Department of Land Affairs 2006/07 Annual Report; Minister on Land Bank Corruption

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Meeting report

AGRICULTURE PORTFOLIO COMMITTEE
7 November 2007
DEPARTMENT OF LAND AFFAIRS 2006/07 ANNUAL REPORT; MINISTER ON LAND BANK CORRUPTION

Chairperson:
Mr R Mohlaloga (ANC)

Documents handed out:
Department of Land Affairs 2006/07 Annual Report
Department of Land Affairs (DLA) 2006/07 Annual Report presentation
Programme for Land & Agrarian Studies (PLAAS) on DLA Annual Report 2006/07

Audio recording of meeting

SUMMARY
The Department of Land Affairs looked at the performance of each of its seven programmes in 2006/07. The overwhelming themes were lack of operational capacity and the challenge of service delivery. Its strategies for lowering the vacancy rate within the Department and Gijima as well as inadequate state funding were discussed.

The
Programme for Land & Agrarian Studies (PLAAS) commented on the shortfalls identified in the Annual Report in tackling the unequal distribution of land. The Department’s performance showed a chronic mismatch between the intended scale of the programme and the actual resources, policies and systems available to meet those goals. The urgency and the great necessity for clarity on policy was emphasized. Several suggestions were made to the Department as alternative solutions. These two presentations were well received by the Committee who asked many probing questions.

The Minister of Agriculture and Land Affairs reported on the termination with immediate effect of the Director General for Land Affairs and Cabinet’s decision to hand over the forensic audit report on financial management at the Land Bank to the police so that criminal proceedings could be instituted. She also outlined what steps were being taken to turn-around the Land Bank.

MINUTES
Department of Land Affairs (DLA) presentation
Acting Director-General and Chief Land Claims Commissioner, Mr Thozamile Gwanya, reported on the Department performance in respect of 2006/07 financial year. Mr Gwanya looked at the strategic objectives and operational performance for DLA’s seven programmes: Administration, Surveys & Mapping, Cadastral Survey Management, Spatial Planning & Information, Deeds Registration, Restitution (Regional Performance and Claims Settled), Land Reform.

He focused on the issue of capacity and the challenge of service delivery. The human resource management plan was completed during December 2006 to address the issue of capacity. The Citizen’s Charter was developed and finalized as a way to tackle the issue of satisfactory service delivery. The Department took further initiatives and initiated the provision of a skills development framework for land and agrarian reform and established a partnership training program with Fort Hare University, which designed and implemented a training program for creation of skills and capacity.

Mr Gwanya said that the vacancy ratios within the Department as well as the inability to recruit and retain skilled staff was a great challenge against capacity building. The Department set up various programmes to address this matter, which included a Recruitment Project, Internship Programme and Bursary Scheme and Graduate Programme. Furthermore, accelerated training would be provided by the Chief Directorate to improve skills in the industry, and he noted that members of the Portfolio Committee had offered to assist the Department in the recruitment drive.

Foreign land ownership was posing a challenge as well. The South African government needed to regulate ownership of land by foreigners and it was critical for the Department to draft a policy with adequate procedures and regulations to embark on this matter.

Land delivered towards the 30% target since 1994 was about 4,196 million ha. However 30% of 84 million ha is 25.2 million ha. Also addressed were the issues of labour tenant claims, the monitoring system to monitor the land rights of farm dwellers, land acquisition, decentralised land administration, and state land that had been pro-actively vested.

The Department has achieved a record spending of 99.88% (2005/06: 73.08%). However, it had received a qualified audit opinion and the DLA gave a full response on what it was doing to remedy the problems of asset management and rental revenue receivable from leased land.

At the end of 2006 DLA had adopted the Gijima Strategy to improve performance and fast track the delivery of land and agricultural reform in this country. This two-year plan aimed at accelerating service delivery in the following areas: restitution, redistribution of agricultural land, security of tenure, Agri-BEE and family farming. Mr Gwanya concluded that DLA had achieved some of the objectives set for the year under review, yet had experienced many challenges. Many factors contributed to causing the slow pace of land delivery. More resources were needed to meet the priorities, particularly for redistribution. More resources were needed to meet the Apex priorities, especially in relation to increasing the number of hectares. They had agreed with the Department of Agriculture to work closely on post-settlement support.

Programme for Land & Agrarian Studies (PLAAS): University of Western Cape critique
Dr Ruth Hall, PLAAS researcher, gave a critique of the 2006/07 Annual Report. The slow pace of land reform was reemphasized. Only 4.3% of agricultural land had been redistributed and delivery this year varied greatly across provinces and overall had been well below target. It was suggested that land reform needed new approaches with clear political direction and substantial resources.

Dr Hall highlighed issues relating to land transfers and budget. Delivery had risen, yet failed to meet the target with spectacular under-performance in Limpopo and North West. The Department had spent 99% of its budget, however, rises in the capital budget were not matched with equivalent increases in the current budget. No policy guidance was given to the redistribution policy. There was also a clear need for one agency to drive the process of identifying land needs, identifying and acquiring land and planning for settlement and implementation support.

She concluded that the A
nnual Report shows a chronic mismatch between the intended scale of the programme and the actual resources, policies and systems available to meet this. Top priorities were:
– For integration of land reform within a wider framework of agrarian reform (that is, what is it that land reform is intended to achieve, beyond the 30%?).
– For Land Affairs and Agriculture to undertake joint policy development in the area of agricultural land reform.
– For political leadership on the issue of farm dwellers' tenure rights.
– For clarity on institutional arrangements that will be needed to drive a strategic and more interventionist approach
– For the department to demonstrate what would be needed in terms of staffing and resources to scale up protection of land rights and delivery of land.


Discussion
Mr S Abraham (ANC) questioned whether the Department was taking public representatives seriously and whether it was telling the truth. The issue that the Department failed to respond to several inquiries was highlighted and several instances were brought up to prove this point. The responsibility of the Department to respond to every inquiry was re-emphasized.  According to an article published in Farmer’s Weekly magazine, an official from the Department made a comment that he preferred black farmers over whites. Mr Abraham referred to such remarks as racial discrimination. Mr Abraham asked a number of questions: when did the Department expect to complete clearer regulations and present them to the Committee; what was the current situtation with the legal wrangle of the litigation; what kind of provisions were made to provide necessary technical and financial support to the municipalities for implementation of land support. R459 000 had been brought forward from 2005/06 financial year and why had the donor funds not been utilized? Also according to the Public Service Commission Report on Financial Misconduct, the Department lost R20 million due to financial misadministration during the 2005/06 financial year. The Department was asked for an explanation in this regard.

Mr A Botha (DA) agreed with the point made during the presentations that the use of service providers could be a key to land reform. The end of the road was not the end of the road as long the Department turned around and sought outside assistance. He requested clarity on whether the process of land offerd would be open to regular and transparent scrutiny.  Therefore the Committee requests that all land offers must be presented to the Portfolio Committees of Agriculture in the provinces. This would avoid delay in responding to situations quickly and effectively. The Department should assist farmers in training with other farmers, as it would assist with the land reform process.

Dr A Van Niekerk (DA) commented on the way reform and restitution was done and implemented. Farm sector reform was required. There was a high level of frustration among commercial farmers. They were frustrated with the Department,  and in order to have accelerated reform in South Africa, the Department has to have farmers on their side. Discussions have taken place with land reform projects in  Western Cape,  Northern Cape and other provinces, and it was discovered that the Department used certain contractors to write business plans for new land reform applicants. The business plans were insensible and disasterous as there no follow-ups and it was a situation the Department could not ignore. Clarity should also be provided on the illegal eviction statistics.  With respect to spatial  planning, it had been discovered that there was a 60% vacancy rate within the Department. There was an urgency for spatial planning and the Department must take action. With regard to deed transers, there were over 200 people who had been on the waiting list for two years, and were still to receive an answer from the Department. Clarity should be provided on whether the issue lay with the Department of Agriculture or Department of Land Affairs, as it was an important matter which needed to be addressed.

Mr D Dlali (ANC) asked what was the reason for the delay in Programme 4 and how far the Department was from achieving specific targets in Programme 3 in Mpumalanga and other areas.

Mr A Nel (DA) said that he detected a wind of change in the Department and commented that its acknowledgement of failure and emphasis that it was now putting on rectifying post-settlement support, was very encouraging. He asked if municipal land was included in the Deparment’s figure of 1.5 million hectares in state land. The Department said that R11 to 15 billion was needed to settle claims. Had Treasury been informed of this amount that was needed? Regarding the investigation by the Public Service Commission, what is being done about the recommendations? He wondered how much emphasis the Department was giving to the implementation of the Communal Land Rights Act (CLARA) as the development of the communal land was as important as the redistribution of land.

Ms C Nkuna (ANC) thanked the Department for the presentation giving both its strengths and weaknesses and for PLAAS providing constructive criticism. There were many vacancies within the Department and financial constraints which hampered resolving these challenges. The only way to move forward was by considering the challenges and ensuring that they were addressed. They needed to be unified in addressing these problems. The untraceable rural claims might be resolved through the media. Ms Nkuna referred to the amount of R65 000 per hectare and wanted to know how the Department arrived at this figure.

Ms M Nkompe-Ngwenya (ANC) expressed serious concern regarding the 201 resignations that had place within the Department. No clear explanation was given about the reasons for such resignations. It was necessary to identify and deal with the problems within the Department. She also noted her appreciation for the informative nature of both the presentations.

The Chairperson stated that given the challenges, the issue of capacity had become a notable problem and wondered what the Department’s real plan was to address the vacancy rate. He also inquired about the nature of the working conditions within the Department and and how often the Department organized meetings to discuss such matters.

Mr Gwanya stated that the comments of the committee members were encouraging. The Department’s understanding was that the presentation was to reflect on the Annual Report and provide clarification. The Committee’s contribution on each issue was respected and was needed in order to adequately tackle these problems. What was presented in the presentation was not different from the Annual Report itself. Responding to comments that the presentation was not responding to some of the issues that the Committee had raised in the past, Mr Gwanya said he had provided a written response to these which was available and had been distributed to the members. There were several representatives from the department programmes present and each representative would tackle the various issues raised.

Mr Mdu Shabane (DDG: Land and Tenure Reform) referred to Dr Ruth Hall of PLAAS noting the public outcry that only 4,3% of agricultural land had been redistributed. However, this figure covered only the Department. He pointed out that many organisations were involved in land delivery independently of the Department. The Land Bank and the four largest commerical banks and many other entities were involved in the land delivery process. However the Department could not say with certainty what transfer of ownership there had been by these entities and cooperation in the exchange of information was needed and in fact the Minister had been asked to intervene on this matter. The recommendation of the Panel of Experts on the Foreign Ownership of Land that the Deed Office needed to distinguish the race of new owners of transferred land recognised that this type of disclosure does not currently happen.

He continued that indeed what had been achieved so far for the 2006/07 year was pretty much under target and PLAAS was correct in its view on this. However the lack of resources played a role in this.

He said that it was a pity that Mr Abrahams had left the meeting as he refuted his claims. The Department was in contact with the persons that Mr Abraham referred to and had assisted their cases.

He turned to the questions raised about whether the Extension of Security of Tenure Act (ESTA) was not being fully implemented or whether it was effective. The DLA had contracted outside experts to do a review of it and the conclusion was that it is fully implemented but that the one limitation is that the Act is regulatory and not prescriptive. This is the one area that needs to be made more prescriptive.

Regarding the criticism of the Department failing to have identified beneficiaries, Mr Shabane responded that where the state acquired the land proactively, the Department subsequently followed up and identified beneficiaries. He did not agree with PLAAS on this.

Responding to the question on the capacity of the municipalities to take part in land reform, he said that there was a regulatory framework in SA that compelled every department to provide hands-on support to the municipalities, which recognised the limitations. The municipalities were the obvious platform for land reform. They had developed the Area Based Land Reform Plan which is a tool for integrating land reform into the Integrated Development Plans (IDPs) of municipalities. Capacity building started at the local level. The Department had set aside R26 million and donor funding to buy rhe necessary skills and capacity located at the local level.

In response to the criticism that the DLA had failed to buy land that became available on the open market. He acknowledged that the issues of capacity meant that there was no way that they could buy every farm that came onto the market. Hence some of the delays. Besides trying to fill these vacant posts, in various provinces, the Department over the past twelve months was entering into public-private partnership with organisations in adding capacity in identifying land to assisting with post-settlement support to land reform beneficiaries. Some of these agreements were already coming into fruition.The Department realised that they could not accomplish the objectives on their own. They acknowledged that partnerships with outside organisations such as organised agriculture were essential. The Department had changed its strategy and developed strategic partnerships with organisations that have vested interests to ensure that land reform works. Members must recognise that they had had moved away from the heavily criticised business plans designed by contracted consultants. Many of these business plans were not worth the paper they were written on.

On the question of evictions, he recognised that besides evictions there was the matter of constructive evictions where the owner makes the living conditions so unbearable that the people living there have got to move – this was also land rights infringement. The Department was working with civil society organisations who played a cricial role in assisting the Department to monitor these conditions. The Department was also creating a specialised land rights unit with a database of specialised attorneys and mediators

The arrival of the Minister of Agriculture and Land Affairs, Ms Lulu Xingwana, coming straight from a Cabinet meeting, was acknowledged.

Ms Tumi Seboka (Acting Chief Land Claims Commissioner) responded to the questions on land restitution. An evidenced-based strategy had been developed from experiences on the ground by beneficiaries and this document would be circulated. There was an emphasis on the empowerment of municipalities and local communities. The target of 3000 was set for this year as a realistic target of the 5000 remaining from the total of 79 000 lodged claims. The residual outstanding at the end of 2008 would be those claims subject to court cases of which the Commission would be unable to influence the pace of finalisation.

The question about the strategy of using the media to trace claimants had yielded information but she warned that it also  created the impression that the Commission was looking for new claimants. However this strategy had been used successfully by publishing this request to trace claimants at a local level and also at provincial legislature level.

The Chief Financial Officer echoed appreciation to PLAAS for the review of the budget. She acknowledged the big discrepancy between the capital and current budget and said that indeed the new structure DLA was proposing would assist in closing that gap in terms of putting people on the ground to help with implemetation and this would help to align the gap between the two budgets.

The donor funding of R469 000 that was returned to the Danish government was the surplus left over after the 2005/6 training of land reform practitioners. The Department did not have any plans for this surplus.

On the matter of the audit outcomes, she said that the two qualifications involving asset management and lease management had not been qualified before. She provided a full explanation about the problem the Office of the Auditor General had with the opening balances for assets in the asset register. The Department acknowledged that the take over of assets did not have source documents and the adjustment was due to had managed every Department to provide them with documents from every register.

Collection of revenue and the renewal of lease contracts was a historic problem. They needed a two-phased approach: first, land leased by the Department, and then land leased through the power of attorney. The Department could not account for revenue for land leased through the power of attorney as all of the contracts had not been finalised but this project was in progress. An electronic database is in place and by the end of the year, they hope to capture all the leases on the electronic system and produce invoices. There had been many problems, but many initiatives have been taken by the Department to address these. She also addressed the matters of emphasis.

The Human Resources director for DLA commented on the new personnel structure of the Department which was in the final stages of approval.The structure was developed by means of business process re-engineering to ensure it was effective. The end result of that process was that the Department staff establishment would double in size and it expected to fill all these positions over a period of five years. Once the Department achieved this goal and secured budgeting for this purpose, the focus would be on land reform where additional capacity at the face of delivery and in the districts would be largely increased.

In terms of recruitment, the Department had redesigned the recruitment process. The significant changes brought by this was that now it only took 43 days to recruit. Due to this new change, the Department was able to recruit 800 people, doubling delivery in the recruitment process. Recruitment from within the Department and through promotions from other departments was also taken into consideration. The Department offered bursaries and a graduate project provided for them to be  contractually bound for the number of years that they had studied. The graduate project aimed to bring in 450 graduates, which would significantly reduce the vacancy rate. By the end of the financial year, the Department was expecting to reduce it vacancy rate to 10%. Exit interviews had been conducted to determine the root reasons for people quitting. The main reason stated was pressure at work espcecially land restitution and land reform. The Department had a plan to provide an attractive work environment for its employees to put an end to this problem.

Dr Derek Clark (Mapping and Surveying) said it was very difficult to recruit professionals for spatial planning. The comment about the “two-year delay” in deeds registration was definitely not true. These are registered within a few weeks.

Mr Gwanya stated that he would be the first person to admit that the Department was far below the target that had been set. He agreed that CLARA needed to be implemented and said that the final draft of the CLARA regulations had definitely been finalised. These should be available next week for public comment. Likewise the Land Use Management Bill (LUMB) was referred to the Social and Economic cluster and the DPLG for comments and is being finalised by next week. He noted the consultation that informed what needs to happen with post-settlement support.

The Chairperson interrupted in order to make space for the Minister of Agriculture and Land Affairs to comment as she was on a tight schedule and had to leave for another meeting.

Ms Lulu Xingwana said that she wanted to comment on the Land Bank issue. She had met with the President on 24 October and discussed the state of the Department and she had agreed with him to terminate the contract of the Director General for Land Affairs with immediate effect. On 29 October, the DG was informed about the decision and Mr Gwangwa was appointed as Acting DG.

She also reported on the Cabinet decision on the forensic audit report into the financial management of the Land Bank. Cabinet had metthe previous week and had agreed:
- to refer the findings to the police and the National Prosecuting Authority for further investigation, criminal and civil actions.
- the Department and National Treasury must cooperate closely in the process of turning around the Land Bank.
- the Minister of Agriculture and Land Affairs maintain governance oversight and must provide guidance during the restructuring process.
- the Land Bank submit a turn-around strategy by the 30 November
- the Minister of Agriculture and Land Affairs in consultation with the Minister of Finance would initiative a process to appoint a new chief executive of the Land Bank and review the composition of the Board of the Land Bank.
- that there be appropriate action to remedy every issue arising from the report.

Dr Hall made a final comment that the important issues of budgeting and capacity which had been the theme of the discussion, needed to be placed within a framework of clear political direction of what the Department expected to achieve with its land reform, agrarian reform and the farm dwellers issue. More emphasis needed to be placed on consolidating policy initiatives so that they hung together with unified direction, rather than employing these on an ad hoc basis. Further the Committee needed to specify what detail was needed in the Department’s reports to the Committee.

The meeting was adjourned.


 

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