Human Settlements delivery and performance challenges in Gauteng & Limpopo

Meeting report

The Chairperson said the first two topics on the agenda were the presentations from the Department of Human Settlements from the Gauteng and Limpopo provinces.  The reason for the presentations was that the Committee was not satisfied with the performances of the Gauteng, Limpopo and North West provinces in the quarterly reports. Gauteng and Limpopo had been asked to present at this meeting, with North West expected to present the following week. There had been an apologies from Mr P Mashatile, MEC of Gauteng and Ms M Gasela, Head of Department, who could not attend the meeting due to the launch of the Montrose Mega-City project.

Gauteng Department of Human Settlements: Performance report

Ms X Mkhalali, Acting Chief Operating Officer (COO): Gauteng Department of Human Settlements (DHS), said that in the last five years there had been a clear decrease in performance, which was a concerning trend. However, there had been a constant increase in the budget allocation, and this needed to be in line with an increase in the Department’s deliverables.

The “rescue plan” of the DHS had been put in place, with the guidance of the national Department, due to the unsatisfactory performance of the province, and the areas of concern had been taken into consideration. Since the last quarter, on planning and project implementation, the DHS had had to perform a budget realignment by shifting funds from under-performing projects to those that were performing. A focus task team had been put together to manage the province’s bulk infrastructure challenges. A key objective had been the alignment of the Human Settlements Development Grant (HSDG) and Urban Settlements Development Grant (USDG), working in conjunction with the various municipalities. Progress in this regard was positive.

Furthermore, the payment of contractors was an issue that was being addressed. The Department was keeping in line with the national guideline of a 30-day period to pay service providers, while at the same time aiming to pay them within 14 days, in line with provincial guidelines.

Ms Mkhalali addressed the objective of improving the Department’s project management capacity, where Mr L Rampedi, Office of the Head of Department, was assisting by use of a “war room.” Communication with the public and dissemination of information on upcoming or current housing projects was an area that was also being addressed.

With regard to project monitoring and evaluation, she said the Department was aware of the protests in “hotspots” in the southern parts of Johannesburg, and these were a challenge for the province. There was a clear indication that the protestors in these areas were in need of housing. An inter-governmental steering committee had been put together and tasked with identifying land and planning in those areas. Regarding progress, the identification of land and beneficiary administration had been completed.

She said that part of the protests were in respect of people living in bonded housing that had lost their jobs in the last couple of months. As they were unable to manage bond repayments, their homes had been repossessed by the banks, and so they were re-entering the queue for housing. Another key issue was that of land invasion. The Member of the Executive Committee (MEC) had established a team led by the Department of Cooperative Governance, Human Settlements and Traditional Affairs (CoGHSTA) to handle the issue. An immediate solution the Department had implemented was that of signing over houses near the end of completion, and advising the new owners to guard their properties.

Ms Mkhalali said that there were weekly “war room” meetings between the top management in the Department and Mr Rampedi. The Department’s plan was to deliver approximately 32 000 units, and around 63% of the foundations for these units had been completed. Wall plates, roof/finishes and furnishes were slower, at 56%, 46% and 36% complete respectively. There were controls in place to ensure that the Department reached its weekly goals. 

Regarding the monthly performance, the Department was not happy with the progress made. In particular, only 19% of the expected serviced stands had actually been completed. One of the challenges in this respect was that services needed to be performed and completed before obtaining the service certificate, which slowed down the process immensely.

Comparing the Department’s performance in the current financial year to the previous financial year, there were a lot of improvements in the housing unit deliverables. This was not mirrored in the serviced stands deliverables, as improvement was minimal. This was a topic of discussion in the “war room”, which also included representatives of municipalities and relevant agencies and service providers, representing accountability on all fronts.

Referring to the title deeds deliverables, she indicated that 12 029 title deeds were on hand and were available to be handed over to the relevant beneficiaries. The programme of the mining towns showed satisfactory progress, and there were clear plans to improve on and build housing in the key areas by way of a transfer of funds to these projects. Some projects in Droogheuwel and Bekkersdal had had to be halted due to disruptions such as protests or bad infrastructure (sewerage and bad roads). These issues had been noted and were currently being addressed.

Ms Mkhalali concluded by saying that funds had been transferred to the municipalities with respect to National Home Builders Registration Council (NHRBC) enrolments. 32% of the budget had been translated into complete deliveries in the second quarter of the current financial year. This was an improvement from the first quarter. In terms of the Mega-City projects, due to their being in the beginning stages, some of the funds that had initially been allocated to them had been moved to projects that were expected to produce more units.

Discussion

The Chairperson said that despite some shortcomings, the report was well detailed.

Mr L Khoarai (ANC) appreciated having a “war room” structure, and believed that it would improve the quality of the Department’s reporting. He asked for a brief on the progress regarding military veterans, as there had been no mention of them in the presentation.

Mr K Sithole (IFP) also appreciated the depth of detail in the report. His first concern pertained to the coordination between the municipality and the wider province, as the report showed signs of challenges in this area. He further asked who had coordinated the moving of the Brakfontein informal settlement to Daveyton, if there was a mechanism in place to deal with the under-spending in the City of Johannesburg, and why there was little progress in Ekurhuleni.

Mr M Malatsi (DA) asked what the position of the Department was regarding the performances of provinces and the recovery plan, given the interventions put in place by the Department. He asked why it took long to deal with issues that seemed to have been known and obvious. He asked for clarity as to whether the aim of a 14-day payment period had been achieved, or whether it was an aim.

Ms M Nkadimeng (ANC) said she appreciated the initiative of Ms Mkhalali to meet with relevant stakeholders on a weekly basis, adding that it showed good leadership. She asked if the province had a plan in place to manage the people with bonded housing re-entering the queue, the petitions of a disgruntled group of residents from Friendshiptown, and the issue of military veterans. She asked for more information on the progress of the issuing of title deeds to the rightful owners from the municipalities’ offices, as well as the problem of land invasions.  Lastly, she asked how the Department was managing the incapacity of contractors who cannot finish their projects on time.

The Chairperson acknowledged the detail of the report, in that it tried to deal with some of the issues raised with respect to poor performance. She asked for clarity on progress with the alignment of the two social grants and on the handover of title deeds to their rightful owners, adding that it was a good model for other provincial departments to follow. She asked for details of the Housing Development Agency (HDA) deliverables, which had not been clear in the presentation. She was concerned about serviced stands -- the City of Johannesburg had zero, and this was not congruent with a good inter-governmental relationship with the metros which was indicated in the presentation. On the challenge of bulk infrastructure, she raised the point that during the Committee’s oversight in 2015, this was a salient issue that had been raised. Although this was being dealt with, she felt that the progress was too slow and asked for more detail on this area. On the petition from Friendshiptown, she suggested that it needed to be a sole item on the agenda in order to deal with it in detail.

DHS response

The Director General responded to the question about the time it took to respond to the issues that had been present for a long time. He said that this was due to the frequent changes of accounting officers, which negatively affected the administration and organisation of the Department’s work, and made it difficult to initiate and sustain programmes. Regarding the rollover of funds from the previous financial year to the next one, the responsibility was with the accounting officer of Gauteng to hold the receiving entities accountable. This was also being monitored by the National Treasury.

Mr Rampedi responded to the question on bulk infrastructure, and said that the Department was fairly confident that the province was dealing with the salient issues. The main ones were the weaknesses in the planning, which was being monitored by the weekly tracking of the performances. On the issue of the under-performance which had led to under-expenditure, the HDA had been re-positioned to play a more supportive role to assist with this. Furthermore, he was satisfied with the manner in which the Department had reorganised its internal structure to meet its challenges effectively. The recovery plan pointed to an improved performance of the province, as well as the management of the increasing demand for housing in the province.

To align the HSDG and the USDG, the Department had taken two steps. It had introduced a multi-sector and inter-governmental human settlements planning and budgeting forum. It was hoped that this measure would secure the alignment of the delivery of the two grants and involve sector departments in the planning and delivery of the Department. The second step that had been taken was compulsory quarterly meetings, which were expected to solve the issues. By placing more emphasis on the alignment of the two grants, they would avoid using the HSDG to pay for the bulk infrastructure, which would be undesirable.

The Chairperson asked for clarification on the Community Residential Units (CRU) programme.

Mr Rampedi said that the CRU programme faced the challenge of occupants’ resistance to the possibility of having to pay rent. This required the issues to be responded to case-by-case, which did take some time. However, this was being dealt with.

Ms Mkhalali said that a meeting would take place this Friday to deal with the issues of banned hostels and Reconstruction and Development Programme (RDP) houses, among other matters. Regarding the military veterans, she said that new developments in the area stated that the Department could allocate 40 m2 and 50 m2 houses. She acknowledged that the delivery was not good, as only nine of the targeted 667 had been allocated in the current financial year. 20 had been invaded, and 98 still had to be quality assured before they could be allocated.

She said that 96% of housing claims had been paid out. She clarified the time period for the payment of service providers, saying that indeed it was the aim of the Department to meet a 14-day target, for its own efficiency objectives. On the handover of title deeds, there were about 12 000 title deeds available and ready in the Department offices. They would want the MEC to deliver them physically.

The Director General added that the Department had not been able to hand title deeds over during the handover of the houses to recipients, owing to the conveyancing process. The system was too advanced to meet the challenges, saying that it was a “first world system for third world challenges”. There was a long way to go before the matter could be resolved.

The issue of Friendshiptown would be reported on in detail at a later stage.

Ms Unathi Ndobeni, Chief Financial Officer: Gauteng DHS, referred to the issue of bulk infrastructure, and said a decision had been made to reallocate 2% of the HSDG to deal with this issue. There were issues with secondary towns that were being discussed and dealt with, in conjunction with the National Treasury.

The Chairperson thanked officials from Gauteng for their responses, and noted that while there was improvement, there was still room for more.

Limpopo DHS: Performance report

Mr S Mathunyane, Acting Deputy Director General: Integrated Sustainable Human Settlements, Limpopo CoGHSTA, referred to the business plan of the Department, and said that while they had started well, they had been met with challenges along the way.

In the recovery plan, the Department had identified four main challenges:

• delays in claims processing and payments;
• ineffective project and contract management;
• delays in procurement processes; and
• ineffective project planning and pipelining.

The action taken to assist in this regard had been to establish a contract management committee that advised on actions to be taken when contractors did not perform or meet deadlines. Weekly assessments were to be done on the revised implementation plans and contract reviews were to be done on a monthly basis. All outstanding contractual extensions had been finalised by the Department.

Mr Mathunyane said that there were a number of outstanding appointments of contractors that needed to be filled in the current financial year. The Department had concluded the appointment of 13 high performing contractors, using the provisions of the Standard Operating Procedures (SOPs), who were to deliver 2 002 units, and 72 contractors had been appointed to implement 6 000 rural housing units. Certain disruptions, such as the rainy season and protests, had been pre-empted and made a part of the planning and preparation process for the commencement of the building of units.

He said six contractors had not been able to commence on their projects due to the fact that the development areas had not been adequately prepared. 15 contractors had been appointed earlier in the financial year for the rural housing programme, to build 4 007 units. These units were scattered, which made it difficult to upscale. The majority of these fell under the mayoral discretionary allocation, which involved a compulsory number of units that the mayor had to allocate to the most vulnerable and economically distressed applicants.

The under-performance in the installation of serviced sites was due to poor planning. Six contractors had been affected, and the Department had done the reallocations. Those projects that were deemed not to be ready for implementation this year were being packaged for the next year. Contracts had been extended to the end of the financial year, and this was when the projects were expected to be completed.

Three CRU projects were under way. The project in the Greater Letaba municipality was 37% complete. The challenges they faced were that the National Home Builders Registration Council (NHBRC) enrolment had not been completed when the project commenced in December 2016, labour unrest on the project, land invasions and non-payment to sub-contractors by the contractors.

At the Tshikota CRU, there was an outstanding appointment of a contractor. The terms of reference for this appointment had been finalised, and it was expected to be made in January 2018. He said the rural housing contractors had generally under-performed, citing limited capabilities in financial and project management as the reasons for this. In response, the Department had shifted the appointments for the bulk of the rural housing units to be built by high performing contractors. In addition, the Department would take a hands-on approach to assist with technical skills and other problem areas for under-performing contractors. 4 866 units had been delivered by all contractors in the current year, and the average delivery rate from the previous month had increased from 681 to 888 units, which exceeded the monthly target for October.

Mr Mathunyane said that there had been gross under-performance with the provision of housing for military veterans, with only three units delivered in the current financial year. This was largely attributed to the economic viability of constructing the 75 m2 houses demanded by the beneficiaries as opposed to the 50 m2 houses, in line with national policy. The province did not provide additional funds for this expansion, and two contractors could not complete their projects due to financial losses. A decision had been made to revert back to the 50 m2 units, as per policy, and this was expected to improve delivery.

Title deeds had been rejected at the municipal offices due to name changes that had not been reflected in some of the documentation, and this had affected the process adversely. Furthermore, the closure of the deeds office in Pretoria for a new office in Limpopo had contributed to the administrative issues. A number of townships were un-proclaimed, and the Department was in the process of creating a task team to handle this challenge.

Mr Mathunyane said the projects had not commenced in some of the mining towns due to unfinished ongoing informal settlement upgrades that were taking place. In other towns, contractors had returned the allocation of units as a result of not having development areas.

In closing, he said that the average delivery per month was expected to be 1 032 units and 739 serviced sites. Construction was expected to commence by 15 November 2017 at the latest.  The Department was going to deliver 7 342 units by December 2017. Additional capacity in project planning and pipelining had been made available through the HAD, and this was expected to result in addressing the Department’s current planning challenges and enhanced project packaging and pipelining for the next financial year. He believed that targets for the end of the financial year could be met.

Discussion

Ms V Bam-Mugwanya (ANC) asked about the sale of property or farms in Limpopo, which had been an issue in the news. What was the Department doing to skill the under-performing contractors? Was there any classification of contractors in the database? Had funding for contractors been increased to deal with the lack of delivery of military veterans’ housing? She suggested that when it came to tenders, fewer start-up contractors should be given an opportunity, in order not to place too much responsibility on them.

Mr M Bara (DA) said that he was not expecting the targets for the year to be met, as there simply was not enough time. Regarding the blocked projects, how would the 55% outstanding be made up for? In dealing with the CRU invasions, why was the Department waiting until the end of November to remove the people there? Why had the Department knowingly exceeded its limit regarding the military veterans’ housing?

Mr Khoarai suggested that there should be more engagement between the mining companies and the Department to assist mineworkers to get houses. He commented that little attention was paid to the low spending on informal settlements in the presentation, and asked for more detail on this. He also suggested that there should be a provincial steering committee set up to deal with title deeds, if one did not already exist.

Mr Sithole said that from the onset, he was dissatisfied with report, as it showed a lack of progress. He asked for clarification of the targets for serviced sites , whether there had been any rectification of RDP stock, and how expenditure was at 75% with only 226 houses constructed. He asked when the blocked housing projects would be unblocked.

Mr M Wolmarans (ANC) said that the expenditure pattern indicated that the province was off target. Referring to the recovery plan, he felt that the issues to be addressed had been left a little late for completion in the current quarter, and suggested that the province implement a “war room” similar to that done in Gauteng.

Mr Malatsi agreed with Mr Bara that the average monthly delivery rate and the targets were too far behind to be met by the end of the year. He hoped that the interventions put in place would yield the desired results, but had little confidence.

Ms Nkadimeng shared the sentiments of her colleagues in that she did not believe targets could be met in the time set out. She asked for clarity regarding the rural housing programmes, specifically the change from appointing 72 contractors to 13.

The Chairperson said that although the initial presentation -- the budget plan -- had highlighted areas of focus for pipeline management, the same problems seemed to be arising. It seemed as if the province was shifting everything they could not do on to the HDA, and she asked for clarity on this. Only two out of four of the mining town projects were running. This was a point of concern for her, and she said that the rules of engagement with mining companies needed to be standardised across all provinces. She recalled an oversight the Committee had conducted in 2014, and commented that there had been little progress since then. She suggested the issue should be escalated to the national level and that the province be assisted by the National Department.

Limpopo DHS response

Mr Rampedi said that more attention had been spent on perfecting the pipeline in Limpopo. A large issue indicated in the presentation had been that of contract management and under-performing contractors. The role of mining companies in communities needed to be explored more, and he suggested that the province should follow the Royal Bafokeng model in this regard, adding that the HDA should place more focus on this. On the issue of accreditation, responsibility should be with national department, not the provincial department.

The HDA had confirmed that the challenge in Limpopo was largely the number of contractors on site who were not delivering. The Department had been engaged and it had been resolved that high capacity contractors had to be brought in to commence work in the week of 13 November. It was expected that these contractors would not deliver fewer than 4 000 units by the end of the current financial year.

Ms Ngaka Mosehana, Head of Department: Limpopo CoGHSTA, said that the Department had been operating on the assumption that the high performers on the database were actual high performers. However, it had come to light that they were being assisted by one high performer, who had since liquidated himself. Another contributor to the challenges currently faced by the Department was that of contract management -- specifically the tensions between contractors and the officials who were monitoring them. These matters had since been dealt with and formalised through the contract management committee. On the question of an existing structure around title deeds raised by Mr Khoarai, she said that they indeed needed to have one that met on a monthly basis. All the Committee’s comments had been noted, and they would ensure that these were dealt with and engaged regularly.

Mr P Khunou, Chief Financial Officer: Limpopo CoGHSTA, answered a question around the pilot project in the Sekukuni area. He said that during the piloting phase, a number of issues had been identified and currently strategies were being formulated to deal with them before formal implementation. On the land invasions in CRUs, he said that the municipality and the Department were engaging on that issue and following a legal process to remove the people there. Regardeing additional funds for the military veterans’ housing expansion, pressure was coming from other provinces who had allocated housing units larger than that specified in the policy. Answering Ms Nkadimeng’s question on rural housing contractors, he said that the 13 contractors had completed their initial projects and were in the process of being given additional projects. The 72 contractors were those that had recently been added to the database, and who had been allocated 6 000 units.

Mr Jerry Ndou, MEC: Limpopo CoGHSTA, said stabilisation of the organisational structure was key to the effective management of the Department in dealing with its current issues. However, since the current meeting was a public one, he could not go into the details of other sensitive problems within the Department. He welcomed the recommendations made by the Committee, and committed himself to incorporating them to improve the performance of the Department.

The Chairperson thanked the Mr Ndou for showing leadership by attending the meeting, despite the unsatisfactory progress made by the Department.

After the adoption of Committee minutes, the meeting was adjourned.