Deputy Minister on Department of Human Settlements 1st to 3rd Quarter 2014/15 Performance
Human Settlements, Water and Sanitation
24 February 2015
Chairperson: Mafu, N (ANC)
Concerns raised by the Committee that there seemed to be new shifts on the delivery timeframes of the Department. There were programmes where there were already set delivery time targets, these dates were before the now 2019 that the presentation referred to without an explanation from the Department to the Committee. The Committee also requested that there be detail in the targets not met in each quarter in order to determine if they were met from one quarter to another, and if not that needed to be examined.
The Committee noted that as the national Department only spent 3% of the human settlements budget and the rest went to the provinces, it was necessary that the national DHS include the reports of the provinces in order for Parliament to have a full picture of what was going on in the Department. The Committee felt that the report was silent on items that the Department had previously budgeted for and made a priority, such as the USDG, NUSP, accreditation of metros and municipalities, bucket system eradication and title deeds.
NDHS admitted its performance trend was a concern. Performance declined drastically from quarter to another, but as always it had decided to do an honest assessment of itself. It had looked at measures to put in place to ensure that there was a turnaround in the fourth quarter. These were operational matters that were within the control of the Department. The Director General assured the Committee that there would be improvements in the fourth quarter report.
The Committee commended the community outreach programme, but also encouraged that all provinces be included. It was proposed that NDHS should intervene when performance of a province was below 60% not 40%. The Director General replied that the intervention period was a challenge, but there were interventions that the NDHS made with the approval of the Minister and MINMEC to make decisions to be implemented. It was also a struggle to reach a balancing act where implementing agents (provinces) were not punished.
The Committee was concerned that the Department was underspending on important projects and, although they needed the funds, Treasury would take that money away in the next financial year. The Department had already attributed some failures to high vacancy rates, but they had posts they could not fill because they were not going to be funded in the upcoming financial year due to budget cuts.
The Chairperson welcomed the Committee to their first meeting of the year and the Deputy Minister of Human Settlements, Ms Zoliswa Kota-Fredericks, and the Department.
Mr Thabane Zulu, DHS Director General, introduced the structure of the presentation to the Committee and handed it over to Mr Mbulelo Tshangana, DDG: Chief of Operations, and Mr Nyameko Mbengo, Acting DDG: Chief Financial Officer, to present.
Departmental First Quarter Performance (April to June 2014)
The overall achievement by the National Department of Human Settlements during first quarter of 2014/15 was 79%, according to the approved Annual Performance Plan (APP). Out of 143 targets, planned for the period under review, 113 targets were achieved. Office of the Chief Operations Officer achieved 100% of its targets, but overspent by 50% of their budget. The Human Settlements Delivery Frameworks branch total expenditure was 248% and achieved 18 of their planned 23 targets. The Programme Management Unit branch spent 55% of its budget and achieved 59% of planned targets.
Departmental Second Quarter Performance (July to September 2014)
The overall achievement by the National Department of Human Settlements during second quarter of 2014/15 was 74%. Out of 129 targets which were planned for the period under review, 96 targets were achieved 33 targets were not. The Office of The Chief Financial Officer again achieved 100% of its targets and spent 77% of its budget. The Office of the Chief Operations Officer achieved all their targets and spent 90% of its budget. The Programme Management Unit was still amongst the lowest performers with achieving 59% of their targets and spending 36% of its budget.
Departmental Third Quarter Performance (October to December 2014)
The overall achievement by the National Department of Human Settlements during third quarter of 2014/15 was 66%. Out of 119 targets which were planned for the period under review, 79 were achieved whilst 40 were not. The Office of the Chief Financial Officer and Programme Management Unit were the highest and lowest performing branches, respectively.
Departmental Performance (April to December 2014)
The overall achievement by the National Department of Human Settlements for the 1st, 2nd and 3rd Quarter 2014/15 was 74% according to the approved APP. Out of 391 targets planned for the period under review, 288 targets were achieved whilst 103 targets were not. The Office of the Chief Operations Officer and the Office of the Chief Financial Officer were the highest performing branches achieving 90% of their targets. The Human Settlements Strategy and Planning and the Programme Management Unit had the lowest performance reaching 57% and 52% of their targets.
Communication and Outreach Programme
The Department participated in various outreach programmes. During these campaigns, face-to-face communication was done with communities. The roll-out was done in partnership with Municipalities, Provincial Departments of Human Settlements and Entities. During most of the visits, publications with Departmental information were distributed and face to face communication was done where questions were answered about the Department. The Public Information Unit managed to produce the first draft of the publication that is meant to cater for beneficiaries who had received houses.
Delivery Agreement (Outcome 8)
Mr Tshangana gave background information on Outcome 8 objectives. In terms of the Outcome 8 Medium Term Strategic Framework (MTSF) for Human Settlements, a total number of 1, 5 million housing opportunities would be delivered over the MTSF period of five years. The 1, 5 million housing opportunities will consist of: 750 000 households in informal settlements upgraded, 563 000 individual units for subsidy market, 110 000 loans [70 000 Finance Linked Individual Subsidy Program (FLISP) plus 40 000 via Development Finance Institutions (DFIs)], 27 000 social housing units, 10 000 Community Residential Units (CRU) and 35 000 affordable rental housing.
2 200 informal settlements would be assessed and 10 000 hectares of well-located land would be rezoned and released for new developments targeting poor and lower to middle income households. 50 catalytic projects would be implemented, 563 000 title deeds would be issued to new homeowners in the subsidy market; and the title deeds backlog of 900 000 would be eradicated. For purposes of the Delivery Agreements, the targets of each Provincial Department in terms of the various objectives would have to be formally agreed on and approved by Human Settlements MINMEC. Provincial Departments need to revise their business plans to focus on the priorities as set out in the MTSF.
Performance as at end of September 2014
Number of additional households living in adequate housing through the subsidy and affordable housing segments: the 2019 target for this objective is 745 000 households. Performance as on 30 September 2014 was 51 903 Breaking New Ground (BNG) houses, representing 34.8% of annual target.
Improved housing conditions for households living in informal settlements, the 2019 target for this objective is to upgrade 750 000 households. Performance as on 30 September 2014 was 16 020 households in informal settlements, representing 10.7% of annual target.
Number of catalytic projects implemented demonstrating spatial, social and economic integration’s 2019 target was 250 projects. Performance as on 30 September 2014 saw 149 proposals received at National Department, and the best 50 projects would be implemented.
Increasing in the volume of loans granted by private sector and DFIs to affordable market, the 2019 target for this objective is 582 238 loans by DFIs and Banks. Performance as on 30 September 2014 saw 35 635 loans issued, represents 30.6% of annual target.
Percentage of sales transactions of properties worth less than R500 000 has a 20% target to increase transactions by 2019. Performance as on 30 September 2014, the Department is currently developing a system for measuring indicators.
The number of metros accredited with the housing function for 2019 is targeted at eight metros and 12 secondary cities/municipalities/district municipalities. Performance as on 30 September 2014, the accreditation process is being reviewed. The target for the number of municipalities accredited with level 2 and provided with post accreditation support by 2019 is an additional 21 municipalities accredited to level 1 and additional accredited to level 2. As of 30 September 2014, there is a review of the accreditation process.
Mr Tshangana highlighted the MTFS actions which included having only one DFI by 2019, eradicating the title deed backlog, having a Monitoring and Evaluation System to track and assess effectiveness of spatial targeting in human settlements. He also gave a graphic progress to date on the subsidy market in provinces. Total planned delivery in February 2014 was 178 103 projects, revised plans by 28 November showed a decrease to 154 900. Delivery of serviced sites was 31 495, delivery of housing units was 68 156, overall total delivery was 99 651, representing 64.3%.
Interventions to Address Low Delivery
The National Department held individual one-on-one meetings with HODs of Provinces with a delivery of below 40% at the end of the second quarter. National Department is to disburse technical teams to all Provinces to conduct thorough assessments of what is still feasible to be delivered this financial year. The technical teams would assess and validate project readiness taking into account all risks factors for a project to still realise delivery in the current financial year. Slow performing Provinces were to indicate in their revised business plans, the amount from their allocation that could be moved to better performing provinces, and better performing Provinces were to indicate their absorption capacity and resources
There was ineffective coordination between sector departments in planning for the provision of services and amenities, poor alignment of funding to ensure coordinated planning in service delivery in the mining towns and catalytic projects. Challenges were also attributed to lack of capacity, ccordinating National Upgrading Support Programme (NUSP) in Mining Towns and managing NUSP activities in all relevant municipalities. There was slow delivery of the Bucket Eradication Programme. Municipalities benefitting from the Rural Housing Loan Fund (RHLF) submitted business plans but were not complying with the RHLP Framework. There was noncompliance in terms of sanitation norms and standards in some instances.
Corrective Actions/ Remedial Measures
There is a need for a champion department to ensure alignment occurs between various sector departments at national, provincial and municipal level. There had to be Housing Development Agency (HDA) involvement in the mining towns and with catalytic projects. There had to be fast-tracking in the filling of vacant posts. The Housing Development Agency had to be appointed to undertake all work in the Mining Towns. The NUSP Core Team had to be extended and appoint NUSP Contract Managers in provinces. Municipalities had to be supported to develop credible business plans and submit on time. Monitoring and evaluation systems had to be strengthened to ensure compliance with norms and standards; and the assessment and evaluation of the last year’s Bucket Eradication Programme had to be fast-tracked.
The Department played the lead role in co-ordinating inputs and writing South Africa’s National Report for Habitat III. The report took stock of achievements and challenges experienced in implementing the Habitat Agenda since 1996, and identified issues the Department would like to see included in a new international agenda on human settlements. The report was widely consulted on and incorporated inputs from a wide range of stakeholders. The report was approved by Cabinet and submitted to the United Nations ahead of the 1st meeting of the Preparatory Committee for Habitat III in September 2014. Habitat III took place in October 2016 in Ecuador, and ongoing preparations and stakeholder consultations will inform and shape South Africa’s position and participation in this major United Nations Human Settlements conference (which took place every 20 years).
Urban Development and Human Settlements had become officially recognised development issues by the African Union through the establishment of a Specialised Technical Committee on Public Service, Local Government, Urban Development and Decentralisation. The Specialised Technical Committees were officially organs of the African Union. The Department had been actively working towards achieving this recognition for a number of years. At its inaugural meeting in Brazzaville in November 2014, it was decided that a Sub-committee of African Ministers responsible for housing, human settlements and urban development would discuss challenges facing the continent. Efforts were being made to ensure that human settlements and urban development were addressed in the African Union’s Agenda 2063.
Human Settlements Development Grant (HSDG) Performance: The NDHS provided support during the Director General’s visits to Provinces. Presentations were made during such visits so as to inform Provinces on how they planned to spend the HSDG in relation to national priorities.
Provincial Quarterly Performance Reviews: The NDHS also participated in the Provincial Performance Reviews. During these sessions, inputs were provided to Provinces with regards to their financial and non-financial performance during the sessions. The quarterly performance template was revised and submitted to IGR for circulation to provinces.
Human Settlements Development Grant (HSDG) Framework
The Department participated and provided leadership in the development of the Grant Framework for the 2015/16 financial year. This looked at both improving the content of the Framework so as to align it to the Medium Term Strategic Framework (MTSF), the processes regarding the development, submission and approval of the HSDG Business Plans for 2015/16 Division of Revenue Act (DoRA).
Support in evaluating the Performance of the Urban Settlement Grant in Metros:
The Department conducted 2014/2014Built Environment Performance Plans (BEPP) quarterly performance verification engagements led by the Department’s Chief Directorate: Monitoring and Evaluation. The quarterly performance verification was a requirement in terms of DoRA 2014. The verification process was only about the spending versus deliverables.
Urban Settlements Development Grant (USDG) Framework
There was participation in the sessions aimed at improving the USDG framework. This was done by providing inputs regarding the content of the USDG for 2015/16 DoRA. Further, comments were inserted in the draft framework on the submission of the BEPPs to the NDHS so as to assist the Department to track how the USDG responds to human settlement development.
During the period under review, there were activities in advancing the self- build methodology that was embarked upon in the Western Cape, Gauteng, KwaZulu Natal, North West and Mpumalanga. In supporting the establishment of community-based housing cooperatives within People's Housing Process (PHP). There were also activities undertaken towards achieving this – these were based around building stakeholder relations.
Accreditation of Municipalities
The revised approach towards accreditation is presently under consultation with other stakeholders (like COGTA, SALGA, Provinces and Municipalities), and the process should be finalized by the end of the next quarter. As part of the revised approach, the Department had completed a draft enhanced assessment tool for the assessment of municipalities. The tool had been circulated to various stakeholders for input. A joint meeting with COGTA, Water Affairs, and Human Settlements MINMEC was held on the 07 October 2014, and resolved that –
A new date post-assessment of municipalities should be determined for the assignment of the Human Settlements function.
▪ The current Municipal Human Settlements Capacity Grant (MHSCG) purpose should be maintained, however, the conditions be amended
The process towards accreditation of municipalities should be based on evidence
▪ The relevant MECs would make presentations to joint MINMEC before assignment of Housing function is granted to municipalities.
There were 28 municipalities accredited at various levels. The municipalities signed implementation protocols valid for three years. Some of the implementation protocols expired in 2015. NDHS had engaged with National Treasury on changing the conditions of the MHSCG. The changed conditions were gazetted in the adjusted DORA 2014. The first draft business plans were received on 28 November 2014 and analysis was done before final submission.
The delivery of 31 495 serviced sites and 68 156 houses from 1 April to 31 December 2014 created 38 660 employment opportunities; 20 619 direct jobs, 3 166 indirect jobs and 14 875 induced jobs.
The Chairperson said she was happy with the last part of the report on the intergovernmental relations the Department was building since 97% of the Department’s budget was not spent by NDHS but by the provinces. She said that it was obvious that the delivery of the Department was declining from one quarter to another; it was obvious that performance for the fourth quarter would be 55%.
Mr Zulu said he was convinced that with the final quarter report, there would be a better picture on performance at an operational level.
Mr K Sithole (IFP) said there was a lot of shifting in the Department delivery timeframes. There should be clarity on these as the Committee understood that there would be delivery on eradication of the bucket system and clearing title deed backlogs, for instance, earlier than the by 2019 now referred to in the report. Also the sustainability of the current model in making payments to provinces needed to be discussed in greater detail.
Mr Zulu asked to give a later presentation to the Committee on the measures taken to deal with title deeds, pre- and post-1994. The challenge had been identified and what needed to be done; and one human settlements institution had been identified to provide technical assistance.
Mr S Gana (DA) said the report was not specific on the targets per programme, there were just figures. One would like to check if the targets not met in the first quarter were met in the second quarter, or if there were improvements in reaching them. If a target was not met in either the first, second or third quarter - that needed to be looked into by the Committee. As the Chairperson pointed out, 97% of the budget was transferred to the provinces and not spent by the National Department. However, the Committee needed to look into how and where it was spent as soon as provinces submitted their quarterly reports. The Committee should have access to those reports for its provincial oversight visits. There was also the absence in the report about the Urban Settlements Development Grant (USDG) and how it was spent.
Mr Gana said the COO had referred to 50 catalytic projects by 2019, however when examined closer it was 50 projects per financial year which brought it to 250 projects by 2019. If it were 50 per financial year, it would be interesting to know how many had been approved and if there was already implementation. Another issue that made noise previously was accreditation, there was a certain amount of money set aside for the current financial year as a capacity grant. Had that money been transferred to municipalities and how far was the accreditation and spending of the capacity grant?
Mr Zulu replied about the catalytic projects, saying the Department had adopted an approach based on the MTSF to identify the 50 projects for housing opportunities. There were various proposals from institutions that the Department worked with; local government and provincial departments had to identify the budget and implementation framework. The intention was that when the next financial year started, these would be established projects ready to take off.
Mr Tshangana said the capacity building grant had to be discussed with the Committee; there was a change in processes. The balance of the R300 billion was for operations, once accredited, so they could be funded.
Mr Mbengo said the presentation focused a lot on the 3% of the budget that was spent by the national Department and not the 97% distributed to provinces. The Committee would be given a report on how the 97% was spent and how the provinces performed. The majority of the 97% were grants going to provinces. He would submit a report on the targets not met in all the quarters.
Mr N Capa (ANC) raised a concern about the trend through the quarters, asking for the reasons the targets were not met so that they could be addressed and perhaps the Committee could assist. He asked for the implications of the targets not being met in a quarter. Also, was the DG satisfied with the publicity the Department had when they visited the provinces.
Mr Zulu said the performance trend was a concern, but as always the Department decided to do an honest assessment of itself. The Department had started looking at measures to put in place to ensure that these were operational matters that were within the control of the Department. Hence the DG could assure the Committee that there would be improvements in the fourth quarter report. One of the key areas affected was the Project Management Unit, as one of the important areas of the Unit was NUSP.
Ms T Gqada (DA) said she was glad when the Minister made the announcement that out of 1.5 million housing opportunities, half of those would be the upgrading of informal settlements. The reality was that it was not possible to give houses to everyone at the same time. What was important was to improve the current conditions that people lived in. However, what was not clear in the report was what was meant by the upgrade of informal settlements.
Ms Gqada noted that NDHS kept referring to the HDA acquiring pieces of land on behalf of the Department, but there were no planned pending projects that the HDA had to acquire land for. The community outreach programme was a very good programme, but there was a trend of focusing on certain provinces and some did not form part of the programme – like Limpopo and Mpumalanga. In terms of interventions, the Department said that it only got involved when performance was below 40%. She proposed that the Department get involved when performance was below 60%.
Mr Zulu replied that when it came interventions, this was a very challenging phenomenon in the human settlements sector because the Department’s intervention for the non-performance of provinces would only happen at the end of the second quarter. The Department was working on better ways to deal with this; it was a challenging period to intervene in. It could not be determined from the first quarter how a province would perform in their second quarter.
By October of 2014 the Department could pick up red flags and asked provinces to furnish revised business plans and measures. During interactions with MINMEC it was discovered why certain targets were not met. The intervention period was a challenge, but there were interventions that the Department made with the approval of the Minister and MINMEC making decisions that had to be implemented. It was a struggle to reach a balancing act where implementing agents (provinces) were not punished. The gazetting process with Treasury for redistribution of funds was another bureaucratic process where funds would be moved to the performing provinces. The Project Management Unit was established to have effective monitoring tools at national level, but there were bureaucratic processes that were beyond the control of the Department.
Mr Tshangana said part of NUSP was about packaging the plan, where the Department had to visit informal settlements and have a business plan. There were about 195 upgrading plans, the problem was that the budget for NUSP was R7 million. There was a long chain of management; with municipalities managing service providers and so forth, but the budget would be spent.
Mr Zulu added that there were different phases in the upgrading of informal settlements. Assessment was the most critical element that the Department had to deal with first. NDHS felt that, rather than it simply looking at what municipalities were doing, it should also look into what was required and provide interventions to deal with the management required for the upgrading. What was clear was that the technical capacity was not there at municipal level. There were 300 municipalities that had been identified for intervention by the Department. The assessment of informal settlements was important to identify exactly what each informal settlement needed. There were informal settlements that did not have to be moved but needed basic services, and hence assessment was the critical first step.
Ms L Mnganga-Gcabashe (ANC) asked how the unspent money in each programme would be spent with only one month left until the end of the financial year. Also there was a programme where 100% of the targets were met, yet expenditure on the programme was 79% of the budget allocation. She asked for clarity on how it was possible for Limpopo not to manage delivery of serviced sites, yet there were NDHS employees based in the province.
Mr Mbengo replied that the problem the Department faced was that there were too many vacant positions, at one point there were a 100 vacancies. The challenge in the current financial year was those positions were funded; but during the medium term budget policy statement Treasury (due the fiscal problems) cut the budget over the MTSF. In year one, which is the next financial year, the budget cut was R54.7 million. This meant that the posts were not funded in the next financial year and the Department could not fill them. This was impacting on the levels of under expenditure and on the ability of the Department to find ways to achieve its strategic objectives.
Mr H Mmemezi (ANC) spoke about the problem of provinces not maintaining their delivery database; it was not acceptable that houses delivered by government were not in the data. There should be units overseeing this and getting councillors to work with the Department. When the Committee went on oversight visits they were accompanied by large delegations of officials, but it was not clear what they were doing when the Committee was not there if they could not follow up on the database. These officials could not address small problems, answer questions, and often did not even know there was a problem until the Committee made them aware of it. Perhaps this was because the Minister, the Deputy Minister and top Department officials were not cracking the whip, which meant they were not helping South Africans.
The presence of the national Department needed to be felt throughout the provinces, pushing them to deliver, even though there were only three weeks left in this financial year, the Department could still impact on delivery in the provinces.
Mr Zulu said there were areas which were out of the Department’s control and some of this could be attributed to the fiscal challenge.
Deputy Minister Zoliswa Kota-Fredericks said that they took note of the Members’ concerns that the performance of the Department was decreasing. One of the things that the Department had done was to take the Limpopo and Gauteng situations seriously. The state of Limpopo had impacted very badly on procurement. At MINMEC there was a decision by the Minister to urgently meet with the MEC of Limpopo and work together on a plan. If the Department was continually underperforming and under spending, even though they needed the money, Treasury would cut their budget.
The Chairperson said the Department should bring a presentation about Members’ concerns and provide more detail. When the performance of the Department declined, this meant that service delivery to the person on the street was declining; this was why the Committee was raising concerns. The Chairperson warned the Department that the Committee would not take a performance decline in the fourth quarter report lightly.
Mr Sithole reiterated the concern about Limpopo and its reporting system – both province, district and Lephalale municipality. The Committee Report showed that there was a problem and the report of the Department confirmed what the Committee saw in Limpopo.
The Chairperson said she had not addressed that matter because she found comfort in that there was a protocol agreement between the Minister, the MEC, the DG and the HOD to deal with delivery.
[There were apologies from Mr L Khorai (ANC) and Ms T Baker (DA)]
Mafu, Ms NN
Bam-Mugwanya, Ms V
Capa, Mr N
Gqada, Ms T
Mmemezi, Mr HM
Mnganga-Gcabashe, Ms LA
Ntobongwana, Ms P
Sithole, Mr KP
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