National Urban Reconstruction & Housing Agency & Department of Human Settlements strategic plans 2012

Meeting report

Chairperson’s opening remarks
The Chairperson welcomed all presenters, and noted that the Committee and Department of Human Settlements (DHS or the Department) had a common aim of ensuring a better life for all. Whilst these meetings provided the Committee with the opportunity to advise the Department, the Department should take the chance to explain its challenges and suggest any changes to policy that enabled successful implementation of programmes and projects and advancement of national objectives.

National Urban Reconstruction and Housing Agency (NURCHA) Strategic Plan 2012
Mr Viwe Gqwetha: Acting Managing Director, NURCHA, presented the organisation’s strategic plan for the years 2012/13, outlining a five-year bridging finance programme to be implemented in collaboration with various stakeholders. One major priority of NURCHA was to restore sustainability in the entity’s business, given the rising provision for debt experienced in the last few years on its contractor lending programmes. Much time in the past year was spent on working with the Department and National Home Builders Registration Council (NHBRC) in structuring a programme, to be implemented in the current financial year, aimed at better management of lending risk in the construction industry. NURCHA aimed to increase efforts to meet Outcome 8 and ensure value for money invested in affordable housing projects, and hoped to grow affordable housing, particularly the gap market, faced with development challenges. Efforts would be made to capacitate job creation to realise Government Outcome 8 targets. Existing businesses would be developed and NURCHA would ensure full utilisation of resources. This would be ensured through the new model of funding to small and medium contractors by way of the Contractor Finance and Development Programme (CFDP). This programme would address a number of issues including mentoring, finance and training and would be strongly monitored to prevent further risks.

Lending programmes were managed by Built Environment professionals, to enable quick assessment of risks, and to help contractors to complete their work. NURCHA was moving towards minimising reliance on intermediaries and shifting the responsibility back to itself. Previously, intermediaries had attended to risk management.

The strategic plan aimed to respond to the issue of job creation through upgrading of houses and increasing capacity in gap market delivery. Some of the construction risks were a product of the current financial crisis, including slow payment of contractors, which affected their delivery. The entity had faced problems in leveraging funding from the private sector, as there had always been uncertainty around the Development Finance Institution (DFI) process, but the constraints had since been addressed. The new capitalisation of R300 million to NURCHA for a period of 3 years had rejuvenated its confidence. The money would be given in tranches of R100 million and would help in leveraging more funding from the private sector. Financing capacity was increased through new financing structures. CADIZ would provide R75 million, and the TIC would bring R100 million, to increase NURCHA’s capacity to make loans for affordable housing. The capitalisation had, for the first time, meant that it could surpass the number of loans given to developers for affordable housing in the previous years. To date, it had issued 279 and further growth was anticipated in the area.

Factors that had been considered in lending, particularly in the gap market project ventures, were location, bulk services and price of the land. The three factors put together enabled the viability of projects in respect of demand and the ability to get banks’ approval. If the infrastructure bulk services were to be shared equally between the public and the private sector, prices would be kept stable within the gap market. NURCHA was very positive about the prospect for growth in the area due to the role that would be played by Housing Development Agency (HDA) and NHBRC. HDA would play a major role in identifying and managing the release of suitable land in order to increase capacity in affordable housing and the work that was being done by the NHFC in Finance Linked Individual Subsidy Programme (FLISP) would help energise housing delivery.   

This positive environment would empower the public sector to take care of major operations, rather than relying on private developers to produce affordable housing. In the next five years, NURCHA was looking to deliver 18 000 affordable houses and figures were expected to grow over time. Three areas would be targeted for the infrastructure subsidy. NURCHA would play a direct role in the implementation of programmes and reduce reliance on intermediaries. The implementation of the Constructor Finance and Development Programme would assist 120 individuals, of whom 30% represented women and youth contractors. NURCHA would also recover delinquent loans, to deal with high debt provision experienced in previous years.

The programmes would be implemented through a two-year grant from the Department.  Working together with provincial Departments of Human Settlement, NURCHA would extend its capacity in programme management, people leadership, and institutional development and finance management systems, and this collaboration would minimise risks. NURCHA had 24 subsidy housing projects, and this decline was also linked to precautions put in place to reduce risk.

Mr Sindisa Nxusani, Chief Financial Officer, NURCHA, said that planned to spend about R55 million in this financial year to support its programmes. It expected significant growth in the programme management fees, from R15 million to R50 million. Administration expenses were expected to grow from R50 million in the 2012 financial year, to about R86 million. This figure took into account the support costs that would be needed in implementing programmes. In the current financial year, provisions were expected to grow to about R2, 2 million and NURCHA should reach a net surplus, compared to the R37 million in the previous year. The implementation framework had been approved by the NURCHA Board and presented to the DHS for approval. NURCHA would continue to monitor risk areas that had been identified through a risk workshop. There was a fully functional Board, which held three Board meetings per annum. All committees were operational. The fraud prevention strategy was buttressed by whistleblower protection.

Discussion
Ms M Borman (ANC) sought clarity whether it was practicable to try to restore sustainability by trying to recover loans. She asked how the delivery capacity in affordable housing would be enhanced. She raised concern about the slow payment of contractors and asked how NURCHA was dealing with this and trying to prevent it. She also asked if the delivery of 18 000 units in the next 5 years would be spread evenly through out the period.

Mr Viwe said a multidisciplinary team had been set to deal with delinquent loans, and it was tasked with identifying reasons behind late payment, and had identified that in many cases accounts took too long to be finalised in departments, and contractors had no income with which to pay back the loans. He noted that NURCHA was conscious of the risk of problems, especially with emerging contractors, and planned the necessary interventions.

Mr K Sithole (IFP) wanted clarity on slide 9, relating to the R75 million that would be received from CADIZ. He enquired where the 18 000 units to be built over the next five years  would be located. He also asked why NURCHA had targeting women and youth contractors, but apparently excluded people with disabilities.

Mr S Makgalapa (DA) appreciated the presentation but emphasised that the organisation should focus on quality rather than quantity in its delivery strategy. He was pleased about the collaboration with NHBRC because, in the past, loans had been offered to contractors who did inferior work. He asked what measures were now in place to ensure that the loans resulted in good quality work and worthwhile investment. He was happy about the Contractor Finance and Development Programme (CFDP) funding model which helped in mentoring contractors. He sought clarity on how the DFI process was constraining planning.

Mr Viwe said that the Small Contractor Development Programme would ensure that critical aspects of the delivery chain were not left to chance, because of the collaborations with other parties. The NHBCR would ensure that there was adequate training of contractors and compliance with project requirements. The rationalisation of the DFI process was welcomed for negotiating long term contracts with financiers.

Ms P Duncan (DA) wanted to know the location of gap market housing projects and asked to what extent HDA was involved. She asked what criteria determined the delivery of 18 000 units in the next five years.

Mr Viwe replied that it was not easy to predetermine where all the projects would be located over the five-year period, so NURCHA relied mainly on its historical lending programme and initiatives that were done by other parties. The units would not be delivered in equal amounts over the three-year period, as other parties had to play their role. For example, HDA facilitated the release of land allowing for development of bulk infrastructure and affordable housing. The location of gap housing was determined by access to work, and existing infrastructure (such as schools and clinics). A good example was Protea Glen in Soweto, where land was bought at historical prices, enabling developers to deliver on affordable housing at rates below R390 000. Affordable housing would become much more predictable because of the bigger role to be played by the public sector in the release of land and housing development.  

Ms D Dlakude (ANC) wanted to know if the gap housing project catered for rural areas. She asked in which provinces NURCHA was working, and asked for an assurance that the involvement of NHBRC would result in quality low-cost housing, and enhancement of building capacity.

Mr Viwe said provision of housing in rural areas and geographical diversification had continued to trouble NURCHA. No affordable housing projects were undertaken in Northern Cape and Eastern Cape. The most beneficiaries of loans for affordable housing were found in Gauteng and KwaZulu Natal, and plans were under way to expand projects in other provinces as well. To achieve that, NURCHA would start by identifying constraints faced by each municipality and provinces in affordable housing projects. It was serving in a Committee in the Western Cape that prioritised affordable housing. In provinces where there was no security of land being developed, loans could not be approved.  

Ms J Sosibo (ANC) wanted to know why there had been poor employment in NURCHA, but noted that it had since been revised. She also asked when the entity had received the R100 million that was part of the R300 million recapitalisation.

Mr Viwe said the R300 million was spread over three years and the first payment of R100 million had been received in the previous financial year. The money could either be used for lending in affordable housing or in fulfilling NURCHA’s developmental mandate, by partnering with the private sector in order to leverage more funding. As a result a number of national institutions, rather than only foreign companies, were now prepared to lend money because of the comfort provided by the recapitalisation. 

Ms Sosibo questioned the effectiveness of the whistleblower system, if the reports were made only once in the year, saying that fraud happened any time during a year.

Mr Viwe said that the whistle blowing role was contracted to a private company that came to brief NURCHA about its operations once a year, and reported to the Chairman of the Audit Committee, who was a non-executive member of NURCHA. However, the issues were investigated and attended to as they came to light.

The Chairperson said that a number of questions had not been attended to by NURCHA, including the question on people with disabilities. She noted that the Committee was not prepared to accept excuses on having a presence in the rural areas. A balance should be maintained in the delivery of projects and the current bias towards urban areas needed to be stopped. Contractors in rural areas were in need of support as well. She appreciated efforts in ensuring integration in execution of projects but said that more needed to be done. She challenged NURCHA to come up with a plan to solve the issue of late payments to contractors, and asked what measures it was taking in the provinces to ensure that invoices were submitted on time. In some cases, contractors were paid their money after 18 months, which affected their viability as most of them would have borrowed money in order to undertake projects.  

Department of Human Settlements Strategic Plan presentation
Mr Thabani Zulu, Director General, National Department of Human Settlements, noted that provincial representatives were also present at the meeting, and could attend to questions about provinces and municipalities. This presentation was part of the Department’s consultative process and focussed mainly on the mandate, allocations to provinces and the key deliverables and focus. The Department had been working on aligning its budget with the Government Outcome 8, and with priority national imperatives, as well as considering how Metropolitan Municipalities would benefit from Department grants.

Mr Anton Arendse: Chief Director: Human Settlement Planning, DHS, presented the Business Plan, and focused on the Human Settlement Development Grant (HSDG). The division of revenue to be tabled at the end of April had implications for the transfer of grants to provinces and expenditure. In line with the requirements of the Public Finance Management Act (PFMA), a maximum of 5% of the grant had been transferred in April. He noted that this presentation would not focus on the Outcome 8 and national priority projects, as these were described to the Committee when dealing with the State of the Nation Address (SONA).

New national imperatives identified for the 2012/13 financial year were the Finance Linked Individual Subsidy Programme (FLISP), the rectification programme, rural development and disaster relief programmes. The HSDG allocations to the nine provinces totalled R15,7 billion in this financial year, with the major recipients being KwaZulu Natal (KZN), Gauteng, Western Cape and Eastern Cape. The allocations were made after taking into consideration a number of factors such as demography, migration patterns, the formation and prevalence of slums. The allocation format was reviewed annually at MinMEC level, which allowed for ample input in the process. Since this was the first time the Department was presenting its business plan together with provinces, the format was different and detailed how and when money would be spent per region and per project. The Department had moved beyond a mere discussion on grant allocations, and was now ensuring a direct correlation with the number of houses produced. New responsibilities included planning, land assembly, and infrastructure provision. The spending of R15 billion would provide much more than housing alone to beneficiaries. The Department would spend close to R 4.5 billion on slum upgrading, accounting for 29% of the total allocation, but this represented the minimum that would be spent. The major provincial contributors towards that were Eastern Cape, Gauteng, Free State, KZN, Mpumalanga and the Western Cape.  Slum upgrading referred to on site upgrading but there were other programmes which addressed other issues, in particular the Integrated Residential Development Programme (IRDP) which in some provinces, consumed about 20% of their allocation.  About 100 000 units and sites would be put on the ground in this financial year. In respect of affordable rental housing, about 10% was committed, constituting R1.5 billion, and major contributors were Gauteng and Western Cape, who had the largest number of immigrants. Gauteng would receive 1 552 units and 1 000 sites and contributed about R623 million. The projects were specifically part of the Urban Settlement Development Grant (USDG) fund, and excluded work that was being done by the Social Housing Registry Authority (SHRA). The National Housing Finance Corporation (NHFC) was ready to implement the FLISP programme in which R215 million had been committed, including the Credit Link Subsidy, which represented about 1,4% of the allocation. Provinces had set aside about 3% of their total budget allocations for land acquisition.  
Less than R1 billion would be committed to rectification in the current financial year but a balance had to be struck between remedial work and backlogs. In the rural development programmes, about 14% of total allocation would be used. The major contributors to the programme were KZN, Limpopo, Eastern Cape and Mpumalanga, and Gauteng had committed to 225 units and about R13 million of their funds towards the programme. Provinces had also undertaken to spend on priority projects.  DHS was also was planning to spend over R370 million on disaster relief programmes, and R180 million had been rolled over.

Slides were tabled showing how provinces spent their monies and contributed towards different projects.  For example, a large amount of money in the Eastern Cape went to slum upgrading but Northern Cape invested in new and other projects. Limpopo allocated a large chunk of its budget to rural housing, in line with its strategic plan, but KZN showed an even spread between rural and urban commitments, whilst Gauteng had 52% commitment in other projects, including the Backyard Rental Programme. A slide on USDG/HSDG allocations of R3.7 billion showed how this would be spent in eight Metropolitan Cities According to provincial business plans about R5 billion of the HSDG fund would be used in these cities. The combined value of the USDG/HSDG funds was about R12 billion, and the total spent on human settlements grants would be over R23 billion. About 54% of this would be spent in the cities, to deal with urban poverty and housing. By 2030, 70% of South Africa’ population would be urbanised, representing a growth of about 11 million in various sectors.

There was a fair balance between programmes identified with about 42%of the HSDG fund expected to be spent on Outcome 8 priorities, 27% on other priorities such as FLISP, rectification, Disaster Relief, Rural Development, and 31 % to be channelled towards other smaller projects and RDPs.

After 2009, DHS was no longer attending only to housing. It was pleased with the integrated human settlements that had been achieved since then – and Lephalale, in the Northern Mineral belt, had been singled out as a priority. About R274 million would be spent in the project in the current financial year and efforts would be made to ensure that other projects, such as Cornubia, addressed human settlements. There was need for integration between FLISP plans and SHRA, and R125 million had been allocated for the delivery of 4100 units.

Discussion
Ms D Dlakude (ANC) wanted to know why there were no figures on sites and units allocated in some provinces, asking where units would be built if no sites had been allocated. She noted that during the Committee oversight visit to Eastern Cape, there were several houses that needed to be rectified, for example in Nelson Mandela Bay, but nothing  had been done to attend to this despite the lapse of more than two years, and budget being allocated to attend to it. If the province was receiving funds, then questions must be asked as to how were they used and how long it would take to solve the problem. She noted that disasters could happen any time. She further questioned the figure of 120 houses needing rectification in Mpumalanga, because Mnkomazi area in her constituency had not been assessed yet. Ms Dlakude was also critical that urban areas appeared to be given greater priority, and said that allocations should be assessed according to backlogs, not population density, otherwise the problem of migration would continue. Differences in service delivery between urban and rural areas still persisted, despite the fact that people’s lives needed to be changed throughout the country.

Mr J Matshoba (ANC) blamed the DHS for disasters in KZN, saying that houses had been built in 2005, and doors had been fitted but the houses still remained unfinished. There was non-delivery in rectification in the Eastern Cape Amathole region, and Amahlathi Municipality. There was no coordination between departments for disaster relief in KwaZulu Natal.

Ms A Mashishi (ANC) wanted to know in which areas rectification processes were being implemented. She asked that the Limpopo representatives respond to slide 23, which reflected percentages on provincial priorities. She commended the Limpopo Provincial department for winning performance awards three times.

Ms N Mnisi (ANC) wanted to know if it was possible to change the formula on provincial priorities allocations. She was pleased to hear that rectification was being prioritised, but stressed that the figures quoted should be reflected in actual delivery on the ground. She asked how the allocations were going to be monitored, and asked if the provinces were ready to spend the money.

Mr S Magkalapa (DA) noted the new national imperatives for 2012/13, and agreed that it was a complex problem to balance delivery in urban and rural areas, especially since urban areas were experiencing alarming growth due to in-migration. The rectification matter was very problematic. He thought that many of the figures presented were very conservative. He was concerned about failure of provinces to spend, saying that this could have been the reason why National Treasury reduced the budget allocation. The need for rectification should be eradicated through quality delivery in the first place.

Mr Makgalapa said there was some confusion on how provinces were to spend the HSDG fund, because it was not being utilised. The Rural Infrastructure Development Fund was not being spent, and only 20% had been utilised in the previous year, despite problems of bulk infrastructure. He asked for the overall national plan on slum upgrading, given that the North West province was planning to pass by-laws to eradicate slums. He also enquired what provinces were doing to engage the HDA on land matters and whether DHS was working with the Department of Public Works (DPW) in matters related to private land to ensure development in the areas.

Ms P Duncan (ANC) appreciated the presentation but expressed concern that some of the figures that had been presented by Mr Arendse were not on the hard copy. The Integrated Development Plan process was very specific on awarding socio-economic rights, and the Department should give guidance to NURCHA on how that could be better addressed. She encouraged provinces to take seriously the issue of housing in their areas. Migration was critical and impacted on government planning, so a proper database was needed on all migration processes, including information from local clinics and schools.

Mr K Sithole (IFP) said that the President had alluded to bulk infrastructure in the SONA, but the business plan said little on this. He asked what the Gauteng provincial department was doing about the problematic issues around backyard dwellers. He wanted to know why houses that had been built in 2005 in Tshwane had not been allocated to beneficiaries.

Ms Borman congratulated the Department on the presentation, and said that the information now provided would assist the Committee in monitoring the quarterly reports on housing delivery. However, she was critical of the late delivery to Members, only on the morning of the meeting, saying that they had not had time to digest the presentation properly.

Ms Borman asked why there was a bigger contribution (62%) by the Free State in slum upgrading and Limpopo, and why the Free State had no affordable housing allocations. She wondered if the provinces were working with HDA to increase the pace of land acquisition. There was need for further clarification on the rectification process, as it was not clear what figure was still outstanding. She also enquired if the provinces were aware of how the USDG grant was to be spent. She too questioned why sanitation was not reflected in the presentation, despite being part of the Human Settlements mandate.

The Chairperson said that sanitation should show an allocation of its own and not be consolidated into other programmes. She noted that the presentation did not deal enough with the issue of integration, and there was no clear budget for Millennium Development Goals (MDGs) and climate change, both of which were important issues for the Committee. There should be no compromise on rectification, and the fact that the budget had been slashed was testimony to non-delivery in this area. In the Western Cape 2 000 units were rectified last year but the number had since decreased, and the DHS must explain why this was so. She also asked why Mpumalanga had not reflected its Comprehensive Rural Development Programme in its business plan. The figures in the presentation were not reflective of the situation on the ground and needed to be consolidated.

The Chairperson wanted to know how the DHS intended to address disasters that had happened before the allocations. She asked how farm dwellers were classified in Western Cape and Gauteng, as both provinces’ allocations showed insignificant allocations for rural development. She asked how the Department was developing new towns, and when new ones would be constructed. She commended Mathathieni community in ensuring that no slums were built, but wanted to know what efforts were being made to bring development to the area, since the Social Housing Regulatory Authority and NHFC shunned the area. The performance of people such as teachers and nurses was being affected by lack of housing development in rural areas, for example people who worked in Alfred Nzou lived in KZN. In the next session, integrated planning had to be addressed

Ms Dlakude sought explanation on a report that appeared on the news about the flow of sewage in settlements in Gauteng, and on the bucket system used in the Eastern Cape.

The Chairperson said that it was unacceptable and a source of concern that it was left to the Public Protector to bring these matters to light, whilst the DHS, provincial departments and municipalities should be monitoring and conducting oversight. She asked why the DHS had still not sorted out the bucket system still in use in areas such as Nelson Mandela Bay. 

Mr Zulu said that the allocation formula used by the Department was designed by National Treasury and could not be reviewed. The Department was approaching the issue of rectification in a broader way though it was still in a transition period. In the current year, a strategy was being drafted on how to manage the matter at national level and this would be presented to the Committee. He agreed that issues of sanitation were critical, but there were logistical problems. National Treasury had awarded budget for two years, and a new model was being designed to address the matter as well as reviewing how the problem had been attended to previously.  About R479 million had been given to the Department by National Treasury for the 2012/13 period, and R289 million for 2013/14. At executive and municipal level, the Department was engaging on how the delivery model could be capacitated. The Committee would be briefed on the model.

Mr Mongezi Mnyani: Head of Department, Provincial Department of Human Settlements, Gauteng said that the media tended to mislead people, by exaggerating issues around the burst sewerage pipes.

Mr Makgalapa interjected to note that he had been to the site that the Public Protector visited.

Mr Mnyani apologised, and said that Braamfischerville was an old development built by a private developer. The houses had been built below the flood line and about 158 houses had been affected in the disaster. People were given an option to move to another location, but they refused, arguing that children attended schools in the area. Only two people opted to move. Another project was identified in Lufhereng (in Gauteng) to which 58 families moved, and the remainder of families would be moved when another project was identified. The houses affected by the disaster had been demolished and new developments were under way. The City of Johannesburg was now busy with storm drains and laying of sewer pipes, although it had argued, for the past five years, that it did not have to attend to this as Braamfischerville was not part of Soweto. A three-year programme was in place to rectify Braamfischerville’s problems, but he reiterated that people were not prepared to move to other areas. The rectification process was suffering in Gauteng. Although this was started in 2009, before rectification was adopted as a national programme, it was phased out.  About 121 000 houses had been identified and dealt with, but an additional 600 000 had been identified in Mancinville by a private company. The Department was currently in a legal battle with the company, who had used wrong building materials, and the houses were being demolished.

Mr Mnyani said, in response to questions around FLISP, that there had been negotiations had been done with NHFC and a protocol was being evaluated. In Cosmo City there were about 2300 houses that were occupied. However, people were unable to qualify for these if they earned more than R7 500. There were another 4 000 units being financed through FNB, for which teachers and police personnel could qualify, and another 1 000 houses were to be built in Chief Luthuli. about R450 million had been set aside for hostel upgrades. Hostels belonged to the municipalities and not the province, so there was a need for a coordinated effort in finding solutions. Of the 63 hostels in the entire Gauteng province, only six belonged to the provincial Department of Human Settlements. Properties were poorly managed, and therefore became dilapidated, but municipalities were being urged to put property management measures in place. Over the next MTEF period, new hostels would be built. About R1,3 billion of Gauteng’s budget had been committed towards new developments, catering for upgrading of informal settlement, relocations and new towns.  About 27 new townships had been identified in the province and currently nine were under implementation and others were in the planning stage. A new town with 18 000 units was nearing completion. The aim was to ensure that, by 2014, new towns would have been built and the provincial department was busy negotiating with HDA on land issues. HDA tended to concentrate on state owned land, but the Gauteng provincial department was mainly interested in private land.

In relation to rural housing, he explained that the Gauteng MEC had launched a project in Ithembalethu. The Department of Cooperative Governance and Traditional Affairs (COGTA) received the budget for disaster relief from government, but took time to release it to municipalities, and arrangements were ongoing with the Head of Disaster Relief to improve the situation. Municipalities were owed money that they had used for the 2010 disasters, and in Duduza the province had used money obtained from the private sector, with little contribution from the Disaster Management Centre. These issues needed further attention. With its current budget, the province was confident that MDG targets could be met by 2014, in spite of in-migration and population growth. A significant amount of the USDG went towards meeting MDG targets. The province was working with municipalities to ensure spending on the USDG but some of them had backlogs in projects that they had to align with the Fund. Small-scale rentals (backyard dwellers) were a serious problem, but efforts were being made in areas such as Orlando, Mamelodi and Attraville to sort out the matter.  

The Chairperson said it would be necessary to hold a separate session with all the provinces and national department to engage on these issues before September. There was a complaint that sanitation was not being taken seriously by the country, because there was no specific budget. All parties had to prepare a paper to be presented at the Toilet Day Summit in September

Ms Gabi Masilela; Head of Provincial Department of Human Settlements, KZN, said, with regard to the development of new cities, that this province had concentrated on an approach that would help the province to link up with infrastructure corridors. In responding to disaster relief, the province was moving away from relying on the Disaster Management Team to deal with issues and was improving efforts in coordination. A backlog had been created through the ineffectiveness of the previous framework but this was being addressed. However, some people who failed to fix their houses were demanding government assistance as well. The issue of rectification was affected by coastal disasters, and major areas of concern were Umlazi, and KwaMashu, which dated back to pre-1994. The municipalities were given allocations two years ago to do the rectification, as the quality of the houses was very poor.  The spending of the USDG fund by Metros was affected by financial year misalignment, but monitoring and close cooperation with Municipalities had guaranteed spending.

The Chairperson asked if the province had signed the implementation protocol with the Municipalities, saying that without it, there would not be delivery on the USDG. Intergovernmental relations and cooperative governance guided government operations. The only directive in using the fund was to sign the protocols.

Ms Masilela said this Department was in the process of signing the protocols and the fault was not with the national Department, but with shortcomings in inter-governmental relations. The province had a good relationship with HDA, and this would help in addressing land issues. KZN was one of the provinces with huge infrastructure backlogs, which affected delivery, and the reduction in rural targets resulted from the fact that plans were aligned to the provincial Spatial Development. There were negotiations with traditional leaders and Ingwenyama Trust around issues of redefining rural settlement patterns, and to allow people to access basic services. After that process, the targets would be increased. The lack of infrastructure had compelled the province to be biased towards areas such as E-thekwini, to which people had migrated, and which accounted for about 78, 6% informal settlements in the province.

Mr M Tshangana, Provincial Head of Department, Western Cape, said that this province had the capacity to spend the money and achieve the financial targets, as illustrated by its performance over the last two years. The biggest chunk of the USDG grant was spent on funding bulk infrastructure, as this would help to accelerate housing projects delivery. An amount of R60 million had been earmarked for delivering on MDGs, but he said that the biggest challenges was not the access to services, but the maintenance of infrastructure, which was a prerogative of the municipalities.  The rectification process was started long ago in George, Thembalethu and Kwamandukuse, where there were mud houses of 60 square metres. Funding had to be raised to addressed the issue

The Chairperson said that the houses in these areas were in poor condition and had no floor. The province was supposed to prioritise other areas that were hard-hit, rather than waiting until a budget could be found.

Mr Tshangana said the houses would be rectified and a decision had been taken to prioritise Mossel Bay and the Central Karoo. A technical report was currently being done in Mossel Bay, that would be submitted to the regional manager. About 90% of what was in the signed protocols had been implemented and municipalities were working as implementing agencies. In relation to questions on rental units, he noted that only units that had been completed were counted, and rental sites were deliberately left out to prevent problems with the Auditor-General.

The Chairperson pointed out that, for the process of standardisation, units that had not been completed were supposed to be counted, irrespective of the size of the property and stage of development.

Mr Tshangana replied that the projects had standardised business plans, and he was only talking about affordable housing. The HDA had a good relationship with the province, it was acting as an implementation agent, and an implementation protocol would be signed with HDA.

Mr Thuni Makatla, Head of Provincial Department of Human Settlements, North West, said a cordial relationship existed between the province and HDA and there had been a transaction for 259 hectares of land. Delivery in rectification was concentrated in areas within the province and 1 000 units in the province had to be rectified. In relation to FLISP, two projects would be implemented, together with NHFC and FNB and other employer boards would be engaged. The Department, with other agencies, had funded a programme of identifying informal settlements through satellite imagery, and about 540 slums were located. Based on that project information, the province could plan. About 42% had not changed, but there was planning on 19%, and the province was putting services into 3,6% of areas.

Mr Tim Mokhesi, Head of Provincial Department of Human Settlements, Free State, said his province had an agreement with HDA and a protocol agreement was signed with NHFC in respect of FLISP. The 32% figure for in slum upgrading resulted from upgrading informal settlements and top structures. The issues of the bucket system and sanitation were being addressed under RDP phase 1, but the problem was created by some residents who deliberately demolished infrastructure. The backlog was sitting at about 2 000.

The Chairperson said that rectification was not done in the Free State province, or, if any was done, it tended to be minimal. However, the province must be commended for building quality houses.

Ms Renita Soodeyal, Acting Head of Provincial Department of Human Settlements, Northern Cape, said that in respect of rectification two projects were underway. A protocol would be signed with NHFC in Lerato Park. The province had received money from the Department of Cooperative Governance for disaster relief, and this would be used to address problems in Upington in low-lying areas that were prone to disasters. In respect of rural housing, she pointed out that there was not much use of the rural subsidy but an Integrated Resource Planning policy was in place. She queried the allocation formula, saying that the 2% budget allocation to this province was “pathetic”, especially given the Northern Cape’s good performance. At the least, the allocation could be increased to R500 million. The Northern Cape received poor treatment, as it also did not receive the USDG grant, and something needed to be done to help the poor in this province, who were suffering. 

The Chairperson implored the national Department to increase allocations to the Northern Cape, agreeing that it spent the allocations well. She said that the Director General needed to meet with the Committee, discuss the matter and make recommendations to National Treasury. She commended the province on its good spending.

Ms Belinda Mojapelo, Chief Financial Officer, Provincial Department of Human Settlements, Mpumalanga, said that among the 5 720 units allocated, about 500 were referred to under the CRDP programme but there was a problem in the manner percentages were represented in the presentation.

The Chairperson said that the CRDP being popularised in Mpumalanga was not included in the business plan.

Ms Mojapelo replied that the information was reflected in the business plan. In terms of bulk infrastructure, there was an allocation set aside for toilets in Umkomasi

The Chairperson asked how the province had allocated the money, if beneficiaries had refused to sign protocols, and there was an unsettled matter. She asked what had happened to the money allocated last year.

Ms Majapelo said the grant was allocated through the National Department and the province had little power in the matter. The report obtained from the national Department showed that the issue had been dealt with. To speed up the creation of new cities, the province bought land in Emakhazeni, Nkomasi, Mbombela and Emalalhleni Kusile power station. In respect of FLISP, the province was in the process of finalising the implementation protocol with NHFC, and programmes would be rolled out to Emalalhleni and to other identified areas. Only 120 units were targeted for the rectification programme, and the provincial departments depended heavily on the municipality to provide information on locations of units, after which an assessment would be done.

The Chairperson said it was not the role of Municipalities to identify units and implement programmes, and it was not enough to delegate work to them with proper monitoring and evaluation. She suggested that a meeting be scheduled where issues could be resolved.

Ms Asanda Gidana, Director: Human Settlement Planning, Provincial Department of Human Settlements, Eastern Cape, acknowledged the backlog in the rectification programme, but said there was progress. In this financial year, the provincial department had identified more than 6 500 units. It was not easy balancing the rectification programme and units to be constructed, which slowed the process, and it was necessary also to manage demands from the community, which could not differentiate between units to be rectified and those suffering from poor maintenance. The province was responding to disaster in the form of temporary shelters. The revitalisation programme and building of new towns was very slow, due to lack of intergovernmental collaboration.

Mr Siresh Galahitiyana, representative of the Eastern Cape provincial department, noted that a pilot programme had been initiated on FLISP with two units in Nelson Mandela chosen as a pilot project. The province was working in close cooperation with the NHFC and national Department.

Ms Zesuliwe Mcuze, Head of the Provincial Department of Human Settlements, Limpopo, said that this province’s projects were not ready for top structure implementation but the provincial departments was busy with infrastructure development. It was looking to sign an implementation protocol with NHFC for future implementation of the FLISP programme. In relation to rectification, more than 2 000 units were given to NHBRC for assessment, and it had good relations with HDA, which had since identified all the privately-owned land in the province. As part of disaster relief, efforts were being made to relocate residents from an informal settlement in Lephalale, which was situated on the flood line, to another location, once this had been identified by the HDA. A meeting would be held to clarify outstanding issues.

The meeting was adjourned.