Department of Rural Development and Land Reform, Ingonyama Trust Board on their 2nd & 3rd Quarter 2015/16 performance

Meeting report

Briefing by the Department of Rural Development and Land Reform on its 3rd and 2nd Quarter 2015/16 Performance Reports

Mr Eugene Southgate, Deputy Director-General: Department Rural Development and Land Reform said that only the 3rd Quarter Performance Report would be presented. The Department had identified seven strategic goals it sought to achieve in the five-year period of its Strategic Plan (2015 – 20) and beyond. Some of which were:

• Foster corporate governance and service excellence; Improve land administration for integrated and sustainable growth and development;
• Improved access to services; Sustainable rural enterprises and industries; and
• The restoration of Land rights.

In its plan for the way forward, some of the plans and challenges included:

• Cumulative performance (44% instead of 70%) showed that the Department faced an uphill task in catching up on its annual targets;
• There was a high probability risk that the Department would miss its annual targets;
• All Action Plans needed to be tracked and monitored weekly by Branches and Programmes to catch-up on annual targets; and
• The grounding of all provincial personnel until the end of the financial year to ensure the success of intervention plans (see document)

Ms Rendani Sadiki, Chief Financial Officer: Department Rural Development and Land Reform said that Department's total spending for the 3rd Quarter amounted to R6.2 billion, representing 67.68% of the adjusted appropriation of R9.2 billion, leaving an available budget of R3 billion. The main contributor to under spending was Household Transfers spending 17.2 % as was below linear target and specifically under Program Rural Development 47.5% and Programme: Land Reform 37.1%. The vacancy rate of 10.68% or 497 funded vacancies also contributed to under spending of Compensation of employees. The branch had a total establishment of 1345 posts, filled posts were 1190, and there were 139 vacant posts. The cash flow balance was R323.9 million as at 31 December 2015.

Briefing by Ingonyama Trust Board (ITB) on its 2nd and 3rd Quarter Performance and Financial Report: 2015 – 2016

Ms Jabu Bhengu, Board Member: Ingonyama Trust Board; firstly tendered an apology from the Chairman of the Board. The performance recorded during the period under review was compared against targets set in the 2015 – 2016 Annual Performance Plan (APP).

Dr Sikiswe Madlopha, Chief Executive Officer (CEO) of ITB, said that programmes of the Board were as follows:

• Programme 1: Administration;
• Programme 2: Land Management
• Programme 3: Rural Development; and
• Programme 4: Traditional Council Support

Ms Bhengu stated that total expenditure for Quarter 2 and 3 amounted to R10.3 million and R10.8 million respectively. About 39.9% of the total budget was spent to the end of Quarter 3 and this included capital expenditure). A total of 38.06% of the total goods and services budget was utilised up to the end of the 3rd quarter. There Mitigation Plan that had been implemented included some of the following:

The filling of the vacancies for the Deputy Manager Administration, Real Estate manager, Auxiliary clerk and the Business development specialist would result in further expenditure being incurred in quarter four.

• In excess of R200 000.00 was committed for the 4th quarter for stakeholder/community engagement.
• For Land management funds would be utilised for the land valuation exercise which was to commence in the 4th quarter
• For Rural Development, irrigation systems were to be installed for the agricultural projects.
• For Traditional Council Support, the Board appointed a Business development specialist who was working with Traditional Councils to draft business plans for the utilisation of funds.

The total revenue generated for Quarter 2 amounted to R7.6 million and for quarter 3 amounted to R6.7 million (excluding transfer payments).The accumulative income at the end of quarter 3 amounted to R31.2 million which exceeded the budget by 9.22%.              

Discussion

Mr Mduduzi Shabane, Director-General (DG), DRDLR, said that the Committee would be provided with a detailed report on the following: Agriparks; the numbers of farms per province; the graduates and where they were deployed in the rural areas; and the farms that were leased, their location and by whom they were leased.

Mr T Mhlongo (DA) expressed concern that even after the improvement plan, no progress was evident. He asked for clarity about the R3 billion in the available budget and the 7.5% under spending. It was indeed true that the presentation on finances was unclear. The Committee should be provided with information on how had been spent by the Department on each quarter. It was unclear as to how the Department would improve the tracking of invoices in order to comply with the stipulated 30 days for the payment of invoices to the service providers. He reiterated that to date there had been no improvement but there was an improvement plan. The Committee should be provided with more information on the relationship between expenditure and growth. Where were the five Agriparks located? What improvements had been implemented on the five Agriparks especially when one considered that R2 million had already been allocated for this venture? It would be useful for the Department to provide a detailed financial breakdown of the Department.

Ms Sadiki apologised as she thought that Members were more literate regarding finances. She explained how the columnar structure of the presentation should be read in order to better understand the entries. 

Mr M Filtane (UDM) wanted to know if the Department had implemented any urgent steps to address the challenge of R10 million under expenditure of the Department as this would need to be explained to the very communities that had put this Committee in Parliament. In reference to page 11 of the 3rd quarter Performance Report, where it stated that Line managers were being uncooperative. It was quite clear that that this was a behavioural matter, not insubordination, and the dereliction of functions. The person could not be paid a salary every month for not co-operating. How was the Department dealing with people who were not co-operating? What steps that had been taken for the dereliction of duties? The problem was not with the service providers but with the persons who had appointed the service providers who clearly had not make sure that the service providers could do the mandated job.

Mr Shabane responded that the Department had a directive from the Minister that it could not afford to return money to the National Treasury, especially where service delivery was concerned. The Department had taken drastic steps especially with regard to rural enterprises where Members had also noted underperformance; as the Department had decided to make that programme account differently. In these cases, the Department had to assess where to relocate money to areas where it could be utilised best, like land restitution. The non-cooperation had happened in some of the most complex areas and the Committee was already aware that the Minister had approached the President to investigate some matters of suspected fraud of corruption. Those matters were with the Special Investigation Unit (SIU). The Department had been approached by Labour Relations about the non-cooperation of certain persons and had issued instruction that they cooperate. There was a need to improve especially on the level of project management, including management of the service providers that were appointed. This was an area where it was acknowledged that improvement was needed.

Mr Filtane referred to page 26 of the Report which illustrated that capacity was yet again a challenge. He asked if progress had been made in filing the vacancies. How was the Department performing its functions when it was in the middle of drought?

Mr Southgate replied that posts had been advertised for which the Department had received 3000 – 4000 responses. All these applications had to be captured manually. It took about 1 week or even a month to process these applications. Applications could be made online but this had been challenging to the Department but there are coping mechanisms that had been implemented.

Mr Shabane stated that the Department had many hectares of land with many farmers that had been equally affected by the drought. The Department had to review its approach and identify resources to respond. The Animal Research Programme was a key programme and water and fertiliser was provided to farmers.

Mr K Robertson (DA) referred to the restitution programme on page 33 which showed that with the number of claims lodged before 1998, there was a deficit of 406 claims. He asked what had caused such delays in the execution of this programme. How the Department could be capacitated to deal with this problem?

Ms N Magadla (ANC) asked to be provided with the breakdown of number of farms in the country per province.

Mr A Madella (ANC) acknowledged the improvement of the Department as was evidenced in the year on year comparison but expressed concern about the 47% underperformance. In relation to the cost cutting measures that the Department was forced to undertake, it was concerning that this was always affecting the staff complement of the Department. He asked how the moratorium on vacancies would impact on the performance of the Department. It had been indicated that said that 1190 posts in the Department were filled and 139 posts were vacant. This meant that 16 posts were missing; he asked for an explanation about this. The Committee should be provided with more information about the five districts where the Agriparks were in process, and asked where they were and how much had already been spend at the moment. What was the meaning of ‘grounding of provincial personnel' on page 47?

Mr Shabane responded that the Department was waiting for the response from the Minister of Finance before it could formulate its response going forward on the number of questions that had been asked by Members. The Department was concerned about this issue as there was a shortfall of about 1017 jobs around the programme of Enterprise Development, which the Department had acknowledged was underperforming. One of the particular focuses of this programme was Agriparks.

Mr Southgate replied that in the analysis of the performance, most of the issues that had been flagged were in the provinces.

Mr Madella asked about the progress that had been made in Improvement Plan and implementation thereof.

Mr Southgate responded that the Improvement Plan was already in operation in all branches of the Department.

Mr T Walters (DA) said that supply chain challenges were not linked properly with Agriparks. In relation to c capacity constraints in the Department, there was a general feeling that and he sensed that the Department was rushing into implementation. What was the progress that had been made on comprehensive report on Agriparks?  

Mr Southgate responded that managers had been appointed in all provinces particularly to deal with land and restitution issues.

Mr P Mnguni (ANC) spoke about the role of Parliament in upgrading the Ministry. Parliament was under pressure and had to be harsh otherwise colleagues resorted to court action. In relation to compliance and malicious compliance, it was good that correction action was taken to target the tricky issues. He asked how the Department intended to sustain the 30 day compliance strategy on the payment of invoices. The issue of “partial achievement” seemed to be blurring the lines between the actual achievement and non-achievement as this blurred the lines. The Department should do away with partial achievement as this was not full achievement and partial achievement was not in the Public Finance Management Act (PFMA). 

Deputy Minister Candith Mashego-Dlamini apologised about this the reference to partial achievement and said that it meant that work was being done but still was incomplete; hence it was termed partially achieved. She asked the Committee to bear with the Department, because it was spending money in those areas.

Mr Shabane responded that in relation to partial achievement, the measurement had to be between 20% and 65%. Money in many instances had already been spent and it would be difficult to explain how money had been spent if Members are suggesting that partial achievement should be deleted. How would one account for that money that was partially spent. So part of the money was accounted for as partially achieved and these expenses were mostly not quantified, hence partial achievement was used to identify them.

The Chairperson summarised the areas of focus as: disciplinary cases and the time taken; lease agreements of people on farms; underspending in rural development and restitution; transference of funds; graduates deployed in rural areas. The Committee needed to know where they were placed so that it could do oversight. The Internal Auditor was also requested to make an input on the performance of the Department.

Mr Yagan Govender, Internal Audit, DRDLR, indicated internal controls and governance were related to performance. In essence, the improvement in internal control correlated positively with the improvement in performance. If one looked at the Department comparatively, one would notice that there was a constant improvement in performance and in the control environment. There was a positive correlation between the control environment and performance. It was noted that the Department had improved in both of those areas. The ideal state had not been reached but there had been significant improvement in the performance of the Department.

Mr E Nchabeleng (ANC) asked for clarity about the bursary scheme that was being issued by ITB as this was not indicated in the presentation.

The Chairperson raised the issue that the ITB had bursaries located for virginity and this was a matter that needed to be discussed further in the in the next meeting with the ITB.

Ms N Magadla (ANC) urged that more time should be allocated for the next engagement with ITB as there were many outstanding matters that needed to be discussed.

The Chairperson said that the Committee would ensure that the ITB had sufficient time at the next meeting.

Adoption of Minutes

The Minutes of the 27 January 2016, 02 February and 03 February were adopted without amendments.

The meeting was adjourned.