CIPC & ITAC Annual Report 2021/22 & Q1 2022/23 Performance

Meeting report

Opening Remarks

The Chairperson stated the purpose of the briefing. She called on the Department of Trade, Industry and Competition (dtic) to introduce the entities.

Ms Nontombi Matemola, Acting COO, dtic, introduced Adv Voller as the leader of the CIPC delegation. He would introduce the Executive staff with him. From ITAC, Mr Dumisani Mbambo was leading the ITAC delegation and he would introduce the team when he made his presentation.

Ms Matemola thanked the Portfolio Committee for the opportunity to engage in the meetings as the inputs received from the Members were very, very valuable and useful, and the dtic appreciated them.

Presentation by the Companies and Intellectual Property Commission (CIPC)

Adv Rory Voller, Commissioner, CIPC,  pointed out that CIPC had a large mandate and hence he would go very quickly through a long presentation. He was accompanied by the CFO, Mr Mohammed Jasat, who presented the financial report. Overall, the report was extensive, presenting key highlights and non-achievements, but also providing detailed facts, statistics and commentary on every aspect of the work done by CIPC.

Some of the highlights in 2021/22 that the Commissioner was pleased to share included a clean audit for the sixth consecutive financial year; the launch of the Learn-i-Biz programme (director e-learning programme) on 18 October 2021 to educate new and inexperienced company directors regarding their duties and responsibilities; the approval of the business case for the development of the Beneficial Ownership Register.

The ease of doing business was further promoted by the use of 4IR technologies, automating processes, and migrating services to new platforms, such as BizPortal and New e-services. Over 90% of filings were processed within the published service delivery turnaround times, which was attested through excellent customer satisfaction scores: call centre – 78%, Facebook and Twitter – 78%, and Self-Service Centres – 82%. Progress was made in building the patent Substantive Search and Examination capability. By using virtual methods, the education and awareness programme reached a larger audience. The IP for SMME Capacity Development Programme, a national flagship programme spearheaded by the CIPC in partnership with WIPO (World Intellectual Property Organization) and the National Task Force Team, was launched.

The 2021/22 Annual Report showed that 81% of key performance indicator (KPIs) targets were achieved. Automation and digitisation efforts resulted in services such as Company Registrations, Co-operatives Registrations and Changes/Amendments had been reduced to less than a day while services such as Annual Returns Filing, Annual Financial Statements filing and Changes were instant. Because the organisation had changed from an administrative-led organisation to an IT-led one, CIPC was undergoing an organisation re-design. It was not completed by the end of the 2021/22 financial year but full consultation, appropriate placing, and re-skilling of staff was crucial for future success, and that was ongoing.  The implementation of the Inventor Assistance Program through collaboration with WIPO, in which inventors were matched with pro-bono patent attorneys, was a win. CIPC, in partnership with WIPO, successfully hosted and delivered the WIPO SA IP Summer School and Technology Transfer. SMMEs benefited from the developmental programme. The IP Summer School featured the high schools around Durban which exposed the learners to presentations by IP experts.

KPIs not achieved included the organisational design process that was delayed due to the stakeholder consultation process. The K2 migration was not achieved because the organisation had decided to optimise other platforms and re-directed the use of K2 to internal processes. Delays in the implementation of the enhanced Bizportal and e- services functionality were a consequence of CIPC's dependence on the Department of Home Affairs as well as resource constraints. The website slightly underperformed (by 1%) due to data harvesting and the potential security threat. Design registrations underachieved by 14% as the processes were mainly manual.

In light of the delayed Copyright Amendment Bill, CIPC was doing important work by overseeing the collection societies more closely. CIPC was performing the after-distribution audit (by an independent audit firm) to ensure that performers and record producers were paid per actual use and to ensure that collecting societies only deducted 20% of administrative costs as permitted by the Regulations on Collecting Societies.

Two major challenges were experienced in the 2021/22 financial year. A system problem and an attempted security breach posed a risk to data in the CIPC registers. However, swift action resulted in unsuccessful attempts to hack data. Staff was receiving upgraded training. CIPC was dependent on the Department of Home Affairs (DHA) for all transactional services. DHA experienced significant downtime which resulted in CIPC downtime for those services. A solution was being worked on.

The First Quarter Report for 2022/23 was also presented.

For Programme 1, 8 (57%) out of the 14 quarterly targets were achieved. Programme 2, 6 (86%) of the seven (7) quarterly targets were achieved. Programme 3, 3 (75%) out of four(4)of the quarterly targets were achieved.

Key KPIs not achieved in the quarter:

The Employee Performance Management Policy was not approved within the 1st Quarter as originally intended but rescheduled for the Q2 •

The turnaround time for Facebook queries was not met in Q1 as more customers migrate to the use of social media

The availability of ICT systems

Processes identified for automation could not be implemented due to a lack of resources. Targeted for Q2

API Gateway and Management Platform not implemented but targeted for Q3 to organisational prioritisation

Five(5) IP enforcement activities were targeted for Q1 but only four(4) could be implemented . During Q2 the additional intervention will be implemented

The challenges in the quarter included: the downtime of the Department of Home Affairs link impacts on the verification of customers and delays CIPC customers from transacting and Eskom Load Shedding impacted the Service Centres across the country and partners sites.

(See Presentation)

Discussion

Mr M Cuthbert (DA) commented that presentations from CIPC were always of a gold standard. The presentation was open and honest and presented the challenges faced quite openly. That was a credit to the Commissioner himself. Other entities would do well to learn from the CIPC. Whenever a Member asked a question, there was never any evasiveness.

He was pleased that the CIPC had been engaging with the National Lotteries Commission (NLC) to help it resolve its issues. He requested a little bit more clarity around the fact that one could not do broad searches for CIPC details. In the case of the lottery grants, one of the ways that he, as a Member of Parliament, was able to find various aspects of corruption was by checking businesses that were NLC beneficiaries. He found it to be a very useful tool, as did several investigative journalists who used that information on quite a large scale to check exactly what people were up to. It was a good tool for accountability and transparency, but he would like to see some sort of a hybrid arrangement in place, where if there were a public interest in sourcing that kind of information, it was not as complicated as it had become; there was a login process, and one was only able to access one record at a time. CIPC should be looking at some sort of mechanism to allow for that because it was very much in the public interest.

He added that the other thing was to expand on the work that had been done with the NLC. A large majority of the money that was laundered through an extensive financial matrix was through a series of shell companies. Had all of that information been provided to the National Lotteries Commission, as well as the Special Investigating Unit? Was there information available to ensure prosecution and to bring to justice those who had stolen from the most vulnerable in society?

Mr S Mbuyane (ANC) stated that the presentation was very precise and gave Members greater clarity about the work of the CIPC. His interest was in the Joint Key Performance Indicators (JKPIs) for the dtic and its entities. Was the entity able to work with other entities within the Department around the Joint KPIs?

He expressed a concern that people from rural areas were unaware of intellectual property rights, especially because the system was completely computerised. Was there an education and awareness programme that focused on far-flung rural areas? Another concern was employee performance management, vis-à-vis the underspending on personnel. Was it possible to have a consequence management strategy when understaffed? Was there a good working relationship between the entity and the labour unions, and organised labour, or were there still challenges?

The Chairperson asked about the vacancy rate and how it was impacting the work of the CIPC. What was the status of the memorandum of understanding (MOU) with the World Intellectual Property Organization (WIPO) to establish a Learning Academy? She understood that the organisational design process was not completed during the past financial year due to the unavailability of stakeholders for consultations. Which stakeholders were not available, and were plans in place to make sure that the organisational design was completed during the current financial year?

The Chairperson complimented the CIPC on its work in getting the IP, copyright and patent information out to schools as, from her personal experience, it was definitely paying off.

Adv Voller responded to the question about the work that CIPC was doing with the lotteries. CIPC had been a very corrupt organisation at one point but went through a journey of closing loopholes of patronage, where monies were passed to register companies quickly, to putting governance in place and putting in automated systems to enhance service, and to remove some of the areas that were prone to corrupt activity. The Lotteries Commission wanted to learn how CIPC went about dealing with those governance failures and other governance issues, and what process CIPC had put in place. He had met with the Acting Commissioner and seconded the CIPC Head of the Risk and Governance Unit to the National Lotteries Commission, so that they can put in a governance and compliance programme because there had been an orchestrated process of breakdown.

He said that one of the specific areas that the NLC was concerned with was transparency and CIPC was helping the NLC with this. CIPC was helping NLC with the identity, and identification, of all of those involved in non-profit companies (NPCs). The grant system would have a beneficiary system going forward for NPCs only. That was his understanding, but he stood to be corrected. CIPC was the trusted source of that data because CIPC did a lot of verification of who the directors were, and verification of the compliance of those entities. Therefore, the NLC could leverage the CIPC database to point fingers and identify people who were involved and who were not NPC directors. The NLC had no way of identifying who the actual directors or beneficiaries of those particular entities were, so it was going to use CIPC as a trusted source. CIPC had an open register, as one of the issues around corporate law was transparency and disclosure of information and CIPC built a lot of systems around that. The Commission was going to be ring-fencing the NLC data and database to push through all of the data to the Lotteries Commission. The two entities had discussed placing the beneficiary list on the CIPC systems and websites so that was open to anybody. For example, people could see that a childcare centre in Pretoria had been granted R3 million from the lotteries. That would be a public watchdog. CIPC would assist in the development of a robust and well-developed IT system as those had also been eroded. The Chief Information Officer (CIO) would be assisting the NLC to build that capability and pulling data from CIPC.

Concerning the joint KPIs with dtic, Adv Voller assured Mr Mbuyane that the Department and entities met regularly in a “regulator's cluster” i.e., entities that had mandates in the regulatory space, and one of the discussions was around KPIs and how they could assist each other and assist their regulating roles by complementing or passing on information and data. There was a system in place. He had provided the entities with the mechanisms used for benchmarking CIPC, sending over blueprints on how to do it. How CIPC managed, analysed and mined research data was vitally important. That was the new gold at the CIPC. He explained that how quickly CIPC registered a company was a bread and butter, i.e. a foundational, issue that had to happen. Looking at the data and making meaningful sense, talking to fellow regulators and finding trends, and looking at how data could be accessed and mined was an essential focus. Joint KPIs enabled entities to look at the data across the regulatory agencies and make sure that made meaningful sense so that the Minister and the ministry could be assisted with credible data and various data sources.

Concerning IP for SMEs in rural areas, Adv Voller confirmed that it was a big project of CIPC and the Commission had seen quite a few applications coming from areas beyond what would traditionally be the economic areas of SA. CIPC staff went to summer schools and had gone to the major universities and were currently going to the smaller universities; that year, they would be going to the University of Limpopo. Together with the IP Office and WIPO, CIPC developed an outreach programme, making sure that it discussed IP issues across the length and breadth of the country. Larger industrial cities were well-versed in the knowledge of IP and intellectual property was understood in larger innovative institutions, but CIPC needed to spread that word and go further, together with its stakeholder partners, investing a lot of time in rural areas.

As far as the underspending on employees was concerned, he admitted that CIPC was actually a little bit over-staffed, but it did have administrative staff that it needed to re-skill, and that was part of the audit process, and also why the audit process was taking so long. CIPC came from a very administrative background with administrative staff sitting behind a data capturing set and receiving a lot of paper. A batch of typists worked full time on typing up information. CIPC had moved its model and needed professionals to undertake large components of regulation, query resolution and client engagement. That needed the right components of education and required a lot of multi-skilling and upskilling. One of the processes that the Commission had undertaken was a skills audit of every single staff member to find out what their qualifications were and what skills they had to see if their skills could be matched or if they could be upskilled. So, the underspending was a result of the loss of staff. As administrative posts became vacant, he did not fill them. Only critical skills positions were being filled at present. He had to upskill the staff and make sure that they could meet the challenges in terms of the entity’s Vision2030. The CFO could also attest to the fact that he was pretty strict when it came to increases and bonuses as CIPC could not be immune to the current challenges in the public service.

Regarding the relationship between organised labour and management, Adv Voller did not want to make it sound rosy, but it could not be better. At every leadership intervention, strategic review intervention and others, the unions were invited to send representatives. They welcomed that because they shared the information with the rest of the staff. Workplace harmony was a point of discussion. The relationship was open, transparent and included a lot of discussion and consultation into whatever happened in the organisation.

He stated that the vacancy rates did not have an impact on the general body of work that CIPC did as far as the core business was concerned. As he had said in the Annual Report, the Commission met its targets in the core services, even though the current structure in CIPC had 640 posts, of which less than 500 were filled. Since the structure was put in place more than 10 years previously, the entity had moved on to the use of automated tools and so the need had shifted away from administrators and typists. The organisational redesign process was intended to address that shift. So, the vacancy rate did not speak to the actual performance of the entity as it did not have an impact. The IT environment was fully staffed because that would have an impact.

In responding to the Chairperson’s question about the MOU and the Learning Academy with WIPO, Adv Voller explained that when CIPOC had first started the learning academy, it was only for IP, but it had come to include issues of governance, issues of corporate and company law and issues of enforcement and regulation and so it was expanded from a CIPC IP Learning Academy to a CIPC Learning Academy. WIPO was just one part of it because WIPO only worked with IP but the fully-fledged Learning Academy addressed the full mandate of CIPC.

The Chairperson thanked the CIPC team and commend their work. She particularly appreciated the full briefing to the Portfolio Committee.

Presentation by ITAC

Mr Dumisani Mbambo, Acting Chief Commissioner, ITAC, made the presentation. He was assisted by Ms Ntsobe Nkoana, the Chief Financial Officer.

Mr Mbambo presented an overview of the environment in which ITAC was working in 2021/22. The international trade environment globally continued to undergo profound changes, with the rules-based multilateral trading system governed by the World Trade Organisation facing an existential crisis following unilateral and protectionist action. Closer to home, South Africa was also dealing with an impasse within the Southern African Customs Union (SACU). The major challenges emanated from the lack of policy harmonisation and coordination among the SACU member states. ITAC administered trade instruments on behalf of member states of the Southern African Customs Union (SACU). South Africa, being the largest economy in SACU, used tariffs to support its industrial policy objectives. By contrast, the other SACU Member States used tariffs for fiscal purposes.

During 2021/22 ITAC’s tariff investigations focused on diverse sectors of the South African economy, including the chemical, metals, and textile sectors. Most tariff support applications were principally the result of a difficult domestic economic environment and were in response to comparatively low-priced imports from emerging economies. Concerning trade remedies, ITAC conducted eight original investigations and nine sunset reviews. The investigations involved diverse products such as pasta, chicken, laminated safety glass, garden tools, frozen potato chips, tyres and cement. In addition, two safeguard investigations on bolts and set screws were also conducted.

Mr Mbambo briefed the Committee on tariff investigations; ITAC’s engagement with the Automotive Production and Development Programme; import and export control. In light of the Committee's close interest in the matter, he provided an update on support for the Poultry Industry and the Sugar Industry.

ITAC received an unqualified audit opinion for the 2021/22 financial year with findings. Material findings were received on the reporting of annual performance information and annual financial statements. Management developed an audit improvement plan to address the root causes that led to the regression and the implementation of the plan was in progress and being monitored. The Internal Audit’s three-year rolling plan included making a follow-up on audit findings raised by the external auditors. ITAC was also in the process of strengthening the capacity of the current internal audit function. The ITAC Executive Committee also played a role in monitoring the implementation of the action plan through regular reporting on implementation.

Mr Mbambo presented a report on the First Quarter 2022/23 financial and non-financial performance.

During the quarter under review, 4 475 import permits were issued against the target of 4 000. The majority of the permits were issued in respect of imported products used in the following sectors: Marine Resources, Mineral fuels and oils, Chemicals o Rubber and tyres, Metals, Capital Goods and Mechanical Appliances and  Automotive.

Export permits issued in the quarter under review amounted to 3 764, against the target of 3 000.

(See Presentation)

Discussion

Mr Cuthbert was pleased with the improved presentation. ITAC was a bit more prepared than they were the previous time. That was very positive but he was not very positive about the comments made by the Acting Chief Commissioner prior to his presentation as it was important to understand the significance of trading relationships and the economic impact of those trading relationships. He was quite happy that the Commission was not focused on export promotion because if that was the country’s attitude towards export promotion and economic diplomacy, it would find itself in a little bit of a bind. Secondly, he seemed to misunderstand that the concession made on poultry was not an economic interest but had to be weighed up against the benefits received as a result of the US African Growth and Opportunity Act (AGOA) and was used to leverage participation in AGOA at the time. AGOA had benefited other industries such as the automotive industry and sometimes, as is the nature of international trade and economics at large, there would be some sort of trade-off. One should just be a little bit more circumspect about those trade-offs.

Mr Cuthbert found it particularly interesting that there was an admission by ITAC that it was actively pushing for reciprocal agreements from businesses, which was something that Minister Patel had been very lukewarm on in the past, and only recently admitted that he had been engaging in that kind of practice, which Mr Cuthbert personally thought amounted to an extortion racket. He understood that those agreements were not published or made public to Members of Parliament and also to members of the public. If the Committee were to request written copies of those submissions and agreements, would ITAC provide them? Alternatively, the Promotion of Access to Information Act (PAIA) could be invoked. It was important to see what businesses had agreed to and what kind of inducements have been given by the government. When one established relationship demands, it approximated illegitimate collusion which did not sit well with him considering that ITAC was supposed to be an independent body. Nonetheless, ITAC should make that information public. He was interested in knowing if there was any kind of legal recourse for a company that chose not to sign an agreement with ITAC.

Mr Cuthbert noted that ITAC cited protected engagements with an applicant regarding confidential agreements which had resulted in significant delays in certain decisions. Could there not be some sort of transparency to allow people to understand exactly what it was that they were getting themselves involved in? Those agreements had a huge impact on any particular industry and industries at large. He asked why, when duties had been paid in cases where things were not necessarily produced locally, people waited endlessly for the rebates. What was ITAC doing to finalise investigations more quickly, considering that ITAC aimed to finalise investigations within six months, and the presentation showed that several investigations had gone well beyond that period of time? Could ITAC say how long the dtic required to finalise a matter on its side? What kind of work did the dtic need to consider? In the past, it was quickly assessed and submitted to the Minister for his signature. Why did it now need to spend such a long period of time on the Minister's desk?

He added that, despite his disagreements with the Minister, the Minister had come across as a lot more pragmatic than he had found ITAC to be that morning. If he could make a presumptive suggestion, he would say that ITAC should bring itself in line with the standard that had been set by the Minister who had spoken to a more balanced approach than in the past, concerning the implementation of tariffs and other kinds of trade measures as a means to further industrial policy. It would be good for ITAC to maybe follow that approach as there was nothing wrong with being a little bit pragmatic, rather than trying to be an ideologue on one side of the spectrum.

Mr Mbuyane noted the mention of challenges relating to budgetary issues and, also, the vacant positions. The Acting Chief Commissioner made mention of import and export controls. Mr Mbuyane was interested in the idea of safeguarding and also the protectionist approach. In terms of the safeguards, what were the issues relating to the increase in imports? The Acting Chief Commissioner mentioned that he was not aware of dealing with countervailing duties but he dealt with the trade-offs like the Anti-Dumping Act. And so, in his view, what was the protectionist approach of the dtic, and allowing small businesses to thrive around ITAC?

Mr Mbuyane asked for an update on the issue of scrap metal. What was ITAC’s view of the scrap metal laws that had been approved by Parliament recently?

Mr Malematja asked how long it would take to fill the position of Commissioner as several decisions would not necessarily be taken correctly by an acting person. He noted that ITAC had both an audit committee and a management committee but while that had led to the unqualified audit report, there were still findings. The internal audit committee should be ITAC’s regulator to ensure that it met the standard before the Annual Report went to the Auditor-General.

He welcomed efforts to achieve and exceed the permits issued target. How was ITAC planning awareness education? How was the entity planning to deal with remote rural provinces so that people there understood the functions of ITAC?

The Chairperson asked about the areas where there were delays regarding investigations and recommendations made to the Minister before they went to the Finance Minister for signing off. Did the Commission have any recommendations about fast-tracking approvals and implementation after investigations had been finalised? That had become a challenge. She also queried the audit findings and the lack of adequate systems for performance information. The Committee would keep a close eye to see how ITAC resolved those challenges going forward.

Mr Cuthbert added a question regarding the vacancies. He knew the Minister was responsible for appointing the Commissioner but what kind of skills were missing at the Commission itself? There were some very senior posts that remained unfilled. ITAC was a highly technical entity that required skills in public policy, economics, econometrics, and also a variety of other skills. What could the Acting Chief Commissioner say about the skill shortage and what was ITAC doing in the interim to overcome the skills deficit whilst waiting for all of those positions to be filled?

Mr Mbambo noted that Mr Cuthbert wanted transparency, but there was an Act that governed confidentiality. He explained that a section in the application informed ITAC what the company would be doing in terms of supporting economic policies. For example, they committed to investment, increasing employment or sales, or increasing production, etc., and then, to make it legally binding, ITAC completed a contract using what the firms had committed to doing. In some cases, the firm said that there was nothing it could do and that was taken to the Commissioner and the recommendation was made to the Minister on that basis. The firms themselves made the commitments when applying. ITAC was not saying that firms should employ people and be unsustainable in the long run as it was cognisant of the performance of the firms and that they were in business for profit. If ITAC eroded all the profits, the chances were there would be no applications. But ITAC was still receiving applications which meant that companies were able to live with the policy. Applications were not dwindling so firms could not be objecting. He promised, however, that he would explore the matter, despite his concerns regarding confidentiality.

Concerning investigations to be finalised at the DTIC, Mr Mbambo explained that ITAC was trying to involve the sector desk of the DTIC at the earliest stages of the investigation so that it did not complete the investigation and have the Commissioner make a recommendation to the Minister and to find that the increase of the rebate was not aligned with government policy. By getting the views of the sector desk at the start of the investigation, ITAC was hoping to reduce the time it took when the dtic finally dealt with the recommendation. ITAC was involved in a lot of engagements with the dtic to try to speed up the approval at the ministry level. ITAC was also trying to sort out some of the outstanding disagreements between it and the DTIC in some areas.

Mr Mbambo understood the impact of the duties on the economy. With the chicken investigations, for instance, the Commission did its calculation of a dumping duty as a technical body, looking at the dumping margin and if the products were being exported to South Africa at prices that are lower than the normal value in the domestic country as that was dumping. Tariffs were applied only if the product was causing injury in South Africa, especially to employment and investment. The consideration of the inflationary impact on that price as a result of that increase in duties or dumping of the product was something that the Minister had to consider. His mandate was bigger than ITAC’s function as a technical body. The Minister had to consider the social impact of that duty on South Africa.

He responded to the question about the position of the Chief Commissioner. The communication ITAC had received from the Minister’s office was that he was in the process of finding a Chief Commissioner. It was a dtic position, not an ITAC position. The senior position that was vacant was that of the chief economist. As he had explained in the presentation, ITAC had decided to hire someone at a lower level, because the position of chief economist took a huge chunk of its budget as that was for someone with a PhD in economics. He emphasised that ITAC was building an economics unit because ITAC did not only impose duties, but it also had to look at the impact of the duties and that could only be done by economists. A fully-fledged economics unit could do that. He admitted that it was an area that required beefing up; one person could not do that alone.

Regarding countervailing duties, he was saying not that ITAC did not do that, but that ITAC just did not get applications for countervailing which were deals relating to subsidised imports from other countries. Those subsidies were always offered by governments so, if an applicant alleged that China was subsidising a product, ITAC would have to put in a measure against the government. Countervailing then had political implications. However, most dumping was done by individual firms, not governments. So, it was not a political scenario and industries just did not apply for measures to counter subsidies as it would have to involve their government. The safeguards he was talking about were very, very crucial. The safeguards countered the quantity of imports. The domestic industry accepted that it would produce a certain percentage and a certain percentage of the product would be imported. However, if there was a sudden, dramatic and unexpected change with the local production dropping or surging, ITAC could apply the safeguarding mechanism very quickly to protect the local industry. Some industries could die because of oversupply in a short space of time without knowing about it.

He said that ITAC had been addressing scrap metal and its mechanisms had worked to a certain extent but the scrap was still leaving South Africa in huge volumes despite an export tax of 20% for ferrous, even including the 20% export tax on scrap metal, it had not achieved the desired result. The government was considering banning the export of some types of scrap, particularly that picked up from the streets. Only scrap generated in a manufacturing process would be approved for export. Scrap metal picked up from the streets. Scrap metal resulting from the destruction of infrastructure which was cut into small pieces for export as scrap metal to foreign markets was undermining the infrastructure and there would be a temporary ban on that scrap metal. Scrap metal which was a bye product in a manufacturing firm could be exported.

Mr Mbambo took note of the comments about rural areas. Unlike other organisations, ITAC was only based in Pretoria and it was difficult for the rural economy to apply because the people would have to come to the big metros to find consultants to assist them. It was worth looking at having a presence in some remote areas and also having awareness campaigns to take ITAC to the people and to show how ITAC could assist, particularly in agricultural products and other products more common in the rural areas. He would take that comment and seriously consider what could be done.

Ms Nkoana said that the internal audit committee was a structure that reported to the Chief Commissioner. And in the committee, there were various members from different professions, like accountants, risk management professionals, and legal advisors and all obviously would be regulated by the relevant professional bodies, but the committee itself reported to the chief commissioner to assist the Chief Commissioner as the accounting authority to discharge his responsibilities and maybe also to assist with audit findings. Most of the findings received in the 2021/22 audit were around reporting, for example, the actual reports of provenance information and certain disclosures in the financials. A plan was drafted to look at daily controls and monitoring of information which would filter into the Reports at the end of a financial year or quarterly reports. There were deficiencies and weaknesses in the sense that information between some of the units that dealt with tariff investigations was not properly coordinated into one central place, i.e., the system of consolidating information was found to have deficiencies. And the other challenge was around the capacity of the internal audit because ideally, the plan was to have internal auditing on a continuous basis, looking at the reported information and validating that before the information was reported to various government structures. Hence, the plan was to strengthen the capacity of the internal audit function to be able to review and validate the actual reported information before it went to various governance structures

Mr Mbambo agreed that the internal audits unit had to be beefed up. On the chief economist, as he had said earlier, ITAC could not have only one person performing the economic function; ITAC needed a fully-fledged unit to do that work. It was not just for doing investigations, but also for advising on trade policy and trade policy measures. As much as ITAC was using tariff policy to assist the domestic industry, it was not focusing on the other elements, such as the inflationary impact of customs duties on the domestic economy. It needed very skilled people to weigh the benefits of a tariff against the inflationary impact which could have a huge impact on the poor. It required a fine balance that could only be achieved by very skilful people. Creating jobs and attracting investment was one thing but one could not ignore the impact of tariffs. There was also room for improvement in terms of attracting skills, particularly in the internal audit and the economic units.

Ms Matemola informed the Committee that the appointment of the Chief Commissioner was at an advanced stage and the Minister expected it to be finalised in the next couple of months.

Closing Remarks

The Chairperson thanked the entities.

The Committee Secretary stated that the following meeting would be on Tuesday 15 November 2022: the Minister on the Black Industrialists Conference and the World Trade Organisation.

On 16 November, the Committee would engage with the Free State Department of Economic Affairs and Small Business Development and Tourism and Environmental Affairs on the Maluti industrial development zone.

The Committee would consider the BRRR on 15 November before the briefing; the Secretary would be sending a clean report to Members.

The meeting was adjourned.