Sipho Ntombela Acting Director-General 22 February 2013 PRESENTATION TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES ON THE ONDERSTEPOORT BIOLOGICAL PRODUCTS Sipho Ntombela Acting Director-General 22 February 2013

Governance Interventions Institutional Interventions Legislation Presentation Outline Background Environmental scan Core issues Governance Interventions Institutional Interventions Legislation Infrastructure Interventions Summary

Background The strategic importance of the OBP as a State Owned Enterprise (SOE) and its significant role in preventing and controlling animal diseases that impact on food security, human health and livelihoods of South Africans and Africa; The strategic position that the OBP holds as a National Key Point; The alignment of the OBP and its strategic objectives to government priorities and plans; The efforts that the OBP has put in ensuring sound Quality Management Systems and Good Manufacturing Practices; The competitive nature of the R 1 billion+ industry that the OBP competes in; and The wide range of product offerings by the OBP and the distribution footprint that the OBP has in this industry.

Environmental scan Reputational damage that the OBP has suffered during the Rift Valley Fever outbreak and currently the shortage of the Bluetongue vaccines; The business model that currently supports the OBP as an SOE and the identity crisis plaguing OBP; The demise of technological developments at the OBP emanating from the utilisation of outdated equipment and production processes; Insufficient innovation and research and development leading to the production of outdated products; and The competition in the market segment of the industry that the OBP competes in and the marketing challenges the OBP faces in terms of its product, pricing, placement and promotion.

Core issues The DAFF has been at the centre of trying to resolve the current challenges at the OBP and has identified areas for strategic intervention: Governance: Compliance with Section 52 of the Public Finance Management Act and Section 29.1 of the Treasury Regulations; Institutional arrangements: Engagements between the DAFF and the OBP and role players; Legislation: The alignment of the OBP Act to contemporary legislation; and Infrastructure: Alignment to the Presidential Infrastructure Coordinating Commission (PICC) and Strategic Integrated Project (SIP) 11

Governance Interventions The shareholder’s compact has been drafted and it will address The mandate key performance measures and indicators to be attained by the OBP as agreed with the Minister of Agriculture, Forestry and Fisheries The shareholder’s compact will also encapsulate the OBP’s Corporate Plan as per Section 52 of the PFMA and Section 29.1 of the Treasury Regulations. The plan will address: The strategic objectives and outcomes; Strategic and business initiatives; Key performance measures and key indicators; Risk management plan; and Financial plan.

Institutional Interventions The DAFF has assigned Dr Modisane, Acting Deputy Director-General of the Programme Agricultural Production, Health and Food Safety as the nerve-point for issues relating to the OBP; The signing of a Service Level Agreement between the DAFF and the OBP, clarifying roles, responsibilities and delivery targets and monitoring mechanisms; The establishment of a Vaccine Bank, taking into consideration public and private good vaccines; Development of joint disease monitoring and response plan, as well as disease awareness campaigns; and The finalisation of the Veterinary Strategy upon receipt and internalisation of the World Animal Health (OIE) Report on the Performance of Veterinary Services in South Africa.

Developing the Stock Remedies Policy. Legislation The Legislative Review Programme as driven by the DAFF is currently reviewing the OBP Act with a view of amending certain provisions of the Act; The amendment is expected to align the OBP Act with related laws and also strengthening the governance provisions within the Act; and Simultaneously there is a process to unbundle the Fertilizers, Farms Feeds, Agricultural Remedies and Stock Remedies Act, 1947; with a strong emphasis on firstly Developing the Stock Remedies Policy.

Infrastructure Interventions In dealing with the aging infrastructure, R492.4 million over the MTEF period has been secured from National Treasury for the upgrade of the Vaccine Production Facility; Reporting of this project will be done through the SIP 11 into the PICC Management Committee chaired by the Economic Development Department. 2013/2014 2014/2015 2015/2016 R96.5 million R127.5 million R268.4 million

In summary…… Critical area Interventions Governance Finalisation of the Shareholder’s Compact Review of the Corporate Plan Institutional arrangements Signing of a Service Level Agreement The Establishment of a Vaccine Bank Development of a disease monitoring and response Plan Veterinary Strategy OBP Focal Point Legislation Legislative Review Infrastructure Upgrade of the Vaccine Production Facility