Presentation to the Portfolio Committee on NCC Date : 2 November 2011 Presented by: Director-General Mr Lionel October

Regulatory Framework The National Consumer Commission (NCC) is established in terms of section 85 of the Consumer Protection Act No. 68 of 2008 and reports to the Executive Authority of the dti Funding allocation for the operations of the institution is done through the MTEF process in terms of the guidelines issued by National Treasury during July/August each year In year requests can be made for unforeseeable and unavoidable expenditure during the Adjustment Estimates process Funds can only be transferred to an institution provided that section 38(1)(j) requirements are met, which requires that “before transferring any funds to an entity within or outside government, must obtain written assurance from the entity that that entity implements effective, efficient and transparent financial management and internal control systems” Funds are transferred to institutions in tranches based on cash flow projections

MTEF funding allocation for the NCC During the 2010/11 MTEF, funding allocated to the NCC was as follows: R19,792 million transferred to the NCC in September 2011 the dti processed all orders and payments to 30 September 2011 NCC took over administration of payments from 1 October 2011 In addition, an amount of R16,1 million was allocated from Sector Wide Enterprise Employment and Equity Programme Sector (SWEEEP) - EU donor funding, which was to be utilised for set up costs of the institution (i.e. 1 year rental; equipment and awareness campaigns) 2011/12 R’000 2012/13 2013/14 32,988 41,577 43,864

Expenditure and forecasts – 1 April 2011 to 30 September 2011 The following expenditure and forecast was submitted by the NCC as at 30 September 2011 Description of item Year to Date Budget YTD Actual Expenditure YTD Variance Annual budget Year-end Forecast INCOME   Departmental Transfers 19,792,000.00 - 32,988,000.00 Interest Income 34,256.76 (34,256.76) TOTAL INCOME 19,826,256.76 33,022,256.76 OPERATIONAL COSTS 16,450,000.00 10,964,224.32 5,485,775.68 27,414,224.32 Compensation of Employees 12,465,968.00 9,016,464.40 3,449,503.60 24,931,936.00 21,482,432.40 Other Operating Expenditure 3,984,032.00 1,947,759.92 2,036,272.08 8,056,064.00 5,931,791.92 Surplus/(deficit) for the period 3,342,000.00 8,862,032.44 (5,520,032.44) 5,608,032.44 YTD expenditure to 30 September 2011 was R10,964 million Institution projects annual expenditure to be R27,4 million, resulting in a surplus of R5,6 million

Sector Wide Enterprise Employment and Equity Programme (SWEEEP) SWEEEP is donor funding received from the European Union for utilisation of expenditure for enterprise, employment and equity The SWEEEP funds are located at the dti Funding for specific projects are motivated to and approved by the Executive Board of the dti Payments are made on the basis of expenditure being incurred Allocated R’000 Expenditure Available 16,100 6,901 9,199

Funds available 1 October 2011 to 31 March 2012 Description Allocation R’000 Expenditure to 30 September 2011 Available Departmental allocation 32,988 10,964 22,024 SWEEEP 16,100 6,901 9,199 Total 49,088 17,865 31,223

Status of the NCC budget submission to Portfolio Committee the dti has reviewed budget submission to the Portfolio Committee and agreed with the CFO of NCC that it should be revised based on the following guidelines: Certain items appear to be duplicated, e.g. R1 million reflected under capital for computers and R800 thousand under operating for leasing of computer Expenditure items seem to be overstated, e.g. expenditure for printing and stationery for the 1st 6 months was R15 thousand per month and the projections for the remainder of the financial year reflect R120 thousand per month Motivations together with assumptions on the proposed budget Capacity to spend

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