Annual Reports 2010/11: Department Human Settlements, Social Housing Regulatory Authority, Housing Development Agency, NURCHA, Rural Housing Loan Fund, National Home Builders Regulatory Council, National Housing Finance Corporation

Meeting report

Department of Human Settlements Annual Report 2010/11
Mr Thabane Zulu, Director General, Department of Human Settlements, said the Department of Human Settlements (DHS or the Department) received an unqualified audit report for the 2010/11 financial year. This was a great step forward in dealing with finances, especially since the Department was also tasked with managing provincial funds. He said the Department had received a management letter from the Auditor-General  (AG) in respect of the matters of emphasis raised, and this set out issues that were now under consideration in his office.

Mr Zulu said the Department was forced to reflect on Outcome 8 as it related to human settlements. He said the outcome prescribed substantial adjustments as to how the Department was performing. The Department was now internally focused on its work and it needed to be an effective leader in ensuring sustainable human settlements. The fundamental changes taking place within the Department were geared to suit the new mandate and deliverables of the outcomes-based approach. The Department had put in place a turn-around strategy and was busy with implementation of various interventions on human settlements. This would be presented shortly to the Committee. This strategy addressed the issue of weak internal reporting and monitoring. It also addressed the lack of appropriate project management capacity that existed in provinces and municipalities. He said lack of capacity affected performance and measurement of the outcomes, but the strategy addressed this effectively.

There were a number of policy gaps that the Department had identified in planning and funding. Gaps had also been identified on governance and compliance. Some of these had been raised by the office of the AG. The office of the AG was willing to work with departments to improve capacity. The Minister and the Director General (DG) had held meetings with the AG’s office where governance and compliance matters were discussed.

Mr Zulu said the Department would strengthen the policy responsiveness function in an attempt to ensure provinces and institutions were correctly aligned with the new mandate and Outcome 8. The Department had started making policy recommendations that would ensure work was done differently, and according to departmental objectives.

Mr Neville Chainee, Chief Operations Officer, Department of Human Settlements, reported on the human resources and vacancies. The vacancy rate at the Department was high, but it was hoped to use existing personnel for the turnaround and it did not make sense to fill vacancies at this stage. The Department was performing satisfactorily given that it operated on a low staff complement.

The turn-over rate of about 15.4% per year was not high and was as a result of promotions and terminations. Although many staff had been lost, they had moved elsewhere in the public service. There was training and development of internal staff, but the number of officials who had reached retirement age was another discomforting issue. He said there were gaps in previous agreements on performance rewards.

Mr Chainee outlined the legislation submitted to Parliament. Legislation was in the process of being promulgated on sectional titles, community services ombudsman, services and the Rental Amendment Bill, and regulation on the Social Housing Regulatory Authority. The Department was often cited on matters relating to provincial and municipal human settlements as a third respondent. The Department would be called upon to pay legal costs in many of the awards against provincial or municipal human settlement departments. He cited the toilet saga at Makhaza,  where funding to comply with the court order had to come from a departmental grant. These were reflected in the contingencies the Department had proposed to the legal unit.

Mr Chainee said the Department had its own special investigations unit that was managed in relation to the Presidential Proclamations on human settlements and housing matters. 401 municipal employees were arrested and 334 cases resulting from the arrests were finalised. There were 860 acknowledgements of debt of R8.2 million with municipal employees, in relation to fraud on subsidy programmes.

He said disciplinary matters were managed at provincial or municipal level. Nationally, 936 government officials were arrested and 871 were convicted of offences that related to the national subsidy programme. There were a number of suspended sentences with conditions of repayment of the amounts attached. He said there were 1 615 acknowledgements to the value of R21.7 million that had been signed.

Mr Chainee moved to the research unit. The assessment of the performance of the government subsidised housing was of prime importance as it was at the heart of some of the bigger policy issues around grants, subsidy architecture and sustainability. Some of the work had been completed and would be included in the interactions that the Department planned to conduct with stakeholders. He said the research reports were available. The Minister had initiatives on the cost of constructing informal dwellings. The DHS  needed to address unwillingness to recognise slums by the finance sector. South Africa was a developmental state and it must be recognised that there was capital formation in the informal dwellings sector.

In respect of monitoring and evaluation, Mr Chainee noted that the unit had done physical verification of performance on 285 projects. He said this was not supposed to replace monitoring oversight by provinces and municipalities. The unit was however responsible for the development of the programme of action and the submission of reports that went to Cabinet. He said this unit had produced two reports that were approved by the Minister and the Cabinet Committee.

In terms of intergovernmental relations, six metros and two district municipalities were recommended for accreditation. The Municipal Capacity and Compliance Panel had been re-established and its work was ongoing. He said meetings between the Minister and MECs (MinMecs) would continue. Joint MinMecs with the Departments of Cooperative Governance and Traditional Affairs and Water Affairs were held. He said the plan was to have these twice a year.

He added that delivery agreements on Outcome 8 were concluded with all provinces, as well as Ministers of Rural Development and Land Reform, Cooperative Governance and Public Enterprises. The Department was one of the first that complied with the presidential directive on the service delivery agreements.

Mr Chainee then briefly touched on the entities that fell under the DHS. The Department also supported recapitalisation, operational subsidy assistance and programme management to its entities. The Department recapitalised NURCHA to the value of R300 million, to stabilise its previously  precarious financial situation. The Department stabilised and reconfigured some of the programmes to improve sustainability.

An additional cash injection of R49.5 million for the Rural Housing Loan Fund was approved. The Mortgage Default Insurance Programme was approved by MinMEC for implementation. He said there was an agreement of 30 million euros with the European Investment Bank.

Housing Development Agency (HDA) was responsible for managing the release of over 6250 hectares of state owned land.

18 social housing institutions were accredited and the social housing investment programme was issued. A lot of the work would be coming to the fore in the 2011/12 financial year.

Financial report
Ms Funani Matlatsi, Chief Financial Officer, DHS, said the Department operated on a budget of R16 billion, with a slight rise from 2009/10. She said much of the money went to housing development finance. The Human Settlement Development Grant (HSDG) took 93.4% of the entire R16 billion, and was transferred to the provinces in terms of the Revenue Act. She said there were adjustments during the year and the Department received roll-overs worth R81 million. The National Treasury gave the Department an additional funding of R31 million which related to sanitation expenditure. Provinces who received the largest transfers were Gauteng and KwaZulu Natal (KZN). She said all the money was transferred and provinces managed to spend R14.9 billion, or 99% of the total budget allocation. She said the remaining R1.1 billion was requested as a rollover.

Challenges
Mr Zulu said the biggest challenge was around reporting in the total value chain of human settlements. He said the Department needed to sharpen the manner in which it managed the business plans and programmes it received. This was a matter that was dealt with through the Performance Monitoring Unit structure. He said it also talked to some of the blocked projects in provinces that the Department had not prioritised.

Mr Zulu said it was important to ensure that information the Department possessed was reliable and that verification mechanisms were in place. The Department needed to improve on data collection methods and there were systems in place to deal with that challenge. He said the intergovernmental coordination of work human settlement was doing was critical. There also had to be an improvement in allocation of resources to provinces and other sectors, including for training and consumer education. The Department was dealing with issues of project management and capacity. This was critical in ensuring that the national department and provinces were on the same track in terms of monitoring and implementing projects.

Another challenge was aligning the budgeting process of the municipalities that received funding and those that had been accredited by human settlements.

Mr Zulu said the Department had started and was enhancing a unit at national level that would link the performance of human settlements to all its entities and provinces. A number of structures had been established to ensure proper accountability, and they included the Implementation Forum. A Human Settlements and Basic Services Task Team had been established to improve coordination. This was one strategic task team that ensured service delivery work was coordinated. The Performance Management Unit (PMU) wanted to put structures in place to evaluate key programmes were evaluated. This would be enhanced once the structure was fully functional. It would look at programmes of informal settlement upgrading and social and rental housing to improve performances of the funding. The Department wanted an effective system that would talk to the mandate. The elevation of the mandate had brought about an effective performance management system that would link work at national and implementation level.

He said the Department needed to improve on its human resources in terms of training. The turn-over of staff had been a thorny issue and was once raised by the AG. The new mandate required a certain level of capacity that the Department did not have, so it needed to develop a competency framework.

Discussion
The Chairperson disagreed on the statement that there had been an elevation of the mandate and said that essentially it was a change of name. She said that the Breaking New Ground (BNG) concept was adopted in 2004 and the Department would have to admit that it had done nothing in essence since then. She said she hoped the turn-around would not lead to retrenchments, but rather to enhanced training and capacity development. These were issues that had to inform the Department’s retention strategy and be reflected in the turn-around strategy. There needed to be better reporting mechanisms at the DG’s office.

Ms M Njobe (COPE) congratulated the Department on the unqualified audit report. She wanted clarity on the turn-around strategy. The presentation suggested it was complete, whilst the report identified it as a challenge that led to targets not being achieved. She also wanted the Department to clarify the use of, and expenditure on consultants. Whilst the Committee accepted some change in mandate, she questioned why it was not  possible for the Department to use its own staff.

Ms Njobe also sought clarity on the R41 million travel expenses incurred in the year.

Ms Njobe asked if the people arrested for corruption and fraud were required to pay back the Department after serving sentences. She asked why government money had been not recovered from the municipal employees and those government officials that were convicted.

Ms Njobe asked if there was a follow-up on candidates put on learnership programmes. It was of no use paying the fees and supporting students if there was no monitoring.

Ms Njobe also asked about the criteria used to redistribute funds that were taken back from provinces who could not spend.

Ms Njobe also asked about the composition of the task team that was set-up with Department of Cooperative Governance and Traditional Affairs (COGTA), as well as its effectiveness.

Mr K Sithole (IFP) wanted to know if it was possible to eradicate informal settlements by 2014. He said the document was silent on the upgrading and maintenance of hostels.

Mr Sithole asked which provinces benefited from the 281 scholarships and the R1 billion grant, and noted that although the report mentioned Makhaza, there was nothing on the Free State toilet saga. He thought the Department spent too little funding on the Northern Cape, and asked what interventions there would be in that province, with its large number of rural municipalities.

Mr Sithole asked if it was the norm to put in houses without infrastructure. The Department normally did not put infrastructure when it delivered local housing.

Ms D Dlakude (ANC) sought clarification on the funds that were taken back from two provinces.

Ms Dlakude was concerned by the AG’s comment on the report that the Department could not provide a breakdown on units completed, under construction and handed over per project, and asked why this information could not be furnished.

Ms Dlakude enquired about assistance provided to provinces that had blocked projects and the strategy used to recruit the previously disadvantaged learners into the learnership programme.

Mr A Figlan (DA) asked for the details of Thubelitsha closure and the funds that were paid to that company despite being liquidated.

Mr Figlan said that the Committee had been told about shortages of staff, continuously, since 2009.

Mr Figlan asked if the municipal employees found guilty of corruption were named.

Mr Figlan asked if the figures quoted for the N2 Gateway were for the previous financial year or included completed units since the inception of the projects.

Mr A Steyn (DA) asked if the Department used consultants to compile the Annual Report, saying it had happened in the past.

Mr Steyn was  surprised that monitoring and evaluation did not feature in the five key levers of the Department. The mind-shift that the Committee had been pushing for in terms of monitoring had not been taken seriously. The Department failed to produce a performance report on the boards of entities. There were problems in many of these entities and yet performance monitoring had not been done in the past five years. He said matters of emphasis were not handled correctly and, had that happen, could easily have led to a qualified audit opinion.

Mr Steyn did not believe the claim of 2.8 million houses delivered as only 1.2 million was registered at the Deeds Office. Based on the information presented, 1.6 million titles were outstanding, and this needed to be looked at seriously. The Committee was aware of constraints in the townships, but the figures were unacceptable. He said a lot of people were denied an opportunity to be economically active.
He asked why the figures on the deliverables were in the presentation, but not in the Annual Report.

Mr Steyn asked for clarity on how disaster funds were paid. Disaster money need not be paid in instalments, and he pointed out that the KZN disaster happened in February, before the year ended, and the Department should have paid as soon as it happened. He said the Committee should ask for an update report on that situation.

Mr Steyn noted the claims that the Beneficiary Occupancy Audit could not be done due to insufficient funding, and yet R11.1 million was a surplus under that programme.

Mr Steyn noted that Servcon and Thubelitsha were supposed to have ceased operations in 2008, and queried when the payments to them would stop.

Mr Steyn said he was doubtful if the Department would eradicate informal dwellings by 2014 especially since there was no strategic document in place. A study investigation was launched to determine the number of informal settlements in South Africa. It progressed on a slow pace due to the fact that provinces and municipalities did not have such information available. He asked how this could be achieved if the Department did not know the extent of the problem.

Ms H Borman (ANC) said that since 2009, the Committee had been raising a concern about not getting quantifiable outputs that could be monitored.

Ms Borman thought that the source of the challenges at the Department was the vacancy rate, which tied up with non-delivery. Whilst it was commendable that Deputy Director General positions were all filled, most of the critical posts on the operations level were all on an acting capacity.

Ms Borman concurred with the Chairperson’s view that there was nothing new in what the Department was doing. For example the Zanemvula and Greenfields projects were just houses, and were not designed as Cosmo City in Johannesburg. She asked where the proper planning was for the human settlements side, and said that she had hoped that BNG would result in proper, with infrastructure and amenities required for human settlements.

Ms Borman was interested to see which provinces would deliver on the planned new projects that would amount to 400 000 units. No densification would not happen as long as the money did not support the policy. She said deliverables needed to be balanced with funding. She enquired about assistance provided to those provinces that could not spend the money. She said there was a growing concern at municipalities about funding and accreditation. She said the accredited municipalities claimed capability, but on the ground they were doubtful.

Mr R Bhoola (MF) said it would be difficult to hasten the process of delivery based on outdated legislation. The turn-around strategy would hopefully deal with the concerns in this aspect of housing provisions.

Mr Bhoola asked why the report did not correlate with the finances, asked if there was any deviation, and if so, what the challenges were that the Department faced. He asked for assurances that the turn-around strategy would adequately deal with the concerns of the AG.

Mr Bhoola wanted a gender breakdown of the Department’s staff complement, the strategy and a plan of action to ensure the employees remained. He was concerned that despite the shortage of skills, bursaries were given, and he asked why this was done.

Mr Bhoola sought clarification on the legal policy of the Department.

Mr Bhoola thought rental housing was “a disaster” in KZN, and asked why the transfer of homes to people was not happening. There were rental stocks where people were waiting for security of tenure for over 30 years. He wanted clarity on the role and relationship between the Department and the HDA.

The Chairperson wanted to know who was responsible for the unblocking of projects. She cautioned that the DHS performance would be closely monitored, and said that problems should have been clearly cited – for instance, the deviation of R300 million in Free State.

Mr Zulu said the report had focussed on matters over which the National DHS had control. The Department reported on provinces individually, and not in the Annual Report, which was an instrument to deal and reflect on budget allocations. He said the Department welcomed the suggestion and appreciated that the Committee had to get a clearer picture of what was happening on the ground. A strategic unit to monitor provinces would address that in future.
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Part of the challenge related to project management and programmes, as well as the blocked projects, over which the DHS sometimes did not have control. The turn-around strategy put emphasis on the changes in human settlements. The emphasis had been broader than the general housing mandate.

Mr Zulu said there were instances where the national department had difficulties in dealing with monitoring provinces. The PMU unit was another way of ensuring that the Department sourced information from provinces, but also influenced the direction and provided leadership when required. However, there was little, in terms of the law, that the Department could do, and that led to limitations on implementation. He said there was a Cabinet decision that talked about an outcomes-based approach and targets of delivery, and yet the Minister did not have a say on how implementation took place at provinces and municipalities. There was a plan to make legislation relevant to the outcomes based approach. The provinces were responsible for the blocked projects. However, with the new approach on project management of business plans, the Department was looking at being involved directly and getting a better sense of what was happening. He said the Department had already started visiting provinces and they were cooperating.

Mr Zulu said information and contents of Annual Reports were assembled internally but printing was outsourced.

Mr Zulu noted the comments on departmental officials not showing interest in the work of the Committee, especially reports on oversight trips and discipline.

Mr Zulu noted that the turn-around strategy was ready to be presented to the Committee, and the new organisational structure had already been presented to the Department of Public Service and Administration.

Mr Zulu said that the criteria in redistributing funds had been discussed before. It was based on a submission that the national Department had received, referred to as a recovery plan. He said the Division of Revenue Act (DORA) empowered the Minister to shift funds in or around the third quarter of a financial year. The Department would first engage with provinces and provide assistance. He said the process involved visits by the Chief Financial Officer and National Treasury to the concerned provinces, a review of business plans, and a close monitoring of expenditure patterns.

The recovery plan had timelines and reflected how a province or municipality would spend. National Treasury would also intervene if non-expenditure occurred. He said once the Department had identified the under-spending provinces it tried not to return the money to National Treasury. The Department would then look at high performing provinces that might have financial challenges on current and ongoing programmes. Funds would be transferred to those provinces as long as they demonstrated that they could perform those programmes in the financial year. He said the Department was working with NT in identifying bottlenecks in decision making in so far as transfers and compliance with the Public Finance Management Act (PMFA) were concerned.

Mr Zulu said the work of special investigations was outsourced. He said some of this work required policy review and change. There were challenges, but a detailed report would be compiled and provided to the Committee in this regard. He said assisting in municipal and provincial capacity was a challenge and most of the Annual Reports talked to the issue. The Department was putting in place a practical arrangement to deal with capacity. The sector had agreed on central coordination in trying to deal with capacity challenges.

Mr Zulu said that USDG grants and accreditation were positive in helping to unlock the blocked projects that could not happen due to bulk infrastructure. Although this was in its first year, the grant called for a structural arrangement for a successful implementation. He said planning was central for effective delivery in all government departments. Planning was going to be complex but had to be done for the successful implementation of the projects.

Mr Zulu took full responsibility for not filling the vacant posts, but said it was due to overlapping roles and non-alignment of functions at the Department, and that it had been difficult to go on a recruitment process when the Department felt that might add future challenges. Some posts might not make sense in the new structure, so there was a conscious thinking around this, and no new costing. The Department was able to use its personnel productively. Officials at various levels played a meaningful role to keep the Department afloat during the transition. He promised to address the vacancy rate in future, and assured Members it would not be an issue in the next Annual Report.

Ms Matlatsi said the challenge with closures of Servcon and Thubelitsha related to tax liabilities. The tax liability of Servcon had escalated beyond R43 million and the Department was battling to get funds to speed up the closure. She said this had been taken care of in this financial year and a report would be given. Thubelitsha was on the process of being closed down. The Department did not foresee any additional funds from the budget being required, as the institution had healthy books and could afford to clear itself out. The Department would stand down on Thubelitsha once a liquidator was approved.

Ms Matlatsi noted that disasters required once-off payments and KZN was allocated R150 million in the previous financial year. Disaster allocations took longer than one month because the Department wanted to be involved in monitoring and implementation. If the Department just paid over a lump sum, it would not see the product. She said in the coming week the Department had scheduled visits to KZN to see exactly how the disaster funds were spent. A report would definitely follow.

Ms Matlatsi said the Department was challenged by the 8% cap on the sub-programme of Beneficiary Occupancy Audit.

Ms Yvonne Mbane, Chief Director: Human Resource Management, DHS, said the Department had relationships with universities who enrolled its candidates. She said the candidates were continually monitored. These relationships helped in verifying information and ensured the Department did not pay for students who had absconded. Recruitment was done through advertisements in national newspapers. Although the scholarship scheme was administered nationally, municipalities and provinces were responsible for selection of their candidates. She said that qualification verification was conducted on all new entrants to the public service. If people wanted to advance in the public service, the Department must ensure validity of qualifications.

Mr Chainee said evaluations were conducted on boards of entities and reports could be sent to the Committee.

Mr Chainee noted that the Department had an informal settlement upgrading policy. There were substantial deficiencies at municipalities and provinces when it came to informal settlements upgrading. Slum upgrading was a cumbersome and laborious process and was not something municipalities preferred. However, the Department wanted to ensure informal settlements upgrading was prioritised. According to the service delivery agreement signed with the President, it was mandatory for all municipalities to upgrade.

Mr Chainee said accreditation of municipalities was a competency of provinces. The national Department could only do evaluations, and must respect intergovernmental relations. Housing might not be a delegated mandate of local government but providing services to the houses was a function of municipalities.

Mr Chainee confirmed that there was a discrepancy between title deeds and stands handed over. The Department had engaged with Lightstone and commissioned research, although registration and issuing of title deeds was not in the Department’s competency. A joint process was looking into how the backlog of unregistered title deeds could be unblocked.

Mr Chainee disputed the statement that rental housing was “a disaster”. He said the Department had already indicated that government needed to be careful when it came to poor people and maintenance. It would be irresponsible for the Department to proceed without ensuring that a community had the necessary capacity, expertise and resources to take out a sectional title. He said there was a policy on densification, but it was a municipal competency.

The Chairperson requested the Department to respond in writing to issues that were not answered. She said there also needed to be a meeting with the Minister on non-administrative issues. She reminded the DHS that clean audits did not automatically translate to service delivery, but the DHS and the Committee had a good working relationship.

Housing Development Agency (HDA) briefing
Mr Joseph Leshabane, General Manager, Housing Development Agency, said there was growth in operations and presence of the Housing Development Agency (HDA or the Agency). The sector looked to the Agency in acquiring land and management services in support of human settlement developments. The Agency did not have a challenge of managing land once it was acquired. It existed to collaborate with provinces and municipalities, and supplement their capacities, not substitute for them.

Highlights of performance included receiving favourable audit opinions in the two years. HDA also supplemented the appropriations grant it received from Parliament through fees, and diversifying income streams. He confirmed the stabilisation of the N2 Gateway and Zanemvula projects, which were the two biggest housing developments in the country. The written mandate between the Board and the Minister was in place and several implementation protocols had been signed.

Mr Leshabane said there was a Joint Coordinating Committee on State Land Release where the Agency served as Secretariat. All the planning of the Agency was aligned to support Outcome 8, and aimed to make available the 6 250 hectares of State-owned land. He said the criteria used for identifying suitable land for human settlements were in place, as well as the enhanced framework for release of that land. The Minister had also concluded negotiations with Ministers of Rural Development, Public Works and Public Enterprises on releasing state-owned land. There was a framework for medium-term land assembly to ensure each province had a land assembly programme, although he stressed that this would be a multi-year exercise, as there were  a number of regulatory and planning requirements that needed to be complied with.

He said risk management systems were in place and the communications department was enhanced. The financial policies and procedures were authorised by the Board and were reviewed periodically. The Agency had a vacancy rate of less than 4% and a complement of 75 staff members at the end of the financial year. Intergovernmental relations and stakeholder management functions were restructured.

The Agency was expected to conclude seven implementation protocols with other organs of the state, and most of these were all in place. There was rapid movement in aligning with programmes of other departments. Several municipalities had visited the work on the N2 Gateway.

The Agency had developed support systems for municipalities around land acquisitions, and about  900 hectares, worth R821 million, of privately owned land were offered to the Agency. It was not possible to take advantage of that, due to the capital funding gap. Inspections were done on the 6 250 hectares at the Agency’s disposal, and development plans were approved. The Agency had also assessed properties that were owned by Transnet and decided on those suitable for human settlements. He said detailed work on informal settlements was done and could be presented to the Committee in a week’s time. Various provinces were supported in respect of projects. He said the Boystown section of the N2 Gateway was very volatile, despite stability in respect of the management of the project.

Mr Leshabane said the finances of the Agency were in a healthy state, with assets amounting to R150 million. There were other streams of revenue that were growing. The Agency was gradually occupying space in the sector, but there was room for growth.

Discussion
Mr Sithole wanted to know why the top structure of the Agency was not transformed.

Mr Sithole asked in which provinces the Agency operated and with which municipalities it collaborated.

Mr Sithole called for more detailed work on informal settlements that the Agency claimed it was doing.

Mr Figlan enquired about the exact size of units at the N2 Gateway and the number of units to be built in Boystown. He also asked what kinds of structures were planned for the land upgraded in Langa, and asked about the possibility of acquiring the Transnet land next to the Langa train station.

Ms Borman commended the Agency for conducting staff evaluations twice annually.

Ms Borman said municipalities were less informed about the existence of the Agency, and she asked if it was operating in rural areas as well as cities.

Ms Borman enquired about attendance at board meetings.

Mr Steyn said he was concerned by the measurability of the deliverables on plans. He requested the Agency to put emphasis on accuracy of information.

Mr Steyn asked what happened when the HDA acquired land and did planning on behalf of the provinces and municipalities. He wanted the Agency to explain its exact role at the Zanemvula Project.

Mr Steyn was concerned by the Agency receiving advance payments and wanted to know how it would treat the issue in future. He also sought clarity on the R20 million that would be paid to Servcon despite assurance from the Department that it was being liquidated.

The Chairperson requested the Agency to comment on the aspect of an absence of a necessary lender, and asked if the Agency was getting a good response on that point.

The Chairperson asked for reasons that led to the stalling of the N2 Gateway.

The Chairperson asked why HDA was again raising old issues, like lack of capital funding.

Mr Leshabane said the Agency was founded in order to accelerate the delivery of land acquisition. In order to do that, the Agency had to be able to acquire, package, prepare and release land so that development projects could move with speed. Although there were ample funds, the Agency spent a lot of time following looking for money as opposed to securing land. He said the Department needed to address this in future.

He explained that Servcon could dispose of all property but National Treasury refused it the right to sell its properties. Land was available on all provinces and the Agency had identified 58 000 hectares of well located land. He said the Transnet land in Langa was in the process of being bought, but there were compensation issues that were being finalised. The Agency operated in all areas rural or urban without preference.

Mr Leshabane said the Agency was in the process of structuring a working relationship with all provincial human settlements departments. He said the holding arrangement of properties in the Agency was transitional. In due course the Agency would introduce an improved strategy for holding. For all the properties that the Agency held, there were already development plans and these were asked for once land was identified.

Ms Odette Crofton, General Manager: HDA Projects, DHS, stressed that the Agency was an implementing agent, and not the developer, in both the N2 Gateway and Zanemvula. The Agency was going through a learning curve on working with the community on the N2 Gateway. The standard size of units was 40m² in Boystown and 1 392 units were planned. She said there were challenges with upgrading informal settlements, but the Agency was learning. In an attempt to improve communication with the community there were monthly newsletters for every development on the N2 Gateway. Ms Crofton said the projects were all progressing well and there were no evictions on any of the projects. There were challenges with residents of Joe Slovo not wanting to move to the transitional relocation areas in Delft because they were not electrified. Electrification was a competency of the City of Cape Town and Eskom. Otherwise all other necessary services at the TRA were in place.

Ms Crofton said the Agency had worked with the Department’s information unit in collecting a detailed data on the informal settlements throughout the country, and this could be corroborated by municipalities. The Agency was in the process of verifying all maps it received of informal settlements with municipalities and the department.

Ms Rashida Issu, General Manager: HDA Corporate Services, HDA, said the reason the top senior management appeared not to be transformed was that the only person it employed was the Chief Executive Officer, a white male. The Agency had an equity plan and was achieving its targets in terms of the plan. However, there was a problem with governance. Two of the three board members heading departments within the Agency had verbally indicated that they intended resigning, and a letter had been addressed to the Minister asking for advice.

The Chairperson requested an official from the Department to further clarify the issue of Servcon. It appeared that the challenge in finalising the closure was the tax liability of the company, despite its willingness to liquidate.

An official from DHS confirmed that part of the strategy was to get the Agency to buy Servcon properties, but according to the latest information from the Revenue Services, the liability cost had gone up again.

The Chairperson said further clarity on Servcon and Thubelitsha would be sought in a further meeting with the Minister, to which NT would also be invited, in the following week.

The Chairperson appreciated the work done by the Agency, but said it amounted to nothing if units were not erected on acquired land.

Social Housing Regulatory Authority (SHRA) briefing
Mr Brian Moholo, Chief Executive Officer, SHRA, said there was a discussion with the Department whether SHRA should draw financial statements after only six months of existence. The directive was that it was preferable to do so now, rather than try to cover 15 months later. SHRA had a clear intention to create its new entity, and SHRA had mandated him to appoint t a reputable company to help establish office space. An audit firm, Grant Thompton was appointed, to do so, leaving SHRA free to perform its core functions.

Recruitment had begun in January to recruit, although the SHRA was also to “inherit” the administrative staff from the Social Housing Foundation (SHF). He said SHRA was in phase two of building the organisation. SHRA was operating on the same space that SHF was using, to save costs. SHRA had 21 posts on its organogram, and by the end of 2010/11 financial year 12 of these had been filled. To date, 18 posts were filled, but those left were specialist posts.

The work that SHRA had been doing in the last six months had ensured investment programmes and opportunities. Five projects – Madulamoho (Gauteng), Imizi (Eastern Cape), Freshcor (Free State), and two at Yeast (Tshwane) – had been approved following engagement with the Department. He said SHRA could not have released funds without finalising organisational policies, including the finances. In  terms of the Act, SHRA was supposed to accredit institutions by the end of March. 18 applications out of 30 received were approved. Currently, SHRA was monitoring adherence to compliance conditions.

Ms Zohra Ebrahim, Chairperson, SHRA, said the AG had been in discussions with SHRA’s financial team. This was important because SHRA was a regulatory body and could not afford to do anything wrong.

Mr Vusi Fakudze, Chief Financial Officer, SHRA, said SHRA had achieved a clean audit report in its first three months of existence. Most of SHRA’s expenditure related to set-up costs and following through projects left by the SHF. The budget was received in full in January.

Discussion
Mr Sithole wanted to know if outsourcing the recruitment function was not expensive.

Mr Fakudze responded that outsourcing the payroll and HR function was not expensive at all and had to happen because SHRA did not have staff.

Mr Steyn asked if the failures indicated on the presentation were inherited from the SHF. He sought clarity on council members’ remuneration. He also said although he welcomed commitment to clean governance, he did not take kindly to SHRA’s R42 million irregular expenditure in three months.

Mr Fakudze responded that the discrepancy in remuneration figures was as a result of SHRA coming into existence in January whilst work had already started in September of the previous year. All that work had to be paid for in the budget allocation received in January. He said if SHRA had waited for funding it would not be in existence. Also included in the R42 million were invoices for services to SHF before it closed in December.

Ms Ebrahim added that there were three pilots that were approved under SHF (before it closed in December) and SHRA was deemed responsible for those invoices.

Rural Housing Loan Fund (RHLF) presentation
Mr Jabulani Fakazi, Chief Executive Officer, Rural Housing Loan Fund, said RHLF received an unqualified audit report for the past financial year. He said internal auditors found the process was acceptable and adequate, and that it complied with all regulatory provisions. RHLF achieved a surplus of R18 million, and in terms of value disbursements the organisation had exceeded targets. He said RHLF received R49.5 million capital injection for the first time from the Department. This was to grow the business.

Mr Fakazi said the environment was still tough, as a result of the global economic crisis. The recovery was highly fragile, and there were high levels of indebtedness in the market. He said there was a liquidity crunch in the market despite the interest rates remaining at the lowest. A number of RHLF intermediaries who raised funds from other sources struggled. The intermediaries complained about consolidation by the big players in the micro-financing industry. He said these resulted in high levels of debt, as borrowers took out loans to finance loans. Collection rates were under immense pressure as the year came to a close. RHLF had planned to have 15 active clients but achieved 14. In relation to disbursements it had budgeted for R112 million, but achieved R113 million. On lend user loans, RHLF fell short as it had planned for 44.9 thousand but achieved 40.2 thousand. He said R74.8 million was committed but not disbursed. He said the Fund was approaching a billion rand of accumulative loans disbursed since 1996.

Mr Fakazi noted that, according to the monitoring impact studies, 85% of loans were used for house improvements in the previous financial year. A considerable number of borrowers were people who had benefited from government housing and were using the loans for upgrades. 58% of these borrowers were female. Overall, 70% of the borrowers were public servants as they had little chances of being retrenched. This also was a reflection of the fact that the private sector saw a rise in job losses.
40% of the loans were taken by people earning R500 and less, while 53% were taken by those earning R3 000 and less. Professionals like teachers and nurses took bigger loans, but lower sections of the population were not neglected. He said 208 000 loans were disbursed, and this was an indication of levels of indebtedness and how consumers were hard pressed. In South Africa, even the few people who were employed had high dependency ratios.

Mr Fakazi said although RHLF covered the country, there were provinces where it needed to do more. KZN was responsible for most loans, followed by Eastern Cape and Gauteng. Northern Cape, and Free State, whilst North West and Limpopo received few allocations. He said there was a slight increase of R45 million in interest income, and R10.9 million in operating cost.

Consulting fees grew, due to the independent reviews done on impact information received from intermediaries. Whatever RHLF submitted had to be independently verified. He said the directors fees also grew, because five new directors were appointed last year. Legal fees grew as well because the  RHLF procured services of a legal firm to assist in restructuring poor performing intermediaries, in addition to legal fees for loan agreements.

Mr Fakazi said there were savings in terms of office expenses and a surplus of R18.2 million after tax. There were only 11 staff members. He said the current financial year looked gloomy as levels of indebtedness remained high. The Fund would focus on its mandate in terms of the market but it would be tough.

Discussion
The Chairperson asked about the R45 million allocation from the Department. She said there needed to be a report on uMzimvubu and uMhlontlo rural pilot projects.

Mr Fakazi responded that the money was not a voucher programme, as the Department had suggested earlier, but a lending business for the Fund. The R45 million was intended to grow RHLF business and scale up. It had assisted RHLF  in lowering the cost of credit that the end-users faced. The intention was to pass the low interest rates charged by intermediaries on to the borrowers. He said RHLF had worked with NURCHA and the Department to put a business plan in place, but the pilot had not taken off. He said the Eastern Cape was very keen on the project.

The Chairperson wanted to know if the intermediaries complied with charging borrowers low interest rates, or were still charging at their own rates. She asked how the Fund would ensure a change.

Mr Figlan asked about the rate charges on loans. He asked if the middle and low income groups managed the rates that were charged, and if there were guarantees for assisting unemployed people.

Mr Fakazi replied that RHLF had made a presentation on low interest rate products to the Committee in March. The intermediaries accessing the low interest rate product were expected to make monthly reports on loans they granted. RHLF’s risk department went on site to check on the lender level of compliance, to see if the benefits were passed on to the borrower, and had found that benefits were transferred. The RHLF targeted people who earned R9000 or less, and they had to liaise directly with intermediaries where they were unable to pay. RHLF did not assist the borrowers, who were rather expected to contact intermediaries for assistance on restructuring loan payments.

Mr Sithole wanted to know the impact that absenteeism had on meetings and performance of the RHLF.

Mr Fakazi said absenteeism was receiving consideration, especially that of Mr Pule, who continually skipped board meetings.

Mr Steyn asked for a clarification on the number of directors as the report created an impression that there were 11, as opposed to the stated five in the presentation.

Mr Steyn expressed discomfort on the 100% increase on legal fees expenditure. This pointed to a structural problem with the intermediaries. He asked why employees at RHLF were, or deserved to, get bonuses.

Mr Fakazi said the new five directors were replacing those who resigned last year. He said RHLF had a short term incentive scheme payable, provided the Fund had achieved a surplus or implemented targets approved by the Board. The issue of 11 directors looked awkward, but was noted and would have to be clarified before the next AGM.

Mr Bhoola asked if RHLF had a strategic plan in terms of a needs analysis, especially given that the Fund had admitted that it needed to do more in some provinces.

Mr Fakazi said RHLF engaged provinces in trying to address the lending issue and assess the needs of provinces.

NURCHA presentation
Mr Morgan Pillay, Managing Director, NURCHA, said the institution was dealing with clients who had no access to credit and that made its business a high risk. He said NURCHA had to look at alternative revenue sources to support business, as there were low business volumes and low capital. NURCHA worked under poor economic trading conditions and was struggling to raise the necessary capital. The current state of international and local economies made it difficult to raise capital at prices that were reasonable to development lending.

He said the cost of borrowing had become prohibitive and grant funding was impossible to mobilise. The stop-start approach by mortgaging institutions made it difficult to accelerate in the affordable housing market. He said there was deterioration in the sector, because the construction was hit by low wages and low projects volumes. He blamed poor planning and said this had led to smaller companies failing in the sector.

Mr Pillay said that, despite the challenges, NURCHA was able to mobilise capital in the private sector. He said a decision was taken to restrict the lending in the subsidy and infrastructure programme, and move credit criteria for these programmes higher. Government recapitalisation of R300 million was positive and R100 million had been paid this year. He said the coverage of the project had been consolidated and was now covering six provinces. Alignment with intermediaries (Sebra and Trust) had weakened as a result of poor volumes. He said Sebra had pulled out, so NURCHA was left with one intermediary. He said there was a significant drop in terms of the projects, but if industry dynamics improved NURCHA would look to increase.

He said NURCHA had a larger exposure in the Eastern Cape and Gauteng, but there attempts to provide service across the country. The value of loans financed was R267.9 million and NURCHA had been able to put out R1 billion in assets. He said the organisation was doing well in supporting black-owned companies. There was a slight increase in companies owned by women.

Mr Sindiso Nkosana, Chief Financial Officer, NURCHA, agreed that there were challenges in this year, with income dropping at about 18%. There was a deficit of R66 million. The volume of new public sector tenders was low in the previous financial year. NURCHA also noted the tendency of late payments by employers, especially government departments. The finalisation of some projects took longer than expected. There had been budgetary constraints by some employer departments, and that affected operations at NURCHA. The poor project costing was another factor and it affected the application rate of loans.

Mr Nkosana said that the inability to manage contractors by employers affected the quality of work and resulted in non-payments. The recent facilities signed with funders had become expensive for NURCHA. He said commercial banks’ unwillingness to grant loans had an effect on NURCHA’s performance on the affordable housing programme. There were no foreign grants currently, and there was no prospect of receiving such.

Mr Pillay said NURCHA was changing its strategic orientation to deal with poor economic conditions. He said NURCHA would focus on serious alignment to Outcome 8, to support affordable housing. Much of the recapitalisation funding from government would be directed towards that programme. He said NURCHA was assisting provinces with blocked projects, at a fee. There were discussions with the Department to change the funding delivery model, as there was no recourse in the older one. NURCHA had spent R14 billion in projects since inception, and it was looking at doubling that in the next five years.

Discussion
The Chairperson said she did not see NURCHA’s role in supporting the emerging contractors.

Mr Steyn asked if NURCHA agreed that it would have been insolvent, had it not been for the R300 million bail-out from government. It was strange that in the past NURCHA did not have any legal recourse to contractors with whom it worked. That was a recipe for disaster. He called on the officials to raise the issue of government departments failing to pay for services with the Committee.

Mr Steyn also failed to understand how losses could double in one year from R51 million to R102 million. Overall, NURCHA’s performance was worse than previous years, so he wondered how the administration costs could increase. The decrease in projects should have resulted in decrease in project costs, as thee must be correlation between work done and money spent. He asked why consulting and directors’ fees increased as well.

Mr Pillay said when NURCHA was started it was never meant to be a permanent feature of financing, but rather a short-term public/private partnership. Over time, it needed to recapitalise to make a meaningful impact on the financing system. He said the bail-out would help the programmes. NURCHA did have a legal recourse with contractors, but did not have recourse to third parties. A detailed list of the non-paying government departments was sent to the Department. NURCHA had also engaged the National Treasury on this and was working jointly with it to find solutions. The increase in administrative cost was largely due to legal provisions, as more were required to collect outstanding debt.

Mr Nkosana said there were functions that NURCHA did not carry in-house. For example, the HR function was with an external company. The CRM system used to provide information on clients was operated by consultants, as well as some of the IT functions. The jump in directors’ fees was as a result of extra meetings that were undertaken last year. That would naturally have an effect on the general cost.

Mr Bhoola wanted to know why NURCHA was making losses. He said that there were some loopholes and weaknesses, but also asked what the challenges were. NURCHA clearly understood there were problems but was not providing solutions as how it would rectify them. He also enquired about the support to emerging contractors.

Mr Pillay replied that NURCHA was in advanced discussion with National Treasury on the new contractor development programme. He said the programme had been approved and R172 million had been earmarked for the implementation. It would deal with development needs of the small contractors, and hopefully the youth would also benefit. He said NURCHA wanted to improve on internal operations and its delivery model.

National Home Builders Regulatory Council (NHBRC) presentation
Mr Jefferey Mahachi, Acting Chief Executive Officer, NHBRC, said that, as a matter of principle, every builder needed to be registered, and continually renew his or her registration with the NHBRC (also referred to as the Council). There were increases on registration and renewals. NHBRC engaged on road-shows last year to educate homebuilders about the need to register and renewals. Every single house and projects had to be enrolled to facilitate inspections. He said there was a notable decrease in complaints registered with the Council. There had been an increase in the funds spent on remedial work, from R13.4 to R22 million. This was a signal that the NHBRC was not doing its work properly on the ground, as the remedial costs should be low, as it must be recognised that every house would have some structural problems. The number of homebuilders suspended had increased from 452 to 512.
 
Mr Mahachi said NHBRC was putting in place a Project Management Unit that would be looking at planning, monitoring and registry of all projects. In the next financial year the Council should have a proper alignment of what had been enrolled and what the provinces and the municipalities were building on the ground. He said there was discrepancy at the moment, hence the fewer numbers of homes and projects enrolled.

Mr Mahachi noted that the Act required the Council to train homebuilders. The numbers of those builders had dropped tremendously because NHBRC had changed its strategy to say all training needed to be project-focussed. Builders came and went because they were not the legitimately practising builders in the industry. The training had been aligned with those builders who were on the ground.

Mr Mahachi said NHBRC had ensured norms and standards, and quality assurance in the sector. The NHBRC had assisted the public and private sector in improving the programme and project management through training and the necessary skills transfer. NHBRC had also assisted the state, particularly in the provinces of KZN and the Eastern Cape, in implementation of their respective rectification programmes. NHBRC had thus improved the capacity of government to monitor and oversee human settlements projects. It had also helped government in designing a number of typologies that catered for people with disabilities. Those typologies were still in the process of being approved by MinMEC. The NHBRC had contributed to energy efficiency and development of relevant policy that would ensure norms and standards in human settlements. He said the Council had also improved the intergovernmental coordination of projects.

Mr Mahachi said there were challenges in inspections, and so NHBRC had in the past financial year introduced a Hybrid Inspection Model. This model used external outsourced consultants to do inspections. This would be reviewed in this financial year, to monitor its effectiveness.

Mr Courtney Thorp, Chief Financial Officer, NHBRC, said the number of plans passed declined by 5.1%.  The capacity of residential homebuilders remained under pressure. He said existing homes were cheaper than newly constructed homes. Inability to buy was putting NHBRC under pressure. He said the registration of annual fees rose, while subsidy enrolment declined. A 1% dip in interest rates meant an effective 18% loss in spending capacity.

Discussion
Ms Borman said NHBRC played an important role in the sector. She said she was bothered by the remedial works of the Council. The Committee did not want remedial works, but was interested in quality in houses that were built, from the start. She said the Committee had visited Zanemvula and seen its cracked walls, although it was only four months old, and despite the inspection by NHBRC.

Ms Borman said she was impressed by the enrolment as it would match the figures that the provinces and municipalities were building.

Ms Borman asked how NHBRC would reach those who needed to be trained.

Ms Borman asked for clarity on the AG’s report that claimed that support was provided to companies that did not supply declarations. She raised a number of areas relating to appointment of senior staff, VAT, non compliance with Housing Consumer Act, failure to receive approval from the Minister and National Treasury, revenue management, failure of internal audit functions, failure to exercise oversight on finances, the governance framework, and ongoing investigations, all of which required clarification in the report.

Mr Sithole asked how poor workmanship happened at the face of NHBRC, and cited the number of houses that had to be demolished in KZN and the Eastern Cape. He also asked for clarity on payment of staff.

Mr Steyn wanted to know what systems were in place to ensure that contractors suspended of shoddy work did not return as companies of different names and ownership. He said he was shocked by the low number of inspections. He asked if, as had happened in the previous year, some inspection companies were paid on assurance of work, but without proof of work.

Mr Steyn sought clarity on the cap of grants for doing remedial work, which currently stood at R500 000, and asked what would happen if remedial work cost R2 million. This was an issue that the new legislation needed to address.

Mr Steyn queried the issue of training contractors. He said his understanding was that NHBRC registered contractors on the basis that they were capable, so he saw no reason to train them further. He wondered if the shoddy houses resulted from work being awarded to those without proven ability.

Mr Bhoola wanted to know the time that NHBRC intervened in a project and its planning, saying that if it was present from the start, there should be no need for remedial work.

The Chairperson asked about enrolment and training, asking why an emerging contractor should register with NHBRC, if the institution had reduced opportunities.

Mr Vukile Mehana, Board Chairperson, NHBRC, said the Council had an extensive discussion with the AG on corrections that needed to be made on the report. He personally met a senior official, to request that the report be corrected. Most of these issues were based on relationships, but there were difficult issues of attitudes. He disputed that the suppliers did not declare, and said they simply did not fill out the correct forms. The matter was receiving attention. The surplus would be used in carrying out the mandate to protect the consumer. Concerned Ministers had been engaged on this issue. This too was done with the office of the AG. He said NHBRC appointed a senior executive to monitor the outsourced internal audit function, following a decision to strengthen this function.

Mr Mehana said that there was context to the leadership issues, because at one time NHBRC was not properly led. That was being improved, and the Chairperson would be spending some time at the office.

Mr Mehana said there were challenges with the IT system. NHBRC had commissioned work on this because it was continuously experiencing corrupted data. It would probably have to look at using a new system. Four experts had been invited to make presentations on ensuring that business systems talked to each other.

Mr Mehana said that in the middle of the year some managers were investigated by the Special Investigating Unit (SIU). NHBRC was requested to participate fully, and it was urging that the process be speeded up, to try to finalise it by the end of November. A report on the Chief Executive officer had been finalised and handed to lawyers who would recommend whether there was a case to answer.

Mr Mahachi said he took note of the R500 000 cap on remedial work. He said this needed to be a subject of a policy review. The Council in fact had a right to make a determination if prices went beyond R500 000. He said he would not comment on Zanemvula until he had satisfied himself about the details of the problem. He said he noted points raised on training, and in future there might be a review of strategy. NHBRC had decided to be pro-active in dealing with government, as waiting for project submissions took a long time, and where a department did not have capacity, NHBRC would intervene.

He said suspension and deregistration was difficult because contractors doing shoddy work found ways to move around rules.

Mr Thorp said the difference in payments was as a result of the number of meetings that councillors attended.

Mr Mehana said the council member who earned money without sitting in a single meeting was paid for sub-council meetings. He also clarified the issue of the CEO’s salary, saying that R1 million was paid for the first nine months during which the CEO was in an acting post, but when permanently appointed, the salary was R2.5 million annually for five years.

National Housing Finance Corporation (NHFC)  presentation
Mr Samson Moraba, Chief Executive Officer, NHFC, said the work of the NHFCwas about providing innovative and affordable housing finance solutions. This had been a difficult year in terms of the market, and economic conditions impacted on NHFC performance. He said numbers indicated low levels of affordability despite high value loans being taken.

Mr Moraba said the NHFC had put a system in place to try and track the institutions it assisted. There was a target of R50 million for funding projects headed by women. He said NHFC had been able to multiply funding by bringing in various sources. He said the NHFC worked and collaborated with SHRA and supported it to reach stability, and the same had been done with some of the private organisations that NHFC had funded over a period of time. He said NHFC had delivered on affordable rental housing. Enterprise development was part of NHFC impact.

Highlights of 2011 included engagements with various banks and a R216 million deal was concluded with the European Investment Bank in January. NHFC also engaged with other multinationals to provide funding. A R6 billion agreement for the next five years was concluded with one of the principal investors. A turn-around was drawn for some of the distressed clients and NHFC was able to recover over R100 million from these distressed clients. In the past year the NHFC launched the highest number of projects.

Mr Moraba said indebtedness of end-users was impacting on NHFC performance. He said deals were complex and took longer to finalise. Low interest rates meant lending income was low. Impairments had to be reversed. NHFC was working strategically with the Cape Town Community Housing Company (CTCHC), Trust for Urban Housing Finance (TUHF) and Housing Investment Partnership (HIP). He said in line with Outcome 8, NHFC wanted to make rental housing affordable to low and middle income groups.

Ms Zonia Adams, Chief Financial Officer, NHFC, tabled and took the Committee through the financial report. She said growth was about 4%, year on year. The Council received unqualified audit reports for the previous two years.

Discussion
The Chairperson said she was worried because NHFC indicated that there were developments projects and yet when the Committee visited Nelspruit, an indication was given that nothing was happening in that province. She said NHFC needed to indicate time frames for when people would start benefitting from the R6 billion.

Mr Steyn wanted to know if there were conditions to avoid a situation where banks repossessed and sold people’s property for very low amounts. He asked about the advance payment of R14 million to Thubelitsha. He asked how the jobs created were measured, and if they were sustainable.

Mr Figlan wanted to know about the offices of the NHFC in the Western Cape. He asked what criteria were used for the middle income groups.

Mr Bhoola asked for clarity on involvement with SHRA and the evictions taking place in KZN at the social housing projects.

Mr Moraba said the KZN situation was sad, especially because the police response was very weak. He said all the courts had ruled in favour of government; it was only for people to honour the ruling. NHFC had responsibility to fund social housing with approval from SHRA. He said NHFC had to allocate loan funds on the back of the SHRA pipeline. He said some of the social housing projects were funded by the Dutch at cheaper rates, but were catered for in the NHFC budget. This explained why NHFC would have under-performed in some areas.

Mr Moraba confirmed that NHFC operated in the field of those earning R12 000 and less.

Mr Moraba said that although legislation provided for repossessions, only a judge had a right to order the sale of repossessed houses, and this was no longer done by lawyers representing the banks.

Mr Moraba confirmed that the NHFC did not have an office in the Western Cape, but was represented by an intermediary company.

Ms Adams said the Thubelitsha grant was money owed in interest.

The meeting was adjourned.