was aware that they would need to become less dependent on government grants, and in the upcoming strategic plan there was going to be a key measurement indicator, where SANAS would measure their reliance on government income in order to decrease it.

Regarding the targets which had not been met, one of them was the vacancy rate. The CEO said that it could be hard at times to fill vacancies, but SANAS was working hard to meet any targets which had not been met. There was a commissioner who worked with SANAS in order to meet their BEE targets and aims. SANAS spent a lot of time in the African Continental Free Trade Area, and this was to ensure that they could accept goods and services coming from various industries, and make sure that the goods that were being imported and exported met the accreditation standards, both at a local as well as at an international level.

Addressing the question of mergers of entities, Mr Josias said it was important to note that this was how it had been in the past, and when SANAS became part of this global village it had to comply with agreements of the World Trade Organisation (WTO), which required independence and impartiality, and that was why the entities were the way they were. The issues which needed to be addressed were mostly internal structural issues.

Mr Mayedwa spoke about the gender composition of the SANAS board, and said three of the ten members were women. Because the appointment of board members was done by shareholders, a method of improving the gender composition would be for the shareholders to appoint more female board members, and to fill vacancies with women.

Mr Josias mentioned that at the administration level, the gender composition was around 70% female, at the senior management level there was a 50:50 split, and at an executive level there was a 25% composition of women.

Mr Mbuyane said that he still wanted more clarity and elaboration on his question about revenue generation. In order to balance their demographics, there needed to be more inclusivity along the lines of other demographic factors, like race, youth and people with disabilities, not just along the lines of gender.

Mr Mukhufhi responded that from NMISA’s perspective, they would try to increase their revenue generation by providing direct and sustainable metrology services to the state.

The meeting was adjourned.

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