ATC201203: Budgetary Review and Recommendations Report (BRRR) of the Portfolio Committee on Human Settlements, Water and Sanitation, Dated 02 December 2020

Water and Sanitation




The Portfolio Committee on Human Settlements, Water and Sanitation (the Committee), having considered and assessed the performance of the Department of Human Settlements and its Entities for the 2019/20 Financial Year, and the concomitant briefs from the office of the Auditor-General and the Department of Planning, Monitoring and Evaluation on 17, 20, 24, and 26 November 2020, reports as follows:





The Department of Human Settlements’ (hereinafter, the Department) mission is to facilitate the creation of sustainable human settlements and improved quality of household life. The vision of the Department is a nation housed in sustainable human settlements. Its mandate and core business is derived from section 26 of the Constitution, 1996 (which guarantees the right to adequate housing), policies applicable to government, such as Breaking New Ground, and legislation such as the Housing Act, (Act No. 107 of 1997).


The Department has two approaches to addressing housing needs, namely, through the scaled delivery of subsidised housing for low-income households, and through striving to create an environment conducive for operations of the subsidised housing market within the larger economy. The Medium Term Strategic Framework (MTSF) 2014 - 2019 identified a number of priorities in relation to human settlements in order to realise the vision of sustainable human settlements and an improved quality of household life.







The Committee’s mandate is to maintain an oversight responsibility that ensures a quality process of scrutinising and overseeing government’s action.  It is driven by the ideal of realising a better quality of life for all people in South Africa.  It is also required to facilitate public participation as well as oversee compliance with regulatory legislative frameworks related to human settlements.


In brief, the Committee:

  • Considers legislation referred to it;
  • Conducts oversight of any organ (s) of state and constitutional institution (s); falling within its portfolio;
  • Considers international agreements; and
  • Considers budget of department and Entities falling within its portfolio




The mandate of the Department of Human Settlements is to determine, finance, promote, co-ordinate, communicate and monitor the implementation of housing policy and the provision of human settlements.


Since the formulation of the Comprehensive Housing Plan in 2004, the Department has conducted various initiatives to enhance the creation of comprehensive, integrated, co-ordinated, sustainable human settlements and quality housing. These initiatives include the review of the National Housing Code which determines national norms and standards in respect of housing development. In keeping with this responsibility, the Department has set short, medium, and long term human settlements development goals towards breaking of apartheid spatial patterns while promoting access to adequate housing, affordable services in better living environments and a more functional equitable residential property market.


As mentioned in the introduction to this report, Outcome 8 of the government’s outcome-based service delivery approach is focused on the mandate of the Department of Human Settlements. This mandate is to create sustainable human settlements and work towards improving the quality of household life. Section 26 of the Constitution of the Republic of South Africa (1996) and the Housing Act (No. 107 of 1997) are still considered the foundation for the operational models and the spending focus of the Department.





In line with the National Development Plan (NDP), the Human Settlements aims at achieving visible results from effectively coordinated spatial planning systems by 2030 and this is done through:

  • The development of the Spatial Master Plan for Human Settlements that would direct investments to the priority precincts;
  • Implementation of Catalytic Projects;
  • Prioritising, targeting and focusing resources (financial and others) towards upscaling delivery;
  • Supporting and encouraging government and private sector collaboration and integration;
  • Promoting the participation of Youth and Women in human settlements development programmes;
  • Scaling up delivery on the informal Settlements Upgrading Programme.





In terms of Section 5 of the Money Bills Amendment Procedures and Related Matters Act, (No. 9 of 2009) the National Assembly, through its Committees, must annually compile Budgetary Review and Recommendation Reports (BRRRs) that assess service delivery and financial performance of Departments and may provide recommendations on forward use of resources. The BRRR is also a source document for the Committees on Appropriations when considering and making recommendations on the Medium Term Budget Policy Statement (MTBPS).


2.1          METHODOLOGY


The Portfolio Committee on Human Settlements compiled the 2019/20 BRRR using the following documents:

  • The National Development Plan: Vision for 2030;
  • Medium Term Strategic Framework;
  • 2019/20 State of the Nation Address;
  • Strategic Plans of the Department of Human Settlements and its Entities;
  • Annual Performance Plans and Annual Reports of the Department of Human Settlements and its Entities, assessment made by the Department of Planning, Monitoring and Evaluation (DPME) and the Auditor-General South Africa outcomes of audit findings.





In relation to the National Development Plan (NDP) 2030, the Department has the following strategic priorities:

  • Respond systematically, to entrenched spatial patterns across all geographic scales that perpetuates social inequality and economic inefficiency;
  • Implement strategically the chosen catalytic interventions to achieve spatial governance;
  • Achieve a creative balance between spatial equity, economic competitiveness and environmental sustainability;
  • Expand personal freedoms by providing the residents of South Africa with greater choice of where to live;
  • Support individuals, communities and the private sector in engaging with the state on the future of the spaces and settlements in which they live and work while streamlining processes to enable local governments to implement strategic spatial intervention.






The NDP clearly expresses the need to redress and ‘address the challenge of apartheid geography’ by devoting more concerted attention to spatial integration and to accelerate the provision of well-located housing and land to poor South Africans. Human settlements have a key role to play in the effort to address poverty, create employment, and improve socio-economic conditions and creating sustainable futures. Notwithstanding the provision of shelter and security to millions of South Africans over the past decades thorough one of the biggest state housing development programmes in the world, massive spatial injustices still persist.


There is a need to overhaul apartheid spatial planning and patterns of social exclusion to ensure access to liveable, adequate and affordable housing opportunities on well-located land which is necessary for the wellbeing of communities and the society as a whole. Housing provides an opportunity to live in a healthier environment, a financial asset and security of tenure. Well-located human settlements act as enablers for economic empowerment (access to jobs or business), greater social cohesion and reducing income inequality – not excluding its contribution towards stimulating the construction sector. 


The MTSF 2019-2024 priority 5 has the desired goal of restructuring the urban space economy to offer optimal opportunity to integrate, consolidate and ultimately transform settlements. The focus of the human settlement programme is to reshape settlement patterns and accelerate spatial transformation. Over the next five years, government will continue to focus on reshaping and transforming human settlements into equitable and efficient spaces, with citizens living in close proximity to work, social facilities and the necessary infrastructure. To advance this vision, the MTSF 2019-2024 has three interrelated outcomes with clear targets:

  • Spatial transformation through multi-programme integration in priority development areas (PDA’s);
  • Adequate housing and improved quality living environment;
  • Security of tenure through the provision of title deeds.





During the SONA in June 2019, the President outlined seven priorities that would receive focus over the next five years. These were:

  • Economic transformation and job creation;
  • Education, skills and health;
  • Consolidating the social wage through reliable and quality basic services;
  • Spatial integration, human settlements and local government;                 
  • Social cohesion and safe communities;                                     
  • A capable, ethical and developmental state;
  • A better Africa and World. 


During the SONA in February 2020, the President outlined the following in relation to human settlements:

  • The use of the District Development Model to ensure collaboration between different spheres of government and entities;
  • Building of social compacts to ensure partnership and cooperation;
  • Rooting out corruption and act decisively against state capture;
  • The social housing programme to build rental housing for low-income families which was at implementation state, R9 million of private sector investment in the construction of the 37 000 rental apartments;
  • R64 billion to be spent on student accommodation, and would leverage at least another R64 billion in private investment;
  • A new smart-city was taking shape in Lanseria, with 350000 to 500000 targeted beneficiaries.




  1.       Strategic Priorities of the Department of Human Settlements


During the financial year 2019/20 the Department marked various milestones that were special to the South African society. Of outmost importance is the celebration of 25 years of South Africa’s democracy, which provided an opportunity to look back at the road travelled where the provision of about 4.8 million housing opportunities affected just over 25% of the total number of households. The Department celebrated the strong foundation laid by the housing and human settlements legislation, policiesand programmes, the well-oiled but sometimes challenging delivery machinery system and the accountability systems that have been evolving and adapting over this period. The sterling record of achieving an unqualified audit outcome has been remarkable. In this regard, Departmentintends to continue improving on audit outcomes with the purpose of reaching a clean audit.


The 2019/20 Annual Report reflects the collective effort undertaken by the human settlements sector in its endeavour to respond to the constitutional mandate of facilitating access to adequate housing. This financial year marks the first year of the Sixth Parliament which saw Cabinet approving the MTSF 2019–2024, which enjoins the Department to achieve key deliverables towards meeting the vision set out in the NDP.       


In this financial year the Department convened a Human Settlements Indaba in recognition of the centrality of partnerships in its work. The Department tabled its plans for the next five years, creating opportunities for partnerships and commitments in delivering on the MTSF 2019–2024 targets. Principal among these was a proposal to address spatial transformation through the declaration of Priority Housing and Human Settlements Development Areas as spaces of mutual investment. A total of 136 Priority Housing and Human Settlements Development Areas were approved by the Minister and Members of Executive Councils (MinMEC) for public consultation. About 60% of our budgets will be directed towards investment in these spaces. The Departmentalso sought to sharpen its land assembly strategy for development of human settlements in support of the rapid land release strategy.


In addition, the Department has embarked on a process to review the Department key delivery programmes, which include the following:

  • The Integrated Residential Development Programme (IRDP);
  • Finance Linked Individual Subsidy Programme (FLISP);
  • The Upgrading of Informal Settlements Programme (UISP);and
  • Social and Rental Housing Programme.


The Department plan to review the implementation and funding arrangements that would be embedded in the National Human Settlements Code.An Upgrading of Informal Settlements Partnership Grant was muted as a strategy to accelerate the infrastructure provision for informal settlements, and the 2019/20 financial year was adopted as a window for completing groundwork in planning, budgeting and implementation.


Provinces and municipalities play a critical role in ensuring that the National Department of Human Settlements fulfils its mandate. Section 125 (2) and (3) of the Constitution directs that national departments must support these tiers of government should the need arise. During the year under review, the Department has provided technical, planning and financial support as part of the Section 100 Intervention in the North West Province. This intervention resulted in improvements in both the financial and non-financial performance. A request to render assistance was received from the Premier of the Northern Cape Province. The Minister of Human Settlements, Water and Sanitation directed that the Department should intervene as requested to re-engineer the provincial department to meet its obligations.


The Department has continued with the assistance to the Nelson Mandela Bay and Buffalo City Metropolitan Municipalities with the aim of strengthening governance and institutional capacity. This assistance was also extended to the eThekwini Metropolitan Municipality. The positive impact has resulted in improved outcome performance levels and outputs from the Provincial Eastern Cape DHS, Buffalo City Municipality, the Nelson Mandela Metropolitan Municipality and eThekwini Metro.




Within its portfolio of entities, the Department has three entities with a regulatory mandate, one with a development implementation mandate and one which straddles a regulatory and financial mandate.


Based on a previous evaluation, the Department is in the process of legislatively consolidating its entities through a development finance mandate. It has already operationally consolidated the National Housing Finance Corporation (NHFC) entity. Once the NHFC has been legislatively institutionalised as the Human Settlements Development Bank (HSDB), it will allow the entity toundertake a greater and more active role in redressing market failure in the housing finance market. It will also enable its larger balance sheet to be leveraged so as to undertake a more aggressive stance towards transforming the housing finance market, rather than adhering to the current lethargic approach.


Once the regulations relating to the Property Practitioners Regulatory Authority are promulgated, this will enable the use of regulatory mechanisms to transform the sector, which continues to be a laggard in transformation, notwithstanding the substantial amount of investment into the sector by the state.


The pending transfer of land and properties from the Department of Public Works and Infrastructure as well as from the Department of Agriculture, Land Reform and Rural Development will allow the Department to take active and concrete steps to institute the required spatial integration and spatial justicereforms. This will be done through the Housing Development Agency (HDA).


In addition, a more expansive approach to the rental sector will enable the Social Housing Regulatory Authority to ensure that more individuals and households with low incomes are able to access rental accommodation. The current neglect of the income groups earning below R3500 a month leaves individuals and households in this segment open to corruption, lack of safety and exploitation in meeting their housing needs.


The National Home Builders Registration Council (NHBRC) in the sector needs to take on a more activist and transformative role in removing barriers to entry for developers, builders and even manufacturers and suppliers of building material. There is a need for a more incentive-based regulatory mechanism to ensure transformation.


The lack of the ability on the part of the Community Schemes Ombud Service (CSOS) to see its role as broader than just managing middle- and high-income sectional title schemes is unfortunate. The fact of the matter is that the need for more compact and integrated towns and cities will require a more broad-based, medium-density housing focus. This requires a progressive approach to the sector, rather than one which is focused on administration and regulation. A radical change in the developmental intent and ethos of entities is required to achieve the desired transformation of the sector.





7.1. Appropriation Statement 2019/2020



 Total Allocation




 % Spent

1. Administration

R 464 667

R 4 927

R 426 158

R 38 509


2. Human Settlements Policy, Strategy and Planning

R 104 657

R 278

R 94 614

R 10 043


3. Human Settlements  Delivery Support

R 241 494

R 6 353

R 203 177

R 38 317


4. Housing Development Finance

R 33 051 096

R 11

R 32 621 604

R 429 492



R 33 861 914

R 11 570

R 33 345 553

R 516 361



(Source: DHS, 2020)




By the end of the 2019/20 financial year, the Department has spent a total of R33.35 billion out of a total final appropriation of R33.86 billion. The Department has therefore spent 98.5% of its available appropriation, and has underspent by R516.36 million (1.5%).Overall, the Department only managed to fully achieve 62.5% of the 48 targets. During the 2018/19 financial year, the Department achieved 82.6% of its 46 targets. This is an indication that the Department may have regressed in terms of performance during 2019/20.



7.2. Programme Performance


Programme 1: Administration


Programme 1 received an appropriation of R464.67 million, of which it spent R426.16 million (91.7%). Spending under this programme was therefore R38.5 million (8.3%) lower than projected. Underspending in Programme 1 is mainly due to underspending in three areas, namely; Compensation of Employees, Goods and Services and Expenditure for Capital Assets.Expenditure under this programme was 91.7% during both 2018/19 and 2019/20. In terms of the non-financial performance, the Programme’s performance appears to have declined from 77.8% of targets reached in 2018/19, to 66.6% of targets reached in 2019/20.


Programme 2: Human Settlements Policy, Strategy and Planning



Programme 2 received an appropriation of R104.66 million, of which R94.61 million was spent by the end of the 2019/20 financial year. Actual expenditure was therefore 90.4% of the total appropriation and the Programme spent R10.04 million (9.6%) less than projected. Underspending in Programme 2 is attributed to three main areas, namely Compensation of Employees, Goods and Services and Expenditure for Capital Assets.Expenditure under this programme was R90.1 million (92.8%) in 2018/19, compared to R94.6 million (90.4%) in 2019/20. In terms of non-financial performance, there seems to be a decline from 87.5% of targets reached in 2018/19 to 60% of targets reached in 2019/20.


Programme 3: Human Settlements Delivery Support


Programme 3 received a total appropriation of R241.49 million, of which R203.18 (84.1%) was spent. The Programme therefore underspent by R38.32 million, or 15.9%. Underspending was mainly attributed to underspending on Compensation of Employees, Goods and Services, Transfers and Subsidies and Expenditure for Capital Assets.Prior to 2018/19, Programme 3 has been the worst performing programme in the Department for the previous three consecutive years. It made a significant recovery in 2018/19 with 85.7% of its targets being reached, compared to just 31.6% in the previous year. However, the performance of Programme 3 in 2019/20 declined to 47.37% of targets being reached. Spending improved from 75.4% during 2018/19 to 84.1% in 2019/20.


Programme 4:  Housing Development Finance


Programme 4 received an appropriation of R33.05 billion (97.6% of the total budget of the Department for 2019/20), of which it spent R32.62 billion (98.7%). The Programme spent R429.49 (1.3%) lower than projected. Underspending in this Programme was mainly in three areas, namely Current Payments, Transfers and Subsidies and Expenditure for Capital Assets.


Conditional grant transfers from Programme 4


The Department administered 5 conditional grants to provinces and municipalities.



Amount per amended Dora (rand)

Amount Transferred


Amount Spent (rand)

Percentage spent of transferred

Human Settlements Development Grant (HSDG)

18.779 billion

18.779 billion

18.244 billion


Title Deeds Restoration Grant (TDRG)

547.700 million

547.700 million

366.947 million


Urban Settlements Development Grant (USDG)

12.045 billion

11.655 billion

5.069 billion


Provincial Emergency Housing Grant

276.900 million

244.811 million

205.7 million


Municipal Emergency Housing Grant

149.100 million

147.432 million

45.95 million




The highest expenditure during 2019/20 was on the HSDG (97.1%) of all funds transferred to provinces. However, performance by province varied, from exceeding set delivery targets to severe under performance on the overall delivery targets (both serviced sites and top structures). The highest achieving provinces on targets for serviced sites were the Eastern Cape (144%), the Free State (113%), and the Northern Cape (112%), while the lowest performance was recorded in KwaZulu-Natal (66%) and the North West (74%). For top structures, the best performing provinces were Limpopo (138%), and Mpumalanga (100%), while the lowest performance was observed in the Northern Cape (51%), the Free State (55%) and Gauteng (56%).


Overall expenditure on the USDG was 43.5%, resulting in under-expenditure of R6.6 billion. This is similar to the 2018/19 financial year, when 43.8% of the transferred amount was spent. A total amount of R394 million was stopped for the Free State (R118 million), Gauteng (R250 million) and Northern Cape (R26 million). Four provinces received additional reallocated funds of R98.5 million each, namely the Eastern Cape, KwaZulu-Natal, Mpumalanga and the Western Cape.


Expenditure on the Title Deeds Restoration Grant was 67%, despite it being a priority programme. Some of the reasons provided for the low spending of funds include a lack of township establishment, delays in township proclamation, disputes around beneficiary verification, property occupied illegally, tenants not eager to purchase pre-94 rental stock, an influx of unlawful occupants in rented pre-94 stock accommodation, and duplicate site numbers and estates not reported to the Magistrate Courts.


Expenditure on the Municipal Emergency Housing Grant was 31.2%. The transfers are request-based, following disasters or emergencies. For the 2019/2020 financial year, funds were transferredto Mbashe Municipality, eThekwini Metropolitan Municipality, Mtubatuba Municipality, Nama Khoi Municipality, Raymond Mhlaba Municipality and Greater Kokstad Municipality to provide for disasters that affected their jurisdictions.







7.3        Human resources


The Department has embarked on a recruitment drive process which is aimed at filling all critical and essential service posts to address high vacancy rate and in sufficient capacity to perform critical functions during the year under review. Then, the Department decided to fill some of the critical posts on a three-year contract basis which resulted in the loss or lack of retention of the desired critical skills personnel. The Department has since reverted back to filling the vacant posts on a permanent basis.


Despite the reduction in the Compensation of Employees budget during the Medium Term Expenditure Framework period (MTEF) and the impact on the Department’s ability to build its capacity, the Department filled 22 (26%) of its prioritised and critical posts. The Department also prioritised the filling of 84 critical posts, of which 33 (39%) were advertised on salary levels 3 – 14. There are acting appointments in some of the posts, which are in the process advertisement, recruitment and selection.


The Department has been reviewing its organisational structure and implementation is set for 1 December 2020. By the end of the Fifth Administration term, the Department’ Executive Management Team endorsed a proposed organisational structure for the Department. The process was then halted to allow for consultation with stakeholders and for a smooth transition from the Fifth to the Sixth Administration.


The signing of performance agreements by Senior Management Services (SMS) members at 31 May 2019 was reported at 93%. Reasons provided for some members not signing performance contracts by the end of May 2019 are other work commitments, the national elections in May 2019 and the unavailability of the supervisor to sign the performance agreements before the submission date. In the event of a national or provincial election occurring within the first three months of a financial year, all members of the SMS must conclude and sign their performance agreements for that financial year within three months following the month of the elections.






8.1        National Home Builders Registration Council (NHBRC)


The key highlights of 2019/20 were CabinetapprovalofHousingConsumerProtectionBillandsubsequentpublicationin Governmentgazettefor comments; Initiatedthee-servicesforhomebuildersandhousingconsumersinordertomakeNHBRCservice accessiblethroughthe internetandrelated applications; theNHBRCpartneredwiththewomenownedcompanytoconstructandIBThomeforan80years oldgrandmotherwholiveswithhertwograndchildreninadilapidatedmud house intheFree State province; and recoveryofR2.6mfromdefaultinghomebuilders.



8.2 Estate Agency Affairs Board (EAAB)


TheEAABreceiveda qualified auditopinionforthe2019/2020annualfinancial statements. Thebasisofthequalifiedauditopinionwasasaresultofrevenueandreceivablesfromnon-exchangetransactions(i.e. finesand penalties). TheAGSAraisedafindingthatrevenuefrompenaltieswasnotcompleteandthatitwasunderstatedbyR2422274,thusimpactingonthereportedsurplus.



8.3        Community Schemes Ombud Services (CSOS)


The highlights for 2019/20 were as follows: the2019/20financialyearhasbeenayearthatacceleratedstakeholderinterrelationstowardsensuringthattheServicehasacompletedatabaseofcommunityschemesinSouth Africa; ReceivedCommunityschemedatafromtheDeedsOfficeandCompaniesandIntellectualPropertyCommission(CIPC)anditsbeinganalysedtoidentifyunregisteredschemesthatshouldbe registered; A totalof28538CommunitySchemeshaveregisteredwithCSOS(6%increasefromlastfinancialyear); 64%(18236)registeredCommunitySchemesarepayinglevies(12%increasefromlastfinancialyear);R 217 060 000 CSOS levy collected (2% increase compared to the R195 672 310 last financial year); 23 training sessions conducted (1 022 stakeholders trained); an improvement in the Auditor-General finding of “qualified”, versus an “adverse” finding in the previous year, which it hopes to change to “unqualified” in the following financial year; 27 permanent posts were filled (30% growth in the staff complement from the previous financial year); 1 point of presence was established in the Western Cape (George); in one of their periodic updates to the CSOS, the Hawks assured them that the investigation of the funds lost through the unauthorizedtransfer to VBS, remain a priority.



8.4        Social Housing Regulatory Authority (SHRA)


The highlights for 2019/20 were as follows: approximately 17,000 units have been completed from the start of the 2014/15 year to the end of 2019/20; growth in the number of units under regulation from 20 477 units in 2014/15 to 39 407 in 2020 (92% increase). There were 103 fully and conditionally accredited institutions on the SHRA Accreditation Register, of which twelve (12) institutions are fully accredited and 91 are conditionally accredited; increased expenditure of the CCG to R 1 202 831 411 in 2020 representing 166% performance against budget. This is against an initial expenditure of R35 964 329 in 2014/15 and R776 202 726 in the prior 2018/19 year; the total deficit of R413 388 836 (for 2020) has reduced the retained surplus from 989 631 709 in 2019 to R576 242 873 as at end of 2020. Operating expenses (R83.48m) was 6.4% of Total Programme and Operating Costs of R1 299 954 838; SHRA’s performance achieved 67% for the 2019/20 year; out of the 30 performance indicators, 8 indicators (27%) related to transformation; staff vacancy rate at the end of the period was 15% and the headcount of 47 full time staff; the interim Council was appointed by the Minister with effect from 28 October 2019;during the year the SHRA had invested effort and time in the development of the MySHRA portal to provide systems and processes that are more efficient and stakeholder friendly.






  1. National Housing Finance Corporation (NHFC)


The highlights for 2019/20 were as follows: disbursements are R724 million and approvals stood at R939 million; leveraged funds of R1.1 billion from the private sector into the affordable housing space; FLISP achieved R123 million approvals resulting in commitments being higher than the R95 million allocation. The amount leveraged from banks is R943 million to a planned R215 million; an improved Cost to Income Ratio of 46,7%, and credit loss ratio of 1,5% against a target of 63% and 2,5%, respectively. Group surplus of R220 million, and is 358% of budget R48 million; leveraged R1.1 billion from the private sector resulting in the delivery of 2 972 housing units.




The Auditor- General was concerned about the following:

  • Overall, no entity has managed to obtain a clean audit within the portfolio. Leadership is required to set the right tone to provide the necessary oversight support in ensuring that the audit outcomes of the portfolio as a wholeimprove.
  • NHBRC and NHFC material misstatements in the financial statements were corrected by management, resultingin an unqualified audit opinion with findings. This can be attributed to inadequate and lack of timely reviewprocesses, as well as the ineffective use of the internal audit function.
  • CSOS and EAAB both received a qualified audit opinion as a result of inadequate controls and processes aroundrevenue management. Both entities have no permanent CFOs.
  • NDHS submitted financial statements with no errors, and did not material contravene laws and regulations thatgovern financial matters. However, the systems and processes to ensure performance information reported isuseful and reliable require improvement.






Key qualification areas:

  • EAAB – Revenue was materially understated as penalties for late renewals of fidelity fund certificates by estate agents were not always raised. The qualification in 2018-19 on commitments has been resolved.
  • CSOS – Similar to prior years, revenue is materially understated as not all levies from communityschemes were identified and collected. Though still qualified, some improvement was noted towards addressing the finding.


Top three non-compliance areas:

  • Quality of financial statements (NHBRC, NHFC,CSOS, EAAB);
  • Prevention of irregular expenditure (NHBRC, NHFC, CSOS, EAAB);
  • Prevention of fruitless and wasteful expenditure (CSOS).


Nature of irregular expenditure:

  • The majority was caused bycontravention of SCM legislationthrough deviations and irregularities inthe procurement process at NHBRC,CSOS and EAAB, as well as NHFC’scontinued use of contracts afterexpiry dates.


Nature of the fruitless and wasteful expenditure:

  • The majority of the disclosed fruitlessand wasteful expenditure for thecurrent year was caused by interest andpenalties charged on late payment tocreditors at NHFC.


Most common findings on supply chain management:


  • Procurement without inviting at least theminimum prescribed number of written pricequotations from prospective suppliers, and thedeviation was approved even though it waspossible to obtain the quotations (NHBRC,EAAB);
  • Contracts were amended or extended without approval by a delegated official (NHFC);
  • Procurement without inviting competitive bids,and the deviations were approved eventhough it was practical to invite competitivebids (CSOS).




The Committee was briefed in a virtual meeting by the DPME on its analysis of the quarterly performance reports of the Department of Human Settlements. The following were the impact indicators involving the DHS:

  • Spatial transformation through multi-programme integration in priority development areas (PDAs), with an urban focus;
  • Adequate housing and improved quality living environments; and
  • Security of tenure, including eradication of title deed backlog.


Table 2: Pre-audited Annual Performance of the DHS 2019/20:

(Source: DPME; 2020)

Overview of challenges:


  • Rezoning of acquired land in PDA’s


Of the 17 720 ha of land acquired during the previous MTSF period, only 2 800 ha (17%) were rezoned. Of a balance of 14 920 ha acquired land, 0% was rezoned since 2019 and the rezoning of these strategic land parcels, once reconciled spatially with PDA’s, require urgent intervention.


  • Community Residential Units and Informal Settlements Upgrading delivery


There are a total of 150 CRUs (82 new and 68 upgraded) delivered against a 2024 target of 12 000 target (1.2% achievement). With regard to the upgrading of the 1 500 informal settlements by 2024, there has been no shift from the baseline at this stage.


  • Title deed registration


The registration and issuing of title deeds to beneficiaries of state-subsidised housing offers security of tenure which offers protection and contributes to a functional housing market by enabling the efficient and optimal use of land and real estate property resources. One of the key MTSF priorities is to clear 893 222 outstanding title deeds for pre-1994 houses and post-1994 houses and process 300 000 new title deeds for serviced sites. Only 26 666 title deeds have been registered against the combined MTSF target of 1 193 222 (2.2%).




Having been briefed by the Office of the Auditor-General South Africa, the Department of Planning, Monitoring and Evaluation and the Department of Human Settlements and its Entities on its annual report, the Committee made the following observations and recommendations:


  1. The Department was commended for receiving an unqualified audit opinion.However, the AG found that leadership did not adequately monitor performance information reporting to promote efficiency and effectiveness. The Department developed a plan to address internal and external audit findings related to performance information. However, the AG found that senior management did not monitor implementation of the plan in a timely manner.


  • The Department should strengthen the monitoring of the implementation of the action plan in a timely manner. Therefore, the Department should provide tangible steps that it seeks to employ to strengthen the monitoring of the implementation of the action and progress thereof, the Committee during the first quarter of 2020/21. 


  1. The Department achieved 62.5% of its targets and spent 98.5% of its appropriated budget. The Committee is concerned with the misalignment between expenditure and achievements of targets.


  • The Department should plan to strive to achieve both financial and nonfinancial targets. Ensure that expenditure and targets achieved are aligned.There should be a balance between achieving targets and an unqualified audit opinion.In this regard, the Committee calls for a comprehensive plan to increase performance in the coming financial year, nonfinancial performance in particular. This plan should be furnished to the Committee in the fourth quarter of 2020/21.


  1. The Committee was concerned that the department underachieved in Programme 3: Programme Monitoring and Delivery Support (PMDS), which is the heartbeat of the department’s mandate. For example, the development of only 117 informal settlement upgrade plans from the targeted 300 has a direct impact in improving living conditions, especially of the poor.


  • Implement mitigation strategies to ensure that improvements are recorded going forward.


  1. The Committee welcomed reduction in irregular expenditure from R48 million in 2018/19 financial year to R14 million in 2019/20.


  • Ensure proper planning, which will ensure adherence to supply chain management legislation and policies to eradicate deviations.


  1. Lack of progress in the implementation of audit outcomes and recurrence of findings.


  • Strengthen governance and put more focus on the matter of emphasis raised by the Office of the AG to ensure a clean audit in the upcoming financial year.


  1. That key positions in the Department and entities were not filled.


  • Fill key positions with relevant qualified and requiredskilled personnel. All vacant posts should be filled within the 2020/21 financial year.


  1. Lack of compliance with legislation (PFMA) by NHBRC, NHFC, CSOS, EAAB.


  • Enhance oversight and adopt a zero tolerance approachwhen it comes to non-compliance with legislation, with a focus on repeat non-compliances. There should be consequences for PFMA transgressions. The Department should provide a report on consequence management with the regard to noncompliance with the PFMA provisions to the Committee in the fourth quarter of 2020/21.


  1. The Committee was concerned about the inability of the NHFC to prevent irregular expenditure, which amounted to R5.4 million. The irregular expenditure was predominantly incurred due to the continued use of contracts after their expiry dates.


  • Prevent irregular expenditure andresolve matters of emphasis raised by the Auditor-General be addressed within the financial year. There should be consequences for PFMA transgressions. The Department should provide a report on consequence management with the regard to noncompliance with the PFMA provisions to the Committee in the fourth quarter of 2020/21.



  1. The committee was concerned by the performance of set targets, with the NHFC achieving only 19 of the 39 key performance indicators, which is an overall achievement rate of 48.7%. Programme 1 performed the worst out of the four programmes, only achieving 23.5% of targets.



  • Ensure targets are achieved, especially because of the strategic role the entity is supposed to play in ensuring access to sustainable human settlements in the low to middle-income segment of the South African housing market. A plan of action to improve performance for this Entity should be developed with tangible timeframes and submitted to the Committee in the fourth quarter of 2020/21.


  1. The Committee was concerned that the SHRA had irregular expenditure amounting to R225 663 337.


  • There should be consequences for PFMA transgressions. The Department should provide a report on consequence management with the regard to noncompliance with the PFMA provisions and irregular expenditure control plan to the Committee in the fourth quarter of 2020/21.



  1. The processes by the department to collect and collate information in respectof reported achievements were not always adequately implemented resultingin material findings.


  • Ensure that processes are simultaneously designed to ensure that evidence as reflected in the technical indicator descriptions can be provided.


  1. The Committee noted poor performance in the issuance of title deeds, which also resulted in a growing title deeds backlog especially for new housing units and serviced sites.


  • Develop a plan to improve performance on the issuance of the title deeds. Fast-track township establishment plans.Transfer issues of land donated by traditional leaders must be resolved with urgency.


  1. The major systemic challenge facing the Human Settlement sector lies in the fact that it is a strong concurrent function depending on provinces and municipalities (mainly large cities) to implement and deliver on the MTSF outcomes and targets. It is at this level that delivery problems are encountered and unless these spheres are able to effectively fulfil their mandates and duties, overall performance will remain sub-optimal.


  • Use the DDM to ensure cooperationbetween various spheres of government (national, provincial and municipal) and collaboration when rendering service delivery to communities.


  1. The Committee was concerned with the development of plans to implement USDG projects by metropolitan municipalities. The department continues to transfer these grants without the metros having concrete plans, which leads to underperformance.


  • Improve intergovernmental relations with municipalities to ensure the spending of USDGs and ensure service delivery to the people. Urgently implementation of the prescripts of the DDM to ensure an integrated approach in spending the USDG. Support Metropolitan municipalities in the implementationof DDM prescripts.


  1.  That transformation in the property sector (EAAB) was still a problem because the majority of estate agents are still white.



  • Assist the EAAB to fast-tract transformation of the property sector.


  1. The Committee was concerned about delays on the Human Settlements Development Bill.


Fast-track the legislation of the Human Settlements Development Bill.



12.        CONCLUSION


It is the submission of the Committee that the implementation of these recommendations would positively respond to the objectives of the Department and Entities, the National Development Plan and the lives of the people. Recurring challenges observed would be resolved as swiftly as possible if accountability regarding these recommendations could be forthcoming from all the Entities within the sector. To ensure the realisation of these objectives at specified timeframes, the Committee will conduct its oversight on specified intervals. In addition, Parliament should track the implementation of these recommendations by the Executive. 


Report to be considered.



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