Department of Human Settlements 4th Quarter 2014/15 & 1st Quarter 2015/16 performance

Meeting report

Ms L Mnganga-Gcabashe was nominated as Acting Chairperson, in the absence of Ms N Mafu.

Briefing by the Department of Human Settlements on 4th Quarter 2014/15
Mr Mbulelo Tshangana, Acting Director-General of the Department of Human Settlements, said according to the approved Annual Performance Plan the overall achievement of the department during the fourth quarter is 65%. Of 127 targets planned for the period, 83 targets were achieved and 44 targets not achieved.

Mr Neville Chainee, DHS Deputy Director-General: Strategy and Planning, said the department’s organisational branch structure and programme expenditure structure spent R237 519 million with an available budget of R116 342 million. There was an over-expenditure of R121 177 million. The department participated in various outreach programmes where they spent time with members of the community, and the roll-outs were done through partnerships with municipalities, Provincial Departments of Human Settlement (PHSDs) and the entities within the department. The Deputy Minister, Zou Kota-Fredericks, spent February and March in the Western Cape delivering projects in Kraaifontein, Du Noon and Joe Slovo.

As of 31 December 2014, the department developed targets for period up to 2019 and their objectives are: to provide additional households living in adequate housing through the subsidy and affordable housing segments, improved housing conditions for households living in informal settlements, increase the volume of loans granted by private sector and development finance institution (DFIs); the 2019 target is 582 238 loans by DFIs and banks and improve investment decisions in human settlements to improve spatial efficiency. The department plans to build 745 000 households, provide 86 772 Breaking New Ground houses, including rental flats and Community Residential Units (CRUs), and represents 58.2% of their annual target by 2019.

So far they have provided 60 580 loans and it represents 52% of the annual target of the 116 448 loans. The Planning Framework will be expanded into a Spatial Investment Framework to ensure the coordination of investments, human settlements departments and agencies in geographic areas in order to address spatial inequality more effectively. It is anticipated that the final Framework will be submitted to Cabinet by 31 August 2015.The approach to accreditation has been revised to link it with performance of each accredited municipality and the collaborative approach towards the delivery of human settlements amongst the three spheres of government. A draft strategy has been prepared and circulated to stakeholders for commentary. Post-accreditation monitoring and support is continuous. DHS has also commenced with the appointment of a capacity support task team. A motivation for the establishment of a comprehensive capacity support programme was prepared and circulated to stakeholders for inputs.

As of this quarter, DHS has approved the Human Settlements Green Paper. A management and technical team have been appointed, and their draft list of chapters is currently being developed. A cooperative Housing Policy has been developed by external consultants, which will be assessed by DHS. The details of the Housing Policy were discussed by the Policy Task Team at a meeting that was held in February 2015. A draft enhancement of the People’s Housing Process (PHP) Policy Framework has been developed and circulated to relevant stakeholders for comments. Comments and inputs received have been incorporated into the draft Framework and final draft submitted to the Executive Management of the National Department for consideration. The Strategy for Mine Worker Housing has been developed (designed to increase exponentially the supply of housing) and will be circulated to stakeholders for comment.

1 672 units (representing 31% of the annual target of 5 400 units) for state-led social housing opportunities were delivered, while 1 590 CRUs (represents 79.5% of the annual target of 2000 units). In order to develop a coherent and inclusive approach to land for human settlements, the DHS Framework is being developed by the Housing Development Agency (HDA) and premised on the National Land Assembly Strategy developed by the HDA in 2013/14. The National Department will set up a policy and research forum which will include a subcommittee on land before the first version of the Framework will be released. A policy consultation session on the land framework will be held in order to include it in the Green Paper on Human Settlements. The National Upgrading Support Programme (NUSP) in collaboration with the HDA have completed the assessment of 780 informal settlements of which 450 detailed settlement plans have been completed. Currently, the NUSP and the HDA are assessing a further 195 informal settlements. These numbers have been verified and the names of the informal settlements are on record.

According to the National Credit Regulator, 3 522 mortgage loans were granted to people earning less than R15 000 per month up to 30 June 2014. Updated information is not yet available. The National Department and Department of Performance Monitoring and Evaluation (DPME) in collaboration with relevant stakeholders are also in the process of identifying additional credible sources for this information for reporting purposes. DHS provided support and guidance to consumers about affordable and the subsidy housing market. The support was provided for everyone in all nine provinces, and the total number of beneficiaries exposed to the training was 61 995. A discussion document around the curriculum on the property market and homeownership for the subsidy housing market was reviewed and improved. It was circulated to all stakeholders and consultations were held with various role players to solicit inputs and to identify areas of collaboration in the implementation of beneficiary and consumer education. It is envisaged that by the end of the current financial year a model structure of the curriculum on homeownership and the property market would be developed. A revised Grant Framework for the Municipal Human Settlements Capacity Grant was gazetted on 31 December 2014 outlining the conditions of the Grant, the allocation of the R300 million and guidelines. The conditions have been amended to include catalytic/mega projects in line with the Medium Term Strategic Framework (MTSF) priorities. There has been a backlog in the issuing of title deeds, the target for 2019 is 560 000 but they have issued 25 264 title deeds only. The Human Settlements Minister in the Executive Council (MINMEC) in December 2014 adopted the inception report developed by the Estate Agency Affairs Board (EAAB) outlining the challenges and proposed interventions to address the title deed backlog for the subsidy market and a proposed strategy to ensure the transfer of title deeds in a systematic and realistic manner. The EAAB conducted a national briefing session with the PHSDs and the Metros on 12 December 2014 to advise them on the way forward and to solicit comments on the draft Terms of Reference for the proposed scoping exercise and buy-in for the establishment of a Steering Committee.

DHS has through the quarter liaised with provinces, metros, municipalities, CSIR, EAAB and National Treasury. Some of the work performed was by providing inputs to the draft Green Paper, inputs to the Conditional Grant Framework with the Human Settlement Development Grant (HSDG), Urban Settlements Development Grant (USDG) as well as the Division of Revenue Act (DORA). The main objective of the Memorandum of Understanding between DHS and Statistics South Africa is for Stats SA to make available data and reports on a regular basis to DHS on the status of housing in South Africa. The relationship which DHS has with the Department of Small Business Development (DSBD) is to outline collaborations aimed at allowing DSBD officials participate in the special programmes of Human Settlements. DHS also works with Transnet properties for the conceptualization, planning and implementation of creating 50 000 housing opportunities through the land and building under the ownership of Transnet.

DHS is the lead department for matters falling under the auspices of UN-Habitat and therefore had the responsibility for coordinating the National Report for Habitat III which will take place in 2016. The National Report was submitted before the first Preparatory Conference for HABITAT III which took place at the United Nations in New York on 17-18 September 2014. Cabinet approved South Africa’s National Report for Habitat III in October 2014. South Africa participated at the first meeting of the African Union Specialised Technical Committee on Public Service, Decentralisation, Local Government and Urban Development which took place in Brazzaville, Congo, from 24-26 November 2014. They also participated at the Consultative Group meeting held in Addis Ababa, Ethiopia from 5-9 November 2014 which discussed and decided on institutional, operational and strategic matters of the Cities Alliance. A workshop on International Guidelines on Urban and Territorial Planning on 27 March 2015 was hosted by DHS. The purpose of the workshop was to discuss and develop a South African position on the International Guidelines on Urban and Territorial Planning which was presented at the 25th UN-Habitat Governing Council held in April 2015. Their Indaba towards the transformation of mining towns approved the framework for the co-ordination of inter-governmental and sector stakeholders.

The number of Accredited Municipalities:
- Total number of Municipalities accredited at Level 1 is 9
- Total Number of Municipalities accredited at Level 2 is 19
- Total number of Municipalities accredited is 28
- The progress on assignment is 75%
- Assessment to evaluate the readiness of metros for assignment function was also undertaken.

The delivery of 16,284 serviced sites and 26,366 completed units during the fourth quarter of the 2014/15 financial created 14,097 employment opportunities. Various challenges were encountered to obtain the provincial Business Plans for 2015/16 by 7 February 2015. The late adjustment of the provincial allocations and a discrepancy in allocations issues by DHS and that of the Provincial Treasuries resulted in the late approval of provincial plans. Some Provincial Business Plans did not address the MTSF targets due to  unsigned Delivery Agreements and finalisation of provincial MTSF targets. There was particularly slow progress with the implementation of the Financial Linked Individual Subsidy Programme (FLISP) by the provinces, there was a high level of indebtedness and poor credit record of potential FLISP applicants and there was a shortage of in-house data storage space for NDHS data warehouse and related data on current servers and repeated hardware failure. The current capacity is not sufficient to monitor the running of projects through the HSDG and the USDG. Further, there is inadequate capacity, limited financial resources, prolonged procurement processes and no adherence to perform monitoring and reporting requirements, including the due dates for submission of performance information.

Mr Chainee concluded that the solution is to address lack of adequate capacity and financial resources taking into consideration latest developments as noted in the Turn-Around Strategy and the department’s new mandate. The delayed procurement processes and challenges relating to inter-governmental collaboration, need to be addressed, as they impact negatively on policy development processes and service delivery.

Expenditure report
Mr Nyameko Mbengo, Chief Financial Officer, said the Medium Term Expenditure Framework (MTEF) allocation for 2014/15 was R30 521 392 billion. Grants and transfers to entities constitute 97% of the total allocation. The funds shifted between department budget votes following the transfer of the Sanitation Function to the Department of Water and Sanitation was R1.1 billion. R20 million was reallocated from the National Upgrading Support Programme (NUSP) to HDA to assist with the rollout of NUSP in mining towns. The funds remain earmarked as per the Appropriation Act. R4.5 million from savings on compensation of employees was used to fund the scholarship programme. R1.1 million was used to fund the transfer of skills levies contribution to the Public Service Sector Education and Training Authority (PSETA). R4 million was transferred to CSIR for Review of Guidelines for Human Settlement Planning and Design (Red Book) and R4 million was allocated for the outstanding stipends payable on the Youth Build programme hosted by DHS, Eastern Cape Province and the National Home Registration Council (NHBRC).

DHS underspent only because the Department of Public Works under billed them on one of its office buildings and there was a delay in receiving invoices for the leased office accommodation. The under spending on the NUSP is due to delays in the signing of several Service Level Agreements, delays in the completion of some projects as some municipalities have delayed projects and there were delays in the finalization of the development of the Capacity Building Programme Content pilot being extended by Ekurhuleni by two months. Gauteng and KwaZulu-Natal spend the most money out of all the provinces.

The Eastern Cape, Gauteng and KwaZulu-Natal have delivered the most houses within the last financial year. The total expenditure for FLISP is R35 589 million; the only provinces which did not have a FLISP expenditure were Limpopo, Mpumalanga, Northern Cape and the North West. The Rectification expenditure had the Eastern Cape, Free State and KwaZulu-Natal having the most expenditure and Mpumalanga the least. The Urban Settlements grant expenditure totaled to an amount of R10 284 648. The only three Metropolitan Cities which did not spend more than a million were Buffalo City, the Nelson Mandela Bay and Mangaung. A total of 51.7% of the funds were unspent, 48.3% were spent and there was a roll-over of R585 344 from 2013/14 (see document for details).

Briefing by DHS on 1st Quarter 2015/16
Mr Chainee said, according to the approved Annual Performance Plan, the overall achievement by DHS during first quarter of 2015/16 is 43%. Out of the 51 targets planned for the period under review, 22 targets were achieved and 29 targets not achieved. At the beginning of the financial year they were allocated with R690 556 million, but only spend R124 165 million (18% of the allocated funds). The Chief Directorate participated in a number of Ministerial outreach programmes. During these programmes, there were a number of engagements done with communities; these included the use of help desk information where communities were able to ask questions. With the help of municipalities and provincial departments, roll-out partnerships were done and during these visits publications were handed out to assist communities to have a source of reference at any time they needed information about DHS. During the Budget Vote, an environmental friendly information sharing portal was introduced where members of the public used a touch screen to access information about DHS.

The number of additional households living in adequate housing through the subsidy and affordable housing segments will be reached by 2019. The plan is to provide 745 000 households, including 120 327 Breaking New Ground (BNG) houses with flats and rental flats and CRUs. This target should represent 80.8% of the annual target. The number of functional settlements that are spatially, socially and economically integrated will be achieved through implementing 205 projects. The projects which have been recommended by the Evaluation Panel are Thembalethu (Western Cape), Southern Corridor N2 Phase 2 (Western Cape), Lerato Park (Northern Cape), Upington 7612, Bendor Extension 100 (Limpopo), Marapong linked to Lephalale and Cornubia South (KwaZulu-Natal).

To achieve these targets, DHS has developed a Comprehensive Rental Policy. A Comprehensive Rental Framework has been developed and referred to approval structures. The NUSP in collaboration with the HDA have completed the assessment of 816 informal settlements representing 62 municipalities. Of these 503 detailed settlement plans have been completed or are in process. A draft Policy Framework has been developed that seeks to balance the human right of access to and use of land with the creation and capturing of value in the utilization of land through property rights and property market participation in support of economic growth and prosperity. To increase the volume of home loans granted by private sector and DFIs to households in the affordable market, a total number of 26 239 home loans were taken up from financial institutions during 2014 by households earning less than R15 000 per month. If the number of loans issued by the DFIs (62 952) is added, a total number of 89 191 loans were issued by financial institutions and the DFIs to households earning up to R15 000 per month. This represents 76.6% of the annual target of 116 448 loans. Business planning processes, submission and approval of payment schedules and the release of the allocation of the Municipal Human Settlements Capacity Grant (MHSCG) were finalised by the end of February 2015. In preparation of the 2015/16 Municipal Human Settlements Capacity Grant (MHSCG) business planning process, a workshop was hosted for Buffalo City and Mangaung Metro as the new recipients of the MHSCG in February 2015. The total allocation for 2015/16 is R100 million and will be divided as follows:
Buffalo City:                 R9.253 million
Nelson Mandela:           R9.847 million
Mangaung:                    R9.2016 million
Ekurhuleni:                    R14.313 million
Johannesburg:             R16.505 million
Tshwane:                      R12.831 million
eThekwini:                     R14.342 million
Cape Town:                   R13.703 million

Oversight visits were conducted in the Western Cape, KwaZulu-Natal and North West Provinces to evaluate the implementation of the advancement of the self-build methodology programme and deliver the required People's Housing Process (PHP) capacity development workshops. Provinces were supported for upgrading informal settlements through the PHP. KZN and the eThekwini Metro evaluated progress regarding the upgrading of informal settlements through PHP. Provinces were helped with assessing the assignment of evaluating the impact of the Upgrading of Informal Settlements (UISP). There were engagements with CPUT to discuss the Human Settlements Summit with a focus on alternative building technology and DHS successfully launched the Cornubia Integrated Project in April 2014. DHS led a team of South African government officials and academics to the 7th World Urban Forum (WUF 7) in Medellin, Colombia. The outcomes from WUF 7 will support the concept of the long-term planning approach to urban policy and implementation and management thereof, that is, National Development Plan (NDP) – Vision 2030, as well as respective city visions, which can look as far ahead as 2055. DHS is also finalising the National Report on achievements in the last 20 years, what their remaining challenges are and what they hope to have included in the New Urban Agenda to be adopted at Habitat III, Sector engagements through a national workshop on 26 June have further solicited written inputs to be included in the report before it is submitted to Cabinet for approval in the second quarter.

In terms of the Multi Sectoral Task Force (MSTF) document, 21 municipalities (balance of 49 priority municipalities) should be accredited at different levels of accreditation by 2019. The new revised strategy towards the new approach to accreditation has been approved by the Director General. DHS has approved an enhanced assessment tool for municipalities in line with the new thinking, and a list of municipalities prioritized for accreditation has been submitted by the Provinces except for Western Cape, Eastern Cape and Mpumalanga. Further, DHS has embarked on the process of pre- capacitation of the new municipalities that are submitted for assessment. The delivery of 7,362 serviced sites and 21,988 houses during the first quarter of 2015/16 financial year have created 11,235 employment opportunities.

Some of the challenges were due to delayed procurement processes such as approval of the Terms of Reference for execution of specific projects including policy development. There were delays in intergovernmental collaborations which negatively impacted in the implementation of some of the planned outputs such as the signing of the Social Contract for Human Settlements. DHS has recommended that all predetermined objectives, performance measures and targets should be according to the SMART principle as per the National Treasury Framework and fully accounted for. Also there should be a correlation between planning, budgeting and reporting processes. The Acting Director General ensures that responsible officials adhere to performance reporting requirements including reporting on predetermined objectives and submission of evidence of actual achievements. DHS will ensure adherence to planning requirements as stipulated in the Framework for Strategic and Annual Performance Plans and address issues of delayed procurement processes and challenges relating to inter-governmental collaborations.

Expenditure report
Mr Mbengo said only 15% of the total funds were spent in the 1st Quarter 2015/16. He provided figures for programmes and transfer of payments to grants, entities and departmental transfers. He outlined the performance and expenditure of the Human Settlements Development Grant, FLISP, the Rectification programme, Social and Rental Housing, the grants, and mining towns (see document).

Discussion
Mr S Gana (DA) said the documentation handed to the Committee differed from the slides on the slide projector. He suggested that the financial part of the report should be discussed at their next meeting because they are unable to ask questions or comment on information that has been submitted late.

Mr H Memezi (ANC) agreed with Mr Gana that the financial section should be discussed at a later stage.

The Chairperson told DHS that all documents must be submitted to the Committee at least four days before the meeting so members can go through the information before the meeting and prepare questions.

Mr K Sithole (IFP) agreed with Mr Gana.

The Committee agreed that the financial section should be discussed at a later stage.

Mr Gana said DHS is spending a lot of money but there is no improvement with regards to their targets. Gauteng was allocated with a lot of money to build houses and KZN was allocated with less money than Gauteng but KZN has delivered more houses – he asked what had caused the problem. He added that the Free State, Limpopo and the Western Cape are of big concern. How accurate are the figures on the delivery of houses, how did they calculate the numbers and is there any way to verify them.

Mr Memezi said DHS needs to assure the Committee that they will find solutions to remedy their problems. They may even need the help of the Minister if nothing seems to have changed within the next year. He added that it does not make sense to give DHS a huge budget if they do nott deliver on their targets, and they cannot solely blame the backlogs on the provincial departments. The executive is responsible for giving direction; he concluded by saying that the Committee is not happy with the outcomes.

Ms T Gqada (DA) said the backlog on title deeds is not acceptable. DHS seems to have a capacity challenge because none of their employees have been permanently appointed. She asked how much money is spent on the provincial programmes.

Ms M Mokause (EFF) asked what the outcomes of the outreach programmes are because there has been an increase in protests regarding the delivery of houses. She also enquired about the mining areas, and which areas have they targeted.

Mr L Khoarai (ANC) asked if DHS has tried to improve the delivery of houses in the provinces which have not been performing well, and if they have what measures have they put in place to solve this?
 
Mr M Shelembe (NFP) asked which municipalities have caused the delays in the delivery of houses and do they have the expertise to deal with the monitoring of the money that is being sent to the municipalities.

Mr Sithole said the Limpopo department does not have any planning strategies for their delivery of houses. What has been done to solve this problem? He asked if there were any plans to reduce the number of backyard dwellers because the report has not indicated whether they have plans to reduce the number.

Mr N Capa (ANC) said DHS targets are too ambitious. The provinces which received roll-overs did not perform well in the 4th Quarter. From a DHS perspective, what can be done to improve reaching targets?

Mr Tshangana replied saying three Head of Departments and Housing MECs have resigned within a matter of three years, and these changes have led to institutional challenges. The DHS budget was cut by R55 million in the last year and it affected the appointment of employees, especially management posts. It has been difficult to fill vacant positions. He added that DHS will need at least R100 million more to fill the vacancies - they have in the past made use of consultants to do their monitoring work and to provide administration support. A Chief Director and Regional Directors for the Free State, Gauteng and the North West have been appointed to monitor DHS projects running in the provinces. The main reason why KwaZulu-Natal has managed to deliver more houses than Gauteng with a lower budget is because some provinces build different types of houses which cost more money, hence they have lower outputs. The Eastern Cape and KwaZulu-Natal have been strategic in implementing planning projects, hence they have been able to deliver more houses and procure more projects. The issuing of title deeds has become a problem, hence DHS has developed several committees to deal with the backlog of title deeds. They have discovered that the issuing of title deeds should be done first. Further, another major challenge is that some provincial departments have HODs who are not familiar with the delivery of houses. The Eastern Cape and KwaZulu-Natal are the only provinces who do not have new HODs. Departmental projects will generate R1.1 million and they will be delivered in Gauteng because that is where most of the budget is allocated.

The Chairperson said the report was upfront about the problems regarding the backlog of title deeds and DHS was honest about their challenges. This gives the Committee an idea of where DHS is heading and what their challenges are. The information about the funding of mining towns has been communicated to the Committee. She concluded that there will not be a meeting next week due to a meeting for all Parliamentary Chairpersons.

The Committee adopted minutes of the previous meeting and the meeting was adjourned.