Department of Rural Development & Ingonyama Trust Board Annual Performance Plan, with Minister & Deputy

Meeting report

Ingonyama Trust Board (ITB) on its Operational Plan for 2017/18
Dr Fikisiwe Madlopha, ITB CEO, outlined the strategic objectives and indicators for the 2017/18 Operational Plan. A comprehensive plan was put in place to ensure that engagements with stakeholders would continue. The dates were already set for engagement with stakeholders. The need for financial compensation for the trustees was not fixed and would probably increase based on the requests made. There would be a meeting with Treasury in August to discuss the royalties. One of the most important strategic objectives was to ensure that all vacancies were filled. The ITB had experienced trouble in ensuring the performance management of staff. Training would take place in June. The internal skills audit would take place in August. There would be 10 training programmes conducted throughout the financial year.

The ITB had to ensure provision of secure tenure rights to facilitate land development on Ingonyama Trust land. ITB had surveyed 1 576 sites and 1 400 land tenure rights had been approved by the Board. The ITB had to ensure suitable land planning which would attract investment on Ingonyama Trust land. Training would be provided to 12 targeted traditional councils.

Mr Amin Mia, ITB CFO, provided the financial breakdown for the Ingonyama Trust as well as the Ingonyama Trust Board. The ITB expenses had been consistent for all four quarters. Total administrative expenses were R38 763 126.91 which included rates and capital expenditure as well as office accommodation. In contrast the Ingonyama Trust (Trust Funds) had a total expenditure of R99 495 790.

The Ingonyama Trust Board chairperson, Justice Sipho Ngwenya, highlighted that a large sum of the expenses experienced by the ITB was based on the needs of the owners of the Trust. There had been an unusual rise in expenses often triggered by the sudden need from one or more of the Trustees. Any money not used from the Trust would accumulate. He mentioned that the Committee Chairperson had requested a narrative for the commitments of the previous financial year and asked if she had received it.

Discussion
The Chairperson mentioned that she had not received it. She was not aware if it had been made available to the Members yet. She was impressed with the improvement made based on the presentation. However she strongly felt that the Financial Report and the Operational Plan could not be separated.

Mr M Nchabeleng (ANC) said that it was important that ITB include the financial figures in the Operational Plan so that it could be held accountable for the amounts presented with each strategic indicator. He asked who did the training and what the process for acquiring services was. He asked what method would be used to evaluate the land. He asked how ITB would collaborate with the Office of the Auditor General. He asked for the report on the skills audit because before training could be conducted, the skills audit was necessary. He wanted to know where COGTA fitted into the skills audit based on land related legislation as he did not see the relevance. He asked what year the skills development was. He asked if it was for the year 2017, because according to the presentation the number of traditional councils trained had a target of 12 but they only added up to 11. The numbers for 2017/18 indicator did not tally.

Ms N Magadla, (ANC) asked whether there was a system in place to monitor the implementation plan.

Mr T Walters (DA) was concerned about the alignment of the APPs with economic development. He asked whether the strategic partners for food security was based on subsistence agriculture or were partnerships being formed to develop commercial agriculture. The Operational Plan was missing a general rule which was the outcome versus output. The Committee was interested in the outcomes of each achieved target. Who had benefited from the various programmes? He was not just interested in the steps taken to achieve the targets mentioned in the strategic indicators.

Ms T Mbabama (DA) asked what the idea behind having two entities was. She was new to the Portfolio Committee and was curious about how ITB had made the decision to have the Ingonyama Trust split into two legal entities. She asked for a short explanation about the logistics of having two legal entities and whether it meant that each had its own office and representatives? She asked how the people on the ground benefit from the skills development programmes. She asked if it would lead to the people gaining their own assets and learning how to manage the assets without the need to constantly rely on the Trust to handle their finances. At some stage the skills training needed to include transferring the skills to the youth. The trustees needed to run their own businesses at some point. She asked why the people relied on to the Trust to cost projects and access money that already belonged to them.

Mr L Mbinda (PAC) was not happy with the sequence and alignment of the presentation. He asked if the Department had an organisation plan and whether it was outsourced. He felt the presentation was upside down. He was confused about some of the Operational Plan indicators such as 25% implementation of the skills imparted. He asked what the 25% was referring to.

Ms Mbabama asked if the services such as skills development training were outsourced. She highlighted that about two years ago National Treasury had made a proposal about consultants and service providers and asked if ITB had considered that.

Mr P Mnguni (ANC) felt that it was important for communities to have ownership of land. He asked what ITB’s role was in ensuring that the initiative would be approved according to the Integrated Development Plan (IDP) rules in the municipalities. He had worked with the ITB CEO and she was one to put a lot of effort into her work. Her work was of high standard but he was however unhappy about the format of the Operational Plan. The budget had to be added into the Operational Plan and presented simultaneously as ITB went through the target indicators. Each function had to be followed by indicated funds. It was a Treasury regulation to do so. The Operational Plan was not measurable according to the SMART principle. He found it odd that the expenditure had been exactly the same per quarter even though the targets per quarter may have been slightly different. He asked what budget format was used. 

The Chairperson asked what the purpose of the mining imbizos were and if it was necessary that they are held. She asked what challenges ITB had been facing on the accumulation of royalties.

Justice Ngwenya, ITB Chairperson, gave a general response to the questions asked. He viewed ITB as administrators of the law. He understood where confusion may have risen from however the reason for the separated entities was based on the request made by the Portfolio Committee itself. He felt that it was profound for Members of Parliament to create a law that ITB had to implement in their structure and then later question why it had been so.

[There were a few chuckles from the Members of the Portfolio Committee]

He mentioned ITB and the Ingonyama Trust were made separate legal entities based on the new Act on Trust Funds which did not include the needs of the Board. The Board receives funds for its expenses from a portion of the budget provided by DRDLR. The Trust is continuous however the Board was time bound. Every five years a new Board was elected. The reason why signatures from COGTA were relevant was due to a policy which limited ITB access to projects based on the land through the DRDLR.  According to the policy all the power of jurisdiction lay with COGTA. The existing Minister of the DRDLR had to implement plans based on the regulations set by COGTA. COGTA was responsible for the local government of the Ingonyama Trust land. The ITB submitted IDPs according to the planning powers of the municipality.  Finally, the organisation was still adapting to some of the recent changes and so it had been the first time that the financial report was made separate from the Operational Plan. On the training of traditional councils, the number was meant to be 12 and he apologised that there had been a mistake in one of the numbers presented in the quarterly targets.

Dr Madlopha thanked the Committee for the recommendations on the Operational Plan structure. The cost per target would be included in the Operational Plan. She could not comment on the skills audit report. The agreement made was that the ITB Integrated Development Plan was aligned with the rules of the municipalities. The ITB had encouraged the Traditional Councils to open a Traditional Council Trust Board so that they are able to access their own funds.

An ITB representative noted that ITB was able to provide only a support function for the communities. However, it could not help them run their businesses. The gaps in staff training had been identified and policies had been reviewed. The training in June was based on an internal skills audit of the existing staff. There would be continued engagements with National Treasury about the royalties situation.

Dr Madlopha said that a few years ago someone had reported to the media that the royalties from the Ingonyama Trust Fund were not being handed over to the beneficiaries as they rightfully should but instead were being mishandled. It was the responsibility of the Board to follow up on it. She was not sure when the article had been released but she would get the full details on the matter as she was not able to elaborate. The concern about the accumulating royalties was: should the funds be passed on to the beneficiaries or be handed over to National Treasury? The board chairperson would respond to the question.

Mr Mia, ITB CFO, mentioned that he was surprised by how well the finances aligned with the budget. He explained the reason the quarterly expenditure for the Ingonyama Trust Board was spread out evenly was mainly because the general costs were based on administrative expenses. This meant that rent payments were the same throughout out the year, as well as compensation for employees and the cost of goods and services such as security and electricity provided.  He pointed out that on the other hand, the expenses for the Ingonyama Trust were not evenly spread.  

The Chairperson reminded them that there was an outstanding question about the royalties.

Justice Ngwenya, ITB Chairperson, replied that ITB was made aware in the press that the royalties were being collected but by unidentified communities and so ITB has been working towards identifying who the beneficiaries are. On the other hand, the communities that have not claimed royalties have the funds accumulating as well.

Mr Nchabeleng felt that the more he read the presentation, the more it did not make sense to him. He asked what the implications were for having an Ingonyama Trust separate from the Ingoyama Trust Board.

Mr Mguni asked the CFO what budget method he used because it seemed as though the financial report had been cut and pasted.

A Committee member asked for what the R1 million for security was. He asked if it was going towards securing the buildings or was it for the security of the Ingonyama Trust Board members.

Mr Mia said that he uses the zero budgeting system. The remuneration was structured according to National Treasury rates. The vehicles were aligned with the Board approved rate for travel expenses as ITB did not make personal use of the Board vehicles.

The Chairperson asked how often the vehicles were bought. She asked if it was every year or every five years and how it was shown in the Ingonyama Trust budget.

Mr Mia mentioned that the cars were not for the Board members but were however used by the Board members as a means for transport. The cars were a once off purchase.

Department of Rural Development and Land Reform (DRDLR) Annual Operations Plan  
Acting Director General, Ms Leona Archary, said DRDLR was still in the process of refining some of the plans to tie the Operational Plan to the Strategic Plan as well as the Annual Performance Plan (APP). Some of the Provincial Departments were still in the process of finalising their APP. She had noted the comments made to the ITB and would ensure that the Operational Plan included the financial breakdown for each annual target as the Department had prepared the budget on a separate presentation. She mentioned that three provinces already had their budget included in the Integrated Operational Plan (IOP). She apologised and said in future the Department would present it as specified by the Committee.

Ms Nomonde Mnukwa, Chief Director: Corporate Services, said that the income budget for all provinces had been received except for Eastern Cape and Kwa-Zulu Natal.  The indicators and the annual targets for each indicator were noted. Each province was expected to contribute its own unqualified audit opinion towards the overall departmental office.

For Programme 1, the Department had a 30 day annual target for the number of days taken to issue an order number for the procurement of goods and services from the date the request was received. The second programme target included the annual target for the number of Rural District Development Plans facilitated for implementation which was 35. While the focus remained on KwaZulu Natal with six district rural development plans facilitated for implementation as well as five in Limpopo and in the Eastern Cape. The annual target for the number of municipalities implementing the Spatial Planning and Land Use Management Act (SPLUMA) was 192 or 90% of the municipalities. The number of deeds and documents registered had an annual target of 996 975. Gauteng had the largest target for number of deeds and documents to register (490 566), whereas Limpopo had none. The number of days taken to produce spatial analysis reports and maps for Departmental projects such as Geo Spatial Services had an annual target of 14 days.

Programme 2 had an annual target of number of maps of the national map series produced was 204. Although Gauteng and Mpumalanga had not recently produced maps for the national map series, they had an annual target. Some amendments would be made once all provinces had completed the required information to be included in the Operational Plan.

The targets for Programme 3 were noted. These included the number of exited NARYSEC youth utilised in DRDLR projects were 295.  Number of job opportunities created: Rural Infrastructure Development (RID): 2530; Rural Enterprise and Industry Development (REID): 2918.

The annual targets for the Restitution programme included 2 095 373 hectares of agricultural land settled. The land rights restored in order to support land reform and agrarian transformation by 2020. The Department was still waiting for the documents stating the number of claims lodged by 1998 to be researched in the second, third and fourth quarter by from the Provincial Departments which would have an effect on the presented numbers.

The Land Reform programme had met all annual targets of the previous year. The Department indicated the annual target is for 96 165 hectares of land to be acquired through Land Reform. Most of the land would be acquired from the Eastern Cape through Agricultural Land Holding Account (ALHA) acquisitions. 50% of all acquired land was to be allocated to smallholder farmers. She mentioned that 1 273 farmers would be trained through the Land Reform Programme.

The Acting Director General introduced the DRDLR Chief Financial Officer, who had prepared the Financial Report separate from the Operations Plan and she apologised in advance for not integrating the two. Some of the figures were subject to change once the plans from all the provinces were finalised.  

Ms Rendani Sadiki, DRDLR CFO, highlighted that the Financial Report had 260 slides because the Department had included indicated costs related to each objective. The Financial Report would be refined when the Department receives the required outstanding information from some of the Provincial Departments as mentioned by the Acting Director General.  The projects proposed by each province within the Provincial Department had to be approved by the relevant people before the National Department could finalise the figures. She mentioned that this would cause a slight change in the figures should the farmer, for instance, decline a specific project.

Discussion
Mr Nchabeleng proposed that the Department have all the information required to ensure that the Financial Report is accurate before it is presented to the Portfolio Committee. It would be important that the figures presented were not different in the future as this would bring about unnecessary debates.

The Chairperson said that the Portfolio Committee would be able to oversee the objectives as well as achievements or feasibility thereof if the finances were presented at the same time as the Operational Plan. She mentioned that the Committee would prefer to avoid further debate about the figures at the current meeting and in the future. She felt that perhaps DRDLR would need more time to complete the Financial Report and present everything at a follow up meeting.

Mr Nchabeleng said that DRDLR would need more time to finalise all the documents and then present everything to the Portfolio Committee at once.

Mr Mnguni said that DRDLR had to ensure that the document presented included figures that were final. He asked that once the financial report was complete, DRDLR include the figures in the strategic objectives so that according to the accepted structure and system, the presentation would be regarded an Operational Plan. The Department had to ensure that within each target the financial implications were to be included. He was glad that Mr Walters had mentioned the importance of not having to debate conflicting figures should changes be made to the current document. He highlighted that the Financial Report was not just about individual projects but had to be inclusive of all expenditure including accommodation and staff establishment, and integrated into the Operational Plan. He was pleased that the Chairperson had emphasised the structure of the presentation. This format would allow the Committee to oversee quarterly expenses within the Operation Plan as the SMART principle had been emphasised. DRDLR should follow the procedure highlighted to ensure that the presentation met the three Es: effective, efficient and economy.

Mr Walters said that it would be best to wait for the complete and detailed document. He asked that DRDLR include more detail in the Operational Plan. He asked that in the follow up meeting, DRDLR explain each function as the objectives were presented. He asked if it would be possible to indicate what each function meant so that in-depth discussions would be based on the essentials of the presentation. He made an example of one of the strategic objectives: what was meant by ‘District Land Reform Committees being functional’. DRDLR could possibly include details of what the meaning of functional was in the presentation. 

The Chairperson emphasised the need for the proper breakdown of the information presented to the Committee.

Mr Walters said that he agreed with the SMART approach proposed by Mr Mngni. He felt that it was an approach to be built into the reports moving forward.

The Chairperson thanked the Acting Director General and the DRDLR for the presentation and trusted that all the recommendations would be added. It was important for the Committee to be able to hold the Department accountable for the objectives presented as well as the financial breakdown for each. This would help the Committee to keep up with the plans on a quarterly basis.

Ms Archary noted all recommendations and said that DRDLR would go back and include the budget breakdown into the Operational Plan. The amendments would be made. It would be difficult to include the detailed explanations for each strategic objective but would be open to creating a document separately for the Committee to look through for clarity during the presentation. There were short descriptions at the end of the notes with the slides which included the descriptions for the acronyms used in the APP indicators.

The Chairperson said that the Committee needed to give DRDLR enough time to receive all the documents from the different provinces, to finalise the figures in the Financial Report and have them all integrated into the Operational Plan. She suggested that DRDLR have until the second week of June to ensure the Financial Report was complete and then be presented. She asked if the Minister had any final words.

Minister  Gugile Nkwinti apologised on behalf of the DRDLR and said that he was not able to give input as he had just returned from attending to important business and had landed that morning. He would ensure that everything was in order for the follow up meeting.

The apology was accepted and the meeting was adjourned.