Eastern Cape Department of Human Settlements on 2015 plans for Buffalo City & Nelson Mandela Bay Municipalities, in presence of Deputy Minister and MEC

Meeting report

Chairperson's opening remarks
The Chairperson remarked that the Committee was not happy with the way in which the Urban Settlement Development Grant (USDG) was being utilised, and the Committee wanted to explore how the metropolitan municipalities were functioning.

She noted the presence of the Deputy Minister for Human Settlements and the MEC for the Eastern Cape.

Department of Human Settlements targets, plans and budgets for 2015 briefing
Mr Mbulelo Tshangana, Deputy Director General, National Department of Human Settlements, said that the Accounting Officers of three institutions were present and they would lead the discussion. The Committee would recall that the National Outlook of the Department of Human Settlements (DHS or the Department) had been presented, which showed how the provinces had performed in the last financial year 2014/15. The Business Plans of the nine provinces were also presented. A presentation was also done on the Built Environment Performance Plans of the Metropolitan Municipalities (the metros) but it was important to note that the year-end of the Metros would only be in a month’s time. There was therefore not a complete picture yet, and the figures were only up to the third quarter of the municipal financial year. The DHS would provide the performance figures and also some information about the targets that were set for the coming year.

He noted that, not just because the MEC for the Eastern Cape Province was present, he was pleased to note the performance of the Eastern Cape in the last financial year. The figures spoke for themselves as the province had performed very well and targets had been exceeded. The Buffalo City’s performance graph had been going up consistently over the last three years and the picture showed that the situation was much better than three years ago.

Mr Tshangana said a team had been employed in 2012 to assist Buffalo City to package some of the built environment performance plans. A performance review was done for all the Metros last week. There were Metros still sitting at 40% of the expenditure of the USDG. Nelson Mandela Bay Metropolitan Municipality (Nelson Mandela Bay) was not one of those Metros. The City Managers present would present the actual figures and plans going forward.

Eastern Cape MEC and Provincial Department reports
Ms Helen Sauls-August, MEC for Human Settlements, Eastern Cape, extended the sincerest apologies of the Eastern Cape Provincial Department for its absence at the last meeting. It had been called only the night before the meeting, but the communication difficulties between national and provincial departments had now been sorted out. The Provincial Department had seen this as an opportunity to lobby for improvements, and to get the Committee’s support for what it wanted to do.

The Head of Department (HOD) would highlight the outlook for the 2015/16 financial year. The Department was positive that, having almost completed the first quarter of the financial year, it was in line with the plans laid out. The HOD would also be highlighting the challenges experienced in the Eastern Cape. A few weeks previously, it was noted in the media that beneficiaries were moving into certain units prior to the National Home Builders Registration Council (NHBRC) signing off on certification. The Department dealt with this matter decisively whenever it emerged. It was unfortunate that these kinds of pressures were put on the NHBRC. She assured the Committee of her commitment that the Department would not fail to deal with these kinds of challenges.

Mr Gastor Sharpley, Head of Department, Eastern Cape Provincial Department of Human Settlements, said that the unqualified opinion for the past two years had also allowed the Provincial Department (PD) to spend grants given to it and there was staff stability within the PD. In the next five years there would be on site productivity. There were now 60 on- site contractors. In regard to the rectification, there was an intervention with Executive, comprising the Minister, the Minister of the Executive Council (MEC) and the Executive Mayor in Nelson Mandela Bay. This was going to put pressure on the rectification targets of the province because there would be an expectation from the community that the focus should be on rectification in Nelson Mandela Bay. Rectification in the Eastern Cape would only be to units built prior to the legal creation of the NHBRC, as the PD did not rectify houses after the NHBRC was brought on board. The focus was on older units and pre-1994 units.

Mr Sharpley said that the challenges were completely different to what they used to be four years ago. Now the PD faced ‘luxury’ challenges like not enough money for beneficiary administration. Delivery was no longer an issue in the Eastern Cape, neither was the quality of products. It was just about managing the momentum. Obviously this was a fragile success because there were issues that kept haunting the Department. The Department was concerned about regional centres and the principle here was that the Department did not want the main focus to be the local government elections. It wanted to do its job all the time, and make sure that the government was delivering the service required of it.

Another worrying factor with bulk infrastructure was the bucket eradication system. The water and sanitation function had been transferred to another department but it still remained this Department’s responsibility to make sure it assisted Nelson Mandela Bay to address the challenges that it faced. There was cooperation from the two Metros, but the challenges were complex in those metros and the Department hoped it could reduce some challenges. More details were outlined in the attached document.

Buffalo City Metropolitan Municipality: City Manager’s Report

Mr Andile Fani, The City Manager, Buffalo City Metropolitan Municipality, said that he appreciated the support from the National Department, the National Treasury and the Department in the province. The Department had been struggling in the past years but had improved recently. Some challenges were still being experienced. The first challenge was that local business was complaining about not being given work. The Department could not really directly influence companies to consider local business. The second issue was that whatever the Department was doing, it always made sure that it was being done in accordance with the Urban Settlement Development Grant (USDG) framework on the conditional grant. The Department’s Built Environment Plan talked to this and was inclusive of its Budget and Service Delivery Implementation Plan.

Mr Fani said that there was a shortage of land in the city, a point that had been made for a long time. There was a challenge in the national fiscus, precisely because the land that was here actually belonged to the National Department. Some of the land was not strategically located, and this was a challenge for the municipality, but it was working with the Housing Development Agency (HDA) who was trying to provide assistance. Finally the performance of the municipality was not yet what it would like it to be. At the end of the March quarter, the performance was around 67% although the municipality expected it to be around 70% or so. Currently, it was at 72% although there would not be a report on that. This performance was due to a number of challenges, including the procurement processes and the valuation of the procurement processes within the institution. This was being dealt with. The other challenges were collusion sometimes found between contractors and consultants in dealing with their work, and the slow pace of delivery. Perhaps the most serious challenge was that of  illegal occupation. The Municipality had requested consideration on how to deal with the matter, but it had not been resolved as yet.  Those whose houses had been occupied for the past four years or so had indicated that they would not take over their houses, as they wanted the municipality to do something about the situation. They were unwilling to be taken back to those houses that had been illegally occupied for four years. It was something that the Municipality had asked should dealt with politically, and had offered advice. However, as yet nothing had been implemented. It believed that the issue was capable of resolution.
 

Urban Settlement Development Grant: Buffalo City Metropolitan Municipality (BCMM)
Ms Riana Pretorius, Director Planning: Buffalo City Metropolitan Municipality, said that her report would deal with the 3rd Quarter Urban Settlement Development Grant performance. She noted, by way of background, that in the BCMM unemployment was still very high and this did have a knock on effect on the indigent register.

The major programmes of the BCMM were:
- Internal Services – Housing -with 23 projects;

- Bulk Water Programme
- Sanitation Programme
- Roads
- Electricity
- Integrated Transport planning
- Social Amenities and Waste Management.
All the information about Informal Settlements and Title Deeds were also provided.

The main challenges were then outlined. The Project Dimbaza Destitute comprised 27 Units. However, this had been delayed by the community claiming that the land belonged to the Amahleka Traditional Authority. On the Reeston Phase 3 Bulk Services Sewer, the Mechanical and Electrical contracts were awarded, but another bidder appealed the award to the preferred bidder. The same had happened on the Waste Water Infrastructure Capacity (KWT Regional Scheme.

There was a shortage of well-located land and of suitable and well located land for human settlement development, due to ownership, topography and availability of services.

Ms Pretorius said that the USDG was used for the construction of critical bulk infrastructure and the provision of internal services linked to approved housing projects. The Human Settlement Development Grant (HSDG) was used for the construction of top structures on serviced sites as prepared by the USDG.

In terms of sustainability BCMM made its own funds available for the repair and maintenance of infrastructure for the Medium Term Expenditure Framework (MTEF) period. Further details were contained in the attached document.

Nelson Mandela Bay Metropolitan Municipality (NMBMM) on its Urban Settlement Development Grant (USDG) Medium Term Strategic Framework

Mr Mpilo Mbambisa, City Manager: Nelson Mandela Bay Metropolitan Municipality said that the Municipality did not have a mayoral Committee or Executive Mayor so the Speaker was in charge of the Council. In terms of funding, the USDG for 2015/16 was R846 million. The Municipality’s portion of the HSDG was R310 million which added up to about R1.1 billion although ideally it required about R1.7 billion. In terms of the informal settlement upgrading of service sites, the Municipality had a five year annual target of 2 962 sites, had done 2 587.00 and it had its own targets also.

The main challenge with the provision of permanent bulk water to support the upgrading of informal settlements in Nooitgedacht had been resolved and the contractor was to move into the site in April 2015. Further details were contained in the attached document.

Discussion
Mr N Capa (ANC) said that he appreciated the apology from the Department for not attending an earlier meeting.  He said the number of military veterans seemed quite low in East London and asked if there were any efforts to increase the number.

Mr Capa asked if the Municipality had managed to improve the 30 day period for payment of invoices.

Mr Sharpley replied that payment was made in 30 days. When an invoice came to the office it had to be accompanied by an Inspectors Report of actual value created and the NHBRC certification that that particular milestone had been achieved.

Mr Capa said that quite a number of agencies were not known in the rural areas in the province, and therefore more work needed to be done to address this matter.

Mr Sharpley replied that the Department had been trying to get the Social Housing Institutions (SHIs) interested in this. There was an agreement with the Department of Health in the Eastern Cape to try to get accommodation for health professionals. This was still at the feasibility stage of discussion. The Eastern Cape (EC) government rented houses for its health professionals and yet the Department had an instrument that could provide for them.  A rural living allowance was given to some professionals of government, and this could also be used for rental stock.

Mr Capa asked what was being done with regard to rectification.

Mr Sharpley replied that he could provide the figures across the province. Up to the last financial year there was spending of R460 million, compared to a pre 1994 spend of R11 million. The pre 1994 rectification was project based, and the focus was now more on those communities that were requesting post 1994 rectification. 

Mr Capa said that he hoped that the issue of women and youth would be covered in the process.

Mr S Gana (DA) referred to Incremental Housing Programmes and asked which housing programmes would be for Military Veterans or Department of Military Veterans' houses. Mr Gana asked if it was correct to assume that Incremental Housing constituted housing for military veterans.

Mr Gana asked further what the ‘Definition of Results’ was. He said there was a column on page 4 of the presentation headed ‘Other’. He asked what this referred to. He asked further where the DMV delivery targets were in the report.

Mr Sharpley replied that ‘Definition of Results’ was the product, the top structure.  ‘Other’ would be instruments as outlined by the MEC. A separate written answer could be provided for this, but he briefly indicated that this would include the Extended Housing Programme, the individual subsidies, the social housing and a range of other instruments. He apologised if sufficient detail was not provided in the initial presentation.

Mr Gana said that there was money that had to go to Limpopo but had come to the Eastern Cape.  He asked if this money was included in the figure given. He also noted that money had come in late in the financial year, and wanted to check how spending was going in that regard. He asked further if funds were available to share within the sector, and wondered if he had heard that part of the presentation correctly.

The Chairperson said that Mr Gana had not heard correctly and she would clarify the matter for him later.

Mr Gana asked what kind of relief was referred to as "disaster relief".

Mr Sharpley replied that the PD was trying to separate what would be regarded as an emergency, what was temporary accommodation and what was a permanent solution. The province had taken a position that it would not, itself, get into the space of dealing with emergencies, but would rather partner with municipalities on that. If it started to tamper with things like roof sheets and door , and there was no NHBRC, this would be contrary to the Housing Code, and it must also be remembered that municipalities did have a direct mandate to provide immediate relief. This was being tested with Alfred Nzo Municipality, where the PD was going to allocate them funding so that they could provide assistance. The province would not set the rules. Alfred Nzo was asked to provide a proposed policy on how they would manage this as a district. Adaptation was still needed, when one moved from a temporary shelter to a permanent solution, because there was still a gap at this point. This gap was influenced by the situation where someone might be a beneficiary of temporary benefits, but when they had to be registered on the housing subsidy lists, it would be found that they earned over the limit and could not get that relief from the State.

He added that the EC Province was given R100 million for disaster relief, and was working on how to distribute it across the province. 

Mr Gana said that if he had heard the Municipal Manager of Nelson Mandela Bay correctly then it seemed that a lot more needed to be done in terms of contractor management as far as the quality of units was concerned. He asked how the municipality was dealing with issues regarding quality.

Mr Sharpley replied that in 2012, 70 contractors were fired across the province. There were some contractors who were spending seven to 10 years on a site deliberately.  They would build 50 units out of a 500 unit project and wait for the increase of the subsidy. In the past financial year, letters of termination were given to contractors, although firstly they would be given a Notice of Breach which would be followed with a termination. The Department took a zero tolerance stance because once it issued a Notice of Breach the chemistry and trust was broken on site, and its confidence in the ability of the contractor to understand the site and what they were supposed to do on it was lost. Some contractors were negotiated off the site. 30% of the work went to emerging contractors in the area and this was working quite well. There were over 80 contractors of good calibre in the database in the province; 70% of them were EC-based contractors and they were performing quite well on site. The Department continued to make sure that contractors did not take the state for a ride.

Mr Gana said that the last time the EC Department had given a presentation, it was said that the average cost per unit was running up to about R200   000. This was in the report from the Department and referred to under "beneficiary management". 

Mr Sharpley replied that on rectification, the EC Province had rectified 3 271 units with an average spent R144   000. This included the assessments that were done and a range of other activities that were not value created on to the product itself. Breaking down the budget, he said that R2.4 billion was allocated for products that were produced. 26   609 units were produced. He mentioned the figure of R89 000 per project. That was the actual spend. He noted that the correlation between product spend and value for money had to be guarded jealously. If one of the regions appeared to be spending more and there was less productivity, the PD would stop the process.

Mr Gana said that the presentation on Nelson Mandela Bay had not explained why the National Department was working there, if things were going so well. He added that it would have been much easier to follow the presentations if the documents had been received on time.

Mr L Khoarai (ANC) referred to slides13 and 14, where Informal Settlement issues were discussed. He asked if the indicators related to Informal Settlements issues could be explained, and if there was funding for this..

Mr Khoarai asked for clarity about the 271 hectares needed for land acquisition.

Ms T Baker (DA) said she was very impressed that now there was a policy, according to the Minister, which could be used to do proper oversight over USDG expenditure. She had felt that a questionable number of housing opportunities were being presented, in relation to the spend.

Her own research indicated that the housing backlog in the Eastern Cape was large, and, at the current rate of delivery, it was likely to take forty to fifty years to address that backlog. She asked whether, bearing this in mind, the Province was looking at other methods, like Alternative Building Technology (ABT) to help it achieve its targets. There were methods that were far quicker and that could cut the delivery time in half and thus become more cost-effective.

Mr Sharpley submitted that in fact the marketing of Alternative Building Technology (ABT) was different to the reality. Most companies said it was quicker, but this was not true. There were 35 ABT companies and only seven of them had received approval from Agrement South Africa on their products. The PD would only accept something with an Agrement SA certification. He took the point about the government's concern in making sure that the backlog was addressed, and said that this would seem to offer opportunities to ABT, but the Department was still a bit cautious because although the technology might be good, the implementation may leave much to be desired.  

Ms Baker said that in regard to the veterans backlog, it had come out in the debates last week was that the national figure had not actually been determined, so she asked how the province had arrived at this figure. She also wanted to ask the same question in relation to the backlog in informal settlements and the bucket eradication programme. She asked further if there were mechanisms in place to deal with the backlogs.

Ms V Bam-Mugwanya (ANC) said that it did not look like all the possibilities had been exhausted for what could be done for women. She asked what efforts had been made to improve the operations of women and their companies.

Ms Bam-Mugwanya noted the numerous protests, and asked if these were purely sporadic, or were the norm.

Ms Bam-Mugwanya said that the programmes available in the Human Settlements Department did not seem to be reaching the communities. Many rural communities were unaware of the programmes offered by the Department.

Mr H Memezi (ANC) said that the presentations looked good on paper, but the Committee Members were looking to realities, which were that there were problems in the Eastern Cape, in the Nelson Mandela Bay Metropolitan Municipality and in the Buffalo City Municipality. He said that he was not impressed by their paperwork. 

Mr Memezi said that he agreed with the point on quality made by Mr Gana because quality was one of the biggest problems faced by municipalities. Work tended to be given to friends, and this compromised the government efforts. There was a lot of  unhappiness around rectification. People who were supposed to have been helped had not in fact been helped. He knew that there were problems.

Mr Memezi asked the Metros how far they had gone in spending the money they had, before asking for more. The provinces were doing well in helping those that were spending. Spending patterns were not very good, and he disputed that this was an indicator that they had too little money.

Mr Memezi asked Municipalities what they used in order to spread their targets throughout the region. They had vast areas, and established towns should not be disadvantaged at the expense of their past progress. He added that ways had to be found to counter the illegal occupation of land. Officials should come up with options, because there had to be solutions found to this problem.

Mr Memezi said the Department and municipalities should work out solutions for rectification problems. There were more needs on the ground than had been mentioned.

Ms L Mnganga-Gcabashe (ANC) appreciated the improvement made by the provincial department in relation to the delivery of houses in the EC.

Ms Mnganga-Gcabashe said the intervention in Nelson Mandela Bay should have been done earlier by the province. It was now being done, with the Minister, so she asked for a status report on the intervention, indicating the current status of the agreement, if it had been signed and when the starting date for the intervention was.

Ms Mnganga-Gcabashe expressed concern about slides that reflected ‘0’ targets on sites because there were figures for the units. She also expressed concern about blank columns in slides concerning disaster relief, because that seemed to suggest that there was no spending in the current financial year, other than at the end, where it referred to ‘planned target’. She expressed further concern about contractors ‘employed’ to regions, because of the new legislation from the Department of Labour set out that labour brokers were not being permitted to employ people beyond three months; longer than this, and they would be regarded as being employed permanently. She asked if this had been budgeted for, and how was it being dealt with.

Mr Sharpley replied that this province did not have sufficient equitable share to effectively fund the management of its Conditional Grant, so it got 110 contract workers. They were not on the organogram but were task- specific contract workers, for five years. The Department was looking for the opinion on the effective dates of the revised legislation and it was suggested that because the legislation would come into force only after the contractors were employed, on this basis, it might not affect their contracts. It would be a "disaster" if there was insistence that these 110 employees must be regarded as permanent.

Ms Mnganga-Gcabashe asked about the delivery in the current financial year, and specifically questioned if this Committee could be convinced that 30% of the budget could be spent in the metros and district by the end of June.

Ms Mnganga-Gcabashe referred to Slide 9 where the challenges of ‘well located land, including the delays in the release of state-owned land’ were spoken of. Her main concern was that there were no timelines presented. Similarly, the Beneficiary Administration trouble-shooting programme also did not have any timelines. The Committee wanted to see timelines and a budget for land acquisition in the next financial year.

Mr Sharpley said that the land budget was R31 million.

Ms Mnganga-Gcabashe said that the report for the Buffalo City Municipality was prepared from the 3rd Quarter achievements, but because there were not comparative figures for further back, it was difficult to compare the levels of under-performance, especially where the targets were not met; for example on Slide 19 dealing with water access and sewerage. The figures in the column did not tie up. She asked for this to be corrected.

Ms Mnganga-Gcabashe referred to Slide 3 on expenditure in the Nelson Mandela Bay report. She asked the Metro to convince the Committee that it could spend 49% of the budget from April to the end of June. If the province could not meet its target then there would be a problem for that financial year. She added that there were a number of zeros reflected in the financial performance for the third quarter.  She asked that blank spaces be avoided in the future.

Mr Sharpley said he wanted to add something on social housing. The Department did want new Social Housing Institutions (SHIs) to come on stream, particularly black owned SHIs. There were four in the province now who had provisional accreditation, but there was a slow uptake on projects. There seemed to be a dependency on the state, rather than the SHIs being creative in generating projects for themselves. There was slow movement on social housing, but the province was preparing the pipeline to make sure it could deal with it. There were nine SHIs that had projects in the pipeline. The biggest challenge was going to be funding those projects, because each of them was in excess of R100 million.

The Chairperson asked for clarity about rectification, if it was pre 1994 or post 1994. If the figure combined both, then the relative percentages should be indicated.

The Chairperson asked for progress on resolving the illegal occupations in Buffalo City.

The Chairperson asked for clarity regarding the programme on Title Deeds, as the number and amount were unclear.

The Chairperson said that there were challenges in the supply chain, with the intervention in Nelson Mandela Bay Metropolitan Municipality. She asked the National Department to talk about this and satisfy Mr Gana why it was said that there was progress in service delivery.

The Chairperson also commented that in relation to the Military Veterans budget, the numbers did not refer to a one year programme. The numbers should be higher in the EC.

The Chairperson then clarified, for Mr Gana, that the HOD had been saying that if there were other provincial departments who were unable to spend their allocations, the Eastern Cape would be keen to take over those allocations, as it could then spend them in the Eastern Cape.

Response from the MEC
The MEC thanked the Chairperson for providing clarity about the point that the Province was ready ‘to take on money and not to surrender’ money. She reiterated that it would be pleased to take on money from any other province that could not spend. The Department had spent and exceeded its targets. The National Treasury even went so far as to verify what was on the ground. The quality of the units had also been proven. She conceded that there were challenges, especially with blocked projects from 2002, but the Department was systematically unblocking all these challenges in the EC. 

She noted that the backlog was, according to the last census, at a figure of 606 000. This could not be  alleviated in five years. This was a 30 to 40 year project. The targets could only be dealt with within the confines of the budget that existed, and it was a very fine balancing act because the instruments that had to be attended to were not top structures. The EC Department had to deal with all outcomes and instruments by which it was measured, in the MinMEC meetings and in meetings with National Treasury. Funding went to all instruments as Outcome Aid had prescribed for the provinces.  

The MEC apologised if certain areas or terminologies were not easy to understand, but explained that this report was in the format that the National Department required, and that related particularly to how the line items had to be reflected.

She responded to questions on military veterans. This project was in the office of the MEC. The Eastern Cape was the only province where the database of military veterans (MVs) was increasing every year. The Department did not determine the database of MV, this was attended to between the National and provincial structure. When the Department got a list for submission and did the project planning, it then submitted it to the National Department of Military Veterans (DMV). The DMV decided on the individuals for whom houses must be built; if anyone claiming to be a MV insisted on getting a house, the MEC would not be able to get any additional funding back from DMV to prop up the budget, so it was necessary to deal with the issue very carefully. There were guidelines as to how to deal with these issues. For this financial year there was a target of 325 houses.

Previously, the BCMM had said that it was not prepared to wait for the Department to deal with additional funding and bigger housing structures of 50 square metres. Building had started , and some people had benefited in previous financial years, from the 40 square metre houses delivery. This year there would be 57 units built in OR Tambo Municipality. Only 67 out of 200 units were approved for Nelson Mandela Bay. 

In relation to the questions on women, the MEC said that the target this year was to provide assistance to 13   100. Already, the achievement in respect of female contractors was  at 7900 - way above the 30% target, and a matter of which the Provincial Department was  very proud. The majority of these contractors were also from the EC itself. There was an emerging contractor support programme, so that within a year, contractors could be taken through the incubator and mentored. The main issue the Department was still struggling with was the unlocking and unblocking of finances from the financial institutions.

She wanted to clarify that in making his presentation, Mr Sharpley had not indicated that all was well with the metros; it might have been suggested by the NDHS in relation to the USDG figures. This figure did not reflect on the USDG. The metros came to report to those issues directly. She agreed that there were still some issues between the Department and the Metros, in terms of accountability, but hopefully this had been resolved in the last MinMEC meeting when it was resolved that the Metros had to account to the provinces. Those issues about the lines of communication were being cleared up.

She conceded that both Metros had failed to meet their targets. The way to meet the targets was basically through the current approach in the rural areas of Amatole and Alfred Nzo. The blockage in the pipeline had to be looked at, and a new service delivery model created whereby the issues could be dealt with. Unfortunately, Metros were encumbered by the fact that people were moving and migrating into the Metros at such a fast pace that the current resources available could not meet the needs. There was a new informal settlement springing up in Buffalo City almost every month.

Nelson Mandela Bay had to be commended for taking a stance and going to court and taking action against those who illegally occupied land that was already identified for another group of beneficiaries. Backlogs were created when people jumped the queue and they also stalled projects. If it was said that the officials had to come up with solutions, then she would suggest that there was a need for the Portfolio Committee to start re-considering the Prevention of Illegal Eviction Act (PIE) and its implications on local government. This would assist local government to deal with those issues. The current legislation was definitely hampering government and preventing it from moving with the necessary speed. If a person occupied a piece of land and was not evicted within 48 hours, s/he became the responsibility of the local municipality.

The agreement in terms of the province was in front of the EXCO, and the Chief State Legal Advisor, who had to look at the issues in the Memorandum Of Understanding (MOU). Although the PD was happy with the intervention, it must also look, as a province, at the implications of an Act being introduced at this point in time, to the Province. Exco and the Chief State Law Advisor would have to give some guidance.

Response from the NDHS
Mr Tshangana also responded, saying that the MEC had covered part of the intervention. He emphasised that the Nelson Mandela Bay support must be seen as a sector rather than a municipality-specific intervention. The NDHS was obliged, by the Housing Act, to  provide a package of support. He reminded Members that the NDHS had had two sessions with the Metro in the last financial year. Two of those sessions were chaired by the President. The area of procurement in Human Settlements in Nelson Mandela Bay came out very sharply in both of those meetings. On 12 December 2014 the Minister met with the leadership and officials of Nelson Mandela Bay, when again the issue of procurement and supply chain management came out strongly. The management of the entire procurement process was becoming an increasing problem.  There was also an issue about the credibility of the system in use to appoint contractors. A decision was taken in that meeting – he emphasised that this was not something that was imposed - following a request from the leadership of Nelson Mandela Bay that the NDHS had to help with this area of procurement, and that was why the Minister had intervened.

The intervention took the form of a standard or generic operating procedure which was also used in all the other Metros where intervention was required. This model suggested that before any intervention, the Minister, the MEC and the Mayor of the Metro had to sign a Memorandum of Agreement which would explain the rules of engagement. Four Accounting Officers would have to sign the implementation protocol, and they were the HOD, National Director-General, City Manager and the Chief Executive Officer of the Housing Development Agency. They would meet on a monthly basis and oversee the implementation of the programme. They would be accountable to the Executive Authorities - in this case, the Mayor, MEC and the Minister and the technical steering committee would report to that troika. The programme was not open-ended but had a defined life-span. On the previous day the team had been on the ground looking at the pipeline of all the programmes and projects that were managing Nelson Mandela Bay. The MEC still wanted to make a few comments on the Memorandum of Agreement. The NDHS was quite convinced that before the end of this month all the documents would be signed for the intervention to take place. In the meantime, all the groundwork was being done with all the relevant officials looking at some of the projects.

He added that in the previous week, he had been present at a meeting when a memorandum was received from communities who were very unhappy about beneficiary allocations. On the previous day, some contractors submitted a memorandum indicating their unhappiness with the roster system. He was quite convinced that the HOD, the City Manager and Director-General would be able to resolve some of the challenges with which the Metro was faced.
 

Nelson Mandela Bay Metropolitan Municipality response
Mr Mbambisa apologised for the late arrival of the presentation, and said that in fact he had not expected to be asked to give a presentation. Commenting on the capacity around the supply chain management, he noted that the qualified audit opinion provided on this Metro had raised supply chain as a particular area of weakness. The last financial year had started without anyone being in place to handle supply chain. Someone had since been employed in this capacity and there was continuous improvement in the capacity in this area. A level had not yet been reached where it could be said that there was a strong team, but there was improvement. With regard to capacity within human settlements, Members should be aware that the metro had received an Accreditation Grant and there were various initiatives to continue to improve capacity.

Specifically addressing the concerns about the Nelson Mandela Bay Metro presentation, Mr Mbambisa said that this report was based on the standard format that was required by Treasury, but he agreed with Members that there were a lot of challenges at Nelson Mandela Bay. He appealed to the Committee, if it had time, to engage on those issues and said that the Speaker would be able to engage with the Committee also.

Integrated human settlements was a priority for the Metro, as the presentation set out, and so was rectification. Unfortunately some of the communities who had been waiting for rectification for some time believed that their best solution was to protest in the streets and burn tyres. The same was true of those who had been evicted, who were also protesting against the evictions. There were challenges across the area. Small medium and micro enterprises (SMMEs) were demanding that they be given a portion of the work. The Issue of the involvement of women would be covered in the next presentation, as the municipality was doing quite well in this regard. Women contractors were in the majority in the municipality.

Mr Mbambisa said that the intervention was welcomed by the leadership in Nelson Mandela Bay and was well received. There would be some challenges in implementing the changes, and it would be necessary to brief the new leadership. However, he thought that the recent protest which ended up with the handover of the memorandum was not an entirely negative occurrence. He thought contractors were just worried about whether the opportunities that were currently there for them were still going to be there during and after intervention, and at this stage there was not yet a final decision on exactly how the intervention would happen.

He said that the questions on expenditure were quite difficult. His presentation had tried to display that by the end of the third quarter of the last financial year,  the municipality spending was at 47%, and that it had managed to spend all allocations at the end of the financial year. This year, the expenditure by the end of the third quarter was at 56%  and this was seen as an improvement on the previous year. Coupled with this was its confidence that it would still have ability to spend. In April, the spending was at 65%. Some of the challenges were unexpected, such as the SMMEs going to the sites and demanding work from allocated contractors. Some of the situations were also beyond the control of the municipality. 

Buffalo City Metropolitan Municipality Response
Mr Andile Fani said that with regard to illegal occupation, the BCMM now had a process to legally protect the land. The problem was that some of the land belonged to other departments, such as the National Department of Public Works. Those who owned land were asked to indicate whether they were going to utilise the land or not - a particular case was land near the airport, which belonged to the Department of Human Works. However, the Environmental Impact Assessment had declared that area not suitable for human settlement. The Department of Forestry was next door and cycads were destroyed with illegal connections, which also now affected land up to Hamburg area and to Port Alfred. The Metro could pronounce the land that it actually owned, but wanted to make sure that if another sphere owned the land it too would play its part in protecting the land. BCMM probably owned only about 15% of the areas affected, so the whole issue of providing housing was going to be a challenge.

He noted that Buffalo City had had some improvements in the last year. He would send through comparative slides. The Human Settlement Directorate had been complaining during the Adjustment Budget that they needed additional funding because it had depleted its own funding.  There were similar problems as were apparent at the business areas of Mdantasane, where small contractors wanted to be sub-contracted by the main contractors. However, the City clearly could not prescribe to the contractors whom they must sub-contract and preferred to deal only with the main contractors. There was some improvement but the situation was not yet to the City’s satisfaction.

The Auditor General (AG) had raised the point that if the BCMM had been able to spend R70 million in three months, then what was it waiting for? Mr Fani said that "we technocrats" wanted to be able to justify any spending. It was necessary, for any spike, to show the quality of the product, if it had been effective, efficient spending and there was been value for money.  The Auditor-General (AG) would focus on that kind of thing and visit the project for verification of all the aspects of delivery. The Metro would be grappling with such issues. Spending was currently at 72 % now and the Municipality could not say that it would definitely spend 100% because it faced a number of challenges at the moment. Some of the challenges were related to legal matters.

Deputy Minister's Briefing
Ms Zoliswa Kota-Fredericks, Deputy Minister of Human Settlements thanked the Committee for its questions and responses. She thanked the MEC Eastern Cape for the good work around the Govan Mbeki awards, because it involved orientation towards the rural areas and was well organised.

Buffalo City and Nelson Mandela Bay Metropolitan Municipalities were commended for their presentations on the expenditure of the USDGs. It was possible to see the positive shifts, from the past to the present, on expenditure related to the human settlement area.

She noted the comments raised about military veterans and suggested that the Committee allow the parties to go back to MinMEC and revisit the matter because they definitely would not be able to give an informed answer yet. A response would be provided by the NDHS in due course.

Ms Kota-Fredericks was pleased that Nelson Mandela Bay Metropolitan Municipality acknowledged that there were problems, because it showed that everyone was of similar mind. At the end of the day, the technical response on areas of expenditure was very good, but did not cover everything that was being spoken about; for instance, the issue about the lack of a mayoral committee, and similar matters. It was critical that everyone was committed to improvement on those areas of work where there were problems.

One of things that was very important with rapid urbanisation was the investment in secondary towns, and she commended the EC Province on doing this. The focus would hopefully shift from the metros to the secondary towns. For instance, investment in Butterworth was commended, and this would be able to demonstrate that the city was going forward in human settlements.

She noted that it was important that the Housing Development Agency in Buffalo City should be used in the acquisition of land, but also there should be an audit done on who exactly owned that land. All of government-owned land should be utilised for housing. She too issued a warning about the spike of expenditure at the end of the financial year that the Buffalo City Manager had spoken about. She cautioned that fiscal dumping was not allowed.

She noted that the Deputy Director General had covered areas of the intervention fully and she did not think that she needed to add more.

Chairperson's closing remarks
The Chairperson thanked the Deputy Minister, Department, MEC and Metro Municipalities, and expressed her pleasure in the fact that the delegation present comprised senior officials, rather than the more junior ones who had attended meetings in the past. She was grateful that the call for senior members of staff to be sent had been heeded. She really wanted to thank the Speaker from Nelson Mandela Bay because, in the midst of all the challenges happening there, she had taken time to come to this meeting, and this was particularly positive because it showed that all three spheres of government were interacting with Parliament.

She said that the Committee was obviously not fully content with some of the responses, but this was one of the first interactions that the Committee was going to have with the EC Department. The Committee would be visiting the provincial departments, sometimes unannounced, sometimes announced, as part of its oversight work.

The meeting was adjourned.