Recapitalisation and Development and Comprehensive Rural Development Programmes; and investigation into allegations of fraud and corruption in the Mancena Garden programme in Muyexe: Departmental briefings
Meeting Summary
The Department of Rural Development and Land Reform (DRDLR) presented on its Recap and Development Programme under Strategic Land Reform Interventions; Comprehensive Rural Development Programme per Province 2010/11 to 2014/15; and the Report on the investigation into allegations of fraud and corruption in the Mancena Garden programme in Muyexe.The presentation on the Department’s Recapitalisation and Development Programme (RADP) discussed amongst other things the objectives of the programme: increase in food production, guaranteed food security, graduating emerging farmers to commercial farmers, creating job opportunities within the agricultural sector, and establishing rural development monitors. The RADP covered past and future transactions with emphasis on all land reform programmes. It also covered private farmers through the provision of guarantees. Areas targeted for RADP intervention included: all beneficiaries who received land under land reform programmes; land reform farms that had a mortgage component or were on the verge of being repossessed; emerging farmers who purchased farms with loans financed by financial institutions without state support and were experiencing the same challenges as land reform beneficiaries; and irrigation schemes and farms in communal areas. All projects would be funded at 100% based on the five year RADP funding model (see document) and would be guided by comprehensive business plans.
Members questioned the Department on its plans for projects which were identified for RADP funding but could not meet income flow commitments as required under the business plans a few years into the programme. Members remarked that farms without Strategic Partners or Mentors were a recipe for disaster and asked what progress the Department had made with the intensification of recruitment of Strategic Partners and Mentors and what efforts the Department was making to monitor the Strategic Partners and Mentors already recruited into the programme. Members brought to the attention of the Department the case of the sugar cane farmers in
The Comprehensive Rural Development Programme per Province 2010/11 to 2014/15 presentation covered the financials of the RADP per province for the years under consideration.
Members asked why there was a drastic reduction in the budgetary allocation for the 2012/13 financial year. Members questioned the reduced allocation for NARYSEC programme in the 2013/14 financial year compared with the amount allocated in the current financial year when there was a plan to increase the intake of youths into the programme. Members asked whether the Department was allowed to retain amounts not expended by it at the end of its financial year.
The Department, in its report on the investigation into allegations of fraud and corruption in the
Members remarked with frustration that the investigation had dragged on too long and urged the SIU to conclude the investigation expeditiously and report to the Committee its findings. Members questioned whether there was any possibility of tracing the fraudster and whether all other projects of the Department had been secured to ensure he could not take advantage of them
Meeting report
Recapitalisation and Development Programme under Strategic Land Reform InterventionsMr Ursi Mchlage, DRDLR Acting Deputy Director-General (DDG), anchored the presentation on the Department’s Recapitalisation and Development Programme (RADP). The objectives of the RADP were: to increase food production; to guarantee food security; graduate emerging farmers to commercial farmers; create job opportunities within the agricultural sector; and to establish rural development monitors.
The RADP covered past and future transactions with emphasis on all land reform programmes. It also covered private farmers through the provision of guarantees. Not all farms qualified for RADP and selection would be based on farms potentiality informed by assessment and credible business plans. Stringent conditions were to be issued for those who qualified to avoid creating the culture of entitlement.
Areas targeted for RADP intervention included all beneficiaries who received land under land reform programmes; land reform farms that had a mortgage component or were on the verge of being repossessed; emerging farmers who purchased farms with loans financed by financial institutions without state support and were experiencing same challenges as land reform beneficiaries; and irrigation schemes and farms in communal areas.
The funding for RADP projects would be guided by comprehensive business plans and no submissions would be approved without the business plans. All projects would be funded at 100% based on the five year RADP funding model (see document).
Challenges facing the RADP since its inception included lack of Mentors and Strategic Partners to support identified projects; unwillingness of Strategic Partners to invest in the projects; lack of budget to fully fund the project as proposed in the business plans and funding model over the five years period; aligning disbursement of funds with the business plans due to the quality of business plans from Mentors and Strategic Partners; poor prioritisation of activities to be funded in the farm; and beneficiaries causing delays in terms of implementation due to prioritisation on their personal needs which in most cases caused disputes with Strategic Partners and Mentors. Proposed solutions were suggested for each of the challenges (see document).
Discussion
Mr A Trollip (DA) asked how the Department intended to deal with perennial recapitalisation, especially with the irrigation schemes and questioned the Department’s plans for projects which were identified for RADP funding but could not meet income flow commitments as required under the business plans a few years into the programme.
Mr Shabane responded that no model had been created by the Department yet for farmers who wanted to exit the scheme. The Department, however, discouraged the reversal in the minimal progress it had made so far in its land redistribution projects. The Department immediately intervened in cases such as this but was careful not to give the impression that farmers who did not service their loans would always be rescued by the Government. Where the Department had considered business plans eligible for RADP funding, reviews would be conducted before the end of the five year period to consider if the farms were still profitable and decisions would be made accordingly on whether to continue or stop funding. This further emphasised the need for continuous training of the farmers and discipline on their part to ensure that the projects were a success.
Mr Mchlage added that, on the issue of perennial recapitalisation of irrigation schemes, the Department was only ‘piggy backing’ on the work of the Department of Agriculture, Forestry and Fisheries (DAFF), which was underfunded and the Department was assisting in funding the project. He conceded that the Department would have to reconsider the notion of endlessly funding the scheme.
Mr Trollip remarked that a number of persons had applied for Mentorship roles under the RADP but were yet to receive responses from the Department. He questioned how the Department intended to roll out Mentors for the scheme.
Mr Mchlage responded that the Department did in fact have a database of Mentors but some of the applications for Mentorship were from failed farmers and the Department did not consider them suitable. Further, the beneficiaries had to agree to work with Mentors proposed, for the success of the programme.
Mr Trollip asked how the Department intended to deal with the resistance to emerging commodity and farmers’ organisations.
Mr Shabane replied that the experience was that the land beneficiaries themselves were not organised or affiliated to any particular union. The Department was of the opinion that support for the beneficiaries would be more easily accessible if they were organised. To this extent, the Department had reconsidered its own organisation so it could respond to this challenge. In so doing, the Department had reorganised and created the Social, Technical, Rural livelihoods and Facilitation (STRLF) programme to deal directly with the farmers and respond to this challenge. Furthermore, the Department with benefit of hindsight now carried out proper profiling of farmers before funding any recapitalisation projects.
Mr Trollip asked the Department what yardstick it used to determine who qualified for the RADP besides those already stated in its presentation.
Mr Trollip asked what management processes the Department had put into the RADP funded projects to prevent collapse of the projects because of personal priorities being put ahead of the sustainability of the project.
Ms P Ngwenya-Mabila (ANC) raised the issue of sugar cane farmers in
Mr Mchlage responded that the Department was aware of the case and was trying to wade into the matter, but the indebtedness of the farmers was enormous. The Department and Land Bank were yet to reach a consensus on the issue, as the Land Bank wanted the debts settled first and the Department believed that the irrigation project should first be kicked off and proceeds from the project used to settle outstanding debts. He hinted that not all irrigation farms at the site were still suitable for sugar cane farming.
Mr Shabane added that most of the farmers were attached to the farming of particular crops – sugar cane - even when they were no longer viable on the land and had refused to move on to other options which might have been more viable.
Ms Ngwenya-Mabila remarked that while the importance of Strategic Partners could not be over emphasised in the scheme, the monitoring of the Strategic Partners posed an even greater challenge for the Department especially as most of the Strategic Partners were in the scheme for personal beneficiation and not necessarily to help empower the beneficiaries of the scheme. Another challenge the Department needed to confront was explaining the Terms of Reference (ToR) of the scheme to beneficiaries in the dialect they understood and ensure that beneficiaries knew they could report challenges faced with their Strategic Partners directly to the Department.
Ms Ngwenya-Mabila made reference to a beneficiary of the land reform programme in the Free State which had become a progressive beneficiary, was self sustaining, made profits and was not struggling. She asked if these types of beneficiaries still qualified for intervention under the RADP from the Department.
Mr R Cebekhulu (IFP) made reference to an occurrence in KwaZulu-Natal (KZN) where the
Mr Shabane responded that the reality was that there was no trust between most beneficiaries and their Strategic Partners and gave an instance in KZN which had been brought to the Department’s attention, where the Millers had disregarded the farmers efforts and gone on to plant sugar cane themselves. The issue transcended into being more of a social issue which could determine the success or otherwise of the recapitalisation scheme.
Mr Mchlage added that the Department would appreciate specific information to help it follow up the case.
Mr Cebekhulu, in reference to the commitment of Mentors and Strategic Partners to the programme, highlighted the experience of workers in the
Mr Mchlage responded that this was another instance of the Project Management team not carrying out the responsibilities for which it was employed by the Department.
Mr S Ntapane (UDM) remarked that farms without Strategic Partners or Mentors highlighted in the Department’s presentation were a recipe for disaster. He asked what progress the Department had made with the intensification of recruitment of Strategic Partners and Mentors.
Mr Mchlage responded that the farms without Strategic Partners or Mentors were mostly farms that were regarded as not economically viable or unproductive. The Strategic Partners were at liberty to choose which farmers to go into partnership with and, because they were business men, it was only natural they chose the economically viable farms. In the long term, the Department was considering entering into partnerships with NARYSEC youths as against recruiting for Strategic Partners.
Mr Shabane added that the Department realised this risk and this was another reason why the need for profiling of farmers was crucial and the Department needed to expedite action in this regard. He gave an instance of a beneficiary in Mpumalanga who had taken out a loan of R20 million from the Land Bank, had misused the funds, cut off ties with the Strategic Partners and found himself unable to service the loan and facing repossession. He stated that most of these issues were social and touched on the greed of the beneficiaries.
Mr Ntapane remarked that workshops and training programmes for the beneficiaries were to have been organised before the RADP scheme kicked off. He asked if the workshops had started and if not why they had not started.
Mr J van der Linde (DA) stated that employees of the Department had been reported to be high
handed in the treatment of beneficiaries.
Mr Mchlage responded that this was an abnormality and would be followed up at the Department.
Mr Van der Linde highlighted the experience in cases where several beneficiaries were linked to a singular farm, some of whom were deceased and other beneficiaries were unable to pay the families of the deceased; in some instances some of the beneficiaries were not even allowed onto the land by the Strategic Partners.
Mr Van der Linde asked how the Department expected the beneficiaries to gain from the recapitalisation if the funding for the recapitalisation was handed to Strategic Partners only.
Ms H Matlanyane (ANC) asked for clarification on the difference between Mentors and Strategic Partners.
Mr Mchlage responded that, although closely related, Mentors were more of advisers and guides to the beneficiaries on becoming successful farmers. The Mentors were at liberty to come and go and were not necessarily involved in the daily running of the project. Strategic Partners on the other hand were investors and were fully involved in the business, they also guaranteed off takers etc.
Ms Matlanyane stressed the importance of monitoring by the Department and queried whether the Department thought its monitoring was sufficient.
Ms Matlanyane questioned what informed the Department’s choice on the number of Strategic Partners needed on each project.
Mr B Skosana (IFP) remarked that the tender process used in recruiting Strategic Partners had caused more harm than good. He suggested that the Department sought the assistance of extension officers in the Departments of Agriculture and other agricultural colleges to help save cost.
Mr Mchlage responded that the Department recognised that the tendering process used to recruit
Strategic Partners was not ideal but the Department had to begin somewhere rather than wait for ideal situations. The Department was renegotiating the process with National Treasury and proposing to use the method where beneficiaries nominated their own Strategic Partners and the Department, after running the necessary checks to ensure all requirements had been met, approved and enters into contract with the Strategic Partner.
Mr Shabane added that the Department had always had structures in all provinces which involved the DAFF. Many of the DAFF’s personnel were being trained and there was a drive to increase the number of extension officers so they could support farmers on a commercial level. The Department planned to rely on its partnership with the DAFF so that farmers under the scheme would receive the necessary support.
Mr Skosana asked whether the Department was responsible for providing the business plans for each of the RADP projects or whether the beneficiaries themselves provided the business plans.
Mr Skosana asked if the Department provided the beneficiaries with human resources to assist in ensuring that the projects were successful.
Ms N November (ANC) decried the lack of coordination between the Department and its provincial departments and suggested that the provincial departments along with the national Department meet with the Committee.
The Chairperson noted that the Department’s presentation had made no reference to the role played by KPMG in the RADP projects.
Mr Mchlage responded that KPMG and another entity had been appointed by the Department for the purpose of Project Management on behalf of the Department and where there were any deviations they were to report to the Department and the instance in KZN sighted by Mr Cebekhulu was a failure on the part of the Project Managers.
The Chairperson asked the Department who chose which Strategic Partners worked on which projects - the beneficiaries themselves, or did the Department impose Strategic Partners on beneficiaries?
After the Department’s attempt to answer Members questions, Members made further comments on the presentation.
Mr Trollip remarked that the Department’s failure to meet its commitments was what kept potential investors away from some of its recapitalisation projects. He summarised the challenges of the Departments recapitalisation projects as – huge challenges, bad Strategic Partners, lack of commitment on the part of the Department and corrupt Mentors. As regards training on farmers it was important for the Department to take note that not all its trainees would be successful as not everyone who was trained had the wherewithal to withstand the commitment needed for farming. The Department needed to de-emphasise short term investments with Strategic Partners and encourage long term investment for sustainability purposes. Social facilitation was key to the success of the projects and beneficiaries needed to be educated on the time frame before their investments are recouped.
Mr Ntapane observed that there was a lack of succession plan for the Department’s schemes in the
The Chairperson remarked that there was a need for total commitment on the part of the beneficiaries if the recapitalisation projects were to succeed and this needed to be impressed on the beneficiaries during the process of social facilitation. The Department had to strive to build good partnerships between it and farmers unions and strengthen working relationships between the two. He suggested that the Department explored the possibility of subdivision of farms amongst families to encourage a succession plan that worked and a stronger sense of responsibility to the farmland within families.
The Comprehensive Rural Development Programme per Province 2010/11 to 2014/15
Ms Irene Singo, Acting Chief Financial Officer (ACFO), presented to Members the financials of the RADP per province. She explained that there was no separate budget allocated for the Comprehensive Rural Development Programme (CRDP) when it was launched in 2009, but its costs were covered under land reforms till the next financial year (2010/11) when the structure of provinces was developed for rural development. The National Rural Youth Service Corps (NARYSEC) programme also had no separate line budget at its launch in 2010/11 but was covered under Social Technical Rural Livelihoods and Facilitation (STRLF). In the 201/13 budget, NAYRSEC was created as a separate sub programme with its own budget.
Total amount budgeted and spent respectively, for all the provinces in each financial year was: in 2010/11 R158 200 000 and R155 788 000; for 2011/12 R852 037 000 and R796 748 000; for 2012/13 R757 800 000 and spent so far R38 645,000. The Medium Term Expenditure Framework (MTEF) allocations for 2013/14 and 2014/15 were R783 277 000 and R813 358 000 respectively. Details of the amount budgeted per province, amount spent on infrastructure per province and STRLF budget per province were highlighted in the presentation (see document).
Discussion
The Chairperson questioned why there was a drastic reduction in the budgetary allocation for the 2012/13 financial year.
Ms Singo responded that rural development was allocated R757 800 000 for the 2012/13 financial year allocated to provinces but there were funds which were not split across provinces in the line of the Departmental agencies, which were implemented by third parties but not allocated on the budget to the different provinces. The Departmental agencies still ended up implementing these budgeted amounts across the different provinces.
The Chairperson questioned the reduced allocation for NARYSEC in the 2013/14 financial year compared with the amount allocated in the current financial year when there was a plan to increase the intake of youths into the programme.
Ms Singo replied that National Treasury did not initially grant the Department’s request for additional funding; however, on further engagement, additional funding was allocated to the Department. The outer years reflected in the presentation were just estimates and not the actual reflection of the amount that might eventually end up in the budget for those years.
The Chairperson asked whether the Department was allowed to retain amounts not expended by it at the end of its financial year.
Ms Singo responded that the Department was not allowed to retain amounts not expended at the end of its financial year except for cases where it requested a roll-over. The Department was striving to ensure that it expended 100% of its budget.
The Chairperson stated that prior information available to the Committee was that National Treasury had allocated certain sums to provinces directly for rural development. Was there a way the Department could discover how much had been allocated and for what projects in particular to avoid duplication of allocation of revenue from the Department on projects.
Ms Singo confirmed that the Department was aware of the allocation for rural development coordination and the amounts allocated to each province by National Treasury. The Department had engaged with the provinces on these allocations and some provinces had informed the Department of the intention to expend the National Treasury allocation on provincial rural development schemes. National Treasury requested that the Department, National Treasury and the provinces meet to decide on how the allocation should be expended.
Investigation into allegations of fraud and corruption in the Mancena Garden programme in Muyexe
Mr Mduduzi Shabane, Director-General, briefed the Committee on the progress made so far on the investigation into allegations of fraud and corruption by the consultant allegedly contracted on behalf of the Department for the Mancena Garden Scheme in Muyexe. There was an attempt by the Department to enter into a partnership with Old Mutual to support the
Mr Ricus van Rensberg, Director: Internal Audit, shed more light on the case. The Department had requested the Special Investigating Unit (SIU) to make an independent review on the case and in furtherance of this, the SIU had collected all documentation and information it needed from Department officials. The SIU planned to meet with the affected community but had suggested it was better to hold meetings with Old Mutual before the meeting with the community. The SIU was waiting on Old Mutual for a meeting date; Old Mutual appeared to be stalling.
Discussion
The Chairperson opined that unless the fraudster was working in conjunction with Old Mutual, it was preposterous to suggest that an organisation like Old Mutual would part with R1 million without any signed contract between itself and the Department.
Mr Van Rensberg responded hat he could not confirm this as the SIU was yet to hold any meetings with Old Mutual to clarify the details of the transaction.
The Chairperson remarked that the case had three implications for the Department; (1) The Department’s monitoring structures were weak. (2) If Old Mutual was able to produce documents purported to have been signed between itself and the Department, the Department was exposed and indebted to Old Mutual. (3) The community project would be shut down and once again the Department would be regarded as failing to meet its commitments to the community.
Ms Matlanyane questioned whether there was any possibility of tracing the fraudster and whether all other projects of the Department had been secured to ensure that he could not take advantage of them.
Mr Shabane responded that it was the duty of the police to trace the fraudster and all the Department could do was to supply the police with any evidence in its possession to aid the investigation.
Ms Matlanyane asked when Old Mutual was expected to respond and meet with the SIU.
Mr Shabane responded that the Department would pressurise Old Mutual for a meeting with the SIU.
Mr Trollip opined that, if according to Old Mutual’s allegations the Department was in fact indebted to it, then there should be a sense of urgency on Old Mutual's part to recoup its funds and it should not be stalling the investigation by its refusal to meet with the SIU. He suggested that the Committee give the investigating team a time frame within which to complete its investigation.
Mr Van Rensberg responded that it was difficult to apply time lines to investigations as investigations were generally unpredictable and it was impossible to dictate how soon documents and information necessary for the investigation could be accessed. He assured the Committee that it was a priority matter for the team and the SIU hoped to finalise the investigation quickly.
The Chairperson thanked all in attendance. The meeting was adjourned.
Documents
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