NATIONAL REGULATOR FOR COMPULSORY SPECIFICATIONS ANNUAL REPORT Presented to the Parliamentary Portfolio Committee Mr M Moeletsi CEO 12 October 2011

NRCS ANNUAL REPORT - OVERVIEW INTRODUCTION NRCS BUSINESS MODEL GENERAL COMMENTS –VIEW FROM THE BRIDGE STRATEGIC GOALS PERFORMANCE AGAINST CORE FUNCTION GOALS NRCS BOARD AND GOVERNANCE ISSUES NRCS ANNUAL FINANCIAL REPORT NRCS DEMOGRAPHICS AUDITOR GENERAL REPORT

3 INTRODCTION: The NRCS – who are we?  National Regulator for Compulsory Specifications of South Africa (NRCS)  Established by Act 5 of 2008  On 1 st September 2008 all regulatory functions of SABS transferred to NRCS  NRCS’ Mandate: Administer compulsory specifications in the interests of public safety and health or for environmental protection  NRCS regulates IMPORTED, MANUFACTURED, SOLD and some EXPORTED products;  Staff compliment of 287  Regional offices in Gauteng, Western Cape, Eastern Cape, KwaZulu-Natal and Free State

MANDATE: The NRCS and focus areas The National Regulator for Compulsory Specifications Act (Act no 5 of 2008) is primarily focusing on territorial aspects as it addresses the “public safety and health and environmental protection in the Republic”. In executing its functions, the NRCS is therefore focusing on the enforcement of regulations and the major thrust would be on “lock out” of non compliant (unsafe) goods. Some of the NRCS activities, albeit a small focus, can be construed to support the “lock in” principle, primarily in the exportation of fishery products to the EU, Asia and SADC countries.

MANDATE: The NRCS and focus areas The NRCS is responsible to administer three primary Acts, viz: 1) National Regulator for Compulsory Specifications Act (Act no 5 of 2008) 2) Trade Metrology Act (Act 77of 1973) 3) Building Regulations and Building Standards Act (Act 103 of 1977)

Perceptions… Is the NRCS the only Regulator?  There are various national Departmental Regulators responsible for technical regulations, viz.  Dept of Agriculture, Dept of Health, Dept of Labour, Dept of Energy, Dept of Water Affairs, Dept of Environment, Dept of Housing, Dept of Transport, Dept of Communication, Dept of Trade and Industry

Facts… Current best regulatory practice is to reference applicable standards or part thereof in the Technical Regulation/Compulsory Specification:  The NRCS calls up 316 SA National Standards in  60 Compulsory Specifications and  4 Technical Regulations (Legal Metrology)

NRCS Business Model – Enforcement of regulations  The NRCS is primarily responsible to administer and enforce the regulations under its jurisdiction  Its Business model to support this function consists of various activities (next slide)

NRCS Business Model Approval of products: Before regulated commodities enter the market, approval granted based on test reports or certificates of conformity;  Issue certificates (Letters of Authority, Homologation or Type approval certificates) Inspections: Inspectors visit manufactures, importers and retailers to inspect and if needed sample products Sampling and testing: On suspicion or proof of non-compliance, issue directives to stop sales Enforcement: If non-compliance is proved, enforce recall and/or corrective action and/or destruction and/or notify the media and public

Current activities of the NRCS NRCS Involvement in the Industry Industry No. Technical Regulation No. of Referenced SANS Automotive22126 Chemicals, Mechanical and Materials 1564 Electrotechnical1791 Food and Associated Industries 624 Legal Metrology411 Totals64316

NRCS - View from the Bridge - General comments Overview of aspects relating to the NRCS: NRCS embarked on A long term strategy and performance plan that is aligned with the dti objectives A range of 13 projects that supports the IPAP An MoU with the SARS to improve regulatory efficiency Finalisation of individuals to serve on the Advisory Forum New regulations to the NRCS promulgated and became effective during January 2011 Fact finding visit by the Board to the USA Visit to Brazil and India to benchmark regulatory activities Technical cooperation agreement with Thailand Dept of Fisheries

NRCS General comments NRCS as part of the Technical Infrastructure: NRCS Regional and International participation SADC Group of Experts Regional coordinators and secretariats for three SADC committees NRCS experts visited 7 SADC countries on behalf of SADC Secretariat to sensitize law makers and evaluate metrology infrastructures NRCS expert received OIML international recognition Participate in the WP 29 for automotive regulations Participate in various Codex Alimentarius Agreements entered with Thailand and visited various other countries on technical matters

NRCS General comments Overview of NRCS challenges: Inadequate funding especially for the Legal Metrology, Building Regulations and Research functions Need to invest in upgrading the IT system Fast track Competency Development Program for staff Human Resources management and attracting skilled staff (as the NRCS functions in a highly specialised technical environment) Improved working relationship with staff and the Workers Union (NEHAWU) to prevent unnecessary industrial action as was evident during this year.

NRCS Strategic Goals Ten Strategic Goals were set for for Actively access and build new markets for maximum coverage (Core activity) 2Develop and improve enforcement of sanctions (Core) 3Achieve and maintain accreditation to ensure quality control 4Enhance consumer education and public awareness 5Improve brand awareness and recognition 6Optimise revenue generation collection and protection

NRCS Strategic Goals Ten Strategic goals (cont) 7Aggressive skills attraction, development and retention 8Cultivate and leverage strategic relationships and interact with stakeholders 9Ensure good corporate governance compliance strengthen /develop legal resources, ICT and risk management 10Continuously improve on NRCS’ research and development capacity(Core)

NRCS Strategic Goals - Performance Performance on Core activities 1. Actively access and build new markets for maximum coverage a) Inspections executed Target set – 52,940 inspections (4,2% higher compared to previous year) Inspections executed – 57,572 Variance: 8.7% higher than set target

NRCS Strategic Goals - Performance Performance on Core activities (cont) 1. Actively access and build new markets for maximum coverage b.Requests received for Pre-market approvals (9642 applications received) Target set – Response within 21 days from request received Target achieved – 99,9% approvals granted within the time period c. Requests for Pre-market type approvals of instruments Target set – Response within 110 days Target achieved - 82,7% (Reason for variance – New type of instruments, lack of human resources, interpretation of evaluation criteria difficult)

NRCS Strategic Goals - Performance Performance on Core activities d. New and revised compulsory specifications and technical regulations. Target set – 8 per year Target achieved - 100%  8 compulsory specification/technical regulations tabled to the NRCS Board  Position paper on distinctive mark tabled to ExCo

NRCS Strategic Goals - Performance Performance on Core activities 2. Develop and improve enforcement of sanctions a. Directives (NRCS Act) and embargoes (Trade Metrology Act) imposed on non compliant goods Target - Execution within 72 hours i)Directives 73% achieved (NRCS Act) ii)Embargoes 100% achieved (Trade Metrology Act)

NRCS Strategic Goals- Performance Performance on Core activities 10. Continuously improve on NRCS’ research and development capacity Target: a.Identify research projects b.Identify partnerships with tertiary institutions, industry and research entities Targets achieved: i)Research on feasibility, risks, and impact analyses were done for all compulsory specifications and technical regulations ii)No partnership was entered into – lack of resources

NRCS Non core activities NRCS highlights: New regulations to the NRCS promulgated and became effective during January 2011 Registration of companies trading in regulated goods was initiated Increasing its scope of accreditation Enterprise document management system was initiated The Legal Metrology Division assisted the dti with a draft Legal Metrology Policy Communications and Marketing issued 100% alerts on non compliant goods and destruction thereof Carte Blance screened various episodes on enforcement activities of the NRCS

NRCS Board and Governance overview NRCS Board of Directors: Board consits of 9 members Board chairperson Ms S Maziya resigned. Adv D Block appointed as acting Chairperson of the Board Nine Board meetings were held Board Committees: Audit and Risk Committee (5 meetings) Technical Committee (3 meetings) Remuneration committee (6 meetings)

Audit and Risk Committee (ARC): Auditor General invited to all meetings Chairperson resigned during May 2011 and were replaced by independent acting Chair person ARC met 5 times during the year ARC reviewed and recommended adoption of the unaudited financial statements for audit by the Auditor General Effectiveness of internal controls were disturbed by labour unrest and investigations into the CEO, CFO and CIO. No malpractice findings were made. Internal audit found to be effective NRCS Board and Governance overview

Technical Committee: This committee considers and advise the Board on technical matters (regulations, compulsory specifications/technical regualtions, action on non- compliant goods) Held 3 meetings during the period

NRCS Board and Governance overview Remuneration Committee: Advises the Board on remuneration and HR related matters) Held 6 meetings during the period

NRCS Financial History

Annual Financial Statement - overview 2011 (R Millions) 2010 (R Millions) Total income Total expense Sub - total(8)(30) Government grants3336 Surplus for year267

NRCS Demographic presentation BlackColouredIndianWhiteWomen %15%4%23%38%

Auditor General Auditor General : Financial statements presented fairly Financial performance and cash flows for the year are in accordance with the SA Standards and GRAP and requirements of the PFMA No material findings on the annual performance report. Unqualified audit (for three successive years)

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