The Committee was briefed by the Department of Human Settlements (DHS) on the intervention in the Nelson Mandela Bay Metropolitan Municipality with respect to delivery and performance. The briefing was an update on the various interventions being carried out by the Department. The meeting was attended by the DHS and representatives from the Housing Development Agency (HDA) and the Nelson Mandela Bay Metropolitan (NMBM) Municipality. Due to time constraints, only the most important issues were discussed by the DHS and a promise was made to respond to all outstanding issues in writing in a comprehensive report during the next quarterly meeting.
The HDA highlighted some of the problems that had been identified with the NMBM programme. One had been the issue of contractors. Over 400 contractors were on the database for contract implementation, but only about 37 actually got contracts to execute projects and this had caused a lot of disaffection among contractors. The beneficiary management system had also been reviewed and fixed where this was possible. The staff capacity for beneficiary management had also been addressed, as had problems associated with communication with the communities on how they could get access to housing. There had been issues around payment and management of payment. The DHS, in collaboration with the HDA, had appointed a team of professionals, which included civil engineers, town planners, project managers and environmentalists, to unblock all the blockages and give meaningful assistance to the DHS. Hot spots had been targeted for special intervention, and various issues had been dealt with in these places.
During discussion, a senior NMBM official revealed that according to the guidelines of the DHS, there was an allocation committee. However, it had been discovered that the committee had last met on 1 February 2014, and for two years an individual had been allocating houses himself with no authority. He had looked into this, and the issue of allocation to beneficiaries would henceforth be centralised in his office. Members expressed concern over unspent funds, contractors who did not deliver on projects after contracts had been signed, the need to prioritise housing for military veterans, and the problems of houses being illegally occupied.
The Department of Human Settlements provided details of its performance for the 2014/15 financial year, highlighting the below par performance of the Programme Delivery Support (PDS) and Policy, Strategy and Planning units. The DHS received an unqualified audit opinion, with emphasis of matters, from the office of the Auditor General.
Members asked what the DHS was doing about consumer education, so that people did not get houses and then sell them. What was it doing about making it easy to get title deeds for these houses? The grants to the metros were meant to assist them, so why had the Department of Treasury decided to withdraw them? Was the lack of investment in bulk infrastructure due to a lack of capacity to use the available funds? There had been a public private partnership at a time to provide housing units for the military veterans -- was this still in place? The DHS complained of a lack of funds, so why did it have unspent funds at the same time? The various municipalities who claimed to have underspent should be investigated, because most of them wrote that on paper but the funds were actually not there. Such underspent funds should be ring-fenced and tied to specific projects.
Chairperson’s opening remarks
The Chairperson referred to the protests by the staff of Parliament, and said this was the reason why there was no support staff present. She commented that it was a thing of joy when Members of the Committee went out on oversight visits and saw the level of work being done. She also expressed satisfaction with the response of the Department of Human Settlements (DHS) to the various recommendations raised by the Committee..
DHS on the Nelson Mandela Bay Metro (NMBM) human settlements programme
Mr Pascal Moloi, Chief Executive Officer (CEO): Housing Development Agency (HDA) gave the briefing on the NMBM. He began by referring to the Memorandum of Agreement signed by the political principals on 30 June 2015 and the implementation protocol signed by the accounting officers on 2 July 2015.
Some problems had been identified with the NMBM programme. One had been the issue of contractors. Over 400 contractors were on the database for contract implementation, but only about 37 actually got contracts to execute projects and this had caused a lot of disaffection among contractors. The roster system had also been looked into and corrected.
The beneficiary management system had also been reviewed and fixed where this was possible. The staff capacity for beneficiary management had also been addressed, as had problems associated with communication with the communities on how they could get access to housing.
There had been issues around payment and management of payment. A revolving fund had been created by the municipality because there were cases of time lags in payment due to non-verification of invoices and other financial matters. This fund had been mismanaged and the revolving fund kept increasing. This issue had been looked into and addressed.
Tthe issue of institutional management had been addressed. The DHS, in collaboration with the HAD, had appointed a team of professionals, which included civil engineers, town planners, project managers and environmentalists, to unblock all the blockages and give meaningful assistance to the DHS.
Currently there was R450 million in unspent funds and he was confident that there were enough projects on ground on which these funds would be spent. There was a mandate to deliver 2 777 units by the end of the financial year. The DHS would deliver 1 222 units, while 1 506 would be delivered by the capacity existing within the Metro. There was a plan now, and the targets which had been set out had been delivered. There were hot spots which had been targeted for special intervention, and various issues had been dealt with in these places.
Mr Bosco Khoza, General Manager: Land and Housing Support Services, highlighted the five key thrusts identified to drive intervention. These were
- Development of a procurement framework;
- Deployment of technical capacity;
- Financial support of the SMMEs;
- Identification of a project pipeline for maximum impact; and
- The appointment of the HDA as an implementing agent.
In terms of progress, a new procurement framework was to be implemented to deal with the roster system, and this would ensure equity, transparency and comply with legislative requirements. Bids had been issued and over 1 500 had been received.
There was a good interface between the politicians and officials of the metro to address the issues of the hotspots. Walmer was one of such places. A Deputy Mayoral steering committee on Walmer had been established .This committee sat every two weeks and included community representatives, public officials and relevant politicians. A contractor had been appointed to commence construction of 196 housing units in Walmer, while five sub-contractors from within the community had also been appointed. Some quick wins had been achieved. These were
– The establishment of an Enhanced Peoples Housing Process (EPHP) programme for the benefit of the community;
- An electrification programme which had been 99% completed;
- Cleaning of open public spaces;
- The rehabilitation of access roads;
- The establishment of a task team which meet fortnightly and gave feedback to the community.
These achievements had improved the confidence level of the community in the performance of the metro.
The second hot spot identified had been Khayamnandi. The main idea here was to build 800 slabs on which top structures would be built later. Initially the Coega Development Corporation had been appointed as the implementing agent, but the HDA was now the implementing agent for the project.
Another hotspot was Missionvale. Houses had been built in low lying area exposed to flooding. The designs had had to be revised to cater for these low lying foundations. Some challenges had been experienced with designs and the implementation of the project. The housing construction had been done ahead of providing services for water and sewerage in phases one, three, four and five. The houses which had been built but not connected to services in phases one and two had now been fully serviced and phase three was over 90% serviced. Also, there was a plan to ensure completion of servicing of phases four and five by late 2015/early 2016 and to attend to the water leakages that were causing waterlogging in some areas.
Funding for the Integrated Residential Development Programme for 2015/16 allowed for the construction of 2 778 top structures, excluding rectification.
The first quarter expenditure of its R846.5 million Urban Settlement Development Grant (had amounted to R145.5 million, or 17% of the allocation. In terms of settlements, the number of state-subsidised housing units provided in the first quarter had been 240 against the target of 200, while the annual target for the metro stands at 1 506. A total of 195 households had been relocated from stressed informal settlements and servitudes to Greenfield development areas, against the target of 150. The annual target was 1 200. One settlement had been upgraded from informal to formal. The annual target for this was four. 520 households had been provided with permanent water and sanitation services, while the annual target for this was 3 000.
Four areas which needed reforms had been identified in the beneficiary management system. These were:
- Training to manage the national housing needs register and the housing subsidy system;
- Review of the housing demand and allocation policy;
- A beneficiary and consumer education programme;
- Social facilitation.
Regarding title deeds, it had been proposed that a complete verification system be developed, as well as a programme to determine the number of title deeds ready for handover. It was also important to develop and implement a communication strategy around the community so they understood what was actually being done for them, and to prioritise the hotspots in terms of title deeds handover.
Some critical success factors had been identified regarding the programme. These included the sustenance of collaboration between the various organs of government, the confirmation of additional funding mechanisms for up scaling, the timely resolution of outstanding commitments of the NMBM revolving fund, the establishment of systems and procedures for financial management, and beneficiary management and operations management. It was also important to direct communication to the broader community within the Metropolitan Municipality regarding elements of the programme.
Ms L Zwane (ANC, KwaZulu-Natal) worried about the unspent fund of R450 million. She asked if there were any assurances that this fund would be spent before the end of the financial year on the projects for which it had been allocated. Regarding the programme for the SMMEs, she also expressed concern about the figure for rectification. She was of the opinion that with proper training, rectification was supposed to reduce, but there was still a lot of expenditure on rectification. Talking about the revolving fund, she hoped the Metro would control the fund because it was growing, and this could cause problems. She also referred to the housing backlog, and wanted to know how many more houses were needed and if everyone in need of a house had been covered.
Ms P Mququ (ANC) made her observations in her home language.
Mr M Khawula (IFP, KwaZulu-Natal) asked about those who did not deliver on projects after contracts had been signed. He wanted to know what steps were being taken to recoup the funds.
The Chairperson remarked on the performance at the end of September. Performance had been 17% while the budget had been at 54%. She wanted a clarification on that.
On the issue of the unspent funds, she said that two months was a short time to complete all projects. She was worried about how the funds would be spent, because the money could be allocated to other projects instead of lying in the DHS unused
With regard to the beneficiaries, she said that there should be no compromise. The houses should go to those who truly deserved them or qualified for them. Priority should be given to the elderly, disabled and the women, in that order. She asked for quarterly reports on the projects.
She was not sure of the role of the members of mayoral committees (MMC) forum, because it dealt with issues at the community level.
Dealing with the issue of backlogs, she asked if the Metro had a human settlements strategy. She wanted clarification on how the DHS dealt with the number of people still waiting for houses.
Mr Khoza, responding to the issue of unspent funds, said some of the projects already had contractors on site, and he was optimistic that the funds would be spent. The only constraint was that of the new framework. The backlog of housing units stood at 72 000. This data was from the Metro. More housing units could be delivered, but there were financial constraints.
The 17% represented the portion of the Urban Settlement Development Grant allocation spent in quarter one. The work done was in two phases.
Mr Mbulelo Tshangana, Acting Director General, DHS, explained that the 17% was actually an improvement over the 2014 year, where 10% had been spent in the first quarter.
Mr Mandla Mabuza, Acting Executive Director, NMBM, talked about the beneficiaries. According to the guidelines of the DHS, there was an allocation committee. However, it had been discovered that the committee had last met on 1 February 2014, and for two years an individual had been allocating houses himself with no authority. He had looked into this, and the issue of allocation to beneficiaries would henceforth be centralised in his office.
Mr Mandla George, Acting Director: Housing Delivery, NMBM, said the revolving fund issue had been given top priority and all claims brought against the fund were being analysed. These claims had been categorised and some had been recommended for write-off with the approval of the council. Everything was being done to ensure the revolving fund was at the minimal level possible.
Mr Tshangana, on the issue of rectification, said funds were being recovered from contractors who had breached the rules and such contractors were being blacklisted. He proposed that the National Home Builders Registration Council (NHBRC) should come to make a detailed presentation on this at the next briefing.
The Chairperson remarked that occupation of houses was also an issue. She asked that beneficiaries be encouraged to move into the houses as soon as they were allocated so that the issue of illegal occupation would not arise.
On a final note, she was of the opinion that contractors lived up to their social responsibilities in the communities where they operated.
DHS Annual Performance Report for Financial Year 2014/15
Mr Neville Chainee, Deputy Director General: Strategy and Planning, DHS, said the overall performance of the Department, based on the approved Annual Performance Plan for 2014/15, had been 70%. Out of 146 approved targets, 102 had been achieved while 44 had not been achieved.
The Programme Delivery Support (PDS) unit had 40 approved targets, of which 32 had been achieved. In terms of Policy, Strategy and Planning, 24 of the 46 approved targets had been achieved. These were the two areas where the performance had not been very good.
The performance graph of the DHS showed that the first quarter performance had been good. It had declined to 69% in the third quarter and moved to 72% in the fourth quarter, before levelling out to 70%.
Programme Delivery Support had been able to spend just 70.55% of its R29 billion allocation.
In terms of qualitative departmental performance, the DHS had implemented consumer education, targeting beneficiaries across various programmes. It had also implemented community outreach programmes with the Executive Authority, and the roll-out had been done in partnership with municipalities, provincial Departments of Human Settlements and entities.
With regard to Human Settlements’ strategic support, the evaluation of four key focus areas had commenced, including the Urban Settlements Grant, asset creation and the Integrated Residential Development Programme. The drafting of the White Paper had commenced.
In the Enhanced People’s Housing Process (EPHP), a total of 12 533 units had been delivered in five provinces, 4 000 of which were in informal settlements upgraded by the Ethekwini Municipality. In collaboration with the KZN province, a cooperative’s model of delivery was undertaken in the Vulindlela Rural EPHP in KZN. The Department had also begun a partnership with the Department of Small Business Development to establish housing cooperatives. The involvement of the youth in the delivery of EPHP projects had been undertaken through the Youth Brigade Programme in the Western Cape, KZN and the Eastern Cape.
The International Relations Programme had a large focus on Africa. Housing and urban development on the continent had been formally institutionalised under the African Union through the establishment of a specialised technical committee on public service, local government, urban development and decentralisation.The DHS was also in collaboration with Cuba in terms of continued co-operation on the use of Cuban expertise for skills transfer and capacity building.
Mr Nyameko Mbengo, Acting Chief Financial Officer: DHS, gave an overview of the Human Settlements Development Grant (HSDG). The total amount voted had been R17.1 billion. Gauteng, Limpopo and Mpumalanga had had roll overs amounting to R289.7 million. The total money spent by the provinces stood at just under R17 billion, representing 98% of their total allocated funds.
In terms of annual delivery targets, there had been a target of 151 448 for both sites and top structures, and there had been a delivery performance of 143 911.
On the financial linked subsidy programme, there had been a target to deliver 1 101 units, with a budget of R71.6 million. At the end of the financial year, 1 193 had been delivered and a total of R35.6 million had been spent
7 440 units had been targeted for rectification, with a budget of R690.7 million. 7 879 units had been rectified and R757.6 million had been spent. The Minister had given a directive that all rectification processes be rounded up.
The Municipal Human Settlement Capacity Grant had been allocated by Treasury in anticipation that the metros would be assigned the housing function, but this had not happened. The Treasury had decided to withdraw this grant in the next financial year, and it would no longer be made available for allocation.
In the medium term expenditure framework (MTEF) allocation, a total of R30.5 million had been allocated in 2014/15, and it had moved up to R34.5 million in the 2016/17 financial year. It should be noted that grants and transfers to entities had constituted 97% of the total allocation.
The Department had received an unqualified audit opinion with emphasis of matters, which were:
- Material under spending of the vote;
- Some significantly important targets had not been reliable when compared to the source information or evidence provided;
- The financial statements submitted for auditing had had two material errors;.
- The entity-wide strategic risk assessment had been conducted late for the year under review;
- A human resource plan had not been in place, as required by public service regulations.
Mr Tshangana, referring to strategies to deal with the DHS’s problems in dealing with the Metros and Municipalities, said that the Department had decided to group them into various regions and each would report to a Chief Director in the Department.
There were a number of vacancies in the DHS, but they remained unfilled because in the last financial year, about R54 million had been lost to compensation for employees which the DHS had not employed because it had been trying to prioritise. However, the Department of Treasury had agreed to refund this money in the next financial year on condition the funds are directed to filling the vacancies in the DHS.
The Chairperson asked that the issue of military veterans be addressed.
Mr Tshangana said that the programme had not been performing, but there was a target of 2 000 units to be delivered in the next financial year. He asked for time for a proper report to be prepared which would be included in the next quarterly report.
Ms Zwane wanted to know what the DHS was doing about consumer education so that people did not get houses and then sell them. What was the DHS doing about making it easy to get title deeds for these houses? She was worried about the Finance-Linked Individual Subsidy Programme (FLISP), because only a few housing units were allocated to professionals. She was not impressed by this and asked for information about the problems associated with the programme. Commenting on the EPHP and the youth brigade, she asked what was being done about the women’s brigade also.
The grants to the metros were meant to assist them, but the Department of Treasury had decided to withdraw them. This did not make sense to her, and she wanted a satisfactory explanation. She asked about the lack of investment in bulk infrastructure -- was it a lack of investment or a lack of capacity to use the available funds? She commented that there had been a public private partnership at a time to provide housing units for the military veterans, and wanted to know if this was still in place.
Mr Khawula said he could not reconcile the fact that the DHS complained of a lack of funds and at the same time had unspent funds. He was hoping the DHS would clear the air on the issue of billions of rands unaccounted for,
The Chairperson said there was no justification for abandoning the military veterans. They should be made a top priority, and special interventions should be provided for those who required land for building their houses.
On the issue of the Human Settlement Capacity Grant being stopped by the Treasury, she suggested that rather than a total stoppage of the grant, it should be transferred to other pressing issues.
She asked the DHS to investigate the various municipalities who claimed to have underspent, because most of them wrote that on paper but the funds were actually not there. She proposed that such underspent funds be ring-fenced and tied to specific projects.
She was not impressed with the word “war” being used in the briefing notes, and asked that such terminologies be avoided.
Mr Tshangana agreed that the word “war” was not necessary, but remarked that it served only to show the urgency of the actions intended.
On the issue of underspending and lack of funds, he said the DHS indeed had no funds to employ new personnel because of the compensation of previous employees, but the issue had already been resolved.
The programme for the military veterans was indeed very important, but it had not performed the previous year. Reforms were being carried out to ensure it became more productive. He also proposed that the programme be managed separately, as was done in other parts of the world.
Regarding the issue of ring-fenced funds, he said that the capacity grant was indeed ring-fenced but when it gots to the municipalities, the funds were diverted for other uses. This was being looked into also.
The DHS had proposed that the Department of Treasury allow metros to spend 5% of their USDG funds for capacity building, but it had approved that only 3% of the funds could be spent on capacity building.
With regard to consumer education, the DHS was working hard to ensure that those who had been allocated houses did not sell them for a period of at least eight years.
He promised to respond to all other questions raised by the Committee in writing and present them in the next quarterly briefing.
The meeting was adjourned.
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