Communal Property Associations: Compliance with legislation: Departmental briefing

Rural Development and Land Reform

21 June 2011
Chairperson: Mr S Sizani (ANC)
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Meeting Summary

The Department of Rural Development and Land Reform (DRDLR) briefed the Portfolio Committee on compliance by Communal Property Associations (CPAs) to Act 28 of 1996. This regulating Act required of CPAs to report to Parliament about names and IDs of members, the re-election of office bearers, annual financial statements, and minutes of Annual General Meetings. The Act also required that CPAs must have constitutions. Land transactions and the leasing out of land had to be recorded. Reports had to be submitted annually.

The Department started off with the frank admission, backed up by statistics, that compliance was lacking in all provinces. It was admitted that the picture looked bleak. The Department saw itself as partly responsible, even though it had inherited a situation where no structures for enforcing compliance had existed for 15 years. However, it indicated a way forward, with a commitment to building such structures. A new Departmental unit, created especially for that purpose, formed the nucleus of a turnaround strategy. The aim was to provide State institutional backing for ensuring compliance. Mediators and independent facilitators had been appointed, and a legal service provider had been appointed.

Members held a fruitful discussion on the status and position of CPAs, during which several problems experienced by both CPAs and the Department were highlighted. Some Members unreservedly endorsed the proposed turnaround, but the Chairperson and one other ANC member expressed some scepticism as to whether CPA systems were the ideal vehicle, whilst a DA Member felt that the building of compliance structures could run up costs, thereby detracting from resources for land, farming and training of farmers. The Department argued that non-compliance with the Act was a root cause of failure to utilise land and provide access to it, and agreed that there had been problems where some executive members of CPAs had sold farms, in their own interests, and noted that vested interests had given rise to malpractices. Members noted that the Department could not simply enforce compliance directly, but suggested that if the Department was taken to court, it must justify minimum access standards. The Committee informed the Department of several problems in CPAs that had been voiced by their constituencies, and outlined claims that traditional authorities had been sidelined by councilors, or people removed from land and outsiders claiming their ancestral land. Members questioned the provisions around restrictions on the sale of land, and noted that in Kenya those given land had sold it on, and then claimed to have been dispossessed again. Members asked about recapitalisation, and whether the Department had the administrative capacity to ensure compliance, and also examined CPA debts and strategies to raise loans. An ANC member stressed the importance of motivating beneficiaries to invest in the land through contributing work and assets, to establish a sense of ownership. Another ANC member remarked that land had been given to people who had not been ready for it. An IFP member pointed out that some CPA mentors had negative attitudes to government, and would not co-operate. The Department stressed again that the system could prove its merit only after there had been proper compliance with the Act, and said it would be necessary to amend the Act to close some of the loopholes. Members suggested that successful CPAs should be used as a model for improving others. The Chairperson concluded that systems of land ownership and tenure had to be looked at. He called for the establishment of minimum standards for access to land, as was found in India, and stressed that more emphasis must be placed on creating farming skills.

Meeting report

Chairperson’s opening remarks
The Chairperson noted that, eighteen months previously, the former Director General of the Department of Rural Development and Land Reform (DRDLR or the Department) had been asked to report on compliance with the legislation governing Communal Property Associations, Act 28 of 1996 (the Act). The crucial question was how these Communal Property Associations (CPAs) were dealing with assets entrusted to them. However, this was the first meeting which would be dealing with the issue.

Briefing on Communal Property Associations: compliance with the 1996 Act
Mr Mduduzi Shabane, Deputy Director General, Department of Rural Development and Land Reform, said that the Act had been promulgated in 1996, and required an annual report from the Department to Parliament. However, up till now, the Department had not complied with that requirement, and the non-compliance by both the Department and CPAs would be fully outlined in the briefing. However, this briefing would not deal with the functionality of assets, as that was a different process altogether.

Mr Sithe Gumbi, Deputy Director & Acting Registrar for CPAs, Department of Rural Development and Land Reform, said that CPAs had been registered since the Act was promulgated in 1996, and that, to date, 1 200 CPAs and provisional associations had been registered. An additional 300 had not been in existence for 12 months, and were recorded separately. The Act required that CPAs submit information through the Director General and Minister to Parliament. Since 1996, the Department had had no structure to assist CPAs to comply with the law. There was now a unit dedicated to that. Information that CPAs had to submit on an annual basis included the names and IDs of members, a record of office bearers elected, annual financial statements verified by audit, and minutes of Annual General Meetings. Transactions and the leasing out of land had to be recorded.

He reported that it had now been found that many CPAs were operating without a constitution. CPAs were in the past created without any follow-up. Some CPAs had mineral rights or ongoing business and royalties that could not be accounted for. In Kwazulu Natal, there were no financial statistics forthcoming, or bank accounts without income. Lists of new members were supposed to be constantly updated, but more often than not this did not happen. CPAs would lease land, and then lease it back to the previous white land owners. 16 CPAs in the Free State, and two in Northern Cape, had sold farms purchased by the State. There were a number of irregularities, across the whole spectrum.  Some CPAs did not receive land, and yet were not deregistered. These would now receive help. Mr Gumbi admitted that the overall picture was a bleak one.

The Chairperson remarked that the situation worried him, and he likened the CPAs to a bus stop where there was no record of who was queuing. He was also concerned about the lack of member registration and minuted meetings.

Ms Vuyi Nxasana, Chief Director: Tenure, DRDLR, said that as the Acting Registrar had pointed out, the situation indeed looked bleak. There had been some reports, but it would be necessary to institute an intervention strategy. Matters had merely proceeded in a piecemeal fashion the previous year. Mediators and independent facilitators had been appointed, who found that there was much conflict to be resolved. However, it was clear that interventions had to proceed systematically, and not in an ad hoc fashion. Mediators had to go to the CPAs to see the situation for themselves and to understand problems like the prevailing lack of constitutions. Cheadle Thompson Haysom had been appointed as a legal service provider to pinpoint legal issues and identify those guilty of misappropriation. It was also necessary to find out the reasons for failure to hold Annual General Meetings, as well as the reasons behind the fact that there were no bank accounts or constitutions. Some CPA members were not aware of their obligations and roles. If it was found that there was no business conducted on land, there had to be recapitalisation. Overall, she noted that the situation had to be regularised.

Ms Nxasana continued that a selection had been done of the ten CPAs that most urgently required intervention. Systemic issues would be dealt with, through a proper rollout. Because CPAs had different needs, it was necessary to formulate an intervention strategy and amendment in regard to policy issues. Government institutions to oversee systemic problems had to be established. There also remained a question of whether provisional CPAs had to be registered.

Discussion
The Chairperson wondered if there had been cases where land was taken back, where CPAs had used land as collateral security for bank loans.

The Chairperson asked about the situation in Northern Cape and the Free State, with regard to recapitalisation. In cases where the seller had withdrawn land, he asked if that land would be slotted into the normal course of land distribution.

Mr Shabane responded that preconditions for recapitalisation would be tightened, and that such preconditions would be enforced. There had to be an agreement between the Department, the strategic partner, and beneficiaries. The current period for recapitalisation was five years. There was 100% support initially, but that was phased out later on.

Ms Nxasana added that recapitalisation rightly had to be used to train beneficiaries to farm without strategic partners. Once money became available for recapitalisation, a project monitoring team would step in to prevent exploitation by the strategic partner. Recapitalisation had to proceed in terms of a business plan. The CPA was merely a managing body. Attention had to be focused on individual farmers.

The Chairperson asked what the causes of conflict were.

Mr Gumbi replied that there were ongoing power struggles. Some people had been in office for many years, without ever being re-elected. No Annual General Meetings were held. The situation was at its worst where there was mining involved. There were vested interests. Mediators were urgently needed. There were even intra-family disputes, where claims had been lost. 19 CPAs had sold farms in the Eastern Cape. One Chairperson of another CPA had sold a farm.

The Chairperson asked how those CPAs that did not have a constitution had been formed, and also asked what governed them.

Ms A Steyn (DA) expressed her grave concern over the matter. The general bleak picture had been reflected in newspapers over the weekend. She was particularly concerned that the full truth had not yet emerged, and was suspicious that there was more knowledge than claimed about this worrying situation. She was also concerned that nothing had been said about training, and she stressed that people had to be trained to farm. It was not enough to establish an understanding of the problems around the constitutions. There would be costs involved, and that would take money away from rural development. Farms had been sold back, and in some cases the farmers who bought the land back had been taken to court. She asked if that was in line with the Act, or if there was a possibility that people had unlawfully been taken to Court, and asked for full details.

Mr Shabane responded, with regard to costs, that recapitalisation was a separate project, related to actual farming. In the past, the Department did not provide the resources to comply with Parliament’s requirements for reporting, but those resources were currently being created.

Mr Shabane continued, in regard to the sale of land, that there was a provision that the land could not be sold on for a period of then years. However, it was debatable whether conditions could be included that impacted on ownership rights. There was a lack of State control. A pro-active land acquisition strategy was followed.

Mr Shabane continued that the Act was clear on when the Department could intervene. The Department could not, as he put it, simply “parachute in and make changes”, and the CPA would be within its rights to approach the Court if that occurred. However, it was clear that interventions had to be made, and he ventured that it might be necessary to give some thought to making amendments to the Act. As it currently stood, there was a loophole that did in fact allow for the looting of resources. The CPA was a legal personality, and was sometimes used as a “cover” for such activities.

Ms Nxasana added that the issue of recapitalization, to assist training for farming, was crucial. The business of the CPA had to be sustainable. She admitted that massive costs had been incurred and put into the CPAs, since their establishment. The contract with Cheadle Thompson Haysom was intended to improve compliance, but this arrangement could not continue forever. The training of mediators for the turnaround strategy had run up costs of R18 million over the preceding 18 months.

Ms Steyn opined that it would be more useful to have a single page summary of the most basic facts about CPAs countrywide.

Ms Nxasana noted that the brief summary was already in the report, which mentioned that there was a total of 1500 CPAs, of which 300 had not been operative for a year.

Mr Gumbi added that the national list was updated on a daily basis. There was a separate list of new registrations.

The Chairperson said that CPAs had to be categorised, so that it was clear, for instance, how many had constitutions, how many were in debt, and similar details.

Mr Shabane responded that R208 million had been made available to the Land Bank for people facing debt foreclosure. Land had to be prevented from going back into the open market. A curatorship model to support turnaround included the Land Bank, the National Treasury and the Department of Agriculture Forestry and Fisheries.

The Chairperson quipped that the only time “black” had a positive meaning, was when a bank account was in credit or “in the black”.

Ms Steyn retorted that “white” had come to mean redundant.

Ms P Ngwenya-Mabila (ANC) expressed confidence in the turnaround strategy, to solve existing problems. The Act gave responsibilities to both the Department and the CPAs. Getting expertise on board could assist the turnaround strategy. Challenges had to be dealt with. The Department was also partly to blame for letting the situation develop, and now the question was whether it had administrative capacity to enforce compliance. Requirements for registration had to be spelled out clearly. It was not possible to register the CPAs if the identity of members was not known. She asked if there were interim or provisional CPAs, and how many had not received land. She also asked about assistance plans. She noted that people had to know whether, for instance, they were permitted to slaughter cattle for food. She thought it essential that people involved had to contribute something, even if it was their labour. They had to be motivated to invest in the land, and truly own it.

Mr Shabane responded, with regard to capacity, that a whole new branch was being created to increase that. Registration had become a separate project. Deputy Director General Mr Swartz would lead the branch.

Mr Gumbi replied, with regard to registration, that if a CPA complied with the law it was registered in good faith. After registration, land was received. If a registered CPA did not receive land, the courts had to decide on the issue.

Ms H Matlanyane (ANC) commended the Department for being bold enough to make a start on this. She asked about the development of a mediation unit to help people with no capacity. Such a unit had to operate consistently to ensure that problems did not return. There had been a lack of monitoring of farms sold by CPAs. The lack of proper minutes suggested that the executives had simply taken decisions on their own. She asked if it was possible to capacitate CPAs before they were registered, which would amount to “babysitting”, but at least then nobody would be able to take advantage of their lack of skills. She also said that the Department needed some strategy to raise loans, to get CPAs out of the red.

The Chairperson wondered if the CPAs were the right vehicle for land ownership. In Kenya, land had been distributed in small parcels, in the 1960s. The original beneficiaries had not managed to hold on to that land. There was conflict after the elections. Kikuyus occupying superior class positions had bought up the land on the market, and although those who were then landless had complained, they had failed to admit that they themselves had put the land up for sale.  The inability of the CPAs to manage the situation might be an indicator that not enough had been done from the outset to establish whether this was the correct model to use.

Ms Nxasana responded that Parliament had to lead the situation. The Department was in the process of trying to resolve the problems, and ensuring compliance could solve the problems that were faced. There was structural conflict between traditional authorities and the CPAs. That conflict had to be examined critically. Amendments had to be brought to Parliament. There were cases where there had been a founding constitution, but after that there had been no real consultation.

Ms P Xaba (ANC) appeared irritated at the reference, by the DA, to the media, and said that the Department should not fear the media.

Mr B Zulu (ANC) said that CPAs had not been ready to receive land, because they had received no training from the Department prior to being given that land. He cited instances where, for example, fires had been lit on the floors inside houses.  People who were not motivated to work should rather be ignored. The CPA was not the “baby” of agriculture. He said that there seemed to be a situation where the left hand did not know what the right was doing. Mentors were often poorly motivated to co-operate, as seen on a recent oversight visit by the Committee, where a mentor simply refused to talk to the Committee. The Department had caused problems by giving land to those who were not competent to use it properly. He said that if people proved themselves unable to farm, the land had to be returned for use by other people. Another problem was that the CPA could be at odds with traditional authority and its claims to land. People caught in corridors between chiefdoms could end up killing each other, and there had been “smash and grab” practices to remove those who were under the control of chiefs. Legislation was clearly needed to remedy the situation. The Department had tried to bring traditional leaders on board, but chiefs complained that councillors were taking away their power.

Mr Shabane responded that, in the past, registration had occurred on a first-come-first-served basis. The Minister had talked to land reform beneficiaries. There had to be an interest in farming, and actual needs had to be formulated. A profile of CPA land was required. There was a set of recommendations, and a reference group had been set up to discuss them, which would also be meeting with traditional leaders.

Mr R Cebekhulu (IFP) remarked that there had been claims that local people had been left out in the cold and removed from land. Outside people were brought into the CPAs. In Eshowe, there had been open resistance to people from outside, who sometimes entered the CPA as families. Locals were saying that outsiders now owned ancestral land. It was claimed that chiefs had incited people to resist the CPA. Those removed from land at least had to be granted an opportunity to work on that land. Acts like fence cutting could be linked to the fact that the traditional leaders had been left out. Local people had to be given a chance.

Ms Steyn thanked the Department for assisting the Members in reaching a better understanding. There were some faulty impressions of why things had gone wrong. It had become clear that CPA problems were related to those of the trusts, which were actually an even bigger headache.

Mr Cebekhulu said that it was necessary to look into the role of farmers as mentors. Some farmers had negative attitudes to government. The Department had to insist on a positive attitude. He cited an instance of a farmer in New Hanover who, having got the chance to be a mentor, then divided the CPA by appropriating CPA funds.

The Chairperson noted that 8 out of 200 of strategic partnerships in the Western Cape were actually working. The facts needed to be known. The central question around corporate governance was how people would become involved.

Ms Steyn suggested that CPAs who complied and operated successfully should report on how they had achieved their successes, and these could then be used as a frame of reference in future monitoring.

The Chairperson said that the Chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs had told him that 172 former mayors, with a good understanding of running municipalities, had been called back in to help sustain successful municipalities. People with relevant experience had to be taken on board. Interns had to learn from those who had knowledge themselves. He said that he expected the unit run by Mr Swartz to provide a profile of those who were genuinely inclined to farming, and those who were merely interested in quick profits. The question was how to get the involvement of those who were really committed to farming. It was necessary to agitate for social mobilization, but the question was how to motivate a whole nation. It was necessary to “hasten slowly” to get land to the people, but there had to be a proper foundation for this and social rights were also involved.

The Chairperson added that there had to be minimum standards set, for every family, of rightful access to land. In India, a minimum amount of land was allotted to each family. The local approach was to think of farms as being indivisible, but he said that even if land was not divisible, access was. If the Department was taken to court for intervening, it could justify that, in terms of minimum access standards. Democracy did not have to imply that there would be poor deals around land, and equally did not provide any right to malpractice. He said that those committed to rural development would have to make some unpopular decisions.

The Chairperson summarised that the Committee would need to get the figures in connection with the CPAs, in each province, as well as the names and IDs of members. It would be necessary for the Department to examine the constitutions, as well as minutes of meetings. Many answers to the issues would be found there. Financial statements had to be examined to determine what was happening on the land. It would not be enough to merely quantify. The status of the land had to be determined. Once the legal aspects had been covered, the Department had to urgently see to other matters.

The Chairperson said that Ms Nxasana had argued that the CPA was indeed the right vehicle for land ownership. If that was the case, then it was up to the Department to see which CPAs were working properly, and why. Substantive issues had to be identified, so that the findings could be used as tools. Systems of land ownership and tenure had to be examined. The question was how to create access to land for economic livelihood. Farmers were not being produced at present, and there was never a danger of producing too many farmers, as their skills could also be exported to other areas in Africa. The basis for that had to be built. The unit set up now to ensure compliance had to ensure that national policy cascaded down to ward level. The Ngonyama Trust had ignored stakeholders. Rural development could not afford spectators who could only find fault with those who were doing the work on the ground. He said that he was interested also to see the proposed amendments to the Act.

The meeting was adjourned..


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