presentation to the portfolio committee on trade and ... · fishery products, canned meat and...
TRANSCRIPT
Presentation to the Portfolio Committee on Trade and Industry on the NRCS’ Third Quarter Performance
Report for the 2016-17 Financial Year
Mr Edward Mamadise Acting Chief Executive Officer
14 February 2017
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NRCS representation
Mr. Edward Mamadise Acting Chief Executive Officer
Ms. Elmarie Cornelius Acting Chief Financial Officer
Ms. Meisie Katz General Manager Foods and Associated Industries
Mr. Bongani Khanyile General Manager Electro-technical
Mr. Edward Matemba Manager: Strategy and Risk
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Scope of Presentation
Status on Portfolio Committee Commitments Electro-technical LOAs Progress on IT commitments
Strategic Overview of the NRCS
Strategic Goals, Mission, Vision Legislative mandate Regulated industries Highlights
Performance against Targets Non-Financial Performance Financial Performance
Challenges
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NRCS Strategy, Mission and Vision
NRCS Strategic Goals Mission & Vision
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To ensure an optimally
capacitated institution
To develop, maintain and administer compulsory
specifications and technical regulations
To maximise compliance with all specifications
and technical regulations
To inform and educate our stakeholders
about the NRCS
Mission
• To develop compulsory specifications and technical regulations, and maximise compliance of regulated products and services
Vision
• A credible and respected regulator for the protection of the public, the economy and the environment
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National Regulator for Compulsory Specifications Act
(Act No. 5 of 2008)
Legal Metrology Act
(Act No. 9 of 2014)
National Building Regulations and Building Standards Act
(Act No. 103 of 1977)
The Foodstuffs, Cosmetics and Disinfectants Act
(Act 54 of 1972)
Mandate of the NRCS is derived from the following Acts.
Legislative Mandate
Industries regulated by NRCS
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Industry Sector Product regulated / Service rendered Automotive Vehicles, Replacements components, Manufacturers Importers and
Builders Chemicals, Materials and Mechanicals
Building materials (Cement. Treated timber, Safety glass and other safety glazing material). PPE (Safety Footwear, Swimming aids, personal flotation devices, respirators
Electro-technical Electrical appliances and products, Electronic appliances and products
Foods and Associated Industries (FAI)
Fishery products, canned meat and processed meat
Legal Metrology Calibration of measuring instruments, weights, measures and gaming equipment
Building Regulations Ensure uniform interpretation of National Building Regulations and Standards Act, administer review Board
Key highlights
NRCS conducted 10 694 inspections 5 988 fishery and associated products consignment/productions 4 706 inspections for automotive, electro-technical, chemicals, materials and
legal metrology related products.
Non- Compliant Products NRCS found non-compliant products estimated at R69 million.
Automotive – Value of Non-compliance R2m. Brake friction material containing asbestos
CMM – R0,832m. Disinfectants, paraffin stoves plastic bas & swimming aids Electro-technical – Value of Non-compliance R0,987m. CFL’s, lamp holders,
luminaires, cord extension sets, incandescent lamps and adaptors, dishwashers, geysers, cell phone chargers
Foods and Associated Products – Prawns and canned fish - non compliance – mostly pathogenic Vibrio spp and these products were imported. The estimated monetary value of these products is R 47,918,730.00
Legal Metrology - The total monetary value of products tested R 138.6 million. The estimated value of the non-compliant products found is R17.4 million.
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BACKLOG SHORT-TERM INTERVENTIONS - UPDATE
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COMMITMENT Progress to date
Separation of administrative from technical processes
• Separation of Administrative and Technical processes completed - Implementation ongoing
Develop and piloted risk-based approach
• Low Risk & Medium Risk: Manual implementation on going using checklists.
Human Resources • Recruitment and Selection process underway, incumbents to start beginning April 2017. Interviews conducted 9 and 10 February 2017
Applications process during intervention period (Dec to Jan 2017)
• Applications Processed – 6 636 • Applications above 120 days - 2 716 • LOA issued - 2 075 • Since Feb 2017, number of capturers has been increase 3 to 7 to
deal with the backlog on LOA issuing stage. • Applications cancelled - 145 • Applications awaiting capturing – 1 404 • Applications unassigned – 73 • Applications in progress - 635 • Applications pending awaiting industry response – 2 377
NRCS Systems Improvements Progress – SHORT TERM INTERVENTIONS
• The NRCS appointed a service provider to improve current CRM system for a period of six months.
• Business requirements received from business and built into the system
• The building was completed and ICT is currently doing quality assurance before testing.
• Delays experienced in User Testing which was planned for December 2016 due to user availability.
• Testing started on the 23rd Jan 2016 after the holiday recess and expected to be finalised by the end of February 2017
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NRCS Systems Improvements Progress – LONG TERM INTERVENTIONS
• Both Modernization and ERP specification were finalized in November 2016 but could not be advertised during December 2016 due to holidays recess period.
• The ICT steering committee met on the 17th of January and advised the CEO that the two specifications be combined. The CEO approved.
• Both specification were referred back to the BSC in line with SCM requirements. A new committee was appointed to combine and finalize the RFI Bid (BSC sat on the 2nd of February 2017 and document finalized & circulated for inputs to the ARC and ICT Steering committee.)
• The RFI will be finalized and advertised before the end of February 2017
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Project Current Status • The e-EXCO resolved that the committee will now be headed
by the CIO assisted by Mr Riyano after the resignation of the CFO.
• The e-EXCO also resolved that the project teams be dissolved and the functional areas as identified be dealt with by the main committee.
• The CEO emphasized that business must sign off on their business requirements for the project as part of the business reengineering process.
• The NRCS will also appoint an external Project Manager to manage the project due to its size and impact.
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NRCS Systems Improvements Progress – SHORT AND LONG TERM INTERVENTIONS
Document NRCS processes and identify areas of Improvement
Benchmark with similar entities for best practices
Re-Engineering of NRCS processes in line with
NRCS Strategic Objectives
& Implement an ICT Solution that meets NRCS
requirements
6 Months – 18 Months 88% Complete
08/1
6
09/1
6
12/1
6
01/1
7
11/1
6
10/1
6
06/1
7
01/1
8
12/1
7
10% Complete Completed Tasks
-Appointment of Service provider (6 Months period) System Optimisation -Fix Errors on system -Allocate user roles System Enhancement -Gather Requirements -Document and Sign off
Completed Tasks -Project Approval
-Engagement with Local vendors
Strategic Goal 1: To develop, maintain and administer compulsory specifications and technical regulations
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Performance Indicator / Measure
Annual Target Quarter 3 Target Quarter 3 Actual Performance
Variance Reason for Variance
Number of new VC’s/Tech
Regulations submitted to the
dti for approval.
10 Compulsory
Specifications/
Technical
Regulations
4 Compulsory
Specifications/
Technical
Regulations
1 VC/TRs submitted to the dti for approval/1st gazetting
-75% Inadequate capacity within the Regulatory Research and Development area
Administer Review Board: % of
Review Board decisions
finalised within 30 calendar
days
100% 100% 100% None
Compulsory Specifications submitted to the dti
VC 8076, Safety of Lighters ( First gazette)
VC 8054, Chemical Disinfectants ( Final gazette)
VC 8056, Pneumatic Tyres for passenger vehicles and their trailers ( Final gazette)
VC 8059 , Pneumatic Tyres for commercial vehicles and their trailers ( Final gazette)
VC 8013, Hydraulic brake and clutch fluids (Final gazette)
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SG 2: To maximise compliance with all specifications and technical regulations: Automotive
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Performance Indicator / Measure
Annual Target
Quarter 3 Target
Quarter 3 Actual
Variance Reason for Variance Corrective Action
Number of
Inspections
conducted by the
NRCS – Automotive,
Electro-technical,
CMM and Legal
Metrology
18 900 4 345 4 706 +8,3% More retail inspections were conducted due to the need to respond to non-compliant products in the marketplace.
No Action Required
Percentage of Inspections conducted on locally produced, imported and exported canned fishery and meat product consignments
100% of inspections conducted on all declared produced canned fishery and meat products
100% of inspections conducted on all declared produced canned fishery and meat products
Inspected 100% of all declared consignments and productions Total Inspections conducted 5988
No Variance N/A No Action Required
SG 2: To maximise compliance with all specifications and technical regulations: Chemicals, materials and mechanicals
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Performance Indicator / Measure
Annual Target
Quarter 3 Target
Quarter 3 Actual
Variance Reason for Variance Corrective Action
Number of inspections conducted on locally produced Frozen products and fishery and canned meat processing factories and vessels in accordance with the compulsory specification and procedures
2 135 inspections
511 inspections
529 3,5% Land based facilities are inspected by the NRCS on request by the Industry. The number of requests received in this quarter were higher than expected.
No action necessary at this stage.
Percentage of approval applications processed within the set timeframes
90% of all approval applications processed within 120 calendar days
90% of all approval applications processed within 120 calendar days
47% (1 742 out of 3 739) of all approval applications processed within 120 calendar days
-43% 1) Backlog within the Electro-technical domain
2) Inadequate Capacity 3) Applications submitted without all required documents or unacceptable Test Reports
4) Delays in implementing dormant VCs within CMM
Implemented overtime
Appointed new employees
Utilizing field inspectors to eradicate the backlog
Implemented the 30 days cancellation policy for applicants who fail to respond to NRCS findings
Breakdown of Approvals per Industry (Business Unit)
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Opening Balance
Applications received during the quarter
Processed and Finalised within 120 days
Processed and Finalised over 120 days
Total Approvals Finalised
Applications carried over to Quarter 4
% Within 120 Days
Legal Metrology Gaming Applications
102 356 250 0 250 208 100%
Legal Metrology Type Approvals
73 49 58 1 59 63 98%
CMM Approvals 423 54 38 70 108 369 35%
Automotive Approvals*
1802 1037 888 31 919 1882 97%
Electro-technical Approvals**
5170 2919 508 1895 2403 5583 21%
Total 7570 4415 1742 1997 3739 8105 47%
SG 3: To inform and educate our stakeholders about the NRCS
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Performance Indicator / Measure
Annual Target
Quarter 3 Target
Quarter 3 Actual Performance
Variance Reason for Variance
Number of stakeholder consumer education events
or campaigns
12 NRCS consumer education events or campaigns
3 NRCS consumer education events or campaigns
4 Consumer Awareness Campaigns were conducted
+33% The variance was due to the Poultry workshop that was organised by the Department of Agriculture, Forestry and Fisheries
Strategic Goal 4: To ensure an optimally capacitated institution
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Performance Indicator / Measure
Annual Target Quarter 3 Target
Quarter 3 Actual Performance
Variance Reason for Variance
Corrective Action
Percentage (%) of vacancy rate
6% - 9.62% vacancy rate as of 31December 2016
.
Resignations and retirements coupled with a moratorium on filling of vacancies as a measure to manage Human Resources costs
Filling at least 5 vacant posts during Quarter 4
Developed, approved and implemented ICT Master System Plan (MSP)
Develop and approve ICT Master System Plan
Draft concept for MSP finalised
Draft Master Systems Plan (MSP) developed and circulated for IT Steering Committee in January 2017
MSP was referred back to take into consideration the need to modernize the NRCS
Human Resources
Staff Complement – Total 300 comprising of 293 permanent staff and interns. One appointment was made during the quarter Five terminations
Three resignations One dismissal One by mutual separation
Vacancies
29 budgeted vacant positions Vacancy Rate 9,62% NRCS prioritising the appointment of the Deputy CEO and CFO
Staff training
NRCS awarded bursaries worth about R370 000 to employees commencing studies at
various higher institutions of learning in 2017 calendar year
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Financial Overview: Income Statement
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Budget Actual Budget Actual Budget Actual Budget Actual Full year Budget
Transfers from the dti 42,959 25,926 43,459 60,492 - - 86,418 86,418 86,418
Interest Income 3,125 2,368 900 5,321 4,985 4,870 9,011 12,558 13,600
Levies from Compulsory Specs 14,024 6,791 77,028 72,798 19,114 15,024 110,166 94,613 181,178
Services 11,915 13,711 12,854 12,218 12,882 10,950 37,652 36,880 50,205
Levy Audits 1,250 - 1,250 8,184 1,250 1,967 3,750 10,151 5,000
Other Income - (96) 2,225 510 (1,676) (27) 549 387 38,201
Total Income 73,274 48,699 137,716 159,523 36,555 32,785 247,546 241,007 374,603
Compensation of Employees 64,708 57,233 69,130 64,271 69,246 59,167 203,084 180,670 270,778
Goods and Services 27,862 13,877 22,136 14,866 22,719 16,210 72,717 44,953 103,669
Total Expenditure 92,571 71,110 91,266 79,137 91,965 75,376 275,802 225,623 374,447
Surplus / (Deficit) (19,297) (22,411) 46,450 80,387 (55,409) (42,592) (28,256) 15,384 156
Income statement Q1 Q2 Q3 YTD
Recap: Revenue Qualification
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Grap 23 – Non-exchange Revenue
Revenue recognition based on a taxable event
Taxable event different from the timing of revenue
NRCS Act, NRCS Regulations
Taxable event is the import / manufacture of regulated products
Unclear timing of revenue
Weak on punitive measures
Systems and controls
Systems and processes that allow for timely recognition of revenue
Integrated information
Integration of information internally (Surveillance, Approvals and Revenue)
Third party integration
Recap: Revenue Qualification Plan
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Internal control improvements
NRCS Modernisation
• ERP system implementation
• Business process re-design
SARS Collaboration
• Information sharing and system integration
Legislative options
Legal opinion re: NRCS Act
• Amendment to the Act, or
• Engage the dti on the NRCS Act
LOA Conditionality
• Quarterly volumes forecast
• Introduce LOA validity period
Revenue Qualification Plan: Progress
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Plan Progress to date
NRCS Modernisation • ERP system implementation • Business process re-design
• Request for information has been revised to ensure full integration across systems within the NRCS
• Implementation strategy was discussed and agreed with ICT Steering Committee and Audit and Risk Committee
SARS Collaboration • Information sharing and
system integration
• HSS codes project with SARS was finalised • Way forward: Roll out to all NRCS regulated commodities (Planning
phase) to be combined with the modernisation project
Legal opinion re: NRCS Act • To determine if the NRCS Act
needs to be amended
• the dti has indicated that changing the NRCS Act and Regulations will be a lengthy process, therefore the NRCS will proceed with implementing business process re-design based on current legislation
LOA Conditionality • Quarterly volumes forecast • Introduce LOA validity period
• In the process of investigating mechanisms to operationalise • Pending resolution of the LOA backlog
Key challenges Operational challenges
Inadequate capacity and relatively unstable human resource environment The application and regulation of products covered under Compulsory Specifications
that are outdated. High transportation and storage costs for confiscated goods. Long turnaround times and capacity constraints at the test houses compromises the
effectiveness of the Regulator
Border enforcement challenges: Inadequate information supplied on the bill of entry and shipping manifests High number of abandoned goods at Ports of Entry which results in high transportation and
storage costs after confiscation.
Revenue challenges Funding and Expenditure: NRCS performing mandates that are not fully funded, reduction in
funding in the current and prior year and relatively high employee costs. Collection dependent on the industry co-operation Declining economic activity impacting revenue collection
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Abbreviations and Acronyms
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AG – Auditor General CMM – Chemicals, Materials and Mechanical DAFF – Department of Agriculture, Forestry and fisheries FY – Financial year LOA – Letter of Authority NBR – National Building Regulations NCC – National Consumer Commission SABS – South African Bureau of Standards SAPS – South African Police Services SARS – South African Revenue Services TR – Technical Regulation VC – Compulsory Specification YTD – Year to Date