PRESENTATION TO THE PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT AND LAND REFORM

13 OCTOBER 2010

ANNUAL REPORT: 2009-2010

DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM

Mr. Mduduzi ShabaneActing Director-General

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OUTLINE• INTRODUCTION• CONTEXT• PERFORMANCE OVERVIEW• FINANCIAL PERFORMANCE• PROGRAMMES PERFORMANCE• CRDP PROGRESS• REPORT OF THE AG• PROGRESS FROM 2008/09 AUDIT FINDINGS• INVESTIGATIONS COMPLETED• CONCLUSION 2

INTRODUCTION

The Purpose of this presentation is to brief the Portfolio Committee on: The Programme Performance of the Department of

Rural Development & Land Reform (DRDLR) based on the Interim Strategic Plan 2009/10;

The Financial Performance for 2009/10 financial year; and

Progress made in 2009/10 financial year against 2008/09 financial year as per the AG’s Reports.

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CONTEXT At the beginning of the period under review the voted

funds of the department were aligned to the strategic plan of the former department of Land Affairs.

After the new Administration took office in May 2009, a new department of Rural Development & Land Reform was established.

The Department had to come up with a new Vision, Mission, Strategy, Programmes and Budgets to give effect to the new mandate.

Effectively 6 months of the period under review were spent in re-organising whilst implementing at the same time. 4

CONTEXT (Continued)

• The following new programmes were established:– Branch: Geo-spatial Services, Technology

Development and Disaster Management (GTD).– Branch: Social, Technical, Rural Livelihoods and

Institutional Facilitation (STRIF).– Branch: Rural Infrastructure Development.

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CONTEXT (Continued) Despite these fundamental changes, the department

launched its flagship programme – the Comprehensive Rural Development Programme (CRDP) three months after the inception of DRDLR.

The trend of improving governance and the control environment continued resulting in the elimination of audit qualifications – only one now remaining which will be eliminated in the next MTEF period

Even though the AG has correctly identified inadequacies in our risk management strategy, the department has continued to detect & deal with fraud & corruption decisively, e.g. forensic investigations in KZN

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PERFORMANCE OVERVIEW The Department had a final allocation of R6.391

billion out of which R5.854 billion was spent in the year under review.

The spending during 2009/10 translated into 92% of the final allocation, compared to the 99% spent during the preceding year.

The 8% under-spending is largely attributable to the changes in the mandate of the Department and the conceptualisation of the new programmes.

The Department’s activities were organised into seven (7) Programmes, and the following discussion will be based on these programmes.

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FINANCIAL PERFORMANCEAppropriation per programme R'000

Final appropriation

Actual amount spent

Under-Spending

Under- Spending %

Administration 652,244 573,225 79,019 12.11%

Auxiliary and Associated Services

67,197 63,171 4,026 5.99%

Surveys and Mapping 88,455 84,529 3,926 4.44%

Cadastral Surveys 140,824 127,662 13,162 9.35%

Spatial Planning and Information

64,102 41,908 22,194 34.62%

Restitution 2,338,393 2,331,634 6,759 0.29%

Land Reform excl Rural Dev

2,787,536 2,569,601 217,935 7.82%

Rural Development 252,340 62,991 189,349 75.04%

TOTAL 6,391, 091 5,854,721 536,370 8.39%

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Programme PerformanceProgramme 1: Administration• This programme was at the forefront of the transformation

of the old department into the new and, while some of their targets may have been ambitious, their performance was also affected by the changes that took place at the time.

• HR Plan completed & Implementation underway.• Vacancy rate significantly reduced from 16,7% to 10,24%.• 21 prioritised posts (incl 17 Senior Management) filled.• ICT Strategy for 1 year initiated.

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Programme PerformanceProgramme 2: Surveys & Mapping• The environment in which this programme

operates is highly specialised and well regulated.• The performance of this programme has been

consistent over a period of time and some of the set targets have been exceeded.

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Programme PerformanceProgramme 3: Cadastral Surveys Mgmt• The Cadastral surveys environment is also highly

specialised and well regulated.• It is also an area of scarce skills.• The performance of this programme has been

relatively consistent and is still improving.

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Programme PerformanceProgramme 4: Restitution• This is an area where the Department faces its

biggest challenge, at least in the medium term, from a budget point of view.

• The Ministry has directed the department to develop a Turn Around Strategy for Land Restitution.

• The Turn Around Strategy will be informed by the CRDP principles.

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Programme PerformanceProgramme 5: Land & Tenure Reform• During this period the focus of this component has shifted

from emphasis on hectares transferred to sustainability of land reform projects, hence the introduction of the Recapitalisation & Development Programme.

• Despite the reported non-achievement of the set targets, the programme delivered 240 000 hectares.

• The programme also requires improvement in the area of monitoring and evaluation and controls, especially in the light of the fraud and corruption that has been uncovered in some provinces.

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Programme PerformanceProgramme 6: Spatial Planning & Information

• The work of this programme has significantly increased since the inception of CRDP.

• The performance of this programme has been consistent over a period of time.

• Like Surveys & Mapping and Cadastral Survey Management, this programme has implemented scarce skill retention programmes.

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Programme PerformanceProgramme 7: Deeds Registration• The Deeds environment has also performed

consistently well over a period of time in relation to the targets set.

• However, there is clear evidence that integrity and security of information and the systems require urgent overhaul. This has become even more urgent given some of the fraudulent and corrupt activities that have been uncovered.

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CRDP PROGRESSPROVINCE COMMUNITY WARD

Limpopo Muyexe, Thomo, Gonono, Dingamanzi Wards 18, 17, 3 and 4

Northern Cape Riemvasmaak Siyanda District Municipality area (2 sites)

Mpumalanga Mkhondo Wards 1 and 2 (Emahashini, Jabulani Bafazi, KwaGema, Donkerhoek)

North West Mokgalwaneng, Disake and Matlametlong

Ward 29

Free State Diyatalawa/Makgolokwe Jacobsdal

Wards 1 and 4 Diyatalawa/Makgolokwe,Ward 1 Jacobsdal

KwaZulu-Natal Msinga and Vryheid Wards 6, 7, 8, 9 of Msinga / Ward 5, 6, 7 Vryheid

Western Cape Dysselsdorp and Mamre Wards 10 and 12 Dysselsdorp and Mamre (Ward 29 Cape Town)

Eastern Cape Mhlontlo Tsolo (Mqobiso and Nombodlelana) Ward 2 and Qumbu (Ngxakolo and Gqunu) Ward 13

TOTAL 23

REPORT OF THE AG

GENERAL ASSESSMENT

– The Department made significant progress in resolving matters previously reported by the Auditor General.

– Qualification on Lease Receivable was cleared and controls are being put in place to prevent the recurrence.

– The Deeds and the Land Agricultural Holding Trading Accounts received unqualified audit reports.

– Management is continually putting in place management action plans to address weaknesses identified by audit reports and such plans are monitored closely by senior management.

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PROGRESS ON 2008/09 AG’s REPORT AGAINST 2009/10 AG’s REPORT

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AUDIT FINDINGS PRIOR YEAR CURRENT YEAR COMMENTS

2008/09 FINANCIAL YEAR 2009/10 FINANCIAL YEAR

Tangible Capital AssetsAudit Assertions (completeness, valuation, rights & obligation) not confirmed

Tangible Capital AssetsAudit Assertions (completeness, valuation, rights & obligation) not confirmed

Tangible Capital Assets are being verified against Deeds Records. This exercise will be finalised by December 2010

Lease DebtorsAudit Assertions (completeness, valuation & existence) not confirmed

Lease DebtorsAll Audit Assertions confirmed

Qualification on Lease Debtors has been cleared in 2009/10 financial year

AUDIT QUALIFICATION

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PROGRESS ON 2008/09 AG’s REPORT AGAINST 2009/10 AG’s REPORT

AUDIT FINDINGS PRIOR YEAR CURRENT YEAR COMMENTS

2008/09 FINANCIAL YEAR 2009/10 FINANCIAL YEAR

Fruitless & Wasteful ExpenditureR4.9m

Fruitless & Wasteful ExpenditureR2.7m

The amount of Fruitless & Wasteful Expenditure has been reduced

Irregular ExpenditureR74.9m

Irregular ExpenditureR4.2m

The amount of Irregular Expenditure has been reduced

Material Losses through Criminal ConductsR6.1m

Material Losses through Criminal ConductsR53.3m

Forensic Investigations were performed by the Department during the year under review which uncovered fraudulent activities

EMPHASIS OF THE MATTER (not affecting Audit Opinion)

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PROGRESS ON 2008/09 AG’s REPORT AGAINST 2009/10 AG’s REPORT

AUDIT FINDINGS PRIOR YEAR CURRENT YEAR COMMENTS

2008/09 FINANCIAL YEAR 2009/10 FINANCIAL YEAR

Pre-determined Objectives Reported Performance Information not reliable

Pre-determined ObjectivesPerfomance Targets not specific & measurable

Monitoring & Evaluation Unit has been capacitated and key positions in the Unit have been filled

Risk Management & Internal ControlsSection 38(1)(a)(i) of PFMA not fully complied with

Risk Management & Internal ControlsSection 38(1)(a)(i) of PFMA not fully complied with

Improvements in Risk Management & Internal Controls still required

State of Accruals at Year-endAccruals at year-end exceeded amount to be surrendered to NT

State of Accruals at Year-endAccruals at year-end did not exceed amount to be surrendered to NT

Accruals at year-end for 2009/10 financial year were in compliance with Treasury Regulations

Collection of Section 78(2A) MoniesAccounting Officer did not comply with Treasury Regulations 11.2.1

Collection of Section 78(2A) MoniesAccounting Officer did comply with Treasury Regulations 11.2.1

The Accounting Officer did comply with Treasury Regulations 11.2.1 in 2009/10 financial year

OTHER MATTERS REPORTED(Not affecting Audit Opinion)

INVESTIGATIONS COMPLETED BY THE DEPARTMENT

29 investigations were completed during 2009/10. Allegations of corruption and irregularities related to land reform

projects in KZN were investigated by DRDLR. Forensic Investigations uncovered R53 million of fraudulent activities

(reported as material losses) in KZN land redistribution. Special Investigating Unit (SIU) has been brought on board to evaluate

the severity of the fraud issues. The criminal matters have been referred to the SAPS and Hawks to

investigate and prosecute. The AFU has been requested to assist on the recovery of losses

identified. The officials implicated have been suspended and disciplinary action

underway.

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CONCLUSIONWhile acknowledging the legacy of the former department that DRDLR has inherited:•The fundamental changes in the organisation of the government has resulted in a Ministry dedicated to Rural Development and Land Reform; and•The Ministry has provided the department with clear strategic direction and leadership which has resulted in a focused department that is now able to confront the challenges it faces.

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