Department of Agriculture Audit Outcomes & 2019/20 Annual Report; with Minister

Meeting report

The meeting commenced with a presentation of the 2019/20 audit report of the Western Cape Department of Agriculture (DoA), as well as the audit report of the Department’s entity, the Cape Agency for Sustainable Integrated Development in Rural Areas (CASIDRA). The session involving the Committee and the Auditor- General of South Africa (AGSA), at the beginning of the meeting, was closed to the public.

Dr Ivan Meyer, Western Cape MEC for Agriculture, told the Committee that the Department appreciated the opportunity to account for its operations. He advised the Committee that he would not stay for long, due to an upcoming Cabinet meeting.

Dr Mogale Sebopetsa, Head of Department (HOD): DoA, said the agricultural sector had recorded significant recovery and growth in the production of wheat, citrus fruit and horticultural products.  The agricultural sector was by far the only sector that had registered positive growth in 2020, and it would continue to play a much bigger role in South Africa. The Department was committed to achieving the three priority areas of the Western Cape, which included jobs, safety and wellbeing.

The Chairperson requested Members to engage both reports of the Department and CASIDRA at the same time, to save time.

Part C: Governance

Ms N Nkondlo (ANC) pointed the Department to page 164 of the annual report, which dealt with fraud and corruption. She asked for clarity on the three cases reported on 1 April 2019. What was the current situation of these cases? How had the Department improved its policies and control systems to avoid such cases? She said that under the Broad-Based Black Economic Empowerment (BBBEE) code measures, the Department had responded "no" to all questions -- was it compliant with the BBBEE measures as set forth by the National Treasury?  Why was CASIDRA using a different template to report on BBBEE requirements?

The MEC replied that the question raised concerning BBBEE had been discussed in the Standing Committee on Public Accounts (SCOPA), and the Western Cape Premier -- together with the Department -- had agreed to the same response. The Democratic Alliance (DA), the official opposition in South Africa and the ruling party in the Western Cape, had made it clear that race must not be used as a proxy in BBBEE requirements. This did not mean that the DA did not believe in redressing the historical imbalances of the past. The party believed that it was possible to use economical redress as a fundamental principle of policy, instead of using race as the proxy. The DA had therefore adopted the principle of redress as a fundamental part of its economic inclusion policy. The Department would be happy to have a full discussion, or a political debate on the question around BBBEE requirements, since there were contradicting political views.

Ms L Maseko (DA) asked if the Department would have received a clean audit if there had been no case handled by the Supreme Court of Appeal between the Western Cape Department of Agriculture and the Auditor General (AG).

Mr Floris Huysamer, Chief Financial Officer (CFO), DoA, replied that the Department would have achieved a clean audit.

The MEC commented that the Department respected the rule of law and the outcome of the investigation. He had told the Standing Committee on Agriculture and Environmental Affairs that the view of the South African Government was to respect the outcome of that court case, and the Department had respected it. Currently, there was no predictability in the current governance arrangement for both the AG and the Western Cape Government. Hopefully, the court case would provide the Department with predictability. This was not a case where the AG was losing, or the AG was winning. It was equally not a case of the Western Cape losing or the Western Cape winning. Either way, It would be in the best interests of South Africa, to get clarity from the Supreme Court of Appeal, to gain predictability on the national financial governance architecture, because it had wider implications than just simply the Western Cape.

Mr P Marran (ANC) said that in a presentation hosted by CASIDRA, they had been asked to provide information about the payment made to them by the DoA, and they had responded that they could not provide third party information. Although this money that the Department was paying over to CASIDRA was public money, that had been their response. He wished for the court case to come to an end so that the Committee could proceed with the matter.

Based on arable agricultural land for alternative developments, it seemed that the Department was saying that they were not responsible for land distribution or land acquisitions. In the past, there had been programmes where citizens acquired arable land through the DoA. If the Department was saying they were in the process of identifying arable land to be allocated to Western Cape citizens, the Committee was free to show the land that was freely available for allocation. The Committee understood that the Department was not responsible for land reform processes – that it was a national responsibility -- but in the Western Cape province, there was plenty of productive agricultural land. The only requirement was to assist black farmers to acquire land and make it productive again. In light of the resolutions that were taken in September 2020 regarding CASIDRA complying to BBBEE measures, why was this not considered in the current financial year?

The MEC replied that when land was rezoned from agricultural purposes to any other purpose -- for example, housing development or estate development -- the Department of Agriculture in the Western Cape was required by law to make some comments about the utilisation of the land. There was quite a lot of land conversion happening in the Western Cape. Arable land was converted to lifestyle developments, and when that productive agricultural land was under pressure the Department needed to intervene. In cases of alternative developments, the Department considered and weighed them up against agricultural stability, the agriculture food value chain and food security, and had to make some comments. When agricultural land was zoned for agricultural purposes but was no longer productive, comments and recommendations would be provided by the Department through its technical divisions.

The Department acknowledged and considered the offer made by Mr Marran to show it areas that possessed arable land in Western Cape. South Africans must protect agricultural land, specifically considering the economic crises facing the country. In 2020, all the sectors of the economy in South Africa had recorded negative economic growth in the first and the second quarters, but agriculture was the only sector that had recorded positive economic growth. Agriculture had recorded a 28% growth in the first quarter of 2020 and a 15% growth in the second quarter. There had also been a massive growth in agricultural exports. From that perspective, it was important to protect agricultural land, and given where South Africa currently stood with its economic recovery plan, and the development of the agriculture master plan, everyone had a moral obligation and a responsibility to see the extent to which they could protect productive land.

Ms Maseko observed that one of the systems that the Department of Agriculture had championed was the allocation of the Ilima Letsema grant. How would the Department mitigate the grant allocation pressure due to COVID -19, since communities were very interested in food gardens for sustainable food security?

Ms Nkondlo said the question relating to BBBEE was not supposed to be politicised at this meeting. SCOPA was supposed to account for financial matters and how resources were utilised by the Department. This question had quickly led to a political debate, and this was not the right platform to discuss it. There were conflicting views between the State and the DA as a political party. The Minister had referred to resolutions that had been taken at a DA conference -- his political party. If the Committee was interested in the resolutions of the DA, it would have simply asked. That was not the point. The question was that the current legislation was called BBBEE -- did the Department apply the BBBEE codes in its work?   

Mr Marran brought to the attention of the MEC that 70 farm workers had been involved in a tractor accident near Klapmuts in the Western Cape. He agreed to the need to have a debate about the conversion of arable agricultural land for property development or golf estates in areas such as the Boland. The Department must not allow a situation where arable land remained vacant, and for property developers to utilise this land. It was the responsibility of the Department of Agriculture to make sure that vacant land was developed for agricultural purposes and allocated to those who wanted to farm the land.  It was clear that in the year under review, the Department had not applied the BBBEE codes in its work. Did the Department acknowledge that they had not applied the BBBEE codes in the year under review?

The MEC replied that he was aware of the accident that had taken place, and assured the Committee that he would have a meeting with the Minister of Transport and Public Works to discuss the safety and transportation of farm workers.

Mr P Marais (FF+) agreed with the MEC that there should be a debate on the issue of BBBEE requirements. He referred to the Namibian Empowerment Policy where preference was provided to individuals that were in need, as opposed to the colour of their skin. In other words, if a black millionaire applied for land, he/she should not get land because he/she was black. He/she must be refused land because he/she was empowered already. He asked whether black millionaires and their children received bursaries because they were black. Must they get preferential treatment because they were black, or should preference be provided because a person was in need and qualified for that need? The issue of BBBEE should be a discussion between political parties to assess the correct principle, which was based on justice and economic reform.

The Chairperson urged Committee Members not to be clouded by party political issues, otherwise it would lose the focus of having to hold Departments accountable. The issue of BBBEE was political and it could not be resolved at this meeting. There was a need to have a debate on this matter on a neutral platform where Members could all raise their concerns.

The Chairperson asked about the possibility of an intergovernmental resolution on the legal matter between the Department and the Auditor-General, instead of resolving it through the law courts.

The MEC replied that the Department was open and willing to settle the legal matter outside the courts in the spirit of good corporate governance.

Part E: Financial Information

Mr D America (DA) said in the financial statements of the Department, an amount of R206.7 million had been transferred to CASIDRA, and this amount did not reflect in CASIDRA’s financial records of. Why was this amount not reflecting in the financial statement of CASIDRA so that the Committee could know how the money had been utilised?

Mr Huysamer replied that the numbers on both sides had been audited by the Auditor-General individually, and they were correct. The conciliation exercise was a bit more challenging.

Ms Maseko asked why the Auditor General report contradicted the Department's annual report regarding the targets met. Why had the Department not corrected the errors omitted from the Annual Performance Report? The audit committee had indicated that there was a tender that was given to the internal audit team to comply, so why had the Auditor General submitted this report while there had been another service provider that had been introduced within CASIDRA to make sure that everything was implemented correctly?

The Chairperson asked the CFO if was it possible for the Department to transfer money to an entity like CASIDRA, and for the money not to be reflected in CASIDRA’s financial records.

Mr Huysamer replied that the National Treasury did not require CASIDRA to report the expenditure details in its financial statements. It was not a requirement, but the Department could provide the expenditure list to the Committee at their request. 

Ms Nkondlo asked for the reasons leading to under-spending on the Ilima Letsema programme. How many farmers had benefited from the funds allocated for personal protective equipment (PPE)? Were there problems with the Department's tax system? Could the Department provide more information about the outstanding debt of private tenants? What was it doing to mitigate irregular expenditure on flight travelling?

Mr Huysamer replied that 200 000 face masks had been bought and distributed to farmers across the Western Cape province.

The Chairperson asked the AG if there was any possibility to resolve the legal matters they had with the DoA through inter-governmental procedures?

The AG responded that they would look into the matter of resolving the legal matters through inter-governmental procedures. The main issue they had with CASIDRA was that they did not report how the payment transfer made by the DoA had been utilized. This information should be disclosed for transparency purposes.

Ms Maseko said that the macro-organizational structure of CASIDRA was not impressive. Of the nine management staff, there was only one female. What mitigation processes did the Department have in place to promote gender equality in CASIDRA’s management?

Mr Ainsley Moos, Chairperson, CASIDRA, responded that the issue of gender representativity had certainly been exacerbated over the last two reporting cycles. In the past, two female board members had resigned from the organisation. CASIDRA was currently in process of recruiting for the two vacant positions, and they would take into consideration gender equality when they were recruiting.

The MEC thanked the Committee, the Auditor- General and the DoA for their contributions at the meeting. The Department had noted all the concerns raised by the Committee, and would continue to account consistently to it.

Committee resolutions

[the live stream was ended at this point]

The meeting was adjourned.