NRCS & SABS Annual Report & Q1 2022/23 Performance; AGSA update on SABS

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Trade, Industry and Competition

02 November 2022
Chairperson: Ms J Hermans (ANC)
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Meeting Summary

Video

National Regulator for Compulsory Specifications (NRCS)

South African Bureau of Standards (SABS);

The Committee held a virtual meeting to receive a briefing from the National Regulator for Compulsory Specifications (NRCS) and the South African Bureau of Standards (SABS) on their Annual Reports and Quarter 1 Financial and Non-Financial Performance Reports for the 2022/23 financial year.

The meeting commenced with a brief presentation by the Office of the Auditor-General of South Africa concerning SABS. The audit outcome had incorrectly stated that the Bureau was operating at a loss. That was historical and not current data as the Bureau had made a profit in the financial year under review. However, the Auditor-General stressed that it remained concerned about governance issues and that the entity was operating without a board which, in turn, should appoint a permanent CEO.

The NRCS presented the highlights for the 2021/22 financial year. Most important was receiving an unqualified audit opinion and the resolution of the revenue qualification, which had been a major challenge for the entity. The levy estimation methodology was in operation, although further work was needed to improve controls. 7 800 health guarantee certificates were issued to facilitate the exportation of fish and fishery products worth over R15 billion from South Africa to the European and Asian markets. The ICT modernisation programme was continuing, but progress was slow. The audit found irregular expenditure of R6.4 million for expired leases and contracts and for processes not followed by supply chain management. Fruitless and wasteful expenditure of R2.7 million was a result of a water leak, but the main issue was the identification of a case of fraud involving R4.5 million involving an employee in the Refunds section. A disciplinary process had been followed and a case opened with the South African Police Service.

The Committee heard that the SABS had maintained 7 400 national standards, published 414 national standards, and completed the stabilisation stage of the Turnaround Strategy. The entity had 7 001 active customers and supported 121 Small, Medium, and Micro Enterprises. R55 million was invested in capital expenditure, including buildings and laboratory equipment; the Bureau made a net profit of R50.8 million. The Bureau obtained an unqualified audit with findings as a result of poor processing of letters of demand. Additional staff was urgently required to address the pressure in the finance department.

Members showed a deep interest in the awareness and education programmes that the entities were conducting in rural areas and had many suggestions for putting more focus on that area.

Members expressed concern about vacant positions within the entities and positions on the SABS board that had not been filled. They requested an update on the relationship with the labour component at the two entities.

Questions were asked about the ITC modernisation strategy.

Meeting report

Opening Remarks
The Chairperson stated that the SA Bureau of Standards (SABS) had engaged with AGSA on the SABS audit as it believed that some items in the report were incorrect. Subsequently, the AGSA requested an opportunity to correct the position.

Presentation by AGSA

Mr Tshepo Shabangu, Senior Manager, AGSA, introduced Ms T Mbali, the auditor responsible for the audit of SABS, who made the brief presentation.

Ms Mbali stated that the governance issues reported at SABS had not changed because the Bureau was still operating without a board or a CEO. However, some of the content and the challenges that the AGSA represented had related to historical events and not the current situation, such as the statements that the entity was not making a profit.

Concerning the governance issues, Ms Mbali stated that the public entity was still operating without a fully constituted and functional board of directors as the executive authority had not finalised the appointment of a full-time board. That was in contravention of the Standards Act. The entity last had a full board in July 2018 and thus the entity has been operating under administration for the last four years. As reported in the first year of administration, the PFMA did not give authority to the executive authority to appoint administrators since only National Treasury could appoint another authority to perform as a board, and that was only allowed in exceptional circumstances. Likewise, the entity had operated without a permanent chief executive officer since 2018, which created instability within the entity and had a negative impact on sound governance principles and the provision of oversight responsibility over the financial and performance reporting of the entity.

In respect of the challenges, a notice of Consultations in terms of Section 189 of the Labour Relations Act No 66 of 1995 was issued as part of a cost-saving measure to reduce the staff complement. The first phase was initiated in July 2021 and employees were offered Voluntary Severance Packages and Early Retirement Packages. The process was still in progress during 2021-22. Secondly, the vacancies in key positions within the finance business unit as well as a high staff turnover had resulted in the late submission of the annual financial statements as well as the annual performance report. There was an overlapping of roles between executive management and governance and oversight.

The Office of the Auditor-General recommended that the executive authority expedite the appointment of a full-time competent and fully functional board, which had to appoint a full-time CEO to assist with improving the governance matters.

Discussion
Mr C Malematja (ANC) was concerned that all the problems at SABS had been bypassed for so long without being noticed. Also, were there other errors made by AGSA that had not been corrected?

Ms Mbali noted the concern and apologised to the Committee but she was aware she had made an error and that was why she had requested permission to present the corrections and to set the record straight. Errors were not expected in an audit and should one occur, it was immediately corrected.

The Chairperson requested that AGSA take note of the concern of the Member.

Presentation by National Regulator for Component Standards (NRCS)
Dr Nimrod Zalk, Acting DDG: Industrial Policy, dtic, apologised for the absence of the Minister, Deputy Ministers, and the Acting DG, Mr Shabeer Khan. He informed the Committee that both entities had unqualified audits for 2021/22. Ms Katz was leading the NRCS team.

Ms Meisie Katz, General Manager: Food and Associated Industries, NRCS, informed the Committee that the CEO, Mr Edward Mamadise, was on bereavement leave.

Ms Katz presented the highlights for the 2021/22 financial year. Most important was receiving an unqualified audit opinion and the resolution of the revenue qualification which had been a major challenge for the entity. The levy estimation methodology was in operation, although further work was needed to improve controls.
7 823 health guarantee certificates were issued to facilitate the exportation of fish and fishery products worth over R15 billion to the European and Asian markets. The RNCS removed R438 million in non-compliant products from accessing the marketplace. There was no backlog in respect of Letters of Authority.

Although the entity received an unqualified report, there were findings regarding the irregular expenditure of R6.4 million. R3 million was for expired leases and contracts but all expired lease contracts had been regularised and the remaining lease agreement was being attended to. R3.2 million was for non-compliance with the Supply Chain Management policy: the tender was advertised for less than 21 days without approval. That had since been condoned. Fruitless and wasteful expenditure amounted to R2.7 million as a result of a water leak in the Port Elizabeth Building.

A case of fraud amounting to R4.5 million was identified: an employee facilitated fictitious refunds. A case was opened with the SAPS and the employee was on suspension. The disciplinary process had been finalised and the report was awaited.

Mr Oupa Kgasago, Chief Information Officer (CIO)‚Äč, briefed the Committee on the ICT Modernisation Strategy and achievements to date.

Ms Katz presented an update on legacy issues.

(See Presentation)

Presentation by the South African Bureau of Standards (SABS)
Ms Jodi Scholtz, Lead Administrator, SABS, made the presentation. She explained the process of type 5 auditing of products, which was superior to the usual type 3 audit. SABS offered training and consulting services were available, especially for SMMEs.

The operational highlights for 2021/22 included the maintenance of 7 400 national standards and the publication of 414 national standards of which 140 publications were home-grown. SABS had completed the stabilisation stage of the Turnaround Strategy and had 7 001 active customers and supported 121 Small, Medium and Micro Enterprises. R55 million was invested in capital expenditure, including buildings and laboratory equipment; the operating profit was R51.6-million and the entity made a net profit of R50.8-million.

Ms Tina Maharaj, CFO, SABS informed the Committee that SABS Group and SABS entity obtained an unqualified audit opinion for the financial year 31 March 2021/22. The AGSA found material misstatements but those were corrected. However, the AGSA had challenges with the letters of demand provided because they were submitted late and were not signed, resulting in a non-compliance finding.

A brief presentation was made on Q1 results.

(See Presentation)

Discussion
Mr Malematja noted that the NRCS letters of authority hampered business because they were essential for trading. He congratulated them on the unqualified audit but what was the intention in respect of irregular expenditure that was incurred in the previous financial year and was not yet addressed? What was the status of the CFO? It was a problem having someone who was not qualified in a key position, especially when mistakes occurred and the acting person did not take responsibility. What about the underperformance against targets for conducting an inspection? What was the RNCS going to do in remote areas?

Ms N Motaung (ANC) noted that the NRCS had dealt with legacy issues, especially concerning letters of authority, and had started on provincial visits. The progress made in visiting some provinces to do public education was positive. The entity had to visit other provinces as well, especially rural areas where one needed the information regarding the NRCS. She requested the NRCS to give the Committee some of the challenges that they had experienced in the HR department, not the vacancies, but the challenges that they had in that unit. Secondly, she requested an update on the relationship with the labour component at SABS and at NRCS.

Mr Z Burns-Ncamashe (ANC) was uncertain whether the entity had received a clean audit or an unqualified audit. There was a kind of hysteria in every institution as it strove for a clean audit at the expense of the developmental agenda, which should be the major priority. It was something that needed to be looked at because, while it was a necessity to strive for a clean audit, the developmental agenda was key. His colleagues had emphasised the issue around rural areas and he could see that the NRCS had visited North West and Limpopo. If he were to go to the provincial House of Traditional Leaders in both provinces, would he find that they knew about the National Regulator? Rural areas had to be emphasised and the House of Traditional Leaders was an important statutory entity that needed as much information as possible. There were more than 800 traditional leaders in SA in areas occupied by 17 million people. Those people fell victim to several non-compliance matters. As he had said before, the rural shops run by “brothers” from foreign countries sold expired products which could lead to an outbreak. Did the SABS have inspectors that went to the deep rural areas, which did not have proper roads, to check on expired products? He wanted examples from SABS where such inspections had taken place.

He said that in rural areas, people converted vehicles into taxis and they were not looked into until there was an accident. That was the daily transportation system that the people were subjected to but officials were not willing to use their cars on those roads to undertake inspections. He wanted to know what the entities were doing about that.

Mr Burns-Ncamashe asked about the programmes for visits to the rural areas by both SABS and NRCS. Could they show a particular rural area where a meeting was held with a particular community at a specific Traditional Council, together with the ward councillor? When they met with the local authorities, the focus should be on both traditional leaders and ward councillors. He wanted specific details of programmes, including who the ward councillor was as that person was as important as the traditional leader.

Mr S Mbuyane (ANC) asked about the SABS turnaround strategy and the monitoring thereof. In both entities, his issue was the turnaround strategy, implementation and monitoring, and also the challenges. He asked the two institutions to talk about what they had promised in the turnaround strategy, especially in terms of the cement laboratory, and also the placement of the staff which, in his view, had caused challenges with the labour component. The question had been raised about the relationship between the labour component and the process of placement. Had labour been a part of the process when SABS had dealt with the situation?

He turned to the issue of the SABS board of directors. Could the dtic say how far it was in terms of assisting the entity to get proper leadership? That needed to be processed. He welcomed the programme for education and awareness in rural areas, but the NRCS and SABS had to keep in touch with Constituency Offices (COs) when it came to community mobilisation, especially concerning the dissemination of government-related information. The offices could identify suitable places to hold the meetings and that would assist in moving the process forward. The issue of a disciplinary hearing had been alluded to by a Member, but the Committee needed to check on what had happened to the dismissal hearing. The man was released from his duties, but was he just fired? What happened regarding the process of recouping the money?

Mr Mbuyane’s last concern was about the ITC modernisation strategy. How far was it? It had been going on for nine or seven years. How far was the process of ITC modernisation? Those were the questions on which he required clarity. What was the impact of the loss of skills on operations? Was there a plan in place to retain critical skills? What had the vacancy rate been so far in the current financial year?

The Chairperson had noted the high turnover of staff and asked how badly it impacted the entities. Was there a plan to retain highly skilled staff?  What had the vacancy rate been so far in the current financial year?

Responses by NRCS

Ms Katz stated that she had misspoken the number of days that it took to obtain a letter of authority. The process was completed in under 120 days, not in under 21 days.

With regards to the irregular expenditure, Ms Katz pointed out that it was not R31 million but R6.4 million. The NRCS had been working on the matter. In the previous financial year, irregular expenditure had stood at about R9 million; it had been reduced to R6.4 million in the year under review.  Officials had worked on most of the contracts because the irregular expenditure was mainly a result of the facility contracts in the various provinces. They had worked on those contracts and the matter should be resolved.

On filling the CFO vacancy, Ms Katz stated the position had been advertised and the process of shortlisting was underway. The NRCS was hoping to complete the process as soon as possible. With regard to the 93% achievement of targets, one of the challenges that the organisation had about the submission of applications was that not all requirements were addressed in the application, and follow-ups by officials took time. The entity had implemented a process of cancellation if the application was not correct on submission. It was re-registered on a correct submission, thus allowing the NRCS the full-time period to complete the process. Concerning the challenges around Human Resources, the recruitment process was improved to be more responsive to the product position. Also, the relationship between the labour component and the NRCS was a difficult one, but the NRCS was working on the relationship daily.

Mr Edward Matemba, Manager: Strategy and Risk, NRCS, explained that the instance of fraud was in the Refunds section, not the supply chain. It was about the fictitious refunds that were processed by the official who had been dismissed. In terms of the recovery of funds, the NRCS had insurance against fraud and money transfers and was working with the insurer to recover the money. He had registered the claim and was waiting on the finalisation of the claim which had been placed on hold pending the finalisation of the disciplinary process. That had only been completed the previous week, as indicated in the report. He expected that the NRCS would soon be able to recoup the funds.

Ms Katz noted the question from Mr Burns-Ncamashe in respect of the audit outcome. She explained that the entity had received an unqualified audit with findings. She also noted the emphasis that Mr Burns-Ncamashe put on rural engagements. It was one of the issues that the NRCS had prioritised, both in the previous year and also in the current year. The entity had put plans in place to identify the various rural areas where it would be providing awareness.

Mr Duncan Mutengwe, Chief Operating Officer (COO), NRCS, had been assigned the task of dealing with issues relating to stakeholder engagement and, in particular, dealing with rural engagements and community engagements. The NRCS had seen the necessity of going out and educating consumers about the work of the NRCS, particularly because it had noted that the Regulator had been in existence for over 12 years and had a sizable amount of businesses that it regulated. Most of the businesses dealing with the products that it regulated, understood, and knew the NRCS. However, the missing piece in the puzzle was that consumers did not know about the work of the NRCS. Normally the awareness process was approached in terms of three levels, which was the inspection team that went out on a group inspection and targeted a particular area, and conducted an inspection, whilst at the same time engaging the buyers on the work of the NRCS. The second level was the work done through the communications and marketing business unit that also targeted certain malls across the provinces within South Africa, handing out information booklets as well as any other relevant information concerning the work of the NRCS. The third level was what the entity was doing at an organisational level, which was targeting all nine provinces in which it would identify deep rural areas and engage the community in those particular areas.
He explained that the reason so many engagements were conducted in the previous financial year was that the figures included the three levels of engagements, but for the current year, the target set was for the organisational level. The engagement with the community in Limpopo was done early in the year and during the first quarter of the current financial year, the team had gone to the North West to engage the community there. Normally the NRCS would target a particularly rural area where there was a lack of information. A team of communication staff members would go and assess where exactly the Regulator needed to engage the community and they would request permission to engage that community. They engaged the traditional leaders and the councillors before engaging the community. The necessary protocols were observed before the whole team arrived. On the day, the team ensured that all the operational business units were represented and stakeholders that had a similar kind of interest in terms of the consumer awareness programmes were invited.
Mr Mutengwe assured the Committee that SABS had also participated in the programme in Limpopo as well as in the North West. What they did was to go through the mandate of the NRCS and request all the businesses to speak to the areas that the NRCS regulated in their businesses, giving practical examples of the products that were within the scope of the NRCS, and the requirements for any products on the shelves. That process had been very acceptable in the areas targeted. In December, the NRCS would be going to the Eastern Cape where a rural area had been identified. The entity had noted that communities did not have much knowledge about what was required, in particular, about the condition of bakkies that had been converted into passenger-carrying vehicles. It was very difficult if the NRCS was not around to provide that guidance and those vehicles were converted and then found on the roads. The NRCS did not have the capacity to provide oversight in terms of what occurred on the road.

However, he noted that the entity had identified that the automotive business unit needed to continuously engage with the relevant provincial transport offices so that information could also be exchanged in terms of allowing such vehicles to operate on the road. There was a requirement that if a vehicle had been modified, it had to be approved by the NRCS before it could be registered. More engagements with the Department of Transport were necessary, although the NRCS had a service level agreement with the Department of Transport and such issues were discussed at that level. The intention was to go further by engaging the provincial offices of the Department of Transport.

He asserted that the entity had definitely prioritised stakeholder engagement, particularly looking at consumer awareness because not having the information led consumers to do things that were not within the law.

Ms Katz stated that there was a delivery model but currently, the entity was implementing specifications that were unfunded, as indicated in the presentation. The NRCS was engaging the dtic in trying to resolve the matter with regards to the funding of the compulsory specifications or technical regulations.

Ms Katz invited the Chairperson and Committee Members to the planned engagement happening on 8 December 2022 in Kuruman in the Northern Cape. The formal invitation would be forwarded to the Chairperson’s office. She requested the Chief Information Officer to provide an update on the ICT modernisation programme.

Mr Kgasago said that the NRCS modernisation programme was made up of several initiatives between the infrastructure and the business processes digitisation project. The first phase focused on Supply Chain Management, finance, human resources, and facilities. The entity was moving towards the conclusion of that project, as it was 80% done. The balance of the work was focused on the organisational core processes automation or digitisation. It would be focused on all the different business units, which were regulated by different industries. The idea was to enhance their processes as indicated, and also to enhance the customer's experience in engaging with the NRCS. Together with the other infrastructure initiatives, which were happening currently, the programme was at an advanced stage. He noted that the modernisation programme had taken quite some time, but he was confident that significant progress had been made. When the entity returned to the Committee, he would be highlighting the achievements that would have been made. At the same time, he appealed to the Committee to appreciate that the NRCS did not want to push the initiatives and end up having technologies that did not work for the business and the system. The ICT technicians were working collaboratively with the organisation to ensure that even elements of change management happened in a systematic and effective way. When the technology was deployed, people had to understand how it worked so that the business could reap the rewards and benefits of the system.

Responses by SABS
Ms Scholtz noted the question about gender diversity in the SABS team. She assured the Committee that it was something that SABS took very, very seriously. However, when the entity advertised the positions for the divisional heads, no women had applied. She assumed it was a result of several legacy issues. In response, SABS developed a women in leadership programme with the University of Cape Town Graduate School of Business. There were two categories: developing leaders and emerging leaders. Over 70 women applied and 45 women enrolled in the two courses to be empowered with relevant leadership skills. The Academy of Science of South Africa was assisting SABS with a range of technical mentors for the organisation. Partnering with the women in the leadership programme would not only deepen their technical skills but also their leadership skills. So it was something SABS took very, very seriously. Another intervention was in the acting appointments where preference was given to women to empower them. Previously, there was a culture where women did not, unfortunately, put their hands up, and that culture was being eradicated. There would be several vacant head positions moving into the new structure, and women would be targeted.

She explained that Lizo Makele would respond to questions on both formal and informal relationships and institutional mechanisms with labour. She had an open-door policy and the chairperson of the union had called her the previous night to ask about the AGSA presentation which she had shared with them. She mentioned in her presentation that labour was part and parcel of the process. Labour had identified a range of savings as alternatives to retrenchment and they would be discussed now that SABS had concluded the section189 process. The guidance on the provincial house of traditional leaders was taken. Although the traditional leaders did know about SABS, she thanked Mr Burns-Ncamashe for his advice. SABS sold a range of standards to municipalities, but in terms of a practical example, there were standards available for rural areas, most of them around electrification, but also some standards around how healthcare waste should be treated. An amended standard to assess water quality and the quality of drinking water was recently published. Mr Burns-Ncamashe had given her quite a bit of food for thought because those were some of the practical ways in which SABS could engage and empower municipalities, i.e. by showing them the standards they could use to improve service delivery, bearing in mind that the standards were voluntary and that SABS sold the standards. But there might be ways to assist municipalities that needed the standards. SABS also partnered with the Limpopo Economic Development Agency and similar agencies. So there was a range of incubators that the entity worked with. SABS would look to ramp up its engagement with rural areas.

She added that SABS was working with the NRCS and she was aware of a joint engagement scheduled for early December.  Concerning the roads, there were standards around that so SABS could put together a package to assist municipalities. She would certainly take that on board. She would ask the Head of Laboratory Services to talk about the cement lab. The equipment had been procured and it was currently being commissioned with a deadline of the end of December. The CFO had highlighted the critical challenge faced in terms of finance skills, but  Lizo had compiled a list of a number of other critical skills that he could talk to.

Concerning rural engagements, Mr Lungelo Ntobongwana, Divisional Head: Marketing, Sales, and Customer said there was work that SABS was doing with the NRCS. In fact, three engagements had been conducted already. The second part was that SABS conducted engagements with the TVET colleges in conjunction with the dtic, specifically focusing on the youth.

Ms Scholtz responded to the point about the food being sold constituting a health hazard. In the past, when it had received those complaints, SABS had helped the complainant formalise the complaint with the National Consumer Commission (NCC), with which SABS worked. SABS had gone with the NCC to the sellers. For example, at the height of the pandemic, the concerns were around hand sanitisers. The NCC had the power to seize goods and to test those goods and so SABS partnered with the Commission in the process. She would see if the NCC could also be part of the rural programme to ensure a much broader impact.

Mr Thabo Sepuru, Divisional Head: Laboratory Services, SABS, spoke about the turnaround related to the cement laboratory. SABS had implemented a two-pronged approach to try and alleviate the pressure. The first was to get a panel of labs for immediate use by subcontracting some of the work which had already received the first batch of results. The second batch of results was currently being finalised. The commissioning of the duplicate lab test bench meant modifying a part of the building that had been identified to accommodate the new lab and that process of creating the lab was almost complete, with only the touch-ups to be done and cleaning up the lab to required standards. Once conditions had stabilised, the task would focus on receiving and commissioning instrumentation and equipment. The first set of equipment would arrive in the middle of November. All equipment would be in before the December recess period. The next leg is related to the placement of additional people in the lab and to start training them. He was already running with that stream of work.

Mr Lizo Makele, Divisional Head: Human Capital, SABS, responded to the question about the entity's relationship with the union. In summary, the relationship with labour was healthy but characterised by open, frank, and robust engagements in the organisation. Management at SABS took a human-centric approach and so created platforms for robust engagements. The Members had to understand that the labour relations environment was a legislated space, but, as a minimum, SABS made sure that everything within the legislation was in place. And then SABS went beyond that just to make sure that workers and employees were in unison with everything. The coalition agreement that stipulated how the relationship was regulated, and how management engaged with parties had been signed. SABS had complied with the legislation in all the processes. For instance, he talked about sexual abuse and processes, organisational review, restructuring, and all those processes. There were guidelines in legislation about how to deal with unions, and also in their adoption agreement. So SABS had been working with labour very, very carefully. When it came to issues, they sat sit down and ironed out the differences.

He assured the Committee that, at the end of the day, SABS had achieved what it wanted to achieve. Management had put everything on the table and had listened to all the stakeholders. He pointed out that just the very nature of the project, as well as the section 189 process, the replacement process in which SABS was currently placing people in the new structure, attracted some strong emotions. Employees did not want to hear about issues as they were anxious when it came to restructuring. So obviously, there would be a lot of resistance. SABS had caused some delays in finalising the process because management wanted to be sure workers and employees were engaged and to allow sufficient time so that consensus could be reached on the issues. SABS had completed the section 189 process and it had gone well. Instead of retrenching, they had agreed on cost-cutting measures, early retirements as well as severance packages. All employees in the organization and all the structures and organisations were engaged in the placement process. Management held regular discussions and made robust changes to the management programme. The delays were a result of the regular engagements, but SABS and the unions had concluded guidelines around the placements into the new structure. Again that had delayed the process, but management had created the space because it wanted the process to be successful. Things were moving well, but of course, there were delays.

On the issue of the high turnover rate and the loss of skills, Mr Makele said that employees had decided to leave the organisation when they realised that things were not going well insofar as finances were concerned and the initiatives, such as the section 189 process, but SABS had decided not to employ new staff until the processes were complete. Generally, one did not measure the turnover rate when the organisation had taken a decision not to recruit. He had been able to block certain gaps with the current employees and management had asked people to act in some positions as a stopgap measure. He had also employed on fixed-term contracts where possible, but in a highly specialised skill area, it had been a challenge. However, the plan was in place and SABS had completed placements at management level, executive level, and specialist level, and now knew where the gaps were. SABS would fill those positions starting with people internally but was also going outside to bring in the specialized skills required. 

The one last thing he had to say was that management's relationship with labour was an issue following the AGSA Report about the challenges with governance. Labour had made a noise around that, writing letters to National Treasury, to the Minister, and in some cases, refusing to be addressed by the Lead Administrator because they said the appointment of the Administrator was not necessarily in compliance with the law. He stated that the AGSA Report had caused a problem, but SABS was managing it. However, it should not play out in the workplace; it was something that had to be addressed at the ministerial level. It was not something that the Administrator or management and executives could address; it was not in their purview.

Ms Nontombi Matamela, Acting Chief Operations Officer, dtic reminded Committee Members that the Minister had spoken to the issue of the SABS board when he had presented the Annual Report three weeks previously. He had indicated that the intention was to have the board finalised by the end of the current financial year, but she could assure the Portfolio Committee that the dtic was hard at work trying to finalise the board before that date. She assured the Committee that the letter was receiving the utmost attention.

Dr Tshenge Demana, Administrator at SABS and Chief Director at dtic, addressed the issue that the NRCS raised of unfunded mandates. Concerning processed meat, he said that Members might know that the country did not have one single regulator for the food space, a food agency, so to speak. As a result, the system was fragmented: the Department of Health and the Department of Agriculture, Forestry, and Fisheries (now called the Department of Agriculture, Rural Development and Land Reform) operated in that space. The mandate rested with the two Departments, not with the NRCS. The work should be delegated to the NRCS. As it turned out, the two Departments did not support the NRCS in providing compulsory specifications for processed meat. Consequently, the dtic had provided start-up funds for the work to be done. Additional transfers had been made to the NRCS to assist them: the last transfer of R21 million was in November 2021. That also touched on the work of legal metrology which the NRCS said was an unfunded mandate. That also was not correct because legal metrology came about as an extension of the original Act that was called the Trade Metrology Act and that has always been implemented by the NRCS. So legal metrology only extended the scope of that work. In November 2021, Treasury transferred funding to the NRCS to do the work. His colleagues from the NRCS were not giving the full picture of what was happening when it came to funding.

Follow-up questions
Mr Mbuyane noted that the dtic and NRCS did not see eye-to-eye on unfunded mandates. He required a response from both in writing. He also had not received a response on the ICT modernisation strategy. Seemingly no one wanted to respond to his question. He asked for that response in writing, indicating what had happened, what had not happened, and the challenges. He also could not see the SABS turnaround strategy moving because they had to engage with labour, etc. but had the general strategic goals that SABS had set itself been met? If not, why? What were the challenges? The Committee had to monitor the process very closely.

Mr Burns-Ncamashe realised that, in practice, community outreach to all the communities of South Africa might be impossible for both entities, especially in the rural space. Perhaps the best thing to do was to formalise a relationship through the houses of traditional leaders. The provisions of Section 44 of the Constitution could be invoked, assigning or devolving functions to the SA Local Government Association, and through the House of Traditional Leaders. SABS could empower the leadership in those organisations to understand the standards. They could provide SABS with reports. That would assist the work that SABS was doing which was very important and critical, especially for the poor South Africans who were exploited by being sold expired food which could have detrimental effects.

Mr Malematja stated that despite all the reports, nothing was happening. He wanted timeframes as quickly as possible and they should be sent in writing to the Committee.

The Chairperson thanked the Members and suggested that all the follow-up questions be responded to in writing.
           
Closing Remarks
The Committee Secretary informed Members that he hoped to distribute the Budgetary Review and Recommendations Report on the dtic by the coming Monday morning for Members to give input in terms of concluding remarks and recommendations. The following week, the Committee would be briefed by The International Trade Administration Commission of South Africa (ITAC), as well as the Companies and Intellectual Properties Commission (CPIC) on their Annual Report as well as the first quarter, non-financial and financial performance reports for the 2022/23 financial year.

The meeting was adjourned.

 

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