Date: 10 October 2012 Time: 09:00 Venue: M514, 5 th Floor, Marks Building

BRIEFING TO THE PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT

AND LAND REFORMANNUAL REPORT : 2011-2012

Date: 10 October 2012Time: 09:00

Venue: M514, 5th Floor, Marks Building

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Accounting Officer: P M ShabaneAccounting Officer: P M Shabane

PURPOSEPURPOSE

1. Report and Financial Statements of Vote 33, Department of Rural Development and Land Reform (DRDLR): 2011-2012 was tabled in Parliament on 26 September 2012.

2. The Annual Report includes: – Report of the Auditor-General on the Financial Statements;

and– Performance Information

3. The purpose of this presentation is to brief the Committee on the following focus areas emanating from the report :– Overview of programme performance;– Overview of financial performance.

4. The report will highlight the achievements, challenges, and the extent to which targets reflected in the Strategic Plan were met.

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CONTEXT

• The overarching mandate of the DRDLR is to create and maintain an equitable and sustainable land dispensation, and to act as a catalyst for rural development that ensures rural livelihoods, decent work and continued social and economic advancement for all South Africans.

• In 2011, the Department tabled its Strategic Plan for the period 2011-2014, where it had set targets to achieve the following priorities:

1. To roll out the Comprehensive Rural Development Programme to all rural municipalities.

2. To improve productivity in land reform projects through effective implementation of the Recapitalisation and Development Programme.

3. To expedite the finalisation of land claims.4. To improve corporate governance and ensure enhanced service

delivery.5. To implement proper change management and innovation strategies.6. To enhance the efficiency of information management systems.

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CONTEXT

The Annual Report gives an account of DRDLR’s activities for the 2011-2012 year in relation to the Strategic Plan and the Budget approved by Parliament. In line with the priorities we have set for ourselves: ―Elements of the CRDP are being rolled out to 180 rural wards across the country. This include the skills development on the Narysec youth. ―257 farms have been recapitalised as part of the Recapitalisation and Development Programme. ―416 restitution claims which benefited 14 437 household were settled.―The Spatial Planning and Land Use Management Bill (SPLUMB) and Geomatics Profession Bill were published for public comment. ―The backlog of staff assessments was dealt with, and performance agreements were signed and aligned to operational plans for the new financial year. ―The ICT council has been established. The following slides outline the achievements in line with the Annual Performance Plan targets for each of the programmes.

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Programme 1: Administration Programme 1: Administration

2011-2012 is the first year where the strategic goal for good corporate governance and service excellence through compliance with the legal framework was articulated in the Annual Performance Plan of the Department. We have seen great improvement in this area.•Institutional arrangements: For effective coordination of the implementation of the Department’s programmes, the “Back Office” was established. •Systems enhancement: ICT, Planning, Monitoring and Evaluation and Financial systems and processes enhanced. •Compliance and accountability: The Risk Management Strategy was approved and implemented. Strengthened the legal interventions to fast-track labour disputes, disciplinary matters and litigation.

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•Financial governance: 98.3 % of the budget was spent compared to 97.7% in the previous year.

•Supply Chain Management: Recorded significant improvement in the payment of suppliers. This is evidenced by 95% of undisputed invoices paid within 30 days.

– The Department continues to put systems in place to ensure 100% compliance

•Policy and Legislation: The Spatial Planning and Land Use Management Bill was approved by Cabinet for submission to Parliament.

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Major challenges and recommendations

•Reducing the Department’s vacancy rate has proven to be a challenge due to inadequate supply of relevant skills particularly in the geomatics field amongst others. This is being addressed through the provision of scarce skills bursaries.

•The requirements of the Occupational Specific Dispensation (OSD)contributed to the inability to reduce the vacancy rate

•The prolonged policy and legislation consultation processes delayed the finalisation and implementation of critical legislation.

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Programme 2: Geospatial & Programme 2: Geospatial & Cadastral Services Cadastral Services

Major achievements •Comprehensive land register: In the year under review, 623.078 land parcels were verified (constituting 54% of the total of the land earmarked for verification).

•E-cadastre: The digitization of the land administration system has improved the turnaround time of registering deeds from 14 days to 6 days. This has yielded positive results in the efficiency of land administration

•SPLUMB: The Spatial Planning and Land Use Management Bill (SPLUMB) was adopted by Cabinet in March 2012.

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Programme 2: Geospatial & Programme 2: Geospatial & Cadastral Services Cadastral Services

Major challenges

•Inadequate supply of relevant skills in the Geomatics field. This is being addressed through the provision of scarce skills bursaries.

•Delays in the surveying and registration of state and Trust Land were experienced due to difficulties in engaging with resident Chiefs. However the Department engaged with Tribal authorities, and this led to the alleviation of obstructive factors.

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Programme 3: Rural Development Programme 3: Rural Development cont..cont..

Major achievements

•Food security: A total of 947 household food gardens were established for food production purposes. The recapitalisation of 261 farms through the Recapitalisation and Development Programme (RADP) is viewed as a major contributor to food security initiatives.

•Skills Development and Job Creation: Training on technical enterprise development was implemented with a total of 3819 CRDP beneficiaries reached. This resulted in the establishment of 92 agricultural enterprises in the CRDP sites. The establishment of these enterprises and other construction initiatives created 10049 employment opportunities.

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• Rural infrastructure development: Through its own efforts and improved coordination and partnerships with other sector departments, the DRDLR provided rural communities with access to water, sanitation, energy and road infrastructure. As a result, the following milestones were recorded:

o Bulk water projects in the form of reservoirs in Ndaya, KZN and Disake, NW, were completed;

o 3058 households were assisted with clean drinking water;

o 37km of water-pipeline from the Orange River to Riemvasmaak in the Northern Cape was completed;

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o bulk sanitation infrastructure was completed in the Vryheid area in KZN benefitting 903 households;

o 564 households were provided with sanitation units in the various CRDP areas thus significantly improving the dignity of rural communities.

o 780 households were connected to grid electricity in Msinga.

o the construction of the Nelson Mandela Legacy Bridge in the Mvezo and Ludondolo villages in the Eastern Cape is underway.

o ICT infrastructure was rolled-out in 15 rural schools across the country with 3500 learners accessing ICT services.

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Programme 3: Rural Development Programme 3: Rural Development cont…cont…

These various infrastructure projects resulted in the creation of short-term employment opportunities and when completed will improve the socio-economic conditions in the affected rural communities.

In the long term, the results will be improved social cohesion and

improvement in the asset base of these rural communities.

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Programme 3: Rural Development Programme 3: Rural Development

Major challenges •Inadequate integrated infrastructure development planning across the spheres of government proved to be a challenge. In mitigating against this challenge, the Department continues to focus on institutionalising the CRDP management system and has developed norms and standards for rural areas that should enhance integrated planning and delivery.

•Variances in the implementation of the ICT programme were attributed to delays in finding a sustainable model for ICT delivery in rural areas as well as challenges experienced in identification of sites.

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Programme 4: RestitutionProgramme 4: Restitution

Major achievements• Finalization of land claims: A total of 209 land claims (backlog)were finalised.

•Settlement of land claims: A total of 416 land claims were finalised, benefiting 14 437 households. A total of 98 484 hectares of land were approved for restoration.

Major challenges •The restitution process was delayed by community, family and boundary disputes; together with demands for exorbitant amounts for the land claimed.

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Programme 5: Land Reform Programme 5: Land Reform

Major achievements• Land acquisition: A total of 392 850 hectares of land was acquired translating to 310 projects benefiting 1211 beneficiaries

•Recapitalisation of land reform farms: A total of 261 farms were recapitalised contributing to food security initiatives.

•Skills development for emerging farmers: A total of 277 emerging farmers were trained in agricultural programmes

•Revitalisation of irrigation schemes: A total of 5 irrigation schemes are under revitalisation.

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Programme 5: Land Reform

Major challenges

•In implementing the Recapitalisation and Development Programme the Department has experienced some challenges which include, among others, the sourcing of strategic partners for implementation of projects. ―The Department has since held workshops to review the impact of the programme and is currently enhancing the policy on Recapitalisation and Development.

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OVERALL CONCLUSION ON OVERALL CONCLUSION ON PROGRAMME PERFORMANCEPROGRAMME PERFORMANCE

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Total No. of Targets No. of Targets Achieved No of Targets not Achieved

Partially achieved No performance

PROGRAMME: ADMINISTRATION

12 3 9 0

PROGRAMME: GEOSPATIAL & CADASTRAL SERVICES

11 8 2 1

PROGRAMME: RURAL DEVELOPMENT

27 16 5 6

PROGRAMME: RESTITUTION

2 1 1 0

PROGRAMME: LAND REFORM

3 2 1 0

PART 3: ANNUAL FINANCIAL STATEMENTS

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FINANCIAL PERFORMANCE

At the end of March 2012 the Department’s actual spending is R7.997

billion or 98.3 per cent of the total budget allocation of R8.136 billion.

Programme

Final appropriation

Spending Unspent funds

% spent

R’000 R’000 R’000 %

Administration 940,483 934,248 6,235 99.3%

Geospatial and Cadastral Services 587,010 582,988 4,022 99.3%

Rural Development 866,868 786,392 80,476 90.7%

Restitution 2,393,051 2,376,300 16,751 99.3%

Land Reform 3,349,285 3,317,797 31,488 99.1%

TOTAL 8,136,697 7,997,725 138,972 98.3%

EXPENDITURE PER PROGRAMME

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1. Administration― actual expenditure is R934.5 million or 99.4 percent of the

total budget allocation of R940.4 million, under-spending mainly due to vehicle not being acquired.

2. Geospatial and Cadastral Services ― actual expenditure is R582.7 million or 99.3 percent of the

total budget allocation of R587.0 million, major contributor of under-spending is procurement of specialised equipment

3. Rural Development ― actual expenditure is R786.4 million or 90.7 percent of the

total budget allocation of R866.9 million; mainly attributable to compensation of employees due to challenges in attracting and retaining adequate specialised skills and secondly goods and services due to delays in rolling out CRDP projects

EXPENDITURE PER PROGRAMME

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4. Restitution ―actual expenditure is R2.376 billion or 99.3 per cent of the total budget allocation of R2.393 billion, under-spending is mainly due to compensation of employees.

5.Land Reform ―actual expenditure is R3.317 billion or 99.1 per cent of the total budget allocation of R3.349 billion; under-spending is due to delays in payment of machinery and equipment acquired

Response to the Auditor-General’s Report

The Department has three entities under the control of the

Minister of Rural Development and Land Reform which are:

•Deeds Registration Trading Account

•Agricultural Land Holding Account

•KwaZulu-Natal Ingonyama Trust Board

The Annual Report of the Ingonyama Trust Board is tabled

separately from that of the Department whereas the audit

reports of the other two entities are included in this Report.

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1. Report on the Annual Financial Statements:

The Agricultural Land Holding Trading Account( PLAS) Trading account which carries 73% of the land reform budget of R3.3 billion received an unqualified audit opinion.

The Deeds Registration trading account which over the years has obtained an unqualified audit opinion was qualified due to the incompleteness and inaccuracy of accruals― The post for the Senior Financial Officer which was

vacant has since been filled, it is expected that the controls over the clearing of outstanding purchase order will improve.

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1. Report on the Annual Financial Statements:• The Department had previously obtained a qualification which

includes the land held by the Department for land reform purposes. The latter has since been resolved, remaining with the qualification on land held through legal title – which was not transferred through the PFMA, section 42 .

• The Department has gone through a thorough exercise of comparing deeds data with the asset register of the Department; however because the Deeds Registry is maintained for a different purpose using parameters that are different from that of the asset register, the process that we have followed in comparing this data did not ensure an accurate and complete asset register.

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Response to the Auditor-General’s Report 1. Report on the Annual Financial Statements:– We are updating our Immovable Asset Policy to provide more

procedures for monitoring of vesting implementation• We have started with the comparison of data without limiting the

parameters of comparison. • We are building capacity within the State Land Administration unit in order

to be able to follow up on vesting certificates issued and ensuring registration of property thereof.

• Above all we are committed to strengthening the relationships with other custodians of immovable assets through the Immovable Asset Task Team (DRDLR, DPW,AGSA). We will be meeting with various custodians during the month of October .

1. The significant uncertainty relates to restitution claims and rates and taxes for immovable properties. 1. Not all municipalities are up to date with the valuation rolls, in order to

avoid incurrence of unplanned rates expenditure, a policy and procedure manual on rates and taxes will be developed.

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Response to the Auditor-General’s Report 2. Report on other legal and regularity requirements

•The main issues on performance information has been the difficulty in

obtaining sufficient appropriate evidence for validity and accuracy of

performance information as a result of the lack of an information

management system for performance information.

•Some of the challenges that contributed to difficulty in reporting is that there

were too many indicators which were not SMART;

– we have since updated the Annual Performance Plan for 2013-2014

to more specific and measurable indicators.

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Response to the Auditor-General’s Report 2. Report on other legal and regularity requirements•The Minister, in his Budget Speech of 2012, introduced the concept of a “Back Office” as the nerve of the Department in collating information and ensuring alignment between strategic objectives and expenditure. During the year under review, the Department has been setting up the “Back Office” structure.

– The Enterprise-wide Project Management Office has commenced with the process to establish a comprehensive programme and project register of the DRDLR. There are at least 1395 active projects in the DRDLR at various stages of initiation and implementation.

– Official and senior managers are being trained on project management skills.

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2. Report on other legal and regularity requirements

• The DRDLR acknowledges the importance of records management as the centerpiece for governance. The Back Office approach will also assist in ensuring that the documentation that is provided is adequate for preparation of accurate and complete annual financial statements. – We will be issuing the interim financial statement for the

period ending 30 September 2012. – We will use this interim financial statement as a dry run to

ensure complete disclosure notes. – The interim financial statements will be made available to the

Auditor General for audit.

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Response to the Auditor-General’s Report 3. Other Matters

•The Department and the Ministry takes fraud and corruption very seriously•The Department has entered into a SLA with the SIU to assist with investigations due to the SIU’s investigation powers, access to specialists and their costing model. The SIU has, to date published 2 Proclamations for Land Reform (2011) and Restitution (recently). Current successes include recoveries of R88million, criminal and disciplinary actions.•The Department has also increased and prioritised the Forensic posts and is currently busy with a recruitment drive to strengthen the unit

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Response to the Auditor-General’s Report 3. Other Matters•Challenges includes:

– Access to investigation powers (search and seizure) which is limited to law enforcement units, is a challenge for internal investigations

– The size and complexity of the investigations

•On the published information:– Regarding completed cases, the recommendations have been

actioned– Regarding cases under investigation, the Department is in the

process of transferring all the restitution matters to the SIU, and the remaining cases are in various stages of completion

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In ConclusionWe have further identified 12 key control areas towards a clean audit by 2014. These control areas include the following: ―Engage further with other custodians of immovable assets registers through the Immovable Asset Task Team (DRDLR, DPW, OAG, AGSA)―Finalising the survey of state land and continuous monitoring of vesting and registration of state land ―Increased focus of monitoring over non-achievement of targets (portfolio of evidence) to improve service delivery through enterprise project management principles ―Filling Vacant posts―Holding Senior Management accountable for the implementation and monitoring of action plans to address prior years’ internal audit and external audit findings during performance assessments

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Conclusion

• The Department of Rural Development and Land Reform is committed to serve through its values of: – Batho Pele– Commitment – Accountability– Work ethic– Innovation

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Thank youThank you

Date: 10 October 2012 Time: 09:00 Venue: M514, 5 th Floor, Marks Building

Documents

Transcript of Date: 10 October 2012 Time: 09:00 Venue: M514, 5 th Floor, Marks Building