DHS strategy to unblock projects & support to provincial departments & municipalities that are failing to spend their budgets

Human Settlements

04 September 2024
Chairperson: Mr M Seabi (ANC)
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Meeting Summary

The Portfolio Committee on Human Settlements met with the national Department of Human Settlements to discuss the strategy to unblock projects across the country. The Department stated that for the current financial year, there were 100 blocked projects focused on unblocking. It had devised a draft strategy to address the stalled projects, and the Portfolio Committee was required to provide feedback.

The Members of the Committee raised several questions concerning the stalled projects, the reasons for projects being delayed or abandoned, such as the activities of the construction mafia, the lack of money to fully address the stalled projects, the process of appointing contractors, and what consequences were implemented when contractors did not complete their projects.

Members provided feedback on the draft strategy, highlighting the need for close cooperation with other departments, provinces, and municipalities as well as engagement with communities. For instance, had the Department of Human Settlements engaged with other departments, such as the police, to develop a strategy to combat illegal occupations and invasions of housing developments?

Meeting report

The Chairperson opened the meeting by introducing the new Members of the Committee, and read out apologies from the Minister and Deputy Minister of Human Settlements, who could not attend the meeting.

He said Ms T Magagula (ANC) had requested a response from the Department to the Sushanguve complaint, and this had been added to the agenda.

Progress on blocked DHS projects in the provinces

Ms Ngaka Dumalisile, Deputy Director-General: Affordable Rental and Social Housing, Department of Human Settlements, (DHS) said the purpose of the presentation was for the portfolio Committee to note the draft strategy for the unblocking of blocked projects. The Department planned to unblock 100 projects in the current financial year.

Reasons for the stalled projects were:

  • Local governmental issues (poor administration, procurement delays);
  • Land-related challenges;
  • Issues with the contractor; and
  • Beneficiary related issues


The revised unblocking strategy involved legal and contractual clarity, quality assurance, and financial frameworks, amongst others.

The Department had divided the stalled projects into five categories, each of which indicated the reason for the stalled project. This allowed the Department to prioritise funding and focus on projects that could be completed quickly. These categories were:

  • Category A: stalled project subject to legal processes;
  • Category B: stalled project subject to negotiations;
  • Category C: stalled projects not feasible for negotiations;
  • Category D: stalled projects ready for completion; and
  • Category E: completed projects ready for closure.


The Department would have a national steering Committee that would oversee the progress and would receive quarterly reports from the provinces. This would include status reports, technical assessments, site visits and meetings, and progress reports on updating the Housing Subsidy System (HSS)

See attached for the full presentation.

Strategy for improved performance on conditional grant funds

Ms Lucy Bele, Chief Financial Officer (CFO): DHS, gave a presentation on the proposed strategies for provincial departments and metropolitan municipalities to improve their financial performance against conditional grant funds. There were a number of conditional grants, and the provinces and metros needed to ensure that the utilisation of these grants was aligned with the housing instruments.

The conditional grants were:
Human Settlements Development Grant (HSDG);
Informal Settlements Partnership Grant (ISUPG);
Urban Settlements Development Grant (USDG).

There were specific responsibilities that the provinces and metros had to adhere to when utilising conditional grants. Further, the spending of the grants had to be in line with the approved business plans associated with the grant.

There were conditions and considerations for use of other organs of state for implementation of planned projects. Provinces and municipalities needed to ensure that projects were not approved that had not been procured. The procurement process needed to be completed a year before the implementation period. The contractors that were hired should be capable, as well as the appointed state organs. In addition, a memorandum of agreement (MOA) was required, and there needed to be a set schedule with all the deliverables.

There were several pieces of legislation with which the provinces and metros had to comply regarding reporting obligations. They needed to ensure that their spending was in line with the approved business plan, and that payment was made only for satisfactory work, as per a signed contract, that could be proven.

Practices to be avoided or eliminated included beginning the procurement process early, not enrolling with the National Home Builders Registration Council (NHBRC) before beginning with the construction of houses, and spending the grants on projects outside of the approved business plan.

See attached for the full presentation.

Discussion

Mr C Poole (DA) believed Parliament was there to make a difference, and that was why it needed to look at what difference it wanted to make. A research document was handed out this morning [to Members] which spoke about 3 522 blocked projects since 1 April 2019, which was five years ago. They were currently going to build 100 houses, or 100 projects, per year, which meant that over the next five years, there would be 500 projects to address the blocked 3 522. This was not a dent they wanted to make. It would let people down, and they would have to wait for 35 or more years.

Beneficiaries were waiting for a house. The Department must think about whether blocked projects must have their own budget to speed up the process of unblocking them. It should provide a breakdown of the nine provinces, showing how many blocked projects there were in each of them and the municipalities.

In both presentations, the presenters failed to mention the construction mafia, which was a huge cause of these projects being blocked. Due to this, contractors ended up performing poorly and could not build houses for the beneficiaries because they were aiming to make money but also had to pay stipends to the mafia. In the presentations, there was no clear indication of how this particular phenomenon would be dealt with. What was the process for vetting and appointing contractors? Before appointing contractors, the Department needed to ensure the candidates were financially strong and capable of building these houses.

Mr L Mphithi (DA) expressed his appreciation for the presentations, saying it had been a long time coming, particularly to hear the various strategies the Department intended to implement. On several occasions, some of the issues mentioned by the officials had been those that he had been raising in order to understand the strategy of the Department, particularly when it deals with stalled projects and municipalities and provinces that did not fully spend their budget.

He expressed his appreciation for the point made that it was not only about spending, but about getting value for money. This was an important point, because fiscal dumping happens. When money was not spent, people often simply carried on and said it was being allocated somewhere else. He welcomed the strategy and expressed his understanding of the difficulty faced by the Department at the national level in putting these things in place, particularly because a lot of the work was co-dependent with other stakeholders.

One thing he would like to know about was the Department's insistence that it wants business plans to be put in place -- but what happens when they were not? This was important because when the Department receives its allocation from the Treasury, it allocates. Did this mean that if the business plans were not put in place, the Department would simply not allocate? What would the consequence management be for the lack of business plans from the municipalities? He acknowledged that although the DHS would like certain things to be done, how did the Department manage that particular process if they did not get done? He asserted this was a real concern, as people would not follow the rules set out in the various circulars that had been sent.

There was still no clear route to how the Department planned to deal with illegal occupations of housing developments. Residents were living in informal settlements next to buildings that had been built but remained empty. People living in shacks were asking themselves why they stayed in an informal structure when a development had been completed. This was where illegal invasions came into play. because it could not be right for someone to be living in an informal settlement when there was a development that had been sitting for a year or two without being occupied. This resulted in illegal invasions. There were many instances of this, but Dube in Soweto was a particular example, where a development had been built and remained stagnant for two years. People from an informal settlement had decided that they were going to take the doors, the windows, the sinks, and the bricks, and after this, nothing was left.

Mr Mphithi urged the strategy of the Department to consider what had been discussed before. Had it engaged with other departments, such as the police, to develop a strategy to combat illegal occupations and invasions of housing developments? He commented that this was not mentioned in the strategy, and pointed out that the strategy could not be successful if it did not have co-dependences with other departments. One of the presenters had been right to say that the various government departments needed to stop working in silos, and had to figure out how to deal with the various issues. He bought up the construction mafias which, as his colleague had already stated, created a huge crisis in public works and housing. That was why last year, a lifestyle audit was requested for housing inspectors, because they were part of the syndicates, as they received money to illegally allow people to take houses that did not belong to them, or to allow people waiting for housing to jump the queue. This then led to public frustration and public unrest, which ultimately stalled projects in some instances.

He indicated his satisfaction with the draft strategy, as it was a sign that progress was being made, but it needed to be tightened up by considering how the DHS would work with various stakeholders. He acknowledged that by-laws did not fall within the ambit of the Department, but municipalities also needed to look at how they could strengthen their by-laws to ensure that these projects were protected and safe. The NHBRC had a role to play in this particular issue. He had already raised this point with the Department concerning the building collapse in George. The NHBRC had been part of the team that had gone to look at that particular building. It was important for some form of accountability so that when the NHBRC was involved in a strategy like this, there were no doubts about whether they were going to do what was expected of them. The NHBRC had been quiet on this issue, which made it a bit difficult to place them as a stakeholder that would go out and look at a blocked project. He said the NHBRC's image had a credibility problem that needed to be dealt with, particularly because the question he raised in the last Committee meeting regarding the NHBRC had not been responded to by the team from the Department. However, he had let it go because it was the first meeting.

Mr Mphithi referred to the Bill that would be revived regarding the amendment of the Prevention of Illegal Eviction from and Unlawful Occupation of Land (PIE) Act, which could assist the Department in dealing with the invasion of housing developments or projects. Something the Committee could also address was how to get legislation that speaks to the issues that were currently seen on the ground that contribute to blocked projects.

He raises one more point concerning the review of contracts. It was an interesting component, because it deals with reviewing a contract and exploring means to terminate the contract of a person who had built a house. The use of the word "explore" was not strong in the wording -- and where did this exploration lead to? The words used in the contract review needed to be strengthened, and perhaps those small things could give the strategy more weight, particularly when service providers were failing to do what they intended to do. If they failed to carry out their duties, then they needed to be terminated. The language needed to be stronger so the officials had the backing to carry out the terminations when they needed to happen.

Ms S Frenchman (NCC) said the presentations had provided a broader understanding of the Committee's challenges. The first presentation stated that by March 2022, 19 796 projects had been recorded on the housing subsidy scheme. Did the Committee have access to the HSS? If not, could a list of those areas and the blocked project areas be provided? Was there a database of beneficiaries, and who were the custodians of this database? Was there a process to reclaim the money from contractors that defaulted on a project? Were they blacklisted, or did the Department continue doing business with them? She said that if there were stricter rules in place for contractors it would deter them from defaulting on projects and would also assist with blocked projects.

She moved on to the second presentation, and said that some municipalities were recording the building of toilets as an actual house. In the reports submitted to the national Department, it was recorded as such. How did the NHS monitor this?

Her last question was who identified the land for housing. Was it the duty of the national DHS to make sure that the land was viable? Some areas were overcrowded and could no longer endure the strain of more infrastructure. This would help to minimise blocked projects.

Department's response

Ms Dumalisile said that in 2022, when the Ministers and Members of Executive Council (MINMEC) had decided to prioritise blocked projects, the system had verified with provinces that the number of projects deemed to have stalled was 3 445. This was the number of projects, not houses, but every project had various numbers of houses. By the end of March 2024, the provinces had concluded or unblocked 3 150 of the projects. The 100 indicated in the presentation was 100 of the balance of those that were remaining.

Regarding the information received about the business plans, as requested by Mr Poole, they had not received anything from the Eastern Cape. This did not mean that no blocked projects remained or that they had completed everything. Concerning the 100 blocked projects, 41 had been identified in the Free State. The reason for the small amount was that there was no dedicated budget, but they were doing what they could to prioritise closing those projects. The following provinces have indicated for the current financial year that the number of projects to unblock in their business plans were: Free State 41, Gauteng 14, KwaZulu Natal one, Limpopo 13, North West 30, and the Western Cape one. This was based on the money that they could allocate at this point. These numbers make up the 100 blocked projects for the current financial year.

She said she would answer both Mr Poole's and Ms Frenchman’s questions regarding the capacity of the contractors, stating that it was unfortunate to focus only on high-capacity contractors. This was because they were graded from Construction Industry Development Board (CIDB) levels 1 - 9. If one was going to exclude the up-and-coming contractors which would fall within CIDB categories one and three, then one would have a challenge constitutionally. The number of units allocated to contractors was based on their capacity. This was where Mr Mphithi's concerns came in concerning invoking the punitive measures within the contract if they failed to perform. CIDB level one to three contractors could not be excluded from participating completely, but at least they could be allocated based on their capacity.

Ms Dumalisile said that in their presentations, they had not addressed the construction mafia by that name, but had referred to them as the community structures which normally approach the contractors as "community business forums," but they were the construction mafia that were creating challenges. They stalled projects for as long as one did not agree with them. She referred to an incident from the time she was in Limpopo, where one of the community members demanded 30% from the contractor. In this instance, the contractor had already appointed labourers from within that particular community, which had covered the 30%, but the business forum had then come in and also requested 30%. They did not want to participate in the project -- they just came in and said this was the project value and demanded 30% of the value, and then left. Unfortunately, at the end of the day, the contractor did not have enough money to complete the project, which was what they were currently grappling with.

She addressed a concern of Mr Mphithi on the draft strategy regarding the use of language that was more forceful, and said the Department would consider this. She also dealt with Ms Frenchman's question regarding access to the beneficiaries' database, and said that an independent person did not have access to it. The only ones with access were the national Department and the provinces.

She responded to the question regarding claiming money back from the contractors who failed to complete projects, and said the payment process was structured in terms of milestones. Giving the example of someone employing a contractor that was building their home with finance from the bank, the first phase would be when the contractor occupied the site, and the bank would then confirm and pay the agreed-upon amount for this phase. The second phase was the foundation phase, which also had its own set of money. It was considered a milestone. Once the contractor had laid the foundation, the NHBRC would come to confirm and certify. The bank would then pay for the work that had already been done. The full amount was not paid for the house. This was how the Department’s system worked -- it was based on milestones. If the contractor left without completing the project, the contractor would have been paid in milestones, so they would not have been paid in full for a structure that they had not built.

Concerning blacklisting contractors, the process of blacklisting was tedious and long-winded, and it was dealt with only by Treasury. All the Department could do was identify the challenges and submit them to Treasury. It was Treasury that blacklists the contractor in terms of the challenges that one would have experienced with that particular contractor.

Ms Bele addressed Mr Poole's question concerning a separate budget for blocked projects. She pointed out that Ms Dumalisile had indicated that the Department did not have any additional money to deal with the blocked projects. It used the Human Settlements Development Grant to allocate to a blocked project. The Department had spoken to Treasury about the shortages and the frustrations they were facing but had been told there was no additional money. Treasury had advised the Department to prioritise. Essentially, it was stating that if the blocked projects were a priority and the Department agreed it was a priority, then they had to utilise the HSDG. The Department was utilising the HSDG as per the business plan for the Free State, for example -- this was the amount of money set aside for the blocked projects. One yardstick that could be utilised was ring-fencing, where money was specifically set aside for something, such as blocked projects. This meant that the province could not spend that money or use it for something else.

She responded on the issue of business plans not being submitted, and the subsequent consequence management. During the year under review, the Department had challenges with the City of Cape Town (CoCT) and the City of Johannesburg (COJ), which had submitted their business plans, but there were specific issues that they were not dealing with, so the plans were not approved. When other metros were given the chance because they had not been given the entire allocation, they received the money in stages. Before the money could be transferred to the metros and provinces, the business plan needed to be certified to indicate to Treasury that the DHS was happy with the plan. This had not happened in the case of the COJ and CoCT, so the Department could not transfer the money.

She added that metros and provinces knew they were not eligible for grant funding if they did not procure by 31 March. The metros know that even if their financial year ends in June, their procurement should be done by the end of March because they need to produce the appointment letters. If they did not produce a procurement letter, the Department usually did not transfer the money, but this did not mean they would not transfer it because the communities were suffering. However, because this money was on the budget of the councils, the Department had to do something. They all had to sit down and agree on what the priority was so the business plan could be approved and the money could be transferred. This was what the Department had been doing in this regard.

Ms Dumalisile addressed a point raised regarding who was mandated to identify suitable land for housing. The Minister had gazetted the priority housing development areas, and the Department had an entity called the Housing Development Agency (HDA) that was mandated to identify suitable land for human settlement and keep the land until such time as the pre-development planning processes had been concluded. There were instances where provinces would identify land, but it should be within a gazetted priority development area. There were instances where municipalities would be able to identify suitable land and engage their responsible province to assist in procuring that specific land on their behalf. That process was done through the agency, which was the HDA, so that at least they could make use of that land.

She addressed Mr Mphithi's comments concerning illegal occupants. She acknowledged that she had failed to mention that a structure that had been established -- an inter-ministerial committee that was led by the Deputy President -- where they had been identifying state land for purposes of settlement. The committee had been looking at the possibility of disposing of that land to mitigate the whole challenge of illegal occupants so that beneficiaries were settled on proper land, instead of allowing them to settle themselves in areas that were not suitable for settlements. It had not yet yielded positive results, but there was a process that was underway.

Ms Bele said that in the list that would be sent to the Minister for discussion she would include the issue raised by Mr Mphithi regarding lifestyle audits for the inspectors and the NHBRC.

The Chairperson said that in the North West town of Christiana, there was a contractor that had been paid in full, and all the houses had been built, but they were of poor quality. The contractor had been paid in full without the approval of the NHBRC. There had been an attempt to take the contractor back to the site, but there was no more money. He asked whether this could be investigated. It would form part of the resolutions at next week's meeting, where the Committee could receive a response. Could the Department advise the Committee on how they deal with sub-contractors? Sometimes, contractors appoint sub-contractors and do not pay them. The Chairperson had received a complaint from one sub-contractor who said the contractor had been paid all the money, but the sub-contractor was not paid.

Ms Magagula referred to a project that started in 1990 and said she thought there were about six of them to date that had not been completed, but she was unsure whether they formed part of the blocked projects that the Department was going to attend to. She could perhaps make a list and submit it, to check whether they were part of the Department's projects that had been identified. On the issue of people becoming victims because of those who occupy houses registered in the names of others, she said those victims remained out of their houses, so how did the Department deal with that? She gave other examples of people in Tsakane Extension 22 occupying houses registered in the names of others. She asked how the DHS assisted with deregistration and reregistration, or does it allocated the victims to other projects. She suggested that the Department should come up with a plan, because these were some of the issues that made the representatives of the political parties look like they did not care, or did not want to assist.

Ms B Kegakilwe (ANC) said the presentation had indicated that there was money for bulk infrastructure that the Department could give to the provinces or the municipalities. However, people were occupying reconstruction and development project (RDP) houses that had been built, but there was no water. In Geduldspan in the North West, there were incomplete houses. The presentation also indicated that the NHBRC would come in when a project did not reach completion within 12 months. Her question was, what was going to happen to those projects which had been stalled for longer than 12 months? Were they going to be included in the grant, or what was going to happen? Her other issue concerns the contracts. The presenter had said there was going to be a change in the way the municipalities or the provinces entered into a contract with the contractor. She would like to know whether the contract was going to be standardised throughout the provinces, or if the provinces would be allowed to design a contract specific to their province. She added that she was not impressed with the issue of funding as a strategy. The presentation states only that a robust financial framework was needed to ensure adequate funding for public-private partnerships (PPPs), but it was not fully explained exactly how they were going to do it.

There was an issue with the donor funding, but how they were going to make sure that there was money was not clearly explained. Although the Department could have a strategy, the government did not have money, so the strategy was not going to work. Some projects were supposed to be unblocked, but due to financial constraints, nothing could happen. In the North West, the former acting Premier had told the people that 30 projects had been unblocked, but this was not true. Therefore, it needed to be ensured that when the Department says that this was a strategy to address the issue of human settlements, it must ensure that money is available. She was glad that the Minister was going to China -- perhaps they would give us something for housing.

She also brings up the issue of supply chain management, which was a problem throughout. The provinces would plan that they were going to do certain things, but the process was so prolonged that they would end up not spending even what had been allocated to them. Could this process be addressed, starting with Treasury, because that process was frustrating everybody? The last presenter had indicated that there was an infrastructure reporting model used even by Treasury, but the very same Treasury was the entity that was always reducing the money. So how was that model going to be implemented without money being available?

Ms Z Abader (MK) referred to the stalled projects, and addressed the wasted resources and the increased costs for them. She asserted that it was not a new issue, but it constantly came up in the programme, so how could the Department be trusted with all of this information when there was a constant issue concerning wastage and increased costs? There was increased cost because costs were going up all the time. The Department was constantly asked what it was doing about the construction mafia and corruption. Was there a plan to get rid of the construction mafia? If the construction mafia was dealt with, moving forward would not be a problem, but it came up every week and did not seem like it was going away. Why were the contractors not being protected? She suggested that the Department was wasting money because sometimes the contractors left because they could not abide by the rules of the mafia. A new contractor then had to be appointed, and the process was started all over again. Instead of doing that, why could the contractors not be protected? Perhaps the Department could hire security to protect the contractors so that they could complete the projects.

The Department had stated that all blocked projects must be unblocked by 2025 -- were they on track for that? Would 2025 come and the Department say they had not met their deliverables? How far were they, because 2025 was not far away -- it was around the corner. Were there any proper measures in place to say that they were on track or that there would be delays?

Ms Abader said she was going to bring up the questions she had asked the Minister last week, but had not been given proper answers. With regard to the housing or the RDP houses in Welbedacht, KZN, some of them had been built, but not all of them. The people had been promised them many years ago, and they were still waiting. She still did not have an answer. Secondly, she had asked the Minister last week what was being done concerning corruption at the retirement villages. People were not registered and therefore could not get a house. These people had been on the waiting list for the past seven years and had not been given their houses because people who came with R25 000 cash were getting their houses. What would happen to those people who were on the list? What was also going to happen about the corruption there, because nobody was going through to find out what was going on? Some of the senior citizens -- not all of them -- had their families living on the property with them. There were issues of prostitution, drug abuse, and the selling of drugs on the premises, which endangers senior citizens. This corruption needed to be dealt with.

Department's response

Ms Dumalisile asked Ms Magagula to furnish the Department with the information about those six projects. She said the same went for Ms Kegakilwe, as she had mentioned some projects in the North West. This would allow the Department to follow up and provide a proper response when the Minister comes next time for a proper engagement.

Concerning the Tsakane Extension 22, she was aware of one project, but was not sure whether it was the same one where the project was underway and some Umkhonto we Sizwe (MKV) veterans had offered to protect the project, but they had now invaded the houses and were refusing to leave. It was a project that the Department was aware of and was working with the province to find a way to manage it, as the intended beneficiaries were not in the houses. Instead, the MKV members who were there to protect the project were now illegally occupying the houses. The Department would follow up with the province, but it had been brought to their attention and the province had promised that it was attending to that matter.

She requested that Ms Kegakilwe share the information relating to the two projects she had brought up, and the Department would look into it. Currently, they were not in a position to confirm whether those projects were part of what had been submitted by North West as part of the blocked projects they had intended to unblock in the current financial year. This would allow the Department to follow up with the province.

Concerning Christiana in the North West, the Department would follow up. However, the issue of sub-contracting was very challenging. It could be viewed that the sub-contracting was unofficial, in the sense that that particular department, province or municipality was unaware that two parties had created a relationship outside of the main relationship created with the main contractor. In this case, when a construction company is appointed by a municipality or a province, it may decide for some reason to subcontract. This relationship would not be known by that particular province or department, and as a result, when payment was made, payments would come only to the main contractor because that was the only one who had a relationship with that particular municipality or province. This made it very difficult for anyone else to assist in making sure that the sub-contractor was paid.

The second issue involving sub-contracting was when a construction company was appointed by a municipality or province, and wanted their relationship to be recognised by the province or the municipality. In this instance, they would send part of their construction work to the sub-contractor, and that contract would be recognised by the municipality or the province. This would make it easy for the work done by the sub-contractor on behalf of the main contractor, to get paid for. Thus the challenge that the Chairperson was likely confronted with, had been some of those informal relationships that were taking place without the knowledge of the owner of the project. This becomes problematic, because the sub-contractor would have done the work on behalf of the main contractor who had received all the money and because of integrity issues, the main contractor did not pay the sub-contractor. The sub-contractor then had nowhere else to go, and could not complain to the province or the municipality because they did not know the sub-contractor, or the work the subcontractor had done on behalf of the main contractor. Provinces have been trying to discourage this informal sub-contracting by encouraging people to come forward so that they can formally sub-contract. This way the relationship was recognised, and it ensured both could be paid for the work that had been done.

Ms Dumalisile said that Ms Abader's comments or questions that were directed to the Minister in absentia had been noted. She requested clarity concerning the retirement villages, as the DHS did not work with retirement villages. She suspected that she had been referring to a social housing programme and not a retirement village, but it was probably housing some members at retirement age. She requested the name of the complex so the Department could attend to that particular matter.

Initially, in 2022, when the Minister had prioritised the blocked projects, the figure the Department had worked with was 3 445. However, as Members were raising some questions, they were not sure whether new numbers were coming up with the information. The intention of the Minister and her counterpart in the provinces was to clean up anything and everything available at that time as blocked projects. Therefore, by the end of March, the Department had unblocked 3 150 of 3 445, and now they were sitting with what was coming from the provinces. As to whether the DHS would have completed all of them by 2025, the Department would see how far they could get.

Protecting the contractors was tricky because of the costs involved in protecting all of them. She estimated that one province could be sitting with 60 or 80 projects, which may not be financially viable. However, the Department was aware that the Johannesburg Metropolitan Police Department (JMPD) cluster was working on the matter dealing with the construction mafia, so it could provide a comprehensive and conclusive response to what the government was doing about it.

She referred to the wastage that occurs because of stalled projects. This was the biggest concern of the Minister, who had requested that the Department clear all of them. They had become stalled for various reasons, and that was why they needed to deal with all of them. However, it was a wastage that could not have been avoided at that particular time. That was why there was a strategy to enhance some of the elements identified as contributing factors to the stalling of the projects, such as the contracting processes. Mr Mphithi had also urged the DHS to be firmer when it came to contractors who did not perform -- if they did not perform, they must be penalised. It should be clear and there should not be any ambiguity. The Department had identified several contributory factors, and those were the ones that should be addressed so that going forward, it did not continue to create stalled projects and could only deal with the current projects that were running.

Ms Bele added to what her colleague had said regarding the security of the contractors. She used an example of the Gauteng Province last year, which had been held accountable for irregular expenditure by the Auditor General because the grants were capital in nature and could not be used for security, as security was operational. The Gauteng Province had used a lot of their equity share to appoint the "Red Ants" to assist them, because there had been a lot of illegal occupation during COVID-19, but when they ran out of money, they had taken some of the HSDG to assist, which was irregular expenditure. Therefore, she agreed with her colleague that it was a tricky one, because they needed the money to appoint security, and it was expensive -- it had cost millions of rands to get the "Red Ants" to assist them to deal with the hijacking of their projects.

In response to Ms Kegakilwe regarding the money available for bulk infrastructure, in the non-metro areas, or provinces such as the North West, the Department did allow them to use 5% of the HSDG for bulk. However, the HSDG was the only source of funds, and they had to be spread far.

Further, an assessment of the bulk requirement needed to be carried out, and in the North West, the then MEC had said this was a serious issue and the 5% was not sufficient to assist with those projects.

Concerning the infrastructure reporting model (IRM) and the reduction of the funds when the 2025 medium term expenditure framework (MTEF) was started, the DHS had been told by Treasury that they were not out of the woods yet. The Department was still suffering from debt due to the impact of COVID. They had lost close to R13.8 billion from their grants through budget cuts. Further, the Department’s budget for the next three years had been reduced because the country was not generating money. Treasury had told the Department that they were only coming to them with cost pressures, but not reprioritising. But how could one reprioritise, because if people wanted houses, that meant money needed to be transferred to the municipalities, and the Department could not even do that because all four of their grants had been reduced. The Department had been told by Treasury that there was no additional money so they needed to reprioritise.

Mr T Gamede (MK) introduced himself and pointed out that he was new to the Committee as he was sworn in only last week. As the MK Party, they would differ with the report by the Minister, but he was impressed with the officials sent by the Department, as they were aware of what was going on. He had a few questions to ask and a few comments to make as well.

He did not believe in problems without solutions, and the Department had mentioned several problems. He acknowledged the challenges created by the construction mafia. However, the MK Party believes that part of restoring dignity to the people was by having shelter. He therefore asked whether the Department had considered starting or establishing its own construction company that would oversee project management and proper quality assurance in these houses. He thought this would also limit the poor workmanship, where houses pose threats to the safety of the residents, and also, at some point, they end up being demolished and having to start afresh.

He was aware that the Department works with implementing agencies such as the Development Bank of Southern Africa (DBSA), the Independent Development Trust, IDT, the Coega Development Corporation, the HDA and the NHBRC. The NHBRC could assist, especially in those projects, and they could assist in establishing what had caused a project to be stalled, or not completed on time. He talked about the lack of water in Umlazi, the area where he lives, and flats that were unoccupied despite being complete, clashes between ward councillors and chief over land, and vandalism costing more than R100 million.
He therefore believed it was important to consider engaging with chiefs so one could understand who was the owner of the land. It was also important not to forget about civic society and the amafundisi. In 2019 and 2021, most of the houses were being built by the Department, but there was no land after engaging with the chiefs. He said that the councillors in the area did not care about the area -- they were just there for the position, and sent their people to live there and after a few years, the houses were sold.

He also brought up the example of contractors assisting each other, although this was not always the case. Sometimes it was just a paper trail to say that they were contracting with each other, but it was an image of a contractual relationship. It may result in problems if the Department did not monitor these contractors, who may be working together but they were not on the same CIDB level. He concludes that MK would not agree with the report until what the Department had said they were going to do had been done.

Mr S Dithebe (ANC) said that in several provinces -- and his province, the Free State, was an example -- officials always say that the housing subsidy scheme was a problem and needed to be cleaned up. It had people who did not deserve to be there. He appreciated the spirit and the intent on the part of the Minister to try and unblock projects that had stalled, but thought that until the Department took the provinces to task with regards to the HSS, there would still be this mistrust that was spoken about. Each day, a particular province has a list of 50 000 people, and if only about 45 000, for example, qualify, then it does not paint a correct picture of the actual situation. It was important that the Department took action, and based on the report, it did seem as if they were doing everything possible to try and even anticipate some of these challenges.

Concerning the collapsed building in George on 6 May, had the Department worked with the Western Cape provincial government? He was not sure whether it was true, but he had been told that the Western Cape provincial government was not keen to do an investigation. Outside of that, had the Department been able to look at that, given that the NHBRC was one of the entities that fell under the Department? Had that yielded anything yet? Was there a preliminary report?

If a project was blocked and registered, what was the role of the HDA in addressing that and finally resolving the blocked projects? Had the Department thought of a situation where, without necessarily bypassing the provinces and municipalities, the HDA could intervene if a particular project had been recorded for a long time as blocked, and this was because the province was not following the due process of registering it so that it was part of the business plan, but was also procuring that particular project. He knew everything had got to be done within the ambit of the law, but was it something that they had thought about?

Ms Dumalisile responded to the question posed by Mr Gamede regarding the Department establishing its own construction company to oversee the work happening on the ground. The Department did not do this because the conditional grants allowed the Department a certain percentage for operational purposes to buy the necessary technical skills. At the provincial and national level, the CFO appoints the services of an engineer. The DHS follows the money, and they were not only interested in how much money had been spent, but whether it had been spent on doing the right thing. When the CFO procures such services or expertise, the engineers go and verify the work. This was because it was easier for engineers to second guess engineers. This was done from time to time so that the projects could be confirmed.

Similarly, the provinces and metros appoint professional resource teams (PRTs) made up of various technical skills, such as engineers, financial managers, people with a legal background, quantity surveyors, and certified project managers. These were the teams that monitored and confirmed that the actual project was happening on the ground. The money that was procured for such services was also followed to inquire why and when it had been used. Most of the time, the project would run for two years or three years, and by the time the PRT team leaves, they should have transferred the skills internally.

Responding to the project referred to by Mr Gamede regarding the unoccupied block of flats, Ms Dumalisile said it was a community residential unit, and was different from the social housing. The Department had intended to formalise this old apartheid hostel and ensure a family unit was created. Unfortunately, most people refused to migrate or move in because they were expected to pay rent. Most of the time, they had not moved in, and as a result, that programme was slowly dying. The biggest challenge that was raised regarding the RDP houses was the water issue and bulk infrastructure. The challenge was that the distance between that area and the next connection point was several kilometres apart, which would cost millions of rands. This was where the municipalities and the Department of Water and Sanitation had to work together, because bulk infrastructure for four or five kilometres was needed to cross to the other side before the reticulation could be done.

She could not respond to the questions about the collapsed George building, as the Minister had initially assigned the NHBRC to look into this matter. Therefore, at the right time, the Minister could provide an appropriate response to that matter.

She said the Minister had not assigned or mandated the HDA to assist with the blocked projects. However, certain provinces already had existing relationships with HDA, where it was their implementing agent on several housing or human settlement projects that they were doing. Therefore, there were provinces where the HDA had been assigned to do the unblocking of the projects, and their relationship was regulated through the implementation protocol of service level agreements (SLAs) and memorandums of understanding (MOU) for them to be able to do that.

Ms Bele addressed Mr Gamede's point regarding the CIDB levels, by reading a letter from the CIDB to indicate they were interested in the Department's tenders. Each time there was a procurement from the human settlement sector, the CIDB had to monitor and check whether this person was registered. The Department also had to advertise on their website. This indicated that the CIDB was doing its part, and once it picks up non-compliance, it returns to the Department and reports if a specific province or any other entity within the human settlement sector did not comply with the CIDB regulations.

On the issue of engaging the amakosi, the Department had formed an informal settlement upgrading partnership, and the use of the word "partnership" was to indicate the importance of working with the communities. The Department could not do it on its own. Included in this partnership grant was 3% for social facilitation, which allowed for the appointment of someone who could work between the Department, the community, and the land owner.

She brought up the issue of water which Mr Gamede had spoken about. There was a water crisis across the country, and it was something the Department was looking into. Treasury had advised all the metros that with the USDG, attention must be paid to the water crisis. A water strategy needed to be put in place for the metros. Additionally, they needed a specific entity to deal with the water crisis. Around 30 September, the metros were expected to submit their water investment strategies, because the amount of water needed did not match the amount of money available. Therefore, an investment strategy and partners were needed. The starting point was that there were water shortages across the country. All the metros had spent a lot of money but had not invested in stormwater drainage or water purification. Instead, money was used for homes and other things, and water was neglected. Therefore, a water strategy was needed so that next year in all the metropolitan areas, a specific budget would be allocated to the metros to address the water crisis.

She said the national Department and the provinces needed to align with each other. Concerning the HSS, the Department was the one giving it the information. When the Department started the reconciliation, they told the provinces that they had a business plan that was not in the HSS. The approved business plan had to be in the HSS, so that was their starting point. Then because the business plan was in the HSS, they could report on the HSS output, which was the alignment the Department wanted to see. This was because when the Auditor-General (AG) audits, the audit was done on the HSS.

When looking at the IRM, the business plans were taken and shared with Treasury. All the systems needed to work with each other. A reconciliation of the HSS and the basic accounting system (BAS) needs to be made. The CFO acknowledged that there was no interface between the two systems. Essentially, when it came to payments, they had to be recorded on the BAS, so every quarter and every month, the province had to give the DHS a reconciliation. When the Department reported on a claim, they did not rely on the provinces, but instead they went straight to the HSS to extract the information on all the invoices. The Department then goes to the provinces to say, according to the HSS, that they had not paid these people on time. What were the reasons? Then when the Department goes to the MINMEC, they take the report of payment because in the human settlements sector, the payment of invoices is monitored. If the province did not agree, for example, why was the HSS saying it was not enough? The Department was forcing a total clean-up of the system because, for now, that was the system the Department had been audited on.

Mr Poole said that perhaps he needed to rephrase his request for a list of the 3 522 projects. After listening to the DG, he wanted to ask for a list where a total of 3 400 was mentioned, which gave a clear indication of where the project was, what project was being dealt with, and the last 100 of this current financial year. How did this add up? Or was it already completed through the total mentioned?

Mr Gamede acknowledged that there was a water crisis across the country. The water tanks in Amanzimtoti provided water to two other areas. However, the problem of the water crisis did not affect the people in Amanzimtoti. In his ward, if the waste was not collected, the councillor and his family would come around to collect the waste, and he would claim the mileage afterwards. However, in the other two areas, this did not occur, and the waste was just left there, which could affect the health of the people staying there.

The Chairperson said that moving forward, they must try to have minutes of the previous meeting adopted. This was because resolutions were taken at every meeting, and had to be followed up. He suggested that the discussions regarding the blocked project should continue for another one or two meetings so the Committee could be sure it was reaching a closure.

The Chairperson requested clarity regarding the 100 blocked projects.

 Ms Dumlisile repeated the figures she had given the Committee earlier in the meeting.

The Chairperson suggested that when the Committee came back for the third term, they should invite the Free State, North West, Limpopo and the national Department of Human Settlements to advise the Committee on what they were doing to unblock the projects in their provinces.

Mr Poole wanted to know, if the 100 projects were unblocked, whether all the projects would have been unblocked.

The Chairperson said that that question could be answered when the Committee returned from the recess. He wanted the provinces with the big numbers to come and tell the Committee what they were doing to ensure these projects were unblocked.

Ms Frenchman commented that blocked projects were not something that was going to stop -- it was going to be continuous. Instead, it should be minimised.

The Chairperson responded that the blocked projects must be stopped. The Department could try to minimise them as a start, but ultimately they must be stopped. These were the plans and strategies the Committee should hear from provinces.

Committee matters

The Chairperson mentioned another resolution regarding a report the Department would submit concerning the Sushanguve complaint. A further resolution was for a progress report on the recommendations which were now resolutions of the Budgetary Review and Recommendations Report (BRRR). The last BRRR would be for the sixth term. If Members do not have the document, they should check with the Committee Secretary, or it should be on the Parliament website.

There was also concern about both the Minister and Deputy Minister being absent, which called for better planning. He requested that Members be provided with the Housing Act and Housing Code so they understood the portfolio they were dealing with.

Ms Kholiswa Pasiya-Mndende, Committee Secretary, referred to the PIE Act, which was a Private Member’s Bill introduced by former Committee Member Ms E Powell. It had not been revived yet, and she was unsure whether Mr Poole could advise the Committee. The Bill was not from the Department.

The Chairperson said that as they budgeted, it was important to prioritise blocked projects. If need be, the Committee would invite Treasury to question whether they did not see a crisis surrounding blocked projects. For example, at the start of the meeting, it had been brought up that people had been on the waiting list for housing since 1996, and this was not fair. Therefore, some of these projects needed to be prioritised instead of coming up with new ones. Another resolution was the issue of the bungalows in Knysna.

He also requested a progress report regarding the collapsed building in George.

Mr Dithebe referred to the alignment that Ms Bele had spoken about. When would the goal of alignment between the national Department and the provinces be achieved?

The Chairperson requested that the information that Ms Frenchman and Ms Kegakilwe had sent to the Department be also forwarded to the Committee Secretary. In every meeting, through the Parliamentary Liaison Officer (PLO), the minutes and matters arising would be dealt with first. Towards the end of the year, they would have a meeting to evaluate whether they had addressed their resolutions.

The meeting was adjourned.
 

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