Thubelisha Homes update: Department briefing

HOUSING PORTFOLIO COMMITTEE
13 November 2007
THUBELISHA HOMES UPDATE: DEPARTMENT BRIEFING

Chairperson: Ms Z Kota- Fredericks (ANC)

Documents handed out:
Department of Housing Briefing to the Portfolio Committee on Housing Regarding Thubelisha Homes

Audio recording of meeting

SUMMARY
The National Department of Housing briefed the Committee on the performance of Thubelisha, including its new mandate, delivery to date, structure and national and provincial capacity. The overwhelming themes were the scarcity and competition for critical resources, including staff, and Thubelisha’s evolving structure. The challenges of service delivery, urgency for cost-effective implementation, funding and a smooth function transfer to the new Development Agency were discussed.

Members expressed their disappointment at the presentation. The organisation was currently functioning without a CEO, the new Board was appointed only one year after the change of mandate, and there was a need for urgent appointments to key posts. Members raised a number of questions around implementation, the capacity of Thubelisha, its provincial offices, high turnover of staff, and the reasons for the additional requests for funding. Members questioned the mandate of the institution, whether Thubelisha was re-developer or implementer, why Thubelisha had been selected by the Department and why the Department was continuing to fund it, and also felt that it was necessary to fix timeframes. The move of Thubelisha to the new National Housing Agency was discussed, and it was decided that the Department must give a further presentation in another meeting outlining specific details of its role, function and capacity in each province.

MINUTES
Thubelisha Homes (Thubelisha): Department of Housing Briefing
Mr Iltumeleng Kotsoane Director General, National Department of Housing, introduced officials present at the meeting representing the institution.

Mr Mziwonke Dlabantu Deputy Director-General, National Department of Housing, briefed the Committee on Thubelisha and its new structure and performance. Mr Dlabantu looked at the organisation’s background, new mandate, delivery to date, structure and national and provincial capacity.

He focused on the issue of balancing capability and resources as contributing factors to speed of delivery. Thubelisha’s original mandate was for right-sizing, yet was expanded on 1 July 2006 to contribute to the acceleration of delivery by the National Minister of Housing (NMH). This task formed the basis of the Business Plan submitted to the National Department of Housing (NDOH) in 2007. Under this new mandate, two types of projects were undertaken. The first was the Upgrading of Informal Settlement Programme (UISP), which included large scale projects in Gauteng and Kwazulu-Natal, and small scale projects in Western Cape, North West and Mpumalanga. The second was Unblocking of Housing Projects in Western, Eastern and Northern Cape. The new mandate required the fast tracking of housing solutions for people living in areas of stress, and Thubelisha was to act as Lead Developer in mega-projects, including the N2 Gateway Project and the Zanemvula Project in Eastern Cape

The Board of Directors was tabled and its functions were described.

Financial resources during the organisation’s transition stage, scarcity, and competition for critical resources were identified as key challenges. There was competition for skills in the construction industry and the scarcity meant that the skills were very expensive and acquired at a premium, placing a limiting impact on the organisation.

Thubelisha had developed and retained a core competence, thanks to the old staff and recruitments to enlarge the institution. The expanding workload, however, remained insufficient at times owing to the high premium on human resources. Any strategy to address these challenges adequately would require determination of the resource requirements; estimation of the associated costs; and investigation into potential funding streams needed for essential and national programmes. It would also be significant for Thubelisha to look at its conducting structure and management.

Over the past year, Thubelisha implemented an appropriate model for cost-effective delivery. A number of key staff members were lost in recent months in the operational areas, which created a vacuum further down the management structure. Recruitment of essential resources was introduced, several planned initiatives were curtailed and challenges of financial scarcity were managed. The vacuum was filled with new recruitments hired on a temporary project-by-project basis. Board Committees were now in place and functional. Mr Dlabantu stated that this would contribute to the cost-effective goal of service delivery and would bring more focus to the projects. Appropriate candidates for a CEO were currently being identified. A list of pre-selected candidates would be submitted to the Department within four weeks.

Discussion
Members raised a number of questions, but since there was not a CEO present to give specific answers to each one, the Department responded in general.

Mr M Sonto (ANC) drew attention to the issue of implementation and required more information about the committee and how it was established. Provinces marked the starting point of problems in housing.

Mr Sonto remarked that Thubelisha had failed to deliver at pace due to human capital constraints. There was no specific information regarding the institution’s capacity in regions and provinces it had been operating.

Mr Sonto also inquired about the high staff turnover. He asked if there was a relationship between the department and Thubelisha.

Mr Sonto said that although the diagram included in the presentation had set out the structure of the organisation and the distribution of roles, no timeframe was mentioned. It was urgent to either make a decision about the institution delivering or take other steps.

Mr A Steyn (DA) would have liked to hear a CEO lead the presentation and provide answers for the members. Although Thubelisha was commonly viewed as the shining solution to the housing problem, Mr Steyn was not confident, on the basis of this presentation, that the organisation would be able to offer any solutions. It was mentioned that a business plan was submitted to the Department in the beginning of 2007 and additional funding for R23million was requested. This immediately said that the business plan lacked something and was not self-sufficient. He asked for the reason behind the request for additional funding.

Mr Steyn believed that the mandate of the institution was too wide, which would lead to loss of focus in what to actually achieve. The evidence was already there in some of the projects over the last year, where Thubelisha failed to appear. Mr Steyn also asked whether Thubelisha was considered as re-developers or implementers and whether the institution managed projects, appointed contractors or did both.

It was noted that the Board of Directors was appointed in June 2007 although Thubelisha’s mandate was changed in June 2006. Mr Steyn asked why it took a year to get the board in place.

Mr Steyn further enquired what percentage of Thubelisha’s previous staff had been retained, how many of those who left were currently operating as consultants, and overall what percentage of consultants were counselling the institution.

The Chairperson commented that although some of the board members of Thubelisha were present at the meeting, there were regional managers representing regional offices. It was recommended that these officials engage with Mr Kotsoane and Mr Dlabantu. The presentation portrayed the institution as unfolding with a new mandate. However, this was the same institution with no positive improvement in its service delivery. In terms of provinces, only a municipality in Eastern Cape was highlighted during the presentation. A question was raised as to if that was the only one where work was being done.

Mr Dlabantu responded that delivery of budget in 2006 and mid-2007 was an indication that the institution dealt with challenges. There was a need for substantial amount of money at this transition stage. There were critical issues around self-sustainability on the ground. Discussion was ongoing within the institution. Mr Dlabantu said he would come back to the practical issue of budget. Thubelisha was expected to do a programme of internal saving as a part of its model plan. It was important to understand the costs Thubelisha was undertaking. Additional funding was still on progress, yet had not yet been concluded, and this would allow Thubelisha to be self-funding and achieve efficiency. The goal was to find a model that could help Thubelisha achieve efficiency, realise funding, and provide delivery.

At the moment, there were some problems in developing and conducting appropriately. An efficient process must be ensured. The spread of number of activities marked the institution’s critical strategy. The mandate covered the depth and choice of critical issues, which made Thubelisha unique. The institution undertook work in areas and regions where no one else wanted to work as the projects were found to be too challenging or to not make economical sense. Thus, Thubelisha’s choice needed to be defined within a strategy based on the mandate and the places where they were playing a particular role.

Ms Dimakatso Moraka, Board member, Thubelisha, commented that Thubelisha was looking at mega-areas, yet operated everywhere in provincial areas. The institution helped unblock various projects in the North West. There were some mega projects that the institution was already involved in. However, in some provinces, the projects were not large, thus the institution was not visible. In the smaller scale projects, there was a need to rely on the pro-activeness of the province as a way of delivery. In municipalities, this was in the hands of the private sector.

Mr Kotsoane commented that human capital was an issue that the institution was currently addressing. Skilled personnel were appointed to realise this mandate. Thubelisha had two focus areas: building capacity around mega projects and unblocking projects. Mobile difficulty was a real difficulty. The problem of human capital was a matter that the institution was addressing. The focus was on the mega projects. Many people had left the institution because it had not been possible to secure funding. Money must be available to provide clear aid and plans available to the people on the ground. This matter could be resolved with assistance by the provinces.

Mr Kotsoane commented that in regard to funding, Thubelisha must be seen as an institution in transition. There was a goal to reduce the number of institutions within the Housing Department, thus Thubelisha would be a part of the process and would be overtaken by a new institution, The Housing Agency. This new structure would lead to better management of matters

Ms N Ngele (ANC) asked why Thubelisha was specifically selected and why the Department continued providing funding for Thubelisha despite the fact that it was failing its mandate.

A Member commented that many challenges were mentioned, yet no successes were indicated. He enquired about the successes and whether Thubelisha succeeded in overcoming any of the challenges.

Mr Steyn asked how often the senior managers met. He noted that eight offices were mentioned in the presentation and asked which province did not have an office, and what conditions dictated the ownership of an office. Another question was raised regarding the key member of staff that left the institution and whether this person was employed as a consultant now.

Mr Sonto uttered the necessity to having a timeframe for the projects. Concern was expressed regarding repetition. He mentioned again that there was a need for proactive implementation.

Mr Kotsoane pointed out the service of the Thubelisha administration. One of the strategic interventions would be in connection with graduating students, who would be recruited and then serve within the department. The timeframes were agreed as critical in relation to the mega projects and the institution’s capacity. Thubelisha should not hire permanent people as it was expensive. It would be wiser to hire temporary staff on a temporary project basis. This would bring in cheaper skills, concentrated mobility and responsibility, and further enhance the capability of the projects. The Department had chosen Thubelisha as at that stage there had been adequate capacity. Owing to the new mandate, the addressing of blocked projects and the unprofitable nature of the work, no one else wanted to do the job. It was pointed that Thubelisha marked successes around the blocked projects and could claim on tools that the institution had successfully evolved.

Ms Moraka responded to question of why there only eight offices. There was no need to establish an office in both Free State and Northern Cape by virtue of their programme. Instead these were sharing an office. She stated, in regard to those leaving the institution, that they had later joined financial institutions. Although Thubelisha needed to use consultants, these individuals had not been appointed to serve as consultants.

Prince Xhanti Sigcawu, General Manager: Gateway Project, Thubelisha, stated that Thubelisha had not failed in any province, and had met all the targets and honoured payments. With regard to funding, Thubelisha was busy trying to sort out the issues resting in provincial hands. Thubelisha was ready to operate in any province. Thubelisha had a good reputation wherever they undertook a project. It was acknowledged that the institution was experiencing challenges. The main reason was due to the exodus of individuals, which created a vacuum. Currently new staff were being recruited. Senior management met monthly and looked at the delivery package of each province with regional managers. Students were also trained in an effort to employ them on a temporary basis to boost the institution.

The Chairperson commented that Thubelisha was a new entity with a new mandate and more funding was shifted for this purpose. It was agreed that when the new mandate had been finalised, the key staff members left the institution and this created real challenges. The frustrations arising from this challenge were understood. However, there was disagreement on the issue of the new agency.

Mr Kotsoane clarified that the new agency would be a Section 32 company designed around the model of the National Road Agency. It was different from Thubelisha, with an incorporated business plan. That was the best route to follow.

The Chairperson said that the Cabinet had approved the legislation and the public would be given an opportunity to comment on it.

Mr Steyn asked whether Thubelisha would be absorbed into a new entity.

Mr Kotsoane responded that this was a parallel process decided upon by the Cabinet. This process would establish a national housing agency with a development component, for which Thubelisha would be accountable. This issue of the new agency would be discussed in detail when presented at a later date. On the issue of capacity, Thubelisha would be dissolved into two companies with various functions of project management adding more credibility to the entity.

The Chairperson raised a question on the issue of hiring temporary project managers and uttered concern that handing out a project to a temporary employee would lead to disaster.

Mr Kotsoane clarified the matter that Thubelisha, instead of transporting permanent employees from far distances, which would be very expensive, would hire temporary managers according to the particular skill required for each project. This would also bring more focus.

Mr Kotsoane commented that it was the responsibility of the cities and provinces to help with projects. The Minister felt it necessary to interact with provinces’ projects. Then Thubelisha would take over the projects and give them a national status so that additional funding could be requested. This would become the second national project. Serious problems were highlighted from cities, which had negative impact on the project. The Department was ensuring that the necessary capacity was in place and quality and control were ensured with oversight.

Chairperson asked who was the CEO of Thubelisha and where the headquarters were located.

Ms Moraka responded that the headquarters were in Killarney. Due to the need, Thubelisha must now have satellite offices in each province. The process of appointing a CEO was under way. The institution was trying to find the right person at the right price. It was anticipated that there would be recruitment of a new senior executive within four weeks, after making recommendations to the Department with submissions of pre-selected candidates.

Mr G Schneemann asked who fulfilled the responsibilities of the CEO.

Mr Manya Moroka, Board member, Thubelisha Board responded that the current acting CEO was the current chairperson of Thubelisha, based on a temporary arrangement.

Mr Sonto inquired about the salary of the acting CEO, and whether she was remunerated as a CEO.

Ms Moraka responded that the current acting CEO only attended meetings and was not remunerated by Thubelisha.

The Chairperson commented that it was hard to understand why an organisation like Thubelisha did not have a senior executive manager. The institution could not receive funding in the absence of a CEO. This issue was taken seriously. It was critical that the recruitment process was expedited.

A Member inquired about the relationship between Thubelisha and the provinces, how the issues were addressed when problems of payment were experienced, and what mechanisms were placed to resolve such matters.

Prince Sigcawu responded that the Department was currently dealing with this matter.

The Chairperson concluded that the Department must give a further presentation in another meeting outlining specific details of its role, function and capacity in each province.

The meeting was adjourned.