Engagement with Metropolitan Municipalities on Urban Settlements Development Grant, informal settlements upgrading, serviced sites and land invasions
22 February 2023
Chairperson: Ms R Semenya (ANC)
The Portfolio Committee on Human Settlements convened a meeting to receive briefings from the cities of Cape Town and Ekurhuleni on the utilisation of the Urban Settlements Development Grant (USDG), informal settlements upgrading, serviced sites and land invasions. The City of Johannesburg and the Tshwane Metropolitan Municipalities submitted their apologies, as they could not attend the meeting on the day.
The City of Cape Town told the Committee that with the Informal Settlements Programme, there was urbanisation and growth in informality, with increased densities. The City’s response to the informality included approaches to inclusive design of informal settlements and emergency housing, the provision of basic services infrastructure, the recognition of informal building practices, and opportunities for supporting informal structure compliance and tenure. Its priority was to provide safer and healthier housing opportunities for those living in inadequate housing. The social and economic inclusion of these spaces within the broader city environment through the development of integrated and sustainable human settlements, was key to the City.
The City of Ekurhuleni said it had been allocated a total of R9.124 billion over the past five years on the USDG, and R8.949 billion (98%) had been spent. It received the Informal Settlements Upgrading Partnership Grant (ISUPG) grant during 2021/22, and R672.899 million had been allocated, of which R665.851 million (98,95%) had been spent. Since 2014, it has developed a strategy to implement mega projects throughout the City in strategic locations to facilitate housing development and address the housing shortage within the City. To date, 18 mega projects have been activated, and feasibility studies have established that these locations would produce housing opportunities for approximately 200 000 households.
The Committee was concerned about the extent of land invasions in the metropolitan municipalities, and the increase in informal settlements. Members were disappointed that the Department had not fully utilised the funding allocated for the USDG in the metros, and added that there was a lot of vacant land and old buildings that could be refurbished to build shelters for displaced people. The national government enforced the Public Finance Management Act (PFMA) to dignify the process of utilising state funds, yet all the challenges that persisted in many government departments revolved around procurement processes. This pointed to the need for a workshop with Treasury to deal with the matter across all departments, because the country could not afford to lose any more money to mismanagement.
The Chairperson welcomed the Members and the delegations from the National Department of Human Settlements (DHS) and representatives from the City of Cape Town (CoCT) and the City of Ekurhuleni.
The Committee Secretary said she had received late apologies from the City of Johannesburg and the City of Tshwane, who were not available to attend the meeting.
The Chairperson noted the apologies, and said it would have helped to have received the apologies well in time so that the Committee could decide whether it wanted to continue with the meeting on the day. She welcomed the delegations that were present in the meeting. She said the purpose of the meeting was for the Committee to hear the progress report on the Urban Settlements Development Grant (USDG) from the metropolitan municipalities.
DHS overview of USDG and ISUPG expenditure
Ms Lucy Bele, Acting Chief Financial Officer, DHS, presented an overview of the expenditure of the USDG and the Informal Settlements Upgrading Partnership Grant (ISUPG) by the country's main metros,
with details of the outcomes verification visits on the two grants to Ekurhuleni, Johannesburg, Tshwane, Mangaung Metro and the Nelson Mandela Bay Metro,
The Department's overall view and conclusion was that section 18 of the Division of Revenue Act (DoRA) be invoked for poor performing metros, with the following amounts to be stopped and reallocated from both the USDG and ISUPG, as follows:
- USDG: A total of R347.5 million to be stopped from Mangaung (R147.5 million), the City of Ekurhuleni (R100 million) and eThekwini (R100 million).
- ISUPG: A total of R107.6 million to be stopped in Mangaung Metro.
Section 19 of the DoRA should be invoked for funds to be reallocated as follows:
- USDG: The R347.5 million funds recommended to be stopped to be reallocated to the City of Johannesburg (R200 million) and Buffalo City (R147.5 million).
- ISUPG: The whole amount of R107.6 million funds recommended to be stopped to be reallocated to City of Cape Town Metro, to cater mainly for the Passenger Rail Agency of South Africa (PRASA) informal settlements.
(See attached documents for details)
Briefing by City of Cape Town
Mr Malusi Booi, Member of the Mayoral Committee (MMC): Human Settlements, presented on the financial and non-financial performance, the informal settlement programme, and the unlawful land occupations in the City of Cape Town.
Referring to the Informal Settlements Programme, he said there was urbanisation and growth in informal settlements, with increased densities. The City’s response to informality was detailed through approaches to inclusive design of informal settlements and emergency housing; the provision of basic service infrastructure; the recognition of informal building practices; and opportunities for supporting informal structure compliance and tenure.
The City’s priority was to provide safer and healthier housing opportunities for those living in inadequate housing. The social and economic inclusion of these spaces within the broader city environment through the development of integrated and sustainable human settlements was key to the City. It had to develop an informal settlements upgrading pipeline plan which supported the alignment of conditions to be met for upgrading to occur.
The City’s Informal Settlements Upgrading Programme (ISUP) allocated basic service upgrading according to the following convention:
- Where settlements had no services -- generally as a result of unlawful land occupation -- emergency relief services were provided where possible;
- Where settlements had some temporary basic services, full basic service upgrading was provided, such as one water point for 25 households, and one toilet for five households.
- Following the installation of full basic services, incremental upgrading would continue as per project pipeline and grant funding conditions.
Cape Town has experienced a large number of unlawful land occupation attempts since the beginning of the implementation of the Disaster Management Act in late March 2020. The latter half of July 2020 had seen the most dramatic acts of unlawful occupation to date, suggesting that the economic toll of the lockdown had begun to affect the ability of households to pay for their shelters. City resources had been stretched as occupiers had taken to vacant, developing, and developed land parcels to unlawfully erect dwelling structures.
The financial implications of these land occupations were enormous, and would have a long term effect on the City. It did not have the resources to cater for all newly formed settlements, which often immediately asked for services, at the expense of planned service provision. The funding the City received from the national government was decreasing, but the settlements and basic services needs were increasing, and the City could not afford the large-scale, orchestrated land invasions.
(See attached documents for details)
Briefing by City of Ekurhuleni
Mr Andile Mahlalutye, Head of Department (HOD): Human Settlements, presented on the USDG and ISUPG expenditure and performance of the City of Ekurhuleni.
He said the City had been allocated a total of R9.124 billion over the past five years for the USDG, and R8.949 billion (98%) had been spent. The City received the ISUPG grant during 2021/22 and an amount of R672.899 million was allocated, and R665.851 million (98.95%) had been spent. The DHS in the City was 100% funded by the USDG and ISUPG, and the balance of the grants was split to other departments within the City, such as water and sanitation, roads and stormwater, energy and waste management.
The business plans were submitted annually to the national DHS for assessment and approval. The City implemented only approved projects and always complied with the conditions of the grants. Both the national and provincial DHS conducted site visits quarterly to ensure that only projects that were approved were implemented.
The City of Ekurhuleni has since 2014 developed a strategy to implement mega projects throughout the City in strategic locations to facilitate housing development and to address housing shortages within the City. To date, 18 mega projects have been activated. It had since implemented feasibility studies for the 18 identified locations and established that they would produce housing opportunities for approximately 200 000 households.
Since 2014 to date, 16 locations have progressed to constructing engineering services, representing an investment of R1.9 billion. The City's human settlements department had created a platform to include the community forums in the localised management of the projects by creating a project steering committee, to reduce uninformed interference and stoppage of projects. Mega projects were sensitive to budgets injected to drive implementation, but it was envisaged that the projects in this programme would be completed within the timeframe of the next five years.
On Ekurhuleni's plans to curb land invasion, he said the DHS collaborated with the City's police department to curb the unlawful occupation of houses and land earmarked for housing developments. The Ekurhuleni Metro Police Department (EMPD) undertake security assessments, regular patrols and policing, to ensure effective and efficient law enforcement. The Department also supports the implementation of court orders and interdicts. It had been established over a period of time that failure to do proper land invasion management resulted in exorbitant project and litigation costs. It was important to mention that the City had developed a bylaw for managing informal settlements, including land invasion management.
(See attached documents for details)
Ms M Makesini (EFF) said the land invasion in the CoCT was caused by the fact that people needed land, and asked what plans the City had to ensure that those people vacated those areas, especially the ones occupying the railway lines. In Ekurhuleni, how far was the process of dealing with the backlog on the leases of property? She asked for an update on the case of the whistleblowers who were killed because of issues relating to reconstruction and development (RDP) houses in 2021.
Mr M Tseki (ANC) said the departments and the metropolitan municipalities needed to have a way to ensure that there was law enforcement to deal with the land invasion issue. Ekurhuleni, Tshwane and Johannesburg had presented a blanket approach to land invasion policy for the Gauteng province, where if anyone invaded land illegally, they would be given a certain court order. He was unsure where that ended up, but he felt it would have helped if implemented. He asked the CoCT to explain the rental opportunities available in the City, and whether they involved rental to the metro, or if they were private rentals. He said the issue of land invasion was very bad in Ekurhuleni, to the extent that people had to write on their walls to mark their property, and a solution needed to be found.
Mr C Malematja (ANC) was disappointed that the Department had not fully utilised the funding it was allocated for the USDG in the metropolitan municipalities. There was a lot of vacant land and old buildings that could be refurbished to build shelters for displaced people. He asked the City of Cape Town what it was doing to help people get property or settlements that were closer to their workplaces in the City. He said the 24-hour Anti Land Invasion Unit in Palm Ridge was not doing its job, and people were getting killed as a result.
Ms N Sihlwayi (ANC) asked the CoCT to develop a better way to deal with land invasion. She said the Department and the metros were not making an impact in improving the quality of life of the people, which was their core mandate. The national government enforced the Public Finance Management Act (PFMA) to dignify the process of utilising state funds, yet all the challenges that persisted in many government departments revolved around procurement processes. This pointed to the need for a workshop with Treasury to deal with the matter across all departments, because the country could not afford to lose any more money to mismanagement. She was concerned about the underutilisation of the grants, and urged that they must be used for their intended purposes.
Ms E Powell (DA) said the presentation from the Department had not been sent to the Committee in time to allow them to study it, which was unacceptable. The Committee had not been briefed on the performance of the metropolitan municipalities and the Department in 2021, and the Committee’s statutory obligation was to monitor their financial expenditure annually. It was information overload to have the metros present in the middle of the financial year when they had not been given an opportunity to present their performance for the previous year. She said the presentations did not give a good account of the progress made by the metros, because they were done at an awkward time.
Dr N Khumalo (DA) was disappointed at the poor performance of the Mangaung and Nelson Mandela Bay Metros, and asked the Department to provide details on how the shifting and moving around of funds had impacted the lives of citizens, as well as the rationale behind their decision to shift funds for certain projects to prioritise others. What was the alternative for the citizens of the metros whose funds got shifted to other metros? What was the Department doing to address or assist those municipalities? Did the Department have a benchmark for municipalities for procurement processes? She commended the CoCT for being the top performing metro so far in this financial year.
Mr T Malatji (ANC) said the problem with the metros was that they were unable to plan towards delivering the mandates given to them. One of the issues that needed to be dealt with was the provision of temporary services while waiting for permanent solutions. In most cases, people who occupied the temporary buildings illegally occupied them. Some were past beneficiaries who already had RDP houses and had decided to rent or sell them. This meant government was also giving its resources to people who had already received them. He said the Department needed to start building houses for the people instead of "ghosts", because the unfinished housing projects became a major cost and were also the root of invasions. If they were building houses for the people, they would prioritise finishing them in time so people could move in. The problem started when a housing project took years to be finished.
Dr Z Mkhize (ANC) wanted to know about the discussions that had taken place between the DHS and the Department of Cooperative Governance and Traditional Affairs (COGTA), when the idea of taking funds from poor metros to the more affluent metros had been introduced. He said there were no spontaneous informal settlements because when people occupied the places, they invited others and there were people in charge and allocated plots to others. How much land had been found and used to house people closer to towns?
Dr Khumalo asked how far along the Department was in creating online title deeds.
The Chairperson said the presentation highlighted that the metros were not performing as expected, and that the DHS had communicated its intention to reallocate funds because of this. In the previous meeting with the Department, one of the issues that had been raised was that it was difficult to get municipalities to receive budgets for developmental areas because of the bylaws in the municipalities. She said Cape Town had mentioned that some of the land invasions were orchestrated by individuals, and asked what the City was doing to address the issue, and whether any cases had been opened against such individuals.
She was happy with Treasury limiting the funding allocated to the grants, because they were underutilised by the metros and were not making any impact. To deal with the apartheid regime’s spatial planning, the Department intended to ensure that people moved to the towns, and the USDG was introduced because the metros did not have enough funds for the developmental areas. Most of the metros were under the unregulated control of the private sector. What was the Department doing to balance the capping of informal settlements and the unregulated private sector? She asked why the people orchestrating informal settlements in the CoCT were not getting arrested.
Cape Town's response
Mr Booi said Cape Town was making available land parcels for people living in the outer City to stay in the inner City, to cut their transport costs. The developments were closer to transportation and more economic opportunities. This was a priority programme that was headed by the Cape Town Mayor, and the City was ensuring that it produced significant outputs. Minister Kubayi attended the Affordable Housing Indaba at the Cape Town International Convention Centre (CTICC) with representatives from the national Department and other provincial stakeholders.
He gave the example of an open site on Roeland Street in front of Parliament, which had received council approval and was going through planning processes, which would be followed by a tender process for building affordable social housing. There was also a site in Sea Point which was earmarked for social housing. He mentioned several other projects the City was working on in different parts of Cape Town, including Salt River, Pinelands and Woodstock, which would produce more than 10 000 housing opportunities. They were partnering with the private sector to help with capital injections, enabling the projects to come to fruition.
Some families had lived in the City for a very long time, and as their children grew up, they would build backrooms in their RDP houses, which created more informality, and the City was devising a plan for dealing with them. People also used political manoeuvring to push land invasions within the City, especially the use of expropriation of land without compensation. He said it was unfair for Members to say the City was not using its funds, because he had demonstrated how the City had performed in the past year, and the percentages presented were linked to the funds that had been received.
The City did its best to use the small funds it received, and it could account for every amount it spent. The funding received by the City did not match the demand, which was why the City had a backlog of over half a million people waiting for housing. Considering the limited funding, the influx of people coming from other provinces and countries to look for better opportunities in the City did not help the situation. He agreed that there needed to be a workshop between the metros, Treasury and the Committee, so that the Committee could understand the extent of the challenges.
He said the City was safeguarding the land from invasions, but the capacity of the City when invasions happened on a large scale was not enough, which was why they always sought assistance from the South African Police Service (SAPS). It was good to hear the Minister of State Security say there were fewer resources in the poor areas. The City had requested the Minister of Police to increase police capacity in the poor areas because many of the challenges that the City faced could have been prevented.
There was forward planning in the City, hence there were pipeline projects. Within the informal settlements, the City used a quick response (QR)-coding mechanism, which enabled them to pick up some of the issues mentioned by the Members, including foreign nationals and people who had received housing opportunities before. The City was dealing with those decisively, because when they did evictions, they demonstrated all the facts to the people. The City was embarking on court action to get letters of eviction in some areas.
The City did not have issues with procurement, and it now had contractors on its panel appointed in December, as well as engineers, so they did not have to wait for a long time before they could deliver projects. The bigger challenge faced by the City was that there were people who purported to be business forums who went to their sites and demanded work based on the 30% bill of partition. This escalated to issues of extortion, as people were coming in without providing statutory documents and demanding to get work. Refusing to allow them to work resulted in threats to the officials, and one of them had been killed at a site in Delft. The City had offered a reward of R100 000 to any person who could lead them to make an arrest in the case.
Mr Mahlalutye said the illegal occupation of houses was a big problem in the City. It required several interventions because, in some cases, people who had been waiting for housing for a long time left the areas and their houses remained vacant, which opened up opportunities for illegal occupation. In some instances, people given new houses were threatened and intimidated by others, chasing them out of their houses. The Member of the Executive Committee (MEC) had approved an allocation policy that applied to all municipalities in the metro, which enabled them to know who they needed to prioritise. They were able to verify that the people for whom they built houses actually existed.
The City had applied for level three accreditation, but that did not succeed. Fraud and corruption were very common in the sector, and the fraudsters sometimes used technology to lure people into buying and selling their houses illegally. The City had opened cases with the police to deal with the issue. A blanket court order no longer existed, so the City dealt with the issues case-by-case. The City’s bid for an eviction order for Palm Ridge had been successful, but before it was implemented, the illegal occupants had appealed and the outcome of the appeal would be received later in the day.
The City did not have major challenges with procurement processes, according to the recent skills audit that was performed. Service delivery challenges persisted because of the political instability in the City. The City normally passed its Adjustment Budget in January, but it had still not been passed in the current year, and the City ran the risk of not complying in passing it by the end of February. There would be a council meeting tomorrow, but no one knew how the meeting would conclude due to the political in-fighting. The City would have to learn more from the invasion unit of the CoCT to improve the work of its own invasion unit. The budget that the City used for the invasion unit came from its security budget, which was funded through its own revenue.
The province was doing a hostel redevelopment programme, where the City uses some of its budget to upgrade the infrastructure of the hostels. Five hostels were being redeveloped in the City, including the Nguni, Thokoza, Kwa Thema and Daveyton hostels. The backlog on title deeds was a national problem, and the City had over 8 000 title deeds that it needed to distribute. It employed about 30 young people who went to the communities to help issue title deeds. They provided the City with information on the people who had moved, if beneficiaries were deceased, or if there were disputes between beneficiaries, etc. Once that information was collated, the City was able to find a way to distribute the title deeds, and it had been able to distribute at least up to 4 000 title deeds yearly.
Ekurhuleni did audit informal settlements, but the problem was that informal settlements grew rapidly. The City found that in some areas, the population of illegal immigrants was higher than the people who would normally benefit from its programmes. They were usually the people who had no interest in development because they knew that they were not going to benefit and would sabotage the processes. The City was being assisted in dealing with illegal immigrants. The Minister of Human Settlements had gazetted priority housing areas in all the cities, which guided them on where they could and could not build developments. The City ensured that it built houses in alignment with the Municipal Spatial Development Framework, and did not build houses outside the urban edge. They could submit the plan in writing to the Committee.
Some officials within the metro had participated in corruption by approving certain developments with the private sector illegally. The City had dealt with this issue through its internal audit team and enacted the appropriate consequence management actions against the officials. The City also improved the capacity of its Building Control within the City Planning department to ensure that they deal with the illegal structures built in municipalities.
Ms Bele apologised for not submitting the Department’s presentation to the Committee in time, but said it they had been under the impression that they were not expected to do a presentation in the meeting, but to provide an executive summary or overview of the metropolitan municipalities’ USDG expenditure. She had decided to do a presentation at the last minute because she felt more details would assist the Committee.
She said there was a difference between transferring officers and National Treasury, as both did their own processes at their own discretion. What she had presented was done by the Department and the national transferring officer. They started the process by issuing their intention to the provinces that they thought had the potential to underspend, and ask them to submit documents within seven days. After the provinces submit their documents, the Department looks at the challenges and how they could be solved, and assists the provinces with their recovery plans. When the Department refers matters to National Treasury, they give a detailed account of what had been done, who was consulted, what was said, and what the conclusions were. The Department goes a step further to visit and investigate the projects that need additional funding before it refers the matter to Treasury.
The Department had sent letters to all metropolitan municipalities underperforming in the USDG and ISUP, informing them of their intention to stop their funding. The Department allowed the municipalities to respond in writing to appeal the stopping of funds, as permitted by the law, but they must provide valid reasons. National Treasury did reallocate the funds when necessary. The Department was considering providing additional funding to the CoCT for the ISUP, because informal settlements were on top of the railway line, which impeded the trains from moving and the people living in those informal settlements had no access to basic services. The Department wanted to reallocate the funds to the City to assist with moving the people from the railway line because their inability to access basic services was not only a human settlements problem, but also a human rights issue that needed urgent intervention. PRASA and the Department of Transport (DoT) were also putting pressure on the Human Settlements Department to come up with a plan to move the people from the line so that the trains could move.
The reason the DHS had lost funds in the last financial year was that National Treasury looked at the submissions for rollovers from the metros and provinces. It scrutinises the metros' and provinces' requests, including whether there was a permanent City Manager and a Chief Financial Officer in the metros for a period of over six months. All the metros that did not have those positions filled affected the funds allocated to the Department, which also affected service delivery in the end.
A new regulation on procurement had been passed, which stated that organs of state could not sit in the bid adjudication committees of municipalities, because they must come up with their own policies. The Department would have a forum on 1 March to which they had invited National Treasury, to help them customise their procurement processes to be aligned, but Treasury had said they would not be able to help them because there was a lot of work they were doing regarding the new regulation. The Department wanted to have the workshop with Treasury before the end of the financial year to avoid irregular expenditure, but since they were unavailable, they would try and see if the Office of the Chief Procurement Officer could assist them.
The DHS offered support to the metros, and had people on the ground in all of them, especially in Nelson Mandela Bay and the City of Johannesburg. The Department’s financial year ended on 31 March, but the financial year end of the municipalities was 31 June, so the municipalities had until the end of June to spend their budget allocations.
Dr Zoleka Sokopo, Deputy Director-General: Informal Settlements, DHS, said the Department balanced its functions in terms of informal settlements, so it had dedicated capacity where they assisted the metros in developing their annual business plans which were focused on informal settlements. A business plan was credible if there was proof that everything related to procurement had been done in the previous year. The challenge started when metros decided they would only start procuring in the year of implementation, which normally did not work. The Department advised the metros to have a multi-year programme for procurement, and it could not assist further if the metros did not follow that advice.
The DHS had identified that procurement was a problem in the metros, and had decided to partner with the City Support Programme, and had promised all the metropolitan municipalities that it would run procurement workshops to assist them with planning infrastructure projects. There were two other aspects that the informal settlements division of the Department focused on, other than permanent infrastructure. One of them was providing basic services to the informal settlements, and unfortunately, the ISUP grant was continuously used to provide these services, other than building.
The Department also tried to ensure that it achieved its spatial transformation vision in the National Development Plan (NDP2030). The declared developmental areas had informal settlements around them, so when the metros did their informal settlements strategies, they must have a criteria cultivation. One of the criteria should be whether the informal area was within the priority developmental area. This would identify which areas they needed to provide, which would assist in ensuring that they dealt with spatial planning and transformation.
Cape Town and Tshwane had declared informal settlements as transitional areas, which was progressive in terms of the requirements of the Spatial Planning and Land Use Management Act (SPLUMA). One of the areas that the Department had not mastered was preparing for informal settlements, other than policing them. It needed to prepare for them and declare specific areas to manage the informality as it developed. For the informal settlements to be formalised, there was process and procedure that must be followed by the province, including assisting the metros in formalising the informal settlements, and studies such as environmental impact assessments (EIAs), geotechnology, the development of layout plans and zoning, needed to be done to help with the formalisation plan.
The institution that the Department used to accept any land donations from government departments and entities was the Housing Development Agency (HDA), so when the Department of Public Works and Infrastructure (DPWI) provided land, it was accepted by the HDA.
The Chairperson said there was no time for follow-up questions, because the meeting was scheduled until 1pm. The Members could send their follow-up questions in writing, and the DHS and the metros also had some questions to respond to in writing.
The meeting was adjourned.
Semenya, Ms MR
Buthelezi, Ms SA
Khumalo, Dr NV
Makesini, Ms M
Malatji, Mr T
Malematja, Mr C N
Mkhize, Dr Z
Powell, Ms EL
Sihlwayi, Ms NN
Tafeni, Ms N
Tseki, Mr MA
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