North-West Housing Corporation Board briefing; Establishment of Project Management Unit and plans to monitor, manage and evaluate projects to eliminate shoddy work: Department of Human Settlements briefing

Meeting report

Opening Remarks and Welcome
The Chairperson opened the meeting by welcoming all present including Mr Thabane Zulu, Director General (DG), Department of Human Settlements (DHS) and his team and Mr Zachariah Matsela, National Chairperson of the South African Housing Cooperatives Association (SAHCA). The Chairperson stated that the report on the North-West Housing Corporation (NWHC) was a follow up to the meeting held in February 2011 at which serious concerns had been raised and further information requested. SAHCA had been invited as the Committee wished it to be part of the discussions as it might be able to respond to some of the issues. The Committee would also continue to engage with SAHCA as Housing Cooperatives would play an increasingly prominent role in terms of Human Settlements as emphasised by the President in the 2011 State of the Nation Address. In her 2011 budget speech the Chairperson had also made an appeal to the DG to promote Housing Cooperatives including at Department of Trade and Industry (DTI) level. She commended the Department on the progress made in terms of the Project Management Unit initiative and welcomed the report that would be presented to the meeting.

North-West Housing Corporation Report
The DG indicated that the report would be introduced by Mr Thupi Mokhatla, Head of Department (HOD) of Human Settlements, North West Province. He stated that there were two reports and the first would be presented by Mr Phosolo Monale, Chairperson of the NWHC Board and the second by Advocate Matshidiso Mogale, Legal Advisor and Acting CEO of the NWHC and an official of the DHS who was assisting in the winding down process. He noted that the findings which Advocate Mogale was going to share had not been presented to Exco of the North West Province and he was not sure if it should be allowed as some of the information might influence the winding down process and he referred the matter to the Chairperson for her ruling.


The Chairperson said that the meeting should consider the document as it had been analysed by the Committee's internal services and perused by the Members.

The DG proposed that the document be treated as a classified item and that should encompass the discussions on the document so that they would not be made public via the media; he noted the legal implications embedded in the matter.

The Chairperson stated that there were processes that should have been followed and the Committee should have been informed prior to the meeting as, in terms of parliamentary rules, committees could not hold closed meetings without following the correct processes and they had to apply to the Office of the Speaker beforehand. She said that they could request cooperation from the media not to publicise sensitive material but the media could not be asked to leave the meeting. The media were requested to commit themselves to this undertaking and a media representative of the South African Broadcasting Corporation (SABC) voluntarily opted to leave the meeting.

The Chairperson appreciated the gesture and stated that the intention was not to suppress the media, as in terms of the Constitution, they had a right to be present if they had not been informed that the meeting was closed beforehand.

Mr A Steyn (DA) expressed his concern that a precedent was being set as they were all public servants and all committee meetings were open to the public. He noted that the Chair had correctly pointed out the processes to be followed if a closed meeting was necessary due to the sensitivity of the information. He found it unacceptable that Members were being informed before the presentation that certain information was sensitive and they would have to keep quiet about it. The responsible persons should have communicated to the Committee's office that they were not ready to make the presentation or they should have taken certain information out of the presentation. He stated that if he wished to exercise his right to talk about the matter then he wanted to feel free to do so.

Mr M Mdakane (ANC) commented that what Mr Steyn did with the information was up to his conscience and that a precedent would not be set as Members understood what the issues were. He proposed that the Committee receive the report in order to move ahead on the matter.

Ms M Borman (ANC) stated that the matter had been on the agenda and queried why it had not been presented to Exco.

The Chairperson noted that it was a relevant question but they should proceed with the meeting as the Committee had the responsibility to accept the information and deal with it as it could not remain classified forever.

The DG stated that he accepted the comments of the Committee on the technical processes and noted the challenges, including bureaucratic challenges faced in terms of compliance and stated that the Department would adopt a new approach to prevent the problem recurring.

Mr K Sithole (IFP) asked whether Exco had been informed that the report was being presented to the Portfolio Committee.

The DG responded that the Department had only informed the Member of the Executive Council (MEC).

Mr Mdakane responded to the DG's statements and said that he should strive for a good balance in terms of bureaucratic processes and being answerable to the Committee who had the responsibility of oversight and the Department should supply all the information the Committee needed to fulfil this role. There should not be secret information that the Department could not divulge to the Committee as this could compromise the effectiveness of the Committee. Likewise the Minister was accountable to the Committee as a politician and the Department had to supply all information so that the Minister could be held accountable.

Mr Mdakane noted that the issue of the NWHC had been with the Committee for a long time and that the technical issues and matters of principle should not be conflated. While some could commit themselves to protecting the information, Members had copies of the document and unless they left the documents there, once Members left the meeting there was no way to manage what happened to the information. He thus proposed that the Members leave without the document.

The Chairperson said she had given the directive for the meeting to continue and media had left. She reiterated that there should be nothing that should be hidden from the Portfolio Committee as it was there to advise and support the Department and the Department had the responsibility to deliver services on behalf of the Government.

Mr Monale stated that the NWHC did not have any staff except the Acting Chief Executive Officer (CEO) and it had been difficult to access the information from the many NWHC files. Giving the background to the winding down process, Mr Monale stated that the NWHC was a Schedule 3(C) Public Entity in terms of the Public Finance Management Act (Act 1 of 1999) (PFMA) and had been established in terms of the North West Housing Corporation Act of 1982 as amended. It had been in existence for more than two decades and had operated as a housing parastatal of the North West Provincial Government within the Department of Local Government and Housing. A resolution was taken by Exco that the DHS would oversee the winding down process of the Corporation. Furthermore, the Corporation owned rental stock, flats, vacant stands and instalment sale houses in four provinces, namely, North West, Gauteng, Northern Cape and Free State.

The legal mandate of the NWHC was stipulated in Section 19 of the NWHC Act 1982 (Act No. 1 of 1982) as amended. The Corporation's main function prior to the winding down process was the development of properties and management of residential properties for the North West Government. In 2005, the property development function was transferred to municipalities. As a result the Corporation began to experience cash flow problems and requested financial assistance from the provincial Treasury. Due to budgetary limitations, Exco took a resolution to transfer all provincial residential properties to the Corporation for it to let or sell. He noted that this was done in order for the Corporation to generate its own income. The properties transferred to the NWHC were never identified nor quantified nor was proper registration in the name of the Corporation done.

At the same time proclamation R293 was repealed and townships inherited from the former Bophuthatswana with the exception of Mafikeng were not registered in the township register nor formed part of the Surveyor- General's plan. As a result selling and transferring of residential properties to the legal occupants or prospective buyers was impossible. The main source of income from selling came only from Mafikeng and from rental properties. The rental from the flats was lower than the expenses incurred. Tenants were offered the option of buying the flats as cooperative social housing or individual units. Tenants agreed to look at the proposals and to inform the Corporation of their decision and two years later this had still not happened.

The Corporation endeavoured to increase the rental. However, this was successfully resisted by the tenants and the matter was brought before the rental tribunal who declared in favour of the residents. Before the rental could be increased, the flats had to be refurbished and the billing system corrected. The Corporation obtained a grant from the provincial government to refurbish the flats. It also obtained additional funding from the National Finance Corporation (NFC) to get the billing system and asset register in order. All flats in Mafikeng registered in the Corporation's name were refurbished and the billing system corrected. The tenants were informed of the envisaged rental increase at a meeting with the Corporation but they disagreed and the Rental Tribunal was called in once more who agreed that the increase was reasonable. The Corporation offered that the indigent and those who could not afford the increase should come forward and take occupation of Reconstruction and Development (RDP) Houses but no-one responded.

The Corporation had to pay long term debt to the Public Investment Commission and other small creditors. The total debt amounted to over R160 million. The Corporation endeavoured to reduce its debt. Treasury could not assist the Corporation financially and it was not allowed to borrow money in terms of the PFMA. The Planning Committee was briefed on the intention to sell the flats. The Corporation advertised the sale of the flats by public auction in a national newspaper, the Sunday Times. Most of the flats were sold and the new owners came with new terms and conditions and the Corporation could not interfere. The Board of Directors acknowledged that some tenants had been evicted from flats. A service provider was appointed to compile an asset register but the community resisted and the project was unsuccessful.

In the 2007 budget speech of the former Department of Local Government and Housing, the then MEC made an announcement to wind down the Corporation by the end of the financial year. He consequently embarked on a consultative process with the NWHC Board of Directors, management, employees and worker unions to conclude the winding down process. However this was never realised due to a lack of financial resources as the Treasury had not budgeted for the process in that financial year. The Premier affirmed the legal winding down of the NWHC by the end of the financial year in her State of the Province address of 2009. The current MEC for Human Settlements also affirmed that the winding down process would be concluded by 31 March 2010 and this too had not been realised to date. The Corporation had ceased to exist operationally since the 31 March 2010 although it still continued as a legal entity. A service provider was appointed in November 2010 by the DHS to wind down the Corporation given the fact that the strategy to use internal human resources could not be realised. The mandate of the service provider was to develop an asset register including the physical verification of the assets and to wind down the corporation legally and financially. Progress reports were submitted on a monthly basis to the DHS and the Board of Directors of the NWHC and it could be arranged for copies to be sent to the Portfolio Committee.

Advocate Mogale, the Acting CEO of the NWHC said that the service provider had made reasonable progress given the anomalous situation it was faced with.

At this stage a representative of Independent Newspapers joined the meeting and the Chairperson explained the preceding decision taken on the media presence at the meeting and the request for sensitive information to be treated as confidential. The representative of Independent Newspapers noted that due process had to be followed if a meeting was to be declared closed and opted to stay stating that the issue would have to be discussed with her editor.

Mr Mdakane proposed that the meeting should continue and stated that the document itself did not contain such highly sensitive information that, in his opinion, should be classified.

The DG concurred with Mr Mdakane that the meeting should continue although in terms of protocol it would not be right for the executive to read a report on the NWHC in the media on issues which had not yet been brought to their attention.

The Chairperson called for an end of the discussion and for the meeting to continue as the other issues would be looked at later and they would also apologize to the SABC.

Advocate Mogale proceeded with her presentation and stated that progress had been made in a difficult operating environment. The legal team of the Corporation had blasted the Repeal Bill which would enact the disestablishment of the NWHC. No date had been given with regards to the Bill as one needed to consider what would happen to the assets of the Corporation. It was not clear if they would be transferred to the Provincial Government or the DHS and no instructions had been received on what would happen in terms of its liabilities. The technical staff members were reconstructing the asset register, including property verification and valuation on desktop. The Corporation had never had an asset register. An audit preparation operation was in process by members of the Finance team and they were facing serious challenges and they had to engage the Provincial Treasury to assist them.

The legal team was conducting a forensic review of the NHWC and was establishing the validity of the liabilities and the litigation faced and had formulated contingency plans. The team was also considering strategies for legal revenue recovery and also for the legal transfer of assets and liabilities. In terms of communications to the general public, a Help Desk was to be established which would also assist with the asset verification process.

Progress achieved thus far were that 24 753 desktop verifications had been completed and 13 663 asset files had been captured and there had been engagement with nine municipalities around the Province. The finance team had conducted financial due diligence and had started the pre-audit process. The team had also presented a financial close strategy to the Department but it had not been signed off yet. The legal team had drafted the Repeal Bill but was still waiting for instructions from the provincial cabinet on the assets and liabilities.

In terms of the challenges, Advocate Mogale stated that institutional memory had been lost as there were no existing staff or documentation since the entity was non-operational. Previous service providers were not co-operating as there were issues of non-payment by the Corporation. Financial Statements were problematic and the Corporation had previously received qualified audits due to the lack of the reliability of the information supplied. The NWHC had also not been audited for three years. The Corporation had also never had an asset register. Communities were disgruntled as there was no clarity on what was happening and they had been adversely affected by the winding down process. Property transfers in the transitional period were complicated and there were disputes on properties. Assets that had belonged to the Corporation were not registered in the township registers of the municipalities and this was problematic when conveyencers wished to complete transfers to third parties.

With regards to a property register and the capture of property files for conversion into an asset register database, the NWHC was unable to have a comprehensive or complete capturing of files as a service provider, Microzone, had been appointed which was responsible for 75% of the undertaking. Due to the claim that the Corporation owed the service provider money, documentation was being withheld from the Corporation and the matter had been taken to the High Court and was sub judice.

Giving an indication of the way forward, Advocate Mogale said that, in order to expedite the process, the desktop verification should be conducted and properties held in the name of the respective municipalities should be identified. The verification process had already been concluded in the Tshwane Municipality. Assistance from the Help Desk for the physical verification should be provided. Further challenges being experienced were that more individual property files were being found across regions and there concerns from residents about the occupancy process. There was no clarity on the legal authority of the NWHC over properties under various municipalities. There had been misrepresentation in letters purporting to be from the NWHC service provider and property verification agents. There were also outstanding tenant property transfers for sales historically made and paid for.

In terms of the financial section, Advocate Mogale reported that lack of supporting documentation and auditing of assets remained key areas of contention. They had conducted due diligence which reflected the historic record of the financial affairs of the Corporation and depicted the decline in business activity. Three years - 2009, 2010 and 2011, remained unaudited. The pre-audit had begun focussing on obtaining supporting documentation for asset and income cycles, liabilities, contingencies and expenses. There had also been a decline in the book value reducing the Corporation's net worth-equity. It had been envisaged that the winding down process would be complete by June 2011 but due to its complexity this would not be possible.
 
The legal section had conducted legal due diligence and had drafted the Repeal Bill for the repeal of the statute and this had been submitted to the State Law Advisor. In order for the Bill to be passed an asset register needed to be completed and the issues of the liabilities and assets clarified. Advocate Mogale stated that it had been envisaged that the winding down process would be completed by June 2011 but due to its complexity this would not be possible.

Discussion
The Chairperson said that this was not the first time that Members had heard about the challenges and that they had expected the Department to have a strategy to address the challenges. She recalled that at the meeting on the matter in February 2011, the Committee had asked it to report back on the current status of beneficiaries. She agreed that it was a complex matter and therefore it should be addressed from more than one angle and they should present a plan.

Mr Monale stated that the Exco resolution on the winding down process was clear. Firstly they had to verify the assets and come back so that they could take a decision on what should follow. He said that in terms of the portfolio of the Corporation there were five categories - vacant stands, rentals, instalments and old stock. The interest was on the old stock and the occupants of those houses did not have title deeds and this process was aimed at ensuring that all the assets were accounted for in order for a decision to be taken politically on what would happen. The presentation indicated that for the past three financial years there had been no audit by the Auditor-General and this process would culminate in all the relevant information being subjected to an audit.

Mr Steyn commented that the Committee had been embarrassed and he agreed with Mr Mdakane that there was nothing that had to be kept secret in the presentation and the incident had been a storm in a tea-cup. The only thing that had to be kept secret was the incompetence of some officials and perhaps even politicians. There had been earlier presentations which had given more information than what had been supplied at the meeting and they had not progressed beyond that. What was embarrassing for the North West Exco was that they had to go to plaintiff's attorneys to establish how much was owed. They could provide any figure they wanted and it could not be challenged. How was it possible to say that at the end of the day the assets would exceed the liabilities as they simply did not know what their assets were? How had they got into this situation? There had been service providers who had been paid and officials had been in charge of the corporation and the situation was unacceptable. Responsibility had to be placed on someone's shoulders and heads had to roll or the committee would not come out with any credibility. He doubted whether all the assets that were supposed to belong to the people would be accounted for.

Ms Borman concurred with Mr Steyn and said that the matter had dragged on too long and at the end of the day it was the beneficiaries and the people on the ground that suffered. She queried Treasury's role in terms of the non-compliance with the PFMA and the fact that the NWHC had not been audited for three years. She noted that they could not receive documents as service providers had not been paid. Why had they not been paid? There was justification for their actions if they had not been paid. The assets and liabilities should be sorted out or they should consider liquidation and then going public in the newspapers to say that there were people they could not find or assets in order to speed up the process including the transfer of property to legal owners.

Ms D Dlakude (ANC) said that in terms of the process of liquidation nothing was said about the appointment of a service provider.

Mr Mdakane said there were two areas to be looked at, firstly the Board of the NHWC still existed and the Board was still responsible and the legal implications of being Board members were serious as they were accountable for mismanagement in terms of the law. He also felt that the matter of winding down the Corporation would be much more messy than the Committee envisaged and it would take longer to resolve the issues. Tracing transactions and ownership for the transferring of title deeds would be difficult and Treasury and the DG should find a better route to resolve matters. The Board had to be held responsible and the issue of why there had been no audit for three years had to be accounted for. The Department should take control of the situation or it would persist for many years to come. A comprehensive report containing all the information should be submitted to the Portfolio Committee and all relevant stakeholders should take a decision on how to resolve the matter.

Mr Sithole said that the matter was not only the challenge of the North-West Province but also of the country and the Department had to intervene to assist them to deal with the problem.

The Chairperson noted that Bophuthatswana was reintegrated nationally and governance had been put in place. To whom had the Corporation been responsible to? The Board of Directors of the NWHC should have been monitored and the process had not been properly managed. The Committee was committed to resolving the problem and she agreed with Mr Sithole that it was not a problem of the North West only but a national issue. At the same time the officials of the North West had to take responsibility and she still maintained that the present report had not assisted them. She stated that they were still expecting Exco to take a decision and they could not blame the executive at this point in time because they had a meeting with the Portfolio Committee in February and the matter had been discussed. They were advised on the matter and they should have taken it back to Exco and they had failed to report on the beneficiaries, which was one of the matters they had been tasked with. The urgency of a Bill was also determined by the officials. The DG had been at the meeting and he should provide guidance to the province and the matter should be taken seriously.

Ms Borman added that the Corporation had also met the Portfolio Committee on the matter in June 2010.

In response the DG stated that the challenge in terms of national and provincial responsibility was that there was nothing that he as the DG could do to compel the province to act and he could only provide guidance and influence decisions. He met the provincial Head of Department at Technical MINMECs at which issues of common interest were raised but there were no legal precepts that gave him powers in terms of governance issues. The decisions of the Portfolio Committee had been communicated to the provincial department.

The Chairperson stated that the DG should not emphasise that aspect as there were mechanisms such as intergovernmental relations and co-operative governance. What was expected from him at that stage was that if they were not cooperating he should declare and take it to the Minister. In terms of the Committee’s role of oversight they could not do something unless the DG declared. Concurrency did not mean that they were delivering for the province as at the end of the day they were delivering for the National Government and that was why they had cooperative governance.

The DG stated that he was not trying to shift the responsibility but he was speaking in terms of governance where there were no legal precepts to impose certain things.

The Chairperson stated that he should put a proposal to Parliament so that the Committee could assist the Department and the executive.

Mr Steyn stated that the Chairperson had taken the words out of his mouth. He observed that the report had to be presented to the provincial Exco and he asked whether it had made recommendations on the way forward as there had been no recommendations in the report. The Committee needed to know what its recommendations were as well.

The DG said one wished to arrive at a point where all avenues had been exhausted and a challenge had been that all the legal processes had not been completed. The other issue was the matter of politics and the administration where there were challenges and the HOD could elaborate on this. He commented that while the report had not gone to Exco, fundamental steps could not take place and there were details which he could not go into. Until the matter was closed legally nothing could be done about the beneficiaries.

The Chairperson said they should know the whereabouts of the beneficiaries and their economic status. She asked how many Board members there were.

Ms Noligwa Thembani, Director of Rental Housing, DHS said that there were seven and originally there were ten. It had been decided to extend the duration of the present Board's term till the end of the winding down process. She added that the transfer of assets had an underpinning problem in terms of the Land Use Management Act and all Housing Corporations were facing the problem of transferring properties because of the multiple legislation.

Mr Mdakane stated that the Corporation was governed by the laws of the country and Corporations were governed according to the New Company Act as amended and there were responsibilities placed on the Board and the CEO. The Board could not be excused from the responsibility of running a company. When the Bantustan administrations were dissolved, they were incorporated into the provincial administrations and the information was lost. The real issues were not being addressed and the lack of good governance such as not knowing its assets was the responsibility of the Board. The Board should be put under pressure to do the correct thing as a Board and they should be mindful that they could be arrested. Mr Mdakane agreed that the report should also include recommendations on how to resolve the outstanding matters. He agreed with the DG that compliance could not be enforced.

Mr J Matshoba (ANC) said that there should be timeframe within which the matter would be resolved.

The Chairperson addressed Mr Monale as the Chairperson of the Board and said it was too late to defend the Board and it would be in his interests if they finalised the matter as a matter of urgency and advised the Committee on the way forward.

Mr Monale responded that the Board did not have the financial resources and he added that if it had financial resources the matter could be resolved by the end of the next financial year. He identified the major problem as the asset register and this had been the reason for the Corporation receiving a qualified opinion from the Auditor-General in the past. The Board could submit a comprehensive report within three months as its members understood exactly what the portfolio committee required. He noted that there were certain things in the report which he understood in terms of his fiduciary responsibility were not correct and the information could not be relied upon to sue the Corporation.

There was strong reaction from the meeting to Mr Monale's last statement and someone commented that it was a bombshell.

The Chairperson confirmed that Mr Monale required three months within which to submit a report. She queried the Corporation’s lack of financial resources and established that the Auditor-General required payment for audits and that the Corporation lacked the financial resources to access external auditors. She requested that the DG sort out that problem.

The DG cautioned about leaving the meeting with high expectations. The fact of the matter was that one was dealing with a Board that was absolutely dysfunctional with no resources and no support at a provincial level from a governance perspective. Secondly, he was convinced that one would not be able to have an asset register. It would not come into existence and if it did, it would not be accurate and give a correct picture. He had a problem when positive assumptions were made that would not be realised in the next three months when the report was due as that would be misleading Parliament. There was a great anomaly in that the Board was dysfunctional and ineffective and the provincial government and Exco had not approved anything. This was the challenge and, addressing the HOD, Mr Mokhatla, he requested that the matter go to Exco with clearly defined, specific recommendations. As long as that process had not taken place one could not move forward and he commented that where heads must roll, so be it. Exco must know and respond appropriately.

The Chairperson agreed that the matter should be taken to Exco as soon as possible and there had to be a timeframe and she appealed to the DG to ensure that the matter was closed. She said that the Board operated in four provinces in terms of its original mandate and the winding down process should include them.

Mr Mokhatla responded that the matter could be taken to Exco within the next two months.

Mr Matsela, National Chairperson of SAHCA raised his concerns about the inclusion of the other three provinces in the winding down process and queried whether they would be included in the report that would be submitted to the Exco of the North West Province.

The Chairperson said it should be a comprehensive report and it should also be submitted to the National Department as it affected other provinces. The officials of the affected provinces should work with the national office and the information should be shared for one comprehensive report. 

Establishment of the Departmental Project Management Unit (PMU)
The DG introduced Mr Welcome Nkosi, Head of the PMU, who was responsible for the presentation. Mr Nkosi referred to the documentation distributed to Members which contained an outline of how the Department intended to move forward on the PMU and also an implementation schedule. He noted that the PMU was aimed at the enhancement of the Human Settlement Delivery process which implied it would be adding value to this process. He said that the critical factor in the establishment of the PMU was that shortcomings in the existing processes had been identified. In his investigations he had established what these shortcomings were and he had developed a business plan which addressed these challenges.

Defining what Project management was, Mr Nkosi stated that a project was a set of predefined activities or tasks which were to be executed utilizing resources within a specified duration in order to achieve a specified unique objective. Project management was necessary to assist with the better control and improved utilization of resources leading to higher productivity. The PMU would help eliminate problems which the DHS was currently experiencing such as stalled projects, shortage of internal skills, absence of systems and a lack of coherent project plans. Currently there was a failure to implement project management techniques and methods and a lack of momentum in project implementation which happened when there was no synergy between the political process and technical teams on the ground especially in terms of the suitability of land for projects. Mr Nkosi identified the absence of accountability as another serious shortcoming as illustrated by the NWHC in the previous presentation. He commented that the loss of organisational memory as happened in the NWHC should be prevented at all cost.

Mr Nkosi identified the critical success factors in Project Management and prioritized the necessity of ongoing stakeholder management on an interdepartmental level and extending to the private sector and community involvement. He emphasized the need to collaborate, co-operate and co-ordinate and for all stakeholders to be kept onboard to ensure that momentum was not lost. Another critical success factor was to ensure that the mandated outcome was effected in the strategic plans and delivery process and this included ensuring that the necessary financial resources were budgeted for in the strategic plans.

Further critical success factors were the necessity to facilitate the execution of projects and to monitor progress and reporting, developing capacity and capabilities (including skills, information and systems) and implementing a continuous, integrated planning cycle approach across the DHS and its related stakeholders.

Mr Nkosi concluded that if the PMU was properly supported, resourced and populated it would provide a sustainable process for Human Settlement delivery. It would oversee all aspects of national projects including budgets, expenditure, financial performance, infrastructure and intergovernmental integration. He proposed that they invest in the PMU and the Business plan as outlined in the document.

The DG stated that he appreciated the advice from Mr Nkosi and he noted that the PMU was a product of the Portfolio Committee as it had indicated that there was a need for such a structure and it was also in line with the new strategy of Human Settlements. He commented that part of his performance agreement for the current financial year would be focussed on this project management initiative. He said that if the Department got it right everything else would fall into place and the concept that had been developed would assist the committee in their oversight responsibilities. The Department would be able to give the Committee all the information it required as soon as it requested it. However it required to be resourced and it was a priority from his perspective to redirect resources where it was needed.

Discussion
The Chairperson thanked the DG and Mr Nkosi for the presentation and noted the negative effects of the lack of a project management to monitor projects in the provinces and municipalities. She raised the issue of the DG's Performance Agreement and said that the Portfolio Committee had not received his and those of the Senior Management of the Department.

The DG apologized and said it had been signed and was at Human Resources and the Department of Public Service and Administration as it had to reflect the Department's Budget and Strategic Plan and the Committee would receive it shortly.
 
Ms Borman thanked Mr Nkosi for the presentation and she commented that it had been of great concern to the Committee to get delivery on the ground and to prevent shoddy workmanship. She had concerns about its constitutionality and how they would engage with municipalities. Some Metropolitan municipalities were currently receiving accreditation and would have level three status and there were constitutional obligations attached to that. There were also entities that were put in place such as the Social Housing Regulatory Authority (SHRA), the National Home Builders Registration Council (NHBRC) and the National Urban Reconstruction and Housing Agency (Nurcha) and every time when things were not going well, something else was put in place. Mr Nkosi had spoken about land preparation for example and she queried what role the other entities would play or whether some would be phased out. In terms of the financial implications, she noted that the PMU would be located within the National Department and directly responsible to the DG. She maintained that the figures did not reflect the total costs and that there would be additional administrative costs and support staff would be needed. Where was the money going to come from? She also wanted to understand what was meant when they stated that the technical team would be going in on the ground. She presumed that this would happen only when the municipality did not have capacity. She noted that there were 283 municipalities and it seemed to her that a unit like the PMU would have to grow and grow. When would the Committee see the fruit of this unit? Had sufficient work been done to warrant setting up this kind of unit as opposed to strengthening the existing entities, provinces and municipalities?

Mr Sithole said his concern was about land preparation and what role the PMU would play in this.

Ms N Mnisi (ANC) asked what support the PMU would give the NHBRC. She noted that the committee had continuously dealt with the problems of rectification in the past few years. Would the PMU be the solution for rectification? She also queried the lack of an organogram for the PMU.

Ms T Gasebonwe (ANC) queried what was implied by capacity and capability development. Whose capacity and capabilities were going to be developed and how?

Mr Mdakane stated that the setting up of the PMU was an important step forward but the DG should try to ensure that it remained lean, effective and efficient. There would be a great demand for its services to facilitate the delivery of critical skills on a national level and to manage all projects. It would be able to pick up on many things and it would not be taking over from the existing entities but monitor them to see that they were doing their work. Many of them were not implementing their mandates with sufficient speed. The unit should be mindful of not becoming another bureaucracy.

The Chairperson said that Members were in agreement on using existing capacity. She commented that there was insufficient use of the Housing Development Agency (HDA). Looking at the HDA Act she noted the need to perform project management as was legally mandated. She noted the frustrations of communities around land. HDA and Nurcha had to be roped in as they had to support project management. DPSA could also provide support. The Chairperson stated that the Committee was fully supportive of the establishment of the PMU. She noted that all departments had capacity at a national level but it was important that it was not bloated. There were staff at Head Office doing monitoring and evaluating and administration and they could be roped in to support the PMU.

The DG said he appreciated the comments from the Members. On the issue of constitutionality in relation to the Metros, he noted that for the first time the Department had received a USDG Grant which Metros selected. The PMU would be responsible for that including the Treasury. Those grants were meant to unlock potential human settlement development where there was a challenge of bulk services and that was a clear mandate. Thus there was something constitutionally that bound them directly to work directly with the Metros. That did not imply that they would become arrogant and bypass the provinces. There would be collaboration but technically there was a space that Treasury had created to unlock projects.

In respect of the entities such as Nurcha and HDA, the DG stated that they were part of Human Settlements and the Department was trying to kill the culture whereby entities operated in Silos. They were not independent institutions as they received their considerable budgets from DHS on an annual basis and they had to present their Strategic Plans to the Committee. He stated that in the following week he and Mr Nkosi would be meeting with each and every housing entity to assess its strategic and business plans and how it would assist human settlement development. They would also establish what other resources housing entities had received and what role they would be playing in terms of human settlement projects that had been identified by the business plans they had received from provinces. This would ensure that there was an integrated strategy implemented by all that would also prevent duplication. The PMU would be central in this strategy.

The costing exercise had been done initially and Treasury had been approached and would assist outside the normal DHS budget within the first phase. An amount of R5 million had been set aside from the Medium Term Expenditure Framework(MTEF) but they wished to liberate internal funds as well. The Department would take advantage of internal capacity and the skills that could not be sourced internally would be sourced externally. At national level, it was going to streamline all activities that were linked with monitoring, evaluation, financial and performance into the PMU. At present it was fragmented in different branches and it was difficult to manage and the process of interaction had already commenced. The restructuring and migration reflected the new mandate and the old housing mentality was being eradicated. The DG noted that the Department had completed their engagement with the consultants and the final product of what Human Settlement should look like in terms of the new mandate was ready for presentation to the Committee.

The DG stated that land preparation related to the Business Plans of provinces and entities and issues of state owned land and land acquisition and who was being given land and for what specific purpose. The PMU would engage with the entities and ensure that all critical aspects had been taken into consideration. The same applied to rectification and what was important was to outline specific national programmes that was being run and ensure that they were linked to the PMU. Thus the PMU would have all the information regarding rectification such as in which province it was taking place, for what specific purpose and who was doing it and the timeframe. The Committee should also be able to access this information when they needed to and it should be available almost immediately. Rectification would reside with the PMU in terms of monitoring, evaluation, and implementation and in terms of quality assurance and norms and standards. The Department was trying to standardise the approach in human settlements and it was also about the management of information. The Department would be giving support to all institutions that were linked into the Human Settlement Sector and as it was a collective approach, these entities in turn should support the DHS.

The Chairperson thanked the DG and his team and the delegation from North West. She urged them to close the outstanding matter of the NWHC. She apologized to the media for any inconvenience and thanked them for their cooperation.

The meeting was adjourned.