BUDGETARY
REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON AGRICULTURE,
FORESTRY AND FISHERIES ON THE PERFORMANCE OF THE DEPARTMENT OF AGRICULTURE,
FORESTRY AND FISHERIES, DATED 23 OCTOBER 2012
The Portfolio Committee on Agriculture, Forestry and
Fisheries (hereinafter referred to as the Committee), having assessed the
performance of the Department of Agriculture, Forestry and Fisheries
(hereinafter referred to as the Department), reports as follows:
1.
Introduction
1.1. Mandate of the Committee, including provision of Section 5 of
the Money Bills Amendment Procedure and Related Matters Act, 2009 (No. 9 of
2009).
According to Section 5 of the Money Bills Amendment
Procedure and Related Matters Act, the National Assembly, through its
Committees, must annually assess the performance of each national department.
The Committee must submit an annual Budgetary Review and Recommendation Report
(BRRR) for each department that falls under its oversight responsibilities for
tabling in the National Assembly. These should be considered by the Standing Committee
on Appropriations when it is considering and reporting on the Medium Term
Budget Policy Statement (MTBPS) to the House.
2.
The Department of Agriculture,
Forestry and Fisheries
2.1.
Mandate, Vision and
Mandate
The Department’s legal mandate covers
the agriculture, forestry and fisheries value chains: from inputs, production
and value adding to retailing. The aim
of the Department is to lead, support and promote agriculture, forestry and
fisheries resources management through policies, strategies and programmes to
enhance sustainable use and to achieve economic growth, job creation, food
security, rural development and transformation. The Department also aims to
oversee the performance of state-owned entities within its portfolio.
Vision
A leading, dynamic, united, prosperous and
people-centred sector.
Developing and
sustaining a sector that contributes to, and embraces: economic growth (and
development), job creation, rural development, sustainable use of natural
resources and food security.
2.2. Strategic Priorities and Measurable
Objectives of the Department
2.2.1 The Government Priority
Outcomes
The
Government priority outcomes through which agriculture, forestry and fisheries
sectors will play a role in addressing the country’s broad national challenges
in the medium term strategic framework (MTSF) are:
·
Decent employment through
inclusive economic growth (Outcome 4);
·
Vibrant, equitable and sustainable
rural communities contributing towards food security for all (Outcome 7); and
·
Protect and enhance our environmental assets and natural
resources (Outcome 10).
2.2.2 Strategic Goals and Objectives of the Department
The Department plans to
contribute towards the achievement of the Government priority outcomes over the
medium term expenditure framework (MTEF) through six key strategic
goals as identified in the Department’s 2011/12 Strategic Plan. Under each
strategic goal, there is a number of strategic objectives (in bullets) through
which the Department based and measured its programme performance.
These strategic objectives and goals are as follows:
·
Promote environmentally sustainable production
systems
·
Ensure the sustainable management and efficient
use of natural resources
·
Ensure protection of indigenous genetic
resources
·
Increase contribution to green jobs to improve
livelihoods.
·
Promote safe food by managing the level of risks
associated with food, diseases, pests, natural disasters and trade
·
Establish and maintain effective early-warning
and mitigation systems.
·
Increase equity, ownership and participation of previously
disadvantaged individuals (PDIs)
·
Enhance systems to support the effective
utilisation of assets
·
Improve social working conditions in the sector
·
Provide leadership and support to research,
training and extension in the sector.
·
Increase growth, income and sustainable job
opportunities in the value chain
·
Increase the level of public and private
investment in the sector
·
Increase market access for South African and
·
Increase production of feedstock to support the
manufacturing sector
·
Promote the use of feedstock by production for
renewable energies.
·
Establish and strengthen cooperative governance
and functional relations with local and international stakeholders
·
Strengthen policy, planning, monitoring,
evaluation, reporting and sector information
·
Provide effective audit, investigative and
legal, human resources and financial risk management
·
Improve departmental services excellence through
implementation of quality standards, Batho Pele principles and the general
legislative mandate
·
Provide leadership and manage communication and
information.
2.2.3 The Department’s Programmes
Programme |
Purpose |
1. Administration |
The programme provides strategic leadership, management
and support services to the department. The aim of the programme is to lead,
support and promote agricultural, forestry and fisheries resource management
through policies, strategies and programmes to enhance sustainable use; and
to achieve economic growth, job creation, food security, rural development
and transformation. |
2.Economic
Development, Trade and Marketing |
To ensure value chain integration and facilitation of
market access for agriculture, forestry and fisheries products in support of
economic growth, job creation and development. |
3.Food Security and
Agrarian Reform |
The programme facilitates and promotes food security and
agrarian reform programmes and initiatives. |
4. Agricultural Production, Health and Food Safety |
The programme manages the risks associates with animal
diseases, plant pests, genetically modified organisms and registration of
products used in agriculture, promotes food safety and creates an enabling
environment for increased and sustainable agricultural production. |
5. Forestry and Natural Resource Management |
The programme develops and facilitates the implementation
of policies and targeted programmes to ensure management of forests,
sustainable use and protection of land and water as well as managing
agricultural risks and disasters. |
6.Fisheries Management |
The programme promotes the development, management,
monitoring and sustainable use of marine living resources and the development
of |
3. Analysis
of Strategic and Operational Plans of the Department
The Department underwent major restructuring that
resulted in the renaming and/or combining of some of its programmes and
reprioritising of its budget. While the Department had seven programmes in the 2010/11
financial year, in the reporting for the 2011/12 financial year, the Department
has six programmes (as indicated in 2.2.3 above), three of which with new names.
The Department has done away with the former Programme 2: Production and
Resources Management and Programme 3: Agriculture Support Services.
The sustainable use and
protection of land and water mandate of the former Programme 2 and the disaster
risk and management services mandate of the former Programme 3 have been added
to the Forestry programme in the current medium term expenditure framework
(MTEF) period. The rest of the activities of the former Programme 2, viz. agricultural
productivity and infrastructure development now fall under the new Agricultural
Production, Health and Food Safety Programme and the Food Security and Agrarian
Reform Programme, respectively. The rest of the activities of the former
Programme 3 are now split between the Administration; Trade Promotion and
Market Access; as well as the Food Security and Agrarian Reform Programmes. These
changes and how the budget was reprioritised presented a challenge in terms of
continuity from the previous financial year, which was not explained in the
Department’s Strategic Plan but the National Treasury’s Estimates of National
Expenditure showed that there was a budget for these ‘new’ programmes in the 2010/11
financial year.
For all programmes of the
Department, some strategic outcomes and indicators were not aligned with the
strategic goals and/or objectives. These issues were also highlighted in the
high level review of the Department’s 2011/12 Strategic Plan by the Office of
the Auditor-General. The indicators were either not relevant or specific to the
stated strategic objective or outcome and some were not quantifiable. The
highlighted issues raised concerns regarding the level of the Department’s
engagement in the strategic planning process and the people who were involved
in the planning.
As an example, in the Food Security and Agrarian Reform
Programme, under Strategic Goal 4, the strategic objective is to provide
leadership and support to research, training and extension in the sector. This
is assumed to be referring to extension personnel, research
institutions/agencies and all categories of producers in the sector. The strategic
outcome is increased production enabled by extension support and appropriate
technologies and the outcome indicator, which addresses one aspect of both the strategic
objective and outcome, is 2 000 extension personnel receiving targeted
technical and generic training.
4. Analysis of the Annual Report and Financial Statements of the
Department
This section provides the summary of expenditure and
selected performance or non-performance areas for each programme in relation to
key measurable objectives for the 2011/12 financial year as outlined in the
Department’s Strategic Plan and Annual Report for the 2011/12 financial year.
According to the Department’s Annual Report for the
2011/12 financila year, out of the total number of planned targets, only 43
targets were achieved, this represent 51 per cent of the total planned targets
that were achieved during the year under review. However, according to the
Committee’s analysis, the Department had a total of 114 targets and fully
achieved 23 (approximately 20 per cent) of these. The Committee considered
partial achievements, non-aligned and immeasurable targets as non-achievements.
Various reasons that have been given for non-performance include budgetary
constraints, lack of personnel, extensive Cabinet processes, and others.
However, central among these was poor planning and the non-alignment of
indicators, targets and actual performance with the strategic goals or objectives
as previously highlighted. In the year under review (i.e. the 2011/12 financial
year), the Department planned to review and table in Parliament five pieces of
legislation, but none of these were tabled.
4.1 Budget
Overview and Expenditure
Table 1: Total
Budget Appropriation and Expenditure
Appropriations |
Financial
Year |
Actual Expenditure
|
Variance
(under spending) |
R4.96 Billion
|
2011/12 |
R4.93 Billion |
R36 Million |
R3.9 Billion
|
2010/11 |
R3.8 Billion |
R103 Million |
R3.8 Billion
|
2009/10 |
R3.7 Billion |
R35 Million |
Source: Annual Report (DAFF), 2011 and 2012
Expenditure
The
Department was appropriated a total amount of R4.96 billion in the 2011/12
financial year, which was R1 billion more
than the R3.9 billion that was appropriated in the 2010/11 financial year
(see Table 1 -above). Despite not achieving most of its delivery targets, the
Department spent 99 per cent of its appropriated budget in the 2011/12
financial year, which is 2 per cent more than the 97 per cent expenditure that
it achieved in the 2010/11 financial year. Slightly more than half of the
Department’s budget was spent between two programmes, namely, Programme 1,
Administration (27 per cent) and Programme 3, Food Security and Agrarian Reform
(25 per cent) – see Table 2. Approximately 80 per cent (R1 billion) of
Programme 3’s allocation was spent on Comprehensive Agricultural Support
Programme (CASP).
An
amount of R1.65 billion (33.7 per cent of total appropriation) was transferred
to provinces for conditional grants and R1 billion (20 per cent of total
appropriation) was transferred to public entities. Two thirds (75 per cent) of
the transfer to public entities was to the Agricultural Research Council (R755
million) and 20 per cent to the Marine Living Resources Fund (R201 million).
The Department paid R1.2 million to the Public Service Education and Training
Authority in respect of training. The Department also transferred an amount of
R37.3 million to public corporations (i.e. Ncera Farms (Pty) Ltd, Forest Sector
Charter Council and Land Bank). Approximately 80 per cent of the allocation to
public corporations was transferred to the Land Bank.
The
Department failed to spend an amount of R36 million (associated programme shown
in brackets -below), which it attributed to:
·
The procurement of IT equipment worth R3.3 million that was
not concluded in the year under review (2011/12) (Administration Programme).
·
The procurement of mobile veterinary clinics as part of the
Primary Animal Health Care Programme worth R18.8 million that was not concluded
in the year under review (Agricultural Production, Health and Safety Programme).
·
Transfer payments (purpose not explained) of R6.7 million
that were not made due to Memoranda of Understanding (MoUs) not finalised
during the year under review (Food Security and Agrarian Reform Programme).
·
Transfer payments of R3.4 million to international
organisations that could not be concluded during the year under review (Economic
Development, Trade and Marketing Programme).
·
The procurement of capital assets for forestry operations
worth R2.1 million that was not concluded in the year under review (Forestry
and Natural Resources Management Programme).
·
Other minor payments for capital assets across all
programmes, to the value of R781 000.
The
unspent amounts (above) add up to R35.1 million, leaving an unspent amount of
R1.1 million that was not accounted for. The Department claimed that this was a
miniscule amount considering that the circumstances mentioned above, worth R35
million, were beyond their control. This is true as it is far less than R27
million that was not accounted for in the 2010/11 financial year. However, for
a Department that could not fully achieve 80 per cent of its targets where in
some cases lack of funds were cited as a reason, any unspent and unaccounted
for funds means a lot. In addition, the circumstances that resulted in under
spending, which the Department claims were beyond its control, could have been
prevented with proper planning, monitoring and evaluation; as well as by
ensuring that activities are initiated from the very first quarter instead of
the last two quarters of the financial year.
The
Department’s revenue increased to R177.4 million in the reporting year compared
to the 2010/11 financial year of R156.9 million, due to increases in sales of
goods and services.
Also included in the
revenue was an amount of R28 million that was a refund received from provinces
for unspent conditional grants. The latter represents an increase of 90 per
cent from the previous year’s R2.7 million worth of conditional grants that
were unspent by provinces. This is a very serious concern as conditional grants
play a central role in supporting subsistence and smallholder producers that
are the focus of the Department.
4.2
Programme Performance and Expenditure
Table
2: Programme budget and expenditure
Programme |
Final Appropriation R’000 |
Actual Expenditure R’000 |
Variance (unspent) R’000 |
Programme Expenditure in % |
% of Total Vote Actual Expenditure
|
Administration Economic
Development, Trade and Marketing Food
Security and Agrarian Reform Agricultural
Production, Health and Food Safety Forestry
and Natural Resources Management Fisheries
Management |
1 345 746 193 622 1 254 360 908 650
910 100 351 971
|
1 339 756
190 185 1 249 371 889 347 907 662 351
952 |
5 990 3 437 4 989 19 303
2 438 19 |
99.6 98.2 99.6 97.9 99.7
99.9 |
27.2
3.9 25.4
18.0
18.4
7.1
|
TOTAL |
4 964 449 |
4 928 273 |
36 176 |
99.2 |
99.3 |
Source: Annual Report (DAFF), 2012
Programme 1: Administration
Out of 39 targets that were supposed to be achieved
under this programme, only six were fully achieved without any conditions. Of
the 6 achieved targets, only one is new and directly linked to service delivery
or national outcomes, that is, the development of a Wholesale Financing
Facility Model through the Land Bank. Others are continuous Departmental
standard operating procedures.
In terms of farmer development and support, one of the
targets was to have 10 000 smallholder farmers accessing financial
services, which was also an exact target for subsistence farmers, although the
Department has never given a distinct difference between the two or a proper
definition of each. The vague difference that was given to the Committee was
that subsistence farmers were poor farmers that were supported through
Ilima/Letsema (mostly agricultural starter packs not financial services) and
the smallholder farmers were supported through the Comprehensive Agriculture
Support Programme (CASP) and the Micro-agricultural Financial Institutions of
South Africa (Mafisa).
In reporting how the target of 10 000 farmers
accessing financial services was achieved in each case, the Department reported
that 72 856 smallholder farmers (Annual Report, page 31) were supported
through CASP and Ilima/Letsema grants, notwithstanding that the latter was
supposed to be supporting subsistence farmers. The true reflection of the
target’s performance, which was not achieved, was 5 310 clients that
received Mafisa loans during the 2011/12 financial year. A similar arbitrary
figure of 47 818 subsistence farmers receiving support through CASP and
Mafisa was also reported, details of which were not included as they were
supposed to be available in June 2012.
The Department also did not achieve one of its most
important targets that of reducing its vacancy rate to 12 per cent. Instead,
its vacancy rate increased to 13.4 per cent during the 2011/12 financial year.
This was a concern considering that in some of its programmes where the
Department did not achieve its targets, lack of capacity was cited as a reason.
The Department cited delays in qualification verification by the South African
Qualifications Authority (SAQA), as well as citizenship and criminal checks by
the State Security Agency (SSA) as reasons for the inability to fill vacancies.
The Department failed to organise at least 8 per cent
of farmers into producer associations. This was also an arbitrary target as the
Department did not explain which category of farmers were going to be organised
into producer organisations and what was the total number of those farmers on
which 8 per cent was based. Commercial farmers, whether developing or
developed, were already affiliated to producer organisations, some of which were
working with subsistence farmers.
The Department planned to finance and support 284
distressed farmers but only reported that R24 million was transferred to the
Land Bank for this purpose but did not say whether the money was used for the
purpose or not, and if it was, how many farmers were assisted. The Department
mentioned that provinces provide the assistance but do not necessarily report
to the Department, which happens to provide the funding. This clearly shows the
lack of an effective monitoring and evaluation system within the Department.
Programme 2:
Economic Development, Trade and Marketing
The
programme had 16 targets for the 2011/12 financial year and, only three of the
16 targets were fully achieved. Other targets were partially achieved, vaguely
reported or not achieved. Of the three targets that were achieved, two were
vague, for example, the Department planned to establish 90 cooperatives and the
achievement was that 91 cooperatives were registered. In the 2010/11 financial
year, the Department failed to establish and support 3 cooperatives but instead
assisted 241 cooperatives to register - it is assumed that these were the same
241 cooperatives that make the baseline for the 2011/12 financial year.
Another
target under this Programme was to align the Department’s agroprocessing plans
and strategies with that of the Department of Trade and Industry (DTI) and
Economic Development Department (EDD). The reported actual performance was the
completion and approval of one Agroprocessing Strategy by Departmental
Executive Committee (DEXCO), which was reported to be aligned with the DTI and
EDD programmes.
Programme 3: Food Security and
Agrarian Reform
The
Department had 13 targets under this programme. In essence, only two of the 13
targets were achieved. The Committee is of the view that the explanations given
or the reported information in some cases were not necessarily linked nor do
they directly measure the planned target.
As
an example, the Department planned to have at least three Colleges of
Agriculture have their norms and standards approved by Heads of Departments
(HODs). In the 2010/11 financial year, three colleges were reported to have
achieved this and even implemented their norms and standards. These colleges
were Glen (in
The
Food Security Policy and the Zero Hunger Strategy, that were supposed to be
approved in the 2011/12 financial year, were temporarily withdrawn. A Policy on
Mechanisation Support Model could not be approved and the Department reported
that it will be finalised in the first quarter of the 2012/13 financial year.
However, tractors and other farming equipment have been distributed in some
provinces since June 2011, without the Policy. During a Committee meeting in
September 2011, a representative from developing farmers’ organisation
confirmed that the tractors that the Department was buying on their behalf
without consulting them, were not what the farmers
wanted.
The
Department is responsible for the Agrarian Transformation pillar of the
Department of Rural Development and Land Reform (DRDLR)’s Comprehensive Rural
Development Programme (CRDP), which should be covered in this Programme and
under Outcome 7. However, the Department had no set targets or even specific
collaborative projects with the DRDLR (for all three sectors) that have been
budgeted to ensure that Outcome 7 is realised. Where the Department was
specifically involved in the CRDP in some provinces, it was through provincial
personnel initiatives, otherwise in most provinces its involvement and
contribution to the CRDP was haphazard.
The
Department signed service level agreements (SLAs) with the Agricultural
Research Council (ARC) on targeted and priority research in the 2010/11
financial year, which were supposed to be implemented in the 2011/12 financial
year. This was not achieved; instead, the Department recycled the target and
reported about engagements with the National Agricultural Research Forum and
further developments of SLAs with the ARC to carry out the research and
development projects.
Programme 4: Agricultural Production,
Health and Food Safety
This
programme only used 97.9 per cent of its allocated budget and had an unspent
amount of R19 million (Table 2 -above), which was meant for the procurement of
mobile veterinary clinics. Of the 15 targets that were planned for the 2011/12
financial year, the Department fully achieved three, or possibly, four.
The
fourth achievement was questionable since the target was the issuing of
32 000 animal identification marks and the Department managed to issue
23 273 identification marks. The reason given was that the 32 000
target was predicted outside the control of the Directorate (Veterinary Public
Health) that was involved with the issuing of animal identification marks,
which does have the correct predictions on applications for identification
marks. This emphasises the issue that has been highlighted regarding the
Department’s strategic planning process and setting of targets.
Programme
5: Forestry and Natural Resources Management
The
Department did not fully achieve any of its seven set targets for this
programme. Lack of funds or limited budget and unverified information (e.g.
2 898 supported small growers but only 71 verified) were cited as some of
the reasons for not achieving some of the targets. Poor reporting and verification
structures and processes between the Department and the provinces have also
been highlighted as a challenge in the 2010/11 financial year and these have
also been consistently raised by the Auditor-General.
In
one instance, the indicator was a number of irrigation schemes revitalised for
smallholder farmers and the target was given as 0.5 per cent. Unfortunately,
the actual performance of two irrigation schemes that were revitalised
(Makhathini in
This programme used an
amount of R5.6 million on seven consultants for a period of
575 working days. The consultants were used for the assessment of forestry transport
infrastructure requirements (six consultants for R1.55 million) and an
environmental impact assessment (EIA) in the northern
Programme 6: Fisheries Management
It
has to be clarified that the Branch plans and reports as both an entity Marine
Living Resource Fund (MLRF) and a Programme within the Department on relatively
similar targets. There were some difficulties in measuring performance because
some deliverables reported as being delivered by the Branch are actually
delivered by the MLRF. The way the targets were structured in both the
Strategic Plan of the Branch and the MLRF were different. For example, the
Branch would group similar activities under one target, while, in the MLRF,
each activity would be a stand-alone target.
This
programme had 24 targets set for the 2011/2012 financial year from which the
Branch had to deliver. The nine achieved targets (38 percent) include, among
others, the establishment of aquaculture development zones and producer
associations, implementation of the Working for Fisheries Programme (WFFP),
implementation of the fish stocks recovery plan, feasibility studies on two new
fisheries, and scientific recommendations on catch limits for 22 fishery
sectors. The reasons cited for failure to deliver include delays from
compulsory consultation processes, expiration of vessel’s management contract,
supply chain processes and decisions to move some targets to the following
financial year.
Most
of the functions of the Branch were funded through the MLRF, while the
compensation to employees was funded by the Department. The Branch had an
increase in the appropriated budget from R303.6 million (DAFF Annual Report
2011) or R259.1 million (DAFF Annual Report 2012) in 2010/2011 to just under
R352 million in 2011/2012. The expenditure of both financial years was
approximately 100 percent because under-spending did not even amount to 0.1
percent of the final appropriation. It has however been noted that, for
successive years, the Branch has maintained the highest overtime expenditure in
comparison to the other programmes within the Department. The amount increased
from R6.7 million during the 2010/2011 financial year to just over R7.1 million
during the 2011/2012 financial year. The Branch did not fully recover all the
monies which were as a result of irregular expenditure.
4.3. Human Resource Management
The Department’s vacancy
rate, which was reduced to 11 per cent in the 2010/11 financial year, has
increased to 13.4 per cent by the end of the fourth quarter in the 2011/12
financial year. The figure represents 949 vacancies excluding the Minister and
the Deputy Minister. The Department’s key challenges were the loss
of key personnel due to an absence of an effective retention strategy and
delays in appointments, particularly at Senior Management Service (SMS) level;
as well as the
inability to fill vacancies timeously.
In
its organogram that was presented to the Committee, the Department had nine key
branches headed by nine Deputy Director-Generals (DDGs). Of the nine DDGs, only
three have been appointed and six were in the acting positions. The DDGs in
acting positions has been the case since the finalisation of the Department’s restructuring
process in 2010.
The
majority of the acting DDGs generally act in one position for 3-6 months before
they are either removed or transferred to act as DDGs in another branch. The
same with the Chief Directors, particularly in the Fisheries Management and the
Agricultural Production, Health and Food Safety programmes where a number of
positions are vacant with no acting person.
In
Fisheries, about five people (including the current acting DDG) have acted as
DDGs since its transfer to the Department in July 2009 from the Department of
Water and Environmental Affairs (DWEA). Two of those DDGs acted in the year
under review. Of the five that acted, only one had the background and
experience in Fisheries and has since been removed as acting DDG in the Branch.
From 2009, the Department did not have an appointed
accounting officer, i.e. the Director-General (DG) until late 2010. Various
personnel have acted in this position until the appointment of the DG in
September 2010. The DG has been suspended in June 2012 and the DDG Cooperate
Services was acting in this position.
This implied that since 2009, the Department had
never had a permanent accounting officer to present and account on its annual report.
During the presentation of the annual report for the 2010/11 financial year,
the appointed DG, who is currently on suspension, could not account on theaAnnual
report as he was not in the position for the full period. Unfortunately, in the
financial year under review, given that the same DG who was appointed in 2010
has been suspended, an acting DG presented the annual report.
Without
the ability to appoint accountable persons in such key
positions, there can be no stability and progress in terms of service delivery
in the Department irrespective of how much budget is allocated.
It
should be noted that during the period from the 2009/10 financial year to date,
the Department has been losing some key and experienced personnel to provinces
and other state departments. Some personnel are suspended and reinstated
without charges being laid against them.
4.4. Virements and
Shifting of Funds
Although Section 43 of the Public Finance Management Act, 1999 (No.
1 of 1999) makes provision for virements and the shifting of funds from one
programme to the other, as well as movement of funds within the programme,
there are certain requirements that need to be met by an accounting officer.
These conditions are as follows:
Section 43(2) of the Public Finance Management Act provides that
“the amount of a saving under a main division of a vote that may be utilised in
terms of (1) may not exceed 8 per cent of the amount appropriated under that
main division.” Moreover section 43(4) does not authorise the utilisation of a
saving in:
(a) An amount is specifically and exclusively
appropriated for a purpose mentioned under a main division within a vote;
(b) An amount
appropriated for transfers to another institution and; and
(c) An amount
appropriated for capital expenditure to defray current expenditure.
Virements of R25 million were approved in Programme 5: Forestry,
sub-programme Forestry Oversight; from goods and services to compensation of
employees. Shifting of funds approved by the Accounting Officer amounted to R12
million (see National Treasury’s Expenditure Report for the fourth quarter of
the 2011/12 financial year).
4.5.
Auditor-General’s Report
In expressing his opinion, the Auditor-General (AG) indicated that
the financial statements of the Department present, in all aspects, a fair
financial position of the Department as at 31 March 2012 and its financial
performance and cash flows for the year ended, in accordance with the
Departmental Financial Reporting Framework prescribed by the National Treasury
and in line with the requirements of the Public Finance Management Act of South
Africa, 1999 (Act No. 1 of 1999). However the AG in his report drew attention
in respect of the following matters:
4.5.1 Usefulness of the information
4.5.2 Compliance with laws and regulations
4.5.3 Internal Control
4.5.4. Financial Reports and Risk Management
As reported in the 2010/11 financial year and prior
financial years, the Department’s Audit Committee highlighted that the system
of internal control applied by the Department over financial risk and risk
management was not operating effectively, efficiently or transparently. In
addition, as also reported in previous years, the Department’s Internal Audit was
under-resourced and given its current budget and other operational constraints,
it cannot operate optimally in order to address and manage risks that were pertinent
to the Department in the absence of a reliable risk assessment with concomitant
controls identified to mitigate risks.
·
The Chief Audit Executive did not
effectively report, operationally and administratively to the Accounting
Officer and was suspended on 22 July 2011. This was done without any input from
the Audit Committee and without the Audit Committee being apprised of the
reasons for his suspension. His suspension was then lifted on 18 June 2012
without an explanation, and to date no charges have been brought against him.
This implies that for half of the 2011/12 financial year, the Department
operated without an Internal Audit Executive.
·
The Internal Audit Committee noted
that certain matters that were raised in prior years indicative of deficiencies
in the system of internal control and deviations therefore, in certain
instances, have not been fully and satisfactorily addressed.
·
The Audit
Committee had requested but has not been presented with forensic investigation
reports that were commissioned by the Department.
·
Internal audits that were conducted
in the year under review were not addressed, or in certain instances, not acted
on at all by management or the Accounting Officer.
·
Attempts made by the Audit Committee
to meet with the Accounting Officer to address governance concerns prior to his
suspension, were unsuccessful. Further attempts to meet with the Executive
Authority after the suspension of the Accounting Officer, were also
unsuccessful.
The serious issues that were raised by the Internal
Audit Committee were in contrast to the picture that the Department portrayed
in its annual report, where it reported that the Audit Committee and the
Internal Audit Unit hold meetings with the Accounting Officer, the Chief
Financial Officer, the Office of the Auditor- General and the Head of Internal
Audit to discuss audit findings and risk management.
5.
Consideration of Reports of
Committee on Public Accounts
The Department did not appear before the Committee on
Public Accounts during the year under review 2011/12.
6.
Consideration of Reports of
Standing Committee on Appropriations
The Standing Committee on Appropriations was
established in terms of section 4 (3) of the Money Bills Amendment Procedure
and Related Matters Act (No. 9 of 2009).
The Act requires this Committee to consider and report on spending
issues and on actual expenditure published by the National Treasury. The Committee has adopted a tradition of
inviting both National Treasury and the affected departments to account on
government spending.
However, the Department did not appear before the
Standing Committee on Appropriations for the year under review, 2011/12.
7.
Consideration of Other Sources of
Information
7.1
The 2011 State of the Nation Address
During the 2011/12 financial year, the creation of
decent jobs was one of the main focus areas of Government as was emphasised by His
Excellency President Jacob Zuma in his 2011 State of the Nation Address in
Parliament; and also in the country’s New Growth Path (NGP) in which the
agricultural value chain is one of the job drivers. This is linked to Outcome 4
of Government’s priority outcomes and it is therefore expected that the
Department’s performance during the 2011/12 financial year will show progress
towards the achievement of this outcome.
The NGP’s aim for agriculture is to create 500 000 jobs from
agriculture and agro-processing by 2020; to place 300 000 households in
smallholder schemes by 2015 and to upgrade employment on commercial farms. Key integrated policies were to be developed
to link smallholder schemes to land reform and provide integrated support
(economic and social programmes), address high input costs, support farm worker
organisations, and support growth in commercial sector by addressing price
fluctuations in maize and wheat (staple food).
7.2
Committee Oversight Reports
The
Committee undertook joint oversight visits with Portfolio Committee on Rural
Development and Land Reform to the
7.2.1 Oversight
Visit Recommendations
In view of the
observations the above-mentioned committees recommended the following:
There was a need to assist the Land Reform for Agricultural
Development (LRAD) beneficiaries struggling to repay their Land Bank loans.
However, the means of assistance should be sought in consultation with the
beneficiaries themselves. Therefore, the Department of Rural Development and
Land Reform (DRDLR) should facilitate support mechanisms from DAFF and the Land
Bank in order to ensure that the gains attained through enabling access to land
by the black farmers are not undermined. The DRDLR and the DAFF should report
to Parliament about the plans of support and progress to that effect within two
months after the adoption of this report.
The DRDLR and DAFF should include in the monitoring and
evaluation of programmes indicators that illustrate whether developmental
initiatives are improving the livelihoods of beneficiaries. Success of land
reform projects, especially joint ventures (strategic partnerships and equity
schemes) should not only be judged by increase in productivity and maximisation
of profits only. Changes in socio-economic conditions of the beneficiary
households should be accorded even greater attention.
The DRDLR should put in place mechanisms that clarify the
role of STRIF in post settlement support for land restitution, LRAD and PLAS
projects. Support mechanisms should transcend the narrow focus on profiling and
training of beneficiaries but extend towards coordination of extension support
from the DAFF/DARD, Municipalities and any other government or non-government
agencies involved in agriculture and rural development.
The DRDLR and DAFF should be involved in the formulation of
all agreements for strategic partnership or equity schemes. The Northern Cape
DARD and the Provincial DRDLR should within one month of the adoption of the
oversight report, submit progress report in support of Silvermoon to finalise
mentorship or strategic partnership – whichever model is deemed appropriate.
The DRDLR and DAFF should enhance their capacity for
coordination of land reform and agricultural support programmes, integrated as
a broader strategy for rural development.
8. Committee’s Observations
The Committee analysed the Department’s 2011-2012
Strategic Plan, the 2011-12 Annual Report of the Department, the
State-of-the-Nation Address and the Committee’s oversight reports and observed
the following:
The Committee also noted with concern
that:
The Department was requested to respond in writing
giving full details on the suspension of the DG Mr Zita, the
liability issue of Dr RP Mohlahlane and the huge
expenditure of the Department on foreign travel, catering, unspecified and
performance bonus. The Committee wanted clarity on who qualified for
performance bonuses in the Department when it was under performing.
The Committee did not support the request by the Department for more
funding as there was no proper motivation by the Department as to how it
planned to improve the spending of the budget that it had already received.
9. Conclusion
Having interacted with the Department and its entities,
the Committee expressed its disappointment on the
overall performance of the Department. Some of the entities recognised
that coordination and service delivery were still lacking in most areas. The
Committee was gravely concerned in particular with the lack of assistance and
the absence of monitoring and evaluation of the Ncera Farms (Pty) Ltd by the
Department.
10. Recommendations
The Portfolio Committee
on Agriculture, Forestry and Fisheries recommends
that the Minister of Agriculture, Forestry and Fisheries should ensure the
following:
Report to be considered