Report of the Select Committee on Finance on the oversight visit to Eastern Cape from 21 to 22 February 2008, dated 23 May 2008

Background

On 22 and 23 January 2008, the Select Committee on Finance held hearings with provincial departments on conditional grants capital expenditure for the first three quarters of the previous financial year. The Committee had concerns on a number of issues following the hearings and decided to have further meetings with the following departments:

1. Department of Housing, Local Government & Traditional Affairs
2. Department of Land Affairs
3. Department of Sport Recreation Arts and Culture
4. Department of Economic Development and Environment Affairs
5. Provincial Treasury
6. Land Claims Commission
7. Great Kei Municipality

Delegation

1. Hon E M Sogoni
2. Hon M O Robertson
3. Ms N C Chaso (Committee Secretary)
4. Ms N Mnyovu (Committee Assistant)
5. Ms M Herling (Researcher)

The meetings were held in the East London’s Regent Hotel.

Eastern Cape – Department of Local Government and Housing: Key Challenges

The Committee observed the following issues:

· Poor planning by both the Department and municipalities. Some of the approved projects were still not ready for implementation.

· Some of the emerging contractors lack capacity and there was a small pool of established contractors attracted to low cost housing resulting in the need to re-tender. Established contractors were not attracted to rural development projects due to logistical issues and the additional cost of transporting material. Established contractors were supposed to mentor emerging contractors.

· The slow start of the rectification programme was a cause for concern. There was a lot of unfinished work that needed to be redone. There was also the issue of community housing that had been inherited from Matatiele, KwaZulu-Natal which had funding shortages. The rectification programme had been handed to the National Home Builders Registration Council (NHBRC), but this was progressing and only 5000 out of 19 800 units had been dealt with.

· The land restitution process did not prevent development but the department needed to consult with the Land Claims Commissioner to determine whether or not the development interfered with the claim. It was reported that problems arose in cases where the development did not benefit the community as a whole. Communication with the community prior to the development was critical. Road shows to municipalities regarding this matter had been conducted but it was reported that changes in the councils might have led to knowledge gaps.

· There was a need to provide land for sustainable human livelihoods.

· There was some misalignment of the Municipal Infrastructural Grant (MIG) and the housing grant. Reasons for this included the discrepancy in percentage growth in the allocation between housing and MIG, the conditions of the grants and the identification of priorities by the province and the subsequent allocation of the grants by the Department of Provincial and Local Government.

· The meeting was informed that one could still find cases where houses had been built without the necessary supporting bulk infrastructure. There was a need for an integrated approach to development.

· The capacity of the provincial Department of Housing remained a challenge and slow moving projects would be taken back by the Department of Housing.

· The department also reported that all contractors were meant to be NHBRC approved and CIDB compliant but this was taking long owing to lack of capacity at the NHBRC.

Eastern Cape – Department of Sport, Recreation, Arts and Culture: Key Challenges

• The building of infrastructure was the responsibility of the Department of Public Works.

• The process of registering quantity surveyors took time, especially with respect to those who were not registered with the Quantity Surveyors Board.
• There was a lack of commitment and capacity within institutions which were expected to assist in service delivery.
• There was possible exemption in relation to the procurement of library materials that would reduce the turnaround time for receiving materials.
• There was a concern about the number of operational libraries, their location and also the question of who was responsible for operating them. The province had 118 operating libraries and only 36 of those received conditional grants.
• The Department reported that the main cause of poor performance were the capacity within the directorate and supply chain management.
• SEDA did not attend the meeting despite being invited.

Great Kei Municipality

· The municipality showed improvement in relation to revenue collection.

· Electricity distribution was confined to the Komga area. The municipality had licences for areas within its municipality but there were still some problems with Eskom. There was a need for a smooth handover from Eskom to ensure that there were no disruptions in service delivery. Eskom received R500 million from the Department of Minerals and Energy to re-establish networks in Komga.

· Refuse removal was also a big challenge and businesses such as holiday resorts were removing their own solid waste.

· The condition of roads affected service delivery. There was a need for capital equipment to improve and maintain roads.

· The Development Bank of Southern Africa had committed R3 million to fund this municipality but the money had since been reduced to R1 million.

· Rural housing development was engaging Thubelisha to assist in feasibility study and proposals that would be in line with spatial development framework.

· Water and sanitation were a big challenge for this municipality. There was a need for assistance in relation to bulk water and water supply projects. There was almost no information available to determine expenditure and revenue for water services. The age of water infrastructure reinforced the problem of water outages.

· Questions were raised about the municipality’s ability to spend money. It was said that the municipality would get support from DBSA in the form of engineers, technicians & financial advisors.

· The district reported that the local municipalities had no records to verify their asset registers. The municipality had received a disclaimer for the 2006/7 financial year. There was also no proper planning for the refurbishment of infrastructure.

· The Committee undertook to have further discussions with Eskom regarding electricity distribution.

Recommendation

There should be an ongoing forum where planning issues are discussed to ensure that stumbling blocks that have a huge impact on housing are identified and removed early. Each stakeholder should play its role effectively. All line managers in the forum must attend the meetings.

The Committee resolved that it would convene a meeting with Department of Water Affairs and Forestry to establish why the Great Kei Municipality has received only R1 million out of the R3,2 million provided by the Development Bank of Southern Africa.

Report to be considered