Department of Rural Development and Land Reform, CRLR & Ingonyama Trust Board on thier 2014/15 Annual Report
NCOP Land Reform, Environment, Mineral Resources and Energy
17 May 2016
Chairperson: Mr O Sefako (ANC, North West)
The Select Committee on Land and Mineral Resources was briefed by the Department of Rural Development and Land Reform (DRDLR) on its 2014/15 annual report. Key issues highlighted were its performance against the budget allocation, the achievement of an unqualified audit with findings, progress in training and the surveying of state domestic facilities, and the registering of almost a million deeds and documents. The Department had received an appropriation of R9.455 billion and spent 99.4% of it. Fruitless and wasteful expenditure had increased by 12%, and an increase in irregular expenditure had been due to non-compliance with supply chain management prescripts. Warning letters had been issued and disciplinary actions were under way for the officials who were found guilty.
Members asked why there had been a decrease in achievements against targets, when funds had been there to be spent. Why had the development of a rural development strategy system not been achieved? Why was there no deeds office in Limpopo? They questioned the status of the report on irregular expenditure, as well as the logic in saying that the River Valley Catalytic Programme had been achieved when nothing had been done in four provinces. What would the Department do to ensure food production continued in community property associations (CPAs)?
The Commission on Restitution of Land Rights (CRLR) gave details of the land claims which had been researched, settled and finalised, and projects which had been approved. It had established 14 operational claims lodgement offices and acquired four mobile lodgement offices. The Act required the Commission to attend to old claims before dealing with the new ones. The financial value of the claims that had been approved was R 2.778 billion. Lodgements at mobile offices had totalled 13 985 and the number of people reached to date was 45 363. The Commission had 819 funded posts, of which 743 were filled and 76 were vacant.
Members questioned the budgetary constraints and when outstanding claims would be finalised. They asked why claims of over 15 years had not been settled and the turnaround time for settlement. They asked who determined what was paid to researchers and said there was a need to improve communication with the claimants.
The Ingonyama Trust Board (ITB) had received a transfer payment of R 17 352 676 from the Department which had been fully utilised. The Board’s total revenue had been R101 million and expenditure R84 million. There had been a decrease in cash flow from operating activities, while the decrease in cash flow from investing activities was due to the completion of office accommodation and a decrease in vehicle purchases. Vehicles and equipment had been purchased due to an increase in business activities. The Auditor General had not identified any material findings.
Members asked if the Ingonyama Trust Board could be self-sustained, if other communities from KwaZulu-Natal profited from the Trust, and if the King was the owner of the land, as he was the sole trustee. Why had the Trust wasted money on rent when the Department of Public Works had vacant offices that could be used? Were there any schemes like the Ingonyama Trust Board elsewhere in the country?
The minutes of 12 April, 3 May and 10 May 2016 were adopted.
Department of Rural Development and Land Reform on its 2014/15 Annual Report
Ms Nomonde Mnukwa, Chief Director, Corporate Services, Department of Rural Development and Land Reform (DRDLR) spoke on the Department’s non-financial performance. She said 99.9% of its allocated budget had been spent; 92% of valid invoices had been paid within 30 days of receipt; the Department had achieved an unqualified audit opinion with findings; 61 people had been trained in geomatics; 1 669 state domestic facilities (SDFs) had been surveyed; 961 518 deeds and documents had been registered; and the development of a rural development strategy and systems had not been achieved.
There had been an over-achievement of 31 projects implemented in support of the River Valley Catalytic Programme, as the annual target had been 14 projects. 208 animal and veld management programme projects had been implemented, and 9 509 skills development opportunities had been provided to support rural initiatives out of a target of 4 200. 4 916 jobs had been created in rural development initiatives. 217 land reform farms had been recapitalised and developed, 1 925 jobs created in land reform projects, and 440 farm personnel trained. There were no Communal Property Associations (CPAs) that had been compliant with legislation and no labour tenants’ applications had been settled in the period under review. Six land parcels had been transferred under the Transformation of Certain Rural Areas Act (TRANCRAA), and 1 646 had been confirmed as vested. There had been no misstatements, or the misstatements identified were not material and had not affected the credibility of the reported performance. The minimum target of 2% of persons with disabilities as a percentage of the workforce had been achieved.
Ms Sadiki Rendani, Chief Financial Officer (CFO), DRDLR, briefed the Committee on the Department’s financial report. The Department had received an appropriation of R9.455 billion, which was a decrease of R48 million from the prior year’s R9 560 billion. The expenditure for the year under review had amounted to 99.4% of the budget allocation, which had resulted in an under-spending of R59 million. Goods and services had decreased from R2.1 billion to R1.3 billion. Revenue had decreased by 16%, because prior year revenue had included reversals of unclaimed restitution vouchers of R39 million, compared to R4 million in the current year. These were vouchers which had been issued to claimants as settlement of their claims. Once these vouchers were unclaimed for a period of three or more years, the money was declared as Departmental revenue and paid over to the National Revenue Fund.
Fruitless and wasteful expenditure had increased by 12%, from R 5 417 million to R 6 073 million. There had been an increase in Irregular expenditure (R 12 647 million to R25 286 million) which was due to non-compliance with supply chain management (SCM) prescripts. Warning letters had been issued and disciplinary actions were under way for the officials who had been found guilty in the finalised cases of fruitless and irregular expenditure. The Department had obtained an unqualified audit opinion.
Briefing: Commission on Restitution of Land Rights (CRLR)
Ms Nomfundo Gobodo, Chief Land Claims Commissioner, CRLR, briefed the Committee on its annual report. She said the Commission had settled 428 new claims against a target of 379; finalised 372 claims against a target of 239; approved 119 projects against a target of 53; researched 1 525 claims against a target of 1 445; established 14 operational claims lodgement offices; and acquired four mobile lodgement offices.
The Act required the Commission to attend to old claims before dealing with the new ones, but exceptions were cases of court orders that were contrary and where there were overlapping of new and old claims on the same portions of land. Such new claims were given priority. The total financial value of the claims that had been approved during the period under review was R 2.778 billion. Total expenditure was R2. 488 billion, which included expenditure on backlog claims which had been approved in previous financial years and where payments had not yet taken place.
Settled restitution claims for the period under review were as follows:
Western Cape – 194; Eastern Cape – 79; KwaZulu-Natal – 59; Limpopo – 35; Mpumalanga – 35; Northern Cape – 9; North West – 7; Gauteng – 9; and Free State – 1.
Expenditure on claims approved in 2014/15 had been R 1.987 billion, which represented 80%, of which claims approved prior to 2014 had been R501 million, which was 20%. Lodgements at mobile offices had totalled 13 985, and the number of people reached to date was 45 363. There were 819 funded posts, of which 743 were filled and 76 were vacant, representing a 9.3% vacancy rate.
Briefing: Ingonyama Trust Board (ITB)
Ms Jabulile Bhengu, Deputy Chairperson, ITB, covered the background and mandates of the ITB. She said the Trust did not pay any grants, but received a transfer payment from the DRDLR. A total of R17 352 676 had been received for 2014/15, and had been fully utilised.
Mr Amin Mia, CFO, ITB, said 1 100 tenure rights had been approved by the Board against a target of 1 200. The five land management projects to be approved by the Board had been fully achieved. The development or review of human resource /legal policies had not been achieved. 31 traditional council workshops had been held on land management issues, compared to a target of 43.
Total revenue had been R101 081 770 and expenditure R83 965 810, reflecting a surplus for the year of R17 115 960. There had been a decrease in cash flow from operating activities due to an increase in operational expenditure. There had been an increase of R5.6 million in cash and cash equivalents from the prior year. The decrease in cash flow from investing activities was due to the completion of major construction of office accommodation, and a decrease in vehicle purchases. Rent on land was R198 000, and was for the only satellite office at Ulundi. Capital expenditure incurred for motor vehicles had been R 2 210 901. The ITB had purchased vehicles and equipment due to the increase in business activities. The Auditor General had not identified any material findings.
The Chairperson said that the report from the office of the Auditor General was very encouraging. He asked if it was possible for the ITB to sustain itself without the augmentation of funds from the Department. Was it only the community within Ingonyama, or were there other communities from KwaZulu-Natal, that profited directly or indirectly from the ITB?
Ms Bhengu replied that the ITB could not sustain itself, because the regulations stipulated that only 10% of the revenues should be taken for use by the Trust for operational and administrative costs. The remaining 90% was for the benefit of the members of the communities from which those incomes were derived. The Act made very clear that it was for the benefit and material welfare of the members of the tribes and communities living on the Ingonyama land, and not for any other person.
Ms E Prins (ANC, Western Cape) said the briefing on the non-financial performance of the DRDLR was a concern, as the Department reported there had been a decrease in achievement when there was money to be spent. She asked for an explanation of the appropriations compared to the programme that was achieved. She asked for clarity on tax clearance certificates that had expired, as this affected payment within 30 days of receipt in supply chain management. It was normal that if a company wanted to do business with the Department, it had to produce its tax clearance certificate before it could be given a tender. How did this work? What was the status of the report on irregular expenditure mentioned in the financial report of the Department? Had the people involved been charged?
Ms Rendani replied that the Financial Compliance Committee (FCC) sat on a quarterly basis on matters of non-compliance, together with labour relations, on the discipline that was required and the process was continuous. Such matters were reported to the executive committee quarterly, and on an annual basis it was reported on the financial report. A full report had been given to the Director General on what had been done on cases that had been identified
Mr C Smit (DA, Limpopo) said the Department should give a full written report on Agri Parks so the Select Committee would be aware of the progress that had been made. What was the budgetary constraint as regards the outstanding claims from the previous claims process, and when would the claims be finalised? How far had the Department gone in developing the funding models to handle the new claims, and over what period did the Department plan to handle the already existing 104 000 claims?
Ms Gobodo replied that as at December 2015, there were 7 584 outstanding old claims. The amended legislation required that the old claims should be settled before the new claims. Each year, the CRLR settled claims based on the budget allocated. If the Commission settled more than the budget allocation, the CRLR would not be able to pay and would commit the state. In the last financial year, the whole budget allocation had been used. The Commission would continue to engage with the National Treasury on how the outstanding claims could be resolved better. There would be individuals and communities on the waiting list whose claims would not be settled in a certain year, and these would be transferred to the next year because settlement could only be done based on the budget allocation.
Mr Smit said the ITB should give a breakdown of its expenditure -- salaries of employees, goods and services -- so that the Committee could have a better understanding.
Mr Mia replied that goods and services included expenditure such as bank charges, audit fees, legal fees, insurance charges, stationery, maintenance of the land tenure systems, staff training, accommodation and workshops.
Mr Smit said in terms of constitutionalism, the King was the sole trustee and asked if that meant that the land belonged to him. In other communal areas, such as Limpopo, the land belonged to the people and it was administered on their behalf. He asked the ITB for clarity and a better understanding of that concept.
Ms Bhengu replied that in South Africa generally it was recognised that their rights were secured as people who lived on private land. The Ingonyama Trust could not do anything with the land without the approval of the tribal authority. Any compensation, in the event that land was taken for any reason, must be equivalent to the value of what the people had on that land.
Mr Smit asked for clarity so that there could be a better understanding of the concept of revenue generation. What was the rental income, and from where was it coming from?
Mr Mia replied that the ITB provided communities with tenure rights in terms of residential leases, commercial leases and institutional leases. The ITB charged the rentals and the municipalities charged for the leases.
Mr L Gaehler (UDM, Eastern Cape) said that in the future the non–financial annual report should be numbered so that it would assist the Committee Members when asking questions. He asked if the rural development strategy system that had not been achieved was due to a lack of proper planning. Why had the consultation process taken longer than anticipated?
Ms Leona Archary, Deputy Director General, DRDLR, replied that rural development cut across 16 departmental sectors and the reason why it had not been finished in that year was because a lot of work had been involved. The Department had completed the framework, but not the actual system.
Mr Gaehler said that that when the Department requested tax clearance certificates for tenders, such TCCs lasted for one year. Did the Department have the right system in place and did the system accommodate the SMMEs? Did the DRDLR act quickly to assess the work that had been done by the SMMEs? Failure to do so would make the payments spill over to the following year and create problems for the SMMEs, as they would have to request new TCCs.
Ms Rendani replied that the law dictated that the tax clearance certificates had to be valid when bids were made, and also when payments were made. It was not always the case that the Department might have delayed payment, because the SMMEs might have been given the tenders when the TCC was ten months old and due to expire two months later. She added that certain payments were for supplies and other payments were for construction, which took longer periods to complete.
Mr Gaehier said that in the financial report of the DRDLR, it was stated that the revenue had decreased by 16% because of unclaimed vouchers. Why would people not want to claim back their money?
Ms Gobodo replied that the Department had declared money that was for very old settlements. In some instances the beneficiaries thought that the money was insignificant and did not necessarily want the money. In other cases, some claimants could not be found. There were strategies in place to find the claimants and when they could not be found, it was then justified for the money to be returned.
Mr Gaehler said in the briefing by the CRLR, the three claims in OR Tambo District Municipality had been there for about 15 to 20 years. Why were those three claims not settled after so many years?
Ms Gobodo replied that for the past three years the CRLR had been working on it. The issues involved in these claims were actually created by the municipalities. The Commission had put offers on the table and the ball was in the court of the municipalities. No payment could be made until the municipalities agreed to the offers. Until the agreements were signed, none of the issues would be resolved.
Mr A Singh (ANC, KwaZulu-Natal) asked the CRLR for the turnaround time after an applicant had made an application with all the required information. In his constituency, applicants had lodged their claims and had not beenable to communicate with the office of the CRLR. He had found out that the backlogs were because of evaluations. He asked if it was possible to have smaller parcels of land for evaluations, to make it easier.
Ms Gobodo replied that there were different turnaround times. If it was a registered claim with information in the deeds office, the title deed was easy to be identified and settled usually within four to six months. There were, however, complex claims such as dealing with community land claimed by five different communities with overlapping interests. Experts like professors from universities were needed in such situations, who would take six months to research the validity of the claims. There was then a need for verification of the beneficiaries, and this was usually complex. Dealing with humans was very complex and it could take months and even years to be resolved.
Mr Singh said he had observed from the ITB’s annual report that motor vehicles received the biggest chunk of the capital expenditure incurred as a result of depreciating values. Was it every year, or a once-off depreciation?
Mr Mia replied that vehicles were purchased, based on the need of the Trust in terms of demand management. The amount shown was the cost of the vehicles, and not the depreciation. The depreciation was shown separately on the income statement and vehicles were depreciated over a period of five years.
Mr Singh asked why the Trust paid rentals to the satellite office in Ulundi when there were offices that belonged to Public Works that could be used.
Mr Mia replied that the Trust had moved to cheaper office accommodation and was considering building on ITB-owned land.
Ms Prins said Limpopo had nothing recorded as regard the number of deeds and documents registered under geospatial and cadastral services, and asked why this was so and if it was not necessary to have a deeds office in Limpopo. She suggested that the Department should rather go to the claimants who did not come back, as such claimants might have certain problems that the DRDLR was unaware of.
The DG replied that lodgement of deeds in Limpopo was still done in Pretoria. There would be proper a decentralisation of the deeds office, as had been done in other provinces.
Mr J Parkies (ANC, Free State) asked if there were scenarios where in the cases of overlapping of rights, some claimants preferred cash while others preferred land restoration as compensation.
Ms Gobodo replied that there were often cases like that, and those were some of the issues the Commission had had to deal with.
Mr Parkies asked if the Commission determined what was paid to the professionals who carried out the research. He asked for clarity on what the Chief Land Claims Commissioner meant by priority would be given to new claims in cases of overlap.
Ms Gobodo replied that there were panels of researchers and norms were set for the panels. It also depended on the kind or research, as there was both standard and very complex research. She added that where there was an overlap of old and new claims in same area, the CRLR would settle the claims at the same time.
Mr Gaehler said it would be good to improve communication lines and go to the claimants where necessary, as failure to do so would make land grabbers take advantage and grab the land, thereby costing the government more money.
Ms Gobodo conceded that the Commission had not been very good in communication, and it was one issue that it was resolving. There was now a proactive district stakeholder engagement. The database was being updated and officials were going from district to district to establish what the claims were. The focus was, however, on the old claims. The only situation where the law allowed the CRLR to deal with new claims was when they overlapped with old claims, or if there was a court order that required the Commission to deal with new claims. The 104 000 were merely claims that had been lodged, and were not necessarily valid claims. The CRLR still had to do its work to determine the validity of the claims. Some involved land that had already been restored, but where members of the community felt they had been excluded from the processes and wanted to be incorporated.
Mr Gaehler said the Department had promised to give details of the status of all the claims, and that had not been done.
The Chairperson said that there might be individual Members who had not received this, but that it would be made available to them.
He added that land was a highly contested terrain for food production. The River Valley Catalytic Programme had 14 targets, and in four provinces nothing had happened, yet the Department said its targets had been achieved. What was the Department’s logic for that?
Ms Archary replied that the River Valley Catalyst Programme was running and would be reflected only in the next financial year. That was the dynamic.
The Chairperson said where the land had been used for producing food and new owners had taken over, what was the DRDLR doing to ensure the sustainability of food production and that the land did not lie fallow, as the country was faced with a shortage of staple food.
The DG replied that in 2010, the Department had introduced a recapitalisation and development programme. Prior to this, the DRDLR had had the post-settlement support programme. This had its own limitations. The DRDLR had more land than it could afford to provide support. There had been no post-settlement budget in South Africa for a long time. The Department had set aside 25% of the budget for land acquisition towards recapitalisation. If the Department was going to recapitalise all the land that the Government had bought since 1994, the DRDLR would not be able to catch up. This was the dilemma. It was unable to get to the farmers on time, because there was not enough money to support every farmer that had been assisted with land allocation. The DRDLR was looking at various ways of doing this and had categorised the beneficiaries of land reforms. The DRDLR had partnered with land banks so that the farmers could receive cheap loan finance from these institutions, as it was impossible for the government to give people free land and also grants to produce on the lands. The Department was also in discussion with the Industrial Development Corporation (IDC), where a similar possibility was being exploited. There was a need to develop a different instrument for those who wanted to farm at the commercial level.
The Chairperson asked if the Department had worked to ensure that the CPAs were working harmoniously to make sure that lucrative and productive parcels of land remained so.
The DG replied that it was a big challenge. Over the next three years, the Department had set aside R500 million for this purpose. The challenges of the CPAs were twofold. Firstly, the Department should invest more time in helping land reform beneficiaries appreciate that land reform governance was a very complex issue. Secondly, much of the conflict stemmed from the fact that when resources started to flow, people began to fight over them. All of the efforts the Department had put together had not worked. The DRDLR had invested money to continue to mediate over a period of time. There was hope that the CPA Amendment Bill would help strengthen the institutions of government to ensure better governance of CPAs going forward, and that the two-pronged approach would help resolve the challenges of the CPA.
Mr Parkies asked how many schemes like the ITB existed across the country.
The DG replied that the Ingonyama Trust was only one created by the law of Parliament, and there were no similar arrangements anywhere else in the Country that the Department was aware of.
Mr Mduduzi Shabane, Director General, DRDLR, thanked the Committee for affording the Department the opportunity to come before it. He said another year had ended and the Department would soon be back with a similar report. A lot had changed over time and he would not want to pre-empt what was in the forthcoming report.
The Chairperson said the Committee was looking forward to conducting oversight on the Ingonyama Trust as there were interesting issues that it could learn from. He added that there would also be oversight on the CPAs, with the aim of helping with governance.
Adoption of minutes
The draft edited minutes of the Committee’s meetings of 12 April, 3 May and 10 May were adopted without any amendments.
The meeting was adjourned.
- Commission on Restitution of Land Rights 2014/15 Annual Report presentation
- Ingonyama Trust Board 2014/15 Annual Report
- Ingonyama Trust Board 2014/15 Annual Report presentation
- Department of Rural Development and Land Reform 2014/15 Annual Report
- Financial Report: DRDLR’s Annual Report
- Department of Rural Development and Land Reform 2014/15 Annual Report presentation
Sefako, Mr O
Gaehler, Mr LB
Koni, Ms NP
Mlambo, Mr E
Parkies, Mr JP
Prins, Ms E
Singh, Mr A
Smit, Mr CF
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