Budgetary
Review and Recommendation Report of the Portfolio Committee on Trade and
Industry, dated 24 October 2014
The Portfolio Committee on
Trade and Industry, having assessed the service delivery performance of the
Department of Trade and Industry, against its mandate and allocated resources, in
particular the financial resources for the 1 April 2013 to 30 September 2014,
reports as follows:
The aim of the Department of Trade and
Industry (DTI) to lead and
facilitate access to sustainable economic activity and employment for all South
Africans is on track in its core objectives. An inclusive economy using the
instruments of broad-based black economic participation, preferential domestic
procurement and a trade policy that implements global and regional relations
has been effectively implemented during this budget review period. However,
outstanding issues such as the realisation of black industrialists, a more
robust regulatory framework that is more effective with the linkages between
localisation and public procurement remain and calls for stronger enforcement
measures as well as the pursuit of more compelling persuasion.
·
The essential purpose of the Budget Review and
Recommendation (BRR) Report, which takes into account the Medium-term
Expenditure Framework (MTEF), is to evaluate the allocative efficiency
implemented by the DTI and how effective its performance has been in achieving
its stated objectives. This BRR Report is a significant milestone after 20
years of a democratic government.
·
The DTI has evolved from the twin mandates of the
former Ministries of General Services and of Finance and Trade and Industry to
a department with an architecture now more focussed on its primary mandate of
industrialisation and broadening participation underpinned by trade and
supported by a robust regulatory framework. Although President Jacob
Gedleyihlekisa Zuma has
proclaimed a Ministry of Small Business, the Department of Small Business
Development coexists in the DTI budget on Vote 36. A separate budget vote for
the new Department will be established in the 2015/16 financial year.
·
The recognition of the structural economic
challenges called for a decisive break with the past of jobless economic growth
to an employment generating economy and from an economy characterised by
exclusion to an inclusive and equitable economy which is directed at
eliminating poverty.
1.1.
Description of the core functions of the Department
The DTI’s key strategy is the implementation of the Industrial Policy
Action Plan (IPAP), within the framework of the National Industrial Policy
Framework. This serves to drive domestic, regional and international trade and
investment to create sustainable jobs.
The DTI’s key priorities are derived from the IPAP and the central theme
is to facilitate labour-absorption through the reindustrialisation of the
manufacturing sector. This is supported
by incentives for new and expanding manufacturers, initiatives to improve
productivity or competitiveness and export promotion of locally produced goods.
The development of an enabling environment for business and
manufacturers to operate effectively and efficiently to enable job creation and
economic development is another key priority for the Department. The creation
of regulatory frameworks related to company and intellectual property
legislation and consumer protection provide market certainty and thus support
IPAP.
Furthermore, the DTI is responsible for improving trade and investment
relations and supporting deeper regional integration in Africa.
In addition, the DTI drives the national broad-based black economic
empowerment regulatory framework as well as other interventions that promote
the economic participation of vulnerable and previously disadvantaged
individuals. In this regard, the DTI has supported the development of small,
medium and micro enterprises (SMMEs) and co-operatives.
In terms of its core functions, the DTI is responsible for overseeing 14
entities and administering 45 Acts[1]. Its agencies are:
·
Companies and Intellectual Property Commission
(CIPC)
·
Companies Tribunal (CT)
·
Export Credit Insurance Corporation of South Africa
(ECIC)
·
National Consumer Commission (NCC)
·
National Consumer Tribunal (NCT)
·
National Credit Regulator (NCR)
·
National Empowerment Fund (NEF)
·
National Gambling Board (NGB)
·
National Lotteries Board (NLB)
·
National Metrology Institute of South Africa
(NMISA)
·
National Regulator for Compulsory Specifications
(NRCS)
·
Small Enterprise Development Agency (SEDA)
·
South African Bureau of Standards (SABS)
·
South African National Accreditation System (SANAS)
It should be noted that
subsequent to the recent election, the President
announced
the creation of a new Department of Small Business Development[2].
Therefore, a portion of the DTI’s mandate and legislation related to the
development of SMMEs and co-operatives was transferred to the new department,
as well as the SEDA. The Department was established by Presidential Proclamation
on 8 July 2014 and a Memorandum of Understanding with the DTI governs its
portion of the budget and the management thereof until its governance
structures are functional.
Furthermore, the DTI has a
close, collaborative relationship with the Economic Development Department
(EDD), particularly related to the functioning of the Industrial Development
Corporation (IDC), the International Trade Administration Commission of South
Africa (ITAC) and the Small Enterprise Finance Agency (SEFA) (formerly Khula
Finance Ltd, the South African Micro-finance Apex Fund and the IDC’s small
enterprises support section). These entities were shifted from the DTI to EDD
in 2009. EDD is responsible for their administrative oversight, while the
entities still support and/or are responsible for fulfilling parts of the DTI’s
mandate in terms of industrial development, implementation of trade agreements
and broadening economic participation respectively.
Section 5 of the Money Bills Amendment
Procedure and Related Matters Act (No. 9 of 2009) requires the National
Assembly, through its committees, to annually assess the performance of each
national department. A committee must submit a report of this assessment known
as a BRR Report. The overarching purpose of the BRR Report is for the committee
to make recommendations on the forward use of resources to address the
implementation of policy priorities and services, as the relevant department
may require additional, reduced or re-configured resources to achieve these
priorities and services. This Act gives effect to Parliament’s constitutional
powers to amend the budget in line with the fiscal framework.
The BRR Report process enables the
committee to exercise its legislative responsibility to ensure that the
Department and its entities are adequately funded to fulfil their respective
mandates. However, as the Budget Office is still in the process of becoming
fully functional, the committee was unable to exercise its full powers on
providing detailed budgetary recommendations. The committee looks forward to a
fully operational Budget Office, which will substantively contribute to the
budgetary support the committee requires to undertake this process.
1.3.
Purpose of the BRR Report
The purpose of this report is to analyse the financial and non-financial
performance of the DTI, and identified entities, against predetermined
objectives to inform recommendations for the forward-looking budget for the DTI
and its entities. This report attempts to provide an assessment of the
financial and non-financial performance of the DTI and identified entities for
the 2013/14 financial year, and the first six
months of the 2014/15 financial
year (from 1 April 2013 to 30 September 2014) within the context of the
three-year MTEF.
The budget is informed by the national policy priorities as outlined in
the
State of the Nation Address (SONA). It is
driven by the policy commitment to inclusive economic growth to attain social
cohesion and job creation.
The committee met with the Auditor General on 10
September 2014 to discuss its mandate in relation to the work of the
Department. From this engagement, it was decided that the Auditor General would
submit the results of the 2013/14 audit outcomes and the key findings by mid-October
since the results were not available at the time of the meeting. The committee was
then briefed by the DTI on its 2013/14 annual report and 2014/15 first quarter
performance on 12 September 2014.
For the period under review, the committee had also
been monitoring the performance of the Companies and Intellectual Property
Commission, the National Consumer Commission, and the National Credit Regulator
on an on-going basis. The committee considered the development of these
entities vital to the economy and consumers.
It also identified the National Gambling Board and the National Regulator
for Compulsory Specifications for the annual report process. In this regard,
the committee held meetings with these five entities to engage on their 2013/14
Annual Reports and their 2014/15 first quarter reports on 16 and 19 September
and 14 October 2014.
One of the key limitations of the report was that
not all 14 of the DTI’s entities’ annual reports and quarterly spending trends
were monitored over the 18 month period. Therefore, there was a reliance on the
DTI and the Auditor General to highlight challenges experienced by the other
nine entities. However, all entities, with the exception of the NRCS, received
unqualified audit opinions.
In addition, due to the timing of the BRR Report,
verified second quarter financial and non-financial information was not
available. The key challenge was that the DTI and its entities were still in
the process of verifying the non-financial information, which is due at the end
of October each year in compliance with Treasury regulations. Therefore, the
report has only captured performance up to the first quarter of the 2014/15
financial year.
1.5.
Outline of the contents of the Report
This BRR Report consists of
eight sections. Section 1 briefly provides an overview of the DTI’s core
functions, the mandate of the committee, the purpose of this report and the
method followed in preparing this report, as well as the limitations of the
Report.
Section 2 sets out the key
policy focus areas for the DTI. This includes an overview of the relevant
national priorities which the DTI contributes to, as well the DTI’s strategic
objectives, outcome-orientated goals and key measurable objectives.
Section 3 provides a
summary of the key financial and performance recommendations of the committee
as captured in its previous BRR Report and its 2014/15 Budget Report. Where
available, the Minister of Finance’s responses to these recommendations, as
prescribed by the Money Bills Amendment Procedure and Related Matters Act are
captured.
Section 4 assesses the
DTI’s financial and non-financial performance against its vote allocation from
1 April 2013 to 30 June 2014. Firstly, it provides an overview and assessment
of the DTI’s service delivery. Secondly, the available human resources are
discussed. Thirdly, it considers the 2013/14 budget vote allocation in terms of
the economic classification and per programme. It also assesses the actual
total and programme expenditure for the period ending 31 March 2014, as well as
the audit findings. This is followed by a comparison of the DTI’s budgeted and
actual expenditure as at 30 June 2014. Fourthly, the report discusses key
issues raised by the committee during deliberations with the DTI.
Section 5 discusses the
five entities identified by the committee for oversight during this BRR reporting
process in terms of their mandates, strategic objectives and core issues
previously identified by the committee. In addition, their financial and
non-financial performance and their additional forward-looking budgetary and/or
performance requirements are assessed.
Section 6 provides the
committee’s concluding remarks followed by a note of appreciation in Section 7.
The report then closes with the committee’s recommendations for the National
Assembly’s approval in Section 8.
2. Overview of the key relevant policy focus areas
In the annual SONA held in February this year, the President reaffirmed
government’s commitment to implement the National Development Plan (NDP) as the
country’s plan to eradicate poverty, increase employment and reduce inequality
by the year 2030. The President’s first SONA of the fifth democratic Parliament
reemphasised the areas of importance in the NDP which aims to address the
reduction of poverty, the creation of decent work, and the
acceleration of economic growth.[3]
In his post-election SONA
address, the President highlighted five priorities, namely (i) education, (ii)
health, (iii) the fight against crime and corruption, (iv) rural development
and land reform, and (v) creating decent work.[4] The DTI’s
mandate mainly relates to the latter priority of creating decent work. Table 1 provides the linkages between highlights extracted
from the post-election 2014 State of the Nation Address and the DTI’s strategic
objectives under which these points will be implemented.
Table 1: Linkages
between the State of the Nation Address and the DTI’s strategic objectives
DTI’s Strategic
Objectives[5] |
Highlights from the
State of the Nation Address[6] |
Facilitate transformation of the economy to promote industrial
development, investment, competitiveness and employment creation |
•
"....Promote local procurement and increase
domestic production by having the state buy 75% of goods and services from
South African producers." •
"...Promote regional economic development
and industrialisation, through the creation of Special Economic Zones around
the country." •
"...Provide incentives, to support the
competitiveness of the auto, clothing, leather, footwear and textile
industries, which are labour intensive." |
Facilitate broad-based economic participation through targeted
interventions to achieve more inclusive growth |
•
"…Implementation of the amended Broad-based
Black Economic Empowerment Act ... in order to transform the ownership,
management and control of the economy." |
Build mutually beneficial regional and global relations to advance
South Africa’s trade, industrial policy and economic development objectives |
•
“…Champion broader regional integration through
the Southern African Customs Union, SADC and the envisaged Tripartite Free
Trade Area that spans Eastern and Southern Africa.” •
“…Promote South-South cooperation by utilising
membership and engagements with formations and groupings of the South.” •
“…Deepen economic development, trade, and
investment partnerships with the BRICS[7]
through the work of the BRICS Contact Group for Economic and Trade Issues.” |
Source: Madalane (2014)
The President also
highlighted the low level of private sector investment and interrupted energy
supply as key constraints to economic growth. The committee welcomes the
inter-ministerial task team established to deal with the current challenges
that the current energy supply poses to economic growth.
The DTI is committed to the
development of an enabling environment to create decent work. Therefore, the
DTI has identified a number of policy tools such as promoting local
procurement, attracting investment through incentive-based programmes such as
the Special Economic Zones, and providing incentives for domestic production in
specific labour-absorbing sectors.
There have not been any shifts or changes in priorities for the
Department from the 2013 SONA to the two 2014 SONAs. In the 2013 SONA, priority
areas were broadening economic participation, industrial development, and
international trade relations. These were also highlighted in both 2014 SONAs. However,
the President announced in his post-election SONA that government would be
establishing a Small Business Development Department which will take over
certain functions of the DTI.
2.1.
Strategic plans of the Department
The strategic objectives of the DTI are to:
·
“Facilitate transformation of the economy to
promote industrial development, investment, competitiveness, and employment
creation;
·
Build mutually beneficial regional and global
relations to advance South Africa’s trade, industrial policy and economic
development objectives;
·
Facilitate broad-based economic participation
through targeted interventions to achieve more inclusive growth;
·
Create a fair regulatory environment that enables
investment, trade and enterprise development in an equitable and socially
responsible manner; and
·
Promote a professional, ethical, dynamic,
competitive and customer-focused working environment that ensures effective and
efficient service delivery.”[8]
It is required that all government departments align their strategic
objectives to the national priorities/government outcomes. Figure 1 provides a representation of the DTI’s strategic
objectives for the 2013/14 financial year as they relate to the national
priorities.
There were no changes in
terms of the strategic objectives and goals in the 2014/15 financial year.
Figure 1: Linkages
between the DTI’s strategic goals, government outcomes and the 2013/14 allocated
budget
Source: Department of Trade and Industry (2013d: 22)
2.2.
Measurable objectives of the Department
The DTI in its strategic
plan had listed key interventions that were aimed at addressing the challenges
faced by the country. Particularly for the 2013/14 financial year,
interventions were aimed at tackling the challenges of high unemployment and the
impacts of the global economic crisis. The DTI aimed to tackle this challenge
through sector-specific support programmes, such as the agro-processing;
automotive; clothing, textiles and leather and footwear; and business process
services sectors.[9] These sectors are
concentrated in the manufacturing and business services sectors, and they form
the backbone of employment in the country.
For the 2013/14 financial
year, the Department had planned to continue creating an enabling environment
to re-industrialise the country, as industrialisation is viewed as a tool
through which South Africa can create jobs and stimulate economic growth. Industrialisation
is mainly supported by the DTI through the IPAP. The key planned interventions
were as follows[10]:
·
Upscale industrial policy by tabling the annual
rolling IPAP to Cabinet and produce quarterly implementation reports.
·
Develop
three sector-specific action plans developed to influence and respond to the
changing economic environment to enhance manufacturing potential.
·
Complete and submit designation templates to the
National Treasury for 2 subsectors/sectors for local procurement.
·
Undertake two key research projects to facilitate
development of interventions to expand value-added activities in existing and
new sectors of the economy including beneficiation.
·
Special Economic Zone (SEZ) policy and Bill
approved by Cabinet and endorsed by Parliament.
·
Enhance technological competencies by supporting 1
350 students and 700 researchers via the Technology and Human Resources for
Industry (THRIP).
·
Implement the Support Programme Industrial
Innovation (SPII) by supporting 20 new projects valued at R43 million.
·
Implement the Tool-making apprentice programme -
Support 385 students enrolled for the tool making apprentice programme.
·
Implement the Industrial upgrading programme -
Support 220 workers trained through the industrial upgrading programme.
·
Support 940 enterprises approved to participate in
the Export Marketing and Investment Assistance (EMIA) scheme.
·
Support 40 companies supported through the
Workplace Challenge Programme (WCP).
Broadening Participation also forms part of
the DTI’s mandate. Through its Broadening Participation Division, the DTI aims
to create opportunities in which black South Africans and women can participate
more in economic activities. In terms of Broadening Participation, the key
interventions were to[11]:
·
Finalise and implement Informal Sector Strategy.
·
Finalise and implement Youth Enterprise Development
Strategy (YEDS).
·
Obtain approval for the revised Broad-based Black
Economic Empowerment (B-BBEE) Codes of Good Practice.
·
Revise the National Strategic Framework on Gender
and Women Empowerment.
·
Obtain approval of the business case for the
establishment of the Co-operative Tribunal as well as the Co-operatives
Development Agency and phase-in implementation of the amended Co-operatives
Development Act.
The third part of the DTI’s
mandate is Trade, Investment and Exports. Key intervention in terms of trade
for the 2013/14 financial year were to[12]:
·
Increase manufactured exports under Export
Marketing and Investment Assistance (EMIA) by increasing the value of exports to
R900 million.
·
Facilitate investment in targeted sectors to the
value of R50 billion within the investment pipeline.
·
Conclude trade negotiations with regards to the
Economic Partnership Agreement (EPA) with the European Union (EU), Southern
African Customs Union (SACU) India Preferential Trade Agreement (PTA), and Southern African Development Community (SADC)
- East African Community (EAC) – Common Market For Eastern and Southern Africa
(COMESA) FTA (also known as the Tripartite-Free
Trade Agreement (T-FTA)).
·
Implement African regional development programme in
five priority development areas in SACU, SADC FTA and in Spatial Development
Initiatives (SDI) infrastructure projects.
3. Summary of previous key financial and performance recommendations of committee
3.1.
2013/14 BRRR recommendations[13]
The committee recommended
the following in relation to key areas of financial and non-financial
performance:
·
The Minister should ensure that the Co-operative
Development Agency, the Broad-Based Black Economic Empowerment Commission, the
Co-operative Tribunal, the National Trust Fund on Indigenous Knowledge, and the
National Council on Indigenous Knowledge are adequately funded for the 2014/15
financial years and over the MTEF period to ensure that these bodies are able
to fulfil their mandates.
·
The Minister should consider the recapitalisation
requests of the Export Credit and Insurance Corporation and the National
Empowerment Fund in order for these institutions to fulfil their mandate of
facilitating the export of trade and cross-border investments between South Africa
and the rest of the world, and of broadening black participation in the economy
respectively.
·
The Minister should ensure that government
designated procurement products comply with the relevant national standards.
·
Consider ensuring a real increase in the allocation
to the Consumer and Corporate Regulation programme to ensure adequate support
to its regulatory entities.
The Minister of Finance had
responded that the National Treasury was working with
the DTI to address funding requirements on a case-by-case basis. The DTI had
reprioritised and revised its allocations to the NCR and NCC over the 2014 MTEF
period.[14]
At that stage, the Minister of Finance had not responded to the recommendations
in relation to the funding of the new entities.
3.2.
2014/15 Committee Budget Report[15]
The committee had
recommended that the Minister should consider:
·
Additional funding for the Consumer and Corporate
Regulation Programme’s allocation for its regulatory bodies to fulfil their
mandates in the outer years of the MTEF.
·
Increasing the budget for the Trade Investment
South Africa Programme to ensure an adequate presence in strategic foreign
missions in the outer years of the MTEF.
4. Overview and assessment of the department’s financial and NOn-financial
performance
4.1.
2013/14 Non-financial performance
The Department’s work is divided into five thematic
areas. These areas are (i) Industrial Development; (ii) Trade, Investment and
Exports; (iii) Broadening Participation; (iv) Regulation and (v) Administration.
This section gives a comparison of the Department’s key interventions for the
financial year under review and the performance of the Department against those
key interventions for the first four thematic areas.
4.1.1.
Industrial Development
Industrial Development relates to the development
of policies and strategies that promote sector competitiveness, economic growth,
job creation and the provision of efficiently administered support measures. Key
interventions for the 2013/14 financial year, as referred to in the Annual
Performance Plan, are listed in Table
2. The performance side of the table shows the DTI’s performance
as per the 2013/14 Annual Report in achieving the key interventions.
Table 2: Key
interventions and performance for Industrial Development
Key Interventions |
Performance
|
Upscale
industrial policy by tabling the annual rolling IPAP to Cabinet and produce
quarterly implementation reports |
New
iteration of the annual rolling IPAP 2013/14- 2015/16 approved by Cabinet in
March 2014 |
3 sector-specific action plans developed to influence and respond to
the changing economic environment to enhance manufacturing potential |
The
4 sector-specific action plans developed were: •
Nuclear Localisation and Industrialisation
Strategy and Action Plan •
Yellow Metal Strategy and Action Plan •
Music Strategy and Action Plan •
TV Strategy and Action Plan |
Complete
and submit designation templates to the National Treasury for 2
subsectors/sectors for local procurement |
5
Designation Reports completed and submitted including the designation of cables,
solar water heaters, valves and boats and electricity meters |
2
key research projects will be undertaken to facilitate development of
interventions to expand value-added activities in existing and new sectors of
the economy including beneficiation |
The
4 key research projects undertaken were: •
Wind Energy Localisation Roadmap •
Development of a Ports Industry Promotion
Strategy •
SAA wide body fleet procurement process •
Beneficiation in key value chains in a selected
group of minerals |
Finalisation
and Implementation of the SEZ Act (No.16 of 2014): SEZ Policy and Bill approved by Cabinet and
endorsed by Parliament |
SEZ
Policy was adopted by Cabinet in 2013 and the Bill was passed by the two Houses of
Parliament by March 2014 and assented to by the President. |
Enhance
technological competencies by supporting 1 350 students and 700 researchers via the THRIP |
1
548 students supported under THRIP funding and 1 047 researchers approved for
THRIP funding |
SPII
implemented by supporting 20 new projects valued at R43 million |
31
projects valued at R75.9 million were supported (funds were freed to support
new projects) |
Tool-making
apprentice programme – Support 385 students enrolled for the tool making
apprentice programme |
1
022 students enrolled in tool-making apprentice programme |
Industrial
upgrading programme – Support 220 workers trained through the industrial
upgrading programme |
400
workers trained through the industrial skills upgrading programme |
940
enterprises approved to participate in the EMIA scheme |
1
835 enterprises were supported through the EMIA scheme |
51
companies supported through the WCP |
322
companies supported as a result of R5 million sourced to enhance the Programme |
Source: DTI (2014b)
The achievement of targets as depicted in the table
above contributes to the advancement of the South African economy by
stimulating increased industrial outputs.
4.1.2.
Trade, Investment and Exports
This thematic area is responsible for the
strengthening of trade and investment links with key economies and fostering
African development, including through regional and continental integration and
development co-operation in line with the New Partnership for Africa’s
Development (NEPAD). Key interventions for the 2013/14 financial year as
identified in the DTI’s Annual Performance Plan and the related performance are
listed in Table
3.
Table 3: Key
interventions and performance for Trade, Investment and Exports
Key Interventions |
Performance |
Africa regional
development programme implementation: Progress report to be produced on
implementation of agreed programme and projects for priority development
areas in SACU, SADC FTA and SDI infrastructure projects |
Status reports
produced |
Conclusion
of EPA trade negotiations with the EU, SACU-India PTA, T-FTA: Status report
to be produced on progress towards conclusion of trade negotiations |
Progress
reports produced |
Increase
manufactured exports under EMIA by increasing the value of exports to R900 million |
R3.4
billion exports – Target exceeded due to high export sales from projects in
new high-growth markets identified including Indonesia, Thailand, Turkey,
Nigeria, Angola, Mozambique Tanzania and Ghana as well as BRIC. |
Investment
facilitation in targeted sectors – R50 billion |
R60.5
billion – Target exceeded due to a large number of renewable energy projects that
have reached financial closure in terms of the Renewable
Energy Independent Power Producer Procurement (REIPPP)
Programme. |
Source: DTI (2014b)
4.1.3.
Broadening Participation
Broadening Participation is concerned with the
development of interventions and strategies that are aimed at promoting
enterprise growth, empowerment and equity. Key interventions and performance
for the 2013/14 financial year are listed below (see Table 4).
Table 4: Key
interventions and performance for Broadening Participation
Key Interventions |
Performance |
Disburse
R119 million to SEDA for the establishment of new incubators and support of
existing incubators; and support of SMMEs |
R123
million disbursed to support SMMEs – Target was exceeded as a result of a
virement from the Incentive Development and Administration Programme to the
Broadening Participation Programme. |
Performance
monitoring reports on SEDA Technology Programme to be produced |
Monitoring
and performance reports produced |
Approval
of business case for the establishment of the Co-operative Development Agency
and phased-in implementation thereof |
Business
case approved by Minister, National Treasury and DPSA A
phased-in implementation plan has been initiated by developing a draft staff
migration plan and organisational structure |
Approval
of business case for the establishment of the Co-operative Tribunal and
phased-in implementation thereof |
Business
case approved by Minister, National Treasury and DPSA Phased-in
implementation has commenced and a draft structure is in place. |
Revised
draft National Strategic Framework on Gender and Women Empowerment |
Revised
draft National Strategic Framework on Gender and Women Empowerment |
Isivande
Women Fund – Approve 18 new projects |
During
the 2013/14 financial year, the actual projects approved were 16. The poor
quality of applications resulted in targets not being met. |
Approval
of Broad-Based Black Economic Empowerment Amendment Act |
B-BBEE
Amendment Bill assented to by the President |
Approval
of revised B-BBEE Codes of Good Practice |
The
B-BBEE Codes of Good Practice were approved by the Minister and published for
implementation in 2015 |
1
560 enterprises approved for Black Business Supplier Development Programme
(BBSDP) |
1 066
enterprises approved |
Finalisation
and implementation of Informal Sector Strategy |
The
National Informal Business Upliftment Strategy (NIBUS) was adopted by Cabinet
and launched by Minister in March 2014. |
Finalisation
and implementation of YEDS |
YEDS
approved and launched by the Minister in November 2013. |
Supported
companies through the WCP: support 40 new enterprises |
322
enterprises supported due to additional funding of R5 million being sourced
to enhance the Programme. |
Source: DTI (2014b)
4.1.4.
Regulation
Regulation involves the development and
implementation of coherent, predictable and transparent regulatory solutions
that facilitate easy access to redress, and efficient regulatory services for
economic citizens. This occurs by developing policies, bills and regulations to
enforce fair business practices and conducting impact
assessments of regulation on business and other economic citizens.
Table 5: Key
interventions and performance for Regulation
Key Interventions |
Performance |
Two Regulatory Impact
Assessment (RIA) Reports with recommendations for approval on Liquor and
Gambling |
Liquor:
A RIA was finalised to incorporate the new policy Gambling:
A draft RIA report was produced. |
Two
policies for approval on Intellectual Property and Gambling |
3
Policies developed for approval for gambling, liquor and intellectual property. |
Four
Bills for approval on National Credit Act, Lottery, Liquor and Business Acts |
4
Bills developed for approval: •
National Credit Amendment Bill to be assented by
President. •
Lotteries Amendment Bill assented. •
Licensing of Business Bill done and referred back
for consultation and establishment of Task Team by Minister •
Liquor Amendment Bill developed, however not approved
yet. |
Two
regulations for publication |
•
2014 African Championship of Nations Liquor
Amendment Regulations developed and published •
Regulations for Protected Event status and
Prohibited Marks (liquor) developed and published •
Labelling of Meat Regulations developed and
published |
Source: DTI (2014b)
4.2.
Non-financial performance as at 30 June 2014
The DTI highlighted a number of key achievements as
at 30 June 2014. The key achievements are listed in the
sections below in terms of the Department’s thematic areas.[16]
4.2.1.
Industrial Development
·
IPAP 2014/15 – 2016/17 was launched in April 2014.
·
Legal Metrology Act (No. 9 of 2014) was assented to
by the President in May 2014 but is not yet enacted as it requires a
Presidential proclamation in the Government Gazette.
·
Two instruction notes for the designation of Rail
Rolling Stock and Solar Water Heaters were amended and re-published by National
Treasury in June 2014. Local content verification of Solar Water Heaters was
finalised by the SABS.
·
Development of draft Manufacturing Support
Guidelines for newly-established projects under the Manufacturing
Competitiveness Enhancement Programme (MCEP) is in progress.
·
Medium and Heavy Commercial Vehicles Automotive
Investment Scheme (MHCV-AIS) guidelines was launched for public comment.
4.2.2.
Trade, Investment and Exports
·
The Promotion and Protection of Investment Bill was
amended incorporating comments from the public consultation process.
·
Led the South African delegation to the sixth BRICS
Contact Group for Economic and Trade Issues (CGETI) meeting held in May 2014 in
Brasilia, Brazil.
·
Updated status report on EPA negotiations to inform
the stalled review of the SACU–European Free Trade Association (EFTA)
agreement.
·
Draft EPA Tariff Schedules completed and submitted
for verification to the South African Revenue Service (SARS).
·
Notice of termination of Bilateral Investment
Treaties (BITs) given to Sweden and Finland. Agreement reached with Argentina
and Cuba to mutually terminate BITs.
·
Facilitated exports to the value of R1.4 billion.
·
Achieved R14.2 billion investment pipeline in large
renewable and manufacturing projects.
4.2.3.
Broadening Participation
·
The terms of reference for the Black Industrialist
Incentive has been developed and adopted.
·
Supported 92 projects under the Co-operatives
Incentive Scheme (CIS) incentive.
·
Supported 280 projects under the BBSDP incentive.
·
Five pre-feasibility studies for proposed SEZs have
been finalized, namely for: (i) Rustenburg Platinum Hub in North West, (ii) Musina
Logistic Hub and (iii) Tubatse Platinum Hub in Limpopo, (iv) Upington Solar
corridor in Northern Cape and (v) Harrismith Agro-processing Hub in Free
State).
·
Additional three draft pre-feasibility reports have
been developed for Wild Coast Agro-processing Hub in Eastern Cape, Nkomazi
Agro-processing and Logistic Hub in Mpumalanga and Atlantis Renewable Energy Hub
in Western Cape.
4.2.4.
Consumer and Corporate Regulation
·
Draft regulations for the National Credit Amendment
Act (No. 19 of 2014) produced.
·
The Intellectual Property Laws Amendment Act (No.
28 of 2013) enacted, with amendments focusing primarily on the protection of
indigenous knowledge as well as the process to establish the council and trust.
·
RIA on Gambling conducted and a report finalised.
4.3.
Human Resources
The DTI had employed a
total of 1 286 people as at the end of the 2013/14 financial year. A total
of 133 posts were vacant given the total approved posts of 1 149. The 133
vacant posts translate to a vacancy rate of 9.4 per cent.
Table 6: Employment
statistics as at end March 2014
Total
posts |
1
419 |
Filled
posts |
1
286 |
Additional
employees to the establishment |
286 |
Vacancies |
133 |
Vacancy
rate (% of total available posts) |
9.4 |
Black
employees (% of total employees) |
91.2 |
Female
Employees (% of total employees) |
58.1 |
Employees
with disabilities (% of total employees) |
2.7 |
Source: DTI (2014b)
The demographics of the staff complement was 91.2 per cent black
employees. Female employees accounted for 58.1 per cent of total employees
while people with disabilities accounted for 2.7 per cent.
4.4.
Overview of Vote allocation and spending (2009/10 -
2014/15)
4.4.1.
Overview of the Budget Allocation 2013/14
The Department of Trade and Industry’s budget was divided among its seven
programmes/divisions. The Divisions were[17]:
·
Administration
·
International Trade and Economic Development
·
Broadening Participation
·
Industrial Development: Policy Development
·
Consumer and Corporate Regulation
·
Incentive Development: Incentive Administration
·
Trade and Investment South Africa
The Department’s budget has increased from R8.35 billion in 2012/13 to
R9.57 billion in 2013/14 financial year, a real increase of 8.55 per cent. The Department
of Trade and Industry’s expenditure has been on an upward trend since the
2011/12 financial year increasing from R6.8 billion and to R8.3 billion in the
2012/13 financial year. In the 2013/14 financial year, expenditure is expected
to be R9.6 billion. The Department’s expenditure is forecast to reach R11.4
billion by the 2015/16 financial year.
The Department’s budget is centred on the implementation of policies,
strategies, programmes and incentives aimed at promoting industrial development
and broadening participation in the economy. These were implemented through the
Incentive Development: Incentive
Administration and the Industrial
Development: Policy Development programmes,
which use the bulk of the Department’s allocation over the medium term. For the
2013/14 financial year, this was R5.5 billion for the
Incentive Development:
Incentive Administration Division (57.5 per
cent of the total budget) and R1.6 billion for the Industrial Development: Policy Development Division (16.7 per cent of the total budget).
Furthermore, the budget was allocated to the Broadening Participation Division (R968.3 million), the
Administration Division (R690.1 million), the Trade and Investment South Africa Division (R369.7 million), Consumer and Corporate Regulation Division (R256.2 million) and International Trade and Economic Development Division (R138.6 million).
In terms of the
economic classification, the majority of the DTI’s budget (84.2 per cent)
consisted of transfers to businesses or to its entities, compared to 82.2 per
cent in the 2012/13 financial year. The DTI’s transfers also grew in real terms
by 11.2 per cent since 2012/13. The DTI has decreased its budget share
allocated to current payments from 17 per cent in 2012/13 to 15.6 per cent in
2013/14. This share has increasingly been dominated by compensation to
employees (R854.2 million in 2013/14, which grew in real terms by 9.9 per
cent). However, payments on goods and services declined in real terms by 11.8
per cent since 2012/13.
4.4.2.
Overview of spending (2010/11 - 2014/15)
The Department of Trade and
Industry’s expenditure has been increased by an average annual growth rate of
17.7 per cent between the 2010/11 and the 2013/14 financial years. In the 2010/11 financial year, expenditure
declined from R5.9 billion in 2009/10 to R5.8 billion. However, expenditure has
been on an upward trend since the 2011/12 financial year increasing from R6.8
billion to R8.3 billion in the 2012/13 financial year. In the 2013/14 financial
year, expenditure was at R9.4 billion. The Department’s expenditure is forecast
to reach R10.9 billion by the 2015/16 financial year.
Table 7: Audited and
estimated expenditure per programme from the 2010/11 to 2015/16 financial years
Programme (R millions) |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
||
Audited |
Audited |
Audited |
Main |
Adjusted |
Audited |
Main |
Estimates |
|
Administration |
480.0 |
639.4 |
705.4 |
690.1 |
725.9 |
700.4 |
706.9 |
730.7 |
International Trade and Economic
Development |
106.9 |
132.9 |
132.7 |
138.6 |
141.6 |
139.6 |
147.2 |
154.8 |
Broadening Participation |
798.1 |
887.5 |
929.7 |
968.3 |
1 010.3 |
999.8 |
1 005.8 |
1 060.2 |
Industrial Development:
Policy Development |
1 172.6 |
1 328.7 |
1 521.1 |
1 606.5 |
1 596.7 |
1 575.6 |
1 796.8 |
2 078.5 |
Consumer and Corporate
Regulation |
145.0 |
218.6 |
223.6 |
256.2 |
256.2 |
256.7 |
277.3 |
286.9 |
Industrial Development:
Incentive Administration |
2 793.0 |
3 283.5 |
4 514.6 |
5 543.1 |
5 443.1 |
5 361.3 |
5 540.3 |
6 246.5 |
Trade and Investment
South Africa |
301.1 |
310.4 |
259.4 |
369.7 |
341.7 |
347.0 |
360.7 |
370.1 |
Total |
5 796.7 |
6 801.0 |
8 286.4 |
9
572.6 |
9 515.6 |
9 380.3 |
9 835.0 |
10 927.7 |
Source: National Treasury
(2013) and (2014c) and DTI (2014b)
For the 2013/14 financial
year, the Departmental budget was R9.5 billion; however, the Department’s
expenditure fell short of this budget by 1.4 per cent amounting to expenditure
of approximately R9.4 billion. At a programme level, there was under spending
on all programmes, however, the most significant under spending were in the
International Trade and Economic Development Division (4.6 per cent), the
Administration Division (3.2 per cent) and the Industrial Development:
Incentive Administration Division (1.5 per cent).
Table 8: Actual versus budgeted
expenditure for the 2013/14 financial year
Programme (R’000) |
Revised Budget 2013/14 |
Expenditure |
Variance |
Variance (%) |
Administration |
724 139 |
700 370 |
23 769 |
3.28 |
International
Trade and Economic Development |
146 339 |
139 566 |
6 773 |
4.63% |
Broadening
Participation |
1 006 282 |
999 833 |
6 449 |
0.64% |
Industrial
Development: Policy Development |
1 590 453 |
1 575 586 |
14 867 |
0.93% |
Consumer
and Corporate Regulation |
258 146 |
256 689 |
1 457 |
0.56% |
Industrial
Development: Incentive Administration |
5 440 720 |
5 361 292 |
79 428 |
1.46% |
Trade
and Investment South Africa |
349 501 |
346 951 |
2 550 |
0.73% |
Total |
9 515 580 |
9 380 287 |
135 293 |
1.42% |
Source: DTI (2014b)
4.4.2.1.
Expenditure
on Administration
There was under spending of
R23.7 million in the Administration Division. This was a result of:
·
Under-spending on compensation of employees due to
47 posts being vacant out of an establishment of 480. In addition, there were
delays in the implementation of re-evaluation of posts.
·
Under-spending on goods and services was as a result
of ongoing engagements with the Department of Public Works on planned projects
for office accommodation. There have also been savings in certain areas as a
result of cost-containment measures, for example on air travel.
·
Computer equipment that could not be procured as
planned pending the filling of vacant posts.
4.4.2.2.
International
Trade and Economic Development
An under spending of R14.9
million occurred as a result of:
·
Under-spending on goods and services due to
outstanding foreign mission accounts. There have also been savings in certain
areas as a result of cost-containment measures, for example on air travel.
·
Under-spending on transfers and subsidies was due
to exchange-rate fluctuations on payments to the World Trade Organisation and the
Organisation for the Prohibition of Chemical Weapons.
4.4.2.3.
Industrial
Development: Incentive Administration
·
The under-spending occurred largely on business and
advisory consultants as well as venues and facilities, catering and travel due
to the implementation of cost-containment measures.
·
Under-spending of R58.6 million under the MCEP is
due to the cancellation of projects. These cancellations were due to clients
not being able to secure investments to qualify for MCEP incentives.
·
The under-spending of R17 million on payment for
capital assets was due to delays in appointing a vendor for the delivery of
IEMS.
Table 9: Economic classification
of expenditure for the 2013/14 financial year
Programme (R’000) |
Revised Budget 2013/13 |
Expenditure |
Variance |
Variance (%) |
Compensation
of employees |
799 139 |
789 346 |
9 793 |
1.23% |
Goods and
services |
718 808 |
690 354 |
28 454 |
3.96% |
Payments for
financial assets |
1 219 |
1 164 |
55 |
4.51% |
Capital
assets |
39 961 |
18 655 |
21 306 |
53.32% |
Transfer
payments |
7 956 453 |
7 880 816 |
75 637 |
0.95% |
Total |
9 380 335 |
135 245 |
1.42% |
Source: DTI (2014b)
4.4.2.4.
Reasons
for under spending
On compensation of
employees was due to 133 posts (9.4 per cent) being vacant out of an
establishment of 1 419 posts as well as the delays in the implementation of the
re-evaluation of posts resolution.
On goods and services,
under spending was as a result of ongoing engagements with the Department of
Public Works on planned projects for office accommodation. In addition, there
was under-spending on business and advisory consultants as well as venues and
facilities, catering and travel due to the implementation of cost-containment
measures.
Under-spending of R58.6
million under the MCEP was as a result of the cancellation of projects. These
cancellations were due to clients not being able to secure investments to
qualify for the MCEP incentives.
Transfers to foreign
governments and international organisations were lower than anticipated due to
exchange-rate fluctuations on payments to the World Trade Organisation, the Organisation
for the Prohibition of Chemical Weapons and the United Nations Industrial
Development Organisation (UNIDO).
Funds earmarked for Proudly
South Africa were not disbursed as projected.
Payment of bursaries to
non-DTI employees was delayed due to the late receipt of invoices.
The under-spending on
capital assets was due to computer equipment that could not be procured as
planned pending the filling of vacant posts and delays in the appointment of a
vendor for the delivery of the integrated electronic management system.
In terms of payments for
financial assets, funds projected for payments for financial assets were not
fully utilised as planned.
4.4.3.1.
Five year audit trends
Over the 2008/09 and
2012/13 period, the Department has had unqualified audit reports with findings.
Observations by the Auditor General in previous financial years included:
material losses, issues with performance indicators, compliance with
regulation, and irregular expenditure.
For the 2012/13 financial year, the Auditor General
noted that the Department’s entities have had a record of good governance and
financial management. However; newly-established entities have had a number of
challenges with regards to their governance and financial management systems.
According to the Auditor General, close monitoring, by the Department, of its
entities was necessary.
For the 2012/13 financial year, the Auditor General’s report raised the
following issues: material losses, compliance with certain regulations, and
irregular expenditure.
4.4.3.2.
2013/14 Financial audit performance
The DTI received an unqualified audit opinion from
the Auditor General.[18].
However, the Auditor General noted the following concerns which relate to Regulatory Requirements, in particular Compliance
with legislation:
·
Expenditure management: “Effective steps were
not taken to prevent irregular expenditure, as required by section 38(1)(c)(ii)
of the Public Finance Management Act[19] and
Treasury Regulation 9.1.1”.
·
Leadership: “Leadership did not
exercise effective oversight with regard to performance reporting and related
internal controls”.
·
Financial and
performance management: “Management did not prepare, in certain
instances, an accurate and complete annual performance report that is supported
and evidenced by reliable information. Management did not have adequate
preventative and detective controls in place to ensure compliance with laws and
regulations relating to supply chain management”.[20]
4.5.
Financial performance as at 30 June 2014
The DTI’s budget for the 2014/15 financial year is R9.83 billion, a real
decrease of 2.7 per cent from the previous financial year’s budget.
Approximately 56
per cent of the budget will go towards the Incentive Development and
Administration Division[21], 18 per cent to the
Industrial Development Division and 10 per cent to the Broadening Participation
Division.
Table 10: 2014/15 First quarter expenditure by programme
Programme (R’000) |
Revised Budget 2014/15 |
1st Quarter |
Available budget (%) |
||
Cash Flow projections |
Expenditure |
Variance (%) |
|||
Administration |
708 246 |
184 925 |
142 652 |
22.9 |
79.9 |
International Trade and Economic Development |
147 197 |
33 746 |
29 091 |
13.8 |
80.2 |
Broadening Participation |
1 004 477 |
273 452 |
256 921 |
6.1 |
74.4 |
Industrial Development |
1 796 824 |
660 054 |
627 695 |
4.9 |
65.1 |
Consumer and Corporate Regulation |
277 256 |
138 565 |
137 468 |
0.8 |
50.4 |
Incentive Development and Administration |
5 540 281 |
1 178 135 |
669 431 |
43.2 |
87.9 |
Trade and Investment South Africa |
360 748 |
58 483 |
45 457 |
22.3 |
87.4 |
Total |
9 835 029 |
2 527 360 |
1 908 715 |
24.5 |
80.6 |
Source: DTI (2014c)
In the first quarter of the 2014/15 financial year, the DTI projected
spending of R2.52 billion. However, the DTI’s expenditure fell short of this
projection. Expenditure totalled R1.91 billion, 24.5 per cent short of the
targeted quarterly expenditure.
At a programme level, there was under-spending on all programmes. An
acceptable level of deviation from the budget is an amount up to 10 per cent.
However, the Administration, International Trade and
Economic Development, Incentive Development and Administration, and Trade and
Investment South Africa Divisions had relatively high levels of underspending
during the period (see Table
10).
It should be noted that expenditure in the first quarter is usually low,
this is evident from expenditure reports of previous years. However, this should pick up gradually from the second quarter onwards.
4.5.1.
Expenditure by economic classification
In terms of the economic classification, under spending was as a result
of 85 percent under spending on capital assets, 25.3 per cent on transfer
payments, 34 per cent on goods and services, and 8.5 per cent on compensation
of employees.
Table 11: First quarter (2014/15) Expenditure by economic classification
(R’000) |
Revised Budget 2014/15 |
1st Quarter |
Available budget (%) |
||
Cash Flow projections |
Expenditure |
Variance (%) |
|||
Compensation
of employees |
916
869 |
223
088 |
204
069 |
8.5 |
77.7 |
Goods
and services |
612
658 |
163
426 |
107
879 |
34.0 |
82.4 |
Payments
for financial assets |
0 |
0 |
26 |
0.0 |
0.0 |
Capital
assets |
30
957 |
5
433 |
817 |
85.0 |
97.4 |
Transfer
payments |
8
274 545 |
2 135
413 |
1 595
924 |
25.3 |
80.7 |
Total |
9 835 029 |
2 527 360 |
1 908 715 |
24.5 |
80.6 |
Source: DTI (2014c)
As noted in the table
above, there was unbudgeted expenditure on the payments of financial assets
amounting to R26 000 during the quarter.
4.5.1.1.
Expenditure on Goods and Services
Within expenditure on goods
and services, the largest spending was on the following line items:
·
Stationery, printing and office supplies (R58.6
million);
·
Travel and subsistence (R17.5 million);
·
Consultants and professional services: business and
advisory services (R5.3 million);
·
Advertising (R3.7 million);
·
Communication (R2.5 million);
·
External audit cost (R2.4 million); and
·
Contractors (R2.1 million).
In terms of goods, inventory
and property payments had been under spent. However, there was significant over
spending on advertising, consumable supplies, travel and subsistence, and consultants
and professional services.
4.5.1.2.
Transfer Payments
There was significant under spending in transfer payments by the DTI.
Under spending in the first quarter was at 41 per cent amounting to R446.6
million. This was as a result of the following transfers not being made in the
quarter:
·
Industrial Development Zones (R53.5 million);
·
SEZs: Investment Incentives (R130 million);
·
ProTechnik Laboratories (R1.1 million);
·
Isivande Women's Fund (R2.7 million); and
·
South African Women's Entrepreneurs Network (R8.1
million).
In addition, there was
significant under spending under the following incentive programmes:
·
Manufacturing Competitiveness Enhancement Programme;
·
Automotive Production and Development Programme;
and
·
Critical Infrastructure Programme.
In the 2012/13 financial
year (previous year), there had been significant under spending in the same
transfer areas.
Despite the large level of under spending in most of the transfers, it
is important to note that there was over spending of R42.2 million in the EMIA
incentive. However, in terms of the annual budgeted amount for this incentive, this
is still within the annual budgeted allocation.
4.5.1.3.
Expenditure on unbudgeted items
Payment for financial
assets was not budgeted for in the 2014/15 financial year. However, in the
first quarter there was an expenditure of R26 000 towards this item.
Clothing material and accessories in another item that was not budgeted for in
the first quarter, however, a total of R8 000 was spent.
4.6.
Issues raised during the deliberations
The following concerns were
raised regarding the performance of the DTI during the committee’s deliberations:
Renewable
energy and/or regional development: The committee raised the issue with
respect to job creation in renewable energy sector and whether government is
considering the Eastern Cape and provinces other than Gauteng, KwaZulu-Natal
and the Western Cape as possible destinations for future projects in this regard.
Furthermore, the committee enquired whether the DTI is considering a SEZ
specifically for agro-processing where certain provinces producing primary
agricultural products may have a comparative advantage. The Minister informed
the committee that a number of projects have been identified for the Eastern
Cape and Free State provinces, including bio-fuel projects with the opportunity
for the export of bio-ethanol to the EU. With respect to the SEZs, the DTI,
together with provinces, is undertaking feasibility studies on the potential of
establishing SEZs in the Wild Coast, which may include value-addition to cattle
farming, and the platinum sector. There has been consultation around the SEZ
for the platinum sector in Harrismith.
Economic
impact of the DTI’s work: The committee acknowledged that the DTI is one of
the best performing departments in government; however, a view was expressed
that its actions had not necessarily translated into economic growth and job
creation, given the decline in the manufacturing sector. The Minister
acknowledged the decline in economic growth within the manufacturing sector,
but disagreed with the assertion that the implementation of the IPAP had not
yielded any positive results. He was of the view that progress had been
achieved given the current global environment. The IPAP where it has been
implemented has made a difference in the most vulnerable industrial subsectors
such as the clothing and textile industry and had stabilised the sector and
prevented further job losses given its economic reality. In addition, the implementation
of a developmental trade policy provides a measure of tariff support for
industries. The government’s decision to procure locally in support of local manufacturers,
the introduction of incentives through the Manufacturing Competiveness
Enhancement Programme, which saw an increase in the competitiveness of South
African industries, had made a significant difference. He is further of the
view that the decline in the mining sector was a major contributing factor with
respect to economic growth. The Minister further implores that the challenges
facing the economy must be seen against the background that South Africa has
been a mining economy and that the commodity boom has passed.
Addressing
constraints to sustained economic growth: The committee was of the
view that a coordinated approach among all major stakeholders is critical to
identify and address the constraints to sustained economic growth. The Minister
agreed that a social dialogue is critical and emphasised that NEDLAC is the
appropriate forum. The DTI is continuously engaging its social and economic
partners to find consensus on key economic issues such as localisation,
competitiveness and beneficiation.
The committee raised
concerns around high administered prices, the security of the electricity and
water supply and its impact on the manufacturing sector. The Minister acknowledged
that high administered prices remains a challenge, especially for the
manufacturing sector, and indicated to the committee that the DTI is having
discussions with the National Port Regulator about port charges for
manufactured goods, and hoped to address the matter through Operation Phakisa. The
nuclear intergovernmental relations agreement is expected to contribute to the
country’s energy supply security.
South
African investors abroad: The committee was of the view that South Africa
is still one of the most viable economies on the African economy which still
attracts foreign direct investment. The committee enquired how the DTI was ensuring
that business benefited from NEPAD projects, the impact of the rise of
extremism on South Africa’s trade agreements and whether the DTI has measures
in place to protect South African business globally. The Minister informed the
committee that the “Code of Business Conduct for South African Companies
Operating Abroad” needs to be finalised to ensure ethical business conduct on
the part of South African businesses as this influences the reputation of
“Brand South Africa”.
Youth
enterprise development: The committee enquired about the status of the YEDS.
The Minister informed the committee that the YEDS would migrate to the newly created
Small Business Development Department. However,
the Youth Accord requires that the DTI designates 80 per cent of jobs in the
business process services sector to youth.
Development
of black industrialists: The failure of black industrialist to emergence
remains a major concern for the committee. The committee enquired whether the
incentive programme to promote broadening participation in the mainstream
economy of businesses owned by the previously disadvantaged communities has
been effective and whether there is sufficient funding in the outer years to support
the emergence of black industrialists. The DTI informed the committee that the
bulk of incentives were paid to established companies. This did not reflect the
economic reality of the need to promote the creation of black industrialists and
direct incentives are required to address the emergence of black industrialists.
It is important that incentives are not used to purchase imported goods but benefit
local producers.
5. Financial and non-financial performance of identified entities
5.1.
National Consumer Commission
The National Consumer Commission (NCC) was established by the Consumer
Protection Act (CPA) (No. 68 of 2008) and became operational on 1 April 2011.
The NCC’s core mandate is to assist in protecting consumer rights by increasing
consumer awareness of what these rights are; investigating prohibited conduct
by business; and enforcing compliance with the provisions of CPA.
This core mandate falls within the Department of Trade and Industry’s
strategic objective to “create a fair regulatory environment that enables
investment, trade and enterprise development in an equitable and socially
responsible manner”. The NCC, therefore, has a critical role to play in
empowering rural and low income consumers, who are often most affected by
unfair business practices and least able to address these challenges.
According to the Act, the NCC’s functions include the:
·
Development of codes of good practice relating to
the provisions of the Act.
·
Promotion of legislative reform through
consultation with provincial consumer protection authorities, national organs
of state, consumer protection groups, alternative dispute resolution agents and
suppliers.
·
Promotion of consumer protection within organs of
state.
·
Enforcement of the Act including the investigation
and evaluation of any prohibited conduct and offences, issuing and enforcing
compliance notices.
·
Research to increase knowledge of the nature and
dynamics of the consumer market.
·
Promotion of public awareness of consumer
protection matters.
·
Liaison with other regulatory authorities on
matters of common interest.
·
Provision of advice and recommendations to the
Minister.
The NCC’s strategic objectives are to (i) promote compliance with the Consumer Protection
Act; and (ii) be a well-governed and capacitated organisation.
The NCC consists of 6 divisions, namely:
·
The Office of the
Commissioner
·
Corporate Services: responsible for financial, supply chain, human
resources, IT and records management.
·
Enforcement and
Investigations: responsible for the
enforcement of the Consumer Protection Act through the facilitation of
complaints handling and conducting investigations.
·
Legal Services: responsible for the enforcement of the Consumer
Protection Act through (i) applications to the National Consumer Tribunal for
declaration of conduct as prohibited; (ii) the provision of legal opinions and
advice to consumers, suppliers and other divisions of the NCC; and (iii)
various projects related to the Opt-Out Register, the establishment of Codes of
Good Practice, accreditation of Industry Codes and enforcing product labelling
requirements.
·
Advocacy, Education and
Awareness: responsible for
consumer advocacy, education and awareness and managing stakeholder
relationships. It also profiles the NCC as a brand for consumer protection in
South Africa.
·
Research Analysis and
Knowledge Management
5.1.1.
Financial and non-financial performance as at end of
March 2014
5.1.1.1.
Non-financial performance
Seven of the 12 output areas were achieved. The five output areas not
achieved were[22]:
·
The percentage of complaints resolved on an average
of 80 days. On average, complaints were resolved within 297 days due to large
backlog of complaints from the 2012/13 financial year before the NCC changed
its approach to complaints handling.
·
The resolution of the backlog, 92 per cent of the
initial 6 045 complaints were resolved. Non-referral letters were drafted
for the outstanding complaints but had been undergoing quality control by the
end of March 2014.
·
Only one of the two targeted industry codes had
been recommended to the Minister. The NCC was dependent on industries to
approach it in this regard but will proactively identify and engage with
industries to develop such codes.
·
The development of the code of good practice for
the return of vehicles within the motor industry had not been finalised by year
end. This was dependent on the accreditation of the Motor Industry Code by the
Executive Authority.
·
A high level ICT (information and communication
technology) strategy had not been developed due to insufficient internal
capacity.
Furthermore, the NCC had adjusted some of its targets during this
financial period. Targets concerning complaints handling had been adjusted
upward due to improved efficiencies. Some targets related to investigations
were adjusted downward to focus on investigations of trends rather than
individual complaints and to accommodate capacity and financial constraints.
The target to develop and implement a policy for the accreditation of consumer
protection groups was deleted due to financial constraints. It was also noted
that consumer protection groups required funding from the NCC, which it was
unable to provide.[23]
In the 2013/14 financial year, the Auditor-General focused on the first
strategic objective in terms of its usefulness and reliability. No material
findings were found. However, material misstatements were found, which had been
corrected.
5.1.1.2.
Financial performance
The NCC received a transfer of R45.5 million from the DTI, a 5.8 per
cent decrease from the 2012/13 financial year. It also received other income of
R0.37 million in interest. The NCC spent R44.9 million, leaving a surplus of
R0.95 million or 2.1 per cent of total revenue, which is within the accepted
range of 5 per cent of revenue.[24]
Employee related costs amounted to R28 million or 62.4 per cent of total
expenditure. Employee related costs
increased by 22 per cent since the 2012/13 financial year.
Since its inception, the NCC had failed to provide a detailed breakdown
of its operating expenditure, lumping many sub-categories within broader
categories of administration and other operating costs. However, in the 2013/14
financial year, operating expenditure had a detailed breakdown under Note 18 of
the financial statements. Operating expenses declined by R5.3 million or 26.1
per cent to meet the National Treasury’s call for the implementation of
cost-cutting measures.
The NCC still had fruitless and wasteful expenditure of R3.6 million,
mainly from that carried over since the 2012/13 financial year (R3.58 million).
Irregular expenditure had been reduced from R14.9 million in the 2012/13
financial year to R6.9 million in the 2013/14 financial year. The causes of the
irregular expenditure was mainly due to non-compliance with Treasury
Regulations related to procurement and supply chain management. Although
irregular and fruitless and wasteful expenditures remain high, these have significantly
improvement from the 2012/13 financial year.
5.1.1.2.1.
Auditor-General’s Report
The NCC received an unqualified audit opinion with findings. Table 12 provides an overview of the audit opinions over the
last two financial years, as well as the findings the Auditor-General made in
relation to the NCC’s financial statements.
Table 12: Audit opinions
and key findings for the 2012/13 to 2013/14 financial years
Year |
Auditor-General’s
opinion |
Emphasis of
matters |
2012/13 |
Qualified due to: •
Irregular expenditure that could not be
adequately confirmed due to supporting information being stolen from the
NCC’s premises and inadequate filing of information. •
Operating expenditure for the prior year was
incorrectly allocated to the 2012/13 financial year. |
• Significant
uncertainties linked to disclosed contingent liabilities for a lawsuit and a
claim for cancelling contracts and the retention of R2.8 million without
Treasury approval. • The
restatement of corresponding figures. • Material
impairments as a result of long outstanding receivables. |
2013/14 |
Unqualified with findings |
• Significant
uncertainties linked to various lawsuits amounting to R2.3 million and a
disclosed contingent liabilities of R5.2 million due to the retention of
funds without Treasury approval. • The
restatement of corresponding figures in the 2012/13 financial year due to an
error being discovered during the 2013/14 financial year. |
Source: NCC (2013b) and (2014a)
Compliance with laws and regulations
Furthermore, the Auditor-General found non-compliance in terms of the
following during the 2013/14 financial year:
·
Accumulation of surpluses without National Treasury
approval.
·
Financial statements submitted for auditing was not
in accordance with the prescribed financial reporting framework.
·
Material misstatements of property, plant and
equipment, as well as the provision for leave pay.
·
The preference point system was not applied in all
procurement of goods and services above R30 000.
·
The accounting authority did not take effective
steps to prevent irregular and fruitless and wasteful expenditure.
Internal control
The Auditor-General found that:
·
The accounting officer had not exercised sufficient
oversight over financial reporting and compliance with laws and regulations and
related controls.
·
Management had not implemented proper record
keeping to ensure complete, relevant and accurate information that was
accessible and available to support the procurement of goods and services.
5.1.2.
Human resources
The NCC approved its new structure during the 2013/14 financial year.
The structure has 182 approved posts, of which 72 (39.6 percent of all
available posts) were filled at the end of March 2014. The highest vacancy rate
was within the Enforcement and Investigations Programme (62 per cent). [25]As most of the vacant positions are not funded and
increases in the budget over the 2014/15-2016/17 period will not be adequate to
fund all the vacancies, the NCC has decided to revisit the structure and
identify the critical posts. Other approved posts that are not critical may be
abandoned.
Staff appointed outside of the approved structure had been incorporated
into the structure based on a skills audit.
On 31 March 2014, the demographics of the staff complement is 100 per
cent black employees, mainly African employees and two Indian males. In terms
of top and senior management, 31.3 per cent of managers were female. The NCC
also employed two persons with disabilities (2.8 per cent of the staff
complement).
Although there had been no training budget allocated for the 2013/14
financial year, the NCC had held in-house training by experts within the NCC on
the Consumer Protection Act to close its skills gap.
5.1.3.
Financial and non-financial performance as at end of
June 2014
5.1.3.1.
Non-financial performance
The
NCC reported that it had fully achieved 15 of its 20 first quarter targets. It
highlighted a number of quarterly achievements, including[26]:
·
Conducting four targeted inspections on 65
retailers within nine municipalities in two Provinces. These inspections focused
on whether the following areas were aligned to the Act: returns, refunds,
labelling and expired goods. The NCC found altered and falsified labelling as
well as no labelling of ingredients and the name of the producer on certain
foodstuffs. The NCC will conduct follow-up inspections to ensure that there is
adherence to consent agreements.
·
Recalling several products during the quarter for
safety reasons. Some of these recalls have been due to proactive monitoring of
products on global markets.
·
Improving the NCC’s visibility and awareness of
consumer protection matters. This has included exposure in three newspapers
(City Press, Beeld and Times Media), on community and national radio stations
(such as Palaborwa Radio Station, Phalaphala FM, Northwest Radio Station and SA
FM) and on television (including ENCA TV, SABC Newsroom and ANN7).
The five quarterly targets that were not fully achieved
were:
·
The proportion of
complaints analysed within eight working days of receipt: Only 76 per cent of registered complaints were
analysed or assessed within 2 working days compared to the target of 95 per
cent. The remaining complaints had been analysed by the end of July 2014. The
NCC would endeavour to implement standard assessment criteria for different
categories of complaints to improve the understanding of assessments by staff.
·
The proportion of
complaints resolved within 60 working days of receipt: the NCC had resolved 51 per cent of registered
complaints within ten working days compared to the target of 70 per cent. The
NCC explained that the delays in resolving the other complaints was mainly due
to email system failure
following power outages. It should be noted that the targeted time period had
been lowered from 80 days to 60 working days within which complaints should be
resolved in as listed in its Annual Performance Plan. However, this difference
may be attributable to the non-working days in the 80 day period.
·
The number of research
reports completed and signed off by the executive committee: The NCC had planned to have identified a research
project and have the proposal signed off by the executive committee during the
first quarter. The research proposal had been submitted to the Deputy
Commissioner but had not been submitted to the executive committee at the time.
·
Up to date risk register
and risk strategy: The NCC had planned to
review its risk register and implementation strategy, present the review to the
executive committee and have it approved by the Commissioner by the end of June
2014. The risk register had been reviewed and the risk assessments were done.
However, the implementation strategy had not been reviewed in the first
quarter. This has been finalised during the second quarter. It should be noted
that there is no record of this target within the NCC’s 2014/15 Annual
Performance Plan.
·
Proportion of positions
filled: The NCC had advertised
28 positions in the latter part of the 2013/14 financial year. The shortlisting
and interviews had been finalised for 22 posts with 20 of these positions being
filled. At the end of June 2014, two offers were pending and the remaining 6
positions would be finalised in the next quarter.
Furthermore,
the NCC highlighted a number of challenges to it achieving its mandate, namely:
·
A 60.4 per cent vacancy rate at the end of June
2014, while only 45.1 per cent of its approved positions were funded. Hence
only 10 of the vacant positions could be financed. It would be undertaking a
formal restructuring to potentially abandon some of these unfunded, vacant
positions.
·
Major skills
shortages within the NCC and an inability to initiate a proper skills upgrade
programme due to insufficient funding. In the interim, the NCC is providing
internal training to staff.
·
Occasional backlogs requiring employees within the
Enforcement Division to work overtime.
·
The existence of irregular expenditure arising from
the lease of its premises being procured in an irregular manner. The cost of
cancellation and possible relocation make it unfeasible for this to be
rectified in the short term; however, the lease contract will expire within the
next two years.
5.1.3.2.
Financial performance
The NCC has been allocated R53.4 million for the 2014/15 financial year,
a 20 per cent increase from the previous financial year, which is in line with
the committee’s recommendation made within its previous BRRR. As at 30 June
2014, the NCC had received 60 per cent of its grant revenue from the DTI and
interest income of R290 719. It had also spent 21.4 per cent of its annual
budgeted expenditure. The NCC reported that its under spending of operating
expenses is related to disputed telephone accounts and lower audit costs than
in previous years.
It should be noted that the annual planned expenditure may be too low
given the need for the NCC to decrease its vacancy rate, as its work is
dependent on skilled labour.
Table 13: Budgeted
versus actual revenue and expenditure as at end June 2014
|
Annual budget |
Actual 1st Quarter |
Available budget (%) |
Revenue |
|
|
|
Grant revenue from the
DTI |
53 376 000 |
32 026 000 |
40.0 |
Other income |
0 |
290 719 |
n/a |
Total revenue |
53 376 000 |
32 316 719 |
39.5 |
Expenditure |
|
|
|
Employee related costs |
32 338 000 |
7 919 728 |
75.5 |
Amortisation and
depreciation |
745 000 |
436 360 |
41.4 |
Operating expenditure |
21 038 000 |
3 088 073 |
85.3 |
Total expenditure |
53 376 000 |
11 444 161 |
78.6 |
Surplus/(deficit) |
0 |
20 872 558 |
n/a |
Source: NCC (2014b) and (2014c) and the National Treasury (2014c)
5.1.4.
Key issues raised by the committee
The following concerns were raised related to the performance of the NCC
during the committee’s deliberations:
Insufficient resources: Although the committee welcomed
progress made by the NCC, especially in terms of improving its governance and
implementing the required systems, it was concerned about the NCC’s ability to
achieve its broad mandate given the high vacancy rate, inadequate skills of
existing staff and inadequate funding. It inquired what the appropriate level
of resources would be so that the NCC is able to protect consumers. The
Minister initially approved a structure of 132 persons. However, the former
Commissioner had appointed an additional 38 employees that fell outside the
approved structure. The Minister advised the NCC in September 2012 to absorb
these employees by increasing the structure of the NCC for the sake of
stability. A number of these were employed within the contact centre. The NCC’s
new approved structure consists of 182 posts due to the situation it was facing
at that time. The NCC will be engaging in a restructuring process to align its
posts with its new strategy and the needs of the organisation.
Skills audit: The committee required clarity on the
status of the skills audit.
Backlogs: The committee was concerned about the
backlogs in the NCC given the high number of unfunded posts and the skills
levels. The NCC explained that backlogs were due to the lack of human capacity
to deal in combination with an influx of the complaints and its initial
approach to deal with individual complaints rather than referring these to the
appropriate industry bodies where they exist. The NCC has changed its strategy
to collaborate and co-operate with industry.
Conciliations will now be
done by industries once industry codes are accredited.
Fruitless and wasteful
expenditure: The
committee inquired whether the NCC was able to recover this expenditure,
particularly the professional legal fees paid on behalf of the former
Commissioner. Furthermore, the committee sought clarity on the circumstances
surrounding the interest and penalty paid to the South African Revenue Service.
With reference to recovering the legal fees of personal nature, the NCC had
instructed attorneys to recover funds that appeared to be recoverable. The SARS
incident was an isolated case. SARS should be paid monthly and in this
instance, sign-off by the
former Commissioner was not received on time and the payment was late that
month.
Criminal liability in relation to
irregular expenditure: The
committee sought clarity on the status of disciplinary action taken against
officials in relation to irregular expenditure incurred or permitted under the
former Commissioner and whether there are cases for criminal prosecution. In
addition if any recovery processes have been initiated. Approximately 10 employees
had recently been charged on omissions or commissions while serving on bid
committees that had led to irregular expenditure in terms of the lease of the
NCC’s premises. With regards
to criminal liability, criminal complaints were being lodged with the police
and the prosecution would depend on the National Prosecuting Authority.
Audit action plans: The committee sought clarity on the
status of the 18 action plans that were in progress.
5.2.
National Credit Regulator
The National Credit Regulator (NCR) is an entity of
the Department of Trade and Industry which is aligned to two of the
Department’s strategic objectives of:
·
Facilitating broad-based economic participation. In
this regard the NCR is tasked with promoting increased access to credit through
responsible credit granting and continually enhancing a consumer credit market
regulatory framework.
·
Creating a fair regulatory environment that enables
investment, trade and enterprise development in an equitable and socially
responsible manner. In this respect the NCR is responsible for protecting
consumers from abuse and unfair practices in the consumer credit market and
address over-indebtedness.
The NCR’s
mandate of promoting increased access to credit through responsible credit
granting and continually enhancing a consumer credit market regulatory
framework and protecting consumers from abuse and unfair practices in the
consumer credit market and address over-indebtedness is implemented through the
following activities:[27]
·
Registering of credit providers, credit bureaus and
debt counsellors and monitoring the compliance of these entities with the
National Credit Act (No. 34 of 2005).
·
Education of consumers and promotion of public
awareness on the protection afforded by legislation and the role of the NCR.
·
Receive and investigate consumer complaints.
·
Enforce the Act and take action against parties
that contravene it.
·
Research on trends in the consumer credit market.
·
Monitor access to credit to identify factors that
might undermine access, competitiveness and consumer rights.
·
Advise government on policy and legislation in
relation to the consumer credit market and industry.
The NCR’s work
is presented in the entity’s four strategic objectives. These are:
·
The promotion of increased access to credit through
responsible credit granting;
·
The protection of consumers from abuse and unfair
practices in the consumer credit market and address over-indebtedness;
·
The continuous enhancing a consumer credit market
regulatory framework; and
·
Monitoring and improving NCR’s effectiveness in
fulfilling its mandate.
Figure 2: Budget per
Strategic Programme: 2013/14 Financial Year
Source: NCR (2014a)
5.2.1.
NCR’s 2013/14 non-financial performance
The table below
describes the NCR’s performance against its planned targets per strategic
objective. The performance side of the table shows the NCR’s performance as per
the Annual Report 2013/14.
Table 14: Key
interventions and performance for the NCC
Strategic Objectives |
Key
Interventions |
Performance |
Promoting increased access to credit
through responsible credit granting. |
Report on implementation of recommendations |
Achieved |
Final functional specification document of
the NRCA database Management system produced. |
Achieved |
|
Establishment of NCRA Steering Committee. |
||
Develop proposal on affordability
assessment guidelines |
Achieved |
|
Protecting consumers from abuse and unfair
practices in the consumer credit market and address over-indebtedness |
Consumer rights awareness strategy: Produce
a report on Implementation of the strategy. |
Achieved |
Enforcement Strategy: Produce a report on implementation of the strategy. |
Achieved |
|
Stakeholder strategy: Produce a report on
implementation of the strategy |
Achieved |
|
Continually enhancing a consumer credit
market regulatory framework |
2 credit bureau investigations conducted.
Enforcement action taken in terms of section 43, 70, 71, 72 and regulations
17 to 20 of the Act. |
Achieved |
On-site guidelines to be approved and 12 on
site visits to be conducted. |
||
Monitoring and improving NCR’s
effectiveness in fulfilling its mandate |
50% positive response rate. |
Achieved |
Functional Complaints ICT |
Achieved |
|
Go live registrations sub system. |
Not achieved: Registrations sub system did
not go live as planned |
Source: NCR
(2014a)
5.2.1.1.
Registration
The total number
of entities registered with the NCR as at 31 March 2014 were 5 724 credit providers with 45 508 branches; 13 credit
bureaus; and 2 105 debt counsellors.
5.2.1.2.
Compliance monitoring
Credit providers
registered with the NCR are required to submit standardised compliance reports
and assurance engagement reports on an annual basis. These reports provide the
NCR with an indication of whether or not the credit providers comply with the Act.
During the 2013/14 financial year, a total of 14 onsite visits were conducted.
5.2.1.3.
Consumer Education and Communication
During 2013/14,
the NCR addressed 316 workshops organised in partnership with non-governmental
organisations, trade unions, employers, traditional authorities, government
departments and organisations in the credit industry.
5.2.1.4.
Investigations and Enforcement
A total of 153
investigations were approved during the year. The priority investigation issues
were:
·
reckless lending;
·
affordability assessments;
·
proper disclosure (pre-agreements and contracts);
·
unlawful retention of bank cards, identity
documents and pin codes;
·
excessive fees and interest;
·
conduct of debt counsellors; and
·
credit bureaus’ compliance.
5.2.1.5.
Debt Counselling
During the
2013/14 financial year, a total of 468 proactive and reactive compliance
monitoring visits were conducted on debt counsellors nationally.
5.2.2.
Financial performance
The NCR’s spending patterns for the 2013/14 financial year show that the
NCR has underspent in all of its programmes. The underspending has been as much
as 15 per cent in each of the programmes. The graph below shows spending per
programme for the period under review.
Figure 3: Spending per
programme: 2013/14 Financial Year
Source:
NCR (2014a)
5.2.2.1.
Auditor General’s Report
The NCR received
an unqualified audit for the 2013/14 financial year. However, the Auditor
General put emphasis on a matter pertaining to a material impairment of R9.7
million which was incurred as a result of a change in accounting estimates for
provision for bad debts. Furthermore, the Auditor General raised concerns with
the entity’s design and implementation of formal controls over the IT systems
and the evaluation and protection of information.
5.2.3. Human Resources
The NCR had employed a total of 135 people as at the end of the 2013/14
financial year.
The demographics of the
staff complement was 95 per cent black employees. Female employees accounted
for 67 per cent of total employees while people with disabilities accounted for
1.4 per cent.
Table 15: Employment
statistics as at end March 2014
Filled posts |
135 |
Fixed contract |
6 |
Learners |
20 |
Black employees (% of total employees) |
95.0 |
Female Employees (% of total employees) |
67.0 |
Employees with disabilities (% of total
employees) |
1.4 |
Source: NCR (2014a)
5.2.4.
Financial and non-financial performance as at end of
June 2014
5.2.4.1.
Non-financial performance
For the 2014/15 financial year the NCR has revised its Annual
Performance Plan. The new APP accounts for a total of 13 targets. Of the 13
targets, 11 were planned to be achieved from the first quarter of the year.
During the first quarter, all 11 targets were met and 4 were exceeded. The NCR
highlighted the following achievements[28]:
·
Implementation of a new strategy to combat unlawful
advertisements. As a result of this strategy, the number of compliance notices
issues for the quarter was exceeded.
·
The regulations became effective from 1 April 2014
hence the target for workshops held was exceeded.
·
The removal of credit information was a topical
issue that resulted in the target for interviews and news coverage of the NCR
to be exceeded.
5.2.4.2.
Financial performance
There are two main sources of NCR’s incomes, funding from the Department
and registration fees. In the first quarter, funding from the Department
accounted for 83 percent of the NCR’s income and represents 67 percent of the
expected annual transfer from the Department. While registration income
accounted for 15 per cent of total income.
Personnel costs, premises and equipment, and Consumer education are the
biggest cost items on the NCR’s expenditure.
By the end of the first quarter of 2014/15 financial year, the NCR spent
71.4 per cent of the projected expenditure for the first quarter. The NCR also
received R1.3 million more income than the expected income, translating to 2.8
per cent more income for the same period.
The following reasons were provided for this variance:
Income:
·
Income from registration fees was 17 per cent
higher than expected
·
The NCR received unexpected income amounting to
R370 1720 from the National Loans Register and other income from insurance
claim, billboard advertising, and Bankseta amounting to R142 604.
Expenditure:
·
Capital expenditure was 92 per cent less than the
budgeted amount.
·
There was also underspending on professional fees
and debt relief costs.
Table 16: Budgeted
versus actual revenue and expenditure as at end June 2014
R’000 |
1st Quarter budget |
1st Quarter actual |
Variance (%) |
Income |
|||
Fees from registration |
5 654 112 |
6 659 620 |
17.8% |
DTI Transfers |
38 307 066 |
38 307 000 |
0.0% |
Fees from National Loans Register |
- |
370 172 |
100% |
Other income |
- |
142 604 |
100% |
Interest received |
669 000 |
413 010 |
-38.3% |
Total income |
44 630 178 |
45 892 406 |
2.8% |
Expenditure |
|||
Personnel Costs |
15 877 986 |
16 610 454 |
4.6% |
Premises and Equipment |
1 356 075 |
2 132 949 |
57.3% |
Communication |
331 489 |
392 595 |
18.4% |
Information Technology |
547 875 |
561 177 |
2.4% |
Professional Fees |
1 004 000 |
868 636 |
-13.5% |
Consumer Education |
1 524 384 |
1 351 368 |
-11.3% |
Stakeholder Communication |
412 894 |
309 182 |
-25.1% |
Debt Relief |
239 737 |
93 307 |
-61.1% |
General expenses |
1 011 196 |
1 124 854 |
11.2% |
Total expenditure |
22 305 636 |
23 444 522 |
5.1% |
Capital expenditure |
|||
Total Assets |
3 971 263 |
855 988 |
-78.4% |
Projects |
7 721 454 |
0 |
-100.0% |
Capital expenditure |
11 692 717 |
855 988 |
-92.7% |
Source: NCR (2014b)
However, expenditure on premises and equipment was 57 percent more than
the budgeted amount for the quarter at R2.1 million while the budgeted amount
was R1.3 million. This variance is said to be due to depreciation of assets
which was not budget for.
Additional funding request:
The NCR informed the committee that
it required an additional R15.7 million for the 2014/15 financial year. In
order to make up this shortfall, the NCR has suspended its ICT project (R7
million), instituted budget efficiencies of R4 million and has reduced spending
on professional fees by R4.7 million. The budget efficiencies is partially
possible as the NCR has taken a decision to consolidate bi-annual impact
assessment studies on the NCR’s effectiveness to one assessment. Apart from the
current operational expenses, the NCR’s mandate will expand once the National
Credit Amendment Act (No. of 2014) becomes enforceable and additional funding
is required to exercise these new responsibilities.[29]
5.2.5.
Key issues raised by the committee
The following concerns were raised related to the performance of the NCR
during the committee’s deliberations:
Absenteeism of members
serving on the board and on the audit and risk committee: The committee noted with concern the rate of absenteeism
of members serving on the Board, and the audit and risk committee and requested
that the NCR provide clarity in this regard. The NCR informed the committee
that it had raised the issue of absenteeism with the DTI who is represented on
the board. The amendments to the National Credit Act changed the NCR’s
governance structure to only consist of an audit committee and not a full board.
As a result of this amendment, the board members were informed that their term
of office had expired. The powers that were previously vested with the board have
been devolved in terms of section 49 of the PFMA and now reside with the Chief
Executive Officer.
Site visits: The committee raised a concern that the target for
the number of site visits planned had been set too low. The NCR informed the
committee that site visits are one of the tools it utilised when monitoring
credit providers’ compliance with the Act. The NCR also relied on accounting
officers or auditors who are required to submit and report on any contravention
of the National Credit Act annually in the course of an audit, as well as on
complaints received from consumers.
Cost of credit: The committee enquired when the exercise on the
reduction of the cost of credit to consumers would be completed. The NCR
informed the committee that as a result of the need to comply with the supply
chain management processes as stipulated in the PFMA, the process was delayed
but that a service provider had been appointed. The NCR informed the committee that
the NCR should be able to submit its first report on the matter by the end of
the 2014/15 financial year.
Issuing of compliance
notices: The committee
was concerned that only six compliance notices were issued during the 2013/14 financial
year.
Research recommendations: The NCR informed the committee that it had
completed its implementation plan with respect to the research recommendations
from its stakeholder assessment surveys. The committee enquired where it can
access this. The NCR responded that the research recommendations are available
on the NCR’s website.
Nature of complaints: The committee enquired into the nature of
complaints received by the NCR. The NCR informed the committee that most of the
complaints relate to the overcharging of interest and fees as well as
additional fees which are not allowed in terms of the Act. The NCR informed the
committee that they referred matters to the National Consumer Tribunal where consumers
are charged service fees which are not allowed in terms of the Act. There are
only three costs allowed in term of the Act, which are interest, initiation
costs, and monthly service charges.
Internal control matters: The committee enquired about the audit action
plans to address the findings related to internal controls. The NCR informed
the committee that the necessary action plans have been implemented to address
shortcomings highlighted by the Auditor General. These action plans are also
monitored by the DTI on a quarterly basis.
Professional fees: The committee enquired to what constitutes
professional fees as reflected in the first quarterly financial report. The NCR
informed the committee that between 80 and 90 per cent consist of legal fees as
the NCR is a regulator. The NCR requires the services of attorneys to represent
it during hearings with the NCT.
5.3.
Companies and Intellectual Property Commission
The Companies
and Intellectual Property Commission’s (CIPC) strategic objectives are:[31]
·
To encourage the formalisation of South African
businesses and their identity.
·
Encourage the maintenance of high standards of
corporate governance, transparency and brand protection.
·
To promote the protection and commercial exploitation
of innovations in key sectors.
·
To protect our cultural heritage and support a
strong competitive South African creative industry that provides benefit to
local artists.
·
To provide easy access to credible, reliable and
relevant information and advice and secure, value-added services.
·
Build an enabling and intelligent work environment
anchored in a governed and sustainable organisation.
·
To improve the reputation and organisational
performance of CIPC.
5.3.1.
Issues raised in the Budget Review and Recommendations
Report (2012/13)
·
Call centre management: the Portfolio
Committee noted its concerns regarding number of calls not being answered by
the CIPC and the low target set by the CIPC in this regard. This was a recurring as the issue of
accessibility of the CIPC through their call centre, website and other media
had been raised before.
·
Performance: the Committee
suggested that the number of calls received and answered be measured and become
part job description, and will be measured against performance to ensure that
staff attends to calls to ensure that people take responsibility for calls. The
Swedish model that was to be roll-out is based on implemented a switch board
system which will have people with knowledge of the CIPC answering the phone
instead of a call centre model.
5.3.2.
Performance information: 2013/14 financial year
5.3.2.1.
Non-financial performance
For the financial year
2013/14, CIPC reported on a total of twelve (12) indicators and targets are in
alignment with those stated in the 2012/13 Annual Performance Plan. Of the 12
performance indicators, 8 targets were achieved or exceeded and while four (4)
were not fully achieved.
The performance indicators
which were not achieved were the:
·
Percentage of companies that have complied with the
filing of annual returns as prescribed.
·
Percentage of investigations completed within the
published service standard.
·
Percentage of copyright in film applications
allocated an official application number within the published service standard.
·
Percentage of calls answered during the reporting
period.
Of the achieved targets, it
is noteworthy that the set targets are low. Especially since those targets were
exceeded in the previous financial year.
The CIPC revised its
strategic plan during the financial year. This was a result of the Auditor
General’s 2012/13 findings on the performance information of the entity. The
Strategic Plan (2013/2014 – 2016/2017) and the Annual Performance Plan
(2013/14) were then tabled as the revised plans. The APP and BP were revived to
ensure that the entity’s performance information meet the SMART[32]
criteria and to ensure that performance information is reliable, verifiable,
well defined, relevant, cost effective and appropriate. The revision was
approved by the Minister and incorporated into the 2013/14 performance (See
page 28 – page 30 of the Annual Report).
5.3.2.2.
Human Resources Performance
The CIPC’s key
employment statistics are reflected in the table below:
Table 17: Employment
statistics as at end March 2014
Total
posts |
640 |
Total
Employment |
450 |
Number
of vacant posts |
190 |
Vacancy
rate (% of total available posts) |
29.7 |
Black
employees (% of total employees) |
84.4 |
Female
Employees (% of total employees) |
60.9 |
Employees
with disabilities (% of total employees) |
1.6 |
Source: CIPC (2014a)
The CIPC restructured its
organisation at the end of June 2013 and its new approved posts total 640. By
the end of the 2013/14 financial year, 450 people were employed, and 190 posts
were vacant. This results in a vacancy rate of 29.7 per cent. This rate is high
given that the CIPC is a service delivery entity and its main resources are its
employees.
The demographics of the staff complement is 380 black employees. Female
employees accounted for 60.9 per cent of total employees while people with
disabilities accounted for 1.6 per cent, lower than the target of 2 per cent.
5.3.2.3.
Financial performance
For the 2013/14 financial
year, CIPC’s revenue amounted to R455 million, showing a 14.6 percent increase
from the 2012/13. Revenue from exchange transactions[33]
contributed 47 percent to total revenue, while revenue from
non-exchange transactions[34]
accounted for 53 percent. Revenue from exchange transactions had been
increasing by 9.4 percent and revenue from non-exchange transactions increased
by 20.2 percent in the 2013/14 financial year when compared to the 2012/13
financial year.[35]
In terms of expenditure,
the CIPC spent R309 million, an increase of 7.3 per cent from the previous
financial year. Employee costs amounted to R186.8 million and 60 percent of
total expenditure, followed by consulting and professional fees at R34.3
million and operating leases for property at R24 million.
In the last financial
year’s engagement with the CIPC, it was noted by the entity that it was
intending to invest in improving its ICT systems. In this regard, CIPC
indicated that it will be investing R30 million in the 2013/14 financial year.
For the current financial year, CIPC has spent a total of R21.4 million on
computer hardware (R17 million) and on computer software (R4.3 million).
5.3.2.4.
Auditor General’s report
The Auditor General’s
opinion was unqualified with emphasis of matters, however, raised concerns in
the area of leadership, financial performance and management, and governance.
In terms of leadership, the
areas of concern are:
·
The oversight responsibility regarding financial
and performance reporting and compliance and related internal controls.
·
The establishment and communication of policies and
procedures to enable and support understanding and execution of internal
control objectives, processes, and responsibilities.
·
Developing and monitoring of the implementation of
action plans to address internal control deficiencies.
In terms of financial
performance and management, the area of concern is the implementation of proper
record keeping in a timely manner to ensure that complete, relevant, and
accurate information is accessible and available to support financial and
performance reporting.
This concern is articulated
in the Auditor General’s report which is on page 55 of the Annual Report where
the Auditor General notes that he was unable to obtain the necessary information
to verify the reliability of reported performance information.
On page 56, the Auditor
General notes that “…management did not data validation processes and implement
corrective action in order to ensure that performance information is supported
by reliable reports. Furthermore, management did not have sufficient controls
to ensure that source documentation supporting actual achievements was
available”.
Furthermore, the Auditor General noted that the CIPC’s management did
not take effective steps to timeously monitor compliance with applicable laws
and regulations to prevent irregular expenditure.
In terms of governance, the areas of concern are the design and
implementation of formal controls over IT systems to ensure the reliability of
the systems and the availability, accuracy and protection of information.
5.3.3.
Financial and non-financial performance as at end of
June 2014
5.3.3.1.
Non-financial performance
The CIPC’s revised Annual
Performance Plan identifies 23 targets for the 2014/15 financial year. During
the first quarter, 78.3 per cent or 18 of the targets were met. The CIPC
highlighted the following achievements[36]:
·
Growth in the proportion of online transactions for
company registrations, director changes, trademarks, patents, designs and
copyright in film applications. New systems have been introduced to facilitate
online transactions. These increased transactions include those via First
National Bank and the elf-service terminals.
·
1 211 business rescue notices had been filed
since May 2011. For the first quarter of the 2014/15 financial year, 84 notices
were filed. Only 447 businesses (36.9 per cent of total number of notices) have
ended their business rescue proceedings, of which 169 businesses (37.8 per cent
of ended business rescue proceedings) had substantially implemented their
business rescue plan over the previous three financial years leading to their
financial rehabilitation.
The CIPC provided the
following explanations for underperformance[37]:
·
Percentage of companies registered manually within
25 working days: The CIPC underperformed by 2 percentage points. The delays
were due to the implementation of the e-mail indexing solution.
·
Percentage of cooperatives registered manually
within 21 working days: The CIPC underperformed by 2 percentage points. This
was due to system down times.
·
Percentage of online design applications: The CIPC
underperformed by 2 percentage points. The big firms, namely Spoor and Fisher
and Adams & Adams, have not been utilising the electronic system.
·
Percentage of calls answered that come through the
call centre number during the reporting period: The CIPC targeted that 60 per
cent of calls would be answered; however, only 21 per cent were answered during
the first quarter. The low answer rate was due to staff adjustment challenges
and the need to balance answering calls and ensuring normal production.
·
Number of self-service terminals installed and
operational: twelve of the 13 planned terminals were operational, although the
CIPC had installed 13 terminals. The thirteenth terminal had been installed at
Maponya Mall in Soweto in partnership with the National Youth Development
Agency. However, the Department of Home Affairs was reluctant to provide access
to its biometric fingerprint database, which is essential for the terminal to
work. The National Youth Development Agency is responsible for acquiring this
authorisation for the terminal to be activated.
The CIPC intends to
implement a query resolution strategy to improve its service to business. This
should address:
·
The capacity of call takers to resolve queries in
terms of their skills and workloads.
·
The ICT and telephony challenges.
Furthermore, a dedicated
office is planned at the Johannesburg Stock Exchange for listed companies and
their subsidiaries, which is expected to be operational in November 2014. A
dedicated e-mail service is currently available for these companies for their
share capital changes, name changes and other Memorandum of Incorporation
amendments.
5.3.3.2.
Financial performance
The CIPC earns revenue from
its business activities including the registration of companies and
cooperatives, annual returns from companies and closed corporations and
registration and administration of intellectual property rights. For the
2014/15 financial year, the CIPC projected earnings of R393.4 million. More
than half of the revenue is expected to be derived from annual returns of
companies and closed corporations (35.8 per cent and 19.3 per cent
respectively), while registration and administration of intellectual property
rights forms 23.6 per cent of its projected income.
At the end of June 2014,
the CIPC had earned R101.1 million, 25.7 per cent of the projected annual
revenue and 2.8 per cent more than the projected income by the end of the first
quarter. Revenue from annual returns exceeded the first quarter target by 25.6
per cent. However revenue from trademarks and copyright lagged behind by 60.8
per cent and 77.2 per cent respectively. Other income was generated from recovery
of expenditure for private telephone calls from staff, bursary debt and the
sale of tender documents. Furthermore, the CIPC has also retained earnings to
the value of R1.4 billion, of which R453 million will be used for special
initiatives or projects over the MTEF period.
The CIPC spent less than 56
per cent of its projected expenditure as at the end of June 2014. The following
reasons were provided for this large variance:
·
Remuneration cost: Compensation of
employees was 23 per cent lower than projected as advertised posts were
provided for but had not been filled.
·
Audit fees: 77 per cent of the
projected audit fees for internal and external audit, performance and computer
audits were not spent. Only the internal audit services had been paid for.
·
Communication costs: Communication costs
have been underspent by 93.6 per cent in the first quarter. There has been some
savings under this line item as the cost of private phone calls are recovered
from staff. However, for this financial year, about R9.2 million has been
committed to posting Annual Return deregistration letters.
Table 18: Budgeted
versus actual revenue and expenditure as at end June 2014
R’000 |
Total budget |
1st Quarter
budget |
1st Quarter
actual |
Variance (%) |
Available budget (%) |
Income |
|||||
Revenue |
393 444 |
98 361 |
101 123 |
2.8 |
74.3 |
Other income |
0 |
0 |
51 |
n/a |
n/a |
Interest |
43 000 |
10 750 |
19 950 |
85.6 |
53.6 |
Total income |
436 444 |
109 111 |
121 124 |
11.0 |
72.2 |
Operating expenditure |
|||||
Operating expenditure |
402 607 |
104 069 |
73 997 |
28.9 |
81.6 |
Special projects – OPEX[38]
allocation |
22 043 |
5 511 |
183 |
96.7 |
99.2 |
Total expenditure |
424 650 |
109 580 |
74 180 |
32.3 |
82.5 |
Capital expenditure |
|||||
Operational: Capital Expenditure |
26 100 |
6 425 |
2 901 |
54.8 |
88.9 |
Total: operating and
capital expenditure |
450 750 |
116 005 |
77 081 |
33.6 |
82.9 |
Closing surplus/(deficit) – OPEX Budget |
-14 306 |
-6 894 |
44 043 |
738.9 |
|
Source: CIPC (2014b)
5.3.4.
Key issues raised by the committee
The following concerns were
raised related to the performance of the CIPC during the committee’s deliberations:
Turnaround
times for application processing: The committee welcomes the continuous
improvement in service delivery but was still concerned that it takes five
working days to allocate an application number and 25 working days for manual
registration of a company. While the CIPC has achieved 92 per cent of the
service delivery standards, the committee is of the view that the service delivery
standard is still too long and should be reduced over time. The committee
noticed that the baseline targets of 2013 had been reduced which has allowed
the CIPC to over-achieve on those targets. The CIPC informed the committee that the
matter regarding the low targets has been discussed but that the main concern
was the need to balance the target against the need to provide the necessary
scope to stabilise and improve query resolution and call taking within the
organisation, hence the low targets. Although the CIPC has shown improvement
with respect to the registration of businesses, the name reservations process required
more innovation and improvement with respect to the turnaround time. The CIPC
informed the committee that the target for manual registration was specifically
set to encourage movement towards electronic transactions with more resources
allocated to the latter process.
Dispute with staff
related to new query resolution function: The committee was alarmed by a note on page
27 of the Annual Report, which indicated that staff were being discouraged from
taking calls by one of the representative trade unions which would have a
negative impact on business trying to access the CIPC. The CIPC informed the committee that the
central issue with staff has been around change management. The change in the
job descriptions which added query resolution as a result of the redesigning of
the organisation impacted on the job grade. The CIPC staff were now required to
not only to capture information but also to provide resolutions to queries as a
result of the move towards digital resolutions.
This change in job grading required further discussion with the staff
and unions to find an amicable resolution.
Ease of doing business: The committee enquired
about the World Bank’s “Doing Business 2013” report which ranked South Africa
eight places lower to 64 and whether it could be related to long service
delivery standards. The CIPC informed the committee that the reference to the international
ranking is relative and not necessarily indicative of company registration only
but includes value-added tax registration and other licences. The CIPC is of
the view that as a country there is always room for improvement. The CIPC
indicated that it was currently in discussions with other departments on ways
to improve turnaround times for registrations. Since 12 September 2014, the
CIPC has a direct link with the SARS which is expected to improve future
rankings.
Cost of services: The committee enquired
whether the move towards self-service centres and the new website would make
services provided by the CIPC cheaper or whether it would increase the cost to
maintenance of the CIPC’s infrastructure.
The CIPC informed the committee that it received approval from the
National Treasury to increase its fees by five percent annually but would
likely move towards providing free services to consumers. A recent study done
by the Swedish Office indicates that offices that are expected to be
self-sustaining, such as the CIPC, fall within the lowest quartile in the world
with respect to fees.
Presence
of “runners”: The committee enquired about the “runners” operating as agents and
intermediaries when the public is registering their companies at the CIPC and
whether the CIPC had addressed the matter. The CIPC acknowledged the existence
of “runners” but has put systems in place to increase the public’s awareness
and to mitigate against the use of “runners”. It is also important that the CIPC’s
staff are educated around ethical behaviour supported by a fraud prevention
plan which are currently being implemented. A whistle blowing campaign had been
launched.
Resolution of governance challenges: The committee noted certain challenges raised by the Auditor General with
respect to governance, such as the design and implementation of formal controls
over IT systems and the occurrence of irregular expenditure. The CIPC acknowledged the
challenges raised but informed the committee that it had brought these issues to
the Auditor General’s attention. There has been continuous engagement with the
Auditor General’s office to address these shortcomings. The CIPC has
implemented an audit matrix that reflects the issues that requires to be addressed
with specific timelines. Monitoring mechanisms are built into the process
overseen by an internal risk committee.
The National Gambling Board (NGB) is mandated through the National
Gambling Act (No. 7 of 2004) to oversee gambling activities within South
Africa. Legalised gambling activities are gambling at casinos, bingo halls and
on limited payout machines, as well as betting with a bookmaker and wagering on
horse racing and other sport.
According to the Act, the NGB’s functions include:
·
Monitoring and investigating the issuing of
national licences by provincial licensing authorities for compliance.
·
Investigating, monitoring and evaluating the
compliance monitoring by provincial licensing authorities of licensees.
·
Ensuring that national norms and standards
established by the Act are uniformly and consistently applied by provincial
licensing authorities.
·
Establishing and maintaining a national register of
excluded persons, a national central electronic monitoring system to monitor
gambling activity on limited payout machines, and a national register of
gambling machines and devices.
·
Advising the National Gambling Policy Council on
licensing of gambling activities, matters of national policy and on the
determination of national norms and standards regarding any matter in terms of
this Act.
·
Monitoring socio-economic patterns of gambling
activity within the Republic relating to the socio-economic impact of gambling,
and addictive or compulsive gambling.
·
Providing a broad-based public education programme
about the risks and socio-economic impact of gambling.
·
Monitoring market share and market conduct in the gambling
industry for any concerns regarding market share or possible prohibited
practices in terms of the Competition Act (No. 89 of 1998).
The NGB has three programmes, namely[39]:
·
Stakeholder Liaison and
Legal: responsible for
providing strategic co-ordination and promoting liaison at local and
international levels with various stakeholders.
·
Corporate Services: responsible for providing support functions such
as human resources, financial management and information technology
infrastructure support.
·
Compliance and
Monitoring: responsible for
implementing the core functions set out in the National Gambling Act, namely
oversight and evaluation of the performance of provincial licensing
authorities, maintenance of national registers and assistance of provinces with
the detection of illegal gambling activities.
The NGB lists five strategic objectives in its Annual Performance Plan.
These are:
·
Strategic objective 1: Harmonisation in a dynamic
environment
·
Strategic objective 2: Compliance oversight of
provincial licensing authorities and gambling industry
·
Strategic objective 3: Integrated strategic information portal
·
Strategic objective 4: Leading debate on new forms
of gambling
·
Strategic objective 5: Organisational excellence
5.4.1.
Financial and non-financial performance as at end of
March 2014
5.4.1.1.
Non-financial performance
5.4.1.1.1.
Stakeholder Liaison and Legal Programme
Achieved targets in terms of the first strategic objective. However, it
had not reported on targets in terms of strategic objective 4 and 5, which it
should contribute to.
The programme listed delays in the National Gambling Policy Council
meeting as a challenge for it to conclude some of its advisory functions.
5.4.1.1.2.
Corporate Services Programme
This programme only lists performance related to strategic objective 5;
although it indicates that it should contribute to strategic objective 1.
A number of targets were not achieved and these were largely attributed
to insufficient funding. These targets included the development of process maps
to standardise various areas such as human capital, internal controls,
budgetary controls, supply chain management, information technology operations
and/or procedures. Furthermore, there had been underspending on training of
employees.[40]
5.4.1.1.3.
Compliance and Monitoring Programme
All the targets for this programme were reported to be achieved.
However, the Auditor-General raised a concern about the reliability of the
reported performance information.[41]
5.4.1.1.4.
Auditor Generals findings pertaining to predetermined
objectives
In the 2012/13 financial year, there had been no material findings in
terms of the usefulness or reliability of the NGB’s overall performance against
its predetermined objectives.
For the year under review, the Auditor-General focused on performance
within two programmes, namely Stakeholder liaison and legal, and Compliance and
monitoring. In terms of Stakeholder liaison and legal, none of the reported
indicators and targets was consistent with those in the approved annual
performance plan. This was attributed to a lack of proper implementation of the
overall performance process of planning, budgeting, implementation and
reporting. However, there were no material findings in terms of the reliability
of the reported performance information.
In terms of Compliance and Monitoring, there were no material findings
in terms of the usefulness of the reported performance information. However,
the reliability of the reported performance information was questionable, as
this was found to be inconsistent with source documents provided. There had
been no standard operating procedures or documented system descriptions for the
accurate recording of actual achievements, recording and monitoring of
performance.
5.4.1.2.
Financial performance
The NGB received a transfer of R27.7 million from the DTI, a 6.4 per
cent increase from the 2012/13 financial year. In addition, it received R1.9
million from exchange transactions, compared to R0.8 million in the 2012/13
financial year (a 121.2 per cent increase). This was mainly from rental income
(89.5 per cent of revenue from exchange transactions) and licence fees for
limited payout machines (9.2 per cent of revenue from exchange transactions).[42]
The NGB spent R33.7 million, leaving a deficit of R4.1 million or more
than 13.7 per cent of total revenue, which is outside the accepted range of 5
per cent of revenue. In the 2012/13 financial year, the loss had been R4.9
million or 17.5 per cent of total revenue. Spending increased by 3.5 per cent
since the 2012/13 financial year. A
breakdown of the expenditure for the 2012/13 and 2013/14 financial years is
provided in Figures
4 and 5 below[43]:
Figure 4: Expenditure
percentage share for the 2012/13 financial year
Source: (NGB 2014a)
Figure 5: Expenditure
percentage share for the 2013/14 financial year
Source: (NGB 2014a)
Personnel costs decreased from 33.2 per cent of expenditure to 23.3 per
cent of expenditure from 2012/13 to 2013/14, as remuneration for temporary
staff was moved to other operating expenses in the 2013/14 financial year.
Executive managers’ remuneration was 23.1 per cent lower than in the 2012/13
financial year, as three of the four executive managers’ contracts terminated
between May and September 2013 and only the CEO and CFO were replaced fairly
late in the financial year.
Furthermore, board members’ remuneration appeared to be relatively high
and had increase from R1.1 million in 2012/13 to R1.6 million in 2013/14 (a
46.1 per cent increase). Cumulatively, the committees of the board appear to
have met 27 times during the financial year, mainly for the Audit and Risk (10
meetings) and National Central electronic Monitoring System Project (8
meetings) Committees[44]. In 2012/13, the committees collectively met 14
times[45].
The NGB entered into a second operating lease for premises as of 1
December 2012, as there were space challenges at the DTI’s campus. However, its
initial lease at the campus will continue to run for the next six years. The
DTI had agreed to sub-let and pay the NGB for the use of this space. The second
lease is purported to have led to the NGB’s deficit since the 2012/13 financial
year and that it is financially over-committed. In addition, the current size
of the NGB’s workforce may also imply that the new premises may be more than
the entity requires. Furthermore, the two leases have led to the NGB’s
commitment in terms of operating leases increasing by about R4 million from the
2012/13 to the 2013/14 financial years.
5.4.1.2.1.
Irregular expenditure
The NGB had accumulated irregular expenditure of R3.9 million at the end
of the 2013/14 financial year. This was initially R0.3 million in the 2012/13
financial year. Irregular expenditure incurred was due to a lack of compliance
in terms of the procurement of goods and services. This included the retention
of the services of three board members to comply with required submissions and
duties while awaiting approval from the Minister on the matter.
5.4.1.2.2.
Fruitless and wasteful expenditure
In the 2013/14 financial year, the NGB incurred fruitless and wasteful
expenditure to the value of R28 829. This was primarily due to travel and
accommodation of R24 946 for an international conference not being
utilised. Further amounts were due to an over-payment of PAYE to the South
African Revenue Service (R2 312), fees paid to the bank to honour debit
order payments when the NGB had no funds in its bank account (R520) and
additional accommodation paid for a conference stay (R1 051). All of these
amounts are irrecoverable except for the additional accommodation (R1 051)
which is being pursued.
5.4.1.2.3.
Auditor-General’s Report
The NGB received an unqualified audit opinion with findings. The table
below provides an overview of the audit opinions over the last two financial
years, as well as the findings the Auditor-General made in relation to the
NGB’s financial statements.
Table 19:
Auditor-General’s opinion for the 2012/13 and 2013/14 financial years
Year |
Auditor-General’s
opinion |
Emphasis of
matters/Key findings |
2012/13[46] |
Unqualified opinion |
·
Financial statements were not prepared in
accordance with the prescribed reporting framework. ·
Material misstatements of revenue and disclosure
items. |
2013/14[47] |
Unqualified opinion |
·
Restatement of figures for 31 March 2013. ·
A net loss of R4.1 million at 31 March 2014 with
current liabilities exceeding current assets by R8.2 million. ·
Financial statements were not prepared in
accordance with the prescribed reporting framework. ·
Material misstatements in terms of contingent
liabilities, related parties, irregular expenditure, the comparison of budget
and actual amounts and in the cash flow statement. ·
Procurement of goods and services below
R500 000 occurred without the required price quotations. ·
Irregular expenditure was not prevented. ·
The bank overdraft was not approved in writing by
the Minister of Finance. ·
Certain board members continued to serve without
the appropriate approval as required in section 67 of the Act. |
There appears to have been a deterioration in the state of the NGB’s
internal controls to ensure compliance with legislation and complete and
accurate financial statements since the 2012/13 financial year. This may be due
to instability in its leadership with the chief executive officer’s (CEO), Ms B
Tyawa, resigning on 31 May 2013 and the new CEO, Mr T Dlamini, resigning after
three months of taking office. He was appointed on 1 January 2014 and resigned
on 31 March 2014. Furthermore, the chief operations officer’s contract expired
on 31 July 2013, as well as the chief financial officer’s (CFO) resigning on 30
September 2013. A new CFO was only appointed on 17 March 2014.
5.4.2.
Human resources
The table below provides a breakdown of the employment equity status of
the permanent employees at the NGB.
Table 20: Employment
statistics as at the end of March 2014
Total approved posts |
28 |
Total permanent employees |
16 |
Vacancy rate (% of total posts) |
57.1 |
Black employees (% of total employees) |
81.3 |
Female employees (% of total employees) |
62.5 |
Black senior management and specialists |
66.7 |
Women senior management and skilled |
55.6 |
Employees with disabilities |
0 |
Source: Own calculations based on correspondence from the NGB on 16
October 2014
5.4.3.
Financial and non-financial performance as at end of
June 2014
5.4.3.1.
Non-financial performance
The NGB’s board had
been placed under temporary suspension in September 2014 and two co-administrators
had been appointed to manage the day-to-day operations of the NGB. The
co-administrators reported on progress made in 12 of the NGB’s 25 annual
targets during its engagement with the committee. According to the NGB’s first
quarter report, it appears that about 36 per cent (seven) of its targets were
met. The co-administrators highlighted the following achievements:
·
Communication Strategy and Plan was reviewed.
·
Stakeholder Management Strategy and Plan was
reviewed.
·
The advisory report on policy and legislation for
tabling with NGPC and consideration by the Minister was completed.
·
Assistance was provided to provincial licensing
authorities in detecting unlicensed gambling activities.
·
The National Central Electronic Monitoring System
was in operation.
·
The national register was maintained.
·
A functional illegal gambling operator register was
produced
·
The NGB served as secretariat to the Gambling
Regulators for Africa Forum (GRAF). This was coordinated by the head of
compliance. The GRAF conference was held on 11 to 14 May 2014.
·
The task team on illegal gambling, a joint
initiative between the South African Police Service, the Hawks and the NGB was
resuscitated.
The NGB highlighted
the following challenges:
·
There was a need to enhance the NGB’s technological
capacity to oversee an ever advancing industry.
·
There was a lack of punitive measures which the NGB
may impose for matters of non-compliance.
·
There was a high staff turnover rate and a high
vacancy rate.
5.4.3.2.
Financial performance
The
NGB has received R18.5 million or 49.4 per cent of its annual budgeted revenue
at the end of June 2014. This was mainly from the DTI grant and income from the
DTI for the sub-letting of the office at the DTI campus.
During
the first quarter, the NGB spent about R7 million of the budget expenditure of
R8.1 million. This was a 14 per cent underspending for the quarter. The main
expense was personnel costs of R3 million, which was lower than the budgeted
expenditure of R4.5 million. This was as a result of a high vacancy rate,
particularly among top management and critical vacancies within the Compliance
and Monitoring Programme.
Table 21: Budgeted
versus actual revenue and expenditure as at end June 2014
R’000s |
Annual Budget |
Budget 1st Quarter |
Actual 1st
Quarter |
% Variance |
% of total budget |
Revenue |
|||||
DTI
Grant |
29
797 |
17
800 |
17
878 |
0.4 |
60 |
Other
income |
7
700 |
0 |
656 |
100 |
8.5 |
Total Revenue |
37 497 |
17 800 |
18 534 |
4 |
49.4 |
Expenditure |
|||||
Personnel
costs |
17
704 |
4
497 |
3
017 |
49 |
17 |
Travelling
and Subsistence |
979 |
245 |
155 |
58 |
15.8 |
Administrative
expenses |
8
161 |
2
045 |
2
174 |
-6 |
26.6 |
Professional
and consulting fees |
5
500 |
606 |
841 |
-28 |
15.3 |
Board
Members’ Remuneration |
325 |
81 |
199 |
-59 |
61.2 |
Depreciation |
2
111 |
528 |
516 |
2 |
24.4 |
Other
operating expenses |
641 |
126 |
83 |
52 |
12.9 |
Total Expenditure |
36 421 |
8 128 |
6 985 |
14 |
19.2 |
Source:
NGB (2014b)
The
higher than expected expenditure on professional and consulting fees was due to
higher than anticipated external audit fees and unbudgeted LPM consultant's
fees. Furthermore, board members' remuneration was 59 per cent higher than the
budgeted expenditure due to an increased number of meetings for the NCEMS
project’ these additional meetings had not been budgeted for.
5.4.4.
Key issues by the committee
The following concerns were raised related to the performance of the NGB
during the committee’s deliberations:
Rationale behind the
temporary removal of the board: The committee enquired to the reasons for the temporary removal of the
NGB’s board. The co-administrators informed the committee that they would not
be in position to respond to questions around the suspension of the board as it
was an executive decision. The DTI informed the committee that Grant Thornton
had been appointed as the forensic auditor and that a protected disclosure was
made to the Minister in this regard. In a letter dated 16 October 2014, the
Minister informed the committee of his decision to temporarily suspend the NGB’s
board as a precautionary measure pending an investigation into the following
allegations as reported in the 2013/14 Annual Report of the NGB. The
allegations relate to the:
·
“Contravention of section 51 of the Public Finance
Management Act (PFMA), 1999 as amended, by the Accounting Authority of the NGB,
acting either individually or jointly, by among others; failing to prevent
irregular, fruitless and wasteful expenditure, and making overdraft the
entity’s bank account without the approval of the Minister;
·
Contravention
of section 66(5) of the PFMA, 1999, as amended, by the Accounting Authority of
the NGB, acting either individually or jointly, by amongst other; making bank
overdraft on the entity’s bank account without the approval of the Minister of
Finance; and;
·
Contravention of section 67 of the National
Gambling Act, 2004 by the Accounting Authority, acting either individually or
jointly, by allowing members whose term of office expired to continue
participating in the board activities and representing the NGB.”
Furthermore, the Minister received a protected disclosure in terms of
section 6 of the Protected Disclosures Act, 2000, which contains the allegations
listed below that are also part of a forensic investigation:
·
“Contravention of section 68 of the National
Gambling Act, 2004, by the Chairperson and Deputy Chairperson who are members
and executive director, respectively of the National Responsible Gambling
Foundation but never disclosed to the Minister, as legally required;
·
Disrespecting lawful instruction by the Minister of
expiry of terms of board members;
·
Non-disclosure of/failure to audit the trust fund
as required in terms of the PFMA and its regulations;
·
Apparent corrupt activities regarding the National
Central Electronic Monitoring System (NCEMS);
·
Contravention of the National Gambling Act, 2004,
and of the PFMA, 199 and incurred fruitless, wasteful and irregular expenditure
by illegally appointing of expired member of the Board as consultants;
·
Unlawful appointment of staff;
·
Intimidation / bullying / disregard of the
Constitution / witch hunt; and
·
Theft of evidential material”.
Matters related to internal
control measures: The committee
is of the view that some indicators highlighted as successes are basic
governance and internal control measures and should not be listed as
performance targets. The NGB’s co-administrators were in agreement that these
are basic internal control matters. Although internal control governance
structures, such as the management committee, internal audit committee and board
subcommittees, exist; a number of matters of emphasis had been raised in terms
of their functioning and it appeared as if these were not fully functional. The
co-administrators therefore have the responsibility to determine whether the
current policies are being implemented and are compliant with the PFMA and
other guiding documents as it relates to the issue of governance.
Rental obligations with
respect to lease agreements: The committee
raised concerns around the significant increase in rental obligations stemming
from the new lease agreements and enquired to the reasons for the sharp
increase. The co-administrators informed the committee that they had submitted
an initial observation report to the Minister which highlighted that the NGB’s
second lease agreement was an area of concern. It would appear that the lease
agreement commits the NGB in future years to a possibly unaffordable lease.
This new lease significantly contributed to the deficit in the 2012/13 and
2013/14 financial years with a similar outcome expected in the 2014/15
financial year. The co-administrators have subsequently been engaging with the
DTI on the matter, and looking at options of subletting.
The DTI informed the committee that the initial NGB office is located on
a part of the DTI campus that is privately-owned (Block G). As the DTI was
expanding, it requested a number of entities to relocate to free up office
space on campus. The NGB had agreed to do so; however, the landlord refused to
transfer the lease obligation to the DTI. A cession was agreed to between the
NGB and the DTI where the NGB would pay for the lease and recover this from the
DTI. Therefore, the NGB’s financial statements reflect two leases concurrently.
The DTI is in consultation with the National Treasury to incorporate Block G as
part of the public-private partnership under which the DTI Campus is managed.
This would release the NGB from the additional lease obligation. With respect
to whether any unlawful activities could be associated with the second lease
agreement, the co-administrators informed the committee that they would not be
in a position to comment whether unlawful activities took place until an
investigation on the matter is completed. The Group Chief Finance Officer informed
the committee that the DTI has engaged with the NGB on its finances,
notwithstanding that they have overcommitted on the operating leases, and
produced a balanced budget. With regard to the R4 million deficit, the DTI was
of the view that the actual deficit is around R2 million, once the non-cash
expenditure of depreciation and amortization is removed.
Proliferation of gambling: The committee is of the view that the NGB had been
inward-looking, not focusing on the protection of consumers, and has called for
a moratorium on the proliferation of gambling. The committee enquired whether
the NGB has taken the necessary steps to stop the proliferation of electronic bingo
terminals. The co-administrators informed the committee that with regard to the
NGB being inward-looking, its key mandate is oversight of gambling within the
Republic which cannot be effectively executed due to human resource constraints
and inadequate funding. They were in the process of addressing these
shortcomings. A key issue for the NGB in executing its mandate is to address
its relationship with the provincial licensing authorities (PLAs). In this
regard, they have appointed a stakeholder manager. A concern for the NGB is the
proliferation of bingo licences with some provinces rolling out electronic
bingo terminals in the absence of a national regulatory framework in this
regard. The failure of the National Gambling Policy Council to meet due to a
lack of a quorum meant that the issue of compliance with respect to electronic bingo
machines could not be finalised. Steps are being put in place to ensure that
the Council becomes more efficient and effective and that binding decisions can
be taken.
Repositioning of the NGB: The committee noted in the presentation that
“certain measures have been embarked upon to strategically reposition the NGB”.
Furthermore, the outcomes of the Agency Rationalisation Project (ARP) had been
communicated to the NGB. The committee enquired to the measures undertaken and
the nature of outcomes of the ARP in relation to the NGB. The co-administrators
informed the committee that with respect to the repositioning of the NGB the
policy direction of government reflects the need to ensure that all regulatory
bodies are effective and efficient in executing its mandate. With regard to the outcomes of the ARP
process, the NGB informed the committee that the report made certain proposals
in relation to the NGB. Currently, there is a policy review underway which may
lead to amendments to the Gambling Act.
Funding over the MTEF
period: The committee
enquired whether the NGB has budgeted for additional staff over the MTEF
period. The co-administrators informed the committee that they have identified
staff shortages as a major constraint and may request the DTI for financial
assistance. In particular, assistance with strengthening the compliance and
monitoring inspectorate is needed. In order to address the shortage of staff,
the co-administrators, in conjunction with the DTI, are looking at the option
of temporarily seconding staff from the DTI with regulatory experience. The DTI
informed the committee that it is currently engaging the NGB on funding over
the MTEF period but as a result of the irregular expenditure, the NGB must
first ascertain the value of irregular expenditure and then develop a budget
accordingly.
Remuneration of Board
members: The committee
enquired about the reasons for the increase in the board members’ remuneration
and whether the NGB had an approved travel and expense policy in line with
National Treasury regulations. The co-administrators informed the committee
that board members were remunerated according to
the National Treasury circular, which categorises emoluments for different
categories of listed public entities. The NGB is a category 3A public entity
and members are remunerated in terms of this category. Board members are
reimbursed for travel expenses incurred when attending official meetings.
Accommodation, travel (flight and other transport-related expenditure) and meal
costs are borne by the NGB. With regard to
the travel expenses, the DTI informed the committee that due to the increased
number of committee and board meetings there had been a significant increase in
this line item. The DTI further informed the committee that the Auditor General’s
report had highlighted irregular expenditure which had only been identified at
the end of the financial year.
Auditing cost: The committee enquired to the reason for the
additional cost associated with auditing. The co-administrators informed the
committee that this was due to the additional time it took to provide the
auditors with the requisite documentation. However, they assured the committee
that the necessary measures have been implemented such as an audit matrix to ensure
compliance in future.
5.5.
National Regulator for
Compulsory Specifications
The National Regulator for Compulsory Specifications (NRCS) is a national regulatory agency. Its core mandate is
contained in the National Regulator for Compulsory Specifications Act (No. 5 of
2008) and other pieces of legislation including the Trade Metrology Act (No. 77
of 1973), the National Building Regulations Standards Act (No. 103 of 1977),
the Foodstuffs, Cosmetics and Disinfectants Act (No. 54 of 1972) and the Public
Finance Management Act (No. 1 of 1999). The NRCS is mandated to promote the
safety of the public and protect consumers by developing and enforcing
compulsory specifications.
To
achieve its goals as set out by its mandate, the NRCS provides the following
products and services:
·
Developing and amending of compulsory
specifications
·
Issuing approvals/ homologations
·
Conducting Market Surveillance
·
National building regulation application.[48]
The NRCS’ five strategic objectives are to:
·
Utilise a risk-based approach to maximise the
potential compliance with all specifications and technical regulation falling
under the mandate of NRCS.
·
Optimise the scope of NRCS regulatory activity to
protect people in South Africa and the environment.
·
Inform and educate industry and consumers regarding
their rights and obligations with respect to specifications and technical
regulations.
·
Ensure that highly engaged, competent people are in
the right place at the right time to enable effective execution of NRCS
strategy.
·
Ensure that the NRCS is a capable organisation with
“fit for purpose’ resources available to support decision making and action.
The NRCS’ strategy is in line with the IPAP. According to the IPAP, “the
technical infrastructure institutions will continue to reprioritise their
activities to support the development, accreditation and enforcement of
standards that can create, scale up and resuscitate industries, while
simultaneously contributing to broader social benefits”. In this regard, the
NRCS’ work is done in various units of the entity as depicted in the figure
below.
Figure 6:
Responsibilities of the various Business Units within the NRCS
Source: NRCS (2014a)
5.5.1.
Financial and non-financial performance for the
2013/14 financial year
5.5.1.1.
Non-financial performance
Most of the NRCS’ planned targets were achieved with the exception of
one target in strategic objective 1, strategic objective 3, strategic objective
4, and strategic objective 5 (see Table
22).
Table 22: Planned
targets not met for the 2013/14 financial year
Strategic Objective |
Outcome |
Outputs |
Performance Indicator |
Annual Performance |
1 |
Increase
compliance to compulsory specifications and regulations. |
Pre-market approvals to lock out
non-compliant products |
Number of working days to issue approvals
or to evaluate an application for approval. |
Target for application approval: 21 working
days. However, for the 2013/14 financial year, only 43.9 per cent of
application approvals were approved within 21 working days |
3 |
Increase consumer awareness of
non-compliant products, sub-standard products and services. |
Increase consumer awareness of NRCS
regulatory mandate and NRCS regulated industries and regulated commodities |
% increase in the awareness score as per
the benchmark survey. |
NRCS conducted a consumer baseline survey.
The survey found that awareness of the NRCS is at 23 per cent. |
4 |
Increase effectiveness of human resources
(NRCS employees) |
Increase in NRCS organisational performance |
% implementation of HR strategy |
The target ensure 100 per cent
implementation of the HR Strategy, however, there was 50 per cent
implementation of HR strategy |
5 |
An enabling enterprise information
architecture |
Correct and relevant information available
at the right time to inform intelligent decision making and action |
% implementation of the IT Plan – IT
readiness |
Target: 100 per cent implementation of the
IT Plan. Actual Performance: 91.25 per cent implementation of the IT Plan |
Source: NRCS (2014a)
Some performance highlights for the 2013/14 financial year
were:
·
100 per cent of all relevant
recalls for non-compliant products were issued and six media alerts were issued
on products recalled and confiscated products that did not meet the minimum
safety requirements.
·
4 287 inspections
within the Trade Metrology domain being conducted (exceeding the targeted
number of inspections by 8.5 per cent).
·
A total of 6 199
domestic inspections within the food and fisheries regulated industries were
conducted. This included 13 124 import inspections, and 13 793 export
inspections.
·
5 192 chemicals,
materials and mechanical products, 4 054 automotive products and 4 338 electro-technical
products were inspected.
5.5.1.2.
Financial performance
In the 2013/14 financial year, the NRCS’s
income totalled R283.6 million, an increase from the previous financial year’s
income of R256.9 million. The DTI funding was the second largest source of
funds for the NRCS. For the 2013/14 financial year, according to the DTI, an
amount of R103 million was transferred to the NRCS. This amount makes up 36.3
per cent of the NRCS’ income. The largest share of its revenue income is
acquired from services rendered by the NRCS, levies for compulsory
specifications with an amount of R139.2 million and acquired through the
provision of services amounting to R33.5 million.[49]
The NRCS spent R248.2 million, leaving a surplus of
R35.4 million or 12.5 per cent of total revenue, this amount is not within the
accepted range of 5 per cent of revenue. The largest expenditure item for the
NRCS is employee costs which amounts to R180.7 million (72.8 per cent of total
expenditure) followed by Office rentals and other operating lease expenses at
R13.7 million.
The NRCS incurred irregular expenditure of R5.83
million; however, this amount has significantly decreased from the 2012/13
financial year amount of R33.18 million. This was mainly due to non-compliance
with Treasury Regulations related to procurement and supply chain management.
5.5.1.2.1.
Auditor General’s report/ findings
Over the 2013/14
financial year, the NRCS had a qualified audit. The Auditor General raised a
number of issues pertaining to the audit of the NRCS. These were related to the
leadership of the NRCS in terms of their oversight responsibilities and
management of human resources. Furthermore, the Auditor General was concerned
about the financial and performance controls, particularly in relation to IT
system controls.
The table below provides details of the Auditor General’s findings
during the NRCS’s audit for the 2013/14 financial year. In addition, provided
in the table are the root causes of the finding as articulated by the Auditor
General in the report.
Table 23: NRCS 2013/14 audit findings and root causes
Finding |
Root cause |
Non-exchange revenue and receivables from levies
for compulsory specifications: The internal control environment for
non-exchange revenue for compulsory specification was not supportive to
ensure that all levies due to NRCS has be collected and accounted for. This also has a direct impact on the
receivables from levies for compulsory specifications. |
Inadequate oversight in terms of the
leadership’s responsibility regarding financial and compliance with laws and
regulations. Management did not monitor the daily controls over the
processing of transactions and reconciliations as designed for NRCS business
processes, specifically in the areas of property plant and equipment,
receivables and payroll processes. |
Employee cost, Employee benefit obligations for
long service leave awards, Trade and other payables from exchange
transactions for salary related accruals, Provisions for leave pay The calculations and supporting evidence
for the implementation of the wage settlement (new salary packages) were
found to be inaccurate and in some instances no source document available to
corroborate the information with.
This impacted all amounts in the financial statements which use the
salary packages as basis of calculation: employee cost, employee benefit
obligations for long service leave awards, trade and other payables from
exchange transactions for salary related accruals and the provisions for
leave pay. |
|
The financial statements submitted for
auditing were not prepared in accordance with the prescribed financial
reporting framework as required by section 55(1) (b) of the Public Finance
Management Act. Material misstatements
of non-exchange revenue and disclosure notes identified by the auditors in
the submitted financial statements were subsequently corrected but the
uncorrected material misstatements resulted in the financial statements receiving
a qualified audit opinion. |
Inadequate oversight in terms of the
leadership’s responsibility regarding financial and compliance with laws and
regulations. Management did not in all instances monitor the controls
designed to ensure accurate and complete financial statements and compliance
with laws and regulations. |
The financial statements submitted for
auditing were not prepared in accordance with the prescribed financial
reporting framework as required by section 55(1) (b) of the Public Finance Management
Act. Material misstatements of
non-exchange revenue and disclosure notes identified by the auditors in the
submitted financial statements were subsequently corrected but the
uncorrected material misstatements resulted in the financial statements
receiving a qualified audit opinion. The accounting authority did not take
effective steps to prevent irregular expenditure as required by section
51(1)(b)(ii) of the Public Finance Management Act. |
|
The financial statements submitted for
auditing were not prepared in accordance with the prescribed financial
reporting framework as required by section 55(1) (b) of the Public Finance
Management Act. Material misstatements
of non-exchange revenue and disclosure notes identified by the auditors in
the submitted financial statements were subsequently corrected but the
uncorrected material misstatements resulted in the financial statements
receiving a qualified audit opinion. The accounting authority did not take
effective steps to prevent irregular expenditure as required by section
51(1)(b)(ii) of the Public Finance Management Act. Effective and appropriate steps were not
taken to collect all money due, as required by section 51(1)(b)(i) of the
Public Finance Management Act and Treasury Regulations 31.1.2(a) and
31.1.2(e). |
Source: Auditor General (2014)
5.5.2.
Human resources
The NRCS’ key employment statistics are reflected
in the table below:
Table 24: Employment
statistics as at the end of March 2014
Total posts |
325 |
Total Employment |
293 |
Vacancies |
32 |
Vacancy rate (% of total available posts) |
10.9 |
Black employees (% of total employees) |
61.8 |
Female employees (% of total employees) |
26.6 |
Employees with disabilities (% of total
employees) |
0.3 |
Source: NRCS (2014a)
The NRCS approved posts total 325. By the end of the 2013/14 financial
year, 293 people were employed, during the year a total of 13 vacancies were
filled and 12 staff members left the entity. This results in a vacancy rate of
10.9 per cent.
The demographics of the staff complement is 181
African employees, 40 Coloured, 15 Indian and 57 White. In terms of top
management, there are 2 employees none of which are Black employees and senior
management, there were 57 people employed of which 22 are black males and 9 are
black females.
5.5.3.
Financial and non-financial performance as at end of
June 2014
5.5.3.1.
Non-financial performance
The NRCS reported on all its core areas’ targets for the first quarter
in its presentation to the committee. The non-core strategic goals being “to
inform and educate our stakeholders about the NRCS” and “to ensure an optimally
capacitated institution”.[50]
The NRCS highlighted that it had conducted 13 604 inspections
across all regulated industries by the end of June 2014. It had met and/or
exceeded its overall targets for inspections on all declared fisheries and
associated consignments and productions; the automotive industry, and the
electro-technical sector, as well as within the legal metrology domain.
However, it under-achieved on its targets within the chemicals, mechanicals and
materials industries.
During the quarter, 69 directives for non-compliant products were issued
within the automotive, electro-technical, and chemicals and materials sectors.
Furthermore, it issued 22 non-compliance certificates for fishery products and
consignments that had not complied with all the relevant compulsory
specifications, as well as 48 non-compliance certificates for fishery products
not fit for human consumption. In terms of legal metrology, 1 688
non-compliant prepacked goods were found at local manufacturers; 277
non-compliant prepacked goods were found at importers; and 418 non-compliant
instruments were found. The main non-compliant products were short mass/measured
imported seafood products and whisky.
The NRCS highlighted the following key challenges:
·
Inadequate testing facilities in South Africa for
some regulated products, e.g. motor cycle helmets and compact fluorescent
lights, resulted in long turnaround times due to capacity constraints that
compromised the NRCS’ effectiveness.
·
Lack of qualified staff and the inability to
recruit the required specialist resources, in particular the evaluator capacity
in electro-technical approvals continues to be a major concern.
·
The
continued application and regulation
of products covered
under compulsory
specifications that are outdated.
·
High transportation and storage costs for
confiscated goods.
·
The generation of revenue is reliant on trends and
markets.
·
Internal control weaknesses including procurement,
asset management and human resource management.
·
Labour relations and a range of staff and human
resource issues.
5.5.3.2.
Financial performance
The NRCS receives funding from the DTI (core funding); R109.7 million
was allocated for the 2014/15 financial year. This forms about 35 per cent of
its budget. Other key funding is from levies paid, 47.7 per cent of the 2014/15
budget. As at the end of June 2014, the NRCS had received R67.8 million from
its various revenue sources, which was only 42.1 per cent of the projected
revenue. The main reason for this variance was under recovery of levy income,
as levy payments are expected to be paid in the second and fourth quarters of
the financial year.[51]
Table 25: Budgeted
versus actual revenue and expenditure as at end June 2014
R’000 |
Total budget |
1st Quarter Budget |
1st Quarter Actual |
% Variance |
Available budget (%) |
Revenue |
|||||
Levies |
149 515 |
49 838.3 |
-117 |
100.2 |
100.0 |
Levy Audit |
4 500 |
1 500 |
0 |
100.0 |
100 |
Service revenue |
39 424 |
9 856 |
11 588 |
-17.6 |
70.6 |
Core funding |
109 734 |
54 897 |
54 867 |
0.1 |
50.0 |
Other revenue/funding |
7 000 |
0 |
0 |
n/a |
100.0 |
Interest income |
3 585 |
896.3 |
1 429 |
-59.4 |
60.1 |
Total revenue |
313 758 |
116 957.6 |
67 770 |
42.1 |
73.9 |
Expenditure |
|||||
Compensation of employees |
206 452 |
51 613 |
43 394 |
15.9 |
79.0 |
Goods and services |
90 537 |
23 209.3 |
11 235 |
51.6 |
87.6 |
Depreciation and
amortisation |
4 025 |
1 006.3 |
479 |
52.4 |
88.1 |
Unclassified current
expenses |
12 400 |
3 100 |
434 |
86.0 |
96.5 |
Total expenditure |
313 414 |
78 928.5 |
55 542 |
29.6 |
82.3 |
Surplus |
344 |
38 029.1 |
12 228 |
67.8 |
|
Source: NRCS (2014b)
Actual expenditure was also lower than planned expenditure by 29.6 per
cent, with only 17.7 per cent of the total planned expenditure being spent. The
main reasons for this under-expenditure was due to vacancies that were budgeted
for but had not been filled during the first quarter and underspending on
contractual services, travel and subsistence, as well as on testing.
5.5.4.
Key issues raised by the committee
The following concerns were raised related to the performance of the
NRCS during the committee’s deliberations:
Enforcement capacity: The committee noted with concern that the
enforcement targets for the first quarter of the 2014/15 financial year remained
a challenge. The NRCS informed the committee that it did not have enough
enforcement agents/regulatory inspectors but that it would reach its targets
within the financial year. Currently, there is no formal tertiary training
available for the types of inspectors required. The NRCS has a seven year
programme to develop technically qualified individuals into regulatory
inspectors. It is working closely with the institutions of higher learning to
develop specific courses that would address these shortages.
Textile industry: In response to a question on whether the NRCS is
responsible for regulating the textile industry, it informed the committee that
the textile industry is not regulated by any compulsory specifications in terms
of the safety of the products and is therefore not included within the NRCS’
mandate.
Effectiveness of risk
profiling: The committee
expressed reservations regarding the effectiveness of risk profiling and
detaining containers for inspection at ports of entries which may result in a
delay of products being placed on shelves. The committee was of the view that the
current system of 120 days to issue letters of authority (LOAs) is too long. There
was also a suggestion that the NRCS should consider a system to fast-track the
clearance of products of known, compliant importers. The NRCS together with the
DTI and a major retailer are busy with a pilot project that would ensure the
“locking in” of compliant products and the “locking out” of non-compliant
products by the retailer agreeing to only stock products compliant with the
necessary health and safety regulations. In return, the NRCS would fast-track approval
of the retailers’ purchased products with spot checks to ensure continued
compliance. The NRCS wants to “lock out” non-compliant products to ensure
effective regulation of the market. The NRCS is of the view that if the pilot
project proves to be a success it would be rolled-out to other major retailers,
and would have attended to 70 per cent of the market. Effective risk profiling
is to ensure that the majority of products on shelves complies with the
necessary health and safety regulations and reduces delays at ports. The NRCS
informed the committee that its presence at ports of entry saw the number of LOA
applications for pre-market approval of products increasing. The NRCS may
consider an appropriate system of fast-tracking compliant importers in the
future.
Increase in unclassified
current expenses: The committee
noted that the unclassified current expense shows a dramatic increase from
R132 000 in 2012/13 to a budget of R12.4 million in 2014/15. The NRCS
informed the committee that the R12.4 million refers to the non-cash provisions
such as bad debt, and bonuses which was not allocated in the 2013/14 budget.
Inadequate ICT
infrastructure: The committee
noted with concern that issues relating to the ICT infrastructure has not been
resolved. The committee enquired to the steps taken to address these
shortcomings. The NRCS informed the committee that the Auditor General had
highlighted a number of issues relating to governance in relation to ICT
infrastructure, and with respect to policies and procedures. The NRCS has
established an ICT steering committee to oversee the implementation of the
necessary strategies to overcome the ICT challenges facing the institution. The NRCS’ primary consideration in managing its ICT
infrastructure is its sustainability, its performance assurance and the ability
of the Information and Systems Management Section to execute the identified
NRCS priorities. The NRCS has embarked on the implementation of a customer
relations management system and IT infrastructure for the organisation.
Compliance with legislation: The committee noted with concern that the NRCS
was not aware that regulations with respect to certain levies had been repealed.
The committee enquired whether the NRCS had taken the necessary steps to ensure
compliance with the Act and other Treasury regulations. The NRCS informed the
committee that it has published the periods by which levies must be paid for
all products or service for which compulsory specification are in place in the Government
Gazette, as required by the new legislation. The NRCS has also taken the
necessary steps to ensure that it complies with all relevant legislation and
regulations.
Compliance with building
regulations: With respect
to compliance with the necessary building regulations, the NRCS informed the
committee that the implementation of building regulations falls within the
ambit of local government authorities. Building inspectors have the
responsibility to ensure compliance but challenges remain in relation to their
capacity and compliance of home owners when extending their buildings.
6. Conclusions
Based on its deliberations, the committee drew the following
conclusions:
6.1 Energy supply
constraints remain a major barrier to industrialisation and economic growth.
Government should create an enabling environment to mitigate negative
implications for industrial policy.
6.2 The committee welcomes
the government’s plans to improve its energy mix in order to provide a more
reliable supply of energy. The current energy pricing, particularly electricity
within certain municipalities, is excessive for industry and the success of industrialisation
in South Africa. Ideally, the price of energy, including municipal electricity
surcharges and the potential price of nuclear energy, should not, at any stage,
compromise the success of industrialisation. Therefore, government should
ensure that the financing model should not inadvertently burden end users,
particularly agricultural and industrial users. However, the committee is of
the opinion that all stakeholders should consider the full range of alternative
energy solutions.
6.3 The committee welcomed
adjustments to the port tariff structure in favour of value-added exports.
However, port charges remain excessive for manufactured and processed goods and
the delays experienced in the movement of goods in the ports compromises efficiency.
6.4 The committee
acknowledged the increasing global pressure from developed countries for products
with lower carbon footprints. However, the possible imposition of a carbon tax
poses a significant threat to industrialisation. The committee encourages government
and business to invest in carbon emission reducing technologies.
6.5 Labour unrest arising
from poor working conditions and the rising wage gap has resulted in protracted
and sometimes violent labour strikes in recent years. This has become an impediment
to inclusive economic growth and industrialisation. South Africa needs to
remain attractive to foreign direct investment. Therefore, the committee believes
that South Africa needs a stable labour environment with decent wages and
working conditions to improve productivity as an integral part of the Social
Compact.
6.6 The committee welcomed
the additional allocations to the Export Promotion and Marketing sub-programme
within Trade and Investment South Africa which has received a nominal increase
of 36 per cent in the 2014/15 budget.
6.7 Investment promotion is
essential for technology transfer, job creation and economic growth. The Trade
and Investment South Africa Division currently has 45 foreign missions in
traditional and strategic markets. However, the DTI should ensure the presence
of an adequate number of officials with the requisite expertise at these foreign
missions.
6.8 The service delivery performance
of the CIPC is not yet optimal, particularly the accessibility of the call
centre and the availability of the CIPC’s new website. This matter needs to
receive greater attention and focus from the CIPC and continued oversight by
the DTI. The committee supports the roll out of additional walk-in centres to
assist the move towards a paperless electronic system, and to improve turnaround
times. Given that the CIPC is self-funding and does not receive transfers
from the DTI, the committee supports its request for permission from the
National Treasury to use some of its surplus for special projects such as IT
improvements.
6.9 A critical part of a
successful industrialisation drive is domestic demand for locally manufactured products.
There is a need to raise awareness and promote the purchasing of local products
among South African consumers. In addition, National Treasury should promote
and enforce local public procurement of designated products to achieve the 75
per cent target set by the President. The committee is also of the view that to
ensure compliance with local procurement requirements, the audit opinion should
reflect the purchase of locally produced goods by departments and entities.
6.10 The capacity to verify
local content will underpin the ability of the National Treasury to monitor
this and the Auditor General to audit this information. Therefore, the committee
supports the review of the resource allocation to entities responsible for providing
local content verification capacity.
6.11 The committee emphasised
the need for broadening economic participation, particularly the development of
black industrialists and rural areas. The committee further acknowledged the
development of an incentive for black industrialists, which should promote the
emergence of more black-owned manufacturing businesses. It also welcomed the
creation of the Department of Small Business Development, which will more intensely
support small enterprise and co-operative development, which is internationally
acknowledged as significant employment generators.
6.12
Several pieces of new or amended legislation have
been assented to recently, such as the Broad-based Black Economic Empowerment
Amendment, the Intellectual Property Laws Amendment, the National Credit
Amendment, and the Special Economic Zones Acts. The committee awaits the
finalisation of the related regulations and the implementation of these pieces
of legislation. Furthermore, the committee awaits the tabling of the Promotion
and Protection of Investment Bill and the Gambling Amendment Bill, which is
critical to close legislative gaps and create an optimum and robust regulatory
environment for business and consumers.
6.13 The committee recognises
that as part of the implementation of new legislation certain entities,
including the NCR and the NRCS, will have additional functions. Consequently,
their budgets should be adjusted to reflect these revised mandates.
6.14 The committee is
concerned that the leadership vacuum due to vacancies in three of the top four
executive positions at the NGB compromises its ability to exercise its mandate
effectively. However, the committee welcomes the intervention by the Minister
to suspend the NGB Board, the forensic investigation related to activities of
the board and effectively address any governance and other issues, as well as
the appointment of the two co-administrators to attend to the daily operational
matters in the meantime. The committee is of the firm view that the current
administrators of the NGB should speedily resolve the pressing matters relating
to the leases and reduce the burden imposed on the NGB due to these operating leases.
The committee is of the considered belief that matters of this nature should
also form part of the terms of reference for the forensic investigation.
6.15
Previously, the committee called for the
rationalisation of the boards of the technical institutions to ensure
harmonisation of their mandates, more effective use of human resources and
increased allocative efficiency. More recently, there has been several concerns
raised about the effectiveness and management of boards of entities. The DTI
has indicated that it is engaging on the Agency Rationalisation Project to look
into the matter. The committee welcomed this development and agreed with the
Auditor General that the DTI should exercise closer oversight of its entities.
6.16
It is pertinent that the Executive takes into
account that when functions are migrated that resources follow functions
seamlessly, as well as ensuring that dedicated support is provided.
6.17
A collaborative spirit among the departments within
the Economic Cluster should be encouraged.
The committee would like to thank the Minister
of Trade and Industry, Dr R Davies, and his Deputy, Mr M Masina, as well as the
Director-General, Mr L October, the Group Chief Operating Officer, Ms J Scholtz,
and all other senior managers of the DTI, as well as the entities and their
management, for their cooperation and transparency during this process. The committee also wishes to thank its support staff in particular the committee
secretaries, Mr A Hermans and Mr N Mkhize, the content advisor, Ms M Herling, the researcher,
Ms Z Madalane, the committee
assistant, Mr D Woodington, and the executive secretary, Ms T Macanda, for
their professional support and conscientious commitment and dedication to their
work. The Chairperson wishes to thank
all Members of the committee for their active participation during the process
of engagement and deliberations and their constructive recommendations
reflected in this report. The committee acknowledged the presence of Mr X
Mabasa, the whip of the Portfolio Committee on Small Business Development,
during its deliberations.
Informed by its deliberations, the committee
recommends that the House requests that the Minister of Trade and Industry
should consider:
8.1
Increasing resources with the requisite skills to
promote South Africa as an investment destination, as well as providing increase
of resources for Proudly SA to encourage South Africans to buy locally
manufactured products.
8.2
Increasing the financial resources to the National Credit
Regulator over the MTEF period, given their additional functions and the
critical role it plays in our socio-economic environment.
8.3
Consulting the Minister of Finance to develop
mechanisms to verify and enforce the public procurement of designated products
so that the 75 per cent public procurement decision is implemented to underpin
the Industrial Policy Action Plan.
Report to be considered.
Auditor General of South
Africa (2014) PFMA audit outcomes of the 2013-14 financial year for Trade and
Industry 2013/14.
Companies and Intellectual
Property Commission (2013) Strategic Plan
2013/14 - 2017/18.
Companies and Intellectual
Property Commission (2014a) Annual Report
2013/14.
Companies and Intellectual
Property Commission (2014b) CIPC Annual
Report 2013/4 and 1st Quarter financial and non-financial
performance. Parliament. Cape Town:
19 September.
Department of Trade and
Industry (2013a) Strategic Plan 2013/14.
Department of Trade and Industry (2013b) Annual Performance Plan – 2013/14 – 2015/16.
Department of Trade and
Industry (2013c) Annual Report (2012/13).
Department of Trade and
Industry (2013d) Presentation to the Portfolio Committee on Trade and
Industry – the dti’s 2013/14-2015/2016 Annual Performance Plan. Parliament. Cape Town: 23 April.
Department of Trade and Industry (2014a) Annual Performance Plan (APP) – 2014 – 2017.
Department of Trade and
Industry (2014b) Annual Report (2013/14).
Department of Trade and
Industry (2014c) First quarter report for the 2013/14 financial year.
Gordan, P. (2014) Budget Speech to joint sitting of Parliament.
Parliament. Cape Town. 26 February.
Madalane, Z. (2014) The Department of Trade and Industry’s
Perspective on the 2014 State of the Nation Address.
National Consumer Commission
(2013) Annual Performance Plan (2013/14
to 2015/16).
National Consumer
Commission (2014a) Annual Report 2013/14.
National Consumer
Commission (2014b) Presentation to the
Parliamentary Portfolio Committee: Trade and Industry on the First quarter
report (2014-2015) of the National Consumer Commission. Parliament. Cape
Town: 16 September.
National Consumer
Commission (2014c) Annual Performance
Plan (2014/15 to 2016/17).
National Credit Regulator
(2014a) Annual Report 2013/14.
National Credit Regulator
(2014b) Quarter reporting on 1st
quarter ending on 30 June 2014.
National Gambling Board
(2013a) Annual Report 2012/13.
National Gambling Board
(2013b) Annual Performance Plan April
2013 to March 2016.
National Gambling Board
(2014a) Annual Report 2013/14.
National Gambling Board
(2014b) First Quarter Performance Report.
National Regulator for
Compulsory Specifications (2013) Annual
Performance Plan 2013 - 2016.
National Regulator for
Compulsory Specifications (2014a) Annual
Report 2013/14.
National Regulator for
Compulsory Specifications (2014b) 1st
Quarter 2014/15 Financial year Report.
National Treasury (2013a) Estimates of National Expenditure.
National Treasury (2013b) Budget Review 2013.
National Treasury (2014a) Budget Review 2014.
National Treasury (2014b) Response of the National Treasury to the
Portfolio Committees.
National Treasury (2014c) Estimates of National Expenditure.
National Planning
Commission (2011) National Development
Plan – vision for 2030.
Portfolio Committee on Trade and Industry (2013) Budgetary Review and
Recommendation Report of the Portfolio Committee on Trade and Industry. Announcements, Tablings and Committee Reports 141: 21 October.
Portfolio Committee on Trade and Industry (2014a) Fourth Parliament Legacy
Report 2014.
Portfolio Committee on Trade and Industry (2014b) Report of the Portfolio Committee on Trade and
Industry on Budget Vote 36: Trade and Industry.
Zuma, J.G. (2014a) State of the Nation Address by His Excellency Jacob G. Zuma, President
of the Republic of South Africa on the occasion of the Joint Sitting of Parliament. Cape Town, 13 February.
Zuma, J.G. (2014b) State of the Nation Address by His
Excellency Jacob G. Zuma, President of the Republic of South Africa on the
occasion of the Joint Sitting of Parliament. Cape Town, 17 June.
Appendix
1: List of Abbreviations and Acronyms
ARP |
Agency
Rationalisation Project |
B-BBEE |
Broad-Based
Black Economic Empowerment |
BBSDP |
Black Business
Supplier Development Programme |
BITs |
Bilateral
Investment Treaties |
BRICS |
Brazil,
Russia, India, China and South Africa |
BRRR |
Budget Review
and Recommendation Report |
CIPC |
Companies and
Intellectual Property Commission |
CIPRO |
Companies and
Intellectual Property Registration Office |
CIS |
Co-operative
Incentive Scheme |
COMESA |
Common Market
for Eastern and Southern Africa |
CPA |
Consumer
Protection Act |
CT |
Companies
Tribunal |
DPSA |
Department of
Public Service Administration |
DTI |
Department of
Trade and Industry |
EAC |
East African
Community |
ECIC |
Export Credit
Insurance Corporation |
EDD |
Economic
Development Department |
EFTA |
European Free
Trade Association |
EMIA |
Export,
Marketing and Investment Assistance |
EPA |
Economic
Partnership Agreement |
EU |
European Union |
FTA |
Free Trade
Agreement |
ICT |
Information
and Communication Technology |
IDC |
Industrial
Development Corporation |
IPAP |
Industrial
Policy Action Plan |
IT |
Information
Technology |
ITAC |
International
Trade Administration Commission of South Africa |
LOA |
Letter of
Authority |
MCEP |
Manufacturing
Competitiveness Enhancement Programme |
MHCV-AIS |
Medium and Heavy Commercial Vehicles
Automotive Investment Scheme |
MTEF |
Medium-Term
Expenditure Framework |
NCC |
National
Consumer Commission |
NCR |
National
Credit Regulator |
NCT |
National
Consumer Tribunal |
NDP |
National
Development Plan |
NEDLAC |
National
Economic Development and Labour Council |
NEF |
National
Empowerment Fund |
NEPAD |
New
Partnership for Africa’s Development |
NGB |
National
Gambling Board |
NIBUS |
National
Informal Business Upliftment Strategy |
NLB |
National
Lotteries Board |
NMISA |
National
Metrology Institute of South Africa |
NRCS |
National
Regulator for Compulsory Specifications |
OCIPE |
Office of
Companies and Intellectual Property Enforcement |
PAYE |
Pay As You
Earn |
PFMA |
Public Finance
Management Act |
PTA |
Preferential
Trade Agreement |
REIPPP |
Renewable
Energy Independent Power Producer Procurement |
SABS |
South African
Bureau of Standards |
SADC |
Southern
African Development Community |
SACU |
Southern
African Customs Union |
SANAS |
South African
National Accreditation System |
SAPS |
South African
Police Service |
SARS |
South African
Revenue Service |
SDI |
Spatial
Development Initiatives |
SEDA |
Small
Enterprise Development Agency |
SEFA |
Small
Enterprise Finance Agency |
SEZ |
Special
Economic Zone |
SMART |
Specific, Measurable,
Attainable, Realistic and Time bound |
SMME |
Small, Micro
and Medium Enterprise |
SONA |
State of the
Nation Address |
SPII |
Support
Programme for Industrial Innovation |
T-FTA |
Tripartite
Free Trade Agreement |
THRIP |
Technology and
Human Resources for Industry Programme |
VAT |
Value-added
Tax |
WCP |
Workplace
Challenge Programme |
YEDS |
Youth Enterprise Development (YED) Strategy |
[1] DTI (2013b)
[2] Zuma (2014b)
[3] Zuma (2014a)
[4] Zuma (2014b)
[5] DTI (2014a)
[6] Extracts from Zuma (2014b)
[7] Brazil, Russia, India, China and South Africa
[8] Department of Trade and Industry (2013a)
[9] DTI (2013a)
[10] DTI (2013b)
[11] DTI (2013b)
[12] DTI (2013b)
[13] Portfolio Committee on Trade and Industry (2013)
[14] National Treasury (2014b: 13)
[15] Portfolio Committee on Trade and Industry (2014b)
[16] DTI (2014c)
[17] National Treasury (2013a)
[18] Auditor General (2014)
[19] Public Finance Management Act (No. 1 of 1999) (PFMA)
[20] Auditor General (2014)
[21] The DTI had name changes for two of its programmes in the 2014/15 financial year. The Industrial Development: Incentive Administration Division has become the Incentive Development and Administration Division and the Industrial Development: Policy Development Division has become the Industrial Development Division.
[22] NCC (2014a)
[23] NCC (2013) and (2014a)
[24] NCC (2014a)
[25] NCC (2014a)
[26] NCC (2014b)
[27] National Credit Regulator (2014a)
[28] NCR (2014b)
[29] NCR (2014 – correspondence)
[30] CIPC (2013)
[31] Ibid
[32] SMART principles refer to setting Specific, Measurable, Attainable,
Realistic and Time bound objectives or indicators.
[33] Revenue from exchange transactions includes fees for corporate information, company, cooperatives and intellectual property registration and maintenance, data sales, and increases in company share capital.
[34] Revenue from non-exchange transactions includes Annual return fees and penalties
[35] CIPC (2014a)
[36] CIPC (2014b)
[37] Ibid
[38] Operating expenditure
[39] NGB (2013b)
[40] NGB (2014a)
[41] Ibid
[42] Ibid
[43] Ibid
[44] NGB (2014a)
[45] NGB (2013a)
[46] NGB (2013a)
[47] NGB (2014a)
[48] NRCS (2013)
[49] NRCS (2014a)
[50] NRCS
(2014b)
[51] NRCS
(2014b)