NCACC Q1 & 2 2023 Performance; SANDF Deployment (with Deputy Minister)

Meeting report

The Chairperson welcomed everyone.

The Chairperson invited the Deputy Minister to make his opening remarks.

Deputy Minister’s opening remarks
Mr Thabang Makwetla, Deputy Minister of Defence and Military Veterans, said he was expecting Minister Gungubele to be in the meeting for the presentation of the NCACC report. He felt it was the preserve of Minister Gungubele, as Chairperson of the NCACC, to permit Adv Jele to share the report. He would make comments in the course of the meeting where necessary.

NCACC presentation
Adv Ezra Jele, NCACC Secretariat Head, drew attention to the convention of the Committee for quarterly reports to be introduced by the Chairperson of the NCACC. He was not seeking to create divergence from the convention.

The Chairperson directed Adv Jele to proceed with the presentation as the Minister had signed off the report.

Adv Jele presented the statistics related to munition transactions for the first and second quarters of 2023. The figures in brackets represent the 2022 statistics.

2023 (2022) Values at a glance:

Export permits authorised;
Quarter 1 – 127 permits valued at R957 million:             (127 permits at R833 million)
Quarter 2 – 136 permits valued at R2 837 billion:            (146 permits at R570 million)

Import permits authorised;
Quarter 1 – 49 permits valued at R5 million:                    (58 permits at R36 million)
Quarter 2 – 69 permits valued at R417 thousand:            (74 permits at R74 million)

IT Challenges and Recovery Plan
Adv Jele reported that the IT system had crashed. The warranty of the equipment that was acquired in 2015 has since expired. Damage to the equipment has a 50% recovery rate and the system has an availability factor of 70%. The historical challenges of the IT system have been in the making for the past eight years. The NCACC has the support of the DOD and SETA to wind down the old system and develop the new system. The recovery plan includes procurement of new equipment at projected costs of R9.9 million and operational costs of R1.2 million. A request for funding was submitted to the DOD.

(See Presentation)

Discussion
The Chairperson wanted to understand if R1 million is being paid for the use of the old system and if migration to new the system would cost R7.8 million.

Adv Jele replied that the costs represented the baseline requirements if the system had been implemented.

The Chairperson asked how much it would cost to get the system operational.

Adv Jele said it would cost about R19.5 million.

The Chairperson asked who the project owner of the system was.

Adv Jele replied that the Secretariat owns the system but it is being managed by the Project Office which is located in the Inspectorate. He regarded this as a fundamental flaw which he had inherited. He felt that it would benefit the Secretariat to be the project owner.

The Chairperson asked when adv Jele took over as system owner.

Adv Jele said the takeover happened in 2017 and 2018.

The Chairperson asked who the Inspectorate was at the time.

Adv Jele replied that some members of the Inspectorate had since left and the current director joined two years ago.

The Chairperson asked if the Inspectorate is located in the DOD.

Adv Jele said the Inspectorate exists alongside the NCACC but has a minimal role insofar as conventional arms are concerned.

The Chairperson sought clarity on whether the Inspectorate exists outside the NCACC and to whom it accounts to.

Adv Jele confirmed that the Inspectorate exists outside the Secretariat but reports to the NCACC on its work.

The Chairperson asked if the warranty had expired before the system was completed.

Adv Jele replied that the system would not have been useful for the industry if the Secretariat had not intervened. The design flaws would take time to change the orientation of the system.

The Chairperson sought clarity on the status of the warrantee while the system was being upgraded.

Adv Jele said the warranty had expired and the Secretariat was therefore unable to approach the OEM for redress. The system was at the user-acceptance stage when the crash happened. The damage would have been greater had the crash occurred at a later stage. A proper warranty would be put in place once the system becomes operational.

The Chairperson asked if it would be cheaper to upgrade than to buy a new system.

Adv Jele replied that the system would require R9 million to become fully functional. This would allow moving from a 50% to 100% recovery rate and a system availability factor beyond 70%.

The Chairperson asked when the system would become fully functional, depending on whether the funds would be made available.

Adv Jele was optimistic that getting the money would not be a struggle. He was expecting the funds to be available within six weeks. Thursdays have been dedicated for training purposes and to finalise glitches in a playpen mode as opposed to a live mode.

Mr S Marais (DA) asked if online applications in the new system were running parallel to the old system. He wanted to know if the R12 million for the recovery plan would be in addition to the R19 million already spent. He asked if the funds have been provided for in the 2022/23 budget or if additional money would be required. The Committee would want to see the system being functional and able to compete with top-class systems worldwide. He noted that in the past, the Chairperson of the NCACC had always held the position of the Minister in the Presidency. He asked if this practice had changed and if the NCACC was still reporting to the Presidency considering that Mr Gungubele is now the Minister of Communications. He wanted to know if the NCACC had been able to hold monthly meetings to process all applications received. He asked if approved applications were valid for 45 days and subject to a once-off extension. He wanted to know if the exporter or importer must reapply for a permit when a transaction was not concluded. He asked if any category of munitions or equipment fell outside the requirement for a permit. He wanted to know if the NCACC had to request the end-user certificate at any time. He enquired if export permits for Poland had been cleared. Part of the requirements for issuing permits is for importing countries to defend themselves but not to get involved in war crimes. He asked if areas of regional instability such as in Ukraine and Belarus had been excluded from this requirement.

The Chairperson asked how the NCACC was keeping a record of imports for value-add and those for onward transmission. He sought clarity on whether the import and export in such circumstances count as one process in the event that the two parts are for the utilisation of the same country.

Mr Marais asked if the NCACC had approved ports of entry and what the protocol would be if a port, that did not form part of the permit initially issued, is used.

Mr M Shelembe (DA) was concerned about the delay in implementing the IT system. He asked what was being done to sort out the challenges considering the costs to maintain the system. He wanted to know if the NCACC had any challenges in complying with the treaties and conventions.

Adv Jele replied that the NCACC did not have the money for the IT recovery plan and needed to approach the DOD with a motivation letter. He was hoping that the DOD would evaluate the motivation favourably and support the recovery plan. He explained that the President appoints the Chairperson of the NCACC from the group of members of the Cabinet. It was a coincidence that Minister Gungubele was in the Presidency but the Chairpersonship had moved with the appointee of the President when he became the Minister of Communication. The meetings had been held consistently, except for the July meeting when Parliament was in recess. July and August applications will be considered in the meeting scheduled for Monday, 11 September 2023. He confirmed that permits issued are valid for 45 days and can be renewed once. This is done to avoid clogging the system. The permit is counted as authorised with the corresponding responsibility to have it reversed. He explained that the aspect of dual-use technology relates to products labelled as ‘commercially off-the-shelf’ because it escapes the envelope of control in terms of the Act. If such an item is married to an item controlled in terms of the Act, it contaminates the shelf item. The status of control refers to the relationship between the Secretariat and the OEM. The end-user certificate is a requirement in terms of international law and the NCACC Act. The recipient country provides an end-user certificate stating that it receives the equipment for its own use. A declaration is required if the recipient country wishes to enhance and alienate a product for another destination. A country would be in violation of international law if the final destination of a product is not declared. He stated that the application from Poland was not denied but put on hold until the circumstances improved. Imports for own defence are underpinned through the acceptance of the end-user certificate and the United Nations Charter in order for countries to protect themselves. In terms of the Russian invasion of Ukraine, he said it was difficult to view the application in hindsight because the conditions were different when the application was considered. He replied to the Chairperson that value-added transactions are viewed as separate and unrelated since the importer may not necessarily be the exporter. He stated that a list of designated ports is known to the defence industry. The Act allows for a change in the port for logistical reasons but the DOD requires an application to consider the deviation. The NCACC is regularly being updated about the challenges with the IT system and is in support of what needs to be done. He sought clarification from Mr Shelembe on what he meant by South Africa having challenges to comply with conventions.

Mr Shelembe asked if South Africa would still trade with countries that are not supporting peace in the world.

The Chairperson, in response to Mr Shelembe, drew attention to the presentation which indicates the circumstances under which applications would be denied.

Mr Marais said it might be prudent for the Committee to follow up with the DOD about the funds required for the IT recovery plan. The Committee was in support of the request and suggested that it should be provided for in the medium-term budget. He sought clarity on whether the NCACC would have to record the re-application of a permit in the quarterly report after the extension had lapsed. He asked if the export of 43 units with zero rand value approved for Poland, related to a specific item.

The Chairperson directed Mr Marais to follow up on his question about the specific item outside the meeting.

Adv Jele said a transaction remains open until it is actioned. The 45-day period is extended when not actioned to allow for the application to be put on hold or to cancel the transaction. He stated that the reports always reflect the actual exports as required by the United Nations.

The Chairperson said the Committee would deal with the funding issue for the new IT system in the new term. He agreed with Mr Marais that the new system is needed to make the entity efficient for the people who are using it.

The Deputy Minister said he had no further comment to make. The advocate was able to share as much as possible by explaining the technical issues and the decisions that the NCACC is taking on an ongoing basis.

Adv Jele thanked the Deputy Minister and the Committee for the opportunity to present the statistics. He expressed his pride in the team of people that he is working with and thanked them for their contribution to making the entity work.

SANDF Deployment
Lt Gen Siphiwe Sangweni, Chief Director: Joint Operations, SANDF, stated that his duty was to apprise the Committee of the deployment of the SANDF by the President during the period 12 July to 14 August 2023. The President authorised the deployment to capacitate the SAPS in the prevention and combatting of crime and the maintenance of law and order in the country under Operation Prosper. The operation was conducted in accordance with the relevant sections in the Constitution. The request for the deployment of the SANDF was to support the SAPS in the protection and safeguarding of national and provincial main supply routes across the country against unlawful acts of arson and vandalism against truck drivers. The complement of 1 720 members of the SANDF was authorised by the President. The contribution required by the SANDF was mainly to prevent the criminal acts of arson and destruction of freight trucks and road blockades. The deployment was for a period of 34 days, between 12 July to 14 August 2023. He stated that the expenditure for this deployment was unfunded but was deemed as unforeseen and unavoidable. The SANDF is forced to respond when assistance is required even if the funding had not been allocated. The military in general, tends to sacrifice beyond what is normally required to save the country but it adds to the financial difficulties of the SANDF. But as patriots, the soldiers do the work required of them.

(See Presentation)

Discussion
The Chairperson asked if the deployment was terminated in August.

Lt Gen Sangweni replied that the deployment did not last the entire 34 days. When the objectives were achieved and there was stability, the SANDF demobilised and the SAPS could proceed in managing the situation. The SANDF presence was retained with the objective of deterrence but was withdrawn when the situation appeared to be under control.

The Chairperson said he considered the SANDF presence a reaction and not a deterrence. He suggested that the Chief Director should consider the possibility of planning for a stationary deployment unit that would be able to react swiftly and not wait until deployed by the commander-in-chief even though the need for intervention is clear. He asked if there was no situation that would warrant intervention without having to wait for deployment. The question is repeatedly being asked about when the SANDF would be getting involved in the situation with the highjacked buildings.

Mr Marais said the Defence Act and the Constitution prescribe the actions that can be taken. He had noted some level of preparation in the response by the Defence Force since the July 2021 insurgency. The reaction time should be quicker and the chance of achieving success earlier in the event of domestic deployment. He congratulated the Chief Director for changing the perception of the Defence Force and for making South Africans proud.

Lt Gen Sangweni thanked Mr Marais for the compliment. He said the Defence Force is constrained in its actions by the Constitution and has to adhere clinically to the prescripts of the law. The SANDF had been forced to implement remedial measures although it is not what the Defence Force wished to do considering the financial constraints. He was hoping the Committee would engage National Treasury about this operation that was unfunded. In the past, contingency funds were made available. He asked that this means of funding be resuscitated and to be available when required at short notice. The stand-by arrangement would be more effective if soldiers could be compensated.

The Chairperson said the deployment happened after the start of the new financial year. Any new funding to cater for unforeseen and unavoidable situations would have to be calculated via adjustments. The item should be included in the BRRR and followed up with the Minister. He noted that the SANDF did not incur the full budgeted amount for the exercise. He requested that the Committee be provided with the actual amount incurred in performing the task and to have it ready for the BRRR. The Committee would always support the President when he deploys soldiers in situations that require urgent intervention by the DOD in tandem with the police. He drew attention to the developing situation of highjacked buildings in the city centre of Johannesburg and a similar situation in Durban where illegal activities are happening. There is an outcry for the DOD to be deployed to put the situation under control. Illegal activities, including drug trafficking and contrabands, require strong security forces to deal with the situation because the police are not coping.

Other Matters

The Committee adopted the minutes dated 8 June 2023 without amendments.

The Third Term Committee Programme was adopted.

The consideration of the JSCD-PCDMV Study Tour Report was postponed to 21 September 2023 due to the unavailability of the Content Researcher.

The meeting was adjourned.