Department of Land Reform and Rural Development on Agricultural Land Holding Account (lease management, transfer of land and property management); Further update on issues of material irregularity as found by the AGSA

Meeting report

Opening remarks

Ms Mokete Mokono, Chief Financial Officer (CFO, Department of Agriculture, Land Reform and Rural Development (DALRRD), led the briefing. She informed the Committee that the Agricultural Land Holding Account (ALHA) was a trading entity established through a 2008 amendment to the Provision of Land and Assistance Act of 1993 to facilitate the implementation of the Proactive Land Acquisition Strategy, which replaced the Land Redistribution for Agricultural Development Programme. The entity was not independent, as the Director-General remained accountable for it.

She explained that the Agricultural Land Holding Account, guided by the Proactive Land Acquisition Strategy, was established to acquire strategically located land with agricultural potential, allocate it to identified beneficiaries, and provide technical and financial assistance for infrastructure and production inputs. The entity’s three main programmes were Strategic Land Acquisition, Land Development Support, and Property Management. It also offered financial support covering financial management, accounting services, and asset and revenue management.

Agricultural Land Holding Account Financial Performance

Land Acquisition Targets and Challenges

Ms Mokono briefed the Committee on the financial performance of the ALHA. She outlined its progress in meeting key targets, noting that ALHA had aimed to acquire 17 902 hectares of land but had only managed to acquire 12 461 hectares, representing 70% of the target. The Department attributed this shortfall to delays in conveyancing, which had resulted in the non-transfer of approved properties. A total of 31 360 hectares planned for acquisition in the third quarter remained in the conveyancing process. To address these delays, the Department had introduced bi-weekly meetings to track progress, with the remaining properties expected to be transferred in the fourth quarter. The Department had met all its quarterly targets for Land Development Support.

Assets and Property Management

She reported that ALHA had total assets valued at R16.6 billion, with its largest balance sheet item being Property, Plant, and Equipment, which had increased from R14.7 billion in the 2023/24 financial year to R14.8 billion in the third quarter. This portfolio included 5 181 properties, some of which were under lease agreements. ALHA envisioned that once leaseholders had gained sufficient agricultural experience, they would be able to take ownership of the properties through title deeds. An assessment conducted by ALHA indicated that these properties had significant agricultural potential, with the capacity to create approximately 60 000 permanent jobs and generate R2.5 billion in economic income. She noted that ALHA owed approximately R580 million to municipalities and faced challenges with municipal billing systems, as some municipalities did not issue bills on time.

Cash Flow and Financial Position

Regarding ALHA’s cash flow statement, she reported that the entity had a closing balance of R806.9 million. However, she cautioned that when considering the R580 million owed to municipalities, it became evident that ALHA lacked sufficient funds to fulfil its mandate. ALHA had received a grant of R641.8 million from the Department and R45 million from lease collections, which exceeded the targeted amount by R12 million. The largest expenditure under property payments was rates and services, amounting to R108 million.

Budget Allocation and Provincial Expenditure

ALHA had spent R194.1 million on land acquisition from a budget of R222.6 million. In terms of provincial budget distribution, Mpumalanga, North West, and KwaZulu-Natal had received the highest allocations, with Mpumalanga receiving R74.2 million and recording an actual expenditure of R106.1 million.

Land Redistribution Instruments and Policy Shifts

Ms Mokono briefed the Committee on the land redistribution instruments used by the Department, in alignment with the 1997 White Paper on Land. These included the Settlement Land Acquisition Grant (SLAG) and Land Redistribution for Agricultural Development (LRAD). She noted that a key setback of these grant systems was their tendency to attract large groups, which often led to internal conflicts and, in some cases, the foreclosure of properties by financial institutions.

The 2005 Land Summit resolved to move away from the willing-seller, willing-buyer model towards a proactive government-led approach to land and agrarian reform. This shift resulted in the adoption of the Proactive Land Acquisition Strategy (PLAS) in 2007, which enabled the government to identify, acquire, warehouse, develop, and transfer strategically located land to beneficiaries. The Proactive Land Acquisition Policy (PLAP), approved in 2009, further entrenched this approach by transitioning from freehold to leasehold tenure.

Budget Constraints and Impact on Land Acquisition

Despite the policy changes, the budget allocated for land acquisition has declined significantly since 2009 due to shifts in government priorities and the introduction of new programmes. In the 2009/10 financial year, the Department had a budget exceeding R2 billion with a target of acquiring 656 000 hectares. However, the current budget stood at R355 million, with a reduced target of 35 355 hectares.

Lease Management Adjustments

Initially, the Department had planned to hold land for five years before releasing it to farmers. However, many farmers encountered difficulties in effectively taking over farms. To address this, the Department introduced long-term leases of 30 years, with an option to renew for a further 20 years. Under PLAS, the Department had acquired and warehoused 2.5 million hectares.

Beneficiary Selection and Land Allocation Policy

An evaluation of ALHA’s institutional arrangements revealed that some beneficiaries had acquired land for speculative purposes rather than for productive agriculture. To mitigate this, Cabinet approved the Beneficiary Selection and Land Allocation Policy in 2020. The policy ensured transparency in land application and allocation by implementing an advertising and evaluation process, overseen by provincial and national panels. It prioritised women, youth, persons with disabilities, military veterans, and agricultural graduates while excluding public servants and serving public representatives, who were subject to cooling-off periods.

Lease Management and Land Allocation

ALHA currently manages a total land portfolio of 2 451 000 hectares, of which 1 882 422 hectares (76.8%) were under active lease contracts. The remaining 568 542 hectares (23.2%) were categorised as follows:

• 64 650 hectares (2.6%) – Contracts being finalised.
• 17 631 hectares (0.7%) – Expired contracts.
• 486 300 hectares (19.8%) – No contract activity.

Challenges and Interventions

ALHA faced several challenges, including:

• Lease payment defaults: A total debt of R820 million was owed, with Mpumalanga having the highest lease collection rate (25%) and the Western Cape the lowest (3%). ALHA collected R46.2 million in Q3 2024/25, bringing total collections since inception to R208.1 million.
• Property management issues: Challenges included refusal to pay lease rentals, capacity constraints, vandalism, land invasions, illegal subletting, and unproductive farms.

To address these issues, ALHA was enforcing breach clauses, strengthening capacity, improving debt management, and repurposing non-productive farms.

Audit Findings and Material Irregularities

ALHA received an unqualified audit with findings, prompting the development of an Audit Improvement Plan focusing on property management, asset management, revenue management, and financial statements. By Q3 2024/25, 66% of the identified corrective actions had been fully implemented, while 34% were partially implemented.

The Auditor-General had identified material irregularities related to the Recapitalisation and Development Programme (RADP) grant funding, where reconciliations had not been completed as required. In response, the Department issued demand letters, reassessed submissions, and referred cases for forensic investigation.

Progress on State Land Transfers

The amended State Land Lease and Disposal Policy (SLLDP) permitted the transfer of leased agricultural land without market value payment. Since March 2024, 219 projects have been approved for land transfer, with 22 transfers completed, covering 9 474 hectares allocated to 22 beneficiaries. The Free State recorded the highest number of beneficiaries, with 12 individuals receiving 5 756 hectares.

Challenges in the land transfer process included delays in obtaining municipal rates and tax clearance certificates, as well as capacity constraints within the Office of the State Attorney. The Department was engaging municipalities and hiring private conveyancers to expedite the process.

Committee Recommendation

The Department recommended that the Portfolio Committee on Land Reform and Rural Development take note of the ALHA report on Lease and Property Management.

[see attached for full presentation(s)]

Discussion

Mr B Madikizela (DA) said that failure to conduct reconciliation at the end of a financial year was a serious omission. He asked the CFO what actions had been taken against officials responsible for the reconciliation process. He inquired whether provinces were spending grants received in line with predetermined objectives. He further asked whether there was an indication of how many people had benefited from land leases handled by the ALHA. Given the consistent decrease in the budget over the years, he asked ALHA to indicate the value for money achieved. He also questioned how many farmers' lives had improved with the R14 billion spent. 

The Chairperson asked the CFO how the Department defined a productive farm. 

Ms R Adams (ANC) noted significant variations in revenue collection over the years and asked what plans were in place to address this. While debt collection appeared to have improved, she stressed that this should be assessed against ALHA’s total debt book to determine whether it was making a meaningful impact in reducing overall debt. She asked why the Northern Cape had not transferred any land to beneficiaries. 

Ms N Ndalane (ANC) questioned why the Department took six months to procure legal services for the assessment of recoverable debt owed to ALHA. She inquired about the number of debt arrangement letters issued and the responses received. She also asked how many summonses had been issued. She sought clarity on whether there were any National Development Plan (NDP) targets for land redistribution and how the country was progressing towards meeting them. 

Mr Z Mthethwa (MKP) expressed concern over a lack of information sharing between the Department of Agriculture and the Department of Land Reform and Rural Development. He said both departments operated as though unaware of the agricultural sector’s dynamics, where a syndicate of large commercial farmers allegedly colluded to block new entrants. As a result, when ALHA beneficiaries failed, this was attributed to a lack of skills or incompetence rather than deliberate efforts to exclude them. He asked who the farmers selling land to ALHA were, as it was unlikely that lucrative farms were being sold. He argued that the land being acquired for new entrants was not productive. He asked whether ALHA had followed up on the COVID-19 Solidarity Fund disbursement, as most of the funds had reportedly gone to established commercial farmers, with minimal benefit to emerging farmers. 

Mr K Madlala (MKP) questioned the reason for low rental collection and what measures were in place to address it. He asked about the relationship between low rental collection and financial support provided to farmers. He inquired whether a determination had been made regarding non-payment of rent. He also asked what benefits had been observed in transitioning from the willing-seller, willing-buyer policy to the Progressive Land Acquisition policy. 

Mr M Mrara (ANC) said ALHA had reduced the relationship between the Department and citizens to a transactional one between a business and its clients. He asked for a racial breakdown of land ownership since 1994. He proposed an audit to determine ownership patterns and whether ALHA primarily benefited the working class or the ruling class. He argued that ALHA’s philosophy needed to shift towards benefiting the historically dispossessed, as Parliament could not support increased budget allocations for an entity that continued to serve those who had already benefited under apartheid. He asked whether ALHA’s interventions were recorded by municipalities, given that the farms were located on municipal land. He noted that the formula used by ALHA excluded a significant number of people, particularly those living in communal lands in villages, and asked how these communities had benefited from ALHA’s interventions. He noted that ALHA’s debt book had risen to R800 million and asked whether there was a provision for writing off bad debt. He inquired whether the debt was primarily attributable to struggling farmers or large commercial farmers. Citing the Public Finance Management Act (PFMA), which classifies fruitless and wasteful expenditure as a criminal offence, he asked what procedures had been instituted to address such findings in the Auditor-General’s report. He further questioned why ALHA had appointed private conveyancers and what costs had been incurred in doing so. 

Mr S Matiase (EFF) asked for clarity on ALHA’s recommendations, stating that these were not clearly articulated in the presentations made to the Portfolio Committee. He referred to a 2021 letter from the former Minister of Agriculture, Land Reform and Rural Development, Ms Thoko Didiza, to the former Speaker of Parliament, Ms Thandi Modise, requesting an extension for the submission of ALHA’s annual performance and financial reports due to accounting discrepancies and misstatements. He noted that similar challenges appeared to persist. He argued that the Department had multiple overlapping instruments aimed at land redistribution, which might be hindering progress. 

Mr Matiase asked the Director-General what was progressive about the Progressive Land Acquisition Strategy. He said the Department was failing to acquire land as mandated and was attributing its shortcomings to various factors, including budget cuts. He suggested that ALHA functioned like a bank within the Department but was not operating according to market principles. He asked what the relationship between ALHA and the Land Bank was. Given ALHA’s mandate to raise revenue for land redistribution, he said there should be a formal connection between the two entities. 

The Chairperson recalled that one of the first meetings of the Committee following the election of Members had involved a review of the legacy report, which contained a long list of unresolved issues spanning several years. The Committee had resolved to examine the report in detail at its strategic planning session to identify matters requiring attention within its term of office. He cautioned that the Committee should ensure it did not contribute to the backlog of unresolved issues that would form part of the next administration’s legacy report. 

Mr L Mahlatsi (UAT) asked why performance figures were not presented alongside targets. He questioned whether warehousing was necessary if the aim was to dispose of land. To avoid delays in land reform, he asked whether the Department should acquire land and transfer it directly to beneficiaries, rather than first transferring it from the seller to the state before transferring it to the beneficiary. He also sought clarification on the term ‘historical debt’ and why it was referred to as such. 

Dr W Boshoff (FF+) said ALHA appeared to be a feasible model, but its inability to generate revenue through lease rental collection was a fundamental issue. He stated that ALHA should function both as an income-generating entity and as a mechanism to provide land access to individuals who would not ordinarily be able to acquire farms. 

Mr Madlala requested that responses to his questions be provided in writing. 

Response

Responsibilities under RECAP

Ms Mokono explained that the Recapitalisation and Development Programme (RECAP) assigned responsibilities to both farmers and the Department. Farmers were required to submit documents to enable the Department to reconcile financial records. However, funds were often recorded as unaccounted for due to farmers' failure to provide the necessary documentation. This made it impossible to determine how the funds allocated to them were utilised. She informed the Committee that certain cases were under review by the Department’s Financial Compliance Committee, which investigates contract management and determines any necessary consequences.

Irregular Expenditure and New Financial Model

Ms Mokono stated that the Department’s most significant irregular expenditure in previous years was linked to its programmes. Consequently, the Department decided to discontinue the RECAP model. A new system had been introduced in partnership with Amalgamated Banks of South Africa (ABSA) and First National Bank (FNB) , where funds were held by the banks. Under this model, farmers must submit procurement requests, which require approval from both the bank and the Department before funds are released.

She further reported that the ALHA currently managed 1 827 contracts. In some cases, when farms were acquired, ALHA found that labour tenants were already residing on the land. In such instances, farms were subdivided, with a portion allocated to the previous owner’s labour tenants and the remaining portion leased to beneficiaries. The land allocated to labour tenants did not form part of ALHA contracts, and ALHA would return to the Committee to provide a full account of the individuals who had benefitted from its interventions. The organisation aimed to ensure that all its supported farmers were productive, generating employment, and paying their lease rentals. However, due to challenges in implementation, the Land Development Support initiative had been introduced.

Measuring Success and Lease Compliance

Ms Mokono informed the Committee that ALHA assessed the success of its projects based on beneficiaries' financial performance. Some farmers had successfully transitioned from emerging farmers to commercial farmers by the end of their lease agreements, enabling them to meet their rental obligations. Non-payment of rental constituted a breach of contract, and ALHA had initiated a process to refer defaulting farmers to legal services for assessment on whether breach of contract clauses should be enforced on a case-by-case basis.

She noted that legal assessments could take time, as ALHA needed to ensure that recovery of funds was feasible. Expediting cases without a likelihood of recovering funds would constitute wasteful expenditure.

NDP Targets and Budget Constraints

Ms Mokono highlighted that ALHA contributed to the National Development Plan’s (NDP) 30% land acquisition target under Chapter 6. The beneficiaries of ALHA were historically disadvantaged farmers who, at the outset, were not commercial farmers.

She reported that a spending review assessment conducted by National Treasury had found a direct link between farmer support and rental collection. The assessment revealed that farmers who did not receive adequate support struggled to pay rent, whereas those who received financial assistance were more likely to meet their rental obligations.

Addressing Fruitless and Wasteful Expenditure

Ms Mokono informed the Committee that ALHA had developed a framework to address fruitless and wasteful expenditure, which had been approved by National Treasury. The framework stipulated that cases involving suspected fraud and corruption would be referred to the Forensic Investigation Directorate for investigation. Where evidence of fraudulent activity was found, cases were handed over to the South African Police Service (SAPS).

She further stated that ALHA was now solely implementing the Proactive Land Acquisition Strategy (PLAS) and had discontinued the use of multiple land redistribution instruments. Given its declining budget and competing priorities, budgetary constraints had become a critical issue, as financial reductions did not alter ALHA’s mandate.

Departmental Restructuring

Ms Mokono confirmed that following the separation of the Department of Agriculture from the Department of Land Reform and Rural Development, ALHA would remain under the Department of Land Reform and Rural Development.

Conveyancing Stages and Agricultural Assessment and Valuation

Mr Rirhandzu Shilote, Chief Director: Land Redistribution, DALRRD, addressed the Committee regarding the progress of land redistribution projects.

Mr Shilote noted that it was not possible to specify the exact stage of the 199 projects, which are still at various stages of conveyancing. He explained that each project was at a different stage, with some farmers still needing to sign donation agreements, despite the state having already signed them. The decision to allow provinces to appoint private conveyancers was made in an effort to expedite the process.

Mr Shilote further explained that when the Department purchases land, it collaborates with the provincial Department of Agriculture to conduct an agricultural assessment, which evaluates whether the land is suitable for agricultural purposes. Based on this assessment, the Department proceeds to the Valuer-General.

PLAS Programme

He expressed confidence that the farms the Department acquires are productive and suitable for agricultural use if managed appropriately. He also highlighted that the PLAS programme is progressive, as it involves the Department actively participating in the land market, even before a beneficiary is identified, unlike in the past when the Department would wait for land to become available for sale.

Role of the Valuer-General and Conveyancers

Mr Terries Ndove, Deputy Director-General (DDG): Land Redistribution and Tenure Reform, DALRRD, addressed the Committee regarding the land redistribution process and its alignment with constitutional and policy frameworks.

Mr Ndove explained that the Office of the Valuer-General is an independent entity responsible solely for land valuation for land reform purposes, while conveyancers are legal professionals who handle the transfer of properties. He emphasised that the functions of these two roles are distinct and should not be conflated.

Land Redistribution and the White Paper

He further noted that land redistribution must align with constitutional imperatives and the White Paper on Land Reform, which serves as the guiding document for land reform in the country. The Department is responsible for ensuring that land reform addresses the needs of the poor, landless, homeless, and vulnerable citizens on an equitable basis. Although agricultural land may be the most readily available, Mr Ndove argued that the Department should not focus exclusively on agricultural land but should also consider other land needs.

Collaboration with other departments

Mr Ndove highlighted the importance of careful collaboration with other departments. While his Department is responsible for land reform, agriculture involves multiple stakeholders, and their roles should not be assumed solely by the land reform department. He stressed that more resources must be made available to enable the Department to fulfil its constitutional mandate of equitable land distribution. He also pointed out the broader societal and economic issues related to apartheid spatial planning, including high transportation costs and environmental concerns, which his Department plays a role in addressing.

Role as Facilitator

Mr Ndove explained that there are times when the Department must act as a facilitator rather than a direct implementer. For instance, if land is made available for residential use, the Department does not necessarily need to be responsible for building residential units on that land.

Land Ownership Audit and Limitations

Regarding the racial breakdown of land ownership, Mr Ndove noted that the land audit conducted in South Africa has limitations. The audit only covered land owned by individuals, which constitutes around 30% of land ownership in the country, and did not account for land owned by companies, entities, or trusts. Consequently, 60% of the land was not included in the audit. He cautioned that while the audit provides a snapshot of land ownership, it does not offer a complete picture, as it does not include land owned by foreign nationals. He emphasised the importance of correcting this information to understand the current status of land ownership and ensure equitable redistribution.

Addressing Uncompetitive Behaviour and Corruption

Mr Mooketsa Ramasodi, Director-General (DG), DALRRD, addressed the Committee on issues related to uncompetitive behaviour, corruption, and challenges faced by farmers under the ALHA programme.

Mr Ramasodi noted that if there is evidence of uncompetitive behaviour in certain sectors, entities such as the Competition Commission can be engaged to address the issue. He also encouraged members to report any corrupt officials within the Department, stating that such reports would assist the Department in eliminating corruption. He further mentioned that the Department itself has already reported officials involved in corrupt activities.

Challenges Faced by Farmers Under ALHA

Mr Ramasodi acknowledged that it would be incorrect to argue that farmers who have benefited from the Agricultural Land Holding Account (ALHA) are failing solely due to a lack of knowledge. He explained that there are significant challenges, including the lack of availability of resources, which also contribute to the difficulties faced by these farmers.

Closing remarks

Mr Madikizela expressed dissatisfaction with the way his questions had been addressed. He indicated that he would submit written follow-up questions for further clarity. He emphasised the need for strategic thinking regarding the Department of Land Reform and Rural Development's objectives, particularly as it prepares to separate from the Department of Agriculture.

Proposal for Joint Committee Sitting

The Chairperson proposed a joint sitting of the Portfolio Committee on Agriculture and the Portfolio Committee on Land Reform and Rural Development to discuss how the separation of the two Departments would be managed and to clarify the strategic objectives of each.

Mr Mrara expressed concern about the comments made by the DDG. While he did not disagree with the statements, he highlighted that the DDG's remarks suggested that there had been limited information available when the guiding document, the White Paper, was developed.

Mr Mthethwa raised a point on the economic role of land, stating that land is a factor of production in economics. He requested that the Department, when it next returns to the committee, present on the economic aspects of land.

The Chairperson thanked the Departmental officials for taking the time to present to the Committee and closed the meeting.

The meeting was adjourned.