ATC111019: Report Fourth  Quarter Expenditure for the 2010/11 financial year and First Quarter Expenditure for the 2011/12 financial year on Conditional Grants Spending Patterns on Land Care Programme Grant: Poverty Relief and Infrastructure Development

NCOP Appropriations

Report of the Select Committee on Appropriations on the Fourth  Quarter Expenditure for the 2010/11 financial year and First Quarter Expenditure for the 2011/12 financial year on Conditional Grants Spending Patterns on Land Care Programme Grant: Poverty Relief and Infrastructure Development, dated 19 October 2011

 

The Select Committee on Appropriations, having analysed the first quarter spending patterns by various provincial departments of Agriculture for fourth quarter in the 2010/11 financial year and first quarter in the 2011/12 financial year, reports as follows:

 

1. Introduction

 

The Select Committee on Appropriations (the Committee) invited eight provincial departments of Agriculture, who were under-spending on the Land Care Programme Grant: Poverty Relief and Infrastructure development Grant, to come and make a presentation on their fourth quarter spending in the 2010/11 financial year and first quarter spending in the 2011/12 financial year. The statistics on spending patterns were published by National Treasury in August 2011. 

 

The Committee meetings took place on 30 and 31 August 2011.  

 

2. Terms of Reference

 

The hearings formed part of the Committee’s ongoing interaction with provinces to monitor their spending on conditional grants allocated to them. A framework for each grant sets out, amongst other things, the purpose of the grant, measurable objectives, conditions, allocation criteria, and past performance.

 

Provinces were requested to make an oral presentation on the Landcare Programme Grant: Poverty Relief and Infrastructure Development and to take into consideration the following:

• Data on trends in allocations, transfers and actual expenditure of conditional grants of the department.
• A brief assessment of your department’s monitoring capacity thus far, for the 2011/12 financial year. Please indicate the under/over-spending and what the capacity constraints that impacted on these outcomes are.
• Whether monthly reports are received from receiving departments or municipalities, and if not, what are the departments doing in order to ensure compliance with monthly reporting.
• Department’s spending plans/business plans on the said conditional grant.

 

The provincial Departments of Agriculture of the Eastern Cape, the Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, the Northern Cape, theNorth West, and the Western Cape, were all invited. All provinces except the North West honoured the invitations.

 

National Treasury was invited to brief the Committee on the spending patterns of the above-mentioned provincial departments. 

 

3. Presentations

 

3.1 National Treasury

National Treasury presented that the purpose of the grant was to enhance the sustainable convservation of natural agriculture resources through community-based participation; to create job opportunities through the expanded public Works programme (EPWP); and to create an enabling environment for improved food security.

 

National Treasury reported that for the 2010/11 financial year the main budget for this grant was R54.5 million and at the end of the first quarter provinces had spent R4.5 million (i.e. 8.4 per cent) of the R5.4 million received.  National Treasury reported that the main budget for the 2011/12 financial year amounts to R57.8 million and provinces projected to spend R57.9 million at the end of the financial year. As at 30 June 2011, provinces had spent only R3.2 million (5.5 per cent) of the R57.8 million allocated to them.

 

Gauteng Province had not spent any of its allocated funds by the first quarter. National Treasury reported that KwaZulu-Natal Province projected to over-spend by R476 000 at the end of the financial year, whereas Mpumalanga Province projected to under-spend by R355 000 at the end of the financial year.

 

On comparing year-on-year growth, National Treasury reported that spending on this grant declined in the provinces of the Eastern Cape, Gauteng,KwaZulu-Natal and the Western Cape. National Treasury said that it doubts that the province of KwaZulu-Natal will overspend its budget allocation at the end of the financial year.  

 

With respect to the challenges reported by provinces, National Treasury reported that the Eastern Cape Province in particular, is experiencing delays in procurement processes. Another challenge reported by the provinces (Eastern Cape, Free State and North West) was that no jobs created against the projected targets. National Treasury added that the provinces of the Free State, Limpopo and the North West reported that no land users benefited from the programme and five provinces (Free State, Northern Cape, North West and Western Cape) reported no hectares of cultivated land were rehabilitated or protected. Lastly, National Treasury reported that the national Department of Agriculture, Forestry and Fisheries has expressed concern regarding the late submission of performance reports by provinces.

 

3.2 The Province of KwaZulu-Natal (PoKZN)

The Province of KwaZulu-Natal (Department of Agriculture, Environmental Affairs and Rural Development) submitted that in the 2010/11 financial year it received a total allocation of R 8.7 million. Of that amount its actual expenditure was R8.2 million (94.5 per cent) resulting in under-expenditure of close to R500, 000. The province reported that the under-expenditure related to the irrigation scheme for the Zwathi project in Zululand that could not be finalisedbefore the end of the financial year. The Department has since applied for a rollover. The Province of KwaZulu-Natal further explained that it has received confirmation from National Treasury that the roll-over request has been approved.

 

With respect to the first quarter of the 2011/12 financial year, the PoKZN reported that it received a transfer amount of R925, 000 and the actual expenditure was R173, 000 (19 percent) of the first quarter transfer. The Committee put it to the PoKZN that the actual spent was 1.9 per cent of the allocated grant funds to the province. The PoKZN agreed and further explained that this was due to projects commencing one month late, due to the delay in signing off the funding agreement between project beneficiaries and Department. And that the first quarter expenditure is for the month of May 2011 only as claims received for June 2011 from beneficiaries were only processed in July 2011. The PoKZN added that some delays in the procurement of required goods such as tools, fencing and protective clothing also affected the expenditure and targets. The PoKZN assured the Committee that it is confident that it will be able to catch up on the expenditure over the remaining three quarters.

 

On job creation and awareness campaigns, the PoKZN submitted that in total 1192 persons were reached through ten projects; 8 projects were for alien plant control, fencing of veld to improve management of grazing land potential, alien plant control to improve water availability for agriculture (i.e. a total of 7 projects which created 182 jobs) and cleaning of bush encroachment (1 projected that created 20 jobs). Moreover, the PoKZN reported that Junior Land Care project reached 120 learners and 870 civilians were reached through the Civil Society Mobilization Programme. The PoKZN further reported that for the first quarter it projected to treat 443 hectares of grazing land (by controlling alien plants, fencing some grazing lands, and stabilising collapsing canals) but managed to treat only 149 hectares. The reason put forward for the variance was that most of the projects were implemented late because of delays in the supply chain management processes. .

 

Regarding monitoring and evaluation, the PoKZN reported that it engages and mobilises communities for support. It conducts frequent project visits and prepares and submits monthly and quarterly reports. These reports are presented in project meetings chaired by the Member of the Executive Council (MEC). This is meant to address all the challenges experienced timeously to ensure successful implementation of projects.

 

When the Committee asked the PoKZN about its challenges and what remedial steps it has taken to address them, the PoKZN replied that the delay in signing the funding agreement resulted in one month’s delay and above that the Supply Chain Management process adopted contributed enormously to procurement delays. The remedial steps that the PoKZN seeks to undertake include: increasing the labour team to meet the individual project targets; the department was working towards having standing contracts (especially for protective clothing) for essential implementing items which will alleviate procurement challenges; and in the current financial year (2011/12) contracts for fencing, engineering work and infrastructure in general have been entered into for a period of 2 years, this will speed up service delivery.

 

3.3 The Province of Free State (PoFS)

The Province of Free State reported that in the 2010/11 financial year it was allocated R4.3 million for the Land Care grant. From these grant funds 18 projects were rolled out and 1 awareness campaign. The projects were meant for pasture establishment and fires; soil erosion control and control of alien plants. The PoFS further submitted that 174 temporary jobs were created. The awareness campaign reached 1000 learners who took part in a four day camp to make them aware of how to manage natural resources.  The PoFS also reported that it spent 16 per cent in the fourth quarter of the 2010/11 financial year.

 

With respect to the 2011/12 financial year, the PoFS submitted that it has been allocated R4.6 million for the Land Care Grant. A total of 18 projects will be rolled out and 1 awareness campaign. The province reported that 142 temporary jobs shall be created and 1 awareness campaign meant to reach 1000 learners will be convened. The PoFS submitted that only R389 000 (8 per cent) was spent during the first quarter of the 2011/12 financial year. Despite this low expenditure, the Province reported had no impact on service delivery because all its projects are seasonal bound.

 

The Province also submitted that the labour cost per labourer was R70 for the 2010/11 financial year but it has since increased in the 2011/12 financial year to R75 per labourer to eradicate 0.1 hectare per day. Eradicating alien plants per hectare cost R400.00. The total number of jobs created were 23 for 84 days. These temporary workers worked for longer periods of time, hence the fee increased in this financial year.

 

Regarding the challenges, the PoFS reported that there was a shortage of skilled technicians. This challenge will be addressed by giving technicians, working over district borders, bursaries and offering experiential training to students. Another concerned raised was lack of capacity to monitor labourersworking in projects. This problem will be addressed by making use of Land Care committees and project leaders.  

 

 

3.4 The Province of Eastern Cape (PoEC)

The Province of Eastern Cape reported that for Land Care Programme Grant in the 2010/11 financial year, R9.6 million was received and R8.7 million (91 per cent) was spent.  The PoEC further reported that it has applied for a roll-over because the unspent funds were committed. It further submitted that fivehundred and forty three (543) casual workers were employed during that period for the land rehabilitation programme and 1 630 hectares of land were reclaimed for productive use.

 

Regarding the 2011/12 financial year grant allocation, the PoEC reported that its main budget for the Land Care Programme Grant was R9.2 million and its actual expenditure was R312, 000 (3.4 per cent of the budget). The Province remarked that application for a roll-over (R800 000) had been made to provincial and National Treasury. 

 

The province said it projected to create 2545 jobs for the 2011/12 financial year and at the end of the first quarter it created 614. The spread of the jobs created were 582 for EPWP: Infrastructure Development (CASP + Land care) and 32 for employment on commercial farms.

 

The PoEC submitted that the under-expenditure R 609 000 in the first quarter  was mainly because of setting up the procedure to pay Expanded Public Works Programme community workers directly, using the South African Post office as a payment agent, as part of community construction projects. It was reported by the PoEC that the main reason for the major deviation in achieving the set targets was the delay in finalising the contractual agreement with payment agent (Post Office) which has the responsibility to manage the EPWP component of Land Care programme in the province. The roll-out procedure involves purchasing of materials and providing training and supervision of communities during the construction of projects (mostly fencing projects) and the Post Office is used as a paying agent. The delay has therefore affected the engagement of casual workers in all activities that requires a labour force, such as reclamation work, construction of gabion structures, and erection of fences.

 

When the PoEC was asked about its challenges, it pointed that in 2010/11 its fourth tranche of grant funds were withheld due to under spending. This includes the Comprehensive Agricultural Support Programme Grant (R 16.2 million) Ilima/Lestema Programme Grant (R 16.2 million) and Land Care Programme Grant (R800 000). The Province submitted that rollovers for these grants were applied for but have not been formally approved. The PoECadded that  another challenge was the lack of technical capacity within its Department of Agriculture; however the low capacity in the Department was being augmented  through the use of consultants for big projects. The Province further said lack of capacity and cash-flow challenges on developingcontractors causes extension of construction period and deviation from Improvement Performance in Practice (IPIP). The Province assured the Committee that community construction is being expanded to increase EPWP benefits for community workers.

 

3.5 The Province of Mpumalanga (PoMpu)

The Province of Mpumalanga submitted to the Committee that for the past two financial years (2008/09 and 2009/10) it spent 100 per cent of its grant allocations. The Province of Mpumalanga reported that in the 2010/11 financial year it received R4.9 million for the Land Care Programme grant, of which R4.8 million was spent at the end of the financial year.

 

The PoMpu added that through the grant funds it created 119 jobs from four projects that were rolled out in three districts (Ehlanzeni, Gert Sibande, andNkangala). The total number of beneficiaries of the various programmes and projects of this grant (awareness campaigns, capacity building, fencing and de-bushing)was amounts to1141.

 

In the 2011/12 financial year, the PoMpu reported that it has been allocated R5.2 million and for the first quarter it projected to spend R1.2 million, but the actual spent was R374 000. The PoMPu submitted that the under expenditure was due to the delays in the procurement of fencing material, drilling and equipping of borehole for livestock watering.

 

Regarding the challenges that the province was experiencing, it reported that generally there is slow progress in projects awarded to emerging contractors. These contractors have cash flow constraints. Above that the social dynamics at project level are delaying implementation and the progress of projects. But the PoMpu made a commitment to the Committee that it has a plan in place and that most of the projects will be implemented in the second quarter of 2011/12 financial year.

 

3.6 The Province of Western Cape (PoWC)

The Province of Western Cape reported that over the last three financial years its allocation of this grant has been fluctuating (2008/09 R3.4 million, 2009/10 R3 million and 2010/11 R3.2 million). In the last two financial years it spent 100 per cent of its grant allocation. It was only in 2008/09 that it under spent by R1000. The PoWC submitted that in the fourth quarter in the 2010/11 financial year it projected to spend R380 000 but due to under spending in the third quarter it spent R696 000. With respect to the first quarter of the 2011/12 financial year, the PoWC reported that it projected to spend R777 000 but only managed to spend R761 00. This variance was as a result of cancellation of Kleinrivier Environmental and Employment Project (KEEP) due to the resignation of the project leader and these funds will be shifted to the Kleinswartberg project that has resources. The KEEP project will be replaced by another project.

 

On the number of projects implemented, the PoWC reported that in 2010/11 financial year 32 projects were implemented and 21 were completed in the fourth quarter, which were started in the third quarter. Six projects were started and completed in the fourth quarter. Overall the total cost of the 6 projects was R696 000.  The PoWC further said all targets for 2010/11 financial year were met.  With respect to the 2011/12 financial year, the PoWC reported that there are 26 projects which were at the implementation stage; 20 of these projects have been started instead of 12 projects. These projects are implemented across the province and those benefited the most from the projects being located in the peripheral/rural areas. So far only 1 project has been completed. The PoWC submitted that R761 00 has been spent on these projects.

 

When asked about the reasons for over-spending in the fourth quarter 2010/11, the PoWC submitted that some projects were slightly behind schedule in the third quarter and therefore spending had to be increased in the fourth quarter to complete the projects and to utilise the available funds. This was mainly caused by Junior LandCare projects that could not be conducted in the third quarter due to a change in the school programme. Another contributing factor mentioned was the continuation of some alien cleaning projects that could only take place in the fourth quarter due to flooding after heavy rains in the third quarter.

 

  3.7 The Province of Gauteng (PoG)

The Province of Gauteng reported that for this grant it received R3.8 million for the 2010/11 financial year. These funds were spent on two projects, theBamba Manzi alien plant removal project in Mogale City which covered 500 hectares and   Wonga Manzi alien plant removal project in City ofJohannesburg Metropolitan Municipality-Region which covered 500 hectares. The total number of jobs opportunities created was 361.  

 

For the 2011/12 financial year, the PoG reported that it has been allocated R4 million in grant funds. R 1.9 million has been allocated to the Wonga Manzialien plant removal project. The objective of this project is to clean 500 hectares of alien vegetation in the City of Johannesburg-Region G and create 500 job opportunities. Another project is the Londindalo Alien Plant Removal Project, which will create 32 jobs. The budget for this project is R 644 000 and it will remove alien vegetation on 69 hectares in Lesedi Local Municipality. The third project is Magalies River Wetland Rehabilitation Project, which will create 25 jobs and has been allocated R1.5 million. The Province further aims to rehabilitate 1 Wetland in Mogale City Local Municipality.

 

 During the interaction with the PoG, the province reported that it has a standing agreement with service providers that after they have been appointed they should utilise their own funds and then claim from the Department. Regarding the monitoring grant expenditure, the PoG submitted that numerous mechanisms are in place to ensure that the Landcare conditional grant funds are correctly spent. The PoG explained that all funded projects have business plans and the Project Governance Committee monitors all projects. These projects are then regularly inspected by the National Land Care Secretariat and Gauteng Treasury. The Province further submitted that the reports are verified.

 

3.8 The Province of Limpopo (PoL)

The Province of Limpopo reported that it receive R8.1 million in the 2010/11 financial year. These grant funds were spent on 15 projects (6 fencing projects, 2 soil conservation projects, 3 alien plant control projects, 2 awareness campaigns, 1 training programme, and 1 control bush encroachment).  

 

For the 2011/12 financial year, the PoL reported that it has been allocated R8.7 million for this grant. It further said it projected to spend R1 million for the first quarter in the 2011/12 financial year but it managed to spend only R640 000. Regharding the under-expenditure in the first quarter, the PoL reported that it had properly planned for all projects but service providers, in most cases, did not have capacity to provide services. To address this matter, the Province submitted that new service providers have been added and their capacity is verified continuously.

 

Regarding the monitoring of grant projects, the PoL reported that it has enough capacity to monitor the grant funds expenditure. The Provincial Assessment Panel assesses and recommends projects which are then monitored monthly by Landcare Coordinators. All monthly and quarterly expenditure reports have been submitted to the national Department of Agriculture, Forestry and Fisheries. 

 

With respect to the performance of service providers, the PoL reported that most service providers failed to render services especially chemicals to control alien plants. This was due to the fact that they procure these chemical from other provinces. The second challenge was the delay by emerging suppliers to render service on fencing material.

 

4. Findings

 

4.1 Expenditure of this grant is off to a slow start in the first quarter of the 2011/12 financial year.

 

4.2 No jobs were created by the following provinces: the Eastern Cape, the Free State and the North West. The Committee is concerned about this because among others, the purpose of this grant is to create job opportunities through the Expanded Public Works Programme.

 

4.3 The Committee was concerned to learn that Gauteng Province did not spend the grant funds transferred in the first quarter of the 2011/12 financial year. And that in the provinces of the Free State, Limpopo and the North West, no land users benefitted from the grant during the first quarter in the 2011/12 financial year.

 

4.4 The provinces of the Free State, Gauteng, the Northern Cape, the North West and the Western Cape, failed to cultivate or rehabilitate any hectares of land.

 

4.5 The Committee notes that generally Provinces put forward delays in the Supply Chain Management processes as the biggest contributing factor to delaying project implementation.  

 

5. Recommendations

 

The Select Committee on Appropriations makes the following recommendations:

 

5.1 In order to realise government’s priority of job creation, provincial departments should spend grant funds through community-based participation, by doing that jobs will be created. Furthermore, all provincial departments should avoid utilising service providers/consultants when implementing projects that seek to enhance and sustain conservation as this detract from the objective of creating appropriate number of jobs;   

 

5.2 All provincial departments should ensure that they utilise grant funds and help people at grass roots level by rehabilitating their cultivated land;

 

5.3 All provincial departments should strengthen their supply chain management units and improve their planning. [Everybody is aware that the three spheres of government (national, provincial and local) now receive three-year allocations for conditional grants and a framework for each grant setting out the purpose of the grant, measurable objectives, conditions, allocations criteria, and past performance, among other things. Therefore, there is no excuse for poor planning and the late implementation of projects. (Emphasised)]; and

 

5.4 All provincial departments should consider adopting the Province of KwaZulu-Natal strategy by entering into multi-year contracts for projects that include fencing, infrastructure, and engineering works. 

 

Report to be considered.