ATC151028: Budgetary Review and Recommendation Report of the Portfolio Committee on Rural Development and Land Reform, dated 28 October 2015

Rural Development and Land Reform

Budgetary Review and Recommendation Report of the Portfolio Committee on Rural Development and Land Reform, dated 28 October 2015.
 

 

The Portfolio Committee on Rural Development and Land Reform, having considered the annual performance reports of the Department of Rural Development and Land Reform for the 2014/15 financial year; further having conducted analysis of budgets and estimates of expenditure over the medium term, reports as follows:

 

1.            Introduction

 

In terms of the Money Bills Amendment Procedures and Related Matters Act, 2009 (Act No.9 of 2009), the National Assembly is required to conduct annual assessment of the performance of each national department with a focus on the medium term estimates of expenditure. Section 5 of the Act sets out a procedure for assessing the performance of each national department to be followed by the National Assembly. This procedure provides for portfolio committees to prepare budgetary review and recommendation report (BRRR), which must provide an assessment of the departments’ service delivery performance given available resources; must provide an assessment of the effectiveness and efficiency of the departments’ use and forward allocation of available resources; and may include recommendations on the forward use of resources. This report, therefore, accounts for work carried out by the Portfolio Committee on Rural Development and Land Reform (the Committee) when it assessed the performance of the Department of Rural Development and Land Reform (the Department) and related entities, the Commission on Restitution of Land Rights (the Commission) and the Ingonyama Trust Board (ITB). It also makes recommendations for budget review and improvement of service delivery.  

 

1.2          The mandate of the Portfolio Committee on Rural Development and Land Reform

 

The Committee, as an extension of the National Assembly, is governed by the rules of the National Assembly to oversee the portfolio of rural development and land reform. Explicably, it oversees the work of Executive and the Department of Rural Development and Land Reform (the Department) whose mandate is transversal; that is, to create and maintain an equitable and sustainable land dispensation and act as a catalyst in rural development to ensure sustainable rural livelihoods, decent work, and continued social and economic advancement of all South Africans. Furthermore, the Committee oversees the work of the public entities and commissions reporting under the Department; namely, the Commission on Restitution of Land Rights (the Commission) established in terms of the Restitution of Land Rights Act, 1994 (Act 22 of 1994) as amended. The Ingonyama Trust Board (ITB) established in terms of the KwaZulu-Natal Ingonyama Trust Act, 1994 (Act 3 of 1994) amended by the National Act 9 of 1997. The Committee, exercising its powers within a legal framework of the Constitution, together with relevant statutes and the Rules of the National Assembly, considers and processes legislation from the Department and its entities, exercises oversight on implementation of the various relevant programmes of the Department and related entities, facilitates public participation, considers budget votes, enquires and makes recommendations about any aspect of the Department, including its structure, functioning and policy.  

 

1.3        The Department of Rural Development and Land Reform

 

The Department derives its mandate from priorities of government, as obtained from the National Development Plan and articulated through the Medium-Term Strategic Framework and 12 Outcomes of government. It coordinates implementation of ‘Outcome 7: Comprehensive Rural Development and Food Security for All’. Concomitant to the outcome, the outputs for this Department are sustainable agrarian reform with a thriving farming sector, improved access to affordable and diverse food, improving rural services to support livelihoods, improved employment and skills development and enabling institutional environment for sustainable and inclusive growth.

 

Table 1: Strategic outcome oriented goals 

Strategic Goal

Strategic Goal Statement

Corporate governance and service excellence   Improved land administration for integrated and sustainable growth and development   Promote equitable access to and sustainable use of land for development Promote sustainable rural livelihoods     Improved access to services   Sustainable rural enterprise and industries     Restoration of Land Rights

Foster corporate governance and service excellence through compliance with the legal framework Improve land administration and spatial planning for integrated sustainable growth and development with a bias towards rural areas An inclusive and equitable land dispensation with transformed patterns of land tenure and use Improve rural livelihoods as a result of capabilities, income and job opportunities provided Improve access to services in rural areas through the coordinated of quality infrastructure Promote economically, socially, and environmentally viable rural enterprises and industries Restoration of Land Rights in terms of the Restitution of Land Rights Act, as amended.

Source:   DRDLR (2015) Strategic Plan of the Department of Rural Development and Land Reform 2015-2020

 

The Department’s Strategic Plan (2015 - 2020), read together with the Annual Performance Plan (the APP) of 2014/15 and that of 2015/16 demonstrated the extent to which the functions of the Department were aligned to Outcome 7 and the National Development Plan. The Department adopted Outcome 7 as the vision of the Department; that is “vibrant, equitable, and sustainable rural communities” and the mission is to “initiate, facilitate, coordinate, catalyse and implement an integrated rural development programme”. The vision and mission of the Department is underpinned by the strategy of “agrarian transformation, interpreted to denote a rapid and fundamental change in the relations (systems and patterns of ownership and control) of land, livestock, cropping and community”. This strategy aims toward facilitating integrated development and social cohesion through partnerships with all sectors of the society. Through the 2014/15 APP, the Department interpreted social cohesion and integrated development as shared growth and development, full employment, equity and cultural progress. The Agrarian Transformation System, discussed below, has been the centre of strategic approach for delivering these objectives

 

Table 2: Strategic objectives of the Department of Rural Development and Land Reform 

Programme	Strategic Objective
Administration	­     Compliance with all public sector legal prescripts ­     Unqualified regularity audit opinion ­     Skills development for improved service delivery
Geospatial and Cadastral Services	­     Improved spatial planning ­     Integrated and comprehensive land administration system
Rural development	­     Job creation and skills development in rural areas ­     Quality infrastructure provided ­     Functional and institutional arrangements ­     Facilitate the establishment of rural enterprises and industries
Restitution	­     Land Rights restored ­     Redress land rights lost after 1913
Land Reform	­     Strategically located land acquired ­     Support to rural communities to produce their own food in all rural districts ­     Farm development support provided to smallholder farmers

Source: The Strategic Plan of the Department of Rural Development and Land Reform (2015-2020)

 

1.4        Approach for compilation of this report  

 

In line with the mandate of the Committee discussed in section 1.1 and section 5 of the Money Bills Amendment Procedures and Related Matters Act (2009), this report is a culmination of a range of oversight activities carried out by the Committee over the 2014/15 and 2015/16 financial years. The following paragraphs highlights, starting from recent activities, some of the key oversight activities carried out by the Committee:

 

Analysis of the annual performance reports: The Committee considered performance reports of the Department, the Commission and the ITB. On 14 October 2015, the Committee considered the 2014/15 Annual Report of the Department, including the annual financial statements. This built on the consideration of the 2014/15 Annual Report of the Commission on Restitution of Land Rights already carried out on 05 August 2015. Due to the fact that the annual financial statements (AFS) of the Commission were audited under Programme 4 (Restitution) of the Department, it meant that the Commission had to appear twice before the Committee for consideration of its annual performance reports. On 15 October 2015, the Committee considered the 2014/15 Annual Report of the Ingonyama Trust Board. Assessment of these reports was based on overarching policy priorities articulated in the National Development Plan (NDP), the Medium-Term Strategic Framework (MTSF) and relevant strategic plans. These priorities found pronouncement from various Cabinet ‘makgotla’, the State of the National Address (SONA), the Budget Speech by the Minister of Finance, and the Minister of Rural Development and Land Reform’s budget policy statements.

Briefing sessions with Chapter 9 Institutions and other government entities that support Parliamentary oversight: On 14 October 2015, the Committee received a briefing by the Auditor-General of South Africa on the performance audit conducted for the 2014/15 financial year. The AGSA focussed on audit of predetermined objectives (AOPO) and audit of AFS. Further, on 19 August 2015, the Financial and Fiscal Commission (FFC) appeared before the Committee to present its analysis of the financial state of the Department and expenditure trends, as well as its recommendations to National Treasury over the last two years. As will be discussed later, the observations of these institutions helped the Committee to analyse the report and arrive at certain conclusions discussed in this report. On 3 June 2015, the Committee received briefing by the Department of Planning, Monitoring and Evaluation (DPME) on the CRDP. It further took into consideration the Management Performance Assessment Tool (MPAT) Report.  

 

Analysis of quarterly performance reports:  During 2015, the Committee continued to receive quarterly reports in order to monitor performance and track implementation of particular recommendations of the Committee, the Auditor-General and others. The report will mainly draw on quarterly reports (4th quarter 2014/15 and 1st Quarter 2015/16) considered by the Committee on 13 and 20 May 2015 and 12 August 2015.

 

Review of responses to the previous BRRR: The Committee considered the Minister of Finance and Minister of Rural Development’s responses to the previous BRRR. Some of the major budgetary question had already been addressed by the Minister of Finance; especially the Medium-Term Budget Policy Statement (MTBPS). The Minister of Rural Development and Land Reform has also comprehensively responded to the BRRR. 

 

Other oversight activities: Analysis draws on various engagements between the Department and the Committee, especially briefing sessions on programmes, oversight visits reports to the lodgement centres in the Regional Land Claims Commissioners’ offices (RLCC) of the Western Cape, Eastern Cape, Kwazulu-Natal, and Limpopo. Further, public hearings on the Recapitalisation and Development Programme on 4 and 5 February 2015, and oversight visit to various RADP farms in the Eastern Cape, Kwazulu-Natal and the Northern Cape.

 

1.5        The structure of the report

 

Following this introduction, this report organised into two six main sections; namely –

 

Section 2:    Outlines an overview of key policy areas to set the scene for analysis of the performance of the Department, the Commission and the ITB;

Section 3:    Presents the financial and non-financial performance recommendations in terms of the 2014 BRRR and the 2015 Budget Vote Report.

Section 4:    Presents an overview of expenditure trends over the last five years, discusses financial performance of the Department and entities during the 2014/15 financial year.

Section 5:    Reviews service delivery against the priorities and predetermined objectives.    

Section 6:    Recapitulates key observations, findings and conclusions.  

Section 7:    Presents the Committee’s recommendations to the Minister of Finance for budget review, and to the Minister of Rural Development and Land Reform for service delivery improvement.

 

2.         Key relevant policy priority areas

 

The Strategic Plan of the Department of Rural Development and Land Reform (2014-2019) sets the performance of the Department within the context of MTSF priorities linked to the National Development Plan (NDP). Chapter 6 of the NDP - Integrated and Inclusive Rural Economy - envisions rural areas that are spatially, socially and economically integrated, where residents have economic growth, food security, access to basic services, health-care and quality education. The driving force to achieve this vision is agriculture. The NDP also suggests that agriculture has the potential to create 1 million jobs by 2030. Further, access to land has a potential of 300 000 jobs in different farming levels. The NDP therefore sets a target to transfer 20 per cent of agricultural land to black people by 2030. Considering progress made to date, the Department needs to transfer to black people another 8.9 million hectares of agricultural land by 2030. The NDP further proposed district-based land reform driven by district land committees which would determine the land needs in particular districts, identification of land available and collaboration of stakeholders to address those needs.

 

Chapter 6 of the NDP was translated into Outcomes 7, one of the 12 outcomes of government, which focusses on “Vibrant, equitable, ad sustainable rural communities and food security for all”. It identified six policy imperatives relevant to the mandate of the Department, namely:

 

• improved land administration and spatial planning for integrated development in rural  areas;
• sustainable land reform (agrarian transformation);
• improved food security;
• smallholder farmer development and support (technical, financial, infrastructure) for agrarian transformation;
• increased access to quality basic infrastructure and services, particularly in education, healthcare and public transport in rural areas; and
• growth of sustainable rural enterprises and industries characterised by strong rural-urban linkages, increased investment in agro-processing, trade development and access to markets and financial services– resulting in rural job creation.

 

The MTSF further sets out some of the critical targets, namely: increasing the per centage of productive land owned by previously disadvantaged individuals from 11.5 per cent in 2013 to 20 per cent by 2019 (or 16.2 million hectares); reducing the per centage of households who are vulnerable to hunger from 11.4 per cent in 2013 to less than 9.5 per cent; reducing the per centage of the population living below the lower bound poverty line (i.e. R443 in 2011) from 32.3 per cent to below 22 per cent; and reducing rural unemployment from 49 per cent to less than 40 per cent.

 

The 2014 SONA by the President pronounced on key policy issues having a direct bearing on the mandate of the Department; namely, provision of comprehensive support to smallholder farmers by speeding up land reform providing technical, infrastructure and financial support; acceleration of the settlement of remaining land claims submitted before the cut-off date of 1998; and the re-opening of the period for the lodgement of claims for the restitution of land for period of five years, and codify exceptions to the 1913 cut-off date for the descendants of the Khoi and San people. Achievement of these priorities require fast-tracking land reform, ensuring tenure security, comprehensive support to farmers and provision of social and economic infrastructure in rural areas.

Agrarian Transformation System, expressively espoused in the Green Paper on Land Reform (2011), comprehensively integrates land reform and rural development. It aims to ensure transformation of rural economy in line with the NDP by creating integrated rural areas where residents are economically active with food security, access to basic services, health-care and quality education. The Agrarian Transformation System entails the following development measurable: meeting basic human needs; rural enterprise development; agro-village industries sustained by credit facilities and value-chain markets; and improved land tenure.

 

For the year under review, the Department proposed to focus on the following:

 

• Promoting and strengthening intra and inter-sphere collaboration and forging synergies to leverage collective resource targeting, operational collaboration, and coherence in planning.
• Improvement of the livelihoods of the rural poor through coordination of the effective implementation of socio-economic infrastructure with Animal and Veld Management Programme and the CRDP.
• Reopening of the lodgement of land claims as well as building capacity of the commission to implement the programme.

• Continuing with the National Rural Youth Service Corps (NARYSEC) and planning of nine Rural Youth Hubs taking cognisance of the 23 poorest districts in South Africa;
• Shortening of the time to finalise claims. Instead of the ‘willing-buyer willing-seller’ approach, the Department would pursue the ‘just and equitable’ principle for compensation as set out in the Constitution. It anticipated to curb the challenge of escalating land prices and purchasing of land at a cost exceeding the actual market value;
• Amending the Restitution of Land Rights Act, 1994 in order to provide for the reopening of the lodgements of restitution claims by those who missed the deadline of 31 December 1998;
• Extending the June 1913 cut-off date to accommodate claims by the descendants of the Khoi and San as well as heritage sites and historical landmarks;
• Providing adequate post-settlement support to new landowners in order to ensure they sustain productivity of farms acquired by the state for redistribution.
• Providing better incentives to commercial farmers that are willing and capable of mentoring smallholder farmers.

 

2.1        Priority policy and legislation to be developed in the medium-term

 

Ongoing policy development work resulting from public consultations pursuant to the publication of the Green Paper on Land Reform in 2011 led to development and amendment of a number of pieces of legislation. In the last two years, the Department focussed on the five pieces of legislation, namely:

 

• Electronic Deeds Registries Bill: This Bill provides for facilitation of the enactment of electronic deeds registration provisions. It is anticipated that this new manner of deeds registration could decrease the time required for the registration of deeds. In addition, this approach would further enhance the accuracy and examination and registration.
• Regulation of Land Holding Bill: The most important issue in this Bill is that it would provide for classification of land as controlled land; and enforce disclosure by land owners of their race, gender and nationality. All acquisition and disposal of land by foreign nationals would be provided for under this piece of legislation.  The Bill also establishes the Land Commission, its powers and functions.
• Extension of Security of tenure Amendment Bill: This proposes amendments to address the tenure insecurities in commercial farming areas, integrating land redistribution within effective legal protection and disputes mechanisms.
• Communal Property Association Amendment Bill: This Bill seeks to extend the applicability of the Act to land acquired under the LTA for labour tenants. Under this Bill, there are proposals for establishment of CPA office and the appointment of a Registrar of CPAs. This Bill will help to provide further clarity on the management of the CPAs and the content of the CPA reports.
• Communal Land Tenure Bill: This Bill would provide for the regulation of communal land in South Africa. In addition, it would further provide for mechanisms to transfer communal land (including the Ingonyama Trust land, to communities and members of communities as well as administration of communal land. The piece of legislation would further clarify the manner in which municipal functions can be performed on communal land.

 

During the period under review, none of the pieces of legislation were tabled in Parliament. However, the Department carried forward these legislative initiatives into 2015/16 APP, with plans to submit them between June and September 2015. By the end of September 2015, the Department had submitted the Extension of Security of Tenure Amendment Bill.

 

3.         Previous financial and service delivery recommendations

 

This section presents an overview of the Committee’s recommendations regarding the 2013/14 financial and service delivery performance as per the October 2014 BRRR. Further, it presents the responses of the Minister of Finance as per provisions of Section 7(4) of the Money Bills Amendment Procedure and Related Matters Act (2009). This Act provides that the Minister of Finance must submit a report to Parliament at the time of the budget explaining how the Division of Revenue Bill and the national budget give effect to, or the reasons for not taking into account, the BRRR recommendations. It will further highlight the responses of the Minister of Rural Development and Land Reform, especially on the service delivery recommendations.

 

3.1        The 2014 budget review recommendations

 

For compilation of this report, the Committee considered the BRRR for the 2014/15 financial year, both the budget recommendations and service delivery recommendations.

 

3.1.1     Budget recommendations

 

In 2014, the Committee observed that the Commission had approximately R4billion of commitments for restitution arising from previous commitments. In its conclusions, it stated that this could affect the ability of the Commission to settle and finalise new claims as they had to settle the commitments from prior years. It therefore recommended an engagement between the Ministers of Finance and of Rural Development and Land Reform re-look the funding mechanisms takes into account the commitments, amount of outstanding land claims, and the increasing number of new claims arising from the post 2014 lodgement processes.

 

Another recommendation was that: taking into considering that 25 per cent  of the allocation of land redistribution is reserved for farm development (i.e. RADP), further noting that it reduces the amount available for purchase of strategically located land at scale anticipated; the minister, in consultation with the Minister of Rural Development and Land Reform, should create a special budget allocation for RADP for land reform farms to add to the current allocation in order to reach a wide range of deserving beneficiaries, including smallholders on communal land.

 

Having considered the recommendations, the Minister of Finance responded as follows: dedicated budget to fund commitments of R4billion: The Minister reported that the National Treasury and the Department of Rural Development and Land Reform have agreed that all restitution claims would be addressed simultaneously.  Further, that in relation to adequate budget for new claims, the DRDLR has reprioritised R571 million over the 2015 MTEF period from the existing baseline to fund new claims. With recapitalisation and development, an amount of R4.7 billion has been proposed for allocation under the Recapitalisation and Development Programme over the 2015 MTEF period.

 

3.1.2     Service delivery recommendations

 

The recommendations pertaining to service delivery in three sections, namely for the Department, the Commission and the ITB.

 

(a)      Department of Rural Development and Land Reform

 

The Committee recommended the enhancement of the capacity of the Department to implement programmes and ensure that 100 per cent spending of budget corresponded to performance on the service delivery targets. In addition, it recommended that the Department must fill all the funded strategic vacant posts; for example, the Chief Financial Officer. A particular attention was to be on the internal controls and management of performance information.

 

The Committee recommended that the Department must consider putting in place mechanism to address the high rate of staff turnover. Further, that the Department must develop mechanisms to enhance the capacity of the Department to coordinate effectively all relevant departments or units across all spheres of government in a manner that foster the intergovernmental approach to rural development. This was especially necessary, and continued to be, to avoid duplication of services as is the case in Animal and Veld Management Programme (DRDLR) and the Land Care Programme (DAFF)  

 

With regard to investigations, the Committee recommended that the Department should submit the outcomes of the SIU investigations conducted over the last five years (2009-2014). Further ensure that the Department of Rural Development and Land Reform puts in place systems and mechanisms to ensure that all internal investigations are completed on time. 

 

The project to set up e-cadastre, which had been on the cards for a long time, also received attention. The Committee recommended that it should be completed and implemented. Further, that the Department should fast-track implementation of the second phase of land audit to ensure completion of the full land audit that explains property ownership by race, gender and nationality. In similar vein, accelerate implementation of the Spatial Planning and Land Use Management Act.

Concerned about increasing productivity of farms and the required post-settlement support, the Committee recommended that the Department must ensure proper funding of the RADP so that the programme could assist smallholder farmers. 

 

(b)        Commission on Restitution of Land Rights

 

The Committee made the following recommendations for the Commission:

 

• Development of a prioritisation plan for land claims lodged prior to 31 December 1998 in order to comply with of the Restitution of Land Rights Amendment Act, 2014.
• Finalisation of the codification of exceptions to the 1913 cut-off date without delay so that the Khoi and San are afforded opportunity for redress of their land dispossession and removals.
• Ensuring no shifting of funds from restitution because of the budgetary constraints relating to settlement of both the old and new land claims.
• Roll out the mobile lodgement centres, appointment of additional human resources to fast track the lodgement process.
• Developing and implementing the communication plan for the reopening of the lodgement of land claims as well as communicating progress to land claimants generally.

 

(c)        Ingonyama Trust Board

 

The Committee made the following recommendations for the ITB:

 

• Initiation of the processes to appoint the new Board and further ensure that the Board establish the new Audit Committee.
• Facilitation of a process to ensure that the Ingonyama Trust Board refocus its mandate to comply with its founding legislation.
• Discussion, with the relevant stakeholders, on the review of the mandate of the Board as well as the funding of the Ingonyama Trust Board through transfers from the Department in order to determine the necessity of transfers against the backdrop of surplus and savings.
• Assisting the ITB to develop policies that will provide guidance in the operations of the Board.   
• Submitting a report to Parliament about the strategies developed to address issues of non-compliance on valuation of property. 
• Submitting a report to Parliament on how it is going to address matters raised by the Auditor General, especially reasons for the qualified audit opinion.

 

3.2.       The 2015/16 Budget Vote 39 Report  

 

During consideration of the Budget Vote 39, the Committee recommended that the Minister should -

 

Administration

 

• Submit a progress report detailing status quo with regard the five pieces of legislation that targeted for tabling in Parliament. Further, the report should indicate if the Department would be meeting the set timeframes, if not, revised timeframes should be proposed so that proper planning by the Committee could be done.
• Ensure that the vacancy rate of the Department and the Commission was reduced by filling all strategic and senior management positions, the vacant Deputy Director-Generals and Chief Directors positions in particular, in order to address the challenges lack of capacity perform on some of the critical programmes. 
• Consult farm workers widely, as intended active partners to enterprises that would be established in terms of the proposed policy on ‘Strengthening Relative Rights for People Working the land’. Further, the Minister, having concluded consultations with farmers and stakeholders, should table a report in Parliament about key policy proposals for further deliberation. 
• Ensure implementation of the risk management strategies and plans so that all forms of exposure to risks are contained and submit progress report to Parliament.

 

Geospatial and cadastral Services

 

• Submit a report about the target municipalities that the Department plans to assist develop the Land Use Schemes in order to address the related legacy of apartheid spatial planning.
• Submit a progress report on the investigation on the e-cadastre project.

 

Rural Development

 

• Ensure effective improvement of coordination of planning and interventions, especially in areas where there is potential for duplication of services; for example Land Care programme of the Department of Agriculture, Forestry and Fisheries vis-à-vis Animal and Veld Management Programme of the DRDLR. In addition, mechanisms to foster coordination within the Department should be put in place, especially land reform, restitution and RID as well as REID. Further, to submit report on progress made.
• Conducting a review of the NARYSEC programme to assess if the programme has achieved the intended consequences in the last five years, challenges encounters, and implications for future implementation plans.

 

Restitution (Commission on Restitution of Land Rights)

 

• Continuously engage National Treasury about increasing allocation of funding for restitution to clear the commitment register of settled land claims.
• Ensure that the programme for mobile land claims lodgement centres are publicised, including circulation at local municipalities, constituency offices, traditional councils, and other public centres to ensure effective campaign for reopening of lodgement of land claims. Further, submit progress report on the performance of the mobile lodgement centres, including but not limited to, provinces and areas visited, number of land claims received per mobile lodgement centre, total cost of operation per mobile centre.
• Develop guidelines and strategic framework for prioritisation of all land claims lodged prior to the cut-off date of 31 December 1998. Such framework should provide a time-framed and realistic plans, with estimated costs, for research, gazetting and settlement of such land claims.
• Submit a report on all litigation matters before the Land Claims Court, detailing the dates of lodgement and referral to the Land Claims Court, the nature of dispute, the current status of each matter, and financial implications to the Commission.
• Finalise the revised organogram of the Commission to ensure that the new structure aligns with the autonomy of the Commission. Further, submit quarterly report on progress towards achieving full autonomy of the Commission. 

 

Land reform and development support

 

• Improve on monitoring and evaluation of the implementation of the Recapitalisation and Development Programme.
• Develop models for assessment of the viability of the Recapitalisation and Development Programme farms which is based on, amongst others, economic viability and profitability of the farms.
• Ensure coordination of with DAFF to ensure streamlining farmer support to land reform beneficiaries, including small-scale farmers. One such area of streamlining is extension support services.
• Submit a performance plans on the Tenure Reform component of the land reform programme (mainly farm evictions and land rights management facility) with clear and realistic targets and performance indicators.

 

The Ingonyama Trust Board

 

• Ensure that the ITB appoints the Chief Executive Officer without delay to avoid having the CEO and CFO positions being centralised in one person.
• Finalise policies to address gaps relating to funding of cultural activities, promotion of women’s independent access to land and other relevant policies that affect the manner in which the ITB performs its functions.
• Facilitate, without delay, resolution of ongoing questions raised by the Auditor-General in relation to the value of the ITB’s land/property so that the ITB could move toward achievement of an unqualified clean audit. Further submit quarterly progress report on implementation of the remedial measures.
• Conduct a comprehensive socio-economic impact assessment of the performance of the ITB and how the beneficiaries have materially and socio-economically benefited from the ITB programmes.
• Submit a detailed plan on how the new programme of Rural Development would work and its impact on the structure and mandate of the ITB. Further, submit the proposed organogram that incorporates the programme of rural development.

 

4.         Overview of 2014/15 financial performance

 

4.1        Vote allocation and expenditure trends (2011/12 – 2015/16)

 

The Committee’s analysis of the budget allocation and financial performance of the Department between 2011/12 and 2014/15 financial years shows that there has been significant increase in the programmes of Administration, the Geo-spatial and Cadastral Services and Rural Development as illustrated in Table 2 below.  Such increases can be linked with the key priorities of the Department, i.e. the RADP, the Office of the Valuer-General, lodgement of new land claims, increase of NARYSEC participants’ increase by 9000 over the medium term, and implementation of Spatial Planning and Land Use Management Act (SPLUMA), hence expenditure on Administration and Geo-Spatial and Cadastral Services. According to National Treasury, SPLUMA has significant impact on allocation for compensation of employees which is set to increase to cover the cost for the required specialised personnel. This takes into account the occupation specific dispensation for this programme. Between 2011/12 and 2014/15, a total average of expenditure for rural development, restitution and land reform accounted for almost 79per cent of the entire budget of the Department. And it is estimated to continue over the Medium-Term.

 

Table 3: Expenditure estimates for the DRDLR

Programme	Audited outcome			adjusted appropriation	Revised estimates	Average Growth rate (per cent)	Expenditure/total average (per cent)	Medium-term expenditure estimates			Average Growth rate (per cent)	Expenditure/total Average (per cent)
R million	2011/12	2012/13	2013/2014	2014/15		2011/12-2014/15		2015/16	2016/17	2017/18	2014/15-2017/18
administration	934.4	1 103.40	1267.5	1348.8	1314.8	13.0	12.9	1 264.3	1 318.4	1389.1	1.8	13.2
Geo-spatial & cadastral serv.	583	548.4	785.9	745.9	779.7	12.0	7.5	799.9	830.4	875.2	3.9	8.2
Rural Dev.	786.3	1 075.60	1700.8	2011.6	1911.6	28.5	15.3	1 975.7	2 187.5	2263.9	5.8	20.8
Restitution	2 376.30	2 865.70	2836.7	2680.7	2680.7	2.4	30.1	2 602.7	3 181.4	3341.0	7.6	29.5
Land Reform	3 317.80	3 326.50	2863.2	2668.4	2668.4	-6.6	34.1	2 737.1	2 874.4	3019.5	4.2	28.2
TOTAL	7 997.70	8 919.60	9 454.1	9455.3	9355.3	4.8	100.0	9 379.7	10 392.1	10888.7	5.2	100.00
Change to 2014 budget estimates								-194	-281.3	-311.2

Source: National Treasury (2015) Estimates of National Expenditure, Vote No 39

 

4.2        2014/15 financial performance of the Department

 

For the 2014/15 financial year, the Department was allocated a total budget of R9.45 billion to cover the cost of implementation of priorities set out in section 3 of this report. As illustrated in Table 4 below, the total expenditure for the period under review is R9.39 billion, or 99.37 per cent, leaving a balance of R59.5 million. The Department has been able to maintain an expenditure of over 99per cent of their total budget. However, when considering the actual variance, the Department regressed from an under-expenditure of R5.6 million in 2013/14 to R59.55 million 2014/15. The main programme that accounted for under-expenditure in 2014/15 was rural development, mainly Goods and Services which could not spend R35.7 million, followed by Households Transfer which could not spend R10 million. The extent to which this financial performance corresponds with service delivery is discussed in section, especially in relation to  key priorities such as reopening of the land claims, Office of the Valuer-General, Recapitalisation and Development of land reform farms as well as the supporting rural livelihoods and the NARYSEC programme is discussed later in section 5 of this report.

 

 

Table 4: Appropriation and Expenditure

		2014/2015				2013/14
Programmes	Final  Appropriation R ‘000	Actual Expenditure R ‘000	Variance R ‘000	Expenditure as per cent of final appropriation	Final Appropriated R ‘000	Actual Expenditure R ‘000	Expenditure as per cent of final appropriation
Administration	1 384 430	1 382 197	2 233	99.84	1 268 553	1 267 482	99.92
Geospatial & Cadastral Services	734 815	732 537	2 278	99.69	787 113	785 869	99.84
Rural Development	1 850 932	1 800 988	49 944	97.30	1 704 840	1 701 643	99.81
Restitution	2 998 742	2 997 937	805	99.97	2 836 851	2 836 703	99.99
Land Reform	2 486 386	2 482 096	4 290	99.83	2 862 383	2 862 359	100.00
Total	9 455 305	9 395 755	59 550	99.37	9 459 740	9 454 056	99.94

Source: DRDLR (2015) Annual Report of the Department of Rural Development and Land Reform.

 

In terms economic classification, allocation for goods and services had declined from R2.17 in 2013/14 to R1.37 billion in 2014/15. For the period under review, expenditure on goods and services has also decreased significantly from R2.17 billion in 2013/14 to R1.34 billion in 2014/15. This is equals to 38.2 per cent decrease in expenditure vis-à-vis almost 100 per cent expenditure during the 2013/14 financial year. The expenditure on Travel and Subsistence was cut from R790.962 million in 2013/14 to R277.840 million in 2014/15. Similarly, the expenditure on training and development also decreased from R109 million in 2013/14 to R9.482 million in 2014/15. During the period under review, an amount of R356. 611 million was paid for consultants, which is lesser that the amount R500.794 million paid in 2013/14. The Committee commended the Department for taking heed of the directives from the National Treasury to cut costs, particularly for travel and subsistence and use of consultants.

 

One of the main concerns of the Committee was the total commitments of R6.181 billion. Although this amount has decreased when compared to the commitments of R6.251 billion in 2013/14, the Committee expressed concerns regarding the potential liability of R113 million resulting from restitution claims and interests to be charged, thus increase the commitments. A critical attention is required from both budgetary perspectives as well as organisational capacity to address this matter.

 

1. Irregular, Fruitless and Wasteful Expenditure

 

The Committee noted with concern an increase of 12 per cent fruitless and wasteful expenditure, from R5.417 million in 2013/14 to R6.073 million in 2014/15. According to the Department, this related to the extension of the NARYSEC training programme from 2 to 4 years due to unavailability of accredited work place sites and limited opportunities/space at accredited colleges as well as interests paid under restitution as compelled by the courts. For that reason, the Department shifted funds from NARYSEC and land reform to restitution grants.

 

With regard to irregular expenditure, the Committee noted an increase of such expenditure from R12.647 million in 2013/14 to R25.286 million in 2014/15 due to non-compliance with supply chain prescripts. The Committee expressed its concern about this matter because it was indicative of the weaknesses in internal controls. This has been one of the key issues identified by the Auditor-General in the previous audit reports. The Committee had also made a budget review recommendation in this regard. 

 

1. Trading Entities

 

This section focuses on the two trading entities, namely the Agriculture Land Holding Account (ALHA) and the Deeds Registration Trading Account (DRTA).

 

The Department, through the AHLA, acquires land in terms of the Proactive Land Acquisition Strategy, hold and lease it to beneficiaries. Funds for the entity are appropriated under the Programme of Land Reform. This entity was commended for 100per cent expenditure of the final appropriation of R1.613 billion. However, the Committee expressed its concerns on the fruitless and wasteful expenditure of R60 000 incurred due to an over payment to a farmer and late settlement of an account. This was an increase of 41.6 per cent when compared to an amount R35 000 in 2013/14.  

 

The DRTA is responsible for registration of title deeds. Although some funds are appropriated through Geospatial and Cadastral Services programme, the main source of funding is fees charged on the registration of deeds and the sale of deeds information. The Department transferred R113.194 million during the year under review, a decline when compared to the transfer of R241.741 million in 2013/14. Nevertheless, the total revenue of the DRTA increased from R603 million in 2013/14 to R722 million in 2014/15. The DRTA spent 100 per cent of the amount. Although an irregular expenditure of R6.9 million and fruitless and wasteful expenditure of R20 thousand were condoned in 2014/15, the Committee expressed concerns that such oven occurred.

 

4.3        The 2014/15 financial performance of the Commission on Restitution of Land Rights

 

For the period under review, the Commission’s budget was appropriated as part of the Department in terms of Programme 4 (Restitution). However, a policy decision was taken to de-link the Commission from the Department as envisaged in the Restitution of Land Rights Act (1994). It is planned by 1 April 2017, the Commission would have become an autonomous entity, i.e. Section 3A Public Entity, reporting directly to the Minister of Rural Development and Land Reform. This discussion on the autonomy of the Commission is discussed further under the service delivery performance section of the Commission.

 

The programme of restitution was allocated R 2.99 billion and was able to spend 100per cent of that allocation. Table 5 below illustrates expenditure per item, i.e. land purchase, conveyancers, grants, and financial compensation. Land purchase and financial compensation accounted for 67 per cent and 30 per cent of the entire budget lines. Expenditure on grants (including the Recapitalisation and Development Programme) accounted for about 3 per cent, or only 4 per cent of the total land acquisition cost. This calls to question the provision to ensure that 25 per cent of the land cost goes for Recapitalisation and Development.  The Committee expressed concern and a need to rethink the link of Recap and restitution and a need for post settlement support to restitution beneficiaries.

 

 

Table 5: Expenditure per item

Regional Office	Land Purchase & Land and Subsoil	Conveyancers	Recap/ Grants	Financial Compensation	TOTAL
Eastern Cape	0	0	0	252 756 532	252 756 532
Free State	0	0	0	81 570 291	81 570 291
Gauteng	400 000	115 954	0	43 817 954	44 333 908
Kwazulu-Natal	728 717 037	1 012 344	45 662 693	87 427 084	862 819 157
Limpopo	363 360 387	0	10 402 948	46 173 913	419 937 247
Mpumalanga	228 218 151	1 461 442	6 572 000	46 382 137	282 633 730
Northern Cape	70 793 518	0	919 874	45 505 978	117 219 371
North West	235 611 214	410 609	1 010 169	46 779 328	283 811 321
Western Cape	32 134 176	1 350	7 323 904	103 042 109	142 501 539
Total	1 659 234 482	3 001 699	71 891 588	753 455 326	2 487 583 095
As a % of total	67.70	0.12	2.89	30.29	100

Source: CRLR (2014) Presentation to the Portfolio Committee on 14 October 2015

 

Of the total R2.48 billion, about R500 million accounted to claims approved/settled before 2014/15 financial year whereas about R1.9 billion of the expenditure related to those claims settled in 2014/15. Therefore, the continuous use of allocation to settle backlog claims and commitments has a negative effect on number of land claims that could be settled in a financial year. Table 6 below illustrates the shifts of funds from allocation for restitution grants to regional offices. It was concerning that the Recapitalisation and Development contribution was only 3 per cent, less than the required 25per cent of the total expenditure for land acquisition.

 

Table 6: Expenditure per sub-programme

Sub Programme	Adjusted Appropriation R’000	Shifting of funds R’000	Virement R’000	Final Appropriation R’000	Actual Expenditure R’000	Variance R’000	per cent
Restitution National office	175 647	-48 096	-	127 551	126 909	642	99
Restitution Regional Office	453 874	156 255	-	610 129	610 128	1	100
Restitution Grants	2 051 221	-108 159	318 000	2 261 062	2260 900	162	100
Total	2 680 742	-	318 000	2 998 742	2 997937	805	100

Source: CRLR (2014) Presentation to the Portfolio Committee on 14 October 2015

 

Overall, 85 per cent of the entire budget goes to project implementation. Compensation of employees and goods and services accounted for 9 per cent and 6 per cent respectively. The Commission was congratulated by the Committee for this arrangement.

 

 

 

4.4.       The 2014/15 Financial Performance of the Ingonyama Trust Board

 

The ITB has two sources main sources of revenue, namely trading and investment activities and transfer of payments it receives from the Department. Income from trading activities derives mainly from leases and compensation from servitudes.

 

Table 7: Budget allocation and expenditure 2014/15 compared to 2013/14

		2014/15		2013/14
	Actual budget and expenditure R		As  % of the total  revenue	Actual budget and expenditure R	As % of the total  revenue
Rental Revenue	70,785,638	70		75,473,809		71
Royalty Revenue	898,581	1		872,171		1
Transfer Payment	17,294,000	17		14,500,000		14
Other Revenue	746,268	1		5,975,012		6
Finance Income	11,357,283	11		9,243,061		9
Total Revenue	101,081,770	100		106,064,053		100
Total Expenditure	83,965,810	83		108,646,503		102
Total Surplus/ deficit	17,115,960	17		-2,582,450		-2

Source: (2015) Annual Report of the Ingonyama Trust Board.

 

The ITB’s disbursement policy prescribes that 90 per cent of the revenue of the Board, gained through trading activities, should be used for the benefit of communities and the remaining 10 per cent should be used for the Board’s administrative expenses. The operating costs of the Board are covered by the transfers from the Department.

 

In the year under review, as illustrated in Table 7 below, the total revenue of the Board for the 2014/145 was R101.081 million. Rental revenue accounted for 70 per cent of the total sum, i.e. R70.785 million, and transfer payment accounted for 17 per cent, i.e. R17. 294 million. The total expenditure of the ITB was R83.965 million, thus remaining with a surplus of R17.115 million or 17 per cent of total revenue. The ITB incurred an irregular expenditure of R2 million partly due to not following the supply chain and bidding processes capital expenditure. This expenditure was mainly related to a purchase of a vehicle and the ITB explained that it would have been a wasteful expenditure due to the single source procurement as there was no available specific vehicle at the other dealership.

 

4.5        Financial performance of the fourth Quarter 2014/15 and first quarter of 2015/16

 

This section is an analyses quarterly reports as a tool to monitoring delivery of service against quarterly performance targets. The Committee considered 4th quarter report against the targets as set out in the 2014/15 Annual Performance Plan (APP) of both the Department and the Ingonyama Trust Board.

 

 

 

 

4.5.1     Department of Rural Development and Land Reform

 

By the end of 4th quarter of 2014/15, the Department had spent about 99.1 per cent of the final appropriation of R9.46 billion.  During similar period in the prior year (2013/14), the Department had spent 99.9 per cent of its budget, a decline of expenditure dropped in 2014/15.Of the total 41 quarter 4 targets, the Department achieved 22 (54 per cent) of the targets. In comparison with the similar quarter in 2013/14, where the Department achieved performance rating of 71.8 per cent, it is a significant drop in quarterly performance. The financial and service delivery as observed during consideration of 4th quarter reports fairly represented the outcomes of this annual assessment, i.e. a 57 per cent performance rating – achieving 24 of 42 annual targets.

 

The three programmes that had already shown signs of underperformance are administration, rural development, land redistribution and development as well as land tenure and administration. Administration (33 per cent), failed to pay all the invoices within 30 days. Although the Department did not achieve its target to ensure 100 per cent of external audit findings resolved in the fourth quarter it has improved by resolving 92 per cent of findings compared to 76 per cent in the third quarter of 2014/15. During this time, the committee noted an improvement on management of performance information, and other governance issues. The main reason was that the Internal Audit Committee was capacitated and had started working to resolve the matters.  

 

The Committee commended the programme of Geospatial and cadastral services for achieving performance rating of 63 per cent of the planned targets for the quarter, an improvement when compared to 50 per cent of prior year. The targets on Land Use Regulators were not established because the regulations for SPLUMA were not finalised.

 

With regard to Rural Development, 6 of the 13 planned targets for the 4th quarter were achieved, that equals 46 per cent. Further, the Department had exceeded the 6 targets, i.e. the numbers of skills and job opportunities provided, the number of households supported with basic services infrastructure, and the number of jobs created in rural development initiatives. During consideration of the 4th quarter, the Committee expressed the following concerns: failure to achieve the targets for the number of youth skilled in rural development initiatives, failure to achieve development and approval of the Rural Development strategy and System; the Rural Enterprise and Industrial Development strategy was not developed and approved, and the Mega Cooperative to facilitate support to NARYSEC youth was not established.

 

The programme of Land Reform comprises two sub-programmes, i.e. Land Redistribution and development and Land Tenure and Administration. Land Redistribution achieved 3 out of 5 targets during the fourth quarter, which is a performance rating of 60 per cent. The Committee commended the Department for exceeding the targets of the number of hectares acquired and allocated and the number of land reforms farms placed under the RADP. The Department reported failure to achieve 87 per cent establishment the OVG, and train 228 personnel through the RADP by the fourth quarter, instead 143 were trained. The Land Tenure and Administration achieved 2 out 5 planned targets in the fourth quarter, which is 40 per cent of the targets. The targets achieved in the fourth quarter were the number of Land Parcels confirmed as vested and a complete Immoveable Asset Register. Targets not achieved include the number of Communal Property Associations (CPAs) compliant with legislation, the number of labour tenants’ applications settled and number of land parcels transferred under TRANCRAA.

 

The Committee expressed the following issues for consideration by the Department: Lack of enforcement of the CPA by the Department. The targeted 60 CPAs regularisation was not complied with no dedicated budget was allocated to this component of the work of the Department. None of the planned settlement of the labour tenants’ applications was achieved. The Committee also noted an increase in the target for 2015/16.

 

During the 1st quarter of 2015/16 financial year, the Department’s total spending amounted to R1.48 billion, representing 15.81 per cent of the total appropriation of R9.4 billion. This represented a 9.2 per cent under spending against the linear target of 25 per cent of as required by the National Treasury. This is a regression compared similar period in 2014/15 where the expenditure was at 22.4 per cent of the entire budget. The 2015/16 quarterly performance is in line with the 33per cent achievement on service delivery targets.

 

Table 8: Expenditure per Programme Q1 2014/15 vs 2015/16

Programme R’000	2014/15			2015/16
	Total Budget R’000	Q1 Expenditure R’000	Q1 % Expenditure	Budget R’000	Q1 Expenditure R’000	Q1 % Expenditure
1. Administration	1 384 430	263 687	19.05%	1 264 265	249 761	19.76%
2. Geo-spatial & Cad Service	733 415	130 708	17.82%	799 903	140 258	17.53%
3. Rural Development	1 852 332	349 989	18.89%	1975 739	199 580	10.10%
4. Restitution	2 998 742	747 439	24.93%	2 602 669	328 080	12.61%
5. Land Reform	2 486 386	623 881	25.09%	2 737 108	565 585	20.66%
Total	9 455 305	2 115 704	22.38%	9 379 684	1 483 264	15.81%

Source: DRDLR (2015) Presentation to the Portfolio Committee on 19 August 2015

 

The lowest contributor to under-expenditure was Rural Development and Restitution programmes with 10.1 per cent and 12.61 per cent respectively. Compensation of Employees was also responsible for under-expenditure due to 714 funded positions not filled, thus resulting to vacancy rate of 14.7 per cent. These vacancies are again in the two main programmes, i.e. Land Reform Programme (50 per cent) and Restitution Programme (23 per cent). The Committee further expressed concerns because the under spending in Land Reform  was attributed to the item of households/grants, which did not perform due to realignment of projects to Agri-Parks resulting in budget reprioritisation, and Goods and Services due to delays by Service Providers. The Committee expressed concerns that Agri-Parks was announced during SONA, yet the planning of the Department did not take into consideration, hence reprioritisation and realigning just within three months of tabling of the strategic plan and the APP.

 

4.5.2     The Commission on Restitution of Land Rights

 

The function of the Commission, reported as programme 4 of the Department, is to receive and investigate claims for settlement. The Committee welcomed that the Commission has exceeded all the four targets planned for the fourth quarter and for the 2014/15 financial year. Particular note was an increase in the researched claims for the fourth quarter. The question arising was whether the Commission was under targeting itself, especially when one considers that it exceeded the targets with minimal budgetary changes.  Section # will explain further the financial state of the Commission and its ability to achieve the targets.

 

 

 

4.5.3 The Ingonyama Trust Board

 

The budget for 2014/15 was R62.7 million, of which R17.3 million were transfers from Department and R45.4 million was income generated from trading activities.  The total revenue generated for the 4th quarter was R 7. 24 million, representing 11.5 per cent of the total budget for the year.  

 

Table 9: 4th Quarter Expenditure per Economic Classification

	Final Budget	Q 4 Spending	% Spent Q 4	Cumulative  Spending  (April to 31 March 2014)	Under/Over  Spending for the year	Rate of Spent for the Year
Compensation	17 939 372	4 481 180	25.0%	17 118 073	821 299	95.42%
Goods & Services	39 562 628	32 324 397	81.7%	45 386 149	-5 823 521	114.72%
Interest & rent on land	200 000	49 500	24.8%	198 000	2 000	99.00%
Buildings & Fixed  Structure	1 590 000	545 975	34.3%	1 335 674	254 326	84.00%
Machinery & Equip	2 900 000	2 089 111	72.0%	2 894 033	5 967	99.79%
Software & Intangible	510 000	35 213	6.9%	503 544	6 456	98.73%
Total	62 702 000	39 525 376	63.0%	67 435 473	-4 733 473	107.55%

Source: ITB (2015) Presentation to the Portfolio Committee on 02 September 2015

 

As shown in Table 8, the ITB spent R 39. 5 million during the 4th quarter of 2014/15 which represents 63 per cent of the total allocation for 2014/15 financial year. It quite evident the ITB began its spending during the last quarter. Cumulatively, the ITB had spent R 67. 4 million, thus overspending by R 4.73 million. The main items contributing to over-expenditure of 7.55 per cent was goods and services with an expenditure of R45 386 million during the years, i.e. 114.72 per cent. The Committee raised concerns about the over expenditure in this item but also noted that this was an improvement if one compared to 145 per cent expenditure in 2013/14.With regard to service delivery performance, as shown in Table 9 below, the ITB achieved 2 of the 5 targets for the 4th quarter. The Committee noted this as an improvement from the 3rd quarter performance where the ITB had achieved only 1 of the 5 targets. It further exceeded its target on the number of land management projects identified.

 

 

 

 

Table 10: Non-financial Performance in the 4th Quarter

Performance Indicator	Annual Target	4th Quarter Target	4th Quarter Performance	Variance for Q4	Annual Performance	Annual Variance
No of tenure rights granted by Board and signed by both parties	1200	300	289	-11	1100	-100
No of land management projects identified and implemented	5	2	5	3	5	0
Land Holding Register maintained	4	1	1	0	4	0
No of HRM/Legal policies developed /reviewed	5	2	0	-2	0	-5
No of TC's workshops held on land management issues	43	12	8	-4	31	-12

Source: ITB (2015) ITB (2015) Presentation to the Portfolio Committee on 02 September 2015.

 

The Committee noted that the ITB did not achieve its targets on the number of tenure rights granted, no single policy was developed and reviewed and there was a shortfall in the number of Traditional Council Workshops to be held during the 4th quarter. The ITB explained that the reason for the shortfall was capacity constrains due to limited number of trainers.

 

5.         Overview of Service Delivery Performance

 

This section discusses an overall performance of the Department, the Commission and the Ingonyama Trust Board. They were assessed against the predetermined objectives set out in the 2014/15 APP and the relevant strategic plans.

 

5.1  The Department of Rural Development and Land Reform    

 

As indicated in Table 1, out of 42 targets planned for 2014/15 the Department achieved 22 targets, which is a performance rate of 52.4 per cent. When compared to the 2013/14 performance rate of 62.5 per cent, the 2014/15 regressed in terms of service delivery targets. It is a major concern that although the Department achieved 52.4 per cent of the targets planned for 2014/15, it spent 99.4 per cent of the budget allocated for the year. This means that budget expenditure does not talk to achievement in terms of meeting its targets. As shown in Table 1, all the programmes with the exception of the Restitution Programme have not done well. It is only under the Restitution Programme that the Department recorded an achievement of all its targets which is on par with the expenditure of 99.9 per cent of its final allocation for the year under review. The programme that had least performance during the year under review is the Administration programme at performance rating of 16.7 per cent followed by Land Reform Programme at the performance rate of 30 per cent.

 

 

 

 

 

 

Table11: Financial and non-financial performance for 2014/15

PROGRAMMES	Targets   2014/15	Targets Achieved	Perform. Rating	Final Appropriation R’000	Budget Expenditure R’000	Budget Expenditure %
Administration	6	1	16.7%	1 384 430	1 382 197	99.84
Geospatial & Cadastral Services	8	6	75.0%	734 815	732 537	99.69
Rural Development	13	7	53.8%	1 850 932	1 800 988	97.30
Restitution	5	5	100.0%	2 998 742	2 997 937	99.97
Land Reform	10	3	30.0%	2 486 386	2 482 096	99.83
Total	42	22	52.4%	9 455 305	9 395 755	99.37

Source: DRDLR (2015). Annual Report of the DRDLR

 

During the period under review, the Department did not submit any Bills or Policies to Parliament despite the fact that the Department priorities policy and legislative reforms as one of its activities for 2014/15.

 

The following sections presents analysis of service delivery according to main programme areas.

 

Programme 1: Administration contributes to the two main strategic goals; namely, sound corporate governance and service delivery; and a reformed policy legislative and institutional environment by 2014. As discussed earlier on, the key strategic objectives under this programme during the period under review included beefing up internal capacity through reduction of the vacancy rate and improvement of skills for employees, ensuring 100 per cent compliance with regulations and legal prescripts and obtaining an unqualified audit opinion on financial and non-financial performance. As indicated in Table 11, only 1 out of 6 targets was achieved. This represented a regression when compared to the performance rate of 37.5 per cent in 2013/14. Except for the target for training geomatics professionals, all the other 5 targets were partially achieved.

 

Programme 2: Geo-spatial and Cadastral Services is responsible for provision of cadastral surveys, geodetic and topographical surveys, spatial planning and information, and technical services in support of sustainable land development. Key activities under this programme included registration of title deeds, development and implementation of e-cadastre and development of Spatial Development Frameworks (SDFs). As indicated in Table 11, 6 out of 8 targets were achieved. This represents 75 per cent of the targets. The Committee commended the Department for improvement in performance under this programme. Further, the Committee congratulated the Department for exceeding a target to support the number municipalities to implement Spatial Development Frameworks (SDFs) and Land Use Schemes (LUS) in line with the Spatial Land Use Management Act, 2013 (Act No 16 of 2013). The Committee expressed concerns regarding failure to achieve the target to have 80 per cent functional Land Use Regulators. None was established because the regulations for SPLUMA were not yet finalised, and would be required for establishment of the functional land use regulators. Review of the 1st Quarter reports in 2015/16 showed that the target for establishing functional regulators was exceeded by 48 per cent.

 

Programme 3: Rural Development focusses on initiation, facilitation, coordination and implementation of the CRDP. The programme 53.8 per cent (or 7) of the 13 targets. Compared to the performance rate of 78.6 per cent achievement of targets in 2013/14, this is a decline in performance. As it became clear during the 4th quarter reporting, the development of Rural Development and Enterprise strategies and support to young people was the one that contributed to underperformance. Another concern relates to failure to achieve establishment of Mega Cooperatives in support of the NARYSEC. The number of youth to be skilled in development was not achieved due to SETA requirements.

 

Programme 5: Land Reform achieved 3 of the 10 targets, which is annual performance rate of 30 per cent. The Committee expressed concerns about this regression compared to the performance of 55.6 per cent in 2013/14. However, establishment of the Office of the Valuer-General was welcome as a step in the right direction toward accelerating the pace of land redistribution. Of great concern was inability of the Department to achieve targets relating to land tenure reform, for example, with regard to CPAs and labour tenants’ applications. In addition, the programme achieve 1 of the 3 targets on RADP, this raises concerns regarding provision of comprehensive support to smallholder farmers and land reform beneficiaries towards agrarian transformation.

 

5.2  The Commission on Restitution of Land Rights

 

During the period under review, restitution was presented as Programme 4 of the Department, but it is implemented by the Commission on Restitution of Land Rights. It is responsible for settling land claims in accordance with the provisions of the Restitution of Land Rights Act (1994), and also provides settlement support to beneficiaries. Under this programme the Commission achieved all its targets and four of the five targets were exceeded. The Committee commended the Commission for the work done to exceed its targets on the number of claims lodged by 1998 to be researched.

 

5.3        The Ingonyama Trust Board

 

As shown in Table 12 below, the ITB achieved 2 of the 5 targets planned for 2014/15, which is a 40 per cent performance rate. This is a regression compared to the achievement of 3 out of 4 targets (75 per cent performance rate) in 2013/14. Its performance in terms of its strategic goals in the year under review is as follows:

 

Table 12: Performance against the predetermined objectives

Performance Indicator	Annual Target		Annual Performance		Annual Variance
Number of tenure rights granted by Board and signed by both parties		1200		1100		-100
Number of land management projects identified and implemented		5		5		0
Land Holding Register maintained		4		4		0
Number of HRM/Legal policies developed /reviewed		5		0		-5
Number of TC's workshops held on land management issues		43		31		-12

Source: ITB (2015) Annual Report of the Ingonyama Trust Board 2014/15.

 

 

The performance of the ITB was organised under four strategic objectives as follows:

 

• Unlocking an enabling environment for conducive development on Trust land: This strategic objective deals with a number of activities relating to uplifting traditional communities. For example, granting and approval of leases, agricultural support, and facilitating distribution of community benefits. The target to identify and implement five land management projects was achieved. The projects are located at Mpophomeni, Newcastle, Dannhauser and Taylors Halt. The ITB also introduced infrastructure development projects with a view to uplifting communities in surrounding areas. For example, the Ulundi Integrated Energy Centre. For agricultural support, it purchased tractors at the cost of R6 million to be used on rotational basis by traditional communities. Whilst the Committee welcomed these initiatives, it requested that the ITB should complete policies around on the use of the tractors and other community development initiatives.

 

During the period under review, the Board did not achieve the target on the number of tenure rights granted and signed. It approved 1100 tenure rights instead of 1200 targeted. This was, however, an improvement when compared to a variance of 444 tenure rights in 2013/14.

 

• Effective and efficient asset management services: this strategic objective seeks to ensure that the resources of the Board are effectively and efficiently utilised. Under this objective, the land holding register was updated on a quarterly basis as planned. Also during the period under review a significant effort was made in developing the lease database software. This will help to record leases and other tenure rights on Trust land. It will also track the flow of lease applications in the lease approval process.

 

• Support to Traditional Councils in Capacity Building Programs: During the period under review, beneficiaries from traditional communities were trained on lease application processes of the Ingonyama Trust, identification of community needs, land use and illegal occupation and administration of Community Trusts. However, there was a shortfall in the number of Traditional Council Workshops held by the end of 2014/15. The reason for the shortfall was that the target set was not attainable as the training officer could attend to only one community per working week for the year, hence 31 communities were trained instead of 43 in 2014/15.

 

• Provide Human Resource Management: The Board did not achieve the target to develop and review 5 policies at the end of 2014/15 as no single policy was developed and reviewed. This target has been shifted to this financial year and a service provider has been appointed, in this regard. However, the Board did not achieve its target to approve at least one policy in the 1st quarter of 2015/16.

 

6.       Summary of observations of the Committee

 

This section summarises the Committee’s observations and conclusions. It draws on analysis presented in preceding sections, especially financial and service delivery performance for the 2014/15 financial years. The reports of the Fiscal Finance Commission (FFC) and the Auditor-General of South Africa (AGSA) were also useful resources to test some of the observations of the Committee against. The section is divided into three sections, namely technical issues, governance, service delivery and financial observations.

 

6.1        Technical Issues

 

The Committee found that the Strategic Plan and the APP of the Department were largely aligned to the priorities of government as outlined in the National Development Plan and the State of the Nation Address articulated as MTSF priorities. However, the realignment of APP during the 1st Quarter of 2015/16 to factor in implementation of Agri-Parks and other policy priorities as per the Minister’s budget policy statement was a major concern as it affected quarterly performance of the Department. 

 

During the audit of predetermined objectives (AOPO), the AGSA found that the supporting documents provided did not tally with the technical indicator description and was not valid to substantiate targets achieved for a range of indicators under Rural Development and Land Reform programmes.  The root cause, according to the AGSA, was lack of daily and monthly controls to ensure accurate record keeping and preparation of financial and performance information. Therefore, AGSA recommended an improvement in controls and information systems environment to avoid weaknesses and risks for reliability. Although performance information verification has improved controls in the provinces with regard to collation, verification and reporting of performance were inadequate.

 

Rural development is a transversal function and will depend in the main on the capacity of the Department to coordinate interventions by other government departments in the three different tiers of government. Most of the Rural Economic Transformation functions require commitment and support of other departments such as the Cooperative Governance and Traditional Affairs, Department of Small Business Development, Department of Trade Industry, Department of Agriculture Forestry and Fisheries, Department of Economic Development, and National Treasury. This requires enhancement of the CRDP management system.

 

The Committee commended the Department, the Commission and the ITB for continuous improvement in the quality of the annual reports presented. For the Department, the Committee noted lack of information under the Tenure programme; for example work done through the Land Rights Management Facility, quantities and challenges pertaining to processing the Labour Tenants applications, especially for KZN. 

 

6.2.       Governance

 

The Committee observed that governance has received high priority within the Department. Among other interventions, the Department has established Governance Committees to assist the Accounting Officer in effective administration of the Department; for example, the Risk and Compliance Committee. The Committee welcomed work done by this Committee especially the completion and approval of the Fraud Prevention Policy. The second Committee is the Internal Audit Committee. Despite the reports that the systems of internal control were not entirely effective during the year under review, the Committee has observed improvements which resulted in the department obtaining an unqualified audit opinion and less matters of emphasis.

 

Information Technology access, security, back-up and disaster recovery were inadequate. Records Management practices were inadequate to ensure preservation of all records and databases of the Department. Although a central Project Management Office is established, it was not yet institutionalised in the Department.

 

The Committee noted that the autonomy of the Commission could result in improvement of service delivery, especially with regard to delegation of powers to provincial heads of the Commission. Further, it also complies with intent of the establishment of the Commission in terms of the Restitution of Land Rights Act.

 

With regard to the ITB, the Minister has continued to renew the term of the Board by another year. This Board is constituted of 9 members of which four are appointed by the Minister of Rural Development and Land Reform in consultation with His Majesty the King, the Premier and the Chairperson of the House of Traditional Leaders of KwaZulu-Natal.  The term of office is 4 years, but they are eligible for further appointment.

 

 

6.3.       Service delivery against the pre-determined objectives

 

With regard to service delivery, the Committee made the following findings:

 

• Although the Department had planned to achieve unqualified audit opinion without findings, it still achieved unqualified audit opinion with findings on predetermined opinion and compliance. The Committee emphasized a need to achieve a clean audit (unqualified without findings on predetermined objectives and compliance).

 

• The Department did not table, in Parliament, any of the planned pieces of legislation nor refer policies for discussion at the Committee. Whilst this points to serious lack of capacity and inability of the Department to meet its targets on one hand, on the other it shows the Department’s commitment to consultative and inclusive processes for policy development.

 

• Redistributive land reform takes place under two main programmes; namely restitution and land redistribution, and PLAS is the only vehicle for redistribution. PLAS, which transfers land to the State, will not assist government to achieve transfer of land to rural people and contribute toward the commitment in the Outcomes of government to “increase the per centage of productive land owned by previously disadvantaged individuals from 11.5 per cent to 20 per cent by 2019 (16.2 million hectares).

 

• The objections to the implementation of SPLUMA by traditional leaders pose a threat to the intensions of the legislation in communal areas. It could potentially fuel tensions between municipal councillors and traditional leaders. An integrated approach toward dealing with the concerns of traditional leaders should be found.

 

• NARYSEC has encountered many challenges across South Africa. Oversight visit at Muyexe (2015) have brought forward evidence of NARYSEC participants collecting stipends without doing any work, incidences of people working with no pay by contractors, and delays in getting certificates for cooperatives.

 

• There seem to be continuous review of structure leading continuous restructuring of branches and positions, which creates uncertainty in the Department. Of particular concern are frequent changes of senior managers. The Committee commended the Department for keeping the vacancy rate at 10.22 per cent during the period under review. The concern was that the key programme of land reform had the highest vacancy rate, i.e. 26.03 per cent followed by the Restitution Programme at 21.16 per cent.

 

• The ITB Secretariat operated with a total component of 56 staff members in 2014/15, which means one additional staff was employed as there were 55 employees in 2013/14. Of the staff component of 56 people, 31 were contract workers (55 per cent) while permanent workers were 25 (45 per cent).  There were 2 vacant posts in 2014/15 as it was the case in 2013/14.

 

6.4.       Financial Performance including funding proposals

 

The expenditure on grants for restitution, especially for the Recapitalisation and Development of farms was less than 25per cent of the total cost for land acquisition under Restitution. This contravenes the policy provision for Recapitalisation and Development. Further, the Report did not give evidence of the link between the grants and section 42C approvals, whether similar communities received support in terms of the Recapitalisation and Development Programme, which could be in contraventions of the Restitution of Land Rights Act.

 

Apart from lack of capacity in the Land Tenure and Administration Unit, lack of CPAs’ compliance to the relevant legislation, and failure to regularise them was due to lack of dedicated budget for the CPAs. Similarly, failure to process the Labour Tenants applications, especially in KZN, was because of lack of budget for this programme.

 

The Commission continued to be exposed to commitments arising from settlements that occurred prior to 2014/15 financial years, during that years an amount of R4 billion was reported. During the year under review, the Auditor-General reported of the R2 billion commitments which is a major cause of concern.

 

The notion that the Department, together with National Treasury and the Department of Agriculture, Forestry and Fisheries were developing an integrated funding model for settlement support to land reform beneficiaries, smallholder farmers and emerging commercial farmers has not taken any shape. The process is said to be under way.

 

7.       Recommendations

 

In view of the above observations and conclusions, the Committee recommends to the National Assembly that –

 

7.1        The Minister of Finance should,  

 

7.1.1  Develop, together with the Minister of Rural Development and Land Reform, a funding plan with clear commitments for commitments to assist the Commission on Restitution of Land Rights to clear all the commitments (R6 billion) related to land claims approved before 2015/16 financial year. Further, the Committee recommends that commitments should be paid up during the MTEF period in order to give way for claims arising from the new phase of lodgement of land claims.

 

7.1.2  Facilitate finalisation of the development of an integrated funding and support model to land reform beneficiaries, smallholder farmers, and emerging black commercial farmers.

 

7.1.3  Provide more funding to the Commission on Restitution of Land rights in order to achieve its autonomy status by the end of 2016/17 and to ensure that it is adequately capacitated in to provide effective service to its clients.

 

The Minister should submit a report about these recommendations to the National Assembly within three months of adoption of this report by the National Assembly.

 

7.2     With regard to the Department of Rural Development and Land Reform, the Minister of Rural Development and Land Reform should –

 

1. Conduct and report on a national survey on productivity of land reform farms (SLAG/LRAD/PLAS and Restitution) to determine the extent of improvement on the number of land reform projects that have become productive over the years; and further assess the socio-economic impact of land reform among beneficiaries.

 

1. Finalise and submit policies relating to strengthening of relative rights for people living on and working on farms, communal land tenure policies, and regulation of foreign ownership of land to the National Assembly for consideration by the Portfolio Committee. Further, the Minister should submit a revised programme for legislation to be tabled within the 2015/16 financial year.

 

1.  Redesign the NARYSEC programme to improve on its management, and further align the programme to the NQF standards for accreditation by competent authority.

 

1. Continue to engage and coordinate Agri-Park interventions by the Department of Agriculture Forestry and Fisheries, Department of Small Business and the Department of Trade and Industry to maximise use of limited resources and avoid duplication of government interventions. Further, enhance the capacity of the Department to coordinate such interventions and expertise from other government departments.  

 

1. Facilitate an inclusive process, together with affected parties and stakeholders, to address the concerns regarding the implementation of SPLUMA on land under the authority of traditional councils.

                                                                                               

1. Ensure that the Department builds internal capacity for both institutional management and business skills to carry out the mandate for tenure reform and land administration, especially support to CPAs, processing labour tenants’ applications. Further, the Minister should submit status report on processing of labour tenants’ applications by the end of 2015/16 financial year; including but not limited to the total applications received by province, the extent of land by district, the cost estimates for processing such applications, and possible time frames.  

 

1. With regard to the Commission on Restitution of Land Rights, the Minister of Rural Development and Land Reform should –

 

1. Engage the Minister of Finance to secure necessary funding to enable the Commission to attain its full autonomy by the end of 2016/17. Such funding must cover the costs for creating additional posts required for management of the autonomous Commission.

 

1. Ensure that the Commission, which reported overachievement on targets within the limited budget available, relook at the manner in which they set their targets to avoid over or under-targeting.

 

1. Ensure that the Commission clears all the commitments arising from the settlement of land claims before 2015/16; further ensure that it minimises circumstances that may result in over-commitment, creating liabilities that affect the capacity of the Commission to settle land claims.

 

1. Develop, and submit to Parliament, the prioritisation plan for land claims lodged prior to 1998 as an indication of compliance with section 6(1) (g) of the Restitution of Land Rights Act (Act 22 of 1994) as amended.

 

1. Review Section 42C of the Restitution of Land Rights Act (Act 22 of 1994) as amended in conjunction with the policy imperatives for the contribution of 25 per cent of the allocation for land acquisition to the Recapitalisation and Development Fund; further ensure that settled and finalised land claims are linked to the RADP and a comprehensive support strategy.

 

1. With regard to the Ingonyama Trust Board the Minister should –

 

1. Review the Ingonyama Trust Board Act to ensure that the functions of the ITB are in line with the legislation.

 

1. Appoint the Board for the full duration of the Ingonyama Trust Board as provided for the in the Ingonyama Trust Board Act, rather than renewals for 1 year as has been the case over the last two or three years.

 

1. Facilitate engagement between the Board and the AGSA together with the Accountant General by the end of 2015/16 in order to address the perennial non-compliance of the ITB with the GRAP standards in relation to valuation of land.

 

1. The Department must create a framework to assess the social impact the ITB is making and report to the Committee.

 

The Minister should report to Parliament, about these recommendations, within three months of adoption of this report by the National Assembly.

 

 

 

Report to be considered.