Report of the Portfolio Committee on
Rural Development and Land Reform on the 2008/09 Annual Report of the Ingonyama Trust Board, dated 04 November 2009
The
Portfolio Committee on Rural Development and Land Reform, having considered the 2008/09 Annual Report of the Ingonyama Trust Board, reports as follows:
1.
Introduction
The briefing on the 2008/09 Annual Report of the Ingonyama
Trust Board (ITB) took place on 28 October 2009.
The following people appeared before the committee for the briefing on
the annual report: Hon. Mr. Justice S.J. Ngwenya
(Acting Chairperson of the Board), Adv. W.E.R. Raubenheimer
and Ms. Ntombifikile Zitha (Board
members), Mr. Chris Aitken and Amin
Mia (members of the Secretariat), and Mr. Mdu’ Shabane (Deputy Director General - Land Tenure Reform).
The Ingonyama Trust is established in terms of
the Kwazulu-Natal Ingonyama Trust Act (Act 3 of
1994). The amendment of the Kwazulu-Natal Ingonyama
Trust Act provides for the establishment of the Ingonyama
Trust Board which functions as a landowner-in-law of the
The vision of the ITB is to improve the quality of the
life of the people living on the Ingonyama Trust land
by ensuring that land usage is to their benefit and in accordance with the laws
of the land. The work of the ITB work is based on the following
objectives:
To formulate and implement policy;
To provide an effective land administration systems;
To create a climate which encourages development; and
To extend security of tenure in accordance with both
customary and statutory law always subject to the Constitution Act, 1996.
The performance
of the ITB should be understood in the context of the legislative framework governing
its establishment and the 2008/09 Strategic Plan of the ITB. The Strategic Plan
identified the following key priorities for the reporting year:
Update and maintain the land tenure information systems
Transfer KwaZulu Towns to local
authorities/municipalities
Transfer state domestic properties
Allocate land for housing, and infrastructure purposes
Identify land in township areas
Ongoing cooperation with DLA in preparation for CLaRA
Monitor legislation impacting on ITB land
Granting of leases and other tenure rights
Disbursements to beneficiary communities
This report provides a summary of the 2008/09 Annual Report of the ITB
with a focus on its structure and governance issues and assessment of its
performance against the key strategic priorities of the Board. It further offers highlights the findings of
the committee and concludes with the recommendations of the portfolio committee.
2.
Presentation
of the 2008/09 Annual Report of the ITB by Hon Mr. Justice S.J Ngwenya
2.1. Overview of the corporate governance and
structure of the Board
The ITB’s governance
comprises the Board and Board Committees; namely audit committees constituted
in terms of the Public Funds Management Act, (PFMA), 1999 (Act No1 of 1999), the
executive committee and bid adjudication committee. The sole Trustee of the Ingonyama Trust is His Majesty King Zwelithini
Goodwill ka-Bhekuzulu. However, in terms of the
Section 49 of the PFMA, the Board is the Accounting Authority.
The Board is supported by the Secretariat
to conduct its day to day business. The Secretariat is responsible for real
estate management, general and financial administration, management of the ITB’s agents and service providers, engagement with
numerous organs of state and the private (commercial) sector, and interaction
with various traditional leaders and government departments
2.2.
Land
use and development of
The Board encourages sustainable use and development of the
Trust land. In terms of its policies, the board can not permit the sale or
alienation of land except under exceptional circumstances. The policy promotes making land available on
leasehold basis so that the communal nature of the land is retained whilst
providing secure tenure to the right holder. Income generated from the leasing
of land is passed on to the community.
Tenure rights on the Trust land include
leases, indigenous titles, Permissions to Occupy (PTOs)
and Servitudes. The Board’s preferred tenure right is leasehold because it is registerable and usually yields a market related rent.
PTO’s were formerly issued by Department of Local Government and Traditional
Affairs (DLGTA) under a delegation but have not been issued since April 2007
because they are also not registerable.
Another form of tenure on Trust land
is servitudes. Servitudes are registerable and range from Eskom
power lines, Transnet railways, Petronet
pipelines, roads, borrow pits and local authority bulk services. The ITB
encourages community participation in development by way of joint ventures and
also worth while job opportunities at both construction and operation stages of
projects.
The policy of the ITB does not allow
interference with the granting of indigenous titles. Indigenous titles
encompass Inkosi/Induna’s allocation of residential
and agricultural land in accordance with the provisions of indigenous laws and
custom. Those titles are not registered
in any formal deeds registry.
2.3. Performance of the ITB against its
2008/09 Strategic Plans
The Acting chairperson presented
some highlights on the performance of the ITB against its goals and targets set
under its strategic plan for the period 2008/09.
Develop
and asset register and land information systems
The Trust
is the largest landowner in the Province with a total extent of 2, 709, 229
hectares held under some 1600 individual titles. It also has numerous
subsidiary interests on its land. The
ITB failed to achieve on its plan to identify and record all real estate assets
including titles, leases, PTOs and servitudes. The
ITB argues that the exercise cannot be completed until some 300 land parcels have
been transferred from the Department of Rural Development and Land Reform
(DRDLR), townships transferred to Local Municipalities and State Domestic
Properties transferred to the relevant organs of State.
To date,
the Land Tenure Information System contains some 16,500 tenure right records
which are continuously updated. However, there are discrepancies between the
area extents recorded by the Deeds Register and data held by the ITB. The ITB
in conjunction with the Surveyor General and the Registrar of Deeds is
investigating those discrepancies.
Transfer
of Kwazulu Towns to local authorities
The Ingonyama Trust Act, 1994 (as amended) puts the board under
obligation to transfer former R293 KwaZulu towns to
the various Municipalities. During the reporting year, only 9 out of 26
townships remain to be transferred. The Board continuously engaged the local
authorities on discussion and how they could take over those properties vested
in them.
Transfer
of land used for state domestic purposes to relevant organs of state
The
identification of properties used for state domestic purposes is a difficult
exercise because of absence of records of allocation prior to the existence of
the Trust. During the reporting year, no single state domestic property was
transferred. The Board is continuously engaging various organs of state,
including both the national and provincial Departments of Public Works, to
ensure that this process is finalized.
The challenge
in relation to the transfer of state domestic properties is the fact that most
of those properties are located on communal land and it is expensive to
subdivide land in terms of the subdivision of Agricultural Land Act, 1970 (Act
No 70 of 1970). However, the Board is
seeking alternative mechanisms which could give effect to those transfers in a
cost effective manner.
Identification
of land in outskirts of township areas
The Board started
a process of identification of properties in its own township areas. Those
areas include land zoned for residential and commercial purposes in Umlazi in
The ITB
together with the relevant municipality and private developers has also
identified
Granting
of leases and other tenure rights
Real
estate management is the major core function of the Board. The Board encourages
land development that will be of benefit to the various communities, in terms
of rental income, employment and other opportunities such as shareholdings and
seats on company Boards.
As at 31
March 2009 the Board had granted 376 leases generating R8, 492,090 per annum by
way of income. The Board also noticed an increased demand for tenure rights on Trust’s
land. The Board currently processes lease applications at the rate of 80 leases
per month. The Board estimates that by
the end of the 2009/2010 financial year the income generated will rise to at
least R9, 708,987 per annum.
Registration
of land vesting in the Trust and consolidation of titles
Out of the
300 land parcels that the Department of Rural Development and Land Reform still
has to transfer to the ITB, only one has been transferred to the Trust. Most of
these parcels would have been transferred to the Trust’s predecessors-in-title
following various proclamations and Commissions but some reason they have never
been transferred. The delays in transfer are impacting negatively on the ITB’s commitment to registration of land vesting in the
Trust and consolidation of titles.
Implementation
of Communal Land Rights Act (CLaRA), 2004
The ITB awaits
the announcement of the commencement date of the CLaRA.
The Board is currently investigating various projects to identify tenure rights
which in terms of the CLaRA will be recognised as old
order rights. Once a commencement date has been announced, the CLaRA will reconstitute the Board as the Ingonyama Land Rights Board for KwaZulu
Natal. This Board will continue to own the land presently registered in its
name and will have certain of the powers and responsibilities of the Minister
under CLaRA in respect of the land.
Mineral
Rights and Royalties
The Board
continued to monitor the development of the mining potential on Trust land for
the benefit of the communities. The
Board facilitates development of mining potential by way of granting mining rights
leases (not mining permits) on Trust land. During the year under review, a
total amount of R14, 378,571 was received as royalty income.
Disbursement
of funds to traditional beneficiaries
The ITB
policy on income accruing from mining or commercial activity within a proclaimed
traditional community area provides for such income to be earmarked for the
benefit of that particular community.
During the year under review, 31 Traditional Councils qualified for
funding and an amount of R1, 971, 101.00 was disbursed. However, the Board is
concerned about the slow take up of funds by the Traditional Councils. The
Board is further investigating alternative methods for the release of
funds.
The board
encourages creation of Community Development Trusts to act as conduits for
monies receivable from the Board in respect of mining royalties, leases and
other income. Such Trusts could also act
as catalysts for development.
2.4. Constraints to the ITB’s
mandate and core business
The ITB is
constrained by the absence of accurate and adequate records of tenure for land
that it owns but occupied by its beneficiaries. As a result, the ITB received rates
accounts for the properties whereas the Board is of the view that those
accounts should have been sent to the various occupiers. The Board’s indebtness in terms of the newly introduced Municipal
Property Rates Act, 2004 (Act No 6 of 2004) could be inflated. The Board reported
that it intends commissioning land audits in order alleviate this problem. In
the meantime the Board is in dispute with eThekwini
Municipality over the payment of rates and the matter is the subject of a
dispute in terms of the Inter- Governmental Relations Framework Act, 2005 (Act
No 13 of 2005).
The Board
experienced an increase of illegal occupations on its land from private
individuals and even organs of state.
Subject to availability of financial resources, field officers were
appointed to identify such occupations following which the Board would take
appropriate action. The Board identified land audits as a first step in identification
of those occupations in key areas and dealing with the problem.
The ITB is
aware of land restitution claims on the Trust land. It endeavours to co-operate
with the Commission on Restitution of Land Rights to resolve those land claims
in order for the Trust to perform its functions as land owner-in-law. However,
the Board has been hampered and challenged by lack of access to full
information about land restitution claims on its land.
2.5. Financial Matters
The
internal administrative costs of the Board are met from a transfer payment from
the Department of Rural Development and Land Reform, (i.e. voted by
Parliament). The operational costs
are met from 10% of funds accruing through the Trust. The Board generates revenue from its trading activities (such as leases
and royalties).
During the year 2008/09, the departmental transfer payment was R2,
492,000 which is an increase of 5, 99% from 2007/08 financial year. The ITB
incurred an expenditure of R2, 448,888 which is an increase of 8, 51% from
2007/08 financial year.
The ITB’s own income generation was the total
revenue of R39, 090, 267 representing an increase of 35, 55% from 2007/2008
financial year. The Boards expenditure is R35, 271, 142 – an increase of 51, 98%
from 2007/08 financial year.
2.5.1. The Report of the Auditor
General
The ITB
has again received a qualified audit opinion by the Auditor-General of
Land holding
The value
of the ITB’s land/property is valued at nil rand. However, in terms of the international accounting
standards (IAS) 16, property, plant and equipment; the cost of an item shall be
recognized as an asset if and only if it is probable that future economic
benefits associated with the time will flow to the enterprises and the cost the
item can be measure reliably. The AG also found that there were discrepancies
between the extent of land per property holding register and the title deeds
register.
Royalty Revenue
The AG also found that there
was no system of control over mineral extractions. As a result, no satisfactory
audit procedure could be performed to obtain reasonable assurance that the
royalty revenue had been properly recorded. The AG could not confirm if the
R14, 38 million was complete. In 2008, it was R12.78 million.
3.
The
findings of the Portfolio Committee on the 2008/09 Annual Report of the ITB
The committee appreciated the presentation by the ITB. The
briefing was also seen as a commencement of a process of engagement between the
Portfolio Committee and the Board to ensure that the committee is aware of the
progress made by the ITB in carrying out its mandate, and further conducts
effective oversight.
The Portfolio Committee raised the following concerns and
issues with the ITB:
Many of the rural people in the
For the two years in succession, the Board has not been able
to fill vacant posts due to shortage of office accommodation. The committee is
also concerned that failure to fill
vacancies as per the organogram has negative effects
in terms of the ITB performing on its mandate and achieving the key strategic
goals set under the strategic plan of the ITB.
Some of the policy development initiatives have been ongoing
for a long time. For example, the ITB reported about the process of recruiting
the service provider to assist them develop the HIV/Aids policy in 2007/08
financial year. However, during the 2008/09 year the Board was still in the
process of employing the service provider for the same purpose.
A comparison on Annual reports for 2007/08 and 2008/09
reveals that three vacancies of Board members could not be filled by the end of
the 2008/09 financial year. The committee wanted to know the reasons for
failure to fill in the vacant positions in the board but at the same time
concerned about the impact on the programmes of the Board and delivery of
services to the beneficiaries. Even if the Board’s response was that all the
vacancies were filled in the 2009/10 financial year, the committee felt that
during the reporting year those vacancies had negative effects on the ITB’s performance.
The fact that there is slow take up
of funds by traditional communities was considered a critical issue. The
committee also raised concerns with regard to the role of the Board on information
dissemination to communities. The slow take up of funds may be directly linked
to the problem around lack of information.
The question of payments of property
rates in communal areas is matter that requires further discussion. The Annual
Report indicated that rates accounts are being sent to the ITB as the owner of
land however the ITB argues that occupiers should be paying those accounts.
The ITB received qualified audit
opinion both in 2007/08 and 2008/09. The committee if further concerned that
there appears to be no improvement on these matters by the ITB. It is important
that the ITB comply with the International Accounting Standards (IAS) so that
it does not receive qualified audit opinion in future.
4.
Recommendations
Having
received a briefing from the Acting Chairperson of the Ingonyama
Trust Board on the 2008/09 Annual Report of the Ingonyama
Trust Board; and further having engaged with the ITB on the contents of its
2008/09 Annual Report, the Portfolio Committee on Rural Development and Land
Reform makes the following recommendations:
(i)
The Board to find cost effective mechanisms of valuation of
all trust land and creating asset register and tenure information system in
order to achieve effective management of communal land.
(ii)
The Board to report to Parliament by the end of November
2009 on how it intends address the matters repeatedly raised by the Auditor
General regarding the property holdings and royalty revenue.
(iii)
The ITB to find effective mechanisms of communication with
the beneficiaries and the public in general about its roles and mandates to assist
in reducing those expectations that are contrary to what the ITB was
established for. It should also
communicate regularly with traditional communities on what funds are available
to be used for development and the procedure to be followed.
(iv)
The Board to submit to Parliament by the end of November
2009 further details on matters relating to mining companies operating on the Trust
land. The information requested must indicate what companies, leases and on
what extent of land.
Report to
be considered