Communal Property Associations, trusts and other land holding legal entities: Department's briefing

Meeting report

Community Property Associations and other legal entities: Department of Rural Development and Land Reform (the Department) briefing
Mr Thozi Gwanya, Director-General, Department of Rural Development and Land Reform, briefed Members on the process followed to establish legal entities that could hold property for communities. The first prerequisite was that there had to be consensus by beneficiaries that land would be held communally. Beneficiaries were then told to choose the legal entity that would function best for their circumstances. The Department encouraged the use of Communal Property Associations (CPAs).

Key challenges for CPAs centered on the allocations of rights to members. These might not be sufficiently clarified. There were further challenges around lack of monitoring of CPAs, the nature and size of land reform grants, failure to use remedies provided in the CPA Act to intervene, and legal entities not operating properly when co-existing with traditional leadership.

The Department chose to remedy these problems by initiating an education campaign to educate land reform beneficiaries about the functioning of CPAs and trusts. It had provided governance training for legal entities, was reviewing the CPA policy and legislation, and was developing and implementing a dispute resolution mechanism to deal with related challenges such as abuse of power and poor management.

Mr Gwanya summarised by saying that the establishment of legal entities was necessary for the registration of land rights and security of land tenure. Legal entities also served as instruments for the democratisation of land use. Governance training, accountability as well as empowerment of land reform beneficiaries were all critical for the success of the legal entities.

Discussion
Ms A Steyn (DA) said that the Department stated that the use of trusts was preferred over the use of CPAs. She wondered why then the Department still recommended the use of CPAs. Most provinces preferred trusts. It was said that CPAs could not qualify for loans from banks because they were not recognised as a legal entity. She asked if this was correct. She also asked if CPAs were functioning in traditional communities under communal land, or only for land that was redistributed. She also wanted to understand the role of traditional leadership with regard to CPAs.

Mr Gwanya replied that CPAs were indeed legal entities and were able to get loans from banks. However, in practice, the attitudes of banks showed that they preferred trusts over CPAs. The banks were confident that they could work better with trusts.

Mr M Swathe (DA) referred to Mr Gwanya’s statement that there had been a dispute between leaders of the CPAs and traditional leaders. The Department also indicated that the traditional leaders wanted to be chairpersons and to lead the CPAs. The Department recommended that the traditional leaders be included as “ex-officios” in the CPAs. He wondered if the traditional leaders had agreed to this. He had heard that traditional leaders were accusing the CPAs of creating “chiefdoms” in their areas of jurisdiction. He asked what the Department was doing about this, as it was a serious matter.

Mr Swathe also noted that the Department had mentioned that it had not been monitoring what the CPAs were doing, due to lack of capacity in the Department. . This meant that the Department could not even receive reports from the CPAs concerning their progress. He noted that the Department was in the progress of creating a new method of recapitalisation for projects. He wondered if this would be addressed in the Department's new programme.

Mr Gwanya answered that the traditional leaders criticised the CPAs for having too much power, to a point where they felt that CPAs were replacing them. There were incidents in Kwazulu-Natal where trusts were saying that the kings did not have any say over the land. These disputes were unnecessary. However, it must be recognised that there were differences. Situations differed from community to community; it depended on the use of power or the abuse of power. It also depended on the particular traditional authorities and traditional leaders. If traditional leaders worked well with people, then operations ran smoothly, but if they did not work well with people there would be conflict.

Mr Gwanya addressed the questions asked by Mr Swathe as well as by Ms Steyn regarding traditional leaders. He stated that it was the Department's recommendation that traditional leaders should become ex-officio members, so that they could not be elected or outvoted. There had been cases where traditional leaders were elected members of a trust and were involved in incidences of abuse of power regarding land allocations. People tended to blame the traditional leaders alone, even though abuse of power was a common occurrence. In the interest of protecting the integrity of the institution of traditional leaders, the Department advised that it would be better for a traditional leader not to be elected but to be an ex-officio member.

Ms P Ngwenya-Mabila (ANC) noted that the Department was going to amend the CPA Act. She commented that she had heard this in the past. She asked when the Department would be presenting the Green Paper to the Cabinet. The Committee needed to know when the process would be finalised. She stated that the same officials who were responsible for land reform projects were expected to support the CPAs and prepare the required reports. In relation to the problems mentioned around reporting, she asked if there was a shortage of staff or if there were other capacity problems. It seemed as though the officials were overloaded with work. She asked what the Department's reasons were for not knowing the state of each legal entity for land reform.

Mr Gwanya replied that the Department was raising challenges experienced with CPAs in the Green Paper. The Department hoped to discuss the Paper with its political principals in March, so that the details could be negotiated and Cabinet approval could be given in April or May. It was the Department's intention to submit a Green Paper in July that would talk to the development of the CPA Amendment Bill.

Mr Gwanya then addressed the questions from Ms Ngwenya-Mabila and Mr Swathe concerning capacity problems within the Department. He agreed that the Department did not have enough people and this affected monitoring functions. It was a full time function to lead and provide guidance to each of the 2100 legal entities involved in land reform. The Department did not have many reports, due to the inability of CPAs to submit reports.

An ANC Member asked whether CPAs or trusts tended to have the least disputes. She too questioned whether the Department was favouring the CPAs. She wanted to know how many projects there were that needed urgent recapitalisation, and in which provinces these were situated.

Mr Gwanya addressed the questions from Ms Steyn and Ms Ngwenya-Mabila. He replied that trusts and CPAs had the same nature and were both land holding entities. One was not better than the other. The only difference was in the way that they functioned. There were more trusts than CPAs. The Department preferred CPAs because the CPA Act stated that the Department had the right to intervene where it saw fit. In terms of trusts, the Department found that when there were disputes regarding the land that was bought by the Department, the trustees tended to become very arrogant and did not want the Department's help. Trustees would say that the Department's duties ended once they helped the trusts acquire the land. Some communities opted for the trust so they could be independent and do what they wanted with the land. However, this could become problematic. 

Mr Gwanya focused on the question of recapitalisation. He stated that the Department had not dealt with the issue in a “global” manner. The Department did not want to deceive itself that it could take all 2100 legal entities and put them into the recapitalisation programme in the first financial year of the project. There was approximately R500 million that could be used for the project in the coming financial year. There were a number of farms that the Department wanted to assist, but whether it was able to do so would depend on the capacity within the Department.

Ms Z Balindlela (COPE) stated that CPAs and trusts had existed since 1996. She thought that it was time for the Committee to review CPAs and trusts, to see if they were still viable in the current economic climate and if they were going to make any good changes as far as communities were concerned.

The Chairperson asked what the content of the training during the Department's education campaign would entail, and if the Department of Higher Education (DHE) and local authorities would play a role.

Mr Gwanya stated that the training would include issues of governance. The training seemed to be limited and needed to look in to the roles and responsibilities of ensuring that land was used productively and for the benefit of communities.

The Chairperson noted that the agenda for this meeting had indicated that the Department would be discussing CPAs, trusts and “other legal entities”. However, the Department seemed to have confined itself just to CPAs and trusts. He wanted to know more about the other legal entities, besides CPAs and trusts, who were holding land.

Mr Gwanya stated that the Department did not have much information on Section 21 companies and Close Corporations (CCs). The process of establishing those entities did not happen through the Department's legal section. The Department had only made land transfers to trusts and CPAs. Land reform beneficiaries had the option to decide whether to work through Section 21 companies or CCs, and the Department could well never hear of these. Although the Department itself had never made land transfers to any Section 21 companies or CCs, it could not rule out the possibility of these entities existing. The Department appointed a service provider to analyse each CPA. The analysis would tell the Department what legal entities were established.

Mr Mduduzi Shabane, Deputy Director-General: Land and Tenure Reform, Department of Rural Development and Land Reform, agreed that the emphasis was on the two types of legal entities that the Department facilitated. There were land reform beneficiaries who approached the Department, after having formed their own entities. The Department had not kept a record of these entities. The analysis of CPAs would reveal to the Department the other forms of legal entities that were holding land.

Mr Swathe noted that CPAs and trusts were not the same. Trusts were independent of the Department. He noted that the Department was going to review the CPA Act. He asked what would happen to trusts if only CPAs were being reviewed.

The Chairperson stated that Mr Swathe's question had to be extended to cover what would happen when property was recapitalised. He said that Mr Swathe's question could be replied to in writing, with the response being sent to the Committee.

Mr Shabane replied that the Department had not laid out all the necessary conditions that were linked to the programme for recapitalisation and development. As part of the programme, there would be a mentor assigned to each project, who would assist with skills development. There would be an experienced farmer who would be attached to the farms benefiting from the recapitalisation programme. There was also a contract that bound beneficiaries to comply with the recapitalisation programme.

Ms Steyn thought that the Department was moving in the right direction. The Department had to ensure that everything it was doing was legal, especially with regards to trusts. She also wanted the Department to ensure that when it included people in the recapitalisation programme, these people were committed to the terms of the contract.

Mr Gwanya replied that everything the Department was doing was legal. He stated that it was not that trusts were illegal, but merely that the Department could not intervene in their affairs. The Department could only intervene in CPAs because the CPA Act allowed it to do so.

Nkosi Z Mandela (ANC) stated that he appreciated the presentation, but that it still left some grey areas that needed to be addressed. The Committee could only be further enlightened if it visited the communities that the CPAs claimed to serve. The challenges that the traditional leaders experienced also needed to be addressed.

Ms Ngwenya-Mabila hoped that the Green Paper would be able to fill all the gaps that were identified during the meeting. She was looking forward to visiting some of the legal entities involved in land reform so she could understand their status.

Ms Steyn thought that the Department and Committee could move forward together, slowly. The Committee needed more information on the status of rural towns. The Committee and the Department needed to look at this information together so that Members could try to understand the problems with which the Department was dealing.

Mr Swathe commended the Department for the direction it wanted to take. The Department had to focus on farms that were given to beneficiaries, and that were not being utilised. He also wanted the Department to focus more closely on the functionality of CPAs and trusts. Beneficiaries were saying that CPAs were not serving them well. The Department had to ensure that CPAs were educated and trained to utilise the resources that they had.

An ANC Member stated that it was the Committee’s and Department's responsibility to restore communities in rural areas. She commended the Department for ensuring that communities in the country were represented.

Ms Balindlela agreed that more information was needed regarding rural communities.

The Chairperson stated that the Committee appreciated the work that the Department was doing, as there had been visible progress. The Committee insisted that the Department must deliver on all the goals to which it had committed itself.

The meeting was adjourned.