Ncera Farms & Ingonyama Trust Board 2006/07 Annual Report

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Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
13 NOVEMBER 2007
NCERA FARMS & INGONYAMA TRUST BOARD 2006/07 ANNUAL REPORT

Chairperson: Mr R Mohlaloga (ANC)

Documents handed out:
Ingonyama Trust Board presentation
Ingonyama Trust Board Annual Report 2006/07
Ncera Farms Annual Report 2006/07
Ncera Farms presentation
Brief Analysis of the Ingonyama Trust Board Annual Report: 2006/07

Audio recording of meeting

SUMMARY
The Committee was briefed on the Ncera Farm budget allocation and expenditure. Members asked questions about the impact the training body had on the community. The Ingonyama Trust Board presentation spoke about its constraint with regard to
the issue of rates on trust land. Members sought clarity on the ongoing legal dispute between ITB and the eThekwini Municipality regarding payment of rates, the effect of the Municipal Property Rates Act and Communal Land Rights Act on the ITB’s functioning, its opposition to the sale of land under its guardianship and the exceptional circumstances under which that land could be sold and its relationship with- and endeavours to empower- traditional communities.

MINUTES
Ncera Farms briefing
Mr Tommie Marais, Chairperson of the Board: Ncera Farms, presented the Annual Report.

The Committee was not impressed when the presentation failed to provide reasons for certain decisions that were taken by the Board. Mr Marais explained that from the onset the entire community benefited from the project. The main stumbling block was a lack of qualified trainers who could make a positive impact on the communities being capacitated. He noted that the beef and milk herd was strictly used for income generation and training purposes. The Board trained farmers in farm planning in an attempt to minimise soil erosion.

Discussion
Adv S Holomisa (ANC) asked if there was sufficient training and capacity building within the project. His sentiments were shared by the Committee who wanted to know how frequently the project is monitored and evaluated and if the project made an impact at grassroots level.

Mr Marais said that he was pleased to announce that as of 1 January 2008 there would be a qualified trainer who would train these communities. The Board is currently short listing for an instructor in agricultural mechanics so that people would be equipped to repair their own machinery. He added that these innovations impact greatly on farmers at grassroots level as they benefit the most.

Ms B Ntuli (ANC) asked what criteria were used to settle farmers.

Mr Marais replied that selection is strictly the Department of Agricultures’ job and not Ncera. However generally the procedure is that the property is advertised, those interested are short listed and interviewed. Factors taken into account were farming experience and whether the plans they want to implement are suitable for the land in question.

Ms M Nkompe-Ngwenya (ANC) asked if these settlements fell under land restitution, land redistribution or security of tenure.

Mr Marais replied that that the settlements fell under land redistribution under a three-year lease with an option to purchase as is the case with state land.

Ms Nkompe-Ngwenya expressed dismay that people were given only a three-year lease. In her view this was impractical as farmers only started making a profit after five years and the scheme made it difficult for people to get loans from the bank.

Mr Marais replied that it did not create hardship as it was a lease with the option to purchase. As a farmer who is starting out it is much better to lease and to use the income generated for operational costs.

Mr A Botha (DA) asked at what rate the land was leased. Was it the market rate and if not, what was it? In addition, he asked what the income was used for.

The response was that the rate used was 10% of the value of the land divided by 12. The agricultural potential and not the market rate, was used.

The Committee was not impressed with the responses and demanded realistic figures. They also asked why there was no standard rate per hectare. The Chair suggested that the figures be sent to the Committee at a latter date.

Ingonyama Trust Board (ITB) presentation
Judge Jerome Ngwenya (Acting Chairperson of the Board) gave a detailed presentation highlighting the history that brought the Board into existence, its structure and corporate governance, and policy towards trust land. He highlighted the strategic key issues noted in the Annual Report (see document for detail). These were:

▪ The development of an asset register and a Land Tenure Information System
▪ Transfer of former KwaZulu towns to local authorities
▪ Transfer of land used for state domestic purposes to relevant organs of State
▪ Monitoring of land claims on trust land
▪ Land identification on the outskirts of townships
Granting of Leases
Agreeing to the granting of Permissions to Occupy (PTOs)
Registration of Land vesting in the Trust and consolidation of titles
Implementation of the Communal Land Rights Act, 2004 (Act No. 11 of 2004) (CLARA)
Mineral Rights and Royalties
Disbursement of Funds to Traditional Beneficiaries
Constraints: the issue of rates. The Board is in dispute with eThekwini Municipality over the payment of rates and the matter is the subject of a dispute in terms of the Intergovernmental Relations Framework Act.
Auditor-General’s basis for a qualified opinion
Financial Performance

Discussion
Mr D Dlali (ANC) stated that Judge Ngwenya indicated that the issue of the definition of a ‘township’ has been debated for the past eight years, and it appeared to Mr Dlali that there was no solution in sight. This was a problem, especially in view of the fact that ITB’s previous strategic plan indicated that six townships were to be transferred, whereas to date only two have been transferred to date. He required clarity on this matter

Secondly, Mr Dlali sought further clarity on the tension, if any, between the ITB’s objective to ensure security of tenure and the statement in the Annual Report that the ITB did not usually agree to the sale of land as it could diminish the area of land in black ownership.

Adv S Holomisa (ANC) asked the ITB to explain its opposition to the sale of land. He was of the view that the ITB was ideally positioned to assist with land tenure reform.

Mr Dlali sought clarity on the audit findings in the Annual Report which stipulated that the ITB did not have established policies and procedures on data collection and recording. He was of the view that, as indicated by Judge Ngwenya in his presentation, the ITB did have such policies and procedures in place and that there might just be a difference in terminology used when compiling the reports.

Furthermore, he noted that the Annual report indicated that the ITB had referred the eThekwini Municipality rate dispute to the High Court and was awaiting a declaratory order. That was however the same thing the ITB told the Committee at the meeting on its 2005/6 Annual Report. He had hoped that the matter would have reached some form of finality by now.

Mr N Singh (IFP) sought clarity on the impact of the Municipal Property Rates Act on the functioning of the ITB and its finances, especially as it related to the eThekwini issue. He agreed with Mr Dlali that it cannot continue to be a “neverending story”, and that an intergovernmental approach be adopted to resolve the matter.

Mr Dlali sought clarity on the ITB’s position on land restitution, especially as it related to its objective on security of tenure mentioned earlier.

Secondly, Mr Dlali questioned whether all the land indicated on the map in the Annual Report in fact belonged to the ITB, as it even included Pietermaritzburg and Richards Bay.
 
Thirdly, Mr Dlali was of the view that no progress had been made in privatising the State forests, and asked the ITB to explain why it has not yet achieved its target.

Fourthly, he noted that the ITB was currently instructing its conveyancers to develop the deeds register. He believed that the ITB would not have taken such action had the Auditor-General not raised this concern in his audit findings. He failed to understand why the ITB did not act sooner.

Ms B Ntuli (ANC) stated that the Annual Report indicated that land would only be alienated in exceptional circumstances, and sought clarity on what precisely those ‘exceptional circumstances’ were.

Secondly, she sought clarity on the process of identifying the beneficiaries of leases for the use of ITB land, and how exactly the ITB land would be transferred to those beneficiaries under the Communal Land Rights Act.

Thordly, Ms Ntuli failed to understand how the ITB resolved claims regarding land that fell under the trust.

Mr Singh noted that the ITB currently had many vacancies, and believed that the 50% staff rate prevented the ITB from functioning optimally. He sought clarity on the ITB’s plans to employ more staff.

Secondly, he noted that the Annual Report reflected only four projects that were currently operational, although he suspected there were more. It was clear that the ITB had funds for such projects but traditional authorities were not coming forward with projects that would employ these funds. He asked whether they were provided with training in preparing business plans so that they could develop projects,

Thirdly, he noted that almost 2.5 million hectares of land fell under the guardianship of the ITB, portions of which were prime residential areas. He asked whether the ITB, together with the Department, was planning to identify possible partnerships with projects which would benefit the communities.

[PMG note: Ms B Thompson’s (ANC) question was not in English]

[PMG note: Ms M
Nkompe-Ngwenya (ANC) question was inaudible]

Ms C Nkuna (ANC) stated that the ITB is the guardian of indigenous land in primarily coastal areas, and asked whether some of that land was not currently owned by foreigners, which could then be expropriated.

[Ms Nkuna’s second question regarding hectares was inaudible]

Furthermore, Ms Nkuna was of the view that most of the issues raised by the AG in his report on the ITB were minor issues which could be ironed out by the ITB.

Adv Holomisa asked whether he was correct that the portions of land shaded in white in the map in the Annual Report were occupied by white South Africans and, consequently, whether he was also correct in asserting that those portions were larger than the areas shaded green which were under the guardianship of the ITB.

Secondly, he noted that the Annual Report indicated that there were currently 300 land titles that have not yet been transferred to it, and sort clarity on the type of land that was and who the current owners were.

Thirdly, Adv Holomisa sought clarity on the criteria used in identifying the traditional countils that qualify for funding.

Mr C Greyling (ANC) noted that 2008 was the deadline for full restitution of land, yet the ITB was still waiting for full details on claims regarding trust land. He sought the reasons for the delay.

[PMG note: Ms Thompson asked a second question, again not in English].

Mr Greyling stated that it appeared that the ITB was eagerly awaiting the commencement of CLARA and its implications. He asked whether there was any communication between the ITB and the Department on the matter.

Judge Ngwenya responded that the ITB was the only entity that enjoyed such a close relationship with the Department. The ITB enjoyed open communication with the Department.

As a general response to the questions he stated that South African tended to the “very clogged with land ownership”, because as a country it did not have much experience in the field of land reform. However the little experience it had gained since 1994 enabled it to provide land titles to persons both in the rural and urban areas.

The last portion of the Annual Report listed the prescribed beneficiaries. He explained that, regarding the issue of the ITB’s opposition to the sale of the land it held in trust, the ITB was always cautious as it was merely a guardian that held land on behalf of another. It was a fact of law that the Master of the High Court would not allow someone or an entity that held land on another’s behalf to sell that land, without the owner’s consent. Thus the beneficiaries of the land held by the ITB would themselves have to decide to sell the land.

The maximum period for a short term lease is nine years and eleven months. Any lease for a period longer than that is termed a long-term lease, such as a ninety-nine year lease. A long-term lease was registered in the Deeds Office and thus provided the same full legal protection afforded to the owner of the land. There were however instances in which the owner of land enjoyed less rights than someone who had some rights over the use of the land, depending on the specific facts of the case.

One of the examples of the exceptional circumstances under which the ITB could sell land under its guardianship was land that was a nuisance to the ITB, in that its management was too costly or burdensome or the land had squatters for example. The primary concern would then be how the best potential of the land could be achieved. That might result in the sale of the land, rather than allowing its value to depreciate due to occupation by squatters, for example. These were some of the ITB’s considerations in its preferred approach to lease rather than sell land.

There were also pieces of legislation that imposed significant statutory and bureaucratic hurdles before land could be sold. One such example was the Subdivision of Agricultural Land Act 70 of 1997, which required Ministerial consent before cutting up a portion of land. The reality was that the waiting period could take ten years. It would thus defeat the very purpose if the ITB attempted to sell land which, by law, had attached to it significant legal red tape. The ITB realised that if it held a long-term lease over such land, it would be able to circumvent all that red tape. ITB long-term leases were forty years in duration, which was then renewable by another forty years.

P
ermission to occupy (PTO) were problematic. It was, for instance, not registered, with the result that the holder of a PTO could still enter into a lease agreement with another party. This would then result in a conflict of rights.

Thus in a nutshell the ITB agreed that free hold rights would probably be the best kind of land ownership. The ITB was however also mindful of the practicalities.

He stated that Members might have raised concern with the fact that ten years have elapsed and still full restitution has to be made. It has however been thirteen years since the introduction of the process in 1994, and Judge Ngwenya was however of the view that ten years was not sufficient to achieve this kind of objective. The ITB has not yet been able to fill the legislative vacuum. He only discovered recently that the Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Act was passed very recently, but Parliament was not immediately after that passing legislation that would fill the gap, resulting in vacuums. The result was that there were, for example, a number of State farms that belonged to the government, but which were not being looked after because no mechanism was currently in place to ensure that. The ITB thus acknowledged the limits of its capacity as it was not the legislature, but did the best that it could with what it had.

There did however appear to be the misconception that CLARA would solve every single problem. That Act dealt with new order and old order rights, which essentially allows the Minister to convert old order rights, such as existing leases, into a new order right. The Act does little else more than that. He thus cautioned against over-reliance on CLARA to solve every land right-related problem.

Rather than opting for a freehold, the view of the ITB was to transplant the sectional title setup into a block of flats in the form of a lease holding. This was especially prudent if one considered the Municipal Property Rates Act, which was already in force and being implemented. The ITB had made an input on that Act, stating that a zero rating should be imposed except if for commercial purposes. Government has not yet made an input, but ITB agreed with the view of the Department because it owned more land than the ITB.

Beneficiaries of leases are prescribed to the ITB by legislation. Secondly, CLARA would impose a slight modification and thus the ITB preferred not to take a decision on the matter at the moment only for CLARA to change the landscape at a later point. The CLARA Committees such as the Land Rights Board must first be in place before beneficiaries can be finalised. The ITB would of course still own residual land which did not have beneficiaries. Generally however a beneficiary would be anyone who offered the best premium.

ITB had many international investors, who were quite familiar with the South African lease laws.

The Municipal Property Rates Act definitely had an impact. The ITB’s view was that it needed to work closely with the local authority responsible for advising municipalities. This did not mean that at the end of the day the ITB would not be liable to pay rates. It was hoped that an agreement would be reached that would hold the ITB accountable for rates that were self-funded. This was because the ITB lease agreements stipulated that the tenants of the land under its guardianship would pay the rates. That arrangement was in place even before the Act came into operation.

The ITB’s procedure for identifying traditional councils that that would receive funding for projects was very simple: the community that housed the source of the income would automatically be the beneficiary. If however the ITB was presented with a piece of pristine land that did not have any income-generating industries but which definitely had the potential, it would nevertheless keen to commit its funds.

Plans were in place for community partnerships, and operated according to a set formula. The ITB would become involved in such community empowering projects on the condition that they had an equity partner.

In conclusion Judge Ngwenya stated that It must be noted that the ITB organogram reflected 16 posts in total that were currently vacant. The staff constraint was dictated by the lack of space. Previously the decision as to office space and premises was taken by the Department, but the rules have now been amended to allow the ITB itself to find suitable office space. The ITB has already purchased office space but it would take some time for it to take occupation of that space. The ITB would then have sufficient space to employ its full staff complement.

The meeting was adjourned.

 

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