Agrèment South Africa: Strategic Plan & Budget 2009/10: further briefing

Public Works and Infrastructure

03 August 2009
Chairperson: Ms B Gxowa (ANC)
Share this page:

Meeting Summary

Agrèment South Africa followed up on a presentation made previously on its strategic plan and budget for 2009/10, by briefing Members on its mandate, achievements, its contribution to the ten priorities highlighted in the Medium Term Strategic Framework, the benefits of Agrèment certification as well as the different types of Agrèment certificates, the different building systems and technical evaluation of houses that were built. Agrèment SA also discussed its financial statement and budget. The budget would focus on manpower costs consisting of salary expenses and salary related costs, running costs and internal costs.

The Committee did not understand why the salaries expense was listed as over 50%, thus exceeding all other costs
, and further questioned Agrèment SA’s explanations that salary expenses were included as manpower costs, but that this also included shared services costs. It was explained that Agrèment SA worked in the ambit of the Council for Scientific and Industrial Research (CSIR). Salaries formed part of the shared services function, as certain of the employees were in fact employed by CSIR. Members then queried whether these employees were to be regarded as consultants, how the finances were dealt with, why the Chief Financial Officer was employed by the CSIR, and called for an explanation on the structure of Agrèment SA, and an organogram. Members further queried why the salaries of the board members were classified as running expenses. Members praised the work being done, and suggested that Agrèment SA present its findings and ideas for the construction of houses to the Portfolio Committee on Human Settlements. Members also noted that it was important for the Committee to perform its oversight function on developments taking place in communities, noting that there were still communities where houses were being built with substandard corrugated iron sheets, and where sub-standard materials were being sold. It was agreed that the Committee would attend to oversight visits.

Meeting report

Mr Joe Odhiambo, Chief Executive Officer, Agrèment South Africa (ASA) read out ASA’s mandate and explained the typical Product Development Cycle. One of the ASA’s achievements was the widespread use of several Agrèment certificated products such as hollow concrete blocks, metal roof tiles and lightweight internal partitions during construction. 

ASA indicated that there were ten priorities highlighted in the Medium Term Strategic Framework (MTSF) to which they contributed. The first was to speed up economic growth and transform the economy to create decent work and sustainable livelihoods. According to ASA, this verified fitness-for-purpose of products and minimised financial risk.

The second priority was the massive programme to build economic and social infrastructure. Agrèment evaluations were a means of enabling the introduction of innovative solutions. The third priority was to develop and implement a comprehensive rural development strategy. ASA would be available and able to evaluate non-standardised and innovative agricultural building materials and products such as water tanks, farm sheds and broiler insulation.

The fourth priority was to strengthen the skills and human resource base. ASA would strengthen skills and human resources within the agency. Priority 5 was to improve the health profile of all South Africans. Agrèment evaluations concentrated mainly on safety and health issues. Priority 6 looked at intensifying the fight against crime and corruption, which ASA believed that they could contribute. Priority 7 focused on building cohesive, caring and sustainable communities. ASA stated that proper housing and improved infrastructure would go a long way to providing caring and sustainable communities.

The eighth priority was to work with Africa and the rest of the world to pursue African advancement and enhanced international co-operation. Agrèment certificates were presently used in many African countries to facilitate the acceptance of innovative building technologies. The ninth priority was to ensure sustainable resource management and use. ASA was currently investigating the ways of assessing sustainability and “green” issues as part of its evaluation process for building systems and products. Priority 10 was to build a developmental state, improve public services and strengthen democratic institutions. ASA wished to participate in this priority, but admitted that its contribution may be limited.

The benefits of Agrèment certification were that there was a technical conduit to new standardised building materials, and this would help the government to fulfill its promise of developing affordable and acceptable housing.

Mr Odhiambo took Members through the Imison, Robust, Scips and Rhinowall building systems as well as the Goldflex 800 Building System. He also explained the different types of Agrèment certificates. The technical evaluation for houses that were constructed focused on the maintenance of those houses. The evaluation looked at whether houses were hurricane and earthquake resistant, if they were strong and durable, low-maintenance, and whether they were termite and vermin proof. ASA used local suppliers and labour as well as local sub-contractors.

Mr Phumlani Myeni, Chief Financial Officer, Agrèment South Africa, briefed the Committee on ASA’s financial statements. The budget looked at manpower costs that consisted of salary payments, running costs and internal or infrastructure costs. ASA tabled the budget for 2008/09, 2009/10, 2010/11 and 2011/12. Salaries expenditure made up the bulk of the budget. The total budget would increase from year to year by 7%, in line with inflation. Manpower costs included direct salaries and related salary expenses such as Unemployment Insurance Fund (UIF) contributions, pension contribution and medical aid. Internal costs were described as infrastructure costs such as telephone expenditure and rental accommodation. Running costs covered operational costs, technical assessments, marketing, material, equipment and research. 

Discussion
Mr S Masango (DA) stated that he did not understand why the salaries expenses exceeded all other costs, being over 50%, and called for clarity, since this seemed to indicate that the salary payments might be too high.

Mr Myeni stated that ASA had twelve people on its payroll. Salary expenses were included as manpower costs. However, these manpower costs also included other costs such as shared services costs, as ASA worked in the ambit of the Council for Scientific and Industrial Research (CSIR). Salaries formed part of the shared services function. If shared services costs were deducted, then the amount for salaries for ASA would be less. He reminded Members that most of the work for ASA was done by people employed by ASA. This meant that the resources comprised essentially the employees from CSIR and other entities that ASA used. This was why salaries or manpower costs looked as if it made up 50% of ASA’s total costs.

Mr G Radebe (ANC) noted that the budget note in the presentation stated that manpower costs included direct salaries and salary related expenses such as Unemployment Insurance Fund (UIF) and pension contributions and medical aid. He wanted to know how shared services costs were categorised.

Mr Myeni stated that the costs that were being incurred for people that were performing finance functions were being recovered. ASA did not have a dedicated finance person. The person that performed the finance function for ASA was actually employed by CSIR, but formed part of the shared services function. Similarly, the human resources (HR) section in the CSIR also formed part of the shared services function, as it was also used for ASA. This was included as salaries or manpower costs because it was associated with providing a service and enabling ASA to deliver on its mandate.

Mr Masango stated that ASA should be clearer on the issue. He was not sure if this meant that people from CSIR who were being employed were working on a consultancy basis. He did not understand why ASA had a finance person outside of the entity when it had its own Chief Financial Officer.

Mr Myeni stated that, although his job description was the Chief Financial Officer of ASA, he was actually employed by CSIR. Although he performed the CFO function for ASA, his costs were being carried by CSIR, who would then recover the costs from ASA. Therefore, he was not a dedicated resource to ASA specifically. ASA operated within the ambit of CSIR.

Mr M Rabotapi (DA) asked Mr Myeni to clarify if he was working for ASA on a consultancy basis.

Mr Myeni stated that he was not working on a consultation basis. ASA operated within the ambit of CSIR. His services were provided to ASA by CSIR, to ensure there was a dedicated resource that would provide the financial service to ASA.

Mr Radebe stated that this issue was causing some difficulty to the Committee. He stated that CSIR should be able to tell the Committee the basis on which it was “loaning” the CFO, Mr Myeni, to ASA, as he was part of the human resources. He stated that Mr Myeni should clarify if he was receiving two salaries.

Mr P Mnguni (COPE) commented that it would help the Committee if the ASA could give the Committee the staff composition or organogram for ASA.

The Chairperson stated that it would be a good idea to get the organogram first, so Members could understand the structure of the entity.

Mr N Duma (ANC) asked if there was a board, if it met regularly and how it related to ASA.

Mr Odhiambo stated that ASA had a board, which was separate to that of CSIR. This consisted of the Chairperson, Mr Pepi Silinga, and ten other board members. The Board met a minimum of four times a year and Board members received a small honorarium. A strategic planning session was held at least once a year. The Board was the executive authority and was mandated by the Minister to run the agency. The ASA received its funding from the Department of Public Works, but was not a State public entity. Therefore, the ASA could not have its own bank account and the funds from the Department were not paid directly to ASA, but to CSIR. Also, all ASA’s employees were actually employed by CSIR. The ASA made use of CSIR’s shared services facilities, especially for non-technical activities such as finance and human resources. The ASA was currently not a statutory body; however, it was in the process of legalising the agency so that it could become a fully-fledged public entity. This would allow the cost structure to be more aligned to the actual costs of the ASA. He reiterated that for the moment, all income and expenses were managed by CSIR.

The Chairperson stated that Members had a little more clarity about the structure of the ASA. However, when ASA next came to the Committee, it must bring an organogram.  

A representative from the Department of Public Works stated that the Department wanted to move ASA out of CSIR, as it clouded government issues. There was a draft bill and a business case being worked on as part of the legal recourse of the institution.

The Chairperson stated that if there was a Bill being drafted, the Department had to inform the Committee about it so Members could be kept up to date.

Mr Radebe stated that the ASA should inform Members of when the terms of office of the board members were to expire. He also asked for more clarity on the role of CSIR in ASA, and for the terms of reference.

The Chairperson asked how the board members salaries were classified in the financial statements.

Mr Odhiambo answered that these were classified as running costs.

Mr Masango stated that he did not understand why salaries for board members were classified as running costs, as they should surely be classified under salaries or manpower costs.

Mr Masango noted the good work ASA was doing regarding the construction of houses. He suggested that ASA present its findings and ideas to the Portfolio Committee on Human Settlements.

Mr T Magama (ANC) stated that it was important for the Committee for perform its oversight function on developments taking place in communities. He visited a community a while ago where houses were being built with sub-standard corrugated iron sheets. A year later ninety out of the one hundred houses built had their rooves blown off by the wind, even though apparently “standard” materials had been used. This highlighted the need for the Committee to perform oversight visits in communities where there were housing projects.

The Chairperson noted that this was a formal process. She thought it was a good idea for the Committee to see the material used in the construction of houses. She stated that the Committee had to ensure that quality material was used for housing. She suggested the Committee perform two or three oversight visits.

Mr Masango seconded this proposal, but informed the Committee Members that they would not be able to perform oversight the following week, as the Committee would be engaged in discussions regarding its own strategic plan.

Mr Radebe proposed that the Committee perform oversight visits in the last week of August, specifically 25 and 26 August 2009.

Mr Magama stated that there was a hospital being built in the same area that he had referred to earlier and suggested that the Committee pay this a visit.

The Chairperson stated that the Committee had to agree on when and where to perform oversight visits.

Mr Mnguni asked who was responsible for performing inspections on building materials being sold in shops, because there was a lot of material that was substandard and that had entered the country by dubious means.

Mr Radebe stated that if ASA could not answer this question, the Committee could ask its researcher to find out.

Mr Odhiambo stated that he did not know if there was a specific entity that performed inspections on building materials. As far as he was aware, there was not an entity that performed this function. This could be a gap that needed to be filled. He welcomed the suggestion to make a presentation to the Human Settlements Committee as well as the oversight visits.

The meeting was adjourned.

Present

  • We don't have attendance info for this committee meeting

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: