Turnaround strategy for Recapitalisation and Development Programme: Department of Rural Development and Land Reform (DRDLR) presentation

Meeting report

Department of Rural Development and Land Reform (DRDLR) Director-General, Mr Mduduzi Shabane, introduced the DRDLR and Department of Agriculture, Forestry and Fisheries (DAFF) delegations.

DAFF Acting Director-General, Ms Elaine Alexander, thanked the Committee for the opportunity and offered apologies for both the Minister and the Director-General of DAFF. She also gave an apology to the Committee because DAFF would not be presenting since notice of the meeting was received fairly late and a proper presentation could not be prepared in time.

The Chairperson gave an overview of the outcomes of the public hearing that happened on 4 and 5 February 2015, of both the success stories and the challenges beneficiaries of the Recapitalisation and Development Programme were experiencing. She highlighted the challenges and frustrations faced by those unable to access or benefit from RADP because of the strategic partnership or mentorship prerequisite, the deviations from business plans and the constant change in RADP policy. The allegations of corruption, the lack of monitoring on how beneficiaries spent allocations and the lack of an integrated approach between DRDLR and DAFF to provide adequate post settlement support were also serious challenges highlighted during the public hearings.

Mr Shabane said the presentation would show and demonstrate the responses and the plan DRDLR put in place to address all the challenges. A process was already started in 2014 with DAFF, the Land Bank and with the leadership of National Treasury to look at all the state money that was available to determine how this money could be invested to provide agricultural support to emerging farmers in particular. That process would be concluded in the next few weeks and DAFF would present the Agricultural Policy Action Plan to explain in much more detail how an integrated support package would be implemented across the board. In the main, most of the DAFF budget both at the national and provincial level, went to farmers in communal areas and not to RADP farmers.

Turnaround strategy for Recapitalisation and Development Programme
DRDLR Chief Director: Service Delivery and Coordination, Mr Bonginkosi Zulu, noted the Portfolio Committee public hearings on 4 and 5 February 2015. DRDLR would present the findings on the evaluation process conducted by the Department of Performance Monitoring and Evaluation (DPME) and its recommendations. The DPME findings indicated that even though RADP had made some progress towards achieving its intended objectives, there was room for significant improvement. The best and lasting solution would entail a redesign and overhaul of all public agricultural support programmes and doing away with existing silos of funding for agricultural support services. This would entail the establishment of an all-inclusive fund to support land acquisition, extension services and mentorship, agricultural finance and market access.

The farmers, beneficiaries and strategic partners had made submissions to the Committee about their experiences in the implementation of the programme. Success stories were presented which indicated that if the programme was implemented properly, the main objectives of the programme would be achieved, that is, to rekindle the class of black commercial farmers which were destroyed by the 1913 Natives Land Act. At the same time there were very bad experiences that were presented by members of the public, farmers and strategic partners including civil organizations. The Department was currently attending to key specific project issues that were raised during the hearings.

Mr Zulu highlighted some of the challenges highlighted during the public hearings in addition to those already raised by the Chairperson. These included:
- Lack of transparency and communication to strategic partners and farmers
- Requirements from technical committee were unrealistic and no standardisation of requirements.
- Cumbersome process for approval of grants/funds
- Repeated requirement of project and financial Reporting
- Non user friendly system for reconciliation of expenditure
- Non- compliance on the usage of RADP funds by farmers and strategic partners
- Non- existent entry and exit mechanisms for farmers
- Compensation of mentors too small
- The need for a sectoral approach for service level agreement (SLA) with DRDLR, not “one size fits all”
- Fraud and corruption by some strategic partners
- Selection criteria of farms for RADP support
- Delays in the disbursement of funds
- Department neglected the commonage programme
- Post settlement support to restitution farms -  RADP was not an appropriate programme to provide support to     farms acquired in terms of restitution.

The aim of the RADP Turnaround Strategy was to establish a unified approach in the implementation of the programme, and address the findings emanating from all the evaluation studies and audits conducted on the programme. The strategy sought to maximize the impact of current and future budget and resources spent on the programme, a better coordinated approach for efficient and effective use of RADP funds, re-alignment of existing farmer support programmes both internal and external and to make financial services accessible to a large segment of needy farmers. It also wanted to ensure that all contractual obligations were enforced and that defaulters were held accountable. Disbursement of funds from the programmes should be aligned to commodities and season and the equitable distribution of RADP funding. Promotion of own equity contribution by farmers and strategic partners was very important.

Mr Zulu gave an outline of what needed to be done to and it included:
- RADP approval to be scheduled annually to coincide with commodity cycles
- Commodity development to help develop disbursement calendars for each commodity
- RADP to be equitably redistributed and to bring in own equity element to it
- Establish panel for business plan valuation/appraisal that include industry
- Develop an automated RADP project management system,
- Alignment with the integrated funding model developed with DAFF, National Treasury and Land Bank to ensure maximum support for Land reform beneficiaries/ farmers.
- Finalize the RADP implementation manual.
- Review the RADP Policy to address the shortcomings identified
- Enforce contractual conditions and hold defaulters accountable.
- Invest in continuous knowledge improvement for Staff, Farmers and Strategic Partners as a compulsory requirement
- Invest in modernisation of the application system for both land acquisition and RADP applications
- Clear criteria on projects selection is very important; and
- Monitoring and Evaluation of implementation.

The Department with its ICT Unit was currently developing an Automated RADP management system. Based on the challenges, an Electronic Application System module, a Business plan module, a Financial Module, a Reporting module and a Monitoring and Evaluation module would be developed.  He gave a detailed outline of the steps and phases of each module. In terms of the Financial Module, it was important to note that procurement of goods and services will be based on three quotations from potential suppliers via a project adjudication committee. The appointed supplier would submit all relevant details for capturing into the system including account details. The module would assist to avoid over expenditure on approved items, delays in the release of trenches, non-compliance in submitting invoices, and mismanagement of joint accounts. The proposed Contract management module would ensure that all the RADP contracts were generated and approved electronically to avoid any discrepancies in the various forms of contracts. Electronic contracts would be tailor made to meet special conditions in line with each form of strategic partnership.

Mr Zulu showed slides 22 to 25 that showed the project plan for the review of the RADP POLICY and the RADP manual. This project plan showed detailed activities and timeframes. The edited final version of the RADP manual would be submitted to the Minister of Rural Development and Land Reform toward the end of July 2015 and the RADP policy would be submitted for final editing, also during July 2015.

Discussion
Mr T Mhlongo (DA) asked what criteria were used to invite farmers to the public hearings and what was DRDLR doing about the allegations of corruption leveled against some Department officials. He asked how the RADP funding would be measured and who was running the farms between the government, the strategic partners and the beneficiaries. He asked what DRDLR was doing about the small scale farmers and if there was specific funding available to those farmers.

Mr Zulu replied that the farmers were invited by the Portfolio Committee on Rural Development and Land Reform, not DRDLR. All the cases alleging corruption would be investigated and quite a number of cases were already either being investigated internally, by the Special Investigating Unit (SIU), the Asset Forfeiture Unit (AFU) or the Hawks. Although the Department was not at liberty to discuss the details of the cases in such a forum, the Committee could be provided with a status report on those cases. The incidents of alleged corruption highlighted during the public hearings would similarly be dealt with. In the view of the Department, the farmers themselves should be running the farm, with clearly defined roles and responsibilities for all the role players. By the end of February, all the contracts and Service Level Agreements (SLAs) would be in place that clearly outlined the roles and responsibilities of all the parties concerned.

Ms N Magadla (ANC) asked if final year agricultural students could be utilised or employed as strategic partners or mentors.

Mr Zulu replied the suggestion would be taken into consideration. For this financial year graduates would be placed at farms for training and from there they could possibly move on to become mentors to emerging farmers or provide support and training to those farmers.

Ms Alexander added that DAFF had spent a lot of money on the training of students and was it involved with universities. These students would eventually get the opportunity to get practical experience on farms and could thereafter be deployed as mentors or strategic partners for RADP farmers.

Mr M Filtane (UDM) said he was very happy with the depth and detail of the presentation, because it showed how comprehensively DRDLR dealt with the issues raised during the public hearings in a relatively short space of time. The Committee appreciated the efforts by the Department. He referred to slide 9 of the presentation where it stated that ‘the aim of the turnaround strategy was to establish a unified approach in the implementation the programme’. He asked whether ‘unified’ in this sense meant a ‘one size fits all’ approach. Using the Langa Livestock Farmers Association as an example, he asked the Department to explain how the R3 million was spent, because it would give the Committee an idea of how the Department advised on how money should be spent. The Department might not have that information readily available, but it could be provided to the Committee. In terms of the Stellenbosch Small Farm Holdings Trust, he proposed that when there was a delay in finalising a business plan, there should be a system in place that allowed for the ‘tweaking’ of the business plan to move forward instead of a complete halt of the process. These farmers were only concerned with what was happening on their commonage farms and the issues of other farmers did not have relevance to them. He asked if the Department had a specific plan to resolve the problems of Stellenbosch Small Farm Holdings Trust, because they have been asking for help for a long time. He asked whether it was wise to engage with beneficiaries after the finalisation of the RADP implementation model to get their ‘buy-in’ rather than involving them in the process. He wanted to know how DRDLR would monitor and penalise provinces to ensure that their commodity calendars were in place on time. Similarly, he asked what penalties would be put in place to enforce contractual conditions to hold defaulters accountable and how training of staff, farmers and strategic partners would be done.

Mr Zulu said the Committee would be provided with the breakdown of money received and expenditure of the Langa Livestock Farmers Association. DRDLR agreed with the recommendation in terms of the Stellenbosch Small Farm Holdings Trust, because the plan was to look at what could be done now with the business plan the Trust already had in place. DRDLR Human Resources Department would have to conduct a skills audit to look at the capacity of the Department and the relevant training would be based on the outcomes of the audit.

Mr Shabane said there were various penalties in place, but the focus should be on enforcement. The Department in some instances terminated relationships with strategic partners or service providers.

Mr A Madella (ANC) commended the report by DRDLR, but he raised his concern that some issues had not been adequately addressed. The Department should perhaps look at establishing a task team to zoom into smaller issues. These concerns include the compensation of mentors and the fact that the time frame for the modernisation of the application system was not clearly indicated. Capacitating staff to perform work in specialised areas was very important and he agreed with the point raised by Mr Filtane that DRDLR should perhaps relook their plan to consult with beneficiaries only when the revised RADP strategy had been finalised.

Mr Zulu said the Department took note of the proposal to re-evaluate the strategy programme to consult beneficiaries, as well as the timeframes of the modernisation of the application system.

Mr T Walters (DA) said the presentation was an indication that the Department sat and grappled with the matters that were raised during the public hearings and it was a good indication going forward. The notion behind the Department’s commitment to ‘redesign and overhaul all public support programmes and doing away with existing silos of funding for agricultural support services’ should be supported. He asked what the detail of that statement entailed, because it was a significant step in the right direction. A basic business ratio analysis, i.e. what determined whether a project was successful or not should be part of the presentations in future. In previous presentations references were made to volumes of production and that could potentially be misleading. He said for future presentations, the Department should provide the Committee with indicators such as profitability ratios that spoke to profit margins and returns on investments during the projects and through the various years of RADP funding. Grain SA and the South African Sugar Association (SASA) showed how support could be structured and that should be incorporated into all commodities.

Mr Shabane said when the Department of Performance Monitoring and Evaluation (DPME) started with the review of RADP; they were simultaneously looking at other programmes of government. The results of those reviews are not coming out at the same time, but DRDLR and DAFF with National Treasury were trying to assess across the board at both national and provincial levels. The money that DAFF disbursed, e.g., was disbursed in terms of the the Division of Revenue Act and it had certain conditions attached. It got disbursed in a particular fashion and in particular areas and DAFF had to look at the comprehensive alignment of those funds. DRDLR had RADP and DAFF had Comprehensive Agricultural Support Programme (CASP) and it should be decided who would be responsible for the funding of these structures. There also needed to be a ‘soft loan’ element to it so that not everybody qualified for a ‘free’ grant.

Mr Zulu acknowledged the proposals made by Mr Walters and said the Department would take it under consideration.

Mr P Mnguni (ANC) said he did not know when DAFF received the notice of the meeting, but it was discouraging that DAFF would not be presenting. Even if the notice was received 24 hours before this meeting, they could have looked at what was pertinent to this meeting and put together a presentation. Going forward, DAFF would really need to ‘come to the party’ and provide the Committee with their input. Not all land was agricultural land and DRDLR would need to look at programmes that did not talk to agricultural support. Some of the issues would then have to be dealt with by the Rural Infrastructure Development (RID) and Rural Enterprises and Industry Development (REID) structures. It is not clear how the different models linked, because e.g. the financial model should show a clear linkage with the expenditure model and the disbursement model and the presentation needed some refinement on that regard. The production cycle also needed to be more clearly described, because it might be clearly described in a business plan, it should also be clearly outlined in the monitoring tool. The Department should look at the development of a scientific monitoring tool that looked at the financial model, the production cycle taking the timeline into consideration.

Ms Alexander apologised to the Committee and said the notice of the meeting was received late the previous day. The presentation was quickly prepared, but it was not quite up to standard. She committed that DAFF would do a comprehensive presentation an agreed future date.

Mr Zulu said the Department would take the proposals made by Mr Mnguni under consideration.

The Chairperson asked whether it was compulsory for beneficiaries to have strategic partners, whether they have the capacity or not and how these strategic partners were chosen. She asked if an audit was done on the equipment of a particular farm before approving a business plan. Some emerging farmers, especially small scale farmers, could not access RADP funding, because they did not know how to compile a business plan. She asked if there was a simplified template of a business plan available to those farmers.

Mr Zulu said it was a prerequisite for qualification for RADP to have a comprehensive farm assessment report. This report included an assessment of infrastructure, a detailed assessment and status of machinery and equipment as well as the potential of that farm. RADP policy required that only new equipment be purchased, but the challenges experienced mostly spoke to choosing the best type of equipment for a specific purpose. RADP policy also allowed beneficiaries the option not to partner with a strategic partner. It was not a prerequisite for every single farmer, but there was a requirement for the strategic partner, if the farmer chose one, to be approved by the Department. At the beginning of RADP, strategic partners were advertised for countrywide and those applicants were put through an interview process. The Department also accredited some applicants that submitted relevant proposals to the Department as well as strategic partners that were recommended by the farmers themselves. The Department going forward wanted to be very clear on the selection criteria of strategic partners. The business plan template currently in use was a ‘one size fits all’ template that was used to assist both small scale and commercial farmers. It was part of the review to develop a template to accommodate all the categories of farmers.

Mr Shabane agreed and said a farmer farming on 10 hectares of land could not have the same conditions as a farmer on 200 hectares, although the principles remained the same.

Mr Filtane asked if the Department could give an idea of what the funding model would be if some would be getting funding in the form of a grant and others in the form of ‘soft loans’. He asked how the Department would go about ‘infusing’ the revised strategy with what was currently happening on the ground. It is a matter of some concern that the map of activities was stretched over a few months.

Mr Shabane said the loan option was on the table through discussions with Treasury and the Land Bank. Prior to the introduction of RADP and CASP people had been going to banks to borrow money and were now facing trouble. DRDLR, DAFF, The Land Bank and Treasury had been instructed by Cabinet to come up with some kind of process to address this problem. Another aspect was that sections of RADP should be in the form of a loan and the structure would be finalised and submitted to Cabinet for approval. Most of the RADP farmers belonged to the National Agricultural Radio Agenda (NARA), a national reference group and much of what was in the revised strategy also came from those engagements and from the farmers themselves.

Ms Alexander said the Comprehensive Africa Agricultural Development Programme (CAADP) was a strategy which entailed a review of all government departments that spent money on agriculture. DAFF had to do it to report to the African Union (AU) on agricultural expenditure and going forward it had would also be shared with the DRDLR. In terms of the sustainability of projects, DAFF had also been looking at commodities along the value chain. A much closer look at the markets was needed because DAFF historically had not really looked at market opportunities. This would help RADP to assess which markets were saturated to inform land reform on what projects to take on and thus a proper market analysis would be in place prior to when the business plan would be compiled.

Mr Walters said he was interested to know what the institutional setting on the ground would be for such support programmes, because it was important to get local provincial and local government involved. He asked if there should not be a follow-up meeting that focused on the support programmes in relation to the Land District Committees.

Mr Shabane said DRDLR needed its own offices at provincial level that fell under the control of the Department to assure accountability. Strong governance structures were needed to provide leadership and coordination. Setting up of the technical committees and the panel of experts would help the Department with business plan valuation and appraisal that included industry players at District Land Committee or provincial level.

Ms Magadla asked the Department to explain what an ‘extension officer’ was and what the job entailed.

Ms Alexander said extension officers mainly focused on specialised technical aspects that helped with increasing productivity. The project manager managed the project from start to finish, but the extension officer worked more closely with the farmer for technical support.

Mr Madella emphasised the importance of DAFF’s involvement and he asked that a joint meeting with DAFF and the Portfolio Committee on Agriculture, Forestry and Fisheries be scheduled.

Ms Alexander said DAFF was fully committed to land reform and both Ministers’ presence at De Doorns recently was a joint statement that the two departments had to work together.

The Chairperson reminded Members of the importance of this process and of their oversight responsibilities.

Committee Programme
Mr Walters raised the concern that there were a few matters not reflecting on the programme especially the 50/50 Draft Policy and the proposed Regulation of Land Holdings Bill in light of the media hype around it.

The Chairperson said the Department still had to present an Annual Performance Plan (APP) and it would give the Committee direction on whether and when those matters would be considered. For now the Committee Programme needed to be adopted and if any of those topics needed to be added, it would be included on the quarterly programme.

Mr Walters asked that the DA’s disagreement with the Draft Committee Programme be noted.

The Chairperson acknowledged the disagreement.

The Draft Committee Programme was adopted without amendments.

The Committee Secretary referred to the upcoming conference in Washington DC. Five members from the Committee, three from the ANC and two from the opposition parties should submit names so that applications could be submitted.

Mr Walters said the Committee should perhaps not make decision in the absence of the EFF representative, Mr Andile Mngxitama.

The Chairperson said the EFF submitted a standing apology asking Mr Mngxitama to be excused until further notice. 

The Chairperson thanked everyone for their input.                                                                                                    

The meeting was adjourned.