DEPARTMENTAL PERFORMANCE REPORT (APRIL 2016 - MARCH 2017) S.M. TSHANGANA 28 NOVEMBER 2017

Overview of the Presentation Summary on operational –strategic management progress Targets not achieved Annual targets and progress for the 2016/2017 APP Financial information Overall performance of the department Audit findings Department’s response to audit findings

Summary on operational –strategic management progress During the 2016/2017 financial year, the department focused on improving the following: Streamlining the planning processes with provinces and metros to ensure aligned and responsive plans to strategic priorities, Providing support to provinces and metros in the implementation of priorities, this assisted the department in managing risks associated with spending the budget and achieving the targets Collaborating with the Department of Rural Development and Land Reform Deeds Registry to ensure that the backlog in issuing title deeds is resolved Putting in place the mechanisms to address the Title backlog by institutionalising the process and assigning capacity to each province to oversee the process Initiating the development of the Customised Sector Indicators that will be used across all Provinces to improve planning - reporting and possibly audit outcomes on HSDG related targets Developing Service Charter and the Service Delivery Improvement Plan for the 2018-2021 MTEF

Summary on operational –strategic management progress continue.. During the 2016/2017 financial year, the department focused on improving the following: Implementing the project readiness matrix which is a risk management tool used to assess the readiness of projects Developing a framework to assess the readiness of municipalities to deliver on mega projects Developing the policy for Human Settlements Mobilising stakeholders to participate on Human Settlements development, particularly in the Nelson Mandela Bay intervention Participating in the Habitat 111 conference, Cities Alliance and implementing the proposed co-operation with Algeria and Cuba

Summary on operational –strategic management progress The department in collaboration with the NHBRC focused on improving institutional capacity and coordination by focusing on the skills acquisition that enable participants to part take in the built environment industry as service providers A significant number of students were also funded to study towards obtaining the built environment qualifications in various institutions of learning The department ensured that risk associated matters are attended to , this includes the establishment of the risk management committee that provides oversight on the management of strategic and operational risks, More focus was put on processing payable and valid invoices within 30 days Matters relating to MPAT were attended to, the department engaged with DPME in areas where there were inconsistencies on the MPAT scores and developed an improvement plan

Achievements on communication and consumer education

Progress made in Mining Towns Between 2014/ 15 financial year until 31 March 2017 : 56 informal settlements in Category A received full upgrading (rapid formalization and full services) 118 informal settlements in Category B1 received interim basic services (leading to eventual formalization) 58 informal settlements in Category B2 emergency basic services (but leading to eventual relocation) 124 informal settlements in Category C would have to be relocated rapidly (to a site which is already available or imminently available) A total of 338 projects have been implemented in municipalities with mining towns A total number of 187,501 sites and 265,271 units were completed from the 2014/15 financial year until the period ending 31 March 2017

PROJECT PARTNERSHIP WITH MINING COMPANIES NDA MOU CURRENT STATUS Lonmin Signed Draft Draft Housing / Human Settlements Strategy and preliminary agreement on 5 project sites Anglo Platinum Submitted for signature Agreement to be reached regarding overall co-financial commitments and funding model for the project; discussions underway regarding with Province regarding Smashblock Informal Settlement Norplats Royal Bafokeng Draft MOU finalized; discussions underway with North West Province and Rustenburg Local Municipality Wesizwe CRU Project implementation underway. New projects being identified.

Summary of policy and delivery targets not fully achieved During the year under review, the department as the overall accounting organization in the Human Settlement Sector did not fully achieve the following targets: Title Deeds restoration programme Households in informal settlements upgraded Subsidy housing units delivered Affordable rental housing opportunities Hectares of land rezoned for new developments Draft White Paper Physical integration of the development finance institutions Master Spatial Plan

Summary of operational-compliance targets not fully achieved Audit plan was not fully implemented-this is due to audits that overlap beyond the financial year Anti fraud and corruption plan not fully implemented due to capacity constraints Human Resources implementation plan not fully achieved-this can attributed to the process of filling vacant positions that was initiated at the end of the quarter 4 Statutory requirements on Human Resources not complied with fully Training of officials, consumers and military veterans on human settlements capacity programmes not achieved

Annual Performance Plan targets and actual performance Administration Annual target Actual Performance Compliance with statutory tabling and prescripts Target Achieved . This includes but not limited to : Tabling dates observed and adhered to Financial Statements developed and submitted as per the schedule Unqualified Audit Report Outcome not adverse, Matter of emphasis on Title deeds –unavailability of source documentation at the time of audit Adherence to Cabinet and Cluster schedule as per approved protocol All requirements adhered to Implementation of the approved audit plan Audits conducted to support operational compliance and improvements , not all audits were conducted as planned – due to capacity constraints Compliance to Human Resource Statutory Requirements Target partially achieved Requirements relating to submission of SMS agreements not fully complied with during the year under review

Annual Performance Plan targets and actual performance Administration Annual target Actual Performance Development of legislative framework as per approved Legislative programme Target achieved : This includes Sectional Title Scheme Management Act, 2011 (Act No.8 Of 2011) (STSM)- The Community Schemes Ombud Service (CSOS) Act (Act No.9 Of 2011) Property Practitioners Bill, 2016 Home Loan And Mortgage Disclosure Amendment Bill,2016 Prevention Of Illegal Eviction From And Unlawful Occupation Of Land (Pie) Amendment Bill, 2016 Housing Consumer Protection Bill, 2016- Drafting of the Human Settlements Development Bank Bill, 2016

Annual Performance Plan targets and actual performance Policy and Planning Annual target Actual Performance 1st draft of the revised Red Book approved for consultation Target achieved An approved Human Settlements Master Spatial Plan Target partially achieved : Draft Human Settlements Master Spatial Plan developed A draft White Paper for Human Settlements The Drafting of the White Paper commenced A framework for the Human Settlements code developed Revised Accreditation Framework

Annual Performance Plan targets and actual performance Delivery Annual target Actual Performance Provinces and four Metros supported on the implementation of PHP Policy Target achieved :  8 689 PHP units delivered in KZN, Mpumalanga, North West Mobilisation and strengthening of stakeholder participation on Human Settlements Development Target achieved Single DFI operational integration completed Target partially achieved: All the required legal, governance and regulatory approvals are in place for the operational integration A draft bill for the establishment of Human Settlements Development Bank finalised for submission to Cabinet. 22 860 youth, women, military veterans, government officials and consumers in the subsidy and gap market, trained on human settlements skills development programmes Target Partially achieved: 21 729 does not include the targeted military veterans 

Annual Performance Plan targets and actual performance Delivery Annual target Actual Performance 9 human settlement interventions implemented in mining towns Target achieved 15 catalytic projects implemented Target achieved (old mega projects in various phases of implementation) 48 Catalytic projects have bee approved and are in various stages 500 feasibilities on informal settlements conducted Target partially achieved: 283 Feasibilities conducted 444 Informal settlement upgrading plans developed 413 Plans developed

Annual Performance Plan targets and actual performance Delivery Annual target Actual Performance Total delivered during the MTSF period until 31 March 2017 (Outcome 8 report) 175 000 households upgraded to phase 2 75 941 households HSDG (56 343) USDG (19 598 ) 265 660 households upgraded to phase 2 115 000 subsidy housing opportunities provided 90 692  subsidy opportunities 284 735 :Subsidy units delivered 69 675 Title Deeds transferred 3 700 affordable rental opportunities delivered 5 040 affordable rental opportunities delivered 15 776 6 301 of Social Housing units delivered 3595 of Social Housing units delivered   8 165 2 000 Community Residential Units (CRU) delivered 981 Community Residential Units (CRU) delivered 5 258

Annual Performance Plan targets and actual performance Delivery Annual target Actual Performance Total delivered during the MTSF period until 31 March 2017 (Outcome 8 report) 100 000 title deeds backlog eradicated 67 449 title deeds backlog eradicated 187 175 (Backlog pre- and post- 1994) 2 455 hectares of well-located land acquired, rezoned, and released for new developments 6 250.385 ha of well-located land acquired , There is slow progress on rezoning of the land 13 507.0 ha 2 Evaluation studies conducted (Affordable Housing and Access) 1 Evaluation study conducted (Affordable Housing) 5 Studies conducted (Asset, USDG, Social Housing, IRDP, Affordable Housing) 100% of projects under implementation monitored and verified (HSDG and USDG) 96.6% of projects under implementation monitored and verified (HSDG and USDG) N/A

DEPARTMENTAL EXPENDITURE ANNUAL REPORT AUDITED

Departmental Expenditure as at 31 March 2017 Programmes R`000 Total Allocation Expenditure Variance % Spent 1. Administration 455 459 420 897 34 562 92% 2. Human Settlements Policy, Strategy & Planning 92 275 86 600 5 675 94% 3. Programme Delivery Support 217 685 151 742 65 943 70% 4. Housing Development Finance 29 930 937 29 927 992 2 945 100% Total 30 696 356 30 587 231 109 125

Financial Intervention (HSDG) Projected Outputs (Sites) Projected Outputs (Units) Projected Outputs (Other) Funds Allocated Actual Expenditure Variance % of Allocation spent   R'000 1.1a Individual housing subsidies (R0 - R3 500) credit linked - 6 827 - 6 827 1.1b Individual housing subsidies (R0 - R3 500) Non - Credit Linked 5 478 47 983 110 359 - 62 376 230 1.2 Housing finance linked Individual subsidies (FLISP)-(R3 501 - R7 000) 2 000 3 057 255 103 78 749 176 354 31 1.3 Enhanced Extended Discount Benefit Scheme (EEDBS) 5 278 68 113 36 954 31 159 54 1.4 State Asset Maintenance Programme 8 011 93 697 136 620 - 42 923 146 1.5a Rectified RDP stck 1994-2002 2 519 222 412 324 397 - 101 985 1.5b Rectification of Housing Stock(pre 1994) 1 166 109 289 120 712 - 11 423 110 1.6 Social and Economic Facilities 1 91 398 98 470 - 7 072 108 1.7 Accredited Municipalities (level 1 & 2): 65 194 67 951 - 2 757 104 1.8 Operational Capital Budget 796 397 770 053 26 344 97 1.9 Blocked projects 33 541 51 694 - 18 153 154 1.10 NHBRC enrolment (related to grant) 26 000 192 174 156 512 35 662 81 1.11a Land parcels procured(IHAHSD) 308 75 639 299 522 - 223 883 396 1.12 Housing chapters of IDP's 1 744 671 1 073 38 Total: Financial Intervention 2 005 3 535 43 283 2 052 684 2 259 491 - 206 807

Financial Intervention (HSDG) cont. Of the reported R18.3 billion expenditure by Provinces for the 2016/17 financial year, a total of R2.2 billion which is 12% of the total available funds, was spent on Financial Intervention Housing programme. A total of 43 283 outputs was reported under Financial Intervention and the outputs cannot be counted as new housing opportunities. The lead contributors to these outputs were mainly NHBRC enrolments with 26 000, followed by Sate Asset Maintenance with 8 011, EEDBS with 5 278 and Rectification with 2 519 units. It is only FLISP under this programme that yielded a total of 5 057 (2 000 sites and 3 057 units) housing opportunities with a reported expenditure of R78.7 million.

Expenditure by Economic Classification as at 31 March 2017 Total Allocation Expenditure Variance % Spent Compensation of employees 371 492 325 288 46 204 88% Goods and services 374 461 332 497 41 964 89% Interest Paid 12 100% Payments For Financial Assets 100 231 100 222 9 Transfers and subsidies 29 823 992 29 822 601 1 391 Payments for capital assets 26 168 6 611 19 557 25% Total 30 696 356 30 587 231 109 125

Transfer Payments as at 31 March 2017 Total Allocation Expenditure Variance % Spent R`000 Grants 29 123 459 100% Human Settlements Development Grant 18 283 991 - Urban Settlements Development Grant 10 839 468 Entities 682 395 Social Housing Regulatory Authority: Operational 36 392 Social Housing Regulatory Authority: Institutional Investment 28 083 Social Housing Regulatory Authority: Restructuring Capital Grant 424 388 Social Housing Regulatory Authority: Regulations 6 000 Community Schemes Ombuds Services 30 020 Housing Development Agency 147 512 Housing Development Agency: NUSP 10 000 Departmental Transfers 18 138 16 747 1 391 92% Mangosuthu University of Technology 3 500 Scholarship Programme 5 847 4 529 1 318 77% UN Habitat 1 924 1 923 1 Households 1 867 1 795 72 96% CSIR 5 000 Payments for financial assets 100 000 National Housing Finance Corporation Total 29 923 992 29 922 601

Human Settlements Development Grant Expenditure (HSDG) Performance as at 31 March 2017 Provinces Voted Funds Roll Over from 2015/16 Total Available Year to date (1 April 2016 - 31 March 2017) Transferred from Voted Funds Spent by Provinces Unspent against Total available % Spent against Total Available % Spent against Roll Over & Transferred Funds % Unspent against Roll-over & Transferred Funds R'000 Eastern Cape 1 991 457 4 186 1 995 643 - 100 Free State 1 098 411 2 784 1 101 195 1 098 317 2 878 Gauteng 5 022 669 4 978 964 43 705 99 1 KwaZulu-Natal 3 124 702 3 123 330 1 372 Limpopo 1 208 370 394 842 1 603 212 1 517 376 85 836 95 5 Mpumalanga 1 314 645 1 302 757 11 888 Northern Cape 371 109 3 821 374 930 368 127 6 803 98 2 North West 2 151 817 1 951 247 200 570 91 9 Western Cape 2 000 811 Total 18 283 991 405 633 18 689 624 18 336 572 353 052

Urban Settlements Development Grant (USDG) Performance as at 31 March 2017 USDG EXPENDITURE (01 JULY 2016 – 31 MARCH 2017) Municipality Voted Funds 1 Roll-over from 2015/16 2 Total Available Funds 3=(1+2) Transfer from Voted funds 4 Spent by Municipality 5 Unspent against Total Available Funds 6=(3-5) % Spent against Total Available Funds 7=(5÷3)   % Unspent against Total Available Funds 8=(6÷3) R'000 Buffalo City 731 499 - 510 132 221 367 69.7 30.3 Nelson Mandela Bay 868 282 439 164 429 118 50.6 49.4 Mangaung 725 003 58 644 783 647 544 689 238 958 69.5 30.5 Ekurhuleni 1 890 352 815 522 1 074 830 43.1 56.9 City of Johannesburg 1 775 809 94 984 1 870 793 1 017 418 853 375 54.4 45.6 City of Tshwane 1 539 334 993 847 545 487 64.6 35.4 eThekwini 1 885 685 856 694 1 028 991 45.4 54.6 City of Cape Town 1 423 504 145 319 1 568 823 787 731 781 092 50.2 49.8 Total 10 839 468 298 947 11 138 415 5 965 197 5 173 218 53.6 46.4

Audit Outcomes The Department achieved an unqualified audit opinion with findings on compliance and/or performance information, The Office of the Auditor General placed an emphasis of matter on the fact that prior year financial statements had to be restated due to an error on the value of the investments, An amount of R230 million was appropriated during 2014/15 for recapitalisation of the NHFC, The amount was transferred to the NHFC as appropriated but was reported as a grant transfer to the NHFC instead of a recapitalisation amount. This is also mainly due to changes in the reporting requirements by National Treasury.

Audit Outcomes cont. Audit finding regarding the insufficient information on the number of title deeds backlog eradicated, This is a result of concurrent functions on the mandate which the department takes overall accountability for –while the function is performed by other spheres of government Audit finding in respect of fruitless and wasteful expenditure, This was due to the overlap between the department’s procured car (transaction, delivery and transition for use) and the rented car.

Audit Outcomes cont. Audit finding in respect of fruitless and wasteful expenditure. This was due to the R13 480 interest charged by the Public Service Pension Fund in respect of a pension contribution for a new staff member who’s pension contribution was unfortunately left out, Additionally interest of R3 233 had to be paid for an arbitration award paid after a 21 day period had lapsed.

Departmental response to the audit outcomes To address the material findings on performance information: the department is developing standard operating procedures that detail how indicators are developed and verified across the sector Customised Sector Indicators shall be used to assess the alignment of plans to the MTSF priorities- and also to verify and test the accuracy of the reported information An audit action plan to address all audit findings has been developed -and progress will be monitored and reported against quarterly through the Internal Audit unit of the department,

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