Catalytic Projects; Distressed mining towns revitalization; Informal settlements upgrade: Department & Housing Development Agency progress

Meeting report

Opening Remarks

The Chairperson welcomed and indicated that the Committee had lost two Members, but in a good way, through their promotion. One Member was promoted to Chairperson of Portfolio Committee on Public Works and another was promoted to Chairperson of the Portfolio Committee on Public Enterprise. She remarked that that was an indication that the Portfolio Committee on Human Settlements was a “super” Committee. Furthermore, the Chairperson welcomed Mr M Wolmarans (ANC), from the North West who had not yet been confirmed as a Member of the Committee and thus remained an alternate Member. She confirmed that the whip would be appointed in the next two weeks. The Secretary of the Committee had lost her mother-in-law and thus was not at work. Furthermore, the Content Advisor of the Committee was also absent due to his fiancée having been involved in a car accident. The apologies of the absent Members were accepted by Members of the Committee.

The Chairperson mentioned that when they were interacting with the BRRR, the Committee had taken a decision to call back the Department of Human Settlements (DHS) to present a detailed presentation on the Catalytic Project Programme, Revitalisation of Distressed Mining Towns, and Programme for informal settlements. She handed over to Mr Mbulelo Tshangana, Director General, Department of Human Settlements.

Mr Tshangana thanked the Chairperson for the introduction. He mentioned that it was only proper that he handed over the duties of presenting to his colleague, Mr Pascal Moloi, CEO, Housing Development Agency, who was involved in the packaging of the presentation.

Briefing by Housing Development Agency (HDA)

Mr Pascal Moloi, CEO, HDA, stated that he would be presenting two of the three presentations for the day namely, the Catalytic Project Programme and the Revitalisation of Distressed Mining Towns, and that he would give an opportunity between the two presentations for Members of the Committee to engage and ask questions. He gave a summary of projects underway according to three regions.

˗ Region A, which included Eastern Cape, Western Cape and Northern Cape, had 17 projects and the highest project costs of R111.5 billion, with the lowest housing opportunities of 201 753.  Infrastructure costs were high. 

˗ Region B, consisting of Gauteng, Limpopo and North West, had 19 projects and would produce the largest estimated number of housing opportunities at 234 614 at a budget of R71.2 billion.   Infrastructure was in place.

˗ Region C, consisting of KwaZulu-Natal, Mpumalanga and Free State, had 12 projects. The region had the second largest budget at 83.5 billion and would afford 233 225 housing opportunities.

 

 Mr Moloi explained that they had categorised the projects into three categories. Category A which was the “Inception” stage, Category B being the “Planning” stage, and Category C as the “Implementation” stage. The biggest area of focus for the HDA was Category B, the planning stage where a project would have to pass compliance requirements, amongst other quality checks and measures, before being moved into the implementation stage.

Mr Moloi presented a breakdown of the projects per province indicating the categorisation of each before pausing for engagement and questions from the Committee.

Discussion

The Chairpersons thanked Mr Moloi, for the presentation and opened up the floor for questions. The Chairperson had a question of her own. She asked Mr Moloi to elaborate on who, in the HDA hierarchy, was responsible for each of the three regions mentioned in the presentation.

Mr Moloi informed the Chairperson that the HDA had three regional heads; Mr Bosco Khoza who was the regional head for Region A, Mr Lucien Rakgoale for Region B, and Ms Nomsa Mlotshwa who was the head for Region C. He also mentioned that each province had a provincial manager, and there were provincial officers in all but three provinces. Mpumalanga did not have a manager because the province had only one project running so having an office was not feasible, though the Agency still ran support services in that province. The two other provinces without an office were the North West and Limpopo, but the Agency was in the process of establishing an office in Limpopo.

Mr L Khoarai (ANC) mentioned his interest in the statistics, which had not been presented on the day, and how the lack of that information could possibly hamper the progress of HDA and DHS moving forward. He also wanted to know how the HDA had been dealing with the issue of traditional leaders in the different areas and the land that was under their control.

Mr M Malatsi (DA) mentioned his curiosity regarding the source of funding and Mr Moloi’s mention of HDA’s troubles with regard to securing funding from other grants, apart from the Human Settlement Development Grant (HSDG). He wondered how this affected their effectiveness and whether the lack of multiple sources of funding was a constraint on the HDA’s progress and delivery of programmes. He also asked about the N2 Nodal Development which was listed as having a budget of R19.1billion in the current financial year, but no listed or confirmed budget for the following financial year. He wanted to know how that impacted on the HDA’s delivery on their project cycle. Lastly, he wanted an elaboration on the annual target of delivery across all projects, rather than solely individual projects, so that the Committee could have an overall perspective against which they could measure the performance of the whole Catalytic Programme.

Ms V Bam-Mugwanya (ANC) asked about the projected job opportunities and who exactly those job opportunities were expected to benefit. She also asked how the HDA handled the areas in which they encountered land claims and what the status was in some of those situations.

The Chairperson referred to the implementation protocols that had been signed that had more to do with the administrative functions of management. She actually wanted an understanding of how many of those Memorandums of Understanding (MOU’s) had been confirmed with the relevant political bodies for support. The second point was that the bulk of Category C projects were in Gauteng and Limpopo, but when the Committee had discussed the Quarter One Report, those two provinces were amongst the worst performers. They had a lot of projects in the implementation stage so she wanted to have a sense of the challenges the HDA faced with regard to delivering the projects in those “problem areas”. She also noted how catalytic projects by nature required a lot of skill and financial muscle and asked how the HDA navigated around dealing with the issue of radical economic transformation and that the fact that those projects should be benefiting the previously disadvantaged, whether through contracts or the provision of jobs. The Chairperson asked whether the HDA was comfortable enough to say that those mega catalytic projects were addressing the issue of skilling young people, empowering women, and benefiting black people. She mentioned that if they continued to run the “normal way”, the people that would benefit would be the big contractors who were already historically advantaged and privileged groups, which further disadvantaged the historically disadvantaged majority.

Mr Moloi stated that Matlosana N12, as a Category A, B and C project still had issues, especially around planning, that had to be resolved. He added that the HDA had subjected Matlosana to a set of due diligence processes regarding legal, financial, transformation issues and the empowerment project. He also stated that one of the risks was around contracting, which had been resolved by honouring the invoices that had been issued to them. On the issue surrounding the traditional leaders, those were things that prevented a project from moving from the planning phase to implementation. It was a key focus area for the HDA in going about their business.

Mr Moloi mentioned that negotiations required a lot of interaction which was part of the HDA’s normal practices when dealing with traditional leaders. Regarding land claims, the HDA had come across that issue, with the best example being Alexandra Township due to its history, where land claims had been made against the HDA.

Mr Moloi mentioned that part of the solution was for them to deal aptly with the land claims. He mentioned that they might not necessarily deal with the claims directly, but would rather employ the use of the relevant authorities who were qualified and well informed to help the HDA on the matter.

With regard to sources of funding, the HDA was only accounting for what has been confirmed through the business plans, most of which came from the HSDG. The HDA still had to confirm commitments from Urban Settlement Development Grant (USDG) appropriations and other grant funds that they were invoking.

Mr Moloi mentioned that it was normal that, in most cases, new projects required bulk investments up front. If one looked at their project annual action plans, the HDA sought to know from the Department of Basic Education when a school would be built and how much it wasn’t cost so that they could plan accordingly using that information. Details, such as whether the institution being built was public or private were important, knowing whether it was a clinic and if so, how much water usage it would need was also important for the agency’s planning process. The N2 Nodal Development was a good example as it included a number of things, for example to secure their funding model the HDA had to take into consideration what the South African national roads agency (SANRAL) was doing. He mentioned that the HDA had a funding model in place, based on the abovementioned information.

On the job opportunities to be created and who they were for, Mr Moloi noted that it was a combination as some job opportunities were created as a result of the construction process, jobs for constructing the roads, housing, sewage and other things. He mentioned that the sites they dealt with were mixed development sites which meant that there would be commercial sites as well as industrial sites established. They would employ a whole host of people which had not yet been broken down into the exact demographics. Furthermore, it was impossible for them to concede to not delivering on a project, and that even if it took them longer than projected, the HDA would remain focused on completion and delivery. He also mentioned that if the HDA ran into issues then it had to identity the issue appropriately, and provide relevant interventions. As for the MOU’s, they had already been signed by Gauteng, North West and Limpopo, and most of the IP’s were ready and signed. The HDA also had MOU’s confirmed by other provinces, such as the Western Cape, Northern Cape and the Free State. The key point was that they could sign IP’s but those remained loose intergovernmental contracts until the relevant stakeholders also came on board and signed off on the IP’s.

On the issue of Gauteng, he mentioned that they had 15 catalytic projects. To date, Gauteng was a leader in reporting back and accounting for projects. According to Mr Moloi, the HDA reports arrived almost weekly through a channel which the MEC had created in order for them to account for units that came out of mega projects in the province of Gauteng.

Mr Tshangana replied that the DHS treated the MOU’s as a priority because budgeting was a critical process and the Executive Authorities of the three spheres of government had to commit to the budgets and sign off on them in order for implementation and delivery to take place as promised. The DHS had set a target to have the process of securing those agreements and backing from government by the end of November. The other question that the Director General wanted to address was about why Gauteng and Limpopo were not performing well, especially since they had a significant number of projects listed under those two provinces.

Mr Tshangana noted that it did not makes sense for the Department to be in the situation where projects had been allocated to a big developer who had enough capacity to deliver more than 1 000 units, but was failing to do so. The MEC had taken a decision to target those projects that were running and were capable of delivery.

Mr Tshangana said that part of the problem was around the instability of HOD’s in the Gauteng province which had slowed down decision making and thus delayed key processes. As for Limpopo, the DHS, together with HDA, had a significant number of contractors but who were rather small and thus unable to deliver on a lot of the bigger projects.  The MEC had asked the DHS to intervene and to bring in contractors that could duly perform the functions required by the magnitude of the respective projects. Furthermore, he mentioned that the laws were mixed development projects which meant they had to perfect a “funding mix” because their sources included public finance, USDG, HSDG and also private finance. He mentioned that perfecting the funding mix was a lengthy and tedious process and that National Treasury had stated that it would only support the DHS and HDA once they had reached financial closure. That was amongst the reasons why financial due diligence was a key priority for the Department.

The Chairperson thanked Mr Moloi for the presentation and mentioned how, when correctly implemented, the Catalytic Programme could help in dealing with the growing problem of spatial development across the country. She highlighted that an important thing for the Committee was to see the HDA having a positive impact on the poor performing provinces. She also mentioned how if the HDA performed well, then the Department also performed well. The Chairperson once again appreciated the presentation from Mr Moloi amidst the outstanding issues and slides that were not available for presentation on the day.

The Chairperson then invited the second presentation which was the Revitalisation of Distressed Mining Towns. She reminded Members of the Committee and delegates from the Department and Agency that the President had included that item as an area to be dealt with in his SONA 2014 address, thus underpinning the importance of showing progression in that “critical” area. It could also make a serious improvement on Departmental achievements, if managed properly.

Briefing on the Revitalisation of Distressed Mining Towns

Mr Moloi gave the second presentation of the day which was on the Revitalisation of Distressed Mining Towns. The CEO mentioned that the NDHS provided support to 22 municipalities with mining towns in six provinces through the Human Settlements Development Grant (HSDG) ring-fenced funding and the National Upgrading Support Programme (NUSP) which includes 16 Special Presidential Package municipalities. He mentioned that part of the achievement of the overall objective involved the identification of planning/implementation gaps to align government planning and delivery processes across the three spheres of government. The NDHS funding and support as well as other funding streams from sector departments were also being brought together. Mr Moloi mentioned that the HDA aimed to secure their delivery framework and financial model through identifying and implementing partnership projects between government, mining companies and the private sector.

Challenges for the programme included the ability of HDA to achieve the MTSF Target and correctness of reporting and the fact that the National Upgrade Support Programme Plans were not reflected in Provincial Business Plans and Built Environment Performance Plan. Improving prioritization and budget allocation for the Programme was a challenge. The DHA had to improve information management and reporting and the consolidation of Capacity Support and Application. The implementation pipeline for informal settlements, and the consequences of the reduction in settlements/households as well as densification were proving to be challenging.

Mr Moloi paused at this point to allow for questions and engagement from the Committee.

The Chairperson thanked Mr Moloi for the presentation but paused the engagement from Members in order to allow for the Department of Human Settlements to add to the presentation before proceeding.

Mr Tshangana expressed concern at how the Department had been working without a working strategy for some time, and how in their recent IMC meeting, they had been able to present their draft strategy which he stated as being especially important in changing their approach when it came to the mining towns. In the draft strategy, they had taken the decision that mining companies should actually be the ones that were responsible for providing housing to the miners that worked for the companies.

Furthermore, Mr Tshangana acknowledged the fact that they had a situation of expediency in Marikana where Lonmin gave money to the Department for them to be able to build housing for the miners. With their focus being on quality of service delivery, he also mentioned that they quickly realised, after their trip to Australia where they observed some of the common practices there, that they had to change their approach with regard to the mining towns.

With that information, Mr Tshangana recommended that the DHS and HDA be invited to return to the Portfolio Committee so that they could present the draft strategy that he had mentioned. He also mentioned that there were instances, especially in the case of Lonmin and Marikana, where Department of Mineral Resources officials were not happy with the DHS, criticising the Department for using the expedient building of housing units funded by Lonmin as a bailout strategy. The new approach suggested that government should continue with their support in the form of subsidising the provision of housing units to miners, however, the mining companies themselves should be the ones to take the lead in providing housing for their workers.

Mr Tshangana mentioned how this draft strategy had been received well at the Inter-Ministerial Committee and how it was on course to being approved by the Ministry as well.

Discussion

Mr Wolmarans raised an issue concerning coordination. He mentioned how in all the mining towns across the country, the DHS and HDA were actually chasing shadows, explaining that there were constant land invasions and occupation that led to the establishment of informal settlements which made it look like the Department was actually not progressing in their functions. He also said that the occupants of land were taking advantage of legislation that gave the government responsibility to provide people with basic services and needs such as water and other provisions surrounding adequate housing. He also wanted clarification on who had to do what financially in terms of the settlements and special framework.

Mr L Khoarai (ANC) wanted to gauge the Department’s understanding of what an MOU entails.

Ms M Nkadimeng (ANC), asked for more clarity on how the HDA specifically dealt with the problems and challenges they encountered with projects that were meant to service the mining towns.

Mr M Bara (DA) stated his concern as being the fact that there was no real consistency when it came to the matter of the mining towns and how the issues revolving around those areas were dealt with nationally. He also agreed with the strategy mentioned by Mr Tshangana, and stated that it could not be the responsibility solely of the government to provide housing for mineworkers, especially when the companies that employed them were more than capable and capacitated to do so effectively. He further stated that mining companies should also be required to submit plans on how they tended to accommodate their employees given the situation of mining towns, and how they would take action to alleviate some of the pressures, a task that government had taken on. Mr Bara mentioned how important it was for miners to have access to housing with basic services and how there should be a certain degree of consistency as to how this was to be achieved. If not, the Department would be left with areas where miners were able to work out positive deals for themselves in terms of the provision of adequate housing, while in other areas the miners did not fare as well in terms of housing. His suggestion was that there should be a countrywide standard or minimum as to how mining towns were serviced, as well as an indication of where the private sector needed to play a role.

The Chairperson thanked the Members of the Committee for their engagement and proceeded “on a lighter note” to congratulate both the HDA and DHS for including Postmasburg (Northern Cape) in their reports because they had been criticised for excluding that town. She invited the third presentation on the Progress Report on the Upgrading of Informal Settlements Programme. She noted that the presentation tied in with the one that had just been presented, thus the concerns raised by Members would be addressed in the subsequent presentation, with the opportunity for clarification of any gaps after that.

Briefing on the Delivery Frameworks, Department of Human Settlements (DHS)

Mr Johan Wallis, Acting DDG: Human Settlements Delivery Frameworks, stated that his presentation might overlap with the ones presented prior by Mr Moloi. He gave a quick outline of the presentation which included the background of the programme, details on the distribution of informal settlements, number of households in informal settlements, UISP performance assessment and more. Mr Wallis presented a graphic from the 2011 consensus which showed the concentration of informal settlements, mostly in Gauteng, the Western Cape, Free State, and the Eastern Cape. Another graphic showed that the number of households in informal settlements had also increased since 1995, rising from 1 170 902 in 1995 to 1 294 904 in 2011 nationwide. Furthermore, the provinces of the Northern Cape, North West and Western Cape had figures for 2011 higher than those reported in 2001 in terms of number of households per province. The UISP findings of performance assessments, showed they had an informal settlement growth of 300 in 1994 to over 1700 in 2010. Mr Wallis mentioned that that was a concern because it meant that the number of informal settlements was not going down. There was also very little capacity in government to implement informal settlement upgrading effectively because it was an expensive and slow process that could take up to seven or eight years. In most cases, “greenfields” projects which took about three years as opposed to the seven to eight presented by a full upgrading programme of informal settlements, were preferred. He mentioned the lack of community participation when it comes to informal settlement upgrading and how the Department would rather have a situation where the community was actively participating in the process and not just serving as consultants on the side-lines.

The Department had managed access to basic services and secure tenure for a total of 447 780 households through HSDG and USDG funding. 750 000 households in informal settlements would be upgraded to phase two communal services during the period running 2014 – 2019. Informal settlement upgrading was identified by government as a key area of focus for human settlement development. It had been clear over the last couple of years that the capacity to undertake informal settlement upgrading remained a challenge for government. Mr Wallis noted how the National Upgrading Support Programme (NUSP) provided technical support to municipalities for the development and implementation of upgrading programmes and plans. Capacity building and training of practitioners and community members was minimal but was a key part of the NUSP programme.

Due to the mandate given to HDA in terms of mining towns, a decision had been taken to ensure that there was a comprehensive holistic planning exercise as part of the recovery plans to include informal settlements under the auspices of NUSP. There was little evidence of NUSP plans in Annual Provincial Business Plans and Built Environment Performance Plans in Municipalities. Mr Wallis concluded with the challenges the DHS and HDA faced, including the ability to achieve the MTSF target as well as correctness of reporting. Other challenges included the reduction in settlements/households and dealing with the consequences of densification. HDA had to improve the prioritisation and budget allocation for the Programme whilst also improving information management and reporting, and consolidating capacity support and application. Mr Wallis thanked the Chairperson and concluded his presentation.

The Chairperson asked the Department whether they were happy with the progress of the presented programmes.

Mr Tshangana stated that they were not happy with the progress. He said that one of the reasons why NUSP had been formed was to deal with the challenges that Mr Wallis had just listed. He mentioned how NUSP had been created to provide the capacity needed to effectively deal with all of the issues they were raising at the meeting. Even with the creation of NUSP, the Department had not performed well in dealing with the challenges.

Mr Tshangana also noted how there were very few informal settlements that were not being serviced.  However, the real issue was the quality of the service that was being provided and whether they could be comfortable with saying that it was adequate. He gave the example of having a water standpipe servicing a large number of dwellings which led to quick deterioration and breakage and major maintenance challenges. The Department wanted to create a situation where they had one sanitation point servicing one household which would be better than the current RDP standard of one sanitation point for every five households. Mr Tshangana also stressed that they were not qualifying the shared services properly and that the target they had set for themselves of 750 000 households by 2019 was actually a shared service.

Discussion

Mr M Malatsi (DA), asked about what the sense of DHS was on delivery, based on current performance and resources. He also wanted to know how confident the DHS was that their performance would be closer to the targets that had been set and what they were doing to mitigate challenges.

Mr M Bara (DA) mentioned how the issue of informal settlements seemed to be a “moving target” because new informal settlements were being established on a daily basis. He asked whether there had been any attempts, whether in partnership with other government departments or not, to deal with land invasions and occupations that resulted in the “mushrooming” of informal settlements. It was necessary to arrest or minimise the rise of such settlements.

The Chairperson noted that one of the major concerns that they should consider was how the DHS was being judged on the rise of informal settlements, as Mr Bara had said, on a daily basis. She noted how this made it look like the Department was not doing its job effectively and that was a very sensitive area that needed further engagement and open discussion. She also wanted to have a sense of whether the Department was comfortable with the level of coordination, considering the fact that a number of role players were involved in carrying out some of the projects, such as the Department itself, the mining companies, the communities, provincial managers and their technical staff. Furthermore, she mentioned that the USDG spend with regard to metros was not satisfactory. She pointed out that the only metro that was spending the budget effectively was eThekwini. According to the Chairperson, there had always been the sense that metros were not utilising the USDG enough with regard to upgrading informal settlements. Her question was on the methods of the DHS and HDA in assisting the metros to utilise the grant optimally. She emphasised how sometimes structures might have been put in place but were not used properly, or not used at all. Her final call to the DHS and HDA was for them to have someone who was directly involved in NUSP to be present at future oversight meetings with the Committee so that they could deal with the questions more effectively and promptly than the current officials in the delegation could. She mentioned that all other questions raised by Members would be dealt with in January of the coming year, when the DHS and HDA returned to the Portfolio Committee.

Mr Tshangana stated that the MTSF target they had set for themselves was highly achievable. His main concern, however, was on the Department’s need to be clear about the methodology of accounting for the targets that they had set. In other words, they needed to know clearly how a service had been delivered and how many households had been serviced. With regard to the performance in the USDG, he mentioned that the Chairperson was correct in saying that there was a correlation between poor performance in that area and poor performance in the DHS as a whole. He also mentioned how understanding was also an issue because if the metros could pull together and start performing, then the overall national picture that Mr Wallis was eluding to would also start to change and look more positive. The Department also wanted to focus on making the informal settlements habitable and conducive to raising families, as was already happening. That meant prioritising the provision of basic services and equipping the metros with the capacity to plan for that function.

The Chairperson thanked the HDA officials and DHS officials for their attendance and the presentations. She concluded the meeting but requested Members of the Committee to remain behind in order to adopt the minutes from previous meetings as well as the oversight report. The meeting minutes from the 5th of September 2017 where they dealt with the Quarter 1 Report and oversight report of Mpumalanga were accepted and adopted, and the minutes from the 17th of October 2017 where they adopted the BRRR and North-West Oversight Report were also accepted and adopted. The Chairperson then thanked the Members of the Committee for their participation and adjourned the meeting.