BRIEFING TO THE STANDING COMMITTEE ON APPROPRIATIONS 2017 APPROPRIATION BILL BRIEFING TO THE STANDING COMMITTEE ON APPROPRIATIONS 2 June 2017 VISION: Vibrant, equitable and sustainable rural communities. MISSION: To initiate, facilitate, coordinate, catalyse and implement rural development and land reform programmes to achieve agrarian transformation

PRESENTATION OUTLINE MTSF PROGRESS REPORT CORPORATE GOVERNANCE PERFORMANCE (MPAT) SUMMARY DEPARTMENTAL PERFORMANCE MONITORING AND EVALUATION

Strategic goals Rural Development Administration Corporate governance and service excellence Administration Facilitate integrated spatial planning and land use management. Ensure integrated and comprehensive land administration system. Provide a cadastre modernisation programme Geospatial and Cadastral Serv Provide support to rural communities in prioritised rural districts to enable them to improve their livelihoods; Facilitation of infrastructure development; Facilitate the development of rural enterprises and industries; Increase job opportunities and ensure skills development Rural Development Restoration of Land rights Restitution Promote equitable land redistribution and agricultural development; Provide comprehensive farm development support; Functional systems and institutional arrangements for tenure and land administration Land Reform

APPROPRIATION PER PROGRAMME 2017/18 Appropriation per Programme R'000   2017/18 Administration 1,721,620 NGMS 672,117 Rural Development 1,914,896 Restitution 3,247,384 Land Reform 2,628,223 TOTAL 10,184,240

APPROPRIATION PER ECONOMIC CLASSIFICATION 2017/18 Appropriation per economic classification R'000   2017/18 % of total Allocation Compensation of Employees 2,194,584 21.5% Goods and Services 1,715,466 16.8% Provincial And Local Governments 67,542 0.7% Departmental Agencies & Accounts 1,493,134 14.7% Foreign Gov&International Organ 1,653 0.0% Public Corporations & Priv Ent 1 Non Profit Institutions (NPI) 3,492 Households (HH) 4,683,435 46.0% Machinery and Equipment 24,004 0.2% Software & Other Intangible assets 929 TOTAL 10,184,240 100.0%

KEY FACTS R5.230 billion or 51.4 % of overall budget Total Budget R10.184 billion CoE R2.195 billion 21.5% Other R229 million 2.9% Household projects R4.665 billion 45.7% Org. needs R1.537 billion 15.1% Transfers to Entities R1.496 billion 14.7% R5.230 billion or 51.4 % of overall budget Contractual commitments (salaries, transfers to entities and organisational needs) R2.215 billion Household projects commitments (carried over from 2016/17, Mou/SLA signed, orders issued to service providers) R1.305 billion Household projects to go through normal SCM processes e.g. tender 65.2% of household projects to go through normal SCM process are projected to be awarded by October 2017

BUDGET VS DEPARTMENT POLICY PRIORITIES Total Budget R5.638 billion Rural Development R1.5 billion Land Reform R415.4 million Land Claims R2.609 billion Land Acquisition (ALHA) R1.420 billion R1.106 billion RID & SOYD: Agri-hub; AVMP, FPSU, RVCP, Socio-Economic Infrastructure; Skills development; Revitalisation of Rural Towns; One Integrated Community Dev. Centre; NARYSEC R432.9 million REID: Agri-industries; Job opportunities; Agric & Non-Agric Enterprises; Livelihoods; Skills Development R2.609 billion Land Claims R415.4 million One Household-One Hectare; One Household 2 Dairy Cows Recapitalisation commitment R1.420 billion ALHA (Land Acquisition); One Household One Hectare and Recapitalisation

STATE OF READINESS Demand/procurement plans were linked to project registers and budget to ensure that procurement is at the right time, and at the right cost; Demand/procurement plans were reliably determined and appropriate sourcing strategies were developed; A breakdown of monthly anticipated expenditure was developed; Delivery of services to be regularly monitored to ensure that scarce resources are efficiently and effectively used by regularly tracking, controlling and reporting on expenditure against performance; Continuation with enforcement of cost cutting measures

% COMPLIANCE WITH 30 DAYS PERIOD Financial Year % Paid 2013/14 91% 2014/15 92% 2015/16 97% 2016/17 94%

REASONS FOR NON-COMPLIANCE 2013/14: Department paid 91% of total invoices submitted that reflects 9% non-compliance with 30 days. Reasons for non compliance were invoice discrepancies, invalid tax clearance certificates and changes in banking details by suppliers without informing the department on time 2014/15: Department paid 92% of total invoices submitted that reflects 8% non compliance with 30 days. Reasons for non compliance were invoice discrepancies, tax clearance certificates that expired and ex-post facto invoices (e.g. photo copy machine used after contract expired and invoices must be presented and approved by National Bid Adjudication Committee). 2015/16: Department paid 97% of total invoices submitted that reflects 3% non compliance with 30 days. Reasons for non compliance were invoice discrepancies, tax clearance certificates that expired and ex-post facto invoices 2016/17: Department paid 94% of total invoices submitted that reflects 6% non compliance with 30 days. Reasons for non compliance were invoice discrepancies, tax clearance certificates that expired and ex-post facto invoices

ACTION TAKEN BY THE DEPARTMENT TO COMPLY WITH 30 DAYS REGULATION Discrepancies of invoices – The department included the invalid invoices within 30 days report; going forward will exclude such invoices until the dispute is resolved. The department communicate the discrepancies with service provider eg. Quotation submitted without VAT or Interest while invoice submitted with VAT and Interest for payments. Department will request revised and valid invoice to be submitted. Invalid tax clearance certificates – When the department contracted the service provider tax clearance certificate was still valid. With the implementation of the CSD, the department is able to access Tax Clearance information, if Tax Clearance is not valid department communicates with service provider to address issues with SARS. Until queries/ issues with SARS are resolved the department will not include those invoices within 30 days report. Changes in banking details by suppliers - When the department contracted the service provider banking details were still valid. With the implementation of CSD, the suppliers update the banking details and must submit copy to the department. Until banking details issues are addressed the department will not included those invoices within 30 days report. Ex-post facto invoices – Contract management sends reminders to service provider and departmental officials three months before expiry date. If service providers don’t collect machine and officials continue to use the machine; regarded as irregular expenditure - referred to Finance Control Committee (FCC) . The department established Finance Control Committee to ensure effective and efficient execution of the Irregular, Wasteful and Fruitless Expenditure and Financial misconduct policies. Consequences management is applied after investigation by FCC.

AGRICULTURAL LAND HOLDING ACCOUNT (ALHA) 2016/17 ESTIMATES OF NATIONAL EXPENDITURE (ENE) PRESENTATION

ALLOCATION PER STANDARD ITEM Strategic Land Acquisition 2017/18 R 000 Land Acquisition 422 871 Strengthening of Relative Rights (50/50) 525 000 Planning 19 344 Total 967 215 Recapitalisation and Development Recap: (Commitments) 221 682 One Household One Hectare (1H1H) 106 200 Total Recap 327 882   Total ALHA Projects 1 295 097 Other Expenses Curator fees 5 861 Project Management Unit fees 71 149 Rates and Taxes 47 494 Total other expenses 124 504 Total Transfer Received 1 419 601

(2014/15 to 2016/17 PERFORMANCE TRENDS) MTSF PROGRESS REPORT (2014/15 to 2016/17 PERFORMANCE TRENDS)

OVERALL YEAR-ON-YEAR DEPARTMENTAL PERFORMANCE The Department had the highest-ever Fourth Quarter and Annual performances of 94% and 97% respectively, over the past three Financial Years.

PRODUCTIVE LAND OWNED BY PREVIOUSLY DISADVANTAGED INDIVIDUALS MTSF aims to increase percentage of ownership of productive land by previously disadvantaged individuals by acquiring 2 million hectares of land by 2019: For the period 2014/15 to 2016/17, DRDLR targeted 843,074ha, and acquired 798,788ha. This translates to 40% progress towards the 2 million hectare target. For the next MTEF, a total of 281,165ha of land is planned for. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of hectares acquired 354 802 242 556 201 430 96 165 90 000 95 000

PRODUCTIVE LAND OWNED BY PREVIOUSLY DISADVANTAGED INDIVIDUALS MTSF aims to allocate 1 million ha of land acquired to smallholder producers by 2019: For the period, 2014/15 to 2016/17, DRDLR targeted 226,492ha, and 384,132ha was allocated. This translates to 38% towards the 1 million ha MTSF target. Over the next MTEF, a total of 140,500ha is planned for. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of hectares allocated to farm dwellers and labour tenants New indicator 247 385 136 938 48 000 45 000 47 500

PRODUCTIVE LAND OWNED BY PREVIOUSLY DISADVANTAGED INDIVIDUALS MTSF aims to allocate 200,000 ha of land acquired to farm-dwellers and labour tenants by 2019: For the period, 2014/15 to 2016/17, DRDLR targeted 45,326ha, and 22,185ha were allocated. This translates to 11% towards the 200,000 ha MTSF target. Over the next MTEF, a total of 28,100ha is planned for. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of hectares allocated to farm dwellers and/or labor tenants New indicator 3 910 18 275 9 600 9 000 9 500

REDUCTION OF LAND TRANSFERRED TO PREVIOUSLY DISADVANTAGED INDIVIDUALS WHICH IS UNDERUTILISED MTSF aims to provide support to1 741 farms under RECAP by 2019: For the period 2014/15 to 2016/17 DRDLR targeted 985 farms, and 994 farms were supported. This translates to 57% towards the 1 741 farms MTSF target. This performance indicator was moved to DAFF as of 2017/18.

DEVELOPMENT OF SUSTAINABLE RURAL ENTERPRISES NDP states that, “small- and medium-sized enterprises will play an important role in employment creation’’. For the period, 2014/15 to 2016/17, DRDLR targeted 592 enterprises, and the target was achieved with 886 supported. Over the next MTEF, DRDLR is targeting 531 enterprises. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of new agricultural enterprises supported in the 44 districts aligned to Agri-Parks 422 220 193 141 150 159 Number of new non-agricultural enterprises supported in the 44 districts New indicator 51 55 60 66

PRODUCTIVE LAND OWNED BY PREVIOUSLY DISADVANTAGED INDIVIDUALS Claims Settled: Commission targeted 1 457 total settlements for the period 2014/15 to 2016/17, and they achieved 1 857. There are 3 331 projected claims to be settled over the next MTEF. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of land claims settled 428 617 812 1 001 1 151 1 179

PRODUCTIVE LAND OWNED BY PREVIOUSLY DISADVANTAGED INDIVIDUALS Claims Finalised: Commission planned for 1 066 claims over the period 2014/15 to 2016/17, and a total of 1 604 claims were finalised. There are 2 421 projected claims to be finalised over the next MTEF. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of land claims finalised 372 560 672 724 832 865

SKILLED & CAPABLE WORKFORCE TO SUPPORT AN INCLUSIVE GROWTH PATH The MTSF aims to have 90 000 skilled people by 2019: DRDLR targeted 28 900 (including 10 120 NARYSEC) skills opportunities, and 32 909 was achieved. NARYSEC target amounts to 8 605. Overall, this translates to a contribution of 37% towards the 90 000 MTSF target. Over the next MTEF, a total of 17 212 is planned for. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of skills development opportunities provided in rural development initiatives 12 331 12 576 8 002 6 612 5 200 5 400

REDUCE UNEMPLOYMENT RATE IN THE RURAL AREAS The MTSF aims to have 924,140 people employed through the rural development initiatives, including enterprises and industries by 2019: DRDLR targeted 21,678 jobs over the period under review, and achieved 23,739. This amounts to a contribution of 2.6% towards the MTSF target. Over the next MTEF, a total of 35, 687 is planned for. Performance Indicator Audited / Actual Performance Estimated Performance 2016/17 Medium-term Targets 2014/15 2015/16 2017/18 2018/19 2019/20 Number of job opportunities created in rural development initiatives 4 916 6 005 5 880 5 448 6 700 Number of jobs created in in the Land reform programme 1 925 2 271 2 742 5 000 5 775 6 064

CORPORATE GOVERNANCE PERFORMANCE (MPAT)

MPAT SUMMARY PERFORMANCE LEGEND MPAT 1.2 2012 MPAT 1.3 2013 MPAT 1.4 2014 MPAT 1.5 2015 MPAT 1.6 2016 Level 4-Fully Compliant & Smart 1 8 14 16 19 Level 3-Fully Compliant 10 5 Level 2+ - Compliant with basics - 4 Level 2-Partially Compliant 11 6 Level 1- Non-Compliant 7 3 TOTAL SCORES 28 32 34 37 35 PERFORMANCE RATING (%) 39% 56% 65% 78% 80% Compared to the past 4 MPAT cycles, the Department scored the highest-score ever of 80% during the 2016 MPAT cycle! Now that the Department has achieved this target, the key question is, to what extent can this be translated into the overall Departmental Performance?

KEY PERFORMANCE AREA 1: STRATEGIC MANAGEMENT LEGEND MPAT 1.4 2014 MPAT 1.5 2015 Moderated Score 2016 Level 4-Fully Compliant & Smart 5 3 Level 3-Fully Compliant 2 Level 2+ - Compliant with basics - Level 2-Partially Compliant Level 1- Non-Compliant

KEY PERFORMANCE AREA 2: GOVERNANCE AND ACCOUNTABILITY LEGEND MPAT 1.4 2014 MPAT 1.5 2015 Moderated score 2016 Level 4-Fully Compliant & Smart 5 7 Level 3-Fully Compliant 2 1 Level 2+ - Compliant with basics - Level 2-Partially Compliant Level 1- Non-Compliant 3

KEY PERFORMANCE AREA 3: HUMAN RESOURCE MANAGEMENT LEGEND MPAT 1.4 2014 MPAT 1.5 2015 Moderated score 2016 Level 4-Fully Compliant & Smart 1 Level 3-Fully Compliant 4 3 Level 2+ - Compliant with basics - Level 2-Partially Compliant 5 Level 1- Non-Compliant 2

KEY PERFORMANCE AREA 4: FINANCIAL MANAGEMENT LEGEND MPAT 1.4 2014 MPAT 1.5 2015 Moderated score 2016 Level 4-Fully Compliant & Smart 6 Level 3-Fully Compliant 1 2 Level 2+ - Compliant with basics - Level 2-Partially Compliant Level 1- Non-Compliant

GENERAL INFORMATION

PRE-AUDITED 2016-2017 PROGRAMME PERFORMANCE The Department achieved 79% of its Annual targets (APR) for the 2016-2017 Financial Year. NATIONAL Programmes APR Targets Planned APR Targets Achieved APR Partially-Achieved APR Not-Achieved APR Performance Administration 2 1 50% Geospatial and Cadastral Services 5 4 80% Rural Development 7 6 86% Restitution 3 100% Land Redistribution and Development 8 75% Land Tenure and Administration Overall Total 29 23 79%

DRDLR PERSONNEL COMPOSITION : FY2016/2017 Total Programme 1: Administration Programme 2: National Geomatics Management Services Programme 3: Rural Development Programme 4: Restitution Programme 5: Land Reform Programme : Deeds Head count (31/03/2017) 5 529 1 467 1 057 482 735 617 1 171 Number of funded posts 5 370 1 450 782 477 737 624 1 300 Number of posts additional to the establishment 372 45 286 18 6 8 9 Number of posts filled 5 157 1 422 771 464 729 609 1 162 Number of posts vacant 213 28 11 13 15 138 % Vacancy rate 3.97% 1.93% 1.41% 2.73% 1.09% 2.40% 10.62%

INTERNAL AUDIT AND AUDIT COMMITTEE The Internal Audit function is a fully-fledged Chief Directorate, which reports operationally to the Audit Committee and administratively to the Director-General. It is constituted of three Directorates (Performance Audit and Financial Audit; Operational Audit and Compliance Audit; and Information Technology Audit) and one Sub-Directorate (Project Management and Quality Assurance). During the past year, Internal Audit issued 20 Audit Committee Reports and 51 Detailed Internal Audit Reports. Audit Committee The Audit Committee of the DRDLR, the Deeds Registration Trading Account and the Agricultural Land Holding Account consists of three members and had 7 meetings during the past year. Independent Assessments of Internal Audit’s and the Audit Committee’s effectiveness: Institute of Internal Auditors Quality Assessment Review: Internal Audit’s conformance to the International Standards for the Professional Practice of Internal Auditing was assessed by the Institute of Internal Auditors as ‘Generally Conforms’, which is the optimal conformance level. MPAT: Both Internal Audit and the Audit Committee received MPAT scores of 4.0 for the last four years. This is the highest MPAT score and indicates that Internal Audit and the Audit Committee are fully compliant with legal/regulatory requirements and are doing things smartly.

INTERNAL AUDIT AND AUDIT COMMITTEE cont AGSA: The following table outlines the AGSA assessments on the Chief Directorate: Internal Audit and Audit Committee over the last three years. The symbols reflected below indicate that the required preventative or detective controls are in place.

SUMMARY EVALUATION STUDIES CONDUCTED Socio economic impact on CRDP – 2012 (Internal), Implementation evaluation of the CRDP – 12/13 (DPME/DRDLR), Implementation evaluation of the Recapitalization and Development programme -12/13 (DPME/DRDLR) Implementation evaluation of the Restitution Programme -13/14 (DPME/DRDLR), Implementation and design evaluation of NARYSEC- 13/14 (Internal), Implementation evaluation of PLAS – 14/15 (Internal) Design and implementation evaluation of AVMP-15/16( internal), Diagnostic evaluation of strengthening relative rights of people working the land (50/50) policy framework- 16/17(internal).

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