Transformation in the forestry and fisheries sectors; Challenges faced by Forestry and Fisheries branch; with Minister and Deputy Minister

Environment, Forestry and Fisheries

25 February 2020
Chairperson: Mr F Xasa (ANC)
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Meeting Summary

The Committee met to be briefed by the Department of Environment, Forestry and Fisheries on the transformation in the forestry and fisheries sectors and challenges faced by the Forestry and Fisheries branch.

The Committee expressed concern about the Forestry branch facing challenges in the Category A and Category B and C plantations. Challenges in the Category A plantation included non-payment of rentals by the South African Forestry Companies Limited (SAFCOL) and non-payment of rentals by the Department to communities that have successfully claimed land. On challenges in the Category B and C plantations, these include high temporary unplanted areas due to limited resources, land invasion by communities (hunger for land and protracted land claims) and timber theft. The Committee asked why the Department has not paid communities that have successfully claimed land and what it was doing to recover the money owed by SAFCOL.

The Minister acknowledged that there is a breakdown across the value chain due to mismanagement. The Committee heard that the Fisheries Branch was experiencing a number of challenges including capacity constraints and unfunded vacant posts, cash flow problems within the Marine Living Resource Fund/Fisheries Branch and, poaching and Illegal, Unreported and Unregulated (IUU) fishing. The Committee further heard that the Fisheries branch received a disclaimed audit opinion for the year 2018/19 and this had to do with the facts that biological assets were not included in the financial statement and there was no confiscated stock count. In addition, what was pleasing for Members was that the fishing rights allocation process (FRAP) 2020 is well underway and there were twelve (12) sectors that were due for allocation. The Committee asked the Department to clarify the issue on the audit findings pertaining to the misstatement of biological assets. The Committee also requested an update on the inclusion of women under FRAP rights.

Meeting report

Briefing by the Forestry Branch and the Forest Sector Charter Council

The Chairperson welcomed and invited the Minister of Environment, Forestry and Fisheries, Ms Barbara Creecy, to make an opening statement.

The Minister informed the Committee that the two branches that the Department of Environment, Forestry and Fisheries (DEFF) inherited from the former Department of Agriculture, Forestry and Fisheries (DAFF) were a work in progress and a number of challenges within the Department. It was important that the Committee bears this in mind. 

The Deputy Minister of the DEFF, Ms Maggie Sotyu, was mentioned by the Minister to be the one responsible for the incorporation process of the Forestry and Fisheries Branch in the previous Department of Environmental Affairs. She told the Committee that the Forestry Branch management was aware that the National Government Priorities have been re-arranged and now the top priority was to build a capable state that served the people. South Africa’s forests are crucial for the delivery of this mandate since these are rural economic drivers and are of considerable importance to the national economy.

The Acting Deputy Director-General of the Forestry Branch, Ms Susan Leseke Morongoa, made a presentation on the forestry branch programs, budget allocation, appointments and status of the vacant positions, challenges in the management of state plantations, interventions and time frames to address challenges, transformation of the forestry industry and audit findings by the Auditor General.

On the Forestry branch programs, Ms Leseke informed the Committee that the Forestry branch was involved in a number of programs including afforestation greening, Agroforestry and transfer plantations. On afforestation greening, the Department issued 1291 licenses amounting to 19 495ha in KwaZulu Natal and the Eastern Cape. On greening, the Department is currently facilitating tree planting in municipalities, schools and settlements.

On budget allocation, the forestry branch’s total budget for the 2019/20 financial year was R 711,354.000.00. Of this money, R519, 090.000.00, was spent on the compensation of employees.

On appointments and the status of the vacant positions, the Forest branch has 2172 approved posts. Out of the 2172, 666 positions are vacant even though most of them have become unfunded. The Branch has 270 funded posts and has identified 81 strategic and critical positions, including the strategic positions of the Deputy Director-General and the Director: Commercial Forestry.

On challenges in the management of state plantations, Ms Leseke stated that South Africa’s Category A plantations are managed by private companies, namely SiyaQhubeka Forestry, Singisi Forest Products, Amatola Forestry and MTO Forestry. There are shareholding companies within these companies which include SAFCOL (See presentation). The challenges that are being faced in the Category A plantations include the non-payment of rentals by the Department to communities that have claimed land and, non-payment of the lease rentals by SAFCOL. SAFCOL has rental arrears going back to 2017.

The Forestry Branch manages Category B and C plantations, indigenous forests and state nurseries. The plantations and nurseries are in a dire state. The Department’s work on the revitalisation of nurseries and refurbishment of Category B and C plantations creates employment opportunities. In addition, the Department is facing other critical challenges including high temporary unplanted areas due to limited resources, land invasion by communities (these communities are beset with hunger for land and protracted land claims), timber theft, limited regulatory and enforcement capacity and an ageing and ailing workforce.

On audit findings, in 2018/19 the AG found that there was a misstatement of biological assets. This is a repeated finding and the Department did considered it rather concerning. Moreover, on the Microsoft system, the AG found that the appropriateness of user’s access rights was not reviewed and the activities of the Microforest System Administrator were not monitored and reviewed. In response to all the audit findings, the branch Forestry conducted a workshop with all branch officials to review the audit findings and draft an action plan.

Dr Diphoko Mahango and Ms Makhosazana Mavimbela, the Chairperson and Acting Executive Director of the Forest Sector Charter Council (FSCC) respectively, briefed the Committee on the annual status of transformation within the forestry sector. The Annual Status of Transformation Report depends on an assessment of factors that have an influence on the environment which the forestry enterprises operate; the measurement of B-BBEE status of forestry companies and; an evaluation of the impact of Forest Sector Code principles on industry performance. The transformation report also depends on an analysis of ownership, ownership Voting rights, ownership economic interests, management control, skills development, socio-economic development and procurement preference by Medium and Large Enterprises, Qualifying Small Enterprises and Exempted Micro Enterprises. (See presentation for graphs showing analysis).

Dr Mahango informed the Committee that there is need for better collaboration between government and the Council to deal with pressing issues such as forest fires. There is need for interdepartmental collaboration to effectively deal with issues related to, for example land and water. Other matters include the fulfilment of Charter Undertakings by both Government and industry, disbursement of Lease Rental monies through a recognised Model for developmental projects, the expedition of the land claims, the restitution process and the transfer and recommissioning of Category B & C plantations so that they are productive.

Discussion

Ms H Winkler (DA) asked the Department to clarify whether the challenges it presented to the Committee were emerging challenges or challenges that the branch has been experiencing in the past 5 years. The fact that the forestry branch, which is in fact a directorate, has a large number of employees is concerning and demands an explanation. With regard to the audit finding on the Microsoft system, the Department should explain whether there is a correlation between the activities of the System Administrator not being monitored and reviewed, and the outcome of the assets ordered. The audit summary states that “no regular progress reports provided, however implementation of action plans on-going”. ‘Is there a timeline or breakdown of regular intervals where the reports will be furnished’? ‘On Category A Plantations, why have communities that have successfully claimed land not been paid’? ‘How long has this non-payment been going on’? ‘What is the current value of the rentals in question’? Timber looting is rife in some plantations in areas that include Msunduzi Municipality. ‘What is the Department doing about this’? 

Minister Creecy replied that the challenges that the Department is facing are not emerging challenges but those inherited from the previous management. The challenges include poor management of commercial forests that are experiencing timber theft.

Mr N Singh (IFP) asked if the Department needs a branch of forestry. The work of the branch for the past 10 years leaves one despondent about the fact that over 71 percent of the branch’s budget goes to the compensation of employees. The branch even intends to increase the number of employees which may be viewed as disheartening. The Department should not only regulate forests, but also those companies responsible for the management of forests like SAFCOL, for example. ‘Why was SAFCOL still under the Department of Public Enterprises’? ‘How much of the forests are under land claims and when are these claims going to be finalised’? The claims should be dealt with in a manner that allows communities to be owners and beneficiaries of the forests. Some companies for example like Mondi and SAPPI still own the forests at the expense or cost of communities. ‘What mitigation factors are there in case of forest fires’?

Minister Creecy said the Department needs a Forestry Branch because South Africa has indigenous forests that are part of the protected conservations and have to be managed.

Minister Creecy informed the Committee that the approach to ownership reforms requires one to look at the question of owner-occupiers. She informed the Committee that the ownership reforms will help the Department to deal with the problem of mismanagement and recapitalisation of forests. Also, the reform process will help the Department reduce its high budget on the compensation of employees. Former employees will be the first to receive ownership of the land. The Minister said the Department informed Mondi and SAPPI of this. The Department further requested Mondi and SAPPI to clarify what form of tenure will be provided to communities, how will land beneficiaries generate an income as they await harvest of planted trees and whether there is going to be market guarantees for the sale of harvested trees.

The Deputy Minister informed the Committee that she had had a meeting with Mondi and SAPPI regarding their partnership communities. Mondi and SAPPI told the Department that they are involved in various social development activities including job creation, youth empowerment and women empowerment. The Department decided it will talk to the communities in order to confirm this.

On the question regarding forest fires, the Deputy Minister replied that on the 26th of February a huge number of fire fighters were certified in Nelspruit and will be soon deployed to various provinces.

Mr Singh commented that the reform process should not only be focused on giving communities ownership of forests and land, but also should provide guarantees to Mondi and SAPPI that the end product will be delivered to them. The partnerships that Mondi and SAPPI have with communities should not only be limited to social development. This should extend to ownership of land and factors of production.

Mr N Paulsen (EFF) stated that the branch is struggling to make money because there is a break down in the value chain somewhere. The branch has forests and nurseries it can use to generate money but these are being mismanaged. The state has partners with a vested interest in South Africa’s forests and plantations. ‘What role do these partners play’? ‘What role does the communities that SAFCOL owns money to play in the management of South Africa’s forests’? The communities cannot only be benefiting from the forests without contributing to their management and upkeep. ‘Is there a supply co-ordination between the plantations and nurseries’?

The Minister acknowledged that there is a breakdown across the value chain due to mismanagement.

Mr P Modise (ANC) stated that the nature of the audit summary did not require the delegates to start their presentation by telling the Committee the audit opinion they received from the AG. On greening, the delegates did not tell the Committee some of the municipalities, schools and settlements where they are facilitating tree planting. On the branch’s budget presentation, 70 percent of the total budget goes to salaries which are very concerning. Only 30 percent of the allocated budget goes to forestry work. The Department needs to look into its expenditure. The Department needed to tell the Committee how long there has been vacancies in some of its critical posts and why it was only “recently” applying to the Minister to address the matter. On land claims, the delegates needed to clarify to the Committee how much land it has given out. The delegates also needed to tell the Committee when they escalated the issue of SAFCOL failing to pay rentals to the Minister and what the Minister has done about it?

Minister Creecy informed the Committee that the majority of the people working on the forests are the people that are supposed to be maintaining the forests. However, the process of maintaining the forests has broken down and one can assume this has to do with mismanagement.

On the question of land claims, greening and audit findings, the Minister told the Committee that the Department will provide a written response on this.

The Deputy Minister informed the Committee that when the Department learnt that SAFCOL owed rental money, it contacted SAFCOL but there was no response. The Department then requested the assistance of the Minister and Deputy Minister of Public Enterprises. The fact that SAFCOL is the only state owned enterprise in rental arrears is very concerning.

Ms T Tongwane (ANC) asked whether the licenses mentioned on page 5 of the presentation were issued during the reporting financial year.

Minister Creecy said the Department will provide a written response on the question of licenses.

Ms N Gantsho (ANC) asked what the Department’s recovery plan is for the money that SAFCOL owes communities is. The presentation did not mention that in the western part of the Eastern Cape, in Tsitsikama, there is an MTO forest. The MTO forest experienced fires and the local municipalities and communities had to depend on private firefighting companies. There was no assistance received from the Department. There are houses still owned by SAFCOL which have not yet been transferred to either the Department or the municipalities. Kou-Kamma Municipality engaged with SAFCOL to have the houses transferred. ‘How far is this process’?

Minister Creecy replied that the Department will provide a written response on the money owed by SAFCOL and the recovery plan. Also, she will provide the Committee with a written response on the Kou-Kamma matter.

On the issue of forest fires, the Minister informed the Committee that there are three ways in which fires can be dealt with. First, it is a municipality responsibility. Second, there is a private sector responsibility in the case of fires on large plantations. Lastly, there is a question of how fires can be combated on state land where there is no proper management of forests. The Department is working on various programs to promote firefighting on state land. State forests pose threats to forest communities and adjacent communities. The Department has its own fire-fighter forces and has aircraft back up to deploy in situations of fire.

The Chairperson commented on the variations in percentage ownerships amongst companies responsible for the management of forests. On the land ownership reform process, the Department ought to be careful of self-serving individuals regarding themselves as communities.

The Deputy Minister replied that the White paper of 1996 privatised the management of forests. Four companies including Amatole and Mondi were given the responsibility of the forests. The Department is still trying to determine why there are differences in percentage ownerships.

Briefing by the Fisheries Branch

Minister Creecy informed the Committee that the Fisheries Branch will present on the branch challenges, fishing sector transformation profile and litigation.

On the branch challenges, Ms Susan Middleton, the Acting Deputy Director General of the Fisheries Branch, informed the Committee that these included:

  • Capacity constraints and unfunded vacant posts
  • Cash flow problems within the Marine Living Resource Fund/Fisheries Branch
  • Poaching and Illegal, Unreported and Unregulated (IUU) fishing and;
  • Allocation of fishing rights (FRAP 2021 and small-scale)

(See presentation for the proposed interventions)

Ms Middleton informed the Committee that the Fisheries Branch received a disclaimed audit opinion for the year 2018/19 year for reasons including the fact that biological assets were not included in the financial statement and no confiscated stock count took place. Among the branch’s responses to audit findings include consequence management and the introduction of confiscated stock count.

On the fishing sector transformation profile, Ms Middleton first gave a background of the fishing rights allocation process. Secondly, she informed the Committee that FRAP 2020 is well underway and there are twelve (12) sectors that are due for allocation. The Department has redrafted a submission proposing the reclassification of Hake Handline, Oyster and White Mussel fishing sectors as small-scale species.

Thirdly, Ms Middleton presented a sector transformation profile to the Committee using the year 2005 as a benchmark. The indicators for transformation were average black shareholding, total allowable catches owned and efforts owned by blacks. In 2009 black shareholding increased by 12% from 2005 and it became 55%. Currently the black shareholding calculated by the same method has increased by 20% from 55% to 75%. Fourthly, Ms Middleton presented a graph showing that men dominate the fishing industry.

On litigation, Ms Vanessa Bendernar, told the Committee that there are currently 45 pending civil litigation matters relating to the Fisheries Branch. 17 matters are applications to review and set aside the decisions taken by the former Minister in the Fishing Rights Allocation Process (2015/2016). Ms Bendernar briefed the Committee on the DAFF and others vs BXI and Partners and Others case (See presentation for details).

Discussion

Ms Winkler said due to the outbreak of the Corona Virus in China, there has been a severe decline in the export of the West Coast Rock Lobster. The Department agreed to expand the fishing season for the West Coast Rock Lobster. ‘What is the impact of this extension considering the West Coast Rock Lobster is among the endangered species in South Africa’?

There are many communities in South Africa that rely on fishing for their subsistence. ‘Given the fact that South Africa’s fishing stocks are depleted, what is the Department doing to create alternative terms of employment using ocean resources’. Here an example is marine Eco-tourism.

Dozens of baby sharks were found dumped on the beach with their fins and heads cut off. ‘What is the Department doing about the illegal poaching of Sharks’? ‘How does the Department confirm species identification of imported and exported shark products’? ‘What volume of shark fins is exported from South Africa and where do the sharks originate’? ‘Are there any management plans for South African fisheries to ensure the sustainability in general, and specifically for sharks?

‘How far is the process of the inclusion of women under FRAP (Fishing Rights Allocation)’? Women are bread winners in their communities and its concerning that they are being side-lined for other big fishing corporate projects. On the Marine Living Resource Fund budget, R67 million is being allocated to administration which is concerning considering the fact that this has not worked in the past. The Department should invest money in innovation and new fisheries income programs rather than spend large sums of money on administration and crisis management.

Ms Winkler requested the Department to explain what it meant in its audit finding presentation when it said “Biological asserts were not included in the financial statements”. If we are reducing our living resources to monetary value then the Department needs to explain the economic impact of South Africa not implementing the correct conservation mechanisms of South Africa’s Marine life.

Ms A Weber (DA) reminded the Department that in 2018 there was a High Court ruling to reduce the total allowable catch of West Coast Rock Lobster. ‘Did the Department of Agriculture, Forestry and Fisheries (DAFF) request an appeal as it had indicated it would’? ‘How is the total allocated catch allocated to the West Coast Rock Lobster’? In 2016, the Minister signed off a recommendation to disallow catches of sardines and listed shark species. ‘Has this been implemented’? ‘If not, when will it be implemented’? ‘How is sustainability measured and considered in the role of small scale fisheries in terms of shark catches’? The National Plan of Action for the Conservation and Management of Sharks was adopted in 2013. ‘How far has this been implemented’?

Mr Singh said the Minister needed to keep a close eye on the Marine Living Resources Fund. The Committee hopes that when the 2020’s audit report comes it will not be similar to the report that the Committee heard. The Fisheries Department advertised a vacant post for March 2020 which is an unwise thing to do considering the fact that the branch has not yet been fully integrated in the Department. ‘To what extent has the Department picked up the phenomenon of fronting in transformation’? ‘Does the small scale fishery referred to in the presentation include recreational and subsistence fishing’?

On the West Coast Rock Lobster, the Minister replied that extending the fishing season does not affect the total allowable catch set for the year.

The DAFF did not appeal the ruling by the High Court.

On sharks, the Minister requested that the Department respond to the Committee in writing.

On women and FRAP, “FRAP 2021”: The rules of the game” is yet to be published. On small scale fishing rights, the Department conducted an audit on the existing small scale registration process in the Western Cape following allegations that the rules were not being complied with and that there was general dissatisfaction. The audit looks at the question of gender and is in the process of being finalised. The Department will inform the Committee whether the audit picked up irregularities with regard to the violation of rights, specifically women rights.

On the Marine Living Resources Fund, the Minister replied that running a fishing licensing operation requires extensive resources such that the already existing R67 million budgeted for the operation is insufficient.

On biological asserts, the Minister stated that the determinations made in this regard will be taken on by the Auditor General. Ms Middleton explained that the biological assets finding in the audit report has to do with the fact that the Department did not capture the value of the fisheries projects it was involved in its asset register.

On the filling of the vacancies of the DDG and CFO, Minister Creecy said these were critical posts for the management of the Marine Living Fund and the FRAP. There is funding available for the filling of these positions.

On transformation fronting, Minister Creecy replied that fronting is an ongoing problem and as shown in the presentation, the Department educated people on fronting and its consequences.

On the creation of other forms of employment to avoid the depletion of the already dwindling fisheries, Minister Creecy replied the Department has a program called the ‘Oceans Phakisa’ which focuses on unlocking the economic potential of South Africa’s oceans. This is part of the many programs the Department has formulated to create other income generating activities related to South Africa’s oceans.

On recreational and subsistence fishing, Minister Creecy replied that only subsistence fishing falls under small scale fisheries. Recreational fishery is different.

The meeting was adjourned.

 

 

 

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