Ingonyama Trust Board and Perishable Products Export Control Board, Annual Reports: briefings

Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
26 October 2004
INGONYAMA TRUST BOARD AND PERISHABLE PRODUCTS EXPORT CONTROL BOARD, ANNUAL REPORTS: BRIEFINGS

Chairperson:

Perishable Products Export Control Board Annual Report and Financial Statements

SUMMARY
The Ingonyama Trust Board reported to the Committee about the state of their finances. The Qualified Report from the Auditor-General raised Committee concerns, particularly because the Trust did not have a credit control policy in place. Furthermore, the Trust had been experiencing capacity problems with insufficient personnel. They felt poor management had clouded the impressive work done by the Board.

The PPECB had been doing quality checks on citrus and deciduous fruits for export purposes to match European Union import standards. All citrus and deciduous fruit had to bear a stamp of quality before entering the EU. The company had shown steady increases in profits since 1997. There had been a loss of staff to other employers who had offered better salaries and opportunities. The Committee Members were concerned about white top management with very few women managers. Management had undertaken a number of initiatives such as management development programme to remedy the situation.

MINUTES

Ingonyama Trust briefing
Judge S Ngwenya, Vice Chairperson of the Ingonyama Trust Board, said he expected the Committee to have already familiarised themselves with the report. He then reported that the Trust had administered land on behalf of the communities, and had been working with the Department of Land Affairs. Most of the land had been registered under the old Land Tenure System, using the old metric system of Cape Feet or Morgen. They had converted to the new metric system.

The Department of Minerals and Energy had been managing the royalties of the Trust. Then the Board had embarked on a process to review the management of all of its assets including royalties. They intended to end the agency arrangements with the Department of Minerals and Energy, and to put internal administrative systems in place. The regulations guiding the Trust were not explicit about the disbursement of funds. The Board had felt that disbursement could lead to inappropriate use of those funds by the recipients. They had decided to instead channel funds to community projects.

The Trust had been experiencing large problems with staff shortages. Most staff members were employed on a contractual basis. The Auditor-General had also raised some concerns about the lack of staff contracts. Judge Ngwenya reiterated that the Board had been reviewing the staff structure with assistance from the Department of Land Affairs.

Advocate W Raubenheimer reported that Richard's Bay Minerals had been interested in exploring the Mkhwanazi Land to seek titanium deposits. A company had been formed and members of the Mkhwanazi Clan had been awarded certain positions on the Board of the Mining Company. Both Richard's Bay Mining and the Mkhwanazi Clan owned shares in the company. That had been considered a good deal for both sides.

Discussion
The Chairperson asked why the personnel were still hired on a contract basis, because the Committee had raised the same question in 2003. The report was silent on steps taken to rectify the situation.

Dr E Schoeman (ANC) said the report had many loopholes, which had meant that the Trust had been poorly administered. He asked the Board why they were asking for a chance to remedy the situation, when the same had been asked the previous year.

Advocate Raubenheimer commented that the Trust had not been compliant with the Public Finance Management Act. They had been working with skeleton staff and this had hampered effectiveness.

Judge Ngwenya replied that the Board members were not playing games with the Committee. The Trust had been reviewing its administrative and managerial staff structure, with assistance from the Department of Land Affairs.

The Chairperson enquired why the Trust did not have a Credit Control Policy. Judge Ngwenya replied that a draft policy had been reviewed by the Board and would be implemented by 31 December 2004.
Mr H Nel (DA) asked whether the Board were satisfied with their relationship with the Department of Land Affairs.

Advocate Raubenheimer replied that they had a satisfactory working relationship with the Department of Land Affairs.

The Chairperson asked the Board why they had not consulted with the Department of Land Affairs to second some staff to the Trust. Staff shortages had impacted negatively on the wonderful work of the Board. Furthermore, the Auditor-General 's office would focus on the poor work of management.

Judge Ngweya replied that some of the posts had already been advertised.

Mr Ngema asked how the Board would find solutions to the huge rates charged by municipalities. Judge Ngwenya replied that if the Ingonyama Trust had owed any rates, that particular municipality should summon the Trust. Some municipalities had been billing the previous landowners. Municipalities had to sort out their billing systems.

The Chairperson enquired about the Board members' term of office. Judge Ngwenya answered that the board would operate until 2005. Four members had to been appointed from the Provincial House of Traditional Leaders; four members had been 'forwarded" from the Department of Land Affairs; and one member had resigned because of health reasons.

The Chairperson said he would discuss the process of Board appointments with the Minister. The Committee was concerned that the administrative capacity of the Trust would slow down delivery.

Perishable Products Export Control Board (PPECB) Annual Report 2004
Mr C J Hubinger, Chief Executive Officer, reported that his organisation provided services for the control and management of South African perishable products, and checked the export quality standards of citrus and deciduous fruit. The company had been formed by the Agricultural Product Standards Act of 1990. The PPECB also had to comply with the Public Finance Management Act. The total volume of exported fruit had steadily risen due to deregulation since 1997. In 1994 the company had just above 400 clients; by 2004 the company had above 1300 clients. That clearly indicated a steady rise in revenues.

Citrus farmers were most productive in four Provinces namely Eastern Cape, Limpopo, Western Cape and Mpumalanga Province. The biggest producer had been the Eastern Cape with 14 108 pallets as compared to the Western Cape with 9178 pallets. Deciduous fruit was produced in all provinces, but the Western Cape had always been the largest producer, particularly of grapes and stone fruit.

Mr J Noble, Manager: Human Resources (HR), reported on ways his department had looked at improving organisational efficiency. The human resources department had developed a comprehensive assessment employment practice in 2002. The focus had been on remuneration, career opportunities, recruitment and performance management.

The company had been experiencing high staff turnover and the reasons for resignations were career opportunities in the private sector, remuneration and ineffective communication channels. The HR department then devised strategies, such as the establishment of an Employment Equity (EE) forum. The task of the forum had been to attract and retain EE candidates. Other strategies included canvassing at institutions of higher learning. On Skills Development, the department removed the entry level criteria qualification and appointed teams and coaches to train new entrants. Assessment tools were developed to determine competence.

Mr J Shwibus, General Manager: Finance, reported about the state of their finances. He said that PPECB was a national public entity and therefore had to manage its finances according to the Public Finance Management Act of 1999. The company had fully financed its own activities. Expenditure per function had been divided into four categories. These were Statutory Services at 72 %, Information Systems at 7%, Support Services at 15 % and Professional Services at 6 %. The overall total expenses were R81 170 for the 2003/04 financial year. The financial results measured against objectives were very healthy indeed.

DiscussionDr Schoeman (ANC) asked about the number of clients from previously disadvantaged communities.

The CEO replied that there had been no exporters among the previously disadvantaged groupings.

Mr Van Niekerk asked about the profitability of exports.

Mr M Hawse replied that citrus exporters had made good profits because of good quality. PDI exporters needed to enter the commercial farming sector in big numbers to make a significant impact.

The Chairperson asked why the top management was lily white.

Mr J Noble answered that they had been engaged in training of middle managers to fill top management positions.

Ms Ntuli (ANC) asked about working relationship between tertiary institutions and the internal training courses developed by PPECB.

Mr J Noble replied that they had registered with the South African Qualifications Authority for proper accreditation. The internal training courses had no formal links with educational institutions, but they would look into establishing links for benchmarking.

Mr Ngema asked what the company had been doing to retain staff.

The CEO replied that new entrants were trained and remuneration had been improved. Furthermore, a leadership development programme was introduced throughout the country.

Mr P Holomisa asked what programmes were in place to improve fruit growing in the former homelands.

Mr Hawse replied that the Department of Agriculture had developed plans for commercial citrus farmers in Inkomazi in KwaZulu-Natal, Mbashe in the Eastern Cape and Venda in the Northern Province.

The Chairperson had invited the PPECB leadership to consult the Committee on issues of mutual concern. He said the Committee would visit the company operational centre to see what they were doing. Furthermore, he would consult the Minister about issues raised at that meeting.

The meeting was adjourned.