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SABS under fire for costing SA R4bn a year

Jun 24 2018 06:26
Steve Kretzmann

The SA Bureau of Standards (SABS) has been strongly criticised by business, which says the entity is losing the country at least R4 billion a year in exports in the manufacturing and engineering sectors alone.

This comes after years of businesses complaining about a lack of testing by the SABS, resulting in manufacturers losing contracts because they are unable to obtain the SABS mark timeously, or they have been unable to renew 2 600 permits to use the mark.

Trade and Industry Minister Rob Davies is assessing representations from the SABS board on why he should not go ahead with his intention to put the entity under administration for not performing to its mandate. The SABS falls under Davies’ department.

Steel and Engineering Industries Federation of Southern Africa economist Marique Kruger said the lack of testing and certification by the SABS within the required time frames was a concern, as certification was often needed for products to be sold locally and internationally.

Kruger said trade deals being delayed or cancelled due to a lack of testing hit smaller businesses the hardest and caused a loss of billions in exports a year in the manufacturing and engineering sectors.

“The impact on the domestic production value chain is also huge,” she said.

Director at GAP Holdings, Theuns van Aardt, said manufacturers in the solar water heating industry were “tearing their hair out” because they “cannot get a system approved by the SABS”.

He said the piping, pump and valve industries were similarly affected, and were “being put at massive risk”.

Business development manager Carolien van der Horst of the SA Capital Equipment Export Council said the SABS was also failing to audit the local content of products supplied in government contracts as stipulated in government’s Industrial Policy Action Plan.

Van der Horst said this resulted in companies possibly supplying imported products when servicing tenders from state entities. However, she said it seemed that no one wanted to pay for the SABS to conduct these audits.

SABS CEO Boni Mehlomakulu hit back at industry and the department of trade and industry this week, saying she was fulfilling her mandate according to policy that was implemented in 2005.

She said the issues affecting industry were inherent in the policy, which emerged from the 2004 National Economic Development and Labour Council (Nedlac) report, titled Modernising the South African Technical Infrastructure.

Informed by a department of trade and industry position paper in part authored by Lionel October, who was then the department’s deputy director-general, Nedlac agreed that the SABS should split into a commercial testing and certification entity, and its statutory standards setting body should be funded by government.

Previously, the SABS was the only testing entity, and business wanted policy changed to allow private testing laboratories to be able to compete with the SABS.

She said that, to protect the SABS from litigation where products had failed on the market as only select components had been tested, partial testing – up until then a norm – had been stopped in 2015, which elicited an outcry from industry.

There were also expectations that the SABS maintain 32 laboratories established in the 1970s – which Davies has said would take R1.6 billion to upgrade – and conduct the full array of tests for all compulsory standards, contrary to its commercial mandate.

Mehlomakulu added that there were certain companies that required a test once a year, and the SABS was expected to maintain the facilities and retain the expertise to conduct those tests, yet it was still required to be profitable.

She said she felt the department was not supporting its own policy: “For me, what’s unfair is the fact that no one wants to own the policy position, no one wants to talk about it.”

When questioned about the SABS’ R44 million loss in the 2016/17 financial year, she said the department pulled R55 million from its budget at short notice, so the loss was budgeted for and the SABS’ commercial arm was having to fund its statutory entity.

Mehlomakulu said the backlog of expired permits had been dealt with and she had developed a corporate plan to approach private funders to raise the capital to upgrade infrastructure because previous requests to Treasury had been turned down.

Regarding the auditing of local content to comply with recommendations in the Industrial Policy Action Plan, she said government entities saw it as another auditor-general activity and complained that the SABS was too expensive, while on the verification of local content on Transnet’s 1 064 locomotive purchase, the SABS “was blocked, totally blocked”.

Because the SABS was accountable to Parliament, it was seen as a risk for companies that did not want data made public, she said.

“They would rather give the work to a private company because there aren’t all of these rules for transparency, reporting and all of that.”

Asked whether she believed private companies were getting paid off to produce compliant audits, she said: “I’ve seen it.”

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sabs  |  manufacturing
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