Department of Human Settlements & Housing Development Agency (HDA) on strategic and performance plans: briefing

Meeting report

Updated Departmental Strategic and Performance Plans 2011-14: presentation
Mr Thabang Zulu, Director-General, Department of Human Settlements (DHS), presented the strategic objectives of the Department. Strategic objective one was to provide strategic leadership, administrative and management support services to the Department. The second strategic objective was to develop and promote human settlement and housing policies supported by a responsive research agenda. Strategic objective three focused on implementation and delivery, and communication with stakeholders for effective housing and human settlement programmes. The last objective dealt with the funding of housing and human settlements development programmes. Mr Zulu then outlined the programme and sub-programme plans.

Mr Neville Chaney, Chief Operating Officer, DHS, spoke about the Strategic Outcome 8 approach which the Department had adopted as part of its National Strategic Plan. There were four strategic outcome oriented goals, each with its own goal statement or target, which totalled eight outcomes.

Goal one was the accelerated delivery of housing opportunities and the target was that the Department would provide 400 000 households by 2014. Goal two was to improve access to basic services, and the target was that water would be provided to 100% of households, sanitation provided to 100% of households, refuse removal to 75% of households, and electricity to 92% of households. Goal three was to improve the property market by financing 600 000 housing opportunities within the gap market for people earning between R3 500 and R12 800. The final goal was more efficient land utilisation which would see disadvantaged people closer to the urban areas to improve employment opportunities.

Mr Chaney then continued by outlining the selected performance and operations indicators. These included the number of houses completed per year, the number of households provided with services and tenure, as well as the number of municipalities provided with technical support to implement basic water and sanitation infrastructure.

Mr Nyameko Mbengo, Acting Chief Financial Officer, Department of Human Settlements, continued the presentation by outlining the financial information. He presented the Department programme budget per programme over the medium term up to 2014. A total of R74.1 billion was allocated over the three years from 2011-2014. The biggest chunk of funding would go to the Housing Development Finance programme, which included grants, subsidies and transfers. Mr Mbengo also presented the total allocation to provinces, with Gauteng and KwaZulu-Natal receiving the highest amounts from the Human Settlements Development Grant.

Mr Zulu concluded the presentation by explaining the key risks and challenges faced by the Department. Provincial and local authorities needed more capacity to undertake national programmes and projects. Bulk and infrastructure shortages were found which resulted in an under-capacity to support human settlements functions. Fraud, corruption and mismanagement required special attention as well as a higher level of attention to citizens’ expectations and aspirations. To deal with these issues, a National Programme Management Unit was established to support provincial and municipal programme management. Also, a Human Settlements and Basic Services Task Team was established to coordinate central planning.

Discussion
Mr A Steyn (DA) commented that he wanted the Department to give Members the correct version of the presentation in future, as the documentation he had received was not consistent with what was shown in the presentation. He said that provinces’ business plans were not aligned to the Department and this was a concern when it came to spending. Referring to newspaper reports which stated that the eThekwini was not accredited, he asked for more clarity.

The Chairperson said that there were sometimes inconsistencies in reporting during the transmission of information. She asked Members not to rely on outside information but rather in what was shown in the presentation. The Department should, however, also check who gave such inappropriate information to the newspaper but stressed that Members should rely on the reports given by the Department and not newspaper reports.

Mr Zulu said that there were only two metros which were not accredited - Buffalo City and Manguang. These metros would be accredited on 01 April but had already received an allocation as indicated in the presentation, page 11. Also, all provinces should have submitted their business plans by 03 March but the Department was still waiting for some provinces to submit their business plans.

Ms T Gasebonwe (ANC) said that, at the time of the Committee’s recent visit to eThekwini, the metro had not yet been accredited.

The Chairperson indicated that the Department should have indicated in its presentation which municipalities were accredited.

Mr Zulu said that there were eight metros accredited overall, including eThekwini.

Ms N Mnisi (ANC) asked whether Lephalale was accredited as well.

The Chairperson said that Lephalale was receiving a grant, but had not yet been accredited as a metro. She found it embarrassing to see the inconsistency of information that the Department was presenting.

Mr Steyn said that municipalities were signing contracts with service providers without accreditation.

Mr Chaney said that once municipalities were assigned an allocated amount of funds, they had certain functions to perform which entitled them to using the allocations, but only a small percentage of it.

Mr Steyn asked why the target for housing delivery was 400 000 by 2014 when the previous year it was estimated at 500 000.

Mr Chaney agreed that it was disappointing for the targets to be reduced, but the Department had made a decision to be more realistic in setting targets in order to reach outcome agreements. The target of 400 000 households was related to a Presidency decision but this was only the minimum target expected.

Ms M Njobe (COPE) asked why the target for refuse removal was only at 75%. She said this was a low percentage and that 100% of households needed refuse removal services.

Mr Chaney noted that the 75% target was set in conjunction with the targets of the Department of Cooperative Governance. However, each household would have refuse removal door to door.

Mr K Sithole (IFP) said that he was unsure whether the Department was serious about the eradication of informal settlements. There were currently over 2700 informal settlements across the country, yet only 400 000 homes were to be developed by 2014. He commented that nothing was happening when the Committee visited municipalities.

Mr Zulu agreed that there was a desperate need for oversight at a municipal level; therefore the new National Programme Management Unit was set up to support provincial as well as municipal programme management.

Mr A Figlan (DA) thanked the Department for its presentation. He noted that when the Committee conducted its oversight visits, it found that there was no communication between the national and provincial departments. He said there was a desperate need to build a strong relationship between the different spheres of government.

Mr Zulu said that one of the Department's risk mitigation measures was to improve Intergovernmental Relation (IGR) planning, coordination and cooperation.

Ms M Borman (ANC) asked what criteria were used with regards to the urban settlement development grant when allocating money per municipality. She was concerned with the wording of the presentation as it should have indicated spheres and not “tiers” of government. Ms Borman highlighted that the Department should be careful when presenting accredited municipalities and have accurate facts in future so as to not create confusion.

Mr Mbengo said the allocation to provinces criteria were based on a formula developed by the Ministers and Members of Executive Council (MINMEC). This formula took into account the housing needs and population of provinces as indicated by Statistics South Africa (Stats SA).  

Ms D Dlakude (ANC) questioned whether the targets set by the Department were realistic. She noted that there was a lack of communication between the national and provincial departments and said that she hoped oversight by the Department would be done more effectively. She wanted to know how many people benefited from the Rural Housing Loan Fund (RHLF).

Mr Mbengo said that the RHLF was allocated to public entities, who would then in turn handle these loans to the rural community. He did not have figures currently to give an estimate of how many people had benefited from this programme.

HDA: Medium Term Strategic Plan 2011/12 to 2013/14: presentation
Mr Taffy Adler, Chief Executive Officer, Housing Development Agency (HDA), presented the HDA’s medium term strategic plan. This plan was aligned with the Departments Outcome 8 approach. According to the delivery agreement signed by the Minister of Human Settlements, the HDA was directly responsible for the acquisition of 6 250 hectares of well-located publicly-owned land and buildings. The HDA also had to provide project management services relating to assisting in the upgrading of informal settlements, emergency housing solutions, and incomplete or blocked housing development projects.

Mr Adler noted some key achievements of HDA. It was operating within the grant provided, had financial policies and procedures in place, and had received a clean audit in their first financial year 2009/2010. The HDA had implementation protocols signed with three provinces (Limpopo, Northern Cape and Free State) and two municipalities (Tshwane and Johannesburg). The HDA also had project-specific implementation protocols signed with two provinces (Western Cape and Eastern Cape) and two municipalities (eThekwini and Ekurhuleni).

Mr Adler highlighted that HDA had acquired in excess of 33 000 hectares of well-located state land and this land had been prioritised. This was submitted to the Department of Public Works and the Department of Rural Development and Land Reform for release. This land would meet the Outcome 8 target of 6 250 hectares of land. In addition, 75 hectares of land had been purchased in Bela-Bela with funding provided by the Limpopo province. An implementation protocol had been signed with the Free State, and, via Servcon, eight Transnet-owned properties (105.5401 hectares) were in the transfer and registration phases. However, HDA undertook due diligence and assessment of the Servcon property portfolio as transfer had not taken place as anticipated.

Mr Adler explained that the problem was current state release procedures. These were characterised by complexities, inefficiency, long red tape, and asset management fragmentation. The HDA proposed an enhanced framework for the release of state land. This framework would create a seamless and efficient procedure for the release of state owned land for human settlement development. The HDA undertook spatial analysis to inform land identification. Acquisitions, planning and programming were done in collaboration with the provincial departments of human settlements and municipalities.

Mr Adler then continued by outlining the property portfolio which amounted to a total of R105 million, with a total of 9 properties, 5 occupied and 4 vacant. These were spread across two provinces, which were Free State and Limpopo. Another key achievement for HDA was the N2 Gateway and Zanemvula projects. These projects were stabilised and on track; business and funding plans were developed and presented to the respective provinces and the signing of agreements were concluded in 2010.

The N2 Gateway project in Cape Town was a national priority project involving the building of fully subsidised, rental, and affordable bonded homes. It sought to create sustainable communities along the N2 highway. It aimed to provide 120 000 people with 23 000 homes. Phase 1 was nearing completion and would deliver approximately 15 000 houses. There were approximately 7 000 houses built to date. The Zanemvula Informal Settlement upgrading and Human Settlement project (Nelson Mandela Bay Metro) was one of Government's flagship mega projects and aimed to deliver approximately 10 557 houses, upgrade 1 565 units, and provide rental housing opportunities to subsidy non-qualifiers. HDA had built 2 664 houses and rectified 380 units to date.

Mr Adler explained that the organisational board of the HDA had been developed. A written mandate had been concluded between the Minister and the Board. Policies and procedures that governed the HDA operating environment were also in place. However, there were a few statutory and regulatory challenges. There was a misalignment between the fiscal arrangements and the mandate of the Agency. In some cases, sector role players viewed the HDA as a private sector service provider or consultant, which adversely impacted on their ability to provide support in line with their legislated functions and mandate. More effort was needed to appropriately position the mandate, role and functions of the HDA within the sector in order to expedite achievement of the objects and functions of the Agency.

Mr Adler continued by outlining the HDA’s visionary goals and strategic objectives as well as its macro performance indicators. He then explained the HDA funding options as well as the implications of these different funding scenarios. Mr Adler concluded the presentation by outlining the budget. He said that the current Medium Term Expenditure Framework (MTEF) allocation for 2011/12 was R89.1 million increasing to R93.55 million in 2012/13. It was considered that in the light of the legislated functions that the HDA was to fulfil, the current MTEF allocation was inadequate and would require review. Should the HDA be sufficiently capitalised to achieve its mandate, the operational requirement would have to increase.

Discussion
Mr Steyn asked whether the pie chart presented on page 4 of the presentation was a projection or a real estimate. He suggested that HDA needed to be marketed more to municipalities, as KwaZulu-Natal (KZN) municipalities were not aware of HDA.

Ms Odette Crofton, General Manager: Projects and Programmes, Housing Development Agency, said that the pie chart did not indicate percentages. Rather it depicted projects that were in process and new projects that sill needed liaising with in provinces.

Mr Steyn wanted to know how HDA service costs compared to those of private contractors.

Ms Crofton said the HDA worked on a cost recovery basis and only charged for what was needed. Its service costs were less than those of private contractors.

Ms Mnisi said that she appreciated the extra mile HDA went to acquire 33 000 hectares of land. She commented that KZN knew nothing about HDA and there was a need for HDA to be equally represented in all provinces. With regards to the organisational structure shown on page 23, there was no indication of whether all posts within the company were filled, or if there were any vacancies.

Ms Crofton said that HDA had a staff component of 76 and there were four vacancies, including the position of General Manager: Land. The staff component would be increasing in the current year.

Mr Figlan said that he knew about a vacant piece of land near Langa in Cape Town which was owned by Transnet. He asked whether HDA had enquired about this land before.

Mr Lucien Rakgoale, Manager: Land Acquisitions, Housing Development Agency, said that the HDA was aware of the Transnet land that was available. The HDA had started talks with Transnet to release the land. Transnet was one of the HDA’s strategic partners and had a lot of suitable land that the HDA could acquire.

Mr Figlan wanted to know how many blocked projects were unblocked by HDA.

Ms Crofton admitted that the HDA had a problem when it came to unblocking projects. HDA could not work with municipalities if those municipalities did not request its help. Numbers were not available at this stage but would be within a year at least.

Mr Figlan asked whether the Boystown area in Crossroads had been attended to.

Ms Crofton said that this area had a range of community issues. Imvula had started clearing the site and the movement of people who were either going or staying on the land was being negotiated.   

Ms Borman asked what the role of HDA was on the informal settlements upgrade targets as set out by the Department.

Ms Crofton explained that the HDA was responsible for project preparation and implementation. It worked with requests from provinces and municipalities. Technical support was given to provinces on request.

Ms Borman asked what the expected outcome of the Cornubia priority project was.

Ms Crofton said that 500 units were expected to be completed for the first phase but there were challenges as a new airport development hindered the noise contours that had to be adhered by. This required re-planning as well as town and agricultural approval. 

The Chairperson thanked the HDA and the Department for their presentations. She said that it was time for the N2 Gateway project to come to an end so that the HDA could focus on new projects in the Western Cape. She suggested that an awareness campaign be started to make all provinces aware of the service that the HDA could provide to them.

The meeting was adjourned.