National Consumer Commission 2021/22 Annual Report & Q1 2022/23 Performance

Meeting report

Opening Remarks
The Chairperson stated that the purpose of engaging with the National Consumer Commission on its financial and non-financial performance for the 2021/2022 financial year and its financial and non-financial performance for the first quarter of the 2022/ 23 financial year, was so that the Committee could assess the performance of the Department of Trade, Industry, and Competition (dtic) against its resource allocation.

Ms Nontombi Matomela Acting Chief Operating Officer, dtic, said that, as always, the dtic appreciated the invitation and the interaction with the Portfolio Committee. With her was the Acting Commissioner, Ms Mabuza, who would be leading the presentation.

Presentation by the National Consumer Commission (NCC)
Ms Theza Mabuza, Acting Commissioner, NCC, made the presentation on the non-financial report. Ms Phillipine Moshidi, CFO, NCC, presented the financial results.

85 product recalls were administered in the financial year, including 55 motor vehicles, 14 foodstuffs, ten medical devices, three toys or kids’ devices, two clothing accessories, and one household device. 166 cases were taken for further enforcement against non-compliant suppliers and resulted in redress to consumers to the amount of R 5 million and administrative fines to the value of R350 000. Two pyramid schemes were investigated. Non-compliant clothing, textiles, footwear and leather goods, with a declared customs value of R 21 182 622 78 were destroyed or returned to the country of origin.

The NCC fully met seven out of seven targets. Negative net cash flow from operations of R1.7 million was funded through retained surpluses and an amount of R12.5 million was invested in capital projects, R10 million in ICT infrastructure and R2.4 million on the development of the Opt-Out Registry. The NCC obtained an unqualified audit opinion for the period 2021/22. There were no material audit findings on the financial statements, reported performance objectives and compliance with legislation. The NCC received a clean audit report. Two housekeeping issues were identified but resolved immediately.

The key challenges included inadequate funding to cover the costs of conducting investigations, i.e., the need for additional staff and to appoint specialised investigators for complex matters. There was also inadequate funding to cover costs of prosecution and the defence of matters against the NCC in respect of appointing senior counsel to argue complex matters in the different fora and to appoint law firms to challenge some of the matters on review. Funding was insufficient to match the salaries of critical skills in finance and ICT and to effect the cost of living adjustment for staff. The vacant Commissioner position had added to the burden of work overload.

(See Presentation)

Discussion
Mr S Mbuyane (ANC) proposed that the NCC education and awareness programme should not be conducted by unknown or unregistered companies. The NCC had to make use of the constituency offices for awareness and awareness programmes. There had to be targets on how many people were engaged in the programme. He also asked about the solvency of the entity and the total expenditure of the NCC.

The Chairperson noted that in slide 31, Ms Mabuza had spoken about housekeeping issues that had been resolved. She asked that the Committee be informed of those housekeeping issues so that Members had an idea of what was happening, even if she had fixed them.

The Chairperson also asked the dtic how far it was with the process of appointing an NCC Commissioner so that the Committee could be assured that the governance of the entity was as it should be. She requested the Acting Commissioner to respond to the questions.

Ms Mabuza agreed with Mr Mbuyane that it was important to link the education programmes to the constituency offices. That was vital. When the NCC was trying to establish or resuscitate consumer protection groups, the entity realised that communities were not involved in the consumer awareness process, so constituency offices could assist with the issues relating to consumers and informal traders such as the spaza shops. The NCC had started speaking to the municipalities to assist with galvanizing counsellors amongst the people who were closer to the communities so that they could take issues to the community or the NCC could work through them to guide communities.

She added that in October when in the Eastern Cape, the traditional leaders had invited the NCC to work with them through their offices to educate people. The NCC had accepted the offer and was currently establishing advocacy groups. In the next quarter, the entity would be going back to Mthatha in the Eastern Cape to see what the issues were there. Linking the education programme to the constituencies would help with the programme of educating consumers

Ms Mabuza explained that the housekeeping issues were about the counting of some of the consumer intervention programmes. One service provider had visited two stakeholders but had presented both meetings in one report, instead of two. The counting errors were in Consumer Education and Business Education. The NCC had developed a standard operating procedure to prevent a recurrence of the confusion. In terms of the clean audit plan, accurate monthly and quarterly checks were undertaken to ensure credible performance reporting and that was when the error had been identified. Regarding liabilities versus assets, the CFO would answer if she had been able to hear the question.

The Chairperson took further questions.

Mr C Malematja (ANC) was extremely impressed by the performance of the NCC, but suggested that the targets be provincially based so that he could understand how many provinces the entity had visited. For whatever awareness was needed, he thought that the NCC should work through the PCOs (parliamentary constituency offices) that would be able to give feedback. Also, when the NCC went to do educational awareness, the officials would not be alone if they had facilitated the necessary players. When the NCC left that particular area, the community would be safe. It would also be more affordable. The objective of education was never achieved in a one-off event, so the PCOs would be helpful in that regard. He was pleased with the engagement with traditional leaders.

Mr Mbuyane understood the NCC to say that the total assets exceeded the total liability. He just wanted to check on that point.

Mr D Macpherson (DA) noted that when the Committee had seen the NCC on 8 March 2022, he had raised the point that one could not lodge a complaint online. The NCC said at the time that it would fix the problem. It was 23 November 2022, and one still could not lodge a complaint online. He did not know how the NCC was dealing with consumers, but, if consumers could not lodge a complaint online, it seemed that it did not want complaints. The Committee had to resolve that the NCC should fix it so that complaints could be lodged online. The current process was extremely cumbersome and off-putting.
                                                                                                               

Ms Moshidi responded to Mr Mbuyane about the NCC assets. She referred to slide number 24 which showed the line item for total assets as R33.4 million and the total liabilities as only R3.9 million, which meant that the net asset was R29.33 million. Regarding the R10.4 million in services in kind, which was the line item for services mainly derived from the contract that the NCC had with the SA Bureau of Standards (SABS) for services, which included rent for accommodation, security at the gate, cleaning of the property, hosting of cables for ICT and telecommunication, including telephone lines, as well as sanitisers, the employee wellness programme and so on. The R10.4 million for services was paid directly from dtic to SABS on behalf of the NCC, but the amount exceeded the value of services rendered and the balance had been recorded as receivable as it was as if SABS owed the NCC money, but services would be offered in the future, i.e., after the 31 March 2022.

Ms Mabuza agreed that the NCC had promised to digitise the complaints handling process. Unfortunately, the entity had experienced major problems with the IT system. The back-end infrastructure had required extensive maintenance at the beginning of the first quarter and the NCC had underestimated the effort required to digitise some of the work of the NCC. In addition, the entity had only three ICT staff members. As the CFO had said, the NCC had struggled to fill the position of ICT manager after the previous incumbent had resigned in March 2022. That position was only filled at the beginning of October 2022. The NCC was currently integrating the systems and the opt-out registry system was still in the pilot phase. She agreed that Parliament could hold the NCC to account, but the entity would try to be done with digitisation by the beginning of April or at the latest by the beginning of May. The technicians were integrating the platforms, the back-end infrastructure had been commissioned and they were migrating and digitising systems. The complaint form would be part of that process because it would be carried on the case management system. She knew that the NCC had promised to do it but just did not have the resources.

She added that digitisation would improve ICT security and she was looking for a way of getting additional staff to assist as both programmers and systems analysts to maintain that process. It would take a little bit of time. She apologised but it was in the plan.

Ms Mabuza thanked Mr Malematja for his comments about using the parliamentary constituency offices which was something the NCC would look into when the entity next reported back, it would come with clear deliverables on what had been achieved. The NCC was already looking at models in the Northern Cape and hoped to develop something sustainable and also scalable. Mr Mbuyane had raised the same issue about constituency offices and the NCC would do that.

The Chairperson asked Ms Matemola about the appointment of a Commissioner.

Ms Matemola was aware that the position of the Commissioner had been vacant for some time but assured the Portfolio Committee that the matter was indeed receiving attention in the Department.

The Chairperson requested a written response to that question. She thanked the NCC for the good work and expressed the need for the NCC to improve its footprint in terms of community education and outreach and also to address Mr Macpherson's request for the matter regarding online complaints to be resolved.

Consideration of Minutes
The Committee Secretary read the minutes of 11, 12, 25, and 26 October 2022 and 1, 2, 8 and 9 November 2022 for the consideration of Members who adopted them without amendment or objections.

Committee Business: Study Tour
The Chairperson requested the Committee to make a final decision on the countries to be visited on its possible study tour in 2023. The management committee proposed that the PC visit South Korea and Vietnam at the end of the first quarter of 2023, i.e., March to April 2023. Given the success of those two countries in facilitating deeper industrialisation across and within sectors, particularly in terms of special economic zones and the investment promotion initiative. Those aspects were of interest, given South Africa's view of the governance of its Special Economic Zones and its industrialisation drive.

Dr M Tshwaku (EFF) agreed that the Committee should take a look at the Vietnamese economy and that of South Korea.

The Chairperson noted that Dr Tshwaku’s network was extremely poor, but she took his input as a proposal.

Mr M Cuthbert (DA) asked about the process moving forward. Had the application been submitted to the House Chairperson for approval?

The Secretary explained that at the previous engagement, he was not sure which countries were to be visited. But if the proposal were approved, he would start the process of drafting the application and engaging with the two countries to determine whether the time proposed was a feasible option. Hopefully, before Parliament arose in December 2022, he would be able to submit an application to the House Chairperson for his consideration.

The Chairperson asked if any of the Members were opposed to the proposal of the study tour to visit South Korea and Vietnam.

Mr F Mulder (FF+) had no problem with it. On a lighter note, he suggested a visit to North Korea to see how things should not be done while they were in the area.  

Closing Remarks
The Chairperson thanked Members and declared that she had reached the end of the agenda.

The Secretary informed Members that the following week, 29 November 2022, was the last Committee meeting for the quarter. The Committee would engage with the poultry sector and stakeholders and also look at the draft programme for the first quarter of 2023. There were also outstanding minutes to be considered.
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The meeting was adjourned.