Department of Human Settlements Quarter 1 performance; North West Department recovery plan; with Minister

Human Settlements, Water and Sanitation

28 August 2018
Chairperson: Ms N Mafu (ANC)
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Meeting Summary

The Department of Human Settlements (DHS) appeared before the Portfolio Committee to present its first quarter performance and expenditure report. The Minister said her Department was painfully aware of the important task they were entrusted with, of building houses for all South Africans. The Department had to improve all the time. The success of the Department depended on the functioning of the municipalities and the provinces, and the systems that were in place were starting to integrate well.

The DHS reported that it had identified the areas that required improvement. It had instituted an improved Inter-Governmental Relations (IGR) contracting process with sector partners in order to address recurring audit findings about insufficient supporting evidence for the achievement of the targets, and systems and processes to verify the accuracy and reliability of specific reported achievements. To achieve improved delivery targets, it had instituted a comprehensive review process of performance information. It had consulted provinces and municipalities on the 2017/18 audit findings in order to ensure the submission of credible, reliable and useful performance information. A revised title deeds restoration grant and programme support had been implemented.

The failure of provinces to utilise R1 billion of the funding allocated for housing received strong condemnation from the Committee, which instructed the Department to act decisively in ensuring that the funds were used within the set time frames. The failure to pay all invoices within the required 30 days was also criticised because of its negative impact on small businesses providing services.

Members asked why there were still delays in the provision of housing for military veterans; when the Housing Settlements Development Bank would become operational; why the Finance-Linked Individual Subsidy Programme (FLISP) was not doing well; what the DHS was doing to reduce the title deeds backlog; why Cape Town was always failing to spend its Urban Settlements Development Grant (USDG); and what the latest information was on the corruption probe into the Community Schemes Ombud Service (CSOS).

North West Province presented its recovery plan, and admitted that the province had been under-performing for the past two financial years. The province had spent R384 million until June, which was 18% of the approximately R1.9 billion annual budget allocation. The under-spending for the first quarter had been R206 million. The province had delivered 1 819 housing units of the expected target of 3 091, and 826 of the targeted 1141 sites. Of the 19 245 annual target of pre-1994 and post-1994 title deeds, 3 746 had been transferred. The province was implementing a number of measures to deal with the poor performance by contractors and developers, the lack of serviced sites from municipalities for military veterans, and was fast-tracking the implementation of the housing needs register.

Members expressed concern over the erratic expenditure patterns at some municipalities, and said the DHS had to fast track the implementation of the housing needs register. There was also a need for housing beneficiary lists to ensure units were correctly occupied, and to prevent further vandalism. The Committee said it was not happy with the overall performance, but recognised there had been some improvement.

Meeting report

The Chairperson said only one party was present, but as it was a briefing the meeting, it could continue nonetheless. This was the first meeting of the term, since the meeting the week before had been cancelled. She welcomed Mr J Kabini (ANC) to the Committee. He replaced Mr M Manana, who resigned earlier this year.

Minister’s comments

Ms Nomaindia Mfeketo, Minister of Human Settlements, Ms Mfeketo said she had come with the Director General (DG) and the staff, not because she wanted to “baby sit” them, but because it was important to interact with the Portfolio Committee, as the Department accounted to the Committee, and at all times the Department should take the oversight role that the Committee played in good spirit. Sitting in the meeting and deliberating on important matters with the Committee led to a greater understanding and many lessons were learnt. The Department would know what areas to strengthen after the meetings.

The Department was painfully aware of the important task of building houses for all South Africans they were entrusted with. The Department had to improve all the time. The DG would show the successes and failures, and the areas where the Department had to improve. She emphasised that the success of the Department depended on the functioning of the municipalities and the provinces. The systems that were in place in working with provinces and municipalities were starting to integrate well. At the moment, however, things were not looking that great as systems were not fully being implemented at municipalities that were accredited for housing, and she found it disappointing that the number of opposition Members present at the meeting was not big, as it was a task that everyone needed to focus on.

The Chairperson observed that Mr M Bara (DA) had joined the meeting, and was thankful that the opposition was present as well. She said the Committee was pleased to see a representation of five women in the delegation from the Ministry.

First quarter performance

Mr Mbulelo Tshangana, Director General: Department of Human Settlements (DHS) said the presentation outlined the Quarter 1 performance as per the approved Annual Performance Plan (APP) got 2018/19, indicated progress on the medium term strategic framework (MTSF) targets, and provided details of the Departmental expenditure report as at 30 June, areas that required improvement, and actions implemented to address performance (see document). Ms Funani Matlatsi, Chief Financial Officer (CFO), spoke to the budget and expenditure for the quarter.

The Department had identified areas that required improvement. It was in the process of consulting the National Treasury (NT) and the Department of Planning, Monitoring and Evaluation (DPME) to ensure improvement in managing within the current concurrency in budgeting, planning and performance reporting process.

It had instituted an improved Inter-Governmental Relations (IGR) contracting process with sector partners in order to address recurring audit findings about insufficient supporting evidence for the achievement of the targets, and systems and processes to verify the reliability, accuracy and reliability of specific reported achievements.

To achieve improved delivery targets, the DHS had instituted a comprehensive review process of performance information. It had consulted provinces and municipalities on the 2017/18 audit findings in order to ensure the submission of credible, reliable and useful performance information.

A revised title deeds restoration grant and programme support had been implemented.

Metros were on accrual basis of accounting, so invoices were still being processed. Unspent funds would be subjected to rollover processes in terms of Section 22 of the Division of Revenue Act (DoRA). A team comprised of planning, the project management unit and finance were undertaking visits to metros to verify that any unspent funds on identifiable projects were committed.


Mr L Khoarai (ANC) Said his concern was in his own province as he heard Moqhaka local municipality in the Free State had been taken out of the funding, and he wanted to know the reason. He asked why the issue of military veterans’ housing had not been dealt with, and what challenge the Department was facing.

Mr Bara asked when the Human Settlements development bank would be operational, and if there were any timelines to it. He said the youth scholarship programme seemed skewed, so did it depend on whether a province took it up or not? KwaZulu-Natal had 35 recipients, while other provinces like Gauteng had two and Western Cape one, so how did it work? The Finance-Linked Individual Subsidy Programme (FLISP) did not seem to be doing too well -- were there any innovative ideas to improve on that and the issue of title deeds? He noted that in terms of province performance, there was a slight improvement in Gauteng, but the Northern Cape was never a province that did well amongst the others -- was there any plan to improve the situation in the Northern Cape? Lastly, it was encouraging to hear the DHS was working on interventions to try to improve the situation in the metros.

Ms M Nkadimeng (ANC) referred to the Capacity Development youth scholarship programme. Only seven provinces were supported, and KZN had the most recipients compared to the others. How was the recruitment made in the provinces where fewer scholars were being supported? She said the performance on title deeds was one of the reasons the Department’s Programme Two had received a qualification. What was the Department going to do differently to make sure the backlog was reduced?

The Chairperson spoke to the financials. There were only 23 invoices that have not been paid within 30 days, but those few invoices were still significant as it was a policy that all invoices must be paid in 30 days. What was the reason for non-payment with 30 days? She also stressed that the issue of title deeds was recurring and had been dragging on -- did it mean the Department was unable to resolve the issue? Regarding expenditure, only 13% of the budget had been spent as opposed to the first quarter linear target of 25%, and the Committee would like to know why. The Free State’s outcome was concerning, as the province had spent the required amount, but was underperforming.

She asked the DG if he could explain more about the title deeds situation, because title deeds and non-performance had everything to do with the satisfaction of the people of South Africa. The problem was that the Department was not performing, so what did it plan on doing or changing in order to improve performance?

The Committee would not spend much time on the Urban Settlements Development Grants (USDGs), where the only concern was that Cape Town had always been a candidate for not spending its grant. Was there an intervention under way for the City of Cape Town? Though Mr Bara said he had seen an improvement in Gauteng, the point of the matter was that the performance was low. Lastly, she spoke to a transfer made to the Community Schemes Ombud Service (CSOS) and the fact that the entity had been in the news for corruption, and the Committee sought more information on that.

DHS’s response

Mr Tshangana began by answering the question on CSOS. The Minister had had several meetings with the board concerning the transgressors, and had written to the Board to deal with them. The Minister had put the organisation on terms, and had given them 14 days to explain how they were going to correct what they had done wrongly. Thus, there was a process in place and the Minister had demonstrated leadership in dealing with that particular matter. It was not just about depositing money, it was also about the bank not following the right path. The process was being managed in the office of the Minister, and the chairperson of the board had been written to. The board had also sought legal opinion to deal with the matter. The Department would be willing to appear again once the whole process was completed. The Minister had also asked the Auditor General (AG) to focus on the CSOS matter.

He made a comment of the performance of the City of Cape Town and other provinces. He said that there was correlation between stability at the leadership level and poor performance in an organisation. Signs of instability were followed by a drop in performance. Last year, Cape Town had lost the City Manager as well as one of the executive managers, and there had been turmoil at the management level. There a certain things that needed to be done to stabilise all organisations at a managerial level in the different provinces, not just in Cape Town. The Department would support them in terms of rollovers, but the fiscus was not doing very well and that was why the Department was wary of providing support in that way. Cape Town was under-spending by R166 million, and the Department had already taken away R270 million from the city. Such decisions were made by the Minister, because if the money was not taken away from the under-spending provinces, it would be taken away from the Department by National Treasury. It was a pity for the communities who expected services from that money. Generally, Cape Town had not been doing well, as could seen from the media reports.

Mr Joseph Leshabane, Deputy Director General (DDG): Programme and Project Management, DHS, said the Department provided support to municipalities on several levels, but the significant part was around the planning of projects. In terms of the USDG, the Department made many efforts to hold meetings with the different municipalities and go through their plans with them in order to make sure the projects they wanted to implement were indeed compliant. The problem was not at that level, because once there was a plan it was executed. However, it was increasingly being seen that service delivery in a municipality was affected by the decisions made, or lack of decision making, to get the projects going. Municipalities had the executive authority to make certain decisions without the Department. The internal mechanics in municipalities or provinces may sometimes defeat what the Department did and what they wanted to achieve.

He began to explain about the implementation of the programme to reduce the title deeds backlog. The real question was, after all these years, what was being done differently? He confirmed that the DHS, the allied departments and provinces and municipalities, had to dig deeper than before. Besides the grant that came into effect this year, which was an enabler in itself, the Department had to go to the ground and find out which townships needed to be proclaimed. For the first time, it had been revealed that there were over 500 townships or settlements that needed to be formalised and proclaimed. That was the town planning, engineering and surveying process. If after all these years the municipality had not issued the acceptance certificate for the engineering services, an engineer needed to confirm that there were functional services on the ground. If that engineer failed to do so, the Surveyor General could not confirm the township register and township boundaries -- this was according to the Surveying Act. The Department therefore had had to dig really deep to understand the technical requirements of the law and how to abide by them. The Department was processing over 500 townships and the aforementioned process was what being followed in each province, municipality and township; that was the first thing that was being done differently.

Secondly, there were properties that were in dispute concerning the beneficiaries, whether it was succession or it was a deceased person’s estate and so forth. There needed to be a process to resolve disputes. There were about 60 000 properties that were affected by this. It was also known that over time, beneficiaries moved, so this needed to be physically verified and there was an incredible amount of effort that was put into that. One had to check the deeds register against who was in the property.

Lastly, conveyancing was the least part of the problem. There was no question that provision for that had been made in this financial year, but the point was that the Department had had to undertake independent verification -- how could the Department know what the provinces were reporting to them was correct? In this year, provinces had collectively reported that there had been 80 000 title deeds transferred, but when the Department did an independent verification, they had come to 41 000. What was now being done differently was that if a province claimed to have transferred a title deed, the province also had to provide a conveyancing certificate up front. It was a painful process for provinces that were not used to accounting in that way.

In conclusion, there was indeed a new approach in attending to the issue of title deeds. It had been discovered that while the old title deeds were being focused on, the new projects were lagging behind, so the Department had engaged with different provinces to ensure that there was no backlog of new title deeds while they were dealing with the old ones.

The Chairperson said that in essence, this meant that when the Department appeared for the second quarter report, it would give a different picture.

Mr Leshabane agreed, and confirmed that the Department would be able to report on the progress made in the specific areas in question, and how they were being dealt with.

Mr Neville Chainee, DDG: Strategy and Planning (DHS), said that in eight of the provinces there were difficulties getting approvals and confirmation of the names from the Department of Military Veterans (DMV). In KZN, the Department had got 500 approvals, which proved that they could get approvals. The Department was carrying out the task systematically, but there was a lethargy that existed between the officials and the DMV. For example, military veterans could not be treated the same way they were treated when they joined the military -- some were destitute and some were ill, so how could it be expected for someone who was ill and destitute to come all the way to the Department to confirm their details. Thus, for example, the Department would send field workers out in Limpopo find the missing military veterans. The unfortunate thing was that there were some veterans who had passed on. He and the CFO had agreed that where possible, financial penalties should be imposed for failing on this issue. Politically there was an obligation but officially, in terms of implementation, there was a lag. He gave the example of KZN, where the Member of the Executive Council (MEC) had had to call the national Department to ask what was going on, and the DHS had responded that if the officials did not go to the DMV and get approvals, then financial cuts would be made. The Department was committed to a marked improvement, especially in the case of KZN and Limpopo.

The Chairperson recalled that a meeting was held a year ago with the Department of Military Veterans, and there had been a misunderstanding when the Committee explained to them that they were not performing due to not giving approvals. She asked if there was still a good working relationship between the DMV and the DHS.

Mr Chainee said the relationship was not where it should be, because there were meetings that kept on getting rescheduled, but on the side of the DHS, they had committed themselves.

Mr Tshangana added that there was a new Director General at the DMV, and he had been dedicating time to meet the DHS.

Ms Sindisiwe Ngxongo, Acting Chief Operating Officer (COO), DHS, responded to the question about the scholarship programme. The programme was targeting all spheres of government -- local, provincial and national. It targeted the scarce skills required in the human settlements sector in order to improve the Department’s performance. She indicated that over the years, the numbers were not as bad as they appeared now. The targets might increase in the future, but not now due to the pressure on the budget and the response of the country in terms of free education. In essence, the Department would see a way forward, depending on the circumstances in the country.

Mr Tshangana asked if the COO could address the question about the skewness of the allocation of scholarships.

Ms Ngxongo replied that the skewness was because the students who still had more years left of studying were in the KZN.

Mr Ahmed Vawda, Deputy Director General: DHS, said the principle of the FLISP was that it was a down payment subsidy, and there were several changes the Department had taken to the Ministers and Members of Executive Council (MINMEC). The most important thing was to change the quantum, because it had not been changed since 2012, to try to push the numbers up. The scale and size of the programme required a single implementing agent, and that decision had been made in 2012, but an operational budget had never been made available. MINMEC had taken the decision to reinforce the notion of the National Housing Finance Corporation being the central implementing agent, and looking into other agents and the banks. Otherwise it would be too fragmented in the municipalities if they scaled up, and the scale in the provinces was too small. The idea was that there would be an implementing agent that would receive its own funding, and that matter would be put forward to Treasury for consideration by agreement with MINMEC. Therefore, the ring-fencing of the proportion of those funds raised was the next intervention that the Department had proposed --that it was not only mortgage-linked, but in particular that it was linked to a pension fund facility. In that regard negotiations and talks had begun with the government employees pension fund (GEPF) in order to look at FLISP being linked together with it, to create condition which was non-mortgage linked. Thus, the delinking of mortgages were still there, but also delinked pension funds and other loans that could be made by banks in which the FLISP could be triggered, on condition that it was for housing.

The question was, would the implementing agent assist in institutionalising that and making it a vocation? The resources had been set aside for that. It was concurrent with the MECs’ rights and authority -- it did not take away their authority of approvals, or their ability to use Integrated Residential Development Programme (IRDP) projects and build units and use less to transfer the stock to them, so the Department had opened up the space for that. The pre-emptive clause had been a concern from the bank, so the Department had taken certain steps to de-link that clause – it was a down payment subsidy. The Act did apply, but it had not prevented banks from exercising their rights, and finally the issue was about affordability and people’s indebtedness.

The Chairperson asked if there were possible time frames.

Mr Vawda replied that the Department had adopted the recommendations. Once Treasury approved the resourcing the entity, it was triggered for the new financial year.

Mr Tshangana said the reason why the agency and FLISP were being combined was because there was a relationship between FLISP and the housing scheme. It was expected that FLISP would be rolled out together with the government employee housing scheme (GEHS). To all intents and purposes, there was a business case, but it could only be a final business case once it had been signed off by the Ministry. The Ministry had to present the business case for the bank to the joint evaluations panel, which was made up of a number of ministers. There would be a final business case before the end of this calendar year, because it was 95% complete.

The Human Settlements Development Bank Bill could be capitalised by National Treasury only once the Bill was promulgated, so the Department’s intention was to get it through before the end of the term. It was in the medium term strategic framework (MTSF). If it was going to be passed before the end of the term of government, the Committee should have had it by now, which meant it would not be passed before the end of term. What the Department was more worried about, however, was getting the section 66 approvals from National Treasury. The Minister had written to the Minister of Finance to ask for the approvals to be granted. In other words, the assets and liabilities of the two entities needed to be transferred and once they were transferred, one could say it was a bank and that it could trade on the products and services that were in the business plan. He recommended that once the business plan had been finalised and approved by the Minister, it could be presented to the Committee, because the most important thing about the bank was to understand the products and services, and FLISP would be one of the products and services. This was why the threshold was up moved up to R22 000, which was in line with the financial sector threshold. Ms Funani would cover two questions; the question concerning the 23 invoices and the question on the Free State receiving funds but not enough results were seen.

Ms Funani Matlatsi, Chief Financial Officer (CFO), DHS, said she was quite aware that Free State was not doing well. The problem came from a long time ago as even now the Department was dealing with invoices that had overlapped into this financial year. It had been found that work that was in progress and reported by the province itself, had not yielded the desired results, but the money had been banked. When the DHS had investigated where the money had gone, it found that the money went back to those invoices, and it seemed to repeat every year because if money was being used for invoices of the previous financial year, it led to invoices being carried over each year. She admitted that she had not contacted the Head of Department, but had contacted the DDG for the Project Management Office (PMO) and the CFO, because they were the responsible people who were reporting at MINMEC. They were quite aware that the executive management of the Department had sent at least two DDGs to a province -- for example, Mr Leshabane was responsible North West, Ms Funani herself was responsible for Free State, and Mr Chainee had already taken up Gauteng.

While the Department was helping where it could, it would do so in line with the budget so as to not overstate the budget, as too much money could not be given to areas where no results could be seen in the form of housing units. In the Free State, however there were sites that had been serviced, but those sites needed to yield top structures, and that was where the blockage was. The main problem in the Free State seemed to be backlogs or blockages. There were not enough funds to deal with backlogs, so the Department was tying up a business plan to finish and deal with the backlogs in this year so that everything could start afresh next year with new projects, rather than not finalising the projects.

She clarified the issue of not getting unqualified reports from the Auditor General (AG). Programmes one and four had received an unqualified opinion. However, on Programmes 2 and 3, the AG was trying to find evidence, and it was not found, the information concerning the building of 15 000 houses that had been built, would be rejected. Quality assured evidence was crucial. Measures were being put in place to deal with the matter.

Regarding the delayed payment of 23 invoices, 16 had been carried over due to an irresponsible act of a financial manager who had gone on leave and forgotten to complete the work before going. Her excuse was that she forgot about them. The other delays were due to the people dealing with them giving the excuse that they did not know about the period of 30 days. Disciplinary action had been taken against those responsible, and further disciplinary action would take place with the unit concerned.

Regarding the AG’s report, a dashboard and action plan had been made and would be distributed every month to cpture matters raised and progress made in terms of the recommendations of the AG.

The Chairperson said the Committee hoped the CFO was not just speaking to appease them ,but that action would be taken.

Minister Mfeteko said all the questions had been answered. On the question of CSOS, the Department would be happy to come to the Committee and report, but at the moment it was at the beginning of an investigation, and the conclusion could be reported later. It was a serious offence to invest money without the permission of the Board, National Treasury and all who were relevant.

The housing sector could not ignore the land debate that would change South Africa. If it did not change South Africa, it would be because of the inaction of the DHS and the Committee. The Committee and the Department should not be discussing township corridors -- the town planning of apartheid times -- but new projects to implement that had been spoken of but had been avoided so far because they were apparently too difficult to implement. The municipalities must not sell pieces of land -- the South Africa that had been fought for must be built. She hoped the land debate could happen in the Committee, and that it would hold the national Department accountable.

The Chairperson said she noted the Minister’s last point, and said the Committee would engage on it.

North West Province recovery plan

Minister Mfeteko said it was good that the Head of Department (HOD) was present. A memorandum of understanding (MOU) had been signed with the MEC and the Department was assisting. There had been progress, but it was not as quick as the Minister would like it to be, so she looked forward to hearing from the HOD how matters would be fast-tracked.

Mr Leshabane said the Department of Local Government and Human Settlements in North West was subject to section 1A intervention at the moment. The national Department had to to implement the approved intervention plan. The Committee should take note that the final presentation slides summarised the intervention plan, which was the turnaround plan for the Department.

Mr Ephraim Motoko, HOD: Local Government & Human Settlements, said the presentation was to show the progress made by the province against its financial and non-financial targets for the 2018/19 financial year. It would also show the progress on the intervention of section 100 on certain key areas.

He admitted that the province had been under-performing for the past two financial years. The province had spent R384 million until June, which was 18% of the approximately R1.9 billion annual budget allocation. The under-spending for the first quarter had been R206 million. The Province had delivered 1 819 housing units of the expected target of 3 091, and 826 of the targeted 1141 sites. Of the 19 245 annual target of pre-1994 and post-1994 title deeds, 3 746 had been transferred. The province was implementing a number of measures to deal with the poor performance by contractors and developers, the lack of serviced sites from municipalities for military veterans, and was fast-tracking the implementation of the housing needs register.

Mr Leshabane said that the heart of the intervention was on two fronts. The other parts were processes and plans, but the first was around beneficiary reconciliation and the second was the performance on the projects front. The success of the intervention would depend on those two fronts. That was where the Department was investing more efforts. In due course, the performance of the province would look more positive.


Mr M Shelembe (NFP) asked about the performance of municipalities. The municipality of Kgetlengrivier had a budget of R2.5 million, and expenditure had been R5.9 million – what was the reason? Similarly, in Moretele local municipality, there was a budget of R2.4 million, but R21.8 million of expenditure. He observed that one of the proposed interventions was to facilitate the ceding of contracts from poor performing contractors to contractors with capacity. The Department had not told the Committee if it was the grading of the companies according to the Construction Industry Development Board (CIBD) that would change its association, or if was it the Department’s experiences with the companies.  In Matlosana, how long after the completion of the units had they been vandalised, and who would pay for the repairs?

Ms Nkadimeng spoke about the interventions. How was the Department going to fast track implementation of the housing needs register? Regarding the pre-1994 title deeds, the Department had mentioned that they had transferred 96 title deeds – but out of how many? She asked if there a beneficiary list for community residential units (CRUs) to make sure that the units were occupied and that there were no cases of vandalism again.

Mr Bara said there were inconsistences in the money budgeted and the expenditure and units delivered. For example, in Ramotshere Moiloa, R16.9 million had been budgeted, but there had been an expenditure of R34 million -- how could the expenditure be that amount compared to what had been budgeted for? Ordinarily in most places there were long beneficiary lists, but North West had a problem getting beneficiaries -- what was the reason for this? One problem in North West was that units stayed unoccupied, which resulted in vandalism. Why did the province find it difficult to manage that? Lastly, at what point did the province see that the Rustenburg project was failing? It was only being reported now, a year later, and if it had been reported on time, perhaps a solution could have been found by now.

Mr Wolmarans spoke about the reconciliation of beneficiaries. He asked about the beneficiaries who were out of the system by virtue of having received their subsidies, but had found their units to be already occupied. There was an impression that there were no beneficiaries, because the units had been illegally occupied, so that was a problem that must be dealt with. Secondly, the Community Residential Unit (CRUs) in Moses and Kotane were surrounded by a ring road, which made them undesirable. What was the Department doing about that? He asked if the Committee could receive a comprehensive report on the blocked projects. He also sought clarification over a R10 million allocation involving electrification for 54 units, where there was uncertainty as to whether the DHS or Eskom was responsible.

The Chairperson said that from the time of the oversight visit to North West, the issue of beneficiaries had been a problem. It had been a longstanding issue. Regarding the issue of Merithing, the 54 houses and Eskom, she recalled the report coming from the officials of the Department, not from by the residents. The Committee had asked the National Department to assist the province so that it could be resolved. The report said the residents were complaining about being too close to the solar panels and faced the risk of being electrocuted, especially when it was raining. The Committee had agreed that something needed to be done about that. The Committee just wants to know how far the issue was to being resolved. If there was a need, then the people must be relocated. The issue could not be in a report for more than a year without it being resolved.

The catalytic projects, Bokamoso and Matlosana, had been reported to be progressing well, and they were in mining towns. The Department must not come back to the Committee with the news that such projects had regressed, as the Committee had made it a point to help settlements in mining towns. The Department must focus on giving assistance to the projects that were in progress in order to improve the performance numbers for the province.

Though the Committee was not happy with the overall performance in North West, what was comforting was that the capacity in the province had been improved through the services of people such as DDG Leshabane and DG Tshangana. The Committee was happy to see some improvement, however little.

North West Province’s response

Mr Motoko said all of the emerging risks involved the management of the CRUs. There had been sessions with the municipalities. The issue was that they wanted to treat the CRUs like social housing, not as a solution to alleviate social problems for people earning R800 to R3 500. The target market in Mahikeng was R1 500 to R3 500 per CRU, which meant the target market was not what it was meant to be in terms of the policy set by the Department. They would not allow that any more, and the Department also wants to process them through the North-West Housing Corporation. The problem was that structures had been completed, but there had been no electricity for over a year. There were also defects in the units. Matlosana houses were being run by the North-West Housing Corporation, and they could not accommodate people in the 75 units because there was had been some minor vandalism, and the entity had promised to attend to the damages. The municipality had indicated that the Moses Kotanyi road would be done through the Municipal Infrastructure Grant (MIG), but so far that had not happened. In Mahikeng, the main issue was the pricing of the CRUs. The municipalities see the CRUs as a means of income, and not as a way to alleviate a housing problem for the people belonging to the income bracket mentioned above.

Concerning the Housing Development Agency (HDA), the Department had a good relationship with them. They were getting capacitated to get things moving and had advertised for a provincial manager and were getting other educated people to deal with the North West programme.

The project Mr Wolmarans had referred to was in the Rustenburg Municipality, in Freedom Park. The forensic audit of the project had been completed, and there was a report which specified what needed to be done and what had gone wrong. The bulk of the problems had arisen at the planning and engineering stage of the project. A final report was awaited, but it was obvious it was going to focus on the cost, as probably 50% of the houses had to be demolished.

Mr Motoko also agreed that illegal occupations were a problem the Department was dealing with in the province. However the national DHS was empowering the province and municipalities on how to deal with the problem. There had been a lecture on how to deal with illegal occupations and occupancy audits to help determine if the person occupying a unit was the right person.

A member of the HOD’s delegation answered the question of the budget targets which had been very different to the expenditure. He explained that such variances happened when the Department still had work in progress in that particular period.

Regarding beneficiaries who did not receive their houses or their houses were illegally occupied, the provincial Department was working with the national Department, and a work stream dealing with the unblocking of structures had been developed. The Department was also conducting beneficiary clean-ups to address the challenge of approved beneficiaries who had not received their houses, including those whose houses had been illegally occupied.

Regarding the CRUs, the Department had initially appointed a service provider prior to commissioning the development of the CRU structures. They had needed to conduct feasibility studies on the structures at Matlosana, Rustenburg and Mahikeng. The study had given a good result and the Department had received approval to go ahead. In their mandate, the municipality had conducted a survey to confirm that there would be enough beneficiaries to qualify under the particular threshold. In Mahikeng, for example, a market study had been carried out, but it was outdated so it had to be redone. The municipality was actually coming up with a list that was supposed to be considered. In Mahikeng there was a particular problem, as the municipality had appointed a property manager but the Department had not yet heard who had been placed in those units. The matter was being assessed through the Rental Housing Tribunal.

A delegation member said the housing needs register was implemented by the national DHS, in conjunction with the province. There was a process, on of which was that municipalities had to send officials for training in order to use the system, as it was difficult to use. One had to have a certificate to use it. Unfortunately, the officials had not made it through the course, and many had failed the first phase course. The second phase of training had been done, and results were now being awaited. After that, hopefully implementation could start.

He addressed the issue of the slow beneficiary list. When the Department advertised the project, it was advertised as a “turn-key” development, where the person who dealt with the figures of the project would also deal with the beneficiary administration, in conjunction with the municipality. There had been a problem with the developer getting the list from the municipality, because it made the process slow. Turn-key developments had to be avoided in order to fast track things.

Mr Motoko referred to the difference in the budget and expenditure figures. The projects were a work in progress, and were not units yet.

In respect of the contractors, most were level one to four, and did not have the capacity to complete their tasks. The Department had handed over the projects to contractors with experience. However, the level one to four contractors had not been completely let go, but rather downscaled and would be used for bigger projects at a later stage when they were more experienced and capacitated.

A delegation member said that if the Committee looked at each of the districts, each one confirmed what the HOD had said. Money was being spent on other milestones, and that was why it looked like overspending on the budget.

The Chairperson said a need might arise for an addendum report on the locked projects and those that the Department would choose to unblock. Secondly, the Committee would like to hear about the officials who had failed and passed the system course, because it affected the whole process of managing the beneficiary lists.

Mr Leshabane thought it would be useful for Committee to receive a brief highlight on the legal work being undertaken. Members should not be alarmed at the officials failing the competency test, as it was an important control that could reveal those who understood how the system worked, and those who had not. There would either be retraining or another process to resolve the situation.

The Chairperson said the critical point was that the officials who had failed were in charge of administration. If they failed, who could do the administration work at the municipal level? That was the main issue.

A member of the delegation spoke about the work stream that had been developed, and said the Department was conducting an audit of all the active contracts in the province in accordance with its service level agreements, with the aim of making sure they delivered.

In the course of investigations, it had been found that a number of legal documents were missing. However, the Department had tried to develop certain prescribed management legal documents for the province, such as a contract register, and a contract compliance register which did not exist before. They had also managed to develop a contract management and performance policy which also did not exist before. They had also developed a departmental quarterly contract management reporting matrix. The most important finding in the province was that some contracts had expired, but nothing had been done because there was no reporting matrix, so the focus on contract management had helped.

The Chairperson said the Committee might have to call North West again for the second quarter report.

Adoption of minutes

Members adopted the minutes of the meeting of 26 June.

The meeting was adjourned.

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