Ingonyama Trust Board & DRDLR 2019/20 Quarter 3 & 4 performance; with Minister

Meeting report

Chairperson opening remarks
The Chairperson said the Committee would ascertain the performance of Department programmes over Quarter 3 and 4, with a particular focus on the achievement of set targets, challenges and mechanisms to address these challenges and weaknesses. The Department had been requested to explain how programme performance in these quarters impacted service delivery to beneficiaries/clients of programmes of the former DRDLR. It should provide a detailed account of expenditure outcomes with reasons for over/under expenditure and the impact on planned interventions and service delivery. The Department was asked to provide the same for the Agriculture Land Holding Account (ALHA) explaining how expenditure had impacted the acquisition and redistribution of land. The Department should provide a status report on its audit action plan to implement the Auditor-General South Africa (AGSA) recommendations. Finally, it should present a progress report on the implementation of the Committee's 2019 Budget Review and Recommendations Report (BRRR).

The Chairperson noted that it had been brought to his attention by Ms Steyn that the presentation did not entirely address the invitation's requested items but he would give the Minister the benefit of the doubt.

Minister’s opening address
Minister Thoko Didiza sad that the Department would be presenting on the DRDLR and Ingonyama Trust Board’s performance for Quarter 3 and 4. She reminded Members of the decisions and recommendations made in the previous meeting with the Committee and the concerns raised about the Ingonyama Trust, namely: (i) the number of staff which were placed on precautionary leave (ii) the vacancy rate (iii) the inability to indicate how the Ingonyama Trust Board in its function supported the empowerment of women and youth (iv) the Committee’s displeasure with the ITB failure to submit its budget in time according to parliamentary rules. She agreed that these were important concerns.

Minister Didiza reported that she had convened an urgent meeting with the Ingonyama Trust Board to address these concerns as well as to deal with matters emanating from the Act which speak to the mandate of the Board and the responsibility of the Department. In the meeting with the ITB, it was agreed that some of the concerns could not be dealt with in the meeting but were to be addressed before the end of June.

When she met with the ITB, the Board had already sent through their revised budget and offered an explanation for the delay in the submission of the budget. The Board had indicated that the precautionary leave of some of the senior officials had, in part, to do with this budget. The Board had instituted an investigation on a range of issues on the conduct and behaviour of these officials. The findings of the report would be presented to the Minister and Committee along with the actions that would be taken. The Department and Board was in the process of dealing with the budget. The Board had looked at its regulations to see how they could use some of the resources it had received as income for the communities and how a portion of 10% could be allocated to support the administration of the Board.

The Board had indicated that the increase in their budget was due to the work it does with traditional councils. They give support to the work of these traditional councils, some relates to the work councils do with the network industry where the Board and traditional councils must make approvals, decisions and leases which would allow for servitudes. The Board had indicated that in their management of the Trust land, when it came to decisions on leasing land, these decisions were taken by the traditional councils concerned and once those traditional councils, along with their communities, had agreed to leasing out land for investments or projects only then could the Board issue the lease - after vigorous engagement between the Board, interested stakeholders and the traditional council.

During the meeting DRDLR had with ITB, it was agreed that there was a need for transparency on the side of the Board when the ITB budget was presented to the Committee. The Board had indicated that their inability to perform in some of its programmes was related to budgetary issues as well as the delineation of responsibilities between the Board, in its management role, and the traditional councils as the beneficiaries of resources accrued from leases and other uses of the land.

ITB and the Department had decided to consult legislation to see what the mandate of the ITB was, after which they agreed that they needed to deliberate on two points from the Ingonyama Trust Act as amended in 1997: i) the responsibility of the ITB is to administer the Trust, Trust land, deal with leases, pledges and the disposal of Ingonyama Trust land ii) despite ITB responsibility over the land in question, national government may still exercise land reform after consultation with Ingonyama Trust. Both parties had agreed that they had to settle on what their interpretation of the Act would be; what their responsibilities would be in the context of the Act; and how policies should be developed to guide how the Trust’s land would be managed to ensure transparency to stakeholders and the Portfolio Committee overseeing the Department.

In the ITB-Department meeting before the end of June, the Department would like to find out how the traditional councils use the resources they receive from leases to empower communities.

The Minister said that the Board had briefed the Department on the litigation between the Tendele Coal Mining Company and the KwaMsane community. The Board said that the litigation was about phase 2 of the mining project, to which no approval or lease had been given yet. The contestation of the mine was due to the community, a total of 24 households, demanding more compensation than what the company believed to be fair or just. The matter was still with the court.

Speaking to the DRDLR presentation, the Minister said that there were areas where spending had not gone according to plan. This was due to concurrence which needed to happen between the Department and the Ministry of Finance, particularly on the matter of the stimulus package announced by the President in 2018. As mentioned to the Committee before, the DRDLR plan for the stimulus package was to revitalise 262 farms if the state agreed to fund the project. Project work had already been done in contracting certain commodity organisations to assist the Department in supporting the farmers before DRDLR was informed by Treasury that the Department procurement process would ultimately result in an audit query; after which DRDLR worked with Treasury to implement the necessary changes. On 30 October a letter was written to the Minister of Finance to seek concurrence from the Minister so DRDLR could follow the process it had agreed upon with Treasury. Approval from Treasury took a while; a letter of concurrence was received from the Ministry of Finance on 18 December and at that point DRDLR could not continue with procurement. This was an example of the reasons the Department had been unable to achieve its set targets.

DRDLR Quarter 3 and 4 Performance Report
Rural Development and Land Reform Director-General, Mr Mduduzi Shabane, confirmed that the BRRR progress report would not be part of the presentation due to internal challenges DRDLR had been experiencing and he conveyed his apologies.

Due to time constraints Ms Rendani Sadiki, Department CFO, requested permission to present from the Quarter 4 report which contained information on both quarters and the Chairperson granted her permission.

Performance Scorecard
Ms Sadiki explained that anything between 0% and 99% was regarded as non-performance and that only 100% was considered as an achievement of a set target. DRDLR had performed at 30% in Quarter 3 due to the fact that for achievement, all their targets were set at a 100%. DRDLR had a total of 23 overall targets and 16 of them were achieved. Breaking the data down, she said that there was 0% achievement of targets for administration and that this was due to failure to process payments within the 30-day period, the rural development programme was sitting at 0% and the land reform programme at 25%. DRDLR had achieved 100% on Restitution in Quarter 4 and 50% in Quarter 3. Targets with zeros next to them meant DRDLR had been unable to fulfil the 100% requirement.

On overall performance from Quarter 1 to Quarter 4 DRDLR had started off in Quarter 1 with a 55% achievement rate which decreased to 30% by Quarter 4. The 55% of Quarter 1 was a result of the rollover of projects which could not be finalised by 31 March 2019 which had spilled over to the first quarter, giving the impression that DRDLR had overperformed in Quarter 1. DRDLR had achieved 50% of its targets during Quarter 3 however the negative impact of this was going to be fed through DRDLR annual target.

Trend Analysis
It regressed in Programme 5 between Quarter 3 and Quarter 4. Programme 4 Restitution had improved between Quarter 3 and Quarter 4 from 50% to 100%. Programme 1 Finance had tried to improve from 50% in Quarter 1 to an overall performance of 95% for Quarter 3 and 4 which was recorded as 0% on the achievement of targets for both quarters. Programme 2 had tried to improve but was unable to meet the performance target for Quarter 3 and Quarter 4. Over the five years, the overall performance for Programme 2 and 4 had improved; while there had been regression in Programme 3. Programme 1 remained the same for the past three years.

Programme 1 Administration
She explained the reasons for non-achievement, stating that the biggest challenge for the finance programme was the Agriculture Land Holding Account (ALHA) which had invoices that were taking too long to be paid. On land restitution in Mpumalanga and KZN, DRDLR was sitting on 89%. Despite not achieving this target, DRDLR still had pockets of success like the Office of the Surveyor-General deeds in Mpumalanga and Limpopo which were sitting on 100%.

Programme 2 Geospatial and Cadastral Services
There was improvement with the draft land use master plan approved. The implementation of the strategy of the National Spatial Development Framework had been achieved. For deeds made available within 7 days, DRDLR was sitting at 91% which meant that the target was not achieved. There were a number of issues which resulted in poor performance by DRDLR for this indicator; these challenges included the implementation of lockdown in March as well as load shedding within the second half of 2019.

The deeds transformation policy approval was not achieved since the process had to be put on hold due to many reasons. DRDLR had managed to produce 56 maps, surpassing their target of 45 maps.

The indicator “average number of working days taken to register registerable diagrams”, DRDLR missed its target of 14 days and recorded 18 days. This was a result of quantity surveyors submitting work that was subpar. DRDLR would be engaging with the professionals involved to improve the standard of their work in future. There were vacancies which needed to be filled and this would be addressed as it had a negative impact on the work of DRDLR.

On the number of state land parcels surveyed, DRDLR had targeted 1500 land parcels in Limpopo and achievement was 0. This was because Treasury had given Department of Public Works and Infrastructure (DPWI) funding for the project and thus there was no need for DRDLR to intervene besides collaborating coordinating with National Treasury.

Programme 3 Rural Development
DRDLR had 122 infrastructure projects supposed to be completed, but it managed to complete only 30 of these. The main reason for non-achievement was there had been high achievements in previous quarters. Going forward, DRDLR would be aligning its quarterly targets based on previous achievements.

On number of rural enterprises supported, the overall target was 227 enterprises with Quarter 4 target being 22 but DRDLR managed to support only 14.

On farmer production support units (FPSU), DRDLR had a target of 15 FPSUs in Quarter 4 but DRDLR managed to achieve only one. There was a detailed explanation for this per province (see document).

Performance Barometer
The performance barometer was a summary for all the quarters which details how DRDLR performed for its annual targets.

The target for invoices was 100% and DRDLR achieved 95%. DRDLR had met the requirements for an unqualified audit report. DRDLR produced a draft for the land use master plan and the National Development Framework Strategy was achieved.

On the percentage of deeds made available within 7 days, DRDLR achieved 95% for reasons already explained. The target for approval of the deeds transformation policy had been missed completely.

DRDLR had targeted 200 maps and they overachieved this target by 22 maps. For the number of working days taken to process registerable diagrams, it had missed its target of 14 days by one day and was sitting on 15 days.

DRDLR had managed 1500 state land parcels surveyed. This was the project that had been moved to DPWI. For number of infrastructure projects completed, it had a target of 122 and this target was overachieved, with a total number of projects completed sitting at 127.

For rural enterprises supported, the target was 227 and DRDLR only managed to achieve 175. For farmer production support units needing to be made functional, it had only managed to achieve three, 11% of its overall target.

For skills development opportunities provided in rural development initiatives, DRDLR missed its target and only managed to achieve 93% of it, which was 6 921 opportunities. For the number of job opportunities provided, DRDLR had achieved 92% of its target, amounting to 5 438 jobs opportunities.

For the number of land claims finalised, DRDLR missed this target and they were sitting on 94%, with a total of 603 land claims finalised.

DRDLR had 435 land claims that had been settled, which was an over-achievement as the target was 428.

For hectares acquired, 94 000 were supposed to be acquired and DRDLR narrowly missed this and acquired 92 000 instead. For hectares allocated to smallholder farmers, DRDLR achieved a 186%, over-achieving its set target.

On smallholder farmer beneficiaries allocated land, DRDLR had missed its target and was sitting at 87%.

For number of farmers supported through the Land Development Support (LDS) programme, DRDLR supported 52 instead of 162 farmers. And for the “One Hectare, One Household” programme, DRDLR missed its target; DRDLR supported 53 instead of 2 656 households.

For the number of communal property associations supported to be compliant with legislation, DRDLR had over-achieved its target and was sitting at 107%.

On the number of labour tenant applications, DRDLR missed its target and only managed to achieve 498 against a target of 3 666.

For the number of hectares allocated to farm dwellers and labour tenants, DRDLR had over-achieved its target and was sitting on 109%, a total of 9 500 hectares against a target of 8 750 hectares.

DRDLR’s overall performance was sitting at 30%, as anything below 100% was excluded as unachieved.

Expenditure for Quarters 3 and 4
Ms Violet Matshidza, CFO of DALRRD, presented DRDLR expenditure (see document). Expenditure for each programme was noted plus total spending on compensation of employees, goods and services, transfers and subsidies, and capital assets. In Programme 3, the allocation to support DRDLR beneficiaries was sitting there.

She noted about priority projects:
- Rural Infrastructure Development (RID), DRDLR had spent R417 million on construction projects.
- Rural Enterprise and Industrial Development, R177 million was spent from an allocation of R366 million.
- National Rural Youth Services Corps, DRDLR spent R193 million from an allocation of R340 million.
- Restitution (Land Claims) expenditure was 73.2% when COE was excluded from the allocation.

At the end of the financial year, DRDLR was sitting at 99.9% for its overall expenditure. She listed the expenditures per programme: i) Programme 1 Administration was 99.8%, ii) Programme 2 Geospatial & CADAS was 100%, iii) Programme 3 Rural and Development was 99.7% iv) Programme 4 Restitution was 100% and v) Land Reform was 100%. Explanations for under expenditure were given.

Agricultural Land Holding Account (ALHA) Quarter 4 Financial Performance
DRDLR had allocated R2.7 billion which was meant for land procurement, development support programmes and the finalisation of the Recap commitment as well as other operational matters within the entity.

Ms Matshidza reported that 31 March 2020, DRDLR was sitting on 49% expenditure, it had commitments of R1.1 billion and had accruals. Since ALHA was an entity, for all its commitments, ALHA had to submit requests to Treasury to retain the allocations from the previous financial year and once Treasury approved, it could pay out its commitments.

Discussion
Ms M Tlhape (ANC) expressed concern about the performance of DRDLR for the two quarters. On the 30% of targets achieved, this implied that 70% of services which should have been delivered were not. She felt that the COVID pandemic had actually relieved farmers since the relief they are receiving from government probably makes up for DRDLR's limitations.

Her biggest concern was with Programme 3, for which none of the targets were achieved. Her concern was that the programme spoke directly to the National Development Plan goal of creating viable and sustainable farms which should contribute to food security. She asked DRDLR if the moratorium in this programme had been lifted. Also, DRDLR's plan to pay out service providers within 13 days had not worked so small businesses were being affected. She asked how DRDLR was planning on fixing this challenge.

Ms K Mahlatsi (ANC) agreed that the presentation had been very disturbing. In the previous quarterly review, DRDLR had told the Committee that it would recover from its 29% performance in the subsequent quarters but this did not happen. She asked if DRDLR had requested rollovers for the commitments still outstanding. If so, how much was approved by Treasury? She asked if it was not possible for DRDLR to make arrangements with service providers to ensure that outstanding invoices were paid on time. She asked if all the unspent money was spent on COVID-19 and so there would be no rollover amounts.

Ms A Steyn (DA) asked if DRDLR was proud of its work in the last two quarters of the financial year. She asked from where the R1.3 billion spent on the COVID-Q9 Agricultural Disaster Support Fund had come. It was not fair for DRDLR to claim that certain things were not happening in the last two quarters. DRDLR should give the Committee a detailed account of unspent funds so the Committee could do its oversight. She expressed frustration for DRDLR not providing full details of its expenditure in the past. She was close to taking DRDLR to SCOPA due to the flimsy reports that DRDLR provides.

Ms Steyn was tired of receiving calls from desperate farmers who were trying to finalise land reform projects but could not reach DRDLR officials or get responses from them. She did not understand why DRDLR could not work full time during the pandemic when Members can do so from their phones and laptops at home.

Mr S Matiase (EFF) said that from the presentation, DRDLR gave the impression it was doing well but the opposite was true. He agreed that the reports by DRDLR were disappointing. He advised that the Committee should make a paradigm shift and stop evaluating the work of DRDLR by its programmes, as this was misleading and not a true reflection of the work. He suggested that the DRDLR work be evaluated on the basis of the socio-economic impact it had. The work of DRDLR needed to be looked at from five different perspectives: i) agricultural development and infrastructure in the rural areas ii) economic growth in the rural areas iii) urban and rural integration iv) agri-processing and industrialisation.

Ms B Tshwete (ANC) agreed that the report was unacceptable. She reminded the Committee that in the DRDLR previous quarterly report, it had said it would improve performance in the third and fourth quarter and this had not happened. DRDLR under-expenditure in Programmes 3, 4 and 5 was concerning considering that these were its core business. She voiced concerns about the impact of this under-expenditure on farmers and other beneficiaries. DRDLR’s poor performance and under-expenditure was not acceptable. Perhaps it was time for the Committee to see consequence management strategies being implemented.

Ms T Breedt (FF+) was concerned about DRDLR underspending and repeated that the Committee had been promised improvements in Quarter 3 and 4 but this had not happened. She hoped that this was due to the merging of departments. She would like to see what DRDLR was doing with the unspent funds. She asked if DRDLR’s underspending was the reason for its poor programme performance. She expressed frustration at its performance and DRDLR was not being direct in providing the Committee with the necessary information.

The annual target for FPSUs was 27 but only three were active. She asked where these FPSUs were and why only three were active and successful. She asked how the success of these FPSUs was measured and monitored. Her concern stemmed from the fact that DRDLR had been speaking about agri-parks and FPSUs for a long time and throughout this time DRDLR has continued to backtrack on its plans for a variety of reasons while rural communities and rural agriculture suffers as a result of not having market access or proper support. DRDLR had been lagging on FPSUs and if these FPSUs were prioritised, assistance could go towards rural communities.

Mr N Montwedi (EFF) noted the moratorium on filling of vacancies which had contributed to a large amount of money not being spent in the Administration programme. He asked when the moratorium would be lifted since the Minister said that the integration of the two Departments had been concluded. He noted the R344 million overspending on the Restitution and Land Reform programme, after which DRDLR received approval from National Treasury to shift funds from Administration to ALHA. He asked the Minister why DRDLR had to intervene when the Land Bank was experiencing financial problems, even though the Land Bank reports to National Treasury. There are small-scale farmers in need of DRDLR assistance who were not receiving it while DRDLR was able to assist the Land Bank which accounted to National Treasury.

DRDLR makes transfers and he asked if DRDLR had included the transfer it had made to the Land Bank in its expenditure report. The reason he asked was DRDLR had reported that there was the R1.3 billion stimulus package sitting with commodity organisations to assist livestock and crop farmers. Although the Finance Minister had signed off the money on 30 December 2019, there had not been any implementation of projects. He asked if DRDLR moved money to commodity organisations and then reported expenditure on the part of DRDLR. He did not see a link between the DRDLR financial report and performance report since there was 30% performance achievement while the financial report pointed to over-expenditure.

The Chairperson agreed with the Committee and said DRDLR managed to achieve only 74% rural enterprises supported. Why could DRDLR not support 100% of these rural enterprises since its core mandate was to uplift rural communities. For FPSUs, DRDLR was sitting on 4%. Why had DRDLR not been able to ensure that these FPSUs were fully functional to ensure that food security was met in the country. He asked where the three FPSUs were located so that the Committee could do oversight.

The Chairperson referred to land claims finalised and land claims settled and said land was a crucial issue for South Africans. He asked for the reasons DRDLR was able to achieve only 62% land claims finalised and 74% land claims settled. South Africans wanted to see rapid transformation and DRDLR was not acting with enough urgency about land.

He pointed to the number of farmers supported through the Land Development Support Programme where programme achievement was 31%. He asked for the reasons for such poor performance. He expressed shock at the 1% achievement in the “One Hectare, One Household” programme. As he lived in a rural area, he understood how many households were dependent on their gardens for food. People in rural areas look to government for support and that money should be used for the purpose of poverty alleviation. The 12% achievement for number of labour tenant applications processed was testament to the poor performance of DRDLR. He asked DRDLR to explain why there was poor performance in these support programmes.

DRDLR response
The DG replied that some questions required specific answers and requested that DRDLR respond to these in writing. He acknowledged the Committee’s dissatisfaction with DRDLR performance as reflected by the performance rating model DRDLR uses which is set by the Department of Planning, Monitoring and Evaluation. The challenge with the rating model can be seen clearly when trying to establish the connection between performance and budget expenditure. A connection between expenditure and performance could not be seen if 90% target achievement counted for nothing in the measurement rating model used. Although 90% target achievement counted for naught, it actually cost a lot of money to implement. If Members look closely at the DRDLR indicators, it was sitting at 95% achievement of targets but these were accounted for as 0%. He warned the Committee that this is a challenge that DRDLR was going to continually face. He acknowledged that DRDLR had performed poorly in some of its core areas and this could not be excused. He replied that DRDLR could only commit to improve in the future.

The R1.3 billion stimulus package had been brought up several times in the past and DRDLR had responded to it in the past. He asked that DRDLR respond to the matter in writing. To briefly explain, DRDLR did say that the Land Development Support Programme which was going to be funding the stimulus package got delayed in implementation until DRDLR received approval from Treasury. This in turn meant that there was a surplus of R1.3 billion which was then reprioritised with the request of National Treasury.

There were 146 farmers benefiting from R400 million of the R1.3 billion and the extent of land being supported was 216 000 hectares in all nine provinces. DRDLR did not transfer money to Land Bank to offset the bank shortfalls. The money transferred by DRDLR to the Land Bank was transferred on the basis of agreements between the two. He added where there were challenges monies were reverted to DRDLR

In response to Ms Steyn, he was unsure of what the information she had repeatedly requested was about but offered to help her if she provided details.

To Ms Breedt, he replied that four meetings ago, the Committee had asked the same question on FPSUs but agreed to respond to the question again in writing.

Ms Rendani Sadiki responded to some of the finance questions. Treasury allowed the processing of payments a few weeks after the year end but this applied only where accrual not cash accounting was used. However, DRDLR uses modified cash standard so this was not possible. Treasury regulations dictate for what items rollovers can be requested - usually capital expenditure items for which a project was still running. DRDLR did not ask for rollovers because most of the unspent money was for operational expenditure. DRDLR did ask Treasury to retain all the unspent money for COVID-19, for which approval was granted. This was a part of the R1.2 billion used for COVID-19. No money was sent back to Treasury as all money allocated was used up.

On the processing of invoices within 30 days, Ms Sadiki admitted that DRDLR had regressed this year but DRDLR did end up at 95% achievement for this. The biggest problem was with ALHA but those challenges were being addressed and DRDLR was confident that there would be improvements in the future. DRDLR now has an invoice-tracking system that has been implemented. DRDLR realised that change management training for people had not been conducted so people could get used to using the system since it fast-tracked the approval and payment of invoices. To address this, the finance team was instructed to ensure that every senior manager undergoes change-management training.

Ms Nomfundo Gobodo, Chief Land Claims Commissioner, spoke to the performance of the Commission. She noted that the Chairperson had misread the figures. At the end of Quarter 3 the Commission sitting at 141% for land claims settlements and 96% for finalised land claims. In Quarter 4, the Commission was sitting at 126% and 190% in Quarter 4. For its overall achievement, the Commission had achieved all its targets; they had 102% for settled land claims and 108% for finalised claims.

The Chairperson acknowledged the error.

Minister's response
Minister Didiza replied to the question about how DRDLR felt about its performance. She replied DRDLR could not be satisfied with the non-achievement of set targets. She reiterated that DRDLR will continue to improve on its performance. The moratorium on filling vacant posts was not a decision of the Minister but a decision made by the Department of Public Service and Administration (DPSA) for departments that were merging. Once merged, the department was then allowed to fill vacant posts. The reason for this was to ensure that the system did not get bloated whilst going through a reconfiguration. She pointed out that the old DRDLR and DAFF were able to accommodate their entire staff in the newly merged Department of Agriculture, Land Reform and Rural Development (DALRRD). Where new appointments were not made, this was because there was a duplication of function between the old DRDLR and DAFF.

Minister Didiza agreed that DRDLR could do better with the “One Hectare, One Household’ programme.

On the land claims of labour tenants, there had been the Constitutional Court judgement in Mwelase v Department of Rural Development and Land Reform which changed how DRDLR would approach this matter. The judgement ordered the reinstatement of a Land Claims Court order to appoint a special court master and critical staff necessary to help the Master to oversee the processing of labour tenant claims. The Master then had to present a plan to the court which detailed how labour tenant matters for land acquisitions and transfers would be handled. DRDLR had reported to the Committee that they were not pleased with the functioning of the programme since DRDLR played only an administrative role. Afterwards the appointed Master would be working with DRDLR on the implementation of the master plan as approved by the court.

Minister Didiza replied that the Department had not put money into the Land Bank to deal with the bank's liquidity issues. The agreement to put funds for COVID-19 relief into the Land Bank was between DALRRD and Treasury. Treasury came back to DALRRD to say the Land Bank would not be able to accommodate R100 million in its current state. DALRRD and the Land Bank had agreed that the Land Bank would go back to farmers in distress to assess them, indicate to DALRRD those farmers who are successful and DALRRD would then pay the farmers from that money.

Commitments had been made for the FPSUs and agri-parks. However, at the beginning of the Sixth Administration it was agreed that the manner in which things were done, would not allow DALRRD to achieve the desired impact. This explained the delay which was the result of trying to address those challenges, some of which had been pointed out by the Committee.

Ingonyama Trust Board 2019/20 Quarterly 3 and 4 performance
Judge Sipho Jerome Ngwenya introduced the presentation.

Quarter 3 Performance
Administration
Mr Andile Gabela, Acting ITB CEO, reported that the Board had planned on doing one policy for the quarter but they were unable to achieve this due to internal delays. The policy was then shifted to the last quarter. All assets acquired were captured timely on the asset register. The IT solution supposed to be implemented was implemented in the Quarter 2 instead. ITB had set a target of three training programmes for Quarter 3 but only managed to do two due to inadequate resources as well as internal failures for timely planning. ITB decided as a mitigation strategy to properly schedule all training programmes during Quarter 4. ITB achieved 100% of payment of undisputed invoices within 30 days. The initial draft of its communication strategy was approved.

Land and Tenure Management
It had planned a target of 200 for land tenure rights approved. It over-achieved by 30 additional applications. ITB was continually updating its land holding register and the target of 1 for the quarter was achieved.

Traditional Council Support
ITB planned to provide support to at least 11 traditional councils but in Quarter 3 ITB could not provide any support due to a lack of financial and human resources. ITB decided to discontinue this programme due to the lack of human and capital resources and restart in the new financial year. On educational awards granted, DRDLR had a target of 50 awards which was not reached at all. The target was consolidated and was to be made in the last quarter.

Quarter 3 Expenditure Report: Ingonyama Trust Board
Quarter 3 budget for Administration was R13 million and R11 million was spent. For goods and services, ITB had a budget of R3.6 million and R3.5 million was spent. On compensation of employees ITB had a budget of R9.8 million and R7.8 million was spent.

Quarter 3 Expenditure Report: Ingonyama Trust
R4.7 million was allocated for Corporate Services and Financial Administration for Quarter 3 and R529 000 was spent. On Land and Tenure Management Services ITB had allocated R25 million and R3.7 million was spent. For Traditional Council and Community Support, the budget was R5 million and R451 000 was spent.

Quarter 4 Performance
Administration
ITB had planned on approving three policies but they did not achieve this target. There were three policies which were in the drafting phase and were currently being discussed with the accounting authority. These policies were ICT, Fleet Management and Credit Control and Debt Management. They should be approved before the end of the lockdown. All procured assets were properly registered. There were no vacant positions needing to be filled. All IT solutions had been implemented in earlier quarters due to urgency.

The target for number of training programmes conducted was three as well but none of these were achieved. ITB had identified training to empower employees but the implementation of these programmes took longer and this was compounded by incapacity. ITB was in the process of unfolding various training programmes, both formal and informal, for all employees. ITB was paying all of its invoices in a timely manner.

ITB missed the target for approving its communication strategy. It was still processing the draft internally and it should be approved in Quarter 3 of the current financial year.

Land and Tenure Management
ITB had targeted 200 land rights for approval but had managed to approve a total of 725. For updating the land holding register, the target of 1 for the quarter was achieved.

Traditional Council Support
ITB planned to train 12 traditional councils and this was not achieved due to the lack of funds. The Trust had made money available to appoint a training coordinator and facilitators to train councils.

The target of 50 educational awards was again not achieved in Quarter 4 due to a lack of funding for the project. ITB was in the process of reconciling the number of beneficiary applications received. ITB was trying to process these when the country went into lockdown.

Quarter 4 Expenditure Report: ITB
- For administration, ITB had a budget of R26 million and a total of R10.6 million was spent.
- On goods and services, ITB had a budget of R3.4 million and a total of R2.6 million spent.
- On compensation of employees, ITB had a budget of R25.5 million and of this R8 million was spent.

Quarter 4 Expenditure Report: IT
He broke down the IT expenditure and said that for corporate services and financial administration the budget allocation was R26 million and the amount spent was R2.1 million. For land tenure management services there was an allocation of R45.6 million and R1.1 million was spent. There had been a budget allocation of R5 million for traditional council and community support and a total of R1 million was spent. The budget allocation for the Trust’s goods and services was R66.5 million and of this R4.3 million was spent. He mentioned that there was a capital expenditure that ITB had budgeted R10.7 million for and of this they only spent R38 000.

Ingonyama Trust Board responses to Committee concerns
Mr Gabela, Acting ITB CEO, responded to the concerns raised by the Committee in a letter to ITB:

Service Delivery Performance and Financial Reports
The financial reports of Ingonyama Trust Board are tabled before Parliament annually. ITB presents all its reports as required on a quarterly basis before the Portfolio Committee. Of note, is that neither the Ingonyama Trust Board nor Ingonyama Trust gets an appropriation for any service delivery. Any community project which the Trust makes contribution to is funded from the meagre resources generated by the Trust. It should be noted that the expectation for ITB to facilitate service delivery projects should be accompanied by the necessary funding.

Detailed account of material benefits accruing to people living on the IT land
The material benefits to communities differ from situation to situation and is dependent on the financial resources available. At this stage, the greatest challenge is the protection of communal land against expropriation either for municipal property rates or generally without compensation. The Trust is duty bound to act in the best interest of the beneficiaries.

Status report on implementation of the AG’s recommendations
The main thrust of the Auditor General’s findings is irregular expenditure mitigation. In this regard, many loopholes have been identified. As a result, a forensic investigation has been commissioned and the executive management placed on special leave. An interim payment routine system has been put in place. Other concerns relate to legal interpretation and these are the subject of further discussion. DRDLR is assisting with this.

Response and progress report on the implementation of the 2019 BRRR
The Budgetary Review Recommendations require legislation amendments and are thus outside the realm and competency of the Board. That said, ITB will assist and make the necessary input as the legislation amendment process unfolds.

Discussion
Ms Tlhape welcomed the Minister’s opening remarks on the continued engagement DRDLR was having with ITB. The Minister’s remark had sufficed in answering questions previously posed by the Committee.
She referred to expenditure in Quarter 3 and asked what type of system has ITB put in place for unused funds. With such a low rate of expenditure at 13.53% across all programmes, she raised the concern that funds had not been used for their intended purpose.

She pointed out that expenditure for traditional council support had declined from 49% in Quarter 2 to 9% in Quarter 3 and 20% in Quarter 4. She asked why there had been such a drastic decline in expenditure. She applauded the Board’s consequence management but asked why Administration expenditure was only at 34% and how ITB was running its affairs while its management was placed on leave.

Ms Mahlatsi raised the point that the Committee had agreed with AGSA that when dealing with quarterly reports, audit action plans should be addressed inclusive of risk management. Other than remedial action, she did not see risk management addressed in the presentation. She asked if the executives on special leave were on full salary, what their suspected transgressions where, how many executives were involved and what their names are. She referred to the planned ITB programmes that were not budgeted for. She pointed out to the Minister an important meeting to have with ITB would be on the management of institutions. R1.7 million had been disbursed for training for traditional councils but no workshops were held. What had the money been used for? She asked a similar question about the R1.4 million in bursaries. If the money had not been disbursed what had happened to it? She supported the perspective that the Minister be allowed to deal with these matters. It seemed like there were challenges on principles and policies of governance in the management of ITB.

Ms Steyn thanked the Minister for sharing that she had met with ITB prior to the Committee meeting. She felt there was a need for regular updates on what was happening in ITB as she was still unclear about the role of the Trust Board compared to the role of the Ingonyama state land and the king. It was very confusing and the confusion was causing problems. She asked for details on the disciplinary process of staff that had been placed on suspension leave. On the R113 million budget for land tenure management, she asked if ITB had a land tenure management policy for rentals and selling land and if the land was surveyed. She asked about the court cases that were always brought up and if it was possible for the Committee to know the nature of these cases. She had visited the Ingonyama Trust land and in speaking with community members realised that the people were unsure of their role on the Trust land. Since the conversation was about appropriation of land and redistribution, it was important be clear on the role of the Trust and the Board.

Mr Matiase welcomed the report but said that the report lacked much which was desired. For a number of years the Committee had been receiving reports from the Board detailing administrative failures. He questioned the rationale behind the Board’s solution to remedy the situation - which was forensic investigation - since it had been members of ITB itself which were the alleged offenders. He recommended that DRDLR sends forensic investigators to investigate the ITB. To avoid money being spent on bureaucracy he recommended that ITB stop appointing its own staff and that DRDLR recommends or seconds officials to work in the ITB. If for the past 26 years the ITB has failed to run its own affairs, DRDLR needs to appoint its own officials as he did not see the ITB resolving its problems any time soon.

Ms Tshwete said that the non-achievement of its targets to train traditional councils reminded her that the same thing had happened in the second quarter; this was worrying. She noted that in the second quarter the ITB had reported that their annual target for tenure rights was 1 200 but for the first and fourth quarter the target seemed to have changed to 1 000 and out of this 955 were achieved for both quarters. She asked ITB to explain what had happen to the initial target. Based on the target of 1 200, she asked what had informed the decision to plan to approve 1 200 tenure rights. She requested that ITB sends a list of residential lease holders to the Committee. She pointed to the legal fees of R112 000 for Quarter 3 and R1.7 million for Quarter 4 and asked ITB to submit a list in writing of all these legal cases.

Ms S Mbatha (ANC) asked how long the executive management members would be placed on special leave.

Ms Breedt thanked the ITB for their audit action plan as it showed commitment to get things on track. She asked about the number of staff members placed on suspension and the nature of their transgressions. She asked what ITB’s plan for disciplinary action was. She asked ITB to provide reasons for underspending and how they planned to improve on this in future.

Inkosi R Cebekhulu (IFP) said that his concern was about the need for ploughing in the area.

Ms N Mahlo (ANC) pointed out that the 45 traditional councils to be trained was higher than the number of training programmes planned for the year. She asked if traditional councils were part of the 10 training programmes planned for the year. She referred to the three expenditure items totalling R2.1 million, accounting for about 60% of Quarter 3 expenditure. Including the Board’s expenses, this total went up to 69% of total expenditure. It was not justifiable to spend close to 70% of the budget on Board related costs. She asked if ITB was looking into this high expenditure. She asked for the total number of land tenures approved by the Board.

Ms T Mbabama (DA) made the point that in a previous meeting the Chairperson had asked for clarity on the 10% membership fees that went towards ITB and the 90% that was supposed to go back to the community. The ITB had been asked to give a five-year report detailing what had been given back to the community and traditional councils. She asked how far the ITB was in completing this report and asked for a timeframe for the report. The ITB quarterly expenditure did not comply with the provisions of the Ingonyama Trust Financial Regulations which state that only 10% of the Trust’s income may be used for administration. She asked ITB to clarify why they were not abiding by their own regulations.

Ms Mbabama asked of what the land tenure management budget comprised. She asked ITB to explain why the financial reports tabled in the meeting failed to disclose the Board’s income. She asked how the ITB was managing the Trust’s obligations to municipalities in the area.

The Chairperson said it was his understanding that the Minister had to be represented on the ITB. He asked who the Minister was represented by within the Board of the ITB. He asked if the ITB could identify traditional councils which had been given training and state the cost of this training. In response to Ms Mbabama’s question on the ITB report on its contribution to communities and traditional councils, the deadline of 12 May had been set but due to lockdown challenges the meeting did not take place. The Committee could find out from the secretariat when the next available date would be. He asked ITB to illustrate how communities were benefiting from the ITB as well as provide a list of bursaries that had been paid out over the past five years, their fields of study, their success rate and if they have been able to give back to their communities.

The Chairperson asked if the attendance of Board meetings was recorded and if so, were these people remunerated for their time. He asked for the reason for the decrease in expenditure in Quarter 4. He asked the Minister to indicate how far the inter-ministerial task team looking into the ITB was with its work.

ITB responses
Judge Ngwenya said that listening to Ms Mbabama and Ms Mbatha’s question it seemed that the assumption was that the projects which ITB commits itself to were projects funded by government. He clarified that the funding ITB receives from government was far too little to be used on community projects and most of it went towards administration. The money on the budget of the ITB was generated from land use. The ITB was not responsible for collecting monies levied from communities including tribal taxes which are collected by COGTA. On what the Trust was going to do with the unspent funds, he said that all Members were fully aware that the Trust is required by auditors to provide for contingent liabilities on municipal rates. Until the issue of who is supposed to pay municipal rates is resolved, everyone will continue to move in circles. Since the Trust is a registered land-owner, in most municipalities, it is required to make provision for municipal rates otherwise it could be liquidated as being insolvent.

Judge Ngwenya observed that most of the questions revolved around the perceived incompetence of ITB and that ITB was wasting the state’s money. He said that this was not the case. Speaking to performance, the Committee says that ITB does not follow the provisions of the PFMA without any reference being made to support this claim. He explained that the Board receives its template from Treasury on how to write reports hence some information is not included. going forward. ITB will ensure to include this information. He repeated that the funds of the Ingonyama Trust were not hidden anywhere. He dispelled the belief that the Trust was a multi-billion trust. The system used by the Trust to calculate income projection tended to inflate amounts – this was the principle of straight-line accounting.

Minister Didiza said that DRDLR does not have powers to appoint an administrator for the Trust.

The Chairperson remarked that after 26 years of democracy it should be easy to establish whether the Ingonyama Trust has been a success or not.

Mr Gabela said that due to time constraints, Members’ unanswered questions would be answered in writing.

The Chairperson adjourned the meeting.