State Land Audit progress report; Ingonyama Trust Board 2014 quarterly performance, with Deputy Minister

Meeting report

Ingonyama Trust Board (ITB) briefing
A report by the Ingonyama Trust Board (ITB) was presented by its chairperson, Judge Jerome Ngwenya and Mr Amin Mia Chief Financial Officer and Acting CEO. The Trust was established in 1994 with His Majesty, the Zulu King as the sole Trustee. A Board was established to administer it, which comprises eight members plus Isilo or his nominee as Chairperson. The board members, who are appointed by the Minister, are Justice S Ngwenya, Mr B Shabalala, Adv W Raubenheimer, Ms N Zitha, Ms J Bhengu, Dr T Mbatha, Adv V Mngwegwe and Inkosi K Mathaba who had recently passed away. The Trust is one of the largest landowners in KwaZulu Natal with some 2.8 million hectares. The core business of the Trust is to administer the land for “the material benefit and social well being of the individual members of the tribes.” The Trust generates its own funds through lease income, investment income and compensation from servitudes as well as receiving funding from the Department of Rural Development and Land Reform. Income for the fourth quarter was R13 million and total income for the 2013/14 year was R46.5 million. ITB self-generated funds amounted to R32 million while funds from government for the year amounted to R14.5 million. The Trust generated R 21.78m for the 1^st quarter of 2014/15, which constitutes 34.74 % of the total budgeted income for the year. ITB own funds expenditure for the first quarter in 2014 /15 was R2.47 million while expenditure of transferred funds was R5.9 million, the latter being spent on compensation and goods and services. There was a further breakdown of expenses, which included some R380 000 educational awards during 2013/14 and R638 000 for 2014/2015. Performance indicators covered tenure by the Board, workshops held, the landholding register being maintained and number of land management projects identified and implemented.

Discussion
Mr E Nchabeleng (ANC) commented that the ITB report had increased from one page previously to 29 pages, which was a good sign. He was concerned about the position of CFO and CEO being occupied by the same person. The board chairperson and the Director General should address this. He asked for an explanation of the emphasis throughout the report between ITB own funds and those received from the Department.

Mr P Mnguni (ANC) said it seemed that while the government could only provide partial funding, it should be seen in the light of budgetary constraints and was the norm. While funding might not be sufficient, it did still have a cumulative effect and was better than nothing. What was the basis for spending either fiscus money or own funds?

Mr A Madella (ANC) asked how many of the educational awards went to people with disabilities and was there a specific percentage of funding which went to those with disability. He asked what steps had been taken to find a permanent CEO. It seemed that permanent staff numbered fewer than temporary staff. This was an anomaly and how was this being addressed in the light of job security. Slide 19 of the presentation indicated that only 13.8% of the budget in the first quarter of 2014 had been spent. This was half of the 25% target.

Ms A Qikani (ANC) asked whether there was any change in the institutions where educational awards were donated every year.

Mr M Filtane (ANC) welcomed the fact that the political head of the department was present since the Department had an oversight role and according to the Public Finance Management Act (PFMA), the Department was responsible for outcomes, while what they had received from the report were outputs. He asked what impact was made by the work of the IT unit, since its mission so clearly stated that it worked for the material benefit and social well being of the individual members of the tribes. He referred to slide 13 of the presentation which referred to expenditure consisting of Goods and Services. He had no idea what that constituted. He felt it imperative that one should visit some of the land being administered by the ITB in order to get some idea of what was actually being done by the Trust.

Mr Mnguni asked how the government grant had been used, again referring to the item of Goods and Services on slide 19, which constituted 8.2% of the budget. The educational awards were a positive contribution but questioned how did people on the ITB land benefit from this.
 
Mr T Walters (DA) agreed that an oversight visit would be helpful in gaining a better idea of the work done by the Trust and how this linked up with the goals of the National Development Plan (NDP) and the development of people in general. He said that communal land should benefit the residing communities. As the Trust was engaged in estate management it should be in the business of promoting growth in terms of value and lease allocation and he asked how this related to the generation of income.

Mr Mhlongo asked if the budget provided by the Department was sufficient for the work of the Trust since the first quarter of 2014 showed underperformance. He asked what the challenges were in achieving targets and how they evaluated their expenditure. He asked for an explanation of slide 9 indicating a compensation payment of R463 000 and asked how targets were scheduled. Had the Department addressed the findings raised by the Auditor-General audit report? He asked for the size of the satellite office costing R15 000 per month, how many employees worked there and where it was located. He asked what the targets were for the R14.5 million being transferred in the fourth quarter from the Department. He asked what “other” referred to in slide 15 under “servitudes and other”.

Mr Mhlongo felt there was a lack of honesty and professionalism being displayed by trying to apportion blame elsewhere.

Ms Qikani referred to the irrigation system in the Eastern Cape which had started before 1994, had been taken over by government in 2012 and which was now no longer functioning.

Mr Nchabeleng said the Committee was there to support the Trust and the Department had to play the role of overseer. He asked if the Department did not have one suitable person to take on the position of CEO in the meantime.

Ms Ngwenya-Mabila asked why there were two positions still vacant when they were being funded by government and what was happening with community projects. She asked how long board members were supposed to serve. The CEO had been suspended and therefore his position was not really vacant. She wanted to know what the Board was doing in this regard.

Justice Ngwenya said that the impression created by the large number of 2.8 million hectares is that of vast tracts of land which can be out to good use. The land under administration is in fact larger than half of Europe. The current staff complement could not do justice to the proper administration of this land, in order to maximize its utility and to make it sustainable. The Board had been appointed during the transition in 1998 when the Public Finance Management Act (PFMA) had not yet been in place. They had started with a R3 million budget, which had been useful. By 2000 they had to submit a three year consolidated report and institute various accounting practices in line with the PFMA. The need for a secretariat grew as a result of changing demands although the employees were inexperienced. The passing of the Communal Land Rights Act (CLaRA) held further implications for the mandate of the Board. Members usually served a four year term but this Act affected this since although it had been passed, it had never been implemented.

Consequently when members came to the end of their term their membership was extended by one year. He himself was a founding member. Furthermore, CLARA had been challenged in court. It was partly for this reason that contract staff were being used rather than making them permanent. The Board undertook a study to create an ideal organogram and realised that representation should be more local and less centralised. There was not enough contact with traditional councils, which require further capacity. Issues around conversion of title deeds, some of them still referring to ‘morgen’, needed to be resolved as well as communal land which was unplanned. Much of this work needed to be outsourced, as most of it was in deep rural areas where there had been no municipalities in the past.

This brought the new relationship with municipalities into the foreground and the rateability of the land into question. If communal land should be rateable, on what basis should it be rated? This created conflict in some instances, some of which might have brought about the suspension of the CEO at the beginning of June this year. The Board will sit on this matter on 19 September. It is impossible to borrow someone else in the meantime. The manner in which the presentation demarcated between own monies and those transferred from the Department in no way meant to indicate anything but that the Board is fully aware of the fact that they are accountable for public funds and that they collect monies on behalf of traditional councils who cannot mange to do so themselves currently. From the money it collects 10% was used for administrative purposes, while the rest was cascaded down. Over the years the traditional councils held their own accounts, but the Auditor General suspended most of them as they were not being managed correctly. The rates demanded by certain municipalities was a looming concern as municipalities were taking the Trust to court on this issue. Money had been set aside for this as a contingent liability. The unintended impression that the Board wished to point out the inadequacy of the transferred funds, was incorrect and unfortunate. It merely tried to infer caution, since some other entities, like Ncera, had been entirely dependent on the state, while this was not the case with the Ingonyama Trust. Yet, the burden of having to pay rates would mean that further assistance might be needed from the Treasury. The educational awards were scholarships. There was a consultation form and assistance was provided in the areas where most of the revenue was being collected. One of these was the mining houses from which they received royalties. This now goes to Treasury resulting in a decline in income for these communities. The scholarships will hopefully go some way to helping. The ITB vacancies were advertised a year ago, but finding someone suitable is difficult. The specific skill set is not readily available. The person needs to understand traditional leadership and the ins and outs of communal land issues.He said the Board was involved with several community projects. Sugar cane growers were being assisted by Tongaat-Hulett in processing their sugar cane and there had been an upsurge in small sugar cane growers as well as other projects involving communal gardens.

The integration of previous black and white areas into municipalities had meant a renegotiation of relationships with them. Disputes between the municipality and His Majesty Inkosi needed to be resolved. Issues around plans being passed, rezoning of land and planning for infrastructure were issues the Board faced continually. Similarly tenure rights needed tight agreements and issues around low cost housing also were being addressed. 

Mr Mia said some 3 000 leases had been processed manually during 2013/14 and the new system which automated the process was a world class system, integrated with their Pastel accounting system. Goods and Services included payments to traditional councils, and also included administration fees, legal fees, auditing fees, stationery, telephone, board members travel and accommodation. They had four offices and rental included security. Once the budget was approved, they put in a quarterly request for a department transfer, working on an accrual basis. ITB usually used the department transfer first and used it for compensation and administration. Net Rental revenue referred to lease income which was usually invoiced annually during the first quarter. ‘Other’ referred to rates from lessees. Interest income was derived from investment in five banks. Reserves were monies held for rate payments to municipalities which had not been paid thus far. The Trust drew up a monthly budget consisting of two cash flows and expenditures; one for ITB own funds and one for the transfers from the Department. These were approved by the CFO. Cashbooks were reconciled weekly and a payment schedule was drawn up before expenses are paid to determine if the budget is sufficient. The first quarter of the year is always a challenge to align with the budget. The budget was based on the previous year’s budget and current targets, as well as staff requirements. If the budget is insufficient the reserves are used. These reserves were held largely in case of rate payments being required. The matter whether rates were payable remained unclear and in dispute. On the allocation of bursaries, he said that they fixed things as they went along and while they had not applied any specific policy for the allocation of a percentage of the funds to disabled nominations, this could be considered going forward.

Adv Vela Mngwengwe, Acting Director: Public Land Support Services, said the board simply approved the scholarship nominees sent by the traditional council. They did not have much control over the process of deciding who gets an educational award. There would need to be a policy guiding the internal process of how a traditional council decides on contenders to ensure fairness. They would have to refer back to the traditional councils in this regard.

Justice Ngwenya said the board vacancy created by the recent passing of Mr Mathaba, had not been filled. The small staff contingent were hard put to manage the land. Much time was needed to train traditional leaders. The question of rates needed clarification, since cooperation between municipalities and state entities required political leadership. The Auditor General finding was a perennial question regarding the non-valuation of some of the land. At the outset the land had been acquired before the PFMA had been instituted in 1994, and the value of the land could not be accurately determined because it had not been paid for. A valuation of R300 per hectare had been queried, but when the Board had asked for a recommendation from the Auditor General, they had been referred to Department of Land Affairs, only to be told that they do not value the land. Yet this was also not deemed acceptable by the Auditor General. The Board was in a quandary and yet seemed to be flouting the rules. Municipal valuation also could not apply since communal land was involved which is not for sale. Valuers were needed and this required substantial funds. This seemed to be a situation facing communal land elsewhere in the country.

Mr Mhlongo said that the Board should not shift responsibility.

Ms Ngwenya-Mabila suggested another time should be scheduled to revisit these matters.

The Director General said the priorities of the Trust were in alignment with the objectives of the NDP. The particular type of performance reporting that had been provided for this meeting had attempted to fulfil the Committee’s request where targets are set for the strategic objectives and these are measured against performance. Impact could only be measured over time and independently. Such studies were conducted periodically. The last impact study was conducted in 2010. That review could be made available to the Committee. 

Mr Filtane welcomed the explanation but reiterated that the performance indicators given still left him completely “in the dark” as to the day-to-day activities executed by the Trust as well as the traditional councils.

Mr P Mnguni (ANC) conceded that political and legislative environments had changed since the birth of the Trust, but one needed to adapt to the current environment out of necessity. The Trust also needed to remain mindful of its scope of work and remain with the boundaries thereof. The Trust needed to stick to its mandate of land administration and not get involved with other matter around His Majesty, Isilo, such as weddings. Mr Mnguni emphasized this point several times.
 
Mr Walters asked what was happening in terms of rural development. The trust held some 2.8 million hectares of land and yet by rough calculation this equated to as little as R16 per hectare, indicating that major assets were not being utilized optimally. An increase in leases and land value would indicate rural development, as well as households, getting involved in agricultural activity. Were households on these lands being empowered? He asked if their leases could allow them to ask the bank for loans. The NDP referred to land committees, which should cooperate with local government to drive rural development. Were such committees being formed? It seemed that currently the communal land was not economically viable.

The Deputy Minister, Ms Candith Mashego-Dlamini, said that the presentation report did not give a true reflection of the work done by the Trust because of poor reporting. The language used in the budget was unfortunate and not in line with PFMA. The Trust need to better predict its activities for future budgets. The Department had done oversight in two of the districts and had satisfied themselves of the adequacy of the activities being conducted by the Trust. She said the Trust should pay rates and taxes to the municipalities and should budget accordingly. As far as impact of their expenditure was concerned, this was challenging sometimes when the only form of revenue being generated on a piece of land could be an MTN receiver.

Ms Ngwenya-Mabila said the Department needed to monitor and assist the Trust with their reporting to the Committee. The Committee would await the annual report briefing by the Trust and hope to see greater alignment between spending and performance. A good strategic plan and annual performance plan was crucial to be able to track whether spending was in line with targets. In future, a detailed breakdown of Goods and Services was expected. The categorization between own funding and transfers needed to be changed and details about the recipients of the educational scholarships should be made available. Policies needed to be shaped in order to avoid willy-nilly responses to situations and recommendations should be made to fill the vacancy of CEO. She thanked the delegation for attending.

State Land Audit progress report
The Director General, Mr Mduduzi Shabane, introduced the Land Audit Report, saying that some 79% of land in South Africa was privately owned, while about 14% was state owned.

Adv Vela Mngwengwe presented the Land Audit Report, noting the Committee had raised three issues:
-the need for completion of land surveying and a national database of all land under the national government and state land available per province for land reform; and
-mechanisms to fast track the release of state land for land reform and settlement of land claims on state land;
-a report on state land released for redistribution and transferred under restitution per province since 1994.

He said the survey was practically complete except for certain ”slivers” of land between river bank boundaries and in certain mountainous areas due to inaccessibility. The latter are not considered a priority, since the land has no practical use. So far 3.2 million hectares of State land had been surveyed. No legislative authority empowered any department to develop and maintain a national database of state land and therefore it was not possible to accurately report on land falling under both national and provincial spheres, since land was changing ownership constantly. Therefore a bill was being drafted by the Department to create a centralised database. This will clarify who controls ownership for the purposes of selling the land and for transferring it to a claimant. This would facilitate fast-tracking claims. A document had been circulated to the Committee listing procedures for claims on state land to be done effectively and swiftly. The National Agricultural Marketing Council (NAMC) was in the process of identifying one million hectares for food security. This work had been completed in the Eastern Cape, although planting would only begin in the next financial year. Regarding state land released for redistribution and transferred since 1994, there were issues of accuracy which needed to be resolved. The presentation provided details of claims which had been settled on state land per province. The province recording the highest land transfer was Northern Cape with 263 543 hectares, followed by Limpopo with 212 577 hectares and KZN with 211 685 hectares. 

Mr Rajenda Salig, Chief Director: Cadastral Advisory and Research, said the audit had been of registered state land only and had been initiated in 2010. It consisted of two exercises: an desktop audit of deeds registries and databases in determining how much land was owned by the state, how it was used and its occupants. It was categorized as far as possible.

The DG said the first phase was identifying the custodians of public land. The next phase would seek to determine who owns private land according to nationality, race and gender. The draft Regulation of Land Holdings Bill would allow for this information to be made available. The Bill will hopefully be passed by September 2015.

Discussion
Mr Nchabeleng said it was disturbing that certain border territory was not considered worthwhile surveying because of access challenges. Often instances of dispute over borders were as a result of the parties involved no having done their homework properly. It was important to determine accuracy and certainty on borders between countries.

Mr Madella asked by when the one million hectares, which had been earmarked for food production, would start operating. He asked what measures were being taken to find out what the 24% of the Eastern Cape’s unaccounted land constituted.

Ms N Magadla (ANC) said the people needed food now and what was being done with the land abandoned by the Department of Defence.

Mr Filtane referred also to the one million hectare for food security and asked whether work was being duplicated by the Department, since in the Eastern Cape this kind of mapping had already been completed. He asked whether unused private land could not be harnessed in some way.

Mr Walters said it seemed that there was a discrepancy between the total hectares covered by the homelands and the total stated in the presentation for unaccounted land. The total indicated in the booklet for Ciskei and Transkei together was some six million hectares, while unaccounted land in the Eastern Cape in the Land Audit Report was shown to be only around four million hectares. What process was followed and how did these figures correspond to the asset register. Some privately owned land had been abandoned in the townships and one could sometimes not trace the original owner. He asked what was being done with such land, again referring to the Eastern Cape.

Mr Mhlongo asked how much this process cost and if systems should not be able to talk to each other across the provinces. He asked for clarity on the term “old municipalities” in slide 7 of the Land Audit Report.

Mr Nchabeleng asked whether the ocean along our coastline was also being surveyed and if not, who was responsible for this and how did this information link up with their surveys of coastal land.

Ms Ngwenya-Mabila asked what the challenges during the process had been and what did the ‘yes’ in slide 5 of the report relating to citizenship mean. She noted the extremely skewed figures pertaining to land ownership across gender, with males being by far the majority of land owners, whereas it was the majority of women who worked the land.

The DG said the issue of surveying the ocean had been raised in 2014 during Operation Phakisa which had been led by the Presidency and Department of Environment. He said food production has begun with the Department of Agriculture planting some 143 000 hectares already and several provinces had already identified suitable land for food production. Some of the former homelands consisted of land with high potential for this and mapping soil types and suitability was in process. This had been completed in the Eastern Cape and Limpopo. This had been done in conjunction with the Agricultural Research Council. The project would be completed in a year. Private land would also be considered and they were aware that there was much abandoned land lying unused. The Department fully understood the need to alleviate poverty and the importance of improving food security.

Mr Salig said each province has a Surveyor General Office which had inherited data from their predecessors which goes back very far into history. They were now also busy with point by point descriptions of boundaries. Their jurisdiction, however, pertained strictly to land and not land “covered by water” like the ocean. In the previous dispensation, there had not been municipalities everywhere but now there were wall-to-wall municipalities. This change caused a disjuncture or overlap between data. The Eastern Cape consisted of Ciskei, Transkei and the old Republic of South Africa. He mentioned the example of King William’s Town and Bisho, where the former formed part of the old RSA and the latter part of Ciskei. While the survey had included a physical audit, this could not be done with private land, so only a theoretical desktop audit had been done. The work was painstaking as records were not all available on an electronic database and some information had been sourced from the Masters of the High Courts. It was challenging and time consuming work. He suggested the categorization of old municipalities be ignored going forward. On the question about the asset register, he said that the central database was the deeds registry and that all other registers derived from that. They had inspected the entire boundary with Botswana and as stated by a member, the boundary often split communities and even dams in parts. These instances needed attention. All boundaries were defined by international treaties.

The Deputy Minister said previously the land had been divided into homelands and the white areas.

Adv Mngwengwe said the lack of legislative authority was a consequence of the process whereby during the establishment of the democracy in 1994, provincial and national spheres were separated and legislation was passed affecting each department. Accordingly each department laid claim to whatever they were empowered by law to claim and in the process some land remained unclaimed by either sphere. This unclaimed land will be covered by the Restitution of Land Act. The database of public land created by the Department of Rural Development was done so specifically for claim purposes and cannot be used for other purposes by the state. Presently one does not know who controls the land and nothing compels them to disclose when land is bought or sold and by whom to whom. The new bill would rectify this. Hopefully by next November this bill will be passed as it will be presented to the DG in the next week and then to the Minister. The Bill would also enforce the disclosure of nationality of land owners. Currently this information was not available.

As assets were being surveyed they were being allocated according to their purpose and function, for example a clinic would be allocated to the province in question, a police station would be allocated as national land. Referring to the question by Mr Mhlongo, he said the GIS system had to be overlaid onto the existing databases in order to be able to provide nation-wide information. This was within the realms of possibility and just needed to be addressed. He said land abandoned by the Defence Department had been included in the audit. On the valuation of the land, he said that their accounting policy simply valued it at R1 per land parcel, but this was purely for accounting purposes and had no relation to its real value.

The DG said that the survey would be completed within a year.

Mr Nchbeleng asked if documents were being located in old dank and dark cellars and was any effort being made to locate and preserve them. He was sure such records existed.

Mr Walters again referred to the difference in numbers between the stated ‘almost 6 million hectares’ making up the Ciskei and Transkei previous homelands and the shown state owned land in the presentation of around only 1.5 million hectares in the Eastern Cape as unaccounted land.

Mr Mhlongo asked when would the draft Bill be ready and when would the surveying be completed and at what estimated cost.

Mr Salig replied that it was difficult to provide a definite answer but he estimated it would take another year.

Adv Mngwengwe said the discrepancy referred to by Mr Walters was as a result of the land covered by the previous homelands still being unregistered and the land being reported on was registered.

The DG said that documentation should be aligned among all deeds offices. They were in the process of scanning all documents and microfilm, some five million copies every month, in an effort to capture these digitally. They would also be instituting a process whereby electronic registration should be possible by November next year. Throughout this process, all care was being taken to secure the safety of these documents.

The Deputy Minister concluded saying that while the process of surveying was still incomplete, all efforts were being made to finish off as quickly as possible. One should be able to conduct inter-provincial searches, unless certain offices did not have the required systems. The two bills, the Electronic Deeds Registration Bill and the Regulation of Land Holdings Bill, would be brought to Parliament in the foreseeable future.

Ms Ngwenya-Mabila saw the presentation by the Department as the first phase in its ongoing process to keep the Committee informed about progress on these fronts.

The Committee concluded the meeting by ratifying the minutes of the previous meeting and then adjourned.