DHS, NHBRC, HDA, SHRA, NHFC, PPRA & CSOS 2023/24 Annual Performance Plans; with Minister and Deputy Minister

Meeting report

Consideration of Committee programme
 
The Chairperson welcomed Mr L Mphithi (DA) to the Committee, and asked the Members to consider and adopt the Committee's programme for the second term -- from 3 May to 16 June.

Ms Kholiswa Pasiya-Mndende, Committee Secretary read through the programme for the Members.

The Chairperson asked if Members wished to make any comments or additions to the programme.

Ms M Makesini (EFF) asked to add Mangaung to the metros that were to visit the Committee during the term.

The Chairperson said this would be added to the programme.

Dr N Khumalo (DA) suggested that the Committee do follow-up oversight visits to the places it had previously visited, since there were no scheduled oversights for the term in the Programme.

The Chairperson said the current framework produced by Parliament for the term did not include oversights, because the oversights would be done during the constituency period, but she would engage with the Chair of Chairs to see if the Committee could have at least a day to visit some of the areas, but that would depend on the approval from the Chair of Chairs.

She asked for a mover for the adoption of the programme.

Mr C Malematja (ANC) moved to adopt the programme, and was seconded by Mr T Malatji (ANC).

The Chairperson said the programme was duly adopted, and asked the Committee Researcher to provide an executive summary of the Department’s annual performance plan (APP), as well as the study tour request of the Committee.

Overview by Committee Researcher
The Committee Researcher made an executive summary of the Department’s APP for the 2023/24 financial year for the Committee.

The Chairperson said the Committee would suspend its discussion of its study tour to Brazil for later in the meeting after it had received all the presentations of APPs from the Department and its entities. She asked the Committee support staff to let in the delegation from the Department of Human Settlements (DHS) and its entities to the venue.

Dr Khumalo said the Committee should consider probing the feasibility and the achievability of the projections made by the Department in its APP targets. The Committee should deliberate on whether the envisaged amounts would be able to achieve the set goals.

Ms N Sihlwayi (ANC) said there was a lot that the Committee needed to discuss after the engagement with the Department so it would be wise to engage them first, and then deal with outstanding matters later.

The Chairperson said the current financial year was not a normal financial year because it was heading towards the closure of the current Parliament, so the research must be able to tell the Committee what the Department intended to achieve and what it had managed to achieve in terms of the medium term strategic framework (MTSF).

She welcomed the Department to the meeting, acknowledging the presence of the Minister and Deputy Minister of Human Settlements, and welcomed representatives from the Department’s entities. She asked them to observe a moment of silence for prayer or meditation. She then called for a mover for the adoption of the meeting agenda.

Ms Makesini moved for the adoption of the agenda, and was seconded by Mr Malatji.

Minister’s opening remarks

Ms Mmamoloko Kubayi, Minister of Human Settlements, said the Department had stabilised its structures by appointing the relevant boards and executives to ensure its entities would be implemented, as the Committee pointed out in the performance reports of the last financial year that the Department needed to fill vacant positions. All boards were filled and there were no vacancies, and the Department was in the process of appointing a Board chairperson for the Housing Development Agency (HDA), as its chairperson had resigned. Currently, the entity has an interim chairperson.

All chief executive officer (CEO) vacancies were also filled, except for the Property Practitioners Regulatory Authority (PPRA) CEO, as the Board had not commenced the appointment process. The Department received the resignation of the Chief Ombud from the Community Schemes Ombud Service (CSOS) at the end of March, and the Board started the process of appointment for the replacement. All concurrent matters pending for the PPRA were concluded, including that of the Chief Operating Officer (COO) for the PPRA, and the Corporate Manager for the Social Housing Regulatory Authority (SHRA).

Concurrence that was not granted was for the chief financial officer (CFO) of the National Home Builders Registration Council (NHBRC), as discussions between the Minister and the Board were ongoing and there were some delays in the matter. The preferred candidate for the CFO position of the PPRA had withdrawn their application, and the Minister was awaiting the Board to forward the name of the second preferred candidate based on their qualifications and assessment. The matter relating to the Director-General (DG) of the Department had been concluded, as the former DG, Mr Tshangana, had started working at the Department of Cooperative Governance and Traditional Affairs (DCOGTA) on 1 May. The Department would start recruiting a new DG to replace Mr Tshangana permanently.

The Department has filled the following positions permanently:

Chief Financial Officer, effective 1 May;
Deputy Director General: Policy, Strategy & Planning, effective 1 June;
Deputy Director General: Informal Settlements, effective 1 May.

The Department had advertised the position of Deputy Director-General (DDG): Affordable Rental and Social Housing, and was hoping to appoint someone in the next two months. The Department had terminated the services of the DDG: Corporate Services on matters relating to performance and other issues, and the former DDG had taken the matter to the Labour Court. The Department had also filled critical senior management service (SMS) positions, especially the chief director positions, which had been vacant for a long time. They had made strides to fill those positions to stabilise the Department.

Regarding the entities, the Minister said they would conclude the restructuring and repurposing processes in the current financial year to deal with duplications and overlapping of mandates, as mandated by Cabinet. Implementing that intention would be in the 2024/25 financial year. There were outstanding issues that the Department had reported that had not been implemented, including a reliable, efficient, and transparent digital platform that was set to be delivered by the end of March, which the Department had been unable to achieve. The major issue around its implementation was that the solution that was presented were not responsive to the issues presented due to lack of capacity in the Department.

The DHS also intended to improve on monitoring and evaluation (M&E), which was another area in which the Committee had raised a lot regarding the programmes implemented by the Department. It had tested some of its work in one of its programmes in Nelson Mandela Bay in supporting the municipality to be able to deliver on its mandates, and some of the results were visible. The Department intended to improve its M&E to improve the quality of services, because it was currently not where it wanted to be in terms of providing efficient services. There were still gaps between national, provincial, and local municipalities.

She said the Department was presenting its APP with specific policy changes in the background. In concurrence with the Ministers and Members of Executive Councils (MINMEC) and National Treasury (NT), the Department had decided to stop having an Emergency Housing Grant effective from 1 April 2023. The Department intended to utilise alternative technology to avoid double usage of the processes for housing, because currently, the Department provides Temporary Residential Units (TRUs) to families for a short period, which cost up to R80 000, and then later provides the families with a Reconstruction and Development Programme (RDP) house, which costs up to R200 000, which was a lot of money spent in single households considering the limited resources. The Department was considering alternative technologies to be able to provide once-off services. For many of these households, their durability was up to 80 years, and they could be implemented quicker.

The Department had also announced changes to the quantum prices, effective on 1 April 2023, considering the inflation rates, high cost of living and high costs of material. This was not the only cause of the incomplete projects, but in some areas that the Department visited, this had been flagged as the cause of contractors leaving sites, as it was no longer viable for them to complete projects. The Department would pay attention to some areas, including how they made payments for slabs, because they pay a lot of money to contractors for slabs, which results in them not seeing the value in finishing the projects because they had made enough money at the foundation level. To avoid continuous unfinished projects, the Department was reviewing its payment methods to ensure that housing projects were finished.

The Department had included burglar bars for disabled beneficiaries, as it had received several complaints, especially in KwaZulu-Natal (KZN), when it delivered houses to disabled people and found out that they got attacked and people broke into their houses and taken their belongings. The Department was considering amending its policy to ensure that vulnerable people did not become even more vulnerable. The other area that the Department was introducing was solar panels for every Breaking New Ground (BNG) project beneficiary, which was in line with the response to the shortage of electricity and load shedding. Water tanks have also been introduced as a standard for rural communities.

Ms Pam Tshwete, Deputy Minister of Human Settlements, said the pace at which the Department was issuing title deeds to beneficiaries had been a major concern for the Committee over the past few years, and the Department had turnaround strategies in its APP to fast-track the delivery of the title deeds, which the filling of the vacant positions would also improve. The Department wanted to expand informal settlement upgrading, and encouraged those with the means to access land to make it available so that the Department could build. The Department had also visited the disaster-affected areas in KZN and the fire-affected areas in Cape Town and the Western Cape, and had turnaround strategies to address the issues. The Department was looking for alternatives for the Transitional Residential Units (TRUs), but that did not mean they would be abandoned completely, as they could still be used in emergency situations where there was a dire need for them.

Department of Human Settlements (DHS) Strategic Plan and Annual Performance Plan 2023/24

Ms Sandisiwe Ngxongo, Acting Director-General, DHS, presented the APP for the 2023/24 financial year.

She said the Department’s identified priorities for the year included spatial transformation and consolidation by directing grants and other investments into declared priority human settlements and housing development areas, and ensuring alignment with the District Development Model (DDM). It also included a review of grants to support developments, emergency housing, unhabitable mud housing, eradication of asbestos roofs, upscaling employment and job opportunities as a contribution to the economic recovery plan, upgrading of informal settlements, unblocking of blocked projects, digitalisation, registration of title deeds, and monitoring projects.

Ms Lucy Bele, CFO, DHS, presented the departmental budget allocation as per the medium term expenditure framework (MTEF). She said the Department’s MTEF budget allocation per programme for the 2023/24 financial year was R34.942 billion, with administration allocated R511.7 bn, Integrated Human Settlements Planning and Development R23.5 bn, Informal Settlements R9.3 bn, Rental and Social Housing R997 million, and Affordable Housing R5.6 bn. Regarding the Human Settlements Development Grant, the nine provinces would receive an amount of R14.9 bn in 2023/24, which would increase to R15.1 bn in 2024/25, and R15.8 bn in 2025/26.

See attached for full presentation

Discussion

Mr Malematja said he was encouraged by the Department’s improvement, especially filling vacant positions, because the key to departments fulfilling their mandates was having people in the right positions. He wanted to know when the Department envisaged the implementation of its digitalisation strategy, because it had received a good response from the people on the ground when it was presented.

Dr Khumalo said since the emergency grants were cancelled, she wanted to know the steps that would be undertaken in the event of a disaster in an area. As much as she understood the issues with the cost of the TRUs, she was unsure what would happen when people became displaced because of natural disasters, and asked the Department to provide a practical sense of how they would deal with this. Regarding the Department’s contribution to solving the country’s economic challenges through youth and women, she asked if there were actual plans and targets to achieve that and how they would be implemented and monitored, especially in municipalities. She was also concerned about the sustainability of the opportunities given to the youth in that regard, and asked whether they would be temporary opportunities.

She also welcomed the filling of vacant posts, and asked about the three vacant DDG posts and whether anything would change soon in that regard. She also acknowledged the introduction of solar panels to BNG beneficiaries and water tanks to rural communities, noting the evident need, especially in the Eastern Cape. She ascertained the rationale behind the 1.1 million title deeds that were planned to be administered by the Department in the next five years. She asked when the Department envisaged addressing the backlog of the title deeds that went back to 1994. Was the target of 1.1 million title deeds for this period realistic?

Regarding the unblocking of blocked projects, she said the Committee had also received a Ministerial commitment that this would be done by the end of the term. She then asked the Department to clarify what an unblocked project was and the criteria used to identify projects as unblocked. She asked for a report on the 300 unblocked projects throughout the provinces to help the Committee to understand this. The Committee had noticed some gaps in the monitoring and evaluation of projects by the Department and if this could be improved, the projects would progress. The Department should get to a point where it reports on its targets against the measurable impact made by the projects on the ground, because targets may be achieved on the reports while it reflects something else on the ground.  

Ms N Tafeni (EFF) said the Department must present a progress report on its interventions in the 2022/23 financial year to address policy implementation and its impact on service delivery. The allocation for consultants, business, and advisory services had increased from R23.2 million in 2022/23 to R26.3 million in 2023/24, reflecting an increase of 8.1%. Was this increase in line with the Department’s commitment to hiring consultants to capacitate it for upgrading informal settlements to the provision of affordable rental housing?

Mr L Mphithi (DA) said, on the emergency lease procurement, that the Minister may remember a few months ago, she had been contacted regarding the accommodation that was made available for victims of the floods in KZN, and there was an issue in Crystal Valley into which residents from Zwelitsha had been moved. From that experience, he realised that when the emergency lease procurement happened either at a municipal or provincial level, there was some deviation from the contract in the process. As a result, residents were removed from their residences. How many emergency lease procurements were done provincially and at the local municipality level?

The Mooikloof Mega City project had been delayed, and there were reports that the government was part of the reason for its delay because it had not contributed the R1 billion required for the project. What was the delay in terms of that funding being made available? Did the intergovernmental relations programme relate to having cooperation between national, provincial, and local government to protect and circumvent the scamming and fraud activities that exist across the country?

On upgrading informal settlements, he noted the increase of R188 million to R233 million, listed as consultants. Was this the same increase that was referred to in programme one? The issues around the eradication of mud houses and digitisation of the beneficiary list were fundamentally important for people in the country, but they were not expressed clearly in terms of the targets in the APP. The number of mud houses that would be eradicated and the date by which the beneficiary lists would be digitised were not clarified. They needed to be clarified so that Members could give detailed information to the people on the ground.

He thanked the Minister for the approach to addressing the issue at Crystal Valley, and commented that it was very helpful that they could at least get the people some accommodation for the few days they were there. He added that it remained a challenge, because across the country, municipalities were using this form of emergency lease procurement for people, but eventually, the people ended up on the streets because of the mishandling of money and lack of contract adherence, and the DHS needed to handle that situation better.

Mr A Tseki (ANC) said the report was informative, direct and concise, but it would have been nice if it had been presented in 2019, because it was good. He asked if the Department had managed to resolve the title deed backlog, and if that was not the case, why? The presentation lacked a historical explanation to show the progress made on issues that had been raised previously and the progress made. He wanted to know the difference between the Department’s 2022/23 and 2023/24 plans.

When the Committee visited the provinces during the public hearing for the National Builders Registration Council Bill, it reported on the challenges faced by people, including that of a person who built their house on a wetland, but those challenges were not addressed in the APP. The change of payments for slabs was long overdue, and it was welcomed. About four months ago, the Committee visited a house in the North West that was said to be completed over a year ago, but there were no windows installed. How did the Department plan to address such issues in the current financial year?

He said the example made by the Minister about the houses of people living with disabilities being broken into was painful to hear, and made another example of how in Gauteng, people were being evicted from their houses by people with fraudulent title deeds and letters of authority that were fraudulently received from the deeds office. He asked whether the R14.9 bn allocated to provinces would be taken from the Department’s R34.9 bn MTEF allocation, and where the remainder of the amount would go if that was the case.

Ms Sihlwayi said the Minister had mentioned the challenges faced by the Department, and perhaps should have mentioned the bottlenecks to solving them. She appreciated the strides made by the Department to fill the 16 vacancies in its middle management. She noted that the top management was not yet filled, specifically the position of the DG. The DG position was important, because its absence could handicap the Minister and the middle management, and perhaps the Department should provide timelines on when the position would be filled.

The Minister had mentioned challenges regarding the concurrencies in the provinces and municipalities, but was the role of the Minister not to look at the norms and standards to ensure that these spheres achieved their mandates? Regarding the cost of slabs, was it not the Minister’s prerogative to have a technical directive to state the price at which the Department could buy the slabs? She appreciated the introduction of the water tanks to houses, because it contributed to the solution for the water scarcity problem in the country.

She said the truth must be told that the NHBRC was not doing its work in construction monitoring and management, and asked the Department to clarify the entity's role. In all the places the Committee visited for oversight, the NHBRC was either not present or late, and when they were present, they spoke with English terms that communities could not understand. The people should not be undermined by the NHBRC, especially because they were meant to give standard and quality housing to dignify people. She also wanted to know what the blocked and unblocked projects were.

The Minister had challenged the issue of asbestos and mud houses, but this was not mentioned in the presentation. She said last week, the Committee had visited Cape Town and seen that Bungalows still existed, and one woman who lived in one had a painful leg injury because the flooring of the bungalow was rotten, so it had broken and she had fallen in. She wanted to know the approach of the Department to resolve such situations. Was the emergency grant meant to deal with the disaster? As the Committee pushed the Department to deal with the disaster in Port St Johns and KZN, did the Department have a budget for that?

She said digitisation in terms of housing needs and title deeds, etc, was a very exciting issue because it dealt with previously displaced people and the prospects of having their outstanding matters solved. She asked the Minister to speed up its implementation.

The Chairperson said that when the Committee met with the City of Cape Town metro, they had mentioned that they were going to build a human settlement project on the land next to Roeland Street, but the project did not exist in the business plan of the Western Cape Human Settlements Department. This pointed to the problem of integration between government departments. It was hard to imagine how the District Development Model could be implemented to ensure that the voices of municipalities were represented in the business plans of the provinces. How did the APPs of municipalities get reflected in the business plans of the provincial departments, and how could they be synchronised?

In some of the projects that the Committee had visited, there was a problem where some projects accommodated only coloured people, which perpetuated the previous exclusionary projects where specific races were put in specific places. The understanding was that the programmes were intended to include all the different races of people that lived in the city, but they ended up accommodating only one race, and black people ended up in informal settlements. She said the Department should be able to enforce the DDM in all the business plans of the provinces, and ensure that synchronisation of grants for the metros and the Urban Settlement Development Grant (USDG) were combined to produce what the government intended to achieve.

She said the Department was still presenting the Finance Linked Individual Subsidy Programme (FLISP), yet the NHSC was in the meeting to present a new name to the Committee, which was trying to show that the projects were aimed at including everyone. She warned the Department against making name changes but not changing policies, because it affected their own laws in the long run. On the blocked projects, the Committee had asked for a list so the Members could identify them in their constituencies and submit the issues to the Department directly. She asked the Department to send the list to the Committee so that the Members could report on them to the Department.

Regarding the title deeds, two municipalities in the Western Cape and Eastern Cape, respectively, said they could not proceed because they had lost the documents and did not know how to give the people land parcels. This was the Drakenstein Municipality in the Western Cape and Port St Johns in the Eastern Cape. She said people even advertised on social media that they were selling RDP houses, and were not even scared. The Committee had always advocated that when people received the houses from government, they must be given letters that say they were not allowed to sell them, and not make Spaza shops in them until they had lived in them for eight years. She appreciated the Department’s efforts to strengthen monitoring and evaluation, and noted that they should not monitor from their offices but should go to the projects on the ground.

She said the Johannesburg, Mangaung, and Tshwane metros should not get their budget allocations until they presented themselves to Parliament and account, because they did not honour the Committee’s invitation and had decided to prioritise their own meetings. It was not enough to say one would practice oversight over the institutions and produce reports, because once the issues were identified, there were no follow-ups on whether the issues were being addressed until another assessment was done, and that should change.

Department’s response

Ms Bele said the total grant that would be given to provinces was R19 246 370 billion, which entailed two grants -- the Human Settlements Development Grant (HSDG) amounting to R14 943 649 billion, and the Informal Settlements Upgrading Partnership Grant (ISUPG) of R4 302 721 billion. The total grants that would be transferred to municipalities would be R12 514 098 billion, of which R8 149 316 billion would be for the Urban Settlements Development Grant (USDG), and R4 364 782 billion for ISUPG municipalities.

There were two informal settlements. The first was the informal settlements in the nine provinces, and the other informal settlements were in metropolitan municipalities. The Department was funding the provinces to assist them with the informal settlements and then they were also funding the metropolitan municipalities to deal with the informal settlements within their metros. The Department had a programme called the National Upgrading Support Programme (NUSP), which was dedicated to assisting the provinces and the municipalities to develop upgrading plans, hence the Department had allocated the R26 million to consultants. The Department had an emergency budget, and it was called the Emergency Housing Response, which was previously called the Emergency Housing Grant. The difference between the Response and the Grant was that the Emergency Housing Response was within the Department, while the Department had to transfer the Emergency Housing Grant to the provinces.

Regarding the allocation of budget to the Tshwane, Johannesburg and Mangaung metropolitan municipalities, she would be happy to oblige the Chairperson’s request, but would just need evidence of letters of invitation sent to the metros from the Committee.

Ms Mathope Thusi, Acting DDG: Corporate Services, said there were six DDG positions in the Department, and only three had been filled, with only two having started on 1 May, while the other one would start on 1 June. The other post was the one that was filled by the Acting DG, and another post recently became vacant due to the termination of contract that was referred to by the Minister. The Department would commence the filling of the posts of DG and the DDG for Corporate Services.

Ms Nonhlanhla Buthelezi, Acting DDG: Entity Oversight, referred to intergovernmental relations, and said the Department holds conversations with the provinces, municipalities, and entities before plans were put together, and there was a programme in the housing code which promotes intergovernmental cooperation and consultation with the communities. In terms of that programme, there was supposed to be a write-up of the projects that would be selected. Before a business plan is packaged and submitted, there must be a conversation about the projects that need to be implemented and from there, it gets transcribed into the business plan.

The Department also interacts with other sector departments, such as the Department of Rural Development on issues of title deeds and the deeds registry on how they were going to operate, as well as the Department of Energy on how they were going to roll out the programme to support each other. There was room for improvement, but the Department did not interact with other departments for the sake of it -- they looked at early warning signs and other issues that may need to be addressed, and devised ways to intervene in those issues.

Regarding monitoring and evaluation, she said the business plans work over a three-year period, but the projects go over a period of five years, and there were teams that did project-level monitoring on the ground, and perhaps it was another area that the Department needs to improve on, especially regarding the digital platform. The Department currently focuses on only a 5% sample at the project level monitoring because of the number of projects, which requires them to enhance the level such that they could even bring in the communities to assist with what was happening on the ground, as well as the NHBRC, as they do the quality control on the units that were under construction.

Ms Rashnee Atkinson, Acting DDG: Research, Policy, Strategy & Planning, said they could provide a progress report on interventions to address how they deal with policy implementation to the Committee and added that when the Department looks at the business plans and engages with the provinces, they look at the programmes in the housing code that was effective for the business plans. On the Integrated Residential Development Programme (IRDP), which was the allowance to allocate funds for planning towards township establishment, and the other part was to ensure that the Department was building top structures. The trend that the Department had seen consistently over the years was that most of the grant went to the policy and the housing code across all nine provinces.

The other programme was the Rural Housing Programme, which was usually invested by the Eastern Cape, KZN, Limpopo, North West, Mpumalanga, and to some extent, the Free State. That had been consistently the allocation of funding to the two programmes in the housing code. The remaining programmes in the housing code were implemented depending on specific provincial priorities. They were usually linked to how the provinces wanted to implement their multi-housing development plans linked to their spatial development plans. There must be a connection between all the plans and policies in the housing code, and they must be implemented through the business plan. The Department recently emphasised to provinces that they must ensure through their business plans that more attention was given to how they would want to address their policy priorities and how those policy priorities were achieving the MTSF targets.

The enforcement of the DDM was becoming very important, which was why the Department had been working with the provinces. The DHS would like to see where the funds were going and what districts were impacted on. The information could be provided in detail to the Committee to show where the money had been spent and the projects implemented at the district level. Regarding the Mooikloof Mega City, she said that at some point during the Department’s engagement with the province and municipality in the preparation of the business plan about two years ago, the issue was about the City of Tshwane and the developer not seeing eye-to-eye about the bulk infrastructure that had to be provided by the City of Tshwane.

Ms Tshepiso Moloi, Acting DDG: Affordable Housing, said the mud houses and asbestos programmes had both been elevated into the APP. The Department had looked into the mud houses, which were mostly targeted as rural housing by most rural provinces. The Department assessed the remuneration that was done by the provinces and also ascertained the baseline. In the current financial year, there were about 9 760 mud houses that provinces had said they would be able to eradicate, but the Department was also working with the Department of Land Reform and Rural Development (DALRRD) to assess all the mud houses in all the provinces in an effort to create a baseline that it would use in the elimination of the mud houses in their entirety across the country. This would also include the dilapidated houses identified in rural areas.

The asbestos issue had also been elevated into the APP of the Department, and all provinces had indicated that they were undertaking an assessment of asbestos. The Department found out that the Western Cape had indicated that it did not have asbestos in its houses, but the Department had come to be aware that there may be asbestos housing in the Western Cape, and would conduct that assessment in the current financial year. All the other provinces did have houses with asbestos, with the Free State and Mpumalanga currently confirming the assessments they had done.

The DHS defined blocked projects as any projects that had had no expenditure within 12 months, and this definition was coined in 2019. Blocked projects would be 80% incomplete due to several areas needing intervention, especially due to poor performance from the contractors, lack of bulk infrastructure, or an increase in material costs due to inflation and the contractors being unable to complete the projects. In other areas, there was also a lack of bulk infrastructure or invasion of incomplete housing, which also fell under the definition of blocked projects.

Initially, when the programme was elevated, there were close to 3 445 projects that were identified as blocked, but the assessment done by the Department in the provinces indicated that 2 800 of those were closed and not blocked, because some of their challenges, which were mostly financial, had been addressed. Currently, there are 690 blocked projects, and these would be implemented for eradication in the next three years. The Department had also appointed a team to do data verifications on all the projects to provide the Department and the province's capacity to unblock some of the existing blockages.

The Department was challenged in terms of the eradication of the backlog of title deeds. At the beginning of the term, the envisaged target was to eradicate a backlog of about a million title deeds, but currently, the Department has eradicated about 7% of that. They had realised that by the end of the MTSF, they would have eradicated only about 25% of the backlog due to several challenges, including township establishment and lack of bulk infrastructure.

The Department had looked into partnering with the Vulindlela Unit in the Presidency to ensure that they identified some of their challenges regarding the IGR, and came up with solutions that would help them fast track the programme. The Department was also engaging the HDA to assist them with unlocking the areas for township establishment. The provinces were also adding capacity in terms of conveyancers to ensure that the Department achieves at least the envisaged 25% by the end of the MTSF. The Department would also appoint professionals working on the programme to provide the necessary capacity for the title deeds programme.

Dr Zoleka Sokopo, Chief Director: Human Settlements Strategy, said there were ten rental accommodations in KZN and in total, there were 2 574 beds. EThekwini Municipality procured five rental accommodations, three were procured by the HDA, and two by the province. Many lessons were learnt, including that there needed to be multiple interventions other than just TRUs in responding to natural disasters. As a result, the Department introduced alternative bedding technology (ABT), and the material supply as the second tool, especially for the people who were displaced because of fire and flood disasters. There was also a repairs programme for the houses that were partly destroyed during the disasters.

The ABT assists people mainly in rural areas, as people living in mud houses were the most affected by floods. The Department was also promoting the intensification of other intervention programmes in rural areas through the housing process and the Rural Housing Programme. The intensification of these programmes, alongside the responses to the housing emergency fund, would help the Department deal with many emergencies in rural areas. The other aspect was the mitigation or prevention measures within the emergency. The Department was doing this through the informal settlements upgrading, where they had fire prevention strategies and flood prevention measures.

In the case of a disaster, the Department of Human Settlements had an SOS emergency alert system linked to the National Disaster Management Centre (NDMC), and the Department knew when an emergency needed attention. The staff of the Department had also established a command centre wherein community liaison officers were appointed and helped ensure that all the processes that needed to be followed, were followed.

There was also a technical assessment aspect of the emergency response, and all the entities of government were going to be part of it, including the provinces and municipalities, and they would follow specific guidelines that would outline what each partner was expected to do in responding to emergencies through the emergency housing fund. The idea was that the recovery period should at least start within 15 days, but in some cases -- especially regarding material supply -- the turnaround time was much shorter and could be up to 48 hours.

Ms Bele said, on the allocation letter, that National Treasury gave the Department additional funds to deal with the mitigation plan to assist in terms of disasters, so emergencies were under Programme 3: Informal Settlements and Emergency, in the APP. Treasury had given the Department additional funds to assist the municipalities in drafting their mitigation plans, and the Department would procure capacity to be able to do that so that municipalities could respond to disasters.

Ms Ngxongo referred to the houses that were built in uninhabitable spaces. She said the current Housing Consumer Protection Bill 2021 had elevated the role of the inspectors because the houses may have been endorsed by inspectors, indicating that they were proper. The Bill also elevated the point of being disqualified as a housing inspector because of the professionalisation of inspectors, so that the Department could deal with whoever gave the go-ahead for the houses to be built in unhabitable spaces.

Regarding digitisation, she said they had been given strict orders that they must do the testing of the digitisation app by the end of June. The Department had worked with the State Information Technology Agency (SITA) and the South African Revenue Service (SARS), which had been very successful in Information and Communications Technology (ICT), as well as the Departments of Home Affairs and Science and Technology, to create the app that would be tested at the end of June.

She said the follow-ups were done by the Department when it did the assessments and monitoring of entities' oversight, but the challenge was in the differentiation between the entities' oversight and the monitoring of the core business of the entities. The programme heads monitored the core business of the entities at the project level, which was where the confusion was, because the Department expected this to be covered under the entities' oversight.

The Department planned to spend 40% of its procurement budget on women -- which was a Ministers and Members of Executive Council (MINMEC) decision -- 19% on youth, and 5% on persons living with disabilities (PWDs). This was the standard target across the sector. The Department was also finalising its graduate programme, where those with the skills required in the built environment would be linked up with registered professionals to move to the next level and get PR numbers.

Deputy Minister Tshwete said it would be good for the Department to do follow-ups on the oversight reports of the Portfolio Committee, and ensure that they visit every province to see what they could do to solve the challenges. Regarding the "happy letters" referred to by the Chairperson, she said every time they visited the provinces, they always encouraged the handing over the happy letters because they were important, as they informed the homeowner that the house was complete. There were instances where the Minister had visited homes and seen that some things were not complete and had ordered that they be redone, which proved the importance of consistent monitoring of the projects and the contractors, because sometimes they did not complete the work.

She said when she was still the Deputy Minister for Rural Development, there had been a programme called the ‘group areas act,’ where people of different races were being separated just as it had been done during apartheid. This issue must be spoken of often, and the Department needs to work on it to ensure that when it builds houses, it mixes people of different races. She said there were cases of people who sold RDP houses and advertised them on social media. The Department reported these issues to law enforcement and made follow-ups, because the happy letters gave people a period in which they were not allowed to sell the RDP houses.

In the Langa township in the Western Cape, most people who live in the flats are not South Africans, yet the owners of those flats create more informal settlements and add to the queue for social housing. Their reason for doing this was that they were unemployed and needed money to survive, so they rented out their homes. It was a complicated issue, but the Department did not give them houses again. Sometimes the constant changes in provincial leadership cause instabilities because the new leaders must be integrated into the system before projects continue, which is time-consuming.

Minister Kubayi said that when a disaster happens, it would be logged into the area and the signal would go to the national Department through an email or phone call from a councillor. The Department would dispatch the personnel responsible for outreach to go on site to engage with the councillor and technical teams to assess the situation. This was because sometimes, when the Department sends engineers, they just go and do the job without consulting the councillors in the area. Most of the ABTs could be built in seven or eight days and allowed for a quick response, which was why the Department was utilising them. The possibility of people sleeping in community halls could not be fully avoided during disasters, but the Department was trying to reduce the time people spent in the halls to less than 24 hours, if possible, or less than a week.

The tiers were not implemented across the country, but the Department had requested an amendment from Cabinet to implement the tiers, and they had been piloted in KZN. Cabinet did not want the Department to continue with the tier model, because it was expensive. In the Crystal Valley situation, the Department said it would accommodate the people for a month in student accommodation. When the students had to move back in, the landlord was correct to say his contract with the educational institution and the National Student Financial Aid Scheme (NSFAS) required him to remove those people from the accommodation. Cabinet had raised concerns about the matter because it was costly, but because the Department was chasing time, the money had to be spent in that period because the Department was under pressure.

There were two projects that the Minister had received letters from the Presidency to respond to, and they include the Mooikloof Mega City and the Lanseria Project. The Presidency had asked the Minister to account for these projects by Friday, because the expectations for the projects were that they were meant to be within the DHS's business plans that had been approved, and they were not. There were several legacy issues that the Department was dealing with where processes and planning were not synchronised between national, provincial, and local government. The provinces had done their business plans, and the next step would be for the metros to do their own business plans, and the provinces would be called to be part of that process to see whether there was alignment in the plans.

The other challenge was that there were also turf wars, where the metros would refuse to be dictated to by the provinces as they were governed by their own Municipal Finance Management Act (MFMA) priorities. This was common across the country, regardless of the political party in charge. Another challenge was the instability caused by coalition governments, as there were often changes to the leadership, especially in cases where progress had already been made in specific areas. Metros were also often big and could fund their own projects, which made it difficult for them to collaborate with other spheres of government, as they wanted to use their sovereignty to make their own decisions. They also feel that the National Department was trying to take away their powers, which was why, through the IGR, the Department also engages institutions such as the South African Local Government Association (SALGA) to try and mend these relationships, and would appreciate the help of the Committee in that regard.

Regarding scammers and the IGR, she said the Department did outreach and advocacy where they communicated information about scams on their social media platforms, but they did not have the capacity to do law enforcement. There was not much the Department could do about scams other than to raise awareness, but they did report the crimes to the South African Police Service (SAPS) for investigation. However, they did not always receive positive feedback, because they took a long time to investigate, and the matters took a long time to get into the courts.

Regarding filling the DG vacancy, she said in the next circular, they would be issuing a job evaluation based on the requirements, and then put it on the public domain. Because it was a public process, they always gave it three months for the Department to do its part, and then it would have to go to Cabinet for approval. The Department was subject to the Department of Public Service and Administration (DPSA), which was helpful when the Department complied with the process.

Many of the issues raised by the Committee were legacy issues, as many projects were not done correctly in the country. The difference between unblocking and rectification was that rectification refers to projects done and handed over to beneficiaries. However, over the years, they had begun to show wear and tear, so they needed to be rectified. Blocked projects were projects that never got to be finished. The rectification project was not dead, the problem was that provinces had not been prioritising it regarding resource allocation.

The Department did not have a Chief Director for Entity Oversight, which was why there was some level of limitation, and the Auditor-General (AG) had raised the issue with the Minister. While there was a separation between the people doing the core business and those doing entity oversight, the capacity of the Department in terms of entity oversight was limited. There were a lot of legacy issues around how services had been provided in the Department of Human Settlements, so they had to fix things that had not been done correctly while ensuring that they did not delay the work they needed to do.

Follow-up discussion

Ms Tafeni said the Department must not forget to install water pipes in the water tanks, because the people of Mbashe local municipality in the Eastern Cape got their houses in 2014 but they still did not have taps, even today. The Deputy Minister said the DHS did not give people second houses, but the Department needed to follow up on this because at Mbashe local municipality, government handed over about 750 houses to people in 2014, and those people still did not have their title deeds. As a result, those people sell their houses to other people and then they go to cohabit with their partners in informal settlements, and when it was time to register for housing allocations, their partners would go and register, meaning they got second houses. This still happens in the Eastern Cape. They sell their houses through lawyers for an amount, and once the title deed for the house is received, they pay the lawyer 50% to change the ownership at the municipality.

Ms Makesini said the Drakenstein and King Sabata Dalindyebo local municipalities were given status to be developers, but they were failing to build houses because they lacked the capacity to do so. Was the Department able to resolve such issues when they discovered them through their inspectors? In some instances, the municipality does not care about people living with disabilities -- for example, some people use wheelchairs and live in houses without enough space to move around, and the municipalities are arrogant, saying they wanted houses and had been given houses. In Amathole District Municipality, where the Department built beautiful houses, the problem was the main street toilets, which caused the beautiful houses not to look so nice. Was the Department planning to remove the toilets and provide the people with proper toilets? The dignity of the people must be prioritised, and the toilets that were built must complement the beautiful houses built for the people. Had the Department reported the contractor who built the toilets?

In DCM, there was a lot of illegal occupation of houses, and they were easy to identify because all the illegal occupants had a blue window frame. When the officials of the Department were asked about the number of illegally occupied houses, they said it was difficult to determine because they feared for their lives as they were threatened. What was the Department doing to ensure that the rightful owners of those houses could access them? The NHBRC was failing the Department because they did not do their work, especially that of ensuring that people got happy letters with their houses.

The HDA was not working with municipalities in Port St Johns, and the district municipality was very frustrated with the entity. What work did the HDA do if it could not work with its stakeholders to ensure they gave people proper services? The backlog of projects in Port St Johns was largely caused by the HDA not working well with the municipalities.

Ms Makesini appreciated that the delegation from the Department was mostly women and hoped that when the appointments for the remaining vacancies were made, they would continue appointing women.

Mr Mphithi asked if he was right to assume that the Department did not have a target for mud houses and asbestos, because, in their response, it had spoken of the targets of the provinces, and the APP did not show the Department’s numbers. He had heard the comments about the IGR and the conversations that were happening, but the conversations were not helping on the ground because people were being threatened and killed. The inspectors in DCM were getting bribes from the projects for not delivering the quality of houses they were supposed to deliver. Lifestyle audits must be conducted on the inspectors, because a lot of government funds were leaking from them because project managers used the lowest quality of products to build the houses. This affected the people who were beneficiaries in the end.

He said there should be an investigation into the Crystal Valley matter because the discrepancies they found in the temporary accommodation were shocking. R18 million had been used to house the people for a month, yet some were there for only a few days. Some form of corruption had happened there, including the owner of the student accommodation because the accommodation was not even completed. Only half of the Zwelitsha residents were accommodated while others were outside with their belongings.

The material supply was far different in Crystal Valley because it was just one pillar, cement and zinc, and they could not build anything from that. The conversation on material supply also needed to consider who the recipients were and whether they could use it, because it also left vulnerable groups at risk because they could not protect themselves if others took the material from them, especially women and people living with disabilities. The people at Crystal Valley were moved to other accommodation and still had not found a place to settle till this day, which was unfortunate, the Department must find a place for them soon.

There were always reports of victimisation and illegal evictions in the Lufhereng project in Soweto, and the IGR conversations needed to lead to outcomes that dealt with these reports. Lufhereng was a very big project, and the IGR conversation needed to lead to solutions to the reported problems. In Tladi in Soweto, the people who built houses in a wetland were being moved, and others did not want to move, but there were different actors in the space that were influencing the community to turn against each other, and it was a difficult place to be in as a public representative to try and resolve the issue. This was where the IGR could be crucial to ensuring that there were outcomes where the community stakeholders were put in a round table discussion, and there was a clear idea of what the project was set out to do.

Dr Khumalo agreed with Ms Makesini that it was good to see that women were leading the Department, especially in a Department where one would not expect to see a lot of women in charge. She said her question was about the plans for women, youth and PWDs, and how the Department was making changes in that regard were not responded to. She asked if the goal of the Department to complete all the blocked projects by the end of the financial year still stood, and asked for a timeframe of when the Committee would receive a report on the blocked projects.

Ms Sihlwayi said housing was an area of crime by contractors, officials, and even by community beneficiaries, and she was unsure about how the Minister of Police could help the Department of Human Settlements with this challenge. Regarding the rectification and blocked houses, she said the Minister must sit down with the National Treasury and ask them to intervene, regardless of the title deeds.

Mr Malematja wanted to know what was being done to stop criminal activities in the sector and how the Department dealt with the quantum and pricing of the slabs. He said when Members were aware of the people committing crimes in the communities, they had a responsibility to report them to the officials, instead of debating it in Parliament.

The Chairperson said the title deeds issue remained problematic because some municipalities admitted losing them. A solution must be found to deal with the issue because they had either sabotaged them or they were incompetent. The provinces that accredited municipalities just for the sake of it was a problem, because they could not explain how municipalities that did not have an engineer, inspector, or project manager could be expected to build houses. Accreditation of municipalities needed to be taken seriously to ensure that they built capacity before they were accredited.

She said the material produced by the suppliers must also be investigated, because some of it was easily damaged. The contractors must also be engaged to produce quality products and be penalised if they do not produce quality products. The Department needed to go the extra mile to protect the people, because waiting for the Bill would be problematic. She was impressed by the number of women who had received their title deeds, as reported in the Department’s APP, but wanted to know the number of women contractors at levels 7, 8 and 9, and how far the Department was in developing those contractors.

Department’s response

Minister Kubayi said the Department had a water mandate, but the Department of Water and Sanitation (DWS) had the main responsibility, so starting from 1 April, the Department had decided to move forward with the water tanks in the hope that the DWS would engage with the communities about the installation of taps and pipes, because the Department’s budget would not allow them to do so. There were areas where the Department managed to install the tanks into houses, but in some areas, they could not install them, so they engaged with the DWS Minister to assist. The reason for this initiative was to try and close the inequality gap between rural areas and urban areas, because there were no water pipes in rural areas. The Department could not just leave them without water, which was why the water tanks were a solution.

She said the Department would pay attention to the areas of Mbashe and Dutywa, but the Eastern Cape was one of the Department’s most problematic provinces on all fronts. The problem was that if the Department focused on doing investigations into the money that was not accounted for in the province, it would end up not delivering houses to people because it would consume its time and resources on the investigations, so it could only report the issues to the investigating authorities. This was the same problem with safety and security in projects, because the Department must also hire security for most of its projects so that they were not invaded, which was money which should be used for Human Settlements service delivery.

She said she recently went to the Nelson Mandela Bay metro with the Deputy Minister, and there were a lot of unfinished projects. They had managed to unblock about 80 projects, and they would be finished by the end of the financial year. If they had not done that, they would not have progressed, so in some of the projects, they literally had to go there physically and monitor their progress and get the people to do the work. She said they would go and attend to the title deeds issue. She acknowledged the major problems that existed in that regard, noting that in some municipalities, the title deeds were piled up in cupboards and not issued to people. They would wait until there were about 2 000 title deeds before they issued them. These were some of those issues that required the leadership to stand up and get the people to start doing their jobs, but she would investigate it further.

She and the Deputy Minister would visit the Garden Route area, as she had been shown videos of what was happening in these areas, and they would assess the situation and see what they could do. They would also visit Mbashe and Dutywa. She had visited the Amathole District and unblocked the project, and there was an investigation into the contractors involved, and the matter had been handed over to the Hawks. The HDA would respond to the DCM issue, because it was one of the areas that they were involved in.

Regarding the targets for the mud houses and the asbestos, she said because the Department was forced not to change its MTSF plan, the Department had to ensure that it put the targets in the business plan because the housing code allowed this to be in the business plans and for the provinces to deal with them. Going forward, the Department wanted to synchronise its plans with the provinces. It was revising its White Paper policy and how the housing code had been done to accommodate the changes. There was a need to look at how the planning was making sense in the manner that they were doing it, because the APPs and business plans were not always synchronised. There needed to be a solution to unify both into one governing document so that money could flow.

There were multiple facets to the Lufhereng project, such as the RDP facet, social housing, rental, etc., so the scammers mostly used the rentals to get the people to pay them money. The Department tried to engage the councillors on the matter, and the Minister would go there on Thursday to deal with issues pertaining to Tladi and the people who were evicted when the roads were created.

The Gauteng province wanted to push the project of utilising houses that had big backyards to create economic income, but the challenge with this was that it was being promoted without building bulk infrastructure, which resulted in sewer spillages in the streets. The backyard houses increased the number of households significantly more than the infrastructure was built to carry, which resulted in sewer spillages. The plan would work better if the province expanded its bulk infrastructure. The problem was that the people who were not supposed to lead policy were making policy pronouncements, and the pressure was put on the Department of Human Settlements when their projects failed. When backyard dwelling was promoted, it gave the people the idea to also rent out their RDP houses. The government was sending contradictory messages to the people.

The Minister appreciated the feedback on gender equality, and noted that gender parity would continue to improve in the Department. However, the unions had complained and objected to some panels because they had all female members, so the Department would ensure that they did not compromise one gender over another and ensure that parity was achieved. On the empowerment of youth and women in economic matters, the Department wanted to ensure that in its spending, it would be conscious about ensuring that it procures from small businesses, youth, women, PWDs, and military veterans in its programmes.

The DHS was also encouraging provinces to follow suit. This was a conscious drive from the Department to ensure that it contributes to the economic emancipation of previously disadvantaged groups. It did not consider itself a social portfolio, but considered itself an economic portfolio because it was in the built environment and had the potential to drive economic growth if it was driven properly. The Department gave itself three years to clear the blocked projects, starting from the 2022/23 financial year to the 2024/25 financial year.

The Department would see through the progress of the implementation, and whether it would be able to finish the project within the targeted financial year, as there were areas of concern in some areas, and there was progress in others. One of the provinces with many blocked projects was the North West, and the Department had engaged with the Member of the Executive Council (MEC) of the province to resolve the projects. The Department would submit an updated version of the number of blocked projects in each province and their cost to the Committee. On the issue of crime, she said the Department needed the security cluster's assistance, because they also had fatalities where some of their inspectors in KZN, the Free State and the Western Cape were killed. There were also incidences where people were afraid to go on site to monitor projects, which was how some projects ended up not being finished.

The Department had the power to withdraw accreditation, and the MECs within provinces also had the power to withdraw accreditation. The Department had started a new framework in consultation with MINMEC on the process of approval of accreditation, and the process of withdrawal. The Minister agreed that it should not be accredited if a municipality had no engineers or project managers. They had started a discussion on material supply with the Minister of Trade and Industry, to request that they convene a meeting at their department to deal with the issue of costs, because some of the explanations of costs were unjustifiable. The Department had requested the DTI to also check through the Competition Commission if there were no incidents of collusion in the supply of materials. She said the Department did not have a good record of penalising or blacklisting contractors, and the one incident where the Department had tried to blacklist a contractor was unsuccessful.

Housing Development Agency (HDA) 2021/22 audit report
Dr Manqoba Soni, Interim Chairperson, HAD Board, said the entity had received a qualified audit opinion, with 36 audit findings in the 2021/22 financial year. The enhancements made by the entity to date included the following:
Organisational structure that responds to the primary mandate has been approved. The Chief Audit Executive had been appointed at a senior management level.
The implementation of a records and document management system, including process mapping;
Automation of the asset register, including land inventory;
Enhancements of internal controls within SCM and finance to ensure efficiency  -- for example, procurement activation forms, Division of Revenue Act (DoRA) compliance checks before funds were received, monthly reconciliations, training of staff, etc.
Appointment of a service provider to assist with the review of annual financial statements, including the interpretation of generally recognised accounting principles (GRAP);
Addressed the backlog on the investigations and determination tests relating to the irregular, fruitless, and wasteful expenditure cases. 82% of irregular expenditure and 100% of fruitless and wasteful expenditure investigations had been completed.
Appointment of the condonation committee to do the assessment of the irregular expenditure and recommendations to the CEO, with cases amounting to R575 million referred to human resources (HR) for consequence management.
The internal audit unit conducts monthly follow-up audits on external audit action plans to assess whether the previously raised external audit findings have been satisfactorily addressed by management.
The Operation Clean Audit committee was established to monitor the implementation of audit findings at an operational level.
See attached for full presentation
HDA 2023/24 Annual Performance and Corporate Plan

Dr Soni said the 2023/24 financial year marked the Agency’s transition to implementing its primary mandate. The capabilities required for this transition resulted in a revised organisational structure to ensure that the HDA was well capacitated to drive its full mandate. The structure had been submitted to the Minister for consideration. Several properties were acquired to contribute to spatial transformation and the creation of integrated communities, notably the SABC building in Sea Point, Cape Town, and the Eskom buildings located in Braamfontein and Kimberley, respectively. Planning work would commence during 2023/24.

The Department of Public Works and Infrastructure (DPWI) had released 44 parcels of land measuring 2 557 ha in extent, with a further 32 parcels measuring 10 350 ha planned for release. These parcels of land would be utilised for various human settlements development programmes, including upgrading of informal settlements, rural housing, tenure upgrading, social and rental housing and integrated residential housing.

Ms Teboho Sejane, Head: Strategy & Performance, said the funding allocated to the agency for 2023/24 was R243.6 million from the DHS. This contributed 52% of its total revenue. Conditional grant funding from the regions was R228. 5 million. Medium Term Operational Plans (MTOPs) contribute 48% of the total revenue. Investment income contributes less than 1% of the total revenue, and this was expected to remain at the same levels as last year. Investment income was made up of interest received from funds in banks and rental income from the properties owned by the agency.

Targets contained in the 2023/24 corporate plan were informed by commitments made by the provincial Departments of Human Settlements and municipalities to the Agency, and the requisite funding being transferred to the Agency. It was assumed that these commitments would not be withdrawn or payments delayed, as this would impact service delivery on the ground. All funds transferred to the HDA would follow the DORA initiated by the transferring officer prior to release to the HDA.

The Agency had facilitated the acquisition of 3 954,245 hectares of land in priority development areas. To date, 32% of the 1 786.1527 ha of land in priority development Areas has been rezoned. A total of 8 276 serviced sites had been delivered, leaving the Agency with a shortfall of 15 310 sites to be serviced, while a combined total of 7 464 housing units had been delivered, generating a deficit of 17 956 housing units. A total of 59 integrated implementation programmes for Priority Development Areas (PDAs) had been developed out of the 94 integrated implementation programmes for PDAs that were intended.
See attached for full presentation
National Home Builders Registration Council 2023/24 Annual Performance Plan

Mr Francois Beukman, Deputy Chairperson, NHBRC Council, said the APP had been evaluated by management twice: by the Council, and the Department’s executive authority. The focus areas of the APP would be on a clean audit, the strategic representation of the NHBRC, the 50/50 gender balance at top management, the financial sustainability of the organisation, making the organisation the centre of excellence in the built environment, and social transformation.

Regarding digital services, people could register online as a builder or renew their registration anywhere in the country. The enrolment and inspection model of the digital services was also underway. The Council had finalised the organisational structure, including the CEO appointment, and other major executive appointments were currently underway. The review of the inspection model was also underway. There were currently 88 inspectors and six supervisors in the organisation, and they were all attached to certain regional offices, so if there were complaints, they should be reported. There was a dedicated 24/7 anti-corruption line, and the number was 080 2083 698. A few inspectors had been put under duress in the inspection environment, which was difficult for them to deal with, but they remained committed.

Mr Songezo Booi, CEO, NHBRC, said the industry faced a depressed economy with constrained growth, weak order book pipelines and decreased foreign investment. Supply chain disruptions associated with the pandemic also continued to impact some companies. The outlook for South Africa’s economy was full of uncertainty. Nonetheless, businesses were experiencing a gradual recovery from the impact of the pandemic. The construction industry was expected to rebound over the course of 2022, with a forecast expansion of 9.1%.

The NHBRC would focus on operationalising the approved organisation structure and filling all vacant positions. It was working towards implementing a digital complaints registration platform. This system would simplify and speed up housing consumers' dispute registration. For home builders, the entity intended to introduce a homebuilder grading system to reduce enrolment fees, inspect all subsidy-enrolled homes, and issue the final unit report to confirm the warranty cover. The entity’s new fit-for-purpose organisational structure had been approved and the moratorium uplifted, and the entity would fill all critical roles by June 2023. The NHBRC had introduced the role of Executive Engineering and Technical Services to oversee the acquisition of licensing and the commercialisation of the Eric Molobi Housing Innovation Hub.
See attached for full presentation
Community Schemes Ombud Service 2023/24 APP

Ms Phindile Mthethwa, Chairperson, CSOS, said they had launched a business operation system called CSOS Connect last year, which allowed businesses to connect with the entity digitally and to register themselves without the entity’s involvement. This helped the entity to increase its commercial viability and increase its connections. They had also revised their financial statements and reporting. They had adopted GRAP18, which the Board and Treasury approved. It was confident that with the continued success following the organisational structure that the executive authority had approved, they would be able to resource the entity. It was expecting about 40 people to start working this month to ensure it could deliver on its APP.

The other focus area in the APP was transformation, and they had put together a transformation compact document that was with the entity’s executive authority. The focus was training more black managing agents on enterprise and supplier development. The entity was looking to fund some managing agents and put together internships for young people to join it. One of their biggest wins was their ability to convert interns into full-time employees.

Ms Thembelihle Mbatha, Acting Chief Ombud, CSOS, said priority one on the MTSF contributions was that a capable, ethical, and developmental state was the bedrock of the CSOS operations, as the organisation implemented a range of governance improvement measures to progress towards the achievement of an unqualified audit outcome with no material findings.

Priority two was economic transformation and job creation through targeted procurement, as well as by implementing the preferential procurement regulations in support of the MTSF targets for designated groups -- 40% procurement spend to women, 20% for youth and 5% to persons with disabilities.

Priority five involved spatial integration, human settlements and local government. The desired outcome was spatial transformation and justice by implementing housing and human settlements in PDAs.

In priority six, social cohesion and safe communities, CSOS would contribute towards social cohesion and safer communities by regulating the conduct of community schemes and providing timeous dispute resolution services to ensure good governance and harmonious living within these community schemes.

The entire CSOS value chain and service delivery model was underpinned by its success in creating a complete database of community schemes. The database was critical not only for the collection of levies, but also for the provision of education and training and assuring good governance of the schemes. The CSOS Connect System went live on 25 November 2022, enabling community schemes to register online via the CSOS Connect Portal. During the 2023/24 financial year, a project to validate and verify community schemes would be implemented. A panel of service providers had been appointed to conduct physical verification and registration of schemes throughout South Africa. The total universe of community schemes was 70 000, of which 30 000 were registered and 40 000 were not registered.

The dispute resolution performance was stabilising because of perfecting processes and turnaround times within assessments and compliance investigations. This shortened the time it takes for files to mature for conciliation and adjudication. The redistribution of work from Gauteng to KZN and the Western Cape directly affected the readiness of files to be conciliated and adjudicated. With adequate capacity, it was envisaged that turnaround times would be shortened further. A total of 8 308 new applications were received within the 2021/22 financial year, with 2 149 conciliated and 1 600 adjudicated. Accordingly, 5 384 disputes had been finalised. The achievement had continued from 21/22, with overachievement on the disputes target in the current financial year. 8 032 disputes were received and 7 487 finalised this year, which was 93% of disputes resolved.

The registration and payment of levies by community schemes was still a challenge for the entity, but it continues to create awareness through its education and training sessions, which stakeholders appreciated. In addition, new initiatives such as geo-mapping of existing schemes, coupled with the inspectorate, data cleansing, billing and proactive monitoring of new schemes under development, were being implemented to expedite scheme enrolment. Levy collection as at 31 March 2022 had been R250.5 million (2020: R223.6 million). Currently, against a target of R263 million, levy collection was at R243.6 million, and it was still to collect the fourth quarter target of R85.6 million.

There were 32 173 community schemes registered, and 24 309 paying levies, accounting for 76% of the total registered schemes paying the CSOS levy. The total unallocated levies from the inception of levy collection had been R226.6 million in 2017, but currently was sitting at R142.3 million. Initiatives were in place to eradicate unallocated levies through continuous engagements with the bank and managing agents.

One of the enablers of the 2020-2025 CSOS strategic plan was the implementation of a compliance and enforcement strategy, which seeks to establish effective systems to maximize the schemes’ compliance with their obligations and to ensure non-compliance was kept to an absolute minimum, thereby ensuring that schemes comply with the CSOS Act, the Sectional Titles Schemes Management Act, and other relevant legislation.
See attached for full presentation
Discussion

Mr Malematja wanted to know how the CSOS aimed to reach people in rural areas. He said the Committee must also look out for entities that say women were given jobs, when in fact, they were given very difficult jobs beyond their capacity, and they were not supported. How many interns were the CSOS aiming to convert into permanent employees?

He said the inspection model of the NHBRC would impress him only if it also demonstrated that the structures they leave in projects were completed satisfactorily. The Committee wanted to see proof that the NHBRC monitors the work done in projects, and that they were there to defend the beneficiary. He asked if the NHBRC had only 88 inspectors and six supervisors in the entire country and asked how they were able to cover every project in the country. The people of South Africa believed that
government was bringing them into the economy when the HDA started working on the former SABC building in Sea Point and bringing them in. He asked when they intended to start the work, because they had already acquired the land.

Ms Tafeni said the HDA must tell the Committee where the 2 689 hectares of land that were released for development of human settlements by the DPWI was located. What was the source of management revenue to cover the deductions in the budget for 2023/24? To what extent was the proposed budget aligned with the province and municipalities’ HSDG and USDG development plans?

She was numb, and did not know what to say to the NHBRC, because people were struggling in the communities and were complaining about not being assisted by the Council.

The CSOS did not have standard operating procedures, and its system did not enable it to account for revenue and receivables. In the absence of such a policy, how did the entity account for its levy collections?

Ms Makesini asked the CSOS to do more public participation so that they could introduce themselves to communities, especially in rural communities. She said if an entity came before a portfolio committee and no one had questions for it, it probably meant the entity was not visible enough on the ground. The CSOS needed to let the people know of its work, and it must also know the challenges faced by people on the ground.

She acknowledged the plans of the NHBRC and their audit outcomes, but noted that they were under-capacitated in terms of inspectors, and they were not doing their expected work. How would the entity ensure that there were follow-ups on the projects that their inspectors inspected in the provinces to ensure that the work continued to be done? Capacity was needed in the entity so that it could intensify its monitoring and evaluation and effectiveness of its work. Once the Bill was approved, maybe the inspectors who were not doing their work would now act correctly.

She said one of the stakeholders of the HDA was the municipalities, and they were not working well with them. The O.R. Tambo municipality had complained about the attitude of the HDA, as they did not attend meetings when the municipality invited them, so there was a backlog of projects that were not moving forward. The municipality was considering cancelling the contract of the HDA, because it was not assisting them.

Ms Sihlwayi said the HDA needed to provide a crash course on their role because as much as the Committee understood what their role was supposed to be, it always got blurred between the lines. They had appointed a service provider to deal with irregular expenditure, so by virtue of their mandate, they should have a fully-fledged institution with all the necessary tools to deal with irregular expenditure and other issues, including risk audits, internal audits, as well as monitoring and management of the work of the Department. It did not make sense why the entity employed a service provider to deal with irregular expenditure.

The HDA said it was an implementing agent, a project manager, and a developer in their mandate and in the process, there could be challenges in the dual operations of how they did things. Were they coping with the duality of their mandate? Did their dual mandate ever affect their interventions in municipalities such as Nelson Mandela Bay, because in 2020/21, the HDA did not build houses in the metro, so they must also explain what happened during that time. They also raised issues that there was a fragmented funding framework in government and a lack of alignment in functions. How was the HDA resolving those issues?

She said the NHBRC must take all the questions from the Committee seriously. She added that the entity did not exercise all its responsibilities in the nine provinces of South Africa. In the system of projects identified by municipalities or provinces, where did the NHBRC start to do its work, especially in terms of project specifications? The NHBRC was supposed to be immediately involved in the project specifications, because it was mandated by the Minister to protect consumers indefinitely. Where was the NHBRC when the projects in the Western Cape were completed, and small toilets were built and distributed among the people?

The Nelson Mandela Metro had many women contractors, and they had said the HDA allowed only big contractors and developers, and they were taken in only as sub-contractors. In a 20-house project, they were given only two houses and were not given the independence to manage big projects as women. Where was the women empowerment that the HDA was talking about?

How did the NHBRC see its role in the new Housing Consumer Protection Act? When did they protect consumers? When did they negotiate prices, and with whom? Where was the NHBRC when two women living with disabilities were given upstairs houses, where they had to sleep in open areas?

CSOS had a mandate to promote good governance and consistency. How did they do that? Could they build capacity for good governance with the schemes that they had, and were there any examples?

Mr Tseki wanted to know why the HDA’s budget had declined from the last financial year, and what impact the decline would have on them achieving their targets.

The rise in criminal activities in projects meant the NHBRC had dropped the ball somewhere in its operations, because when it started its inspections, it did them under normal conditions as they were doing their due diligence in terms of the law. The problems faced in the projects were man-made, because the NHBRC dropped the ball in doing its work and now that they were trying to regain control, the criminals were fighting back.

He said the Committee needed a session with CSOS to further understand their work so that the Members could also recommend it to the people.

Mr Mphithi said the statistics about young people who were beneficiaries of some of the programmes indicated the numbers were very low. He wanted to know the reason for this and whether it was that there were a few young people involved in the sector, or if there was a lack of skills. The HDA had 25% and the NHBRC had 16% of youth beneficiaries, which meant a lot of work still needed to be done. What were the challenges around this issue? Were the opportunities for transversal work to be done with agencies like the National Youth Development Agency (NYDA) to empower young people with skills so that they could benefit from the entities?

One of the challenges the HDA had spoken about was their struggle with acquisitions, finding well-located land, and buying from the private sector and individuals. Had the entity tried to acquire land owned by the military, and how had that worked out? Were there other avenues that could be explored so that land could be acquired from the private sector?

What was the effectiveness of the disciplinary committee within the NHBRC in dealing with housing inspectors who may have been found doing things they should not have done? As much as it could be said that there was massive corruption among inspectors who went to projects to get "quick bucks," they also faced threats of violence and threats to their lives. What measures had been taken by the NHBRC to counter some of the security threats faced by the inspectors? How did it deal with the corruption from the inspectors who signed off on projects that were not feasible for people to occupy? Were there lifestyle audits done on the inspectors to ascertain whether they were benefiting or earning extra from other sources?

CSOS had made a point about developers not having to register their schemes when they were about to start their operations on a building. What did the entity do to regulate and account for that revenue, since no process was regulating the revenue of the schemes?

Dr Khumalo said the NHBRC was a classic case of everything being great on paper while it was the total opposite on the ground. To someone who had not seen the work of the entity on the ground, their presentation would seem brilliant, but it did not match what people were experiencing on the ground.

She welcomed the HDA’s commitment that it would not get another qualified audit opinion again, and congratulated them on the progress they had made thus far. She wanted to know if the entity had a vetting process to ensure it did not hire the wrong people.

Dr Z Mkhize (ANC) was unsure if the NHBRC had a mechanism to hold people accountable to ensure that the current problems that persisted with the quality of housing being produced were prevented. He was concerned about how the government would have to go back to correct some of the houses that had had poor supervision from the NHBRC. There should be a reliable team of experts that could be trusted to correct those houses. It looked like there was a lapse in competence from the administrative supervisors and the contractors ,and the institution that was supposed to stop the projects was not doing its job.

Dr Khumalo said many people were complaining that they did not know the work that the NHBRC did and how they could get assistance and benefit from their work, and according to their reports, they would have a lot of public consultations. She asked the entity to share the details with the Committee to help spread the information to the public on their behalf.

The Chairperson said the NHBRC did not have a constitutional mandate to exist, but it existed based on the Minister’s interests because they needed to perform a specific task, so if they were not able to assist the Minister in producing quality housing, their existence was pointless. The message must be taken in good faith -- that the entity must perform the functions that it was established to perform. This message also went to the rest of the entities. She welcomed the digitisation of the services of the NHBRC, but wanted to know if the entity planned to address the fact that it did not have offices in other provinces.

The Committee had asked the NHBRC to take note of the issues raised during the public hearings and prepare themselves to do the work to address the issues. Some contractors in the public hearings had raised a question that they must pay a registration fee to the NHBRC, but it was also possible that they could not get a project for up to ten years, and they wanted to know whether this was fair. She asked the Department how it ensured provinces appointed contractors registered with the NHBRC. Was there a way to check whether the appointed contractors were registered with the NHBRC?

The HDA had said it aimed to be a developer of choice, but they were unable to do that because of budget constraints. The Committee had once discussed the issue with the entity, pointing out the need for the recapitalisation of the HDA using its land capital to invest and acquire services to make the entity the developer of choice. She wanted to know how far the entity was in that regard.

She said the CSOS had done a good job, but there were allegations that their gated communities did as they pleased and money was stolen, and there were no adjudication processes and the management only went where they did not fear. The Chairperson wanted to know if the allegations were true. What was the CSOS going to do to transform property relations in the country?

HDA's response

Mr Bheki Khenisa, CEO, responded on the issue of the SABC and Eskom buildings, and said they had already drafted a funding model and in terms of the recapitalisation of the entity, they were looking for partnerships, where they would contribute with their land possessions as capital. As part of the DHS, the entity was part of the Sector Development Plans that were done by the integrated development plans (IDPs) of the municipalities, meaning the HDA worked together with the municipalities. When land was identified, the HDA bought it only according to the demand of the municipalities and how they wanted to move. With the advent of the Spatial Planning and Land Use Management Act (SPLUMA), the challenge was that most municipalities did not have committees, so they did not approve decisions quickly enough. The source of income for the HDA comes from the Department and the municipalities.

The entity participates in all the Innovation for Service Delivery Programmes (ISDPs). The difficulty it deals with was the DDM, because there was little understanding of what it aims to achieve. The projects were not moving because they must ensure that the consultants were paid, but the prices of the consultants were higher than what the grants were able to pay. It was not that there was bad blood between the entity and the O.R. Tambo district; it was just a matter of them finding each other and working together.

In Port St Johns, the project was supposed to be finished at the end of May. When an analysis of the area was done, 374 households were in the flood lines, and the people did not want to move and the land adjacent to the area could accommodate only a few households, but they all wanted to move to it. The municipality owned the land, but to move to land that could accommodate all 374 households, they would have needed to move to privately owned land, meaning the land must be bought. The negotiations to buy the land had begun, and the entity had spoken to the Head of Department (HOD) to request the province to buy the land. The entity had allocated two full-time engineers in Port St Johns who ensured the projects were moving. There was a challenge with the material, because of the distance, but that problem had been resolved, and the entity was focused on managing the project.

He agreed that the role of the HDA needed to be relooked because the entity was supposed to be a transformation agent for human settlements, and they must look at the work they did and figure out whether there might be a conflict of interest. In specific projects, they were able to define their role as either a project manager or an implementing manager. The entity previously had a system of vetting that failed to do proper vetting of contractors, but it was now in the process of acquiring a system which would help them identify whether a contractor had worked with the Department, and whether they were properly registered. The system gathered its information from the Department of Home Affairs database.

The military land issue needed to be carefully considered, because the land was not necessarily owned by government, and had a lot of conditions surrounding it. It was partly owned by government, but was mostly owned by the Graaff's Trust, so the trust had the last say on whether the land could be used. The entity was still negotiating the 10.5 hectares of land that it had shown in the APP.

Ms Joy Masemola, CFO, HDA ,said when the new executive team came in at the middle of last year, they had found that the irregular expenditure was not dealt with in the past five years. There were 181 cases of irregular expenditure in the register. The entity had finalised reports on 84% of the irregular expenditure. There were 19 cases of fruitless and wasteful expenditure, all of which had been addressed. Due to the lack of capacity in SCM, they had found vacancies in key positions and the entity was still in the process of sourcing individuals to fill the posts.

On the budget, she said in the 2022/23 financial year, the entity had received R242 million and in the current year, it expected to receive R243 million from the Department. With the grants from the provinces in the previous year, what was budgeted was R240 million, and in total, the initial budget was R500 million, but during the adjustment budget, it was reduced significantly because the provinces withdrew other projects as they did not have funds for them. The entity was expecting to receive R220 million from grants in the current financial year. It had to do thorough work on its procurement plan because, previously, its procurement was reduced from R4.3 billion to R1.3 billion in the current financial year. This was because some projects were not funded in the previous procurement plan.

Minister Kubayi said the land parcels were part of the 14 000 hectares that the DPWI had identified for transfers, but they had done that without consulting the Department of Defence and Military Veterans. When the DHS had tried to get land transfers in the Western Cape, the DPWI decided not to agree with anything from the DHS, and to focus on the military land. It turned out that the private sector was also interested in the land. Cabinet had decided to withdraw the land parcels from the allocation of the DHS.

Mr Neville Chainee, DDG: Strategy Programme Planning & Coordination, DHS, said the information on which of the 14 000 hectares had been released and to which provinces, could be made available to the Committee. All the departments which were core utilised the lands and retained the lands, and the land was deferred to the DPWI only once a department decided it did not want it. In the cases of Wingfield and Youngsfield, those pieces of land were made available by the Graaff's Trust for military purposes. If it stopped being used for military purposes, it would go back to the Trust and if government wanted to use it, then it must purchase it. The military had not said they did not want to use the land.

In the case of Nelson Mandela Bay, between 2017 and 2020, the HDA was the implementing agent on behalf of the province and the Nelson Mandela Bay municipality, based on an agreement between the national Department, the province, the HDA and the municipality. There was substantial progress, and a lot of delivery was achieved. The implementation protocol ended, and the HDA stopped doing any implementation work because it was no longer appointed to do so in the province and the metro. Only in the last six weeks had the province asked the HDA to intervene on a few projects that were blocked, but the HDA had not been involved in any projects in Nelson Mandela Bay since 2018.

Minister Kubayi said there were 32 land parcels measuring approximately 10 352 hectares. There were 350 left, and out of those, 91 land parcels were no longer available for transfer to the Department, which is about 920 hectares. The 32 land parcels were owned by the Department of Defence and the Department of Police, and some were found not to be state-owned.

CSOS's response

Ms Mthethwa welcomed the suggestion that the CSOS should meet with the Committee to present to it the work it does, and said they would arrange the meeting with the Committee Secretariat. The transformation committee had been elevated to the CSOS structures, and it was now part of the conversation within the social and ethics committee that was constituted last year. The entity was tracking the performance of its conciliators and arbitrators, and was checking for the quality of their decisions and the resolutions they made through the complaints they received. The matters raised with the winelands bosses were receiving attention from the entity.

Ms Mbatha said their schemes were usually for where there was shared use of property and land, so the gated communities had not reached the rural areas per se, but the entity was opening offices in more of the cities and not the rural areas. The collaborations the entity was engaging in were looking at future housing and would involve rural areas from their inception to ensure that they were not excluded, and that the problems that were currently troubling the cities did not affect the rural areas. The CSOS spent about 25% of its R25 million spend on procurement from women in the fourth quarter, and the services included travel, HR training, professional services and ICT. Seven interns were in the entity in the last quarter and were all promoted to permanent positions.

Accounting for revenue was a bone of contention with the previous audit team, but the entity had since revised its accounting policy on revenue recollection. It recognises revenue only from schemes within its database, and was looking at expanding that through training and rolling out some of the compliance they were doing in the scheme. Regarding transformation, it considered some initiatives and external factors, including partnering with managing agents, collaborations with the regulatory authority on the enrolment of candidates and public practitioners, finding candidates for fidelity funds, and collaborating with trusts to pay some of the candidates that it has.

NHBRC

Mr Beukman noted the concerns raised by the Committee regarding the inspectors. He said if those issues had to do with the five-year warranty or the core business of the organisation, they would investigate and report back to the Committee. Regarding the concerns about supervision and consequence management, he said the council and management would take note of them. Another big issue that the Members raised was the absence of a complaints mechanisms, which was an issue that the entity would have to revisit.

Mr Booi said the NHBRC’s core mandate was to protect the housing consumer by ensuring quality homes were delivered through their inspectors, and there were other role players like the builders who formed part of the assurance function. The entity needed to review its inspection model to look at its policies and procedures, as well as its roles and responsibilities and standardisation across all provinces. Regarding where NHBRC fitted in the value chain, he said it needed to be part of the process from the planning stage until completion of projects. It was noticed through engagements with provinces that there were gaps and procedures were not standardised in the provinces, hence there had been a need for it to engage them to ensure the standardisation of processes.

On the warranty certificates, the NHBRC currently provides the Final Unit Report certificates. Through engagements with MINMEC, it was planning to start issuing warranty certificates for all the houses that it issued warranties for. Regarding security threats on site, there were situations where the inspectors escalated those issues to management to a point where management had to engage law enforcement agencies to deal with some of the cases. It continued engaging with law enforcement agencies to deal with the threats.

The new Bill was going to enhance the regulatory function of the NHBRC to provide it with more teeth in enforcing its role as the regulator and ensuring stricter fines were issued to all non-compliant home builders. The Bill also introduced new functions to the NHBRC in the sense that the entity currently gives warranties for new homes, so now, when there was an alteration or an extension to a home, the warranty would extend to that. In the current Act, the warranty was effective from the day of occupation, but the new Bill proposes that the warranty should be effective from the day of contraction to ensure that there was implementation of quality assurance from construction.

There was a need for the entity to consider lifestyle audits on its inspectors, and that would be conveyed to its council. It was also planning to introduce a hybrid model of bringing additional capacity to employ service providers to assist it where it struggled in capacity. It would submit its plan for engagement with provinces to the Committee. The biggest issue raised by the Committee was around quality on site, and how the entity ensured that there were checks and balances to ensure that it was not found wanting in terms of the delivery that it was expected to be monitoring.

Minister Kubayi said the Department would properly assess its provincial offices in the NHBRC regarding capacity, inspection, and stakeholder management, and provide a written report through the Council and the Minister to the Portfolio Committee.

Follow-up discussion

Mr Malematja wanted to know what the NHBRC had done about the service providers who defrauded the entity.

Ms Sihlwayi did not understand why the NHBRC was not performing its role, because it spoke only of the process that it would follow to rectify its under-performance. She wanted to know why the entity failed to perform its role and why there was no quality housing. Where were the gaps and challenges emanating?

The Chairperson wanted to know how the Department ensures that provinces only appoint contractors registered with the NHBRC, and whether there was a system to identify their registration.

Department’s response

Ms Ngxongo said it was correct that they did not appoint contractors, but the Department had noticed that provinces at the implementation level sometimes appoint lower-grade contractors for higher-grade work, which was why the delivery was not up to the required standards. The Department did not have a database that tracked whether contractors were registered with the NHBRC. The NHBRC identified the contractors that were not registered with them, and elevated the matter to the Department.

NHBRC's response

Mr Booi said the NHBRC had a database of all the registered contractors, but this called for better engagement with the provinces during the appointment process to ensure that all the appointed contractors were registered with the entity. In cases where the entity was found wanting in terms of the delivery of its mandate, it was suggested to the entity that there were issues with its system, processes and people, hence there was a need for it to review its entire inspection model. The enhanced inspection model that was developed seeks to address all those issues regarding the systems that the entity deploys, the people it has, and the processes it undertakes.

Deputy Minister Tshwete said they would follow-up with the Western Cape government regarding the matter that Ms Sihlwayi had raised regarding the women who use wheelchairs, who were given upstairs houses. The provincial assessment would also help the Department understand all the issues raised, including the people who were forced to sign happy letters.

Minister Kubayi said part of the challenges that the Department faced regarding the NHBRC was the depleted capacity and the non-existent top level of management. The council of the entity was also disbanded last year, and there were a lot of challenges during that time, but this was being fixed. When the Department engaged with the Committee at the end of last year, several issues were raised regarding building capacity at the NHBRC. The Department had addressed these through the appointment of the CEO, ensuring that the Board and councils were functioning effectively, getting the structure approved, and looking at the gaps within the provinces.

In the work that had been done, a few provinces were problematic, and the Department had attended to those provinces, specifically the Free State and Mpumalanga. It had engaged with the provinces and the NHBRC Board and council to deal with the issues in those areas and to ensure that they were capacitated in those areas. The focus was on those two provinces because the complaints that came during that period were from those areas. Not many challenges were reported about the NHBRC in Limpopo because the officials there were able to respond to challenges.

One of the challenges in the Eastern Cape was that most of the projects were not enrolled with the NHBRC, so the entity was not aware that the processes had started, and part of the challenge was the quality of the projects was found to be sub-par. The Department had engaged several district municipalities and local municipalities and appealed to them to ensure that when projects were done, they were obliged to enrol them with the NHBRC.

There was a need for the Department to proactively engage stakeholders to ensure that the gaps between them and the NHBRC were addressed and that the public representatives within the municipalities could point out what may be missed by the entity. The Department would have to address the issue that the Chairperson raised, because it should not be an option for a government project to be enrolled and there should be penalties for non-enrolled projects. Regarding the capacity constraints of the NHBRC, she said the Department was revising the structure of the entity to be able to respond to the revised roles and responsibilities as part of the plan to support the implementation of the Bill.  

The Chairperson said the NHBRC must revisit the areas that were found to have challenges and address them, because the issues would remain regardless of the new Bill.

Social Housing Regulatory Authority 2023/24 Annual Performance Plan  

Ms Busisiwe Nzo, Chairperson, SHRA, said one of the calls from the Minister to the entity last year was for it to stabilise by appointing its executive management. It had since appointed a new CEO and the position of corporate services manager, which was equal to the position of the CFO in other entities, was going to be filled soon. The APP was informed by engagements that happened from the ground level to the highest level.

Mr Sandile Luthuli, CEO, SHRA, presented the 2023/24 APP, noting that part of its targets for the year was to strengthen its internal operating environment through the achievement of an unqualified audit outcome with no material findings, obtaining approval and funding of the organisational structure, optimising efficiencies, capacity and capabilities, meeting turn-around times and addressing human capital gaps within the SHRA to execute its mandate.

The entity also wants to strengthen its performance management system and business processes and finalise the ICT strategy and implementation of recommendations, prioritising the implementation of automation and digital processes to improve efficiencies, transparency, and decision-making. It also planned to strengthen the fraud and corruption awareness drive, establish a change management and ethical leadership programme across the organisation, and implement the Council-approved stakeholder management and communications strategy.

In collaboration with the national DHS, the entity planned to complete a multi-year development plan for social housing in line with the priority development areas. The SHRA had assessed the alignment of restructuring zones (RZs) and Priority Human Settlements and Housing Development Areas (PHSHDAs), and had identified areas of opportunity. In compliance with the Social Housing Act, recommendations to implement projects in the PHSHDAs would need to be gazetted as RZs. The gazetting of PHSHDAs as RZs would ensure alignment and harmonisation of other human settlements programmes such as the Integrated Residential Development Programme (IRDP).

Mr Vusi Fakudze, Acting Corporate Services Manager, SHRA, said the operational grant allocation had historically increased at an average of 5% between 2019/20 and 2021/22. The increasing trend continued in the current financial year, but the growth from 2021/22 to 2023/24 was lower at an average of 4.74%. The growth in the operational grant was welcomed, but was unfortunately not sufficient to mitigate the effect of inflation, and the 14.69% increase in the 2024/25 year would be more in line with the expected expenditure. The decrease in 2025/26 would place further strain, given the inflationary pressures.

Consolidated capital grant (CCG) allocations fluctuated between 2019/20 to 2021/22 at an average of 3.16%. The decrease in 2021/22 is related to the SHRA not receiving the full budgeted allocation. A gradual increase of 4.46% was expected from 2022/23 to 2025/26. The allocations failed to account for the geotechnical portion of projects which provincial departments formerly administered. The regulations grant allocation had had a downward trajectory from 2019/20 to 2022/23 -- a14.47% reduction. In 2023/24, it was expected to decrease by R3 million due to the expectation that internal capacity would increase, and the use of external service providers would be reduced. This was, however, a significant reduction considering the actual regulatory functions required in terms of forensic investigations, administration, associated legal fees for enforcement and the addition of the total number of units that come under regulation as projects were built. A review of this allocation was necessary.

See attached for full presentation

Property Practitioners Regulatory Authority 2023/24 Annual Performance Plan  

Mr Steven Ngubeni, Chairperson: PPRA, said the entity had filled all the vacant positions since the last meeting with the Committee, except for a new vacancy that recently happened of the CEO position due to circumstances that had led to termination of the contract. The entity was currently recruiting for a replacement, but there was ongoing litigation between the entity and the CEO, which was delaying the process of recruitment.

Ms Thato Ramaili, Acting CEO: PPRA, presented the 2023/24 APP. She said the fair value adjustment was not budgeted for, as it was expected that all Property Practitioners Fidelity Fund (PPFF) investments would be invested with the SA Reserve Bank (SARB) Currency Protection Device (CPD) investment portfolio as explained above regarding interest on investments. The management fee was budgeted at a 9% increase, which was in line with the management fee policy of 9% of the net asset value of the Fidelity Fund.

The management fee budget was calculated based on the approved policy. According to the approved policy, the management fee must be based on the 9% of the audited net asset value. The calculation of the actual management fee had always been the same from the previous years. The budgeted management's calculation was done using estimated 2023 year-end net assets value x 9%, per the policy. The net asset value as at 31 March  was estimated at R588 847 496, hence the budgeted amount of R52.9 million.

Section 38(1)(f) makes provision for the Fidelity Fund to provide grants for various initiatives, including the transformation of the property sector. In providing various grants, the Fidelity Fund net asset value must not be below R400 million. As a result, 4% of the Fidelity Fund net asset value, less the minimum net asset value to be maintained, was budgeted for as a grant to the Property Sector Transformation Fund, resulting in a budgeted amount of R7.5 million.

See attached for full presentation

National Housing Finance Corporation 2023/24 Annual Performance Plan  

Mr Luthando Vutula, Chairperson, NHSC, announced the appointment of the entity’s new CEO, and told the Committee that some of the entity’s focus areas would be on the Human Settlements Development Bank (HSDB) and transformation in terms of sourcing additional funding for the sector and improving its audit findings. The entity was also driving the First Home Finance Programme hard, alongside the NHFC.

Ms Azola Mayekiso, CEO, NHSC, presented the APP. She said at a strategic planning meeting held in June, opened by the Minister,and attended by the directors and executives of the NHFC, the entity had been told that it must ensure that the HSDB raised sufficient capital at the right weighted average cost of capital (WACC) from a diverse pool of funders, to catalyse a market that had the capacity to facilitate between 100 000 and 200 000 decent homes per annum over the medium term. Currently, about 20 000 houses are built in this sector annually.

The Chairperson asked Members to take the presentation as read, and proceed with the discussion as the allocated time for the presentation had been depleted and Ms Mayekiso had not finished presenting the APP.

See attached for full presentation

Discussion

Ms Makesini welcomed the presentation from the NHSC, and said in an ideal world, if all their plans could be achieved, they would assist the people of the country because they were currently struggling to get financed through the HSDB. She asked the entity to make a full presentation to the Committee to devise a clear plan to assist the people. She consoled Ms Mayekiso regarding her inability to finish her presentation. She asked her not to feel disheartened, commenting that she admired her passion for serving the people of South Africa.

She said the PPRA must continue to enforce consequence management on its officials, even if they did not like it, so that they know to handle state resources with care, but they must not be too harsh on the employees because they need to be on their side to maintain a healthy work environment for them. The workers were a strategic sector that needed to be consulted when introducing new things.

Ms Tafeni said the SHRA aimed to produce 30 000 social housing units in the current financial year. She wanted to know what steps were being taken to ensure that the target would be achieved and whether any additional funds would be appropriated to achieve the target. She also wanted to ascertain the status of the Social Housing Growth Plan.

Mr Mphithi asked for clarity from the SHRA on the 6 646 job opportunities and who was targeted, noting that it was important to target young people for such opportunities. He also wanted to know if any memorandums of understanding (MoUs) were signed recently for one of their targets, and who they were signed with. In Programme 4, the entity mentioned that there were challenges with producing the 30 000 social housing units -- what interventions were made to address that challenge and to achieve the target? What was the update on the Social Housing Growth Plan? Were there any current disciplinary cases before the PPRA?

On the NHSC, he said the First Home Finance programme was a great initiative and he was interested in the part that spoke to including rural people who may want to have access to housing opportunities. He asked how the initiative would work in rural environments, as not many people living in rural areas had access to an income of between R3 000 and R15 000.

Dr Khumalo asked to share some cases where people were not delivered the right services -- like the example made by Ms Sihlwayi about women using wheelchairs being given upstairs houses -- with the Deputy Minister so she could also follow up on them. She asked SHRA to share information about some of their programmes with the Committee so it could assist them in spreading the information to a wider audience. She asked the NHSC to what extent their envisaged target of the number of houses was realistic, and whether the entity was empowered enough in terms of resources to potentially achieve the target. Considering its mandate, she said the PPRA could increase its target for PWDs.

Mr Malematja was concerned about the timelines for building social housing by the SHRA, noting how people may be waiting anxiously for the housing to be delivered. He also wanted to know how the entity dealt with delinquent tenants and the plans the entity had in place to deal with rental boycotts. He commended the PPRA for filling the vacant posts. He asked about the Community Residential Unit (CRU) in Kimberley that was finished but did not have the management to run it, noting the risk of people illegally occupying it. He asked the NHSC how they dealt with people who want rental homes, but may be blacklisted because of retail credit.

Ms Sihlwayi asked the SHRA if they had considered having economic development programmes around utilising their land, so that there were economic benefits. She said that although the NHSC budget was identified for their programmes, the labour unions were not included in the partners to accelerate the programmes. Did the entity have programmes to drive information about how people who worked as teachers, nurses, police, etc., could benefit from the NHSC housing? Unions were closest to such people, and could share information if the NHSC involved them.

She said there were buildings in cities and townships that no one knew who the owners were, which were usually used by foreign nationals, and she asked how the PPRA intervened in such buildings. She asked for more details about the Transformation Fund in terms of who would benefit from it, and how. Lastly, she wanted to know why the FLISP programme had been changed.

The Chairperson said there had been a request from the Department of Education that SHRA must build housing near universities for the students who did not want to live in student accommodation but preferred to rent accommodation through SHRA. How far was this process? This was a valid request, because people who went to higher education institutions were not only young people -- some older people had families. They could not live in student residences. She said the Committee had visited some of the SHRA projects; some had stoves while others did not, and there were often differences in the housing built by the entity in the same provinces. Did the SHRA have the option of renting with the intention of buying?

She said when the legislation was signed, she was happy because white owners dominated the property sector, and when the PPRA spoke of transformation, she expected to hear what would be done to change that reality. How did the entity intend to transform the ownership patterns to accommodate those from previously disadvantaged backgrounds? She asked if it was possible to use state capacity to change how property relations were managed in the country. Working with the NHSC, the Department had the means to change property relations. When was the Bill for housing finance going to be finalised? At what point would the state buying power be used to transform the housing system? The state needed to consolidate its buying power and use it to regulate the private sector.

[as the meeting continued beyond 8pm, regrettably PMG could not cover the end of the meeting]