Department of Rural Development & Land Reform; Commission on Restitution of Land Rights; Ingonyama Trust Board 2011/12 Annual Reports

Meeting report

Department of Rural Development and Land Reform (DRDLR) presentation
Ms Ntsiki Mashiya, Deputy Director General of DRDLR, stated that 2011-2012 was the first year where the strategic goal for good corporate governance and service excellence through compliance with the legal framework was articulated in the Annual Performance Plan of the Department. Great improvement had been seen in this area. The Department focused on three areas to achieve the strategic goal:
• Institutional arrangements: which sought for effective coordination of the implementation of the Department's programmes and as a result of which the "Back Office" had been established
• Systems enhancement: lCT, planning, monitoring and evaluation and financial systems and processes had been enhanced.
• Compliance and accountability: The risk management strategy was approved and implemented. This strengthened the legal interventions to fast-track labour disputes, disciplinary matters and litigation.

In terms of financial governance, 98.3% of the budget had been spent compared to 97.7% in the previous year. In the supply chain management area, significant improvement was recorded in the timely payment of suppliers. This was evidenced by 95% of undisputed invoices which were paid within 30 days. The Department continued to put systems in place to ensure 100% compliance. As regards policy and legislation, the Spatial Planning and Land Use Management Bill (SPLUMB) had been approved by Cabinet for submission to parliament.

Administration
The major challenges confronting the DRDLR were that reducing the Department's vacancy rate had proven to be a challenge due to an inadequate supply of relevant skills particularly in the geomatics field, amongst others. This was being addressed through the provision of scarce skills bursaries. The requirements of the Occupational Specific Dispensation (OSD) had contributed to the inability to reduce the vacancy rate. The prolonged policy and legislation consultation processes has also delayed the finalisation and implementation of critical legislation.

Geospatial and Cadastral services
The major achievements were:
• Comprehensive land register: In the year under review, 623 078 land parcels were verified (constituting 54% of the total land earmarked for verification).

• E-cadastre: This was the digitisation of the land administration system which had had improved the turnaround time of registering deeds from 14 days to 6 days. This had yielded positive results in the efficiency of land administration.

• SPLUMB: The Spatial Planning and Land Use Management Bill (SPLUMB) had been adopted by Cabinet in March 2012.

The major challenges in relation to geospatial and cadastral services was inadequate supply of relevant skills in the Geomatics field. This was being addressed through the provision of scarce skills bursaries. Another major challenge was that delays in the surveying and registration of state and Trust Land were experienced due to difficulties in engaging with resident Chiefs. However the Department had engaged with tribal authorities and this had led to the alleviation of obstructive factors.

Rural development
The major achievements were:
• Food security: A total of 947 household food gardens had been established for food production purposes. The recapitalisation of 261 farms through the Recapitalisation and Development Programme (RADP) could be viewed as a major contributor to food security initiatives.

• Skills Development and Job Creation: Training on technical enterprise development had been implemented with a total of 3819 Comprehensive Rural Development Programme (CRDP) beneficiaries reached. This had resulted in the establishment of 92 agricultural enterprises in the CRDP sites. The establishment of these enterprises and other construction initiatives had also created 10 049employment opportunities.

• Rural infrastructure development: Through its own efforts and improved coordination and partnerships with other sector departments, the DRDLR provided rural communities with access to water, sanitation, energy and road infrastructure. As a result, the following milestones were recorded: bulk water projects in the form of reservoirs in Ndaya, KZN and Disake, North West, were completed; 3058 households were assisted with clean drinking water; 37km of water-pipeline from the Orange River to Riemvasmaak in the Northern Cape was completed; bulk sanitation infrastructure was completed in the Vryheid KZN benefitting 903 households; 564 households were provided with sanitation units in the various CRDP areas thus significantly improving the dignity of rural communities; 780 households were connected to grid electricity in Msinga; the construction of the Nelson Mandela Legacy Bridge in the Mvezo and Ludondolo villages in the Eastern Cape was underway; ICT infrastructure was rolled-out in 15 rural schools across the country with 3 500 learners accessing ICT services.

These various infrastructure projects resulted in the creation of short-term employment opportunities and when completed would improve the socio-economic conditions in the affected rural communities. In the long term, the results would be improved by social cohesion and improvement in the asset base of these rural communities.

The major challenge in respect of rural development was inadequate integrated infrastructure development planning across the spheres of government. In mitigating against this challenge, the Department would continue to focus on institutionalising the CRDP management system and had developed norms and standards for rural areas that would enhance integrated planning and delivery. Variances in the implementation of the ICT programme were attributed to delays in finding a sustainable model for ICT delivery in rural areas as well as challenges experienced in identification of sites.

Land restitution
The major achievements were in relation to:
•Finalization of land claims: A total of 209 land claims (backlog) were finalised.
•Settlement of land claims: A total of 416 land claims were finalised, benefiting 14 437 households. A total of 98 484 hectares of land were approved for restoration.

The major challenge was that the restitution process was delayed by community, family and boundary disputes; together with demands for exorbitant amounts for the land claimed.

Land reform
The major achievements were in relation to:
• Land acquisition: A total of 392 850 hectares of land was acquired translating to 310 projects benefiting 1211 beneficiaries.
• Recapitalisation of land reform farms: A total of 261 terms were recapitalised contributing to food security initiatives.
•Skills development for emerging farmers: A total of 277 emerging farmers were trained in agricultural programmes.
• Revitalisation of irrigation schemes: A total of 5 irrigation schemes were under revitalisation.

The major challenge in respect of land reform was in implementing the Recapitalisation and Development Programme. The Department had experienced some challenges which included the sourcing of strategic partners for implementation of projects. The Department had since held workshops to review the impact of the programme and was currently enhancing the policy on recapitalisation and development.

Financial report of DRDLR
Ms Rofhiwa Singo, DRDLR Executive Manager: Financial Management, provided overall feedback on the financial performance. In respect of Administration, the department had spent 98.3% of its budget compared to 97.7% in the previous year. There had been an increase in budget from R7.7 billion in the previous year increased to R8.1 billion in the 2012 financial year. Of the 98.3 % expenditure, about 14% was for compensation of employees, 20 % was good and services expenditure, and about 60% went to restitution and land reform.

A breakdown was given concerning the actual expenditure per programme:
▪ Administration: actual expenditure was R934.5 million or 99.4% of the total budget allocation of R940.4 million, under-spending was mainly due to vehicles not being acquired.
▪ Geospatial and Cadastral Services: actual expenditure was R582.7 million or 99.3% of the total budget of R587 million. The major contributor of under-spending was procurement of specialised equipment.
▪ Rural development: actual expenditure was R786.4 million or 90.7% of the total budget of R866.9million; under-spending was mainly attributable to compensation of employees due to challenges in attracting and retaining adequate specialised skills and secondly on goods and services due to delays in rolling out CRDP projects.
▪ Restitution: actual expenditure was R2.376 billion or 99.3% of the total budget allocation of R2.393 billion, under-spending was mainly due to compensation of employees.
▪ Land reform: actual expenditure was R3.317 billion or 99.1% of the total budget allocation of R3.349 billion; under-spending was due to delays in payment of machinery and equipment acquired.

DRDLR’s response to the Auditor-General’s report
It noted that the Department had three entities under the control of the Minister of Rural Development and Land Reform which were the Deeds Registration Trading Account, Agricultural Land Holding Account and the KwaZulu-Natal Ingonyama Trust Board. The Annual Report of the Ingonyama Trust Board was tabled separately from that of the Department whereas the audit reports of the other two entities were included in the Department Annual Report.

The Agricultural Land Holding Trading Account which carried 73% of the land reform budget of R3.3 billion received an unqualified audit opinion. The Deeds Registration Trading Account which over the years had obtained an unqualified audit opinion was qualified due to the incompleteness and inaccuracy of accruals. The post for the Senior Financial Officer which was vacant had since been filled. It was expected that the controls over the clearing of outstanding purchase orders would improve. The Department had previously obtained a qualification 'which included the land held by the Department for land reform purposes. The latter had since been resolved, remaining with the qualification on land held through legal title which was not transferred through the PFMA (section 42). The Department had gone through a thorough exercise of comparing deeds data with the asset register of the Department. However because the Deeds Registry was maintained for a different purpose using parameters that were different from that of the asset register, the process followed in comparing this data did not ensure an accurate and complete asset register.

The DRDLR was updating its immovable asset policy to provide more procedures for monitoring of vesting implementation. It had started with the comparison of data without limiting the parameter of comparison. It was building capacity within the state Land Administration unit in order to be able to follow up on vesting certificates issued and ensuring registration of property thereof. Above all the DRDLR was committed to strengthening the relationships with other custodians of immovable assets through the Immovable Asset Task Team (DRDLR, Department of Public Works, AGSA). The DRDLR would be meeting with various custodians during the month of October. The significant uncertainty related to restitution claims and rates and taxes for immovable properties. Not all municipalities were up to date with their valuation rolls and in order to avoid occurrence of unplanned rates expenditure, a policy and procedure manual on rates and taxes would be developed.

Concerning other legal and regularity requirements raised in the Auditor General’s report, the main issue about performance information had been the difficulty in obtaining sufficient appropriate evidence for validity and accuracy of performance information – as a result of the lack of an information management system for performance information. Some of the challenges that contributed to difficulty in reporting was that there were too many indicators which were not SMART. The DRDLR had since updated the Annual Performance Plan for 2013-2014 to contain more specific and measurable indicators.

The Minister, in his 2012 Budget Speech, had introduced the concept of a "Back Office" as the nerve centre of the Department in collating information and ensuring alignment between strategic objectives and expenditure. During the year under review, the Department had been setting up the "Back Office" structure. The enterprise-wide projectmanagement office had commenced with the process to establish a comprehensive programme and project register of the DRDLR. There were at least 1 395 active projects inthe DRDLR at various stages of initiation and implementation. Official and senior managers were being trained in project management skills. The DRDLR acknowledged the importance of records management as the centrepiece for governance. The Back Office approach would also assist in ensuring that the documentation provided was adequate for preparation of accurate and complete annual financial statements. The DRDLR would be issuing the interim financial statement for the period ending 30 September 2012. The department would use this interim financial statement as a dry run to ensure complete disclosure notes. The interim financial statements would be made available to the Auditor General for audit.

Concerning other matters raised in the Auditor General’s report which pertained to investigations, the Department and the Ministry took fraud and corruption very seriously. The Department had entered into a service level agreement with the Special Investigating Unit (SIU) to assist with investigations due to the SIU's investigation powers, access to specialists and their costing model. The SIU had to date published two Proclamations for Land Reform (2011) and Restitution (recently). Current successes included recoveries of R88 million and in respect of which, criminal and disciplinary actions had been instituted. The Department had also increased and prioritised the forensic posts and was currently busy with a recruitment drive to strengthen the unit. Challenges for internal investigations included access to investigation powers (search and seizure) which was limited to law enforcement units. Another challenge was the size and complexity of the investigations. With regard to completed cases, the recommendations had been acted upon. For cases under investigation, the Department was in the process of transferring all the restitution matters to the SIU, and the remaining cases were in various stages of completion.

The DRDLR had identified 12 key control areas towards achieving a clean audit by 2014:
- Engaging further with other custodians of immovable assets registers through the Immovable Asset Task Team (DRDLR, DPW, Office of the Accountant General, AGSA).

- Finalising the survey of state land and continuous monitoring of vesting and registration of state land.
- Increased focus of monitoring over non-achievement of targets (portfolio of evidence) to improve service delivery through enterprise project management principles.
- Filling vacant posts.
-Holding Senior Management accountable for the implementation and monitoring of action plans to address prior years' internal audit and external audit findings during performance assessments.

In conclusion, the DRDLR was committed to serve through its values of Batho Pele; commitment; accountability; work ethic and innovation.

Mr Mduduzi Shabane, Director General of DRDLR, informed the Committee that there were two more presentations from Commission of Restitution of Land Rights (CRLC) and the Ingonyama Trust Board (ITB).

Commission of Restitution of Land Rights (CRLC) Annual Report presentation
Mr Thami Mdontswa, Deputy Chief Lands Claim Commissioner of the CRLC, stated that in respect of the year under review, the focus of the commission was the settlement of financial compensation claims and the reduction of club claims. The Commission had the target of settling 90 new claims but had exceeded its target by settling 460 new claims. 389 of the 460 new claims were for financial compensation and 27 were for land restoration. There had also been 223 rural claims and 209 had been finalised out of these claims. The sum of R1.1 billion had been spent on land acquisition while R761 million had been spent on financial compensation which was made directly to the households that qualified. The sum of R87 million had also been spent on development grants.

He gave a summary of the settled claims: 223 claims had been rural claims of which 26 were from the Eastern Cape; 3 from Free State; 9 from Gauteng; 20 from KZN, 158 from Limpopo and 10 from Mpumalanga. A total of 61 claims were found to be non-compliant with the requirements for restitution and were dismissed.

Ingonyama Trust Board (ITB) 2011/12 Annual Report presentation
Judge Jerome Ngwenya, Acting Chairman of ITB, stated that there were three aspects to the Annual Report which were believed to be critical: income, board activities and the Auditor’s General statements and response thereto. There had been a decline in income in the last two financial years. This was due to the legislation quandary which was in place currently – where any royalty was paid to National Treasury. However, it believed that Ingonyama Trust should not have been deprived of the right to receive royalties because it was a state entity which was established to manage land on behalf of the State. The royalties had previously been responsible for a substantial amount of income to the ITB. Further, it should be noted that out of all the entities under the Minister for Rural Development and Land Reform, the budget appropriated to the Ingonyama Trust was still the smallest. This might lead to ITB drifting towards State dependence.

If more resources were ploughed into Ingonyama Trust, it would be able to raise its income generating capacity so that its dependence on the state could be minimised. If the issue as to royalty was resolved and there was consensus that the Ingonyama Trust should continue to receive its royalties, then this might diminish the need to depend on the State completely. These issues would continually be brought before the Committee for guidance and assistance. Apart from the financial statement and income earlier referred to, what had become perennial with the finding of the Auditor-General with regards to financial management and management of IT had in particular been the non valuation of the land and incompleteness of royalties. It should be noted that in the Annual Report, the Auditor General had stated that information had not been available to execute alternative processes on the royalty received as well at the non valuation of land. It was believed that there was enough material to justify the value of Ingonyama Trust land for two reasons. One of which was the transaction undertaken with signing leases with the ITB.

There were a number of challenges confronting the Ingonyama Trust which were:
▪ Conflict between local municipalities and traditional leaders.
▪ Rating of land by municipalities leading to a possible financial hardship.
▪ Threats of land invasion; either as an organised invasion or by creeping appropriation.
▪ Illegal activities such as mining.
▪ Payment of mining royalties to the State.
▪ Improper land use leading to degradation of the natural environment and uncontrolled urbanisation.
▪ Competing land uses.
▪ Fragmented and cumbersome planning legislation.
▪ Operational constraints in resources staff and service providers and technical support & training.

Mr Amin Mia, Chief Financial Officer of ITB presented the highlights of the financial results of ITB. The total assets of the ITB amounted to R263 379 571 which amounted to an increase of 7%. The increase was due to the construction of the new office premises. The net assets was R99 102 832 which amounted to an increase of 2%. The income of ITB was received by self generated trading activities and the total revenue amounted to R51 135 775 and the transfer payment received from the DRDLR increased by 42% which was mainly to pay for increased staff costs and to fill vacant positions. The main source of self generated income of the ITB was rental revenue.

The total expenditure increased by 13% which amounted to R48 849 636. The expenditure increased because of the filling of vacant position and operational expenditure of the ITB. The ITB was now based in its own premises unlike the previous years when it was housed in the provincial office of the DRDLR. It was important to observe that no fruitless and irregular expenditure was noted in the Auditor-General’s report. There was also no query in respect of the performance and management of the ITB.

Discussion
Mr A Trollip (DA) referred to the claims by the DRDLR that the requirements of the ‘occupational specific dispensation’ posed a challenge in the effort to reduce the vacancy rate. He asked for an explanation of this challenge.

He referred to the prolonged policy and legislation consultation process which was claimed to have delayed the finalisation of legislation and had constituted a challenge to the DRDLR. He asked for an explanation of this challenge.

Mr Trollip referred to the claim by the DRDLR that its focus on the CRDP management system would enhance integrated planning. He asked for an explanation concerning this claim.

He referred to restitution and noted that there were a large number of backlogged claims. He asked why the DRDLR’s feedback to claimants was so abysmal. He stated that Parliament had to deal with complaints from claimants on a daily basis about the failure of the DRDLR to respond to claims.

He referred to the hectares of land which had been acquired by the DRDLR and asked if the owners of such lands had been compensated.

Further reference was made to the issue of recapitalisation. He asked how the DRDLR monitored and evaluated that recapitalisation was actually contributing to food security. This was because experience had shown that many of the farms that had received recapitalisation funding continue to be under productive.

He referred to the five irrigation schemes undertaken by the DRDLR and asked for the names and details of the schemes.

Ms P Ngwenya-Mabila (ANC) observed that there was no permanent Chief Financial Officer (CFO) in the DRDLR and asked for how long had the position remained vacant. She observed that some of the labour cases been investigated by the DRDLR were taking a long time to conclude. She asked for the status and progress of these cases.

The Chairperson informed the DRDLR that he had a lot of questions to ask but that in view of the limited time available for the meeting he would put his questions into writing for the DRDLR to be responded to at a later date.

Mr Shabane asked if the DRDLR could also respond in writing to the questions which had already been posed by the members.

The Chairperson replied that it would be ideal if the DRDLR responded immediately to the questions already asked at the meeting.

Mr Shabane responded to the question asking for an explanation of the claim by the DRDLR that it was challenged by the prolonged policy and legislation consultation process which delayed the finalisation of legislation. He drew the Committee’s attention to the fact that the DRDLR had gone on public consultations on the Green Paper on Land Reform after it had received Cabinet approval. The DRDLR had set up various work-streams to work on particular chapters of the green paper. This consultation process ought to have been concluded in 2011 but because the DRDLR had been working with a lot of organisations in the private and public sector, there had been a lot of appeals from these organisation for more work to be done. The DRDLR had not wanted to bring any Bill to Parliament which would be subjected to numerous legal challenges after it had been passed into law. The need to avoid this had therefore warranted that the DRDLR would have to engage in detailed consultations with all the stakeholders in order to ensure that all parties were carried along. It was this prolonged consultation process with various stakeholders that posed a challenge to the DRDLR in working towards the quick finalisation of the legislation.

He responded to the question asking for an explanation of the claim by the DRDLR that its focus on the CRDP management system would enhance integrated planning. He stated that when the DRDLR introduced the RECAP and development programme in 2009, there was embedded in the programme an approach which sought to mobilise government behind the comprehensive rural development programme. At the apex of the system, the President was the political champion of the CRDP who delegated the responsibility to the Minister of Rural Development. There was an executive delivery forum, which coordinated and provided political oversight in the roll out of the CRDP. The executive implementation forum chaired by the Minister had been the most effective part of the system.

Mr Shabane responded to the question relating to why the DRDLR’s feedback to claimants was so abysmal. He agreed that a lot had to be done to improve the feedback to claimants. Indeed, there was a need for DRDLR to communicate with all those who had claims against the State and inform them about the status of their claims. A meeting with the DDGs had been held recently and it was concluded that everyone with outstanding land claims were to be replied as promptly as possible.

On how the DRDLR evaluated that recapitalisation was actually contributing to food security, he stated that a comprehensive review workshop had been held on 17 and 18 August 2012 to determine the impact of the recapitalisation and development programme. A whole range of areas were identified which needed serious attention by the DRDLR. The recapitalisation programme had been reviewed at the review workshop and the conclusions made as a result of the review would be presented to the Committee as soon as it was signed.

Mr Shabane admitted that the post of the CFO had been vacant for over a year. There had been attempts to fill the post on two occasions but the interviews had been cancelled. It was not suggested that this situation was acceptable. However, due process had to be followed before the post could be filled.

Mr Shabane responded to the question concerning the labour cases. He received a monthly report on the cases. The cases which appeared to have taken so long were those cases which involved fraud and had therefore taken over a year. It would be noted that some of the officials of the DRDLR who had been implicated in some of these cases which involved fraud had been dismissed while criminal charges had been brought against them.

The Chairperson thanked everyone for coming to the meeting.

The meeting was adjourned.