Department of Agriculture, Forestry and Fisheries on its 2013/14 Annual Report; Department of Mineral Resources on its 2013/14 Annual Report

Meeting report

Adoption of Minutes

25 November 2014 Minutes

The Chairperson tabled the minutes and took the Members through the document, page by page.

Mr M Rayi, Eastern Cape (ANC) moved for the adoption of minutes.

Mr A Singh, KwaZulu-Natal (ANC) seconded the motion.

The minutes were adopted without any changes.

DAFF Presentation

Mr Rodney Dredge, DAFF Acting Deputy Director-General on Policy, Planning and Monitoring & Evaluation, informed the Committee the Department received an unqualified audit opinion for 2013/14. The AG also audited the non-financial performance information against the overall criteria of usefulness and reliability.

The findings of the AG revealed inconsistency between planned and reported objectives and targets. The root cause pointed to internal control deficiencies which indicated that the Strategic Plan was not consistent with APP as required by the Framework for Strategic Plans of National Treasury and APPs. The AG recommended the objectives and targets reported in the Strategic Plan should be consistent with those reported in the Annual Performance Report.

The AG found errors on the actual information in the Annual Performance Report. It was discovered that sufficient controls were not implemented to ensure accurate, complete and consistent operational plans and technical indicator descriptions. The AG suggested that the Annual Performance Report be supported by reliable information that is consistent with operational plans and technical indicator descriptions.

The findings exposed indicators that were not verifiable and that planned and reported targets were not in line with SMART Principles. Internal control deficiencies led indicators not to be verifiable as required by the Framework for Managing Programme Performance Information. The AG proposed that proper systems and processes be in place and all indicators in the Strategic Plan be specific and measurable as required by the Framework for Managing Programme Performance Information.

The findings uncovered outdated policies and standard operating procedures over performance reporting. Policies and procedures have been found not to be in line with the 2013/14 Strategic Plan and APP and were not updated to ensure relevance to current processes. The AG proposed the implementation of an updated Standard Operating Procedure for each indicator that includes processes for collecting, coordinating, compiling performance information, data integrity and quality insurance. It also recommended the reviewal of current policies to ensure alignment to processes and legislation.

As a result, the Department has compiled an audit matrix for the 2013/14 audit findings in order to address the audit findings especially internal control deficiencies to ensure compliance. This corrective action plan makes it compulsory for all Deputy Director-Generals to attend the audit Steering Committee meetings scheduled for the 2014/15 period and to sign-off all audit findings. A revised template for quarterly performance reports has been introduced to strengthen accountability and address audit findings.

Strategic and Operational Planning Guidelines and Monitoring, Evaluation and Reporting Guidelines are in place and would be reviewed annually to ensure their responsiveness to the current situation. The Department has also developed an integrated planning calendar to improve coordination of performance management processes.

Performance highlights

Mr Dredge told Members that the Department achieved 79% against all annual set targets.

The Department accelerated production to enhance food security. The Cabinet approved the National Policy on Food and Nutrition during September 2013. The Fetsa Tlala Food Production Initiative was launched in order focus on under-utilised agricultural land and production of staple food; to realise enhanced food production at national and household level; and place I million hectares under production.

The Department has mobilised and supported smallholder producers to increase production and access export market opportunities through the World Food Programme (WFP). 88 smallholders produced sufficient high-quality maize. 288 tons of maize had been exported through the WFP to Lesotho.

Exports to BRICS countries had increased by about 12%, China being the most important export destination. Exports figures with China currently stand at 26%, Indonesia 6%, Japan 47% and India 10%. Declarations of Interest have been signed with France and Argentina while a Memoranda of Understanding was signed with Senegal.

There is ongoing revitalisation of two irrigation infrastructure anchor projects: Vaalharts/Taung and Makhathini Flats. This included structures such as dams, canals, fences, access roads, installation of pumps, pump houses, handling facilities for livestock, etc.

The President has assented to the Marine Living Resources Amendment Bill. For the first time, small-scale fishers were given legal recognition. This effectively enables DAFF to implement the Small-scale Fisheries policy to promote transformation and assist fishing communities to sustain their livelihood, generate income and create jobs.

In 2013 the Department hosted the Third Global Conference on Agriculture, Food and Nutrition Security and Climate Change. A resolution was taken for the establishment of a Global Alliance on Climate Smart Agriculture and the Secretary General of the United Nations launched it in 2014.

During the 2012/13 to 2013/14 a number of hectares of agricultural land, woodlands, indigenous forests and temporary unplanted areas have been rehabilitated through LandCare and CARA 11 868 to 32 280 hectares.

With regard to Conditional Grants on Comprehensive Agriculture Support Programme (CASP), a total of R1, 6 billion was transferred during the budget and expenditure for the year 2013/14. Roll-overs to the tune of R307, 347 million (Eastern Cape, Limpopo, Northern Cape and North West) increased the initial budget for year under review to R1, 911 662 billion. 99,6% of budget was spent.

78% of target projects were completed. 20 projects were relinquished because of a number of factors such as conflict among the beneficiaries; delays in the delivery of production inputs for maize planting; budget realignment process by Provincial Treasury in Mpumalanga; and lack of acceptable water rights. The number of farmers supported amounted to 39 194. Jobs created through CASP are around 48 428. This number includes permanent and temporary or seasonal jobs.

Conditional Grants

Mr Dredge indicated that an amount of R438 million was transferred from Ilima/Letsema to provinces. Roll-overs to the tune of R16, 081 million (Eastern Cape and Northern Cape) were approved. This increased the budget to R454,537 million. 93% of that budget was spent. 63 448 farmers were supported. Against a target of 1 348 projects, a total of 1 306 were completed. 93 projects were carried over to 2014/15. The carry-over is attributed to delays in the appointment of service providers in KwaZulu-Natal, Free State and Northern Cape. Only one project was relinquished because of conflict among beneficiaries. Jobs created through Ilima/Letsema during the 2009/10 to 2013/14 periods are around 47 269.

Conditional Grants on Extension Recovery Plan received a budget of R339, 927 million. 84 extension officers were recruited against the targeted 324. Reason for this variance is that Free State, KwaZulu-Natal, Limpopo, Northern Cape and Western cape did not recruit but sustained salaries of previously recruited personnel. Currently, there are 3 602 extension personnel in the system compared to the 2 210 of 2007 when the programme was started. The extension-farmer ratio has also improved from 1:1200 in 2007 to 1:878 at the end of the year under review. The norms and standards recommend a ratio of 1:250-500 depending on the commodity.

The Conditional Grant on Land Care implemented all 176 planned projects. Planned projects included one project in each province and were focused on raising awareness on LandCare. Only 167 of the 176 projects were job-creating projects. 29 247 people benefited. The LandCare has got a youth-focused programme called JuniorCare which has benefited 12 916 during the 2013/14 period.

The LandCare was allocated R108, 997 million. An amount of R105, 823 million was transferred to Provinces. National Treasury withheld 2,9% of the allocated amount on the request of DAFF due to unsatisfactory project reporting from Eastern Cape and North West. The actual project expenditure on LandCare amounted to R102, 008 million.

He said between January 2009 and December 2013, an amount of R314 million was approved for the 3 638 MAFISA loans. Of the 7 383 beneficiaries, 40% were women. MAFISA loans financed livestock (56%), grain (18,2%), sugarcane (9,6%), sunflower (6,1%) and vegetables (2,2%). 2 448 loans created 16 080 jobs.

In order to strengthen the planning and monitoring of the performance of Provinces on Conditional Grants, the Department has developed a Corrective Action Plan. Its main objective, amongst other things, is to strengthen consequence management in order to encourage behaviour change; reduce repeat audit findings by 60%; strengthen interdepartmental cooperation and collaboration; and accelerate collaboration with stakeholders through existing forums and commodity group deployments.

Human Resource Issues

Mr Dredge highlighted that between 2011/12 and 2013/14 post establishment decreased from 7 100 to 6 780 posts. Vacancy rate decreased from 13,45 to 9,8%. It was noted that personnel suitability checks still create constraints in terms of turnaround times in the filling of posts. The HR Strategy 2017 has been developed and approved to ensure excellence in delivering six key HR priorities:

• People acquisition

• Human Resources development

• Performance Management

• Employee Relations Strategy

• Transformation and change

• Employee health and wellness

In its efforts to attract the youth, the Department introduced the Young Graduate Development Programme which employs graduates in the scarce skills group as graduate candidates in line with their qualifications, for example, veterinarians, scientists and researchers. Also, the Department has introduced the External Bursary Scheme in 2004 along side with the Career Awareness programme as a measure of recruiting young people at an early age to follow a career in one of the identified scarce and critical skills in agriculture, forestry and fisheries. Since its inception in 2004, 1 288 young people had benefited from this financial assistance for their studies. 37% of them completed their qualifications and they are contributing to food security and economic development. During the 2013/14 financial year, the Department employed 35 interns who participated in the Young Professionals Development Programme.

Mr Dredge further emphasised there are more males than females in the department even at senior management level. As a result, the Department has in its advertisements for senior managers encouraged females and the disabled to apply. The Executive Management Development Programme has been made to favour young women. The Department noted that its bulk of workforce is aging. Lastly, management practices have greatly improved and the reduction in the number of grievances lodged and disciplinary cases addressed prove this.

Department of Mineral Resources Presentation

Ms Irene Singo, DMR Chief Financial Officer enlightened the Committee about the appropriation statement-programme expenditure, report of the Auditor-General and performance information for all programmes.

The Department is reported to have spent 99,52% of the adjusted appropriation of R1, 394 billion for 2013/14 financial year. R435, 251 million was spent on compensation of employees. The expenditure for this portfolio increased from R395, 914 million in 2012/13 to R435, 251 million in 2013/14. The main reason for the increase is due to the normal salary adjustments and the filling of vacant posts. R249, 551 million was spent on goods and services. The expenditure in this unit increased from R227, 890 million in 2012/13 to R249,551 million in 2013/14 mainly due to inflationary related adjustments.

The R688, 499 million transferred to entities was fully spent in line with its purpose, and R13, 908 million was spent on capital assets. The increase on current assets is attributed to the balance on cash and cash equivalents. The increase in liabilities represents funds to be surrendered to the National Revenue Fund.

Revenue collection amounted to R109 million against the estimated R41, 6 million for the 2013/14 financial year. Included in interest, dividends and rent on land is the revenue from royalties and prospecting fees which amounted to R104,8 million and constituted 95% of total revenue received. The Department has continued to improve systems to ensure more efficient and effective collection.

The Department achieved an unqualified report. It has successfully implemented the recommendations of the AG from the previous financial year. The Department would continue to improve the internal control environment to ensure reliable financial reporting and compliance with legislation. Areas of improvement the AG pointed to were around material adjustments on the Annual Financial Statements; and about an improvement plan on the implementation of Standard Operating Procedures and of debtors management system. The Department is currently implementing a revenue management system for the 2014/15 reporting period as a form of a corrective measure.

Performance of programmes

Programme 1

Ms Singo said the Corporate Services division of the Department has successfully managed to communicate its programmes and policies via media briefings, published newsletters, public participation engagements and updated website and intranet, and implemented its internal communication strategy. Career awareness initiatives were held with communities and universities and this resulted in 35 bursaries being awarded for youth to study towards mining related qualifications.

This unit has been successful in facilitating projects for vulnerable groups especially women around Kimberly, and has developed and reviewed internal processes, guidelines and policies. All new employees were screened as well as service providers, and the target for vetting was exceeded. However, the main challenge is to attract, develop and retain skills among the designated groups such as the disabled, Coloureds and Indians. As a corrective measure, it has started to put in place retention mechanisms such as the Occupational Specific Dispensation for critical skills, but funding remains a challenge.

Concerning Financial Administration, stakeholder awareness on compliance with policies and procedures has improved. 98% of invoices were paid in time. Internal policies and procedures were developed and implemented. Expenditure was in line with the original allocated budget. The number of irregular expenditure reported cases improved by 61%. Action plans on internal audit and compliance framework were fully implemented.

Key challenges identified were around the effective management of costs where cases of irregular expenditure were identified, and to expedite and effectively implement external and internal audit recommendations.

Corrective measures taken by the Department include the development of a policy on irregular and fruitless expenditure which provides for sanctions on transgression, and more awareness has been conducted regarding the care and use of assets in the Department.

Programme 2

Ms Singo, on Mine Health and Safety (MHSI), noted there has been a 17% improvement in all fatalities from 112 in 2012 to 93 in 2013 and this is the lowest fatality ever reported. A 44% reduction in general fatalities has been recorded, from 34 in 2012 to 19 during 2013. Coal, gold and platinum sectors have recorded a reduction in fatalities – 36%, 30% and 4% respectively.

An HIV and TB reporting form was developed, and mines are now reporting to the Department. The examination procedure for GCC engineers has been reviewed and is being implemented. 50 learner inspectors have been placed at mines for experiential training. 81 officials attended technical and administrative courses.

With regard to Mineral Regulation, 60 SMME development projects have been implemented.

2 975 inspections were carried out to monitor and enforce compliance. Mechanisms for streamlining the licensing processes for mining, environment and water authorisations were developed. 147 Local Economic Development projects have been developed, and 7 consultation and engagement workshops with communities were held.

On Mineral Policy and Promotion, the MPRDA and MHSA Bills have been drafted and certified so as to ensure transformation. In its effort to promote investment in the mining sector, the Department has, amongst other things, established strategic and technical partnerships; provided support to the Framework Agreement for a sustainable mining industry; and published the Technical Regulations for the development of petroleum resources. To promote sustainable resource use and management, the Mining Environmental Management Framework has been developed; and derelict and ownerless sites were rehabilitated.

She concluded there has been a significant increase in revenue and employment. Employment figures are standing at 500 00. They are high in the Northern Cape compared to other provinces.

Discussion

DAFF Presentation

Members refused the Department to reply to their oral questions. They reason was that the report presented to them was not satisfactory because it did not provide the necessary figures and there was inconsistency in terms of content between the PowerPoint presentation and annual report documents. They also felt the Department dilly-dallied in spelling out specific corrective actions on the findings and recommendations from the AG. Lastly, Members expressed unhappiness about the absence of the political leaders of the Department.

Members asked the following questions:

Mr C Smit, (DA, Limpopo) asked for clarity on the plan of the Department around access markets for agricultural products. Secondly, he asked for figures on the roll-overs per province. Thirdly, he wanted to know why there are lots of forestry offices compared to agricultural ones.

Mr M Rayi, (ANC, Eastern Cape) wanted to know about the progress regarding community service by veterinarians in provinces. He further asked for clarity about the R357 million not spent on health and food safety of agricultural products because of procurement processes. He also asked for explanation on the R17 million debt that has been written-off. Lastly, he enquired why the eastern side of the Eastern Cape has got a lot of Forestry and Agriculture offices compared to the western side.

Ms B Masango, (DA, Gauteng) enquired if access to markets for small holders is part of the Inter-Departmental Relations, and if that is so, asked for clarity on the relationship between what the Department does and Department of Trade and Industry. She also wanted to find out what the Department is planning to do in order to increase its low achievement on food security against a target of 50.

Mr A Nyambi, (ANC, Mpumalanga) pointed out inconsistencies between the PowerPoint presentation and the annual reports in terms of content. He indicated that the annual report the Department was making its presentation from was different from the ones given to Members with regard to content. But the covers looked the same. He also remarked that in the annual report documents there was no mention of the Committee but only that of the Portfolio Committee on Agriculture, Forestry and Fisheries. He further lambasted the Department for not sending its political heads to the briefing and not detailing specification of its corrective actions on the findings of the AG.

Mr L Gaehler, (UDM, Eastern Cape) asked if there has been an audit done on fishing right quotas given to small farmers, and enquired why fishing offices were concentrated in one area. Lastly, he wanted clarity on why the Eastern Cape spent R12 million on its LandCare Grant when it was allocated R15 million.

The Chairperson felt she would be doing no justice if she allowed the Department to reply in light of what the Members said. Rather it should respond in writing.

Mr Rayi asked the Department to furnish the Committee with the summary of the performance of its entities in its written response.

Mr Jacob Hlatshwayo, DAFF Chief Financial Officer, responding to inconsistencies in documents, explained he was not aware the Department sent the Parliament wrong documents because his annual report document was talking to the PowerPoint. Furthermore, he committed to respond in writing and present his responses to the Committee within seven days. Then on the absence of the Select Committee on the annual report, he indicated no records of having had an engagement with the Committee on the year under review. The only interaction the Department had with the Committee is a recent 2014/15 one.

DMR Presentation

Due to time constraints, the Department was asked to respond in writing. The Committee was satisfied with the presentation. These are some of the questions asked:

Mr Nyambi commended the Department from moving from qualification audit report to an unqualified one and for exceeding the targets set out on Programme 1 and 2. He remarked that the annual report reflects only the role of the Portfolio Committee on Mining and is not giving the Committee any mention. He indicated that the public would be under the illusion that the Committee was not engaging with the Department. Finally, he said the Department should consider extending the invite for events like the Mining Indaba to the Committee.

Ms C Labuschagne, (DA, Western Cape) asked the Department to explain to the Committee why 39 measures were not achieved in the programmes. She further wanted clarity on why the Women in Mining Strategy has not yet been completed and when it would be available to the public. Also, she requested the Department to furnish the Committee a breakdown on mines and mining applications, licensing and closing of mines in provinces together with cost implications.

Mr Smit enquired why mining companies were given licenses when they are not showing any signs of improving the infrastructure of the towns they are operating in because their operations are putting a burden on those towns.

The Chairperson wanted to find out about progress on the Mining Charter, revitalisation of mining towns and Environmental Management Framework.

Mr J Sefako, (ANC, North West) commented that the Social Labour Plans of mines should be linked to infrastructure development of the towns especially housing because the mineworkers are staying in horrible conditions.

The meeting was adjourned.