1. DEPARTMENT OF HUMAN SETTLEMENTS ANNUAL PERFORMANCE REPORT FOR THE FINANCIAL YEAR 2013/14. SELECT COMMITTEE ON SOCIAL SERVICES DIRECTOR-GENERAL: T ZULU

2. STRUCTURE OF THE PRESENTATION 1.Overview of Departmental Performance (April 2013 – March 2014 2.Performance of the National Department as per Approved Annual Performance Plans 2013/14 3.Departmental Expenditure vs Performance (Targets/Outcomes) 4.HS Sector Performance 4.1Communication and Outreach key 4.2Delivery Agreement (Outcome 8) 4.3Job Creation 4.4Accreditation of Municipalities 5.Financial issues 4.Responses to Audited Outcomes / Action Plan 2

3. Overview of Departmental Performance (April 2013 – March 2014) The 2013/14 financial year marks the coming of age of the South African Democracy. While on the other hand it marks the ongoing process of government’s efforts to provide shelter as a socio-economic right. Provinces as guided by the National Department, embraced principles of integrated planning, project implementation and synergy in deploying funding. Through collaboration and coordination, Provinces as delivery agents were brought in the outcomes based approach as they discharge their responsibilities to change the Human Settlements space. The department has also revised the finance linked individual subsidy programme to improve the ability of households in the income category R3 501-R15 000 to access mortgage finance for housing thus increasing access to housing finance and the provision of shelter and basic services

4. Overview of Departmental Performance (April 2013 – March 2014) Engagements were held with the private sectors such as Pathfinder Development Company as well as employers such as Harmony Golden to encourage investments and encourage access to affordable housing finance. The NSPU planned to monitor 144 Municipal Infrastructure Grant (MIG) projects and a total number of 152 MIG projects were monitored across 9 Provinces The RHIG Business Plans were received from 24 benefitting municipalities and funds were transferred to municipalities to implement RHIG. The management of the Urban Settlement Grant continued to receive attention in the devolution of powers to the local sphere of government. South Africa is a prominent member of UN HABITAT and continues to advocate and play an instrumental role for the support of human settlements programmes in Africa.

5. Overview of Departmental Performance (April 2013 – March 2014) The Department of Human Settlements hosted a delegation from Angola’s Ministry of Construction in March 2014.South African and Angola signed a Memorandum of Understanding (MoU) on Co-operation in the field of Human Settlements The Rental Housing Amendment Bill, 2014 has been formally introduced into Parliament on the 20 th November 2013, and subsequently referred to the Portfolio Committee on Human Settlements for deliberations New Policy for Backyard Rental Programme was developed and approved by Task Team The CRU policy was adjusted in regard to the grant quantum levels. The Department embarked on filling all the vacant positions to address the challenge of skills. The strengthening of inward and capacity development initiatives is aimed to achieve the mandate of the department of human settlements.

6. Performance of the National Department as per Approved Annual Performance Plans 2013/14 The overall achievement by the National Department of Human Settlements during the financial year 2013/14 is seventy nine (79%). Out of one hundred and twenty-six (126) targets which were planned for the period under review, ninety nine (99) targets were achieved whilst twenty seven (27) targets were not achieved.

7. DEPARTMENTAL EXPENDITURE VS. PERFORMANCE (TARGETS / OUTCOMES) 7 Branch Final Allocation (Operational) ExpenditureVariance % Spent Planned Targets Achieved Targets Variance/ Targets Not achieved % Achieved Targets 1: Administration 346 922 000247 710 95999 211 04171% 2524196% 2: Human Settlements Delivery Frameworks 37 070 39536 253 742816 65398% 24131154% 3: Human Settlements Strategy And Planning 55 645 60542 156 53713 489 06876% 178947% 4: Programme Management Unit 192 945 05679 867 291113 077 76541% 1712571% 5: Office Of The Chief Financial Officer 198 230 344168 862 38529 367 95985% 3029197% 6: Office Of The Chief Operations Officer 52 629 60041 959 65910 669 94180% 13 0100% Total 883 443 000616 810 573266 632 42770% 126992779%

8. HS SECTOR PERFORMANCE

9. COMMUNICATION AND OUTREACH 9 The Chief Directorate participated in all Ministerial outreach programmes and face to face communication was done with communities with the help desk was set up and individuals queries were logged in for further investigation or solved on site. This was done in collaboration with Municipalities and Provincial Departments of Human Settlements. Public engagements included exhibiting during the annual Rand Show, Pretoria Show, South African Housing Foundation, BRICS Conference. About 4500 generic publications were distributed to GCIS library in Parliament and Thusong Service Centres in Mpumalanga and Limpopo in their regional languages.

10. COMMUNICATION AND OUTREACH CONT 10 Door to door campaigns were done and publications were handed over to members of the communities during the campaign like on 06 August in Oudtshoorn and 02 October in Lerato Park in Kimberley. Community Imbizos hosted by the Minister and Deputy Minister were held across the country. Other outreach programmes were done by officials during Youth And Women Builds.

11. COMMUNICATION AND OUTREACH CONT 11 Sanitation Week held in Ward 5 at Makhaza in Khayelitsha - 25 April 2013 Launched Walmer Link FLISP project - 09 May 2013 Community engagements on the Budget Vote in Du-Noon – 22 May 2013

12. STRATEGY Draft Terms of Reference for the Green Paper developed Rental Housing Strategy Framework developed; the discussion paper about the affordability of rental housing and discussion paper about object subsidies in rental housing Draft sector wide reporting indicators developed Consultation on Draft 2014-2019 Strategic Plan across the sector Draft evaluation report submitted to the Technical Working Group for comments

13. PLANNING Draft ToR for the review of the Programme for Human Settlements Chapter of Municipal IDPs developed Progress report on the support rendered to municipalities on the assessment of the Housing Chapters of the IDPs drafted.

14. ENHANCED PEOPLE HOUSING PROCESS Finalisation of the Human Settlements Policy on community based housing Cooperatives Engaged the Service Provider developing the Policy Engaged SEDA to explore possible collaborations and funding mechanisms for Human Settlements Cooperatives Participates in the DTI Inter-governmental Coordination Committee on Cooperatives to provide an update on Human Settlements Cooperatives Advancement of the self-built methodology Oversight visits conducted in the Western Cape, KZN and North West Provinces to evaluate the implementation of the programme and deliver the required PHP capacity development workshops Support to Provinces in the upgrading of informal settlements through PHP KZN Province and eThekwini Metro to evaluate progress regarding the upgrading of informal settlements through PHP Assessing the M&E assignment of evaluating the impact of the UISP Engaged the CPUT to discuss Human Settlements Summit with focus on alternative building technology

15. INTERNATIONAL RELATIONS PROGRAMME The Department led a team of South African government officials and academics to the 7 th World Urban Forum (WUF 7) in Medellin, Colombia. Outcomes from WUF 7 will support the concept of the long-term planning approach to urban policy and implementation and management thereof. i.e. National Development Plan (NDP) – Vision 2030, as well as respective city visions, which can look as far ahead as 2055 Leading the country preparations for the Third United Nations Conference on Human Settlements and Sustainable Urban Development (Habitat III) in 2016 Finalising the National Report on achievements in the last 20 years, what our remaining challenges are and what we hope to have included in the New Urban Agenda to be adopted at Habitat III

16. STAKEHOLDER AND IGR PROGRAMME The Department successfully launched the Cornubia Integrated Project in April 2014. The Graskop Project was successfully handed over from the China Government to the South African Government A Memorandum of Understanding was signed with Council of Science and Research. Preparations for the National Govan Mbeki Awards well underway with several successful provincial awards already hosted.

17. STAKEHOLDER AND IGR PROGRAMME The following Stakeholders were engaged-: Sector engagements through a national workshop on 26 June and have further solicited written inputs to be included in the report before it is submitted to Cabinet for approval in Q2. Held the 4 th Quarter Provincial, Municipal and Entity Performance Review Sessions at the end of May and have followed up on the matters arising from the reviews with the relevant provinces, metros and entities

18. STAKEHOLDER AND IGR PROGRAMME On the Each one settle one campaign the Department has secured a total amount of R105 000.00 for the Youth Build Special Project including the following items: -250 construction work-suits, 50 protective shoes, 150 T-shirts, 200 blankets, a course for the Youth volunteer on skills, enterprise and cooperate training, a business management course, training on plumbing, electrical, general construction, geo-technical and mentorship program, as well as a one week catering for the volunteers. The sponsorship benefited the elderly, the destitute and child headed households. The secured funds paid for furniture, tools and other building materials through the Departmental NHBRC’s sponsorship special account

19. OUTCOME 8 – CREATE SUSTAINABLE HUMAN SETTLEMENTS AND IMPROVED QUALITY OF HOUSEHOLD LIFE 19

20. UPGRADING OF INFORMAL SETTLEMENTS 20 Upgrading of 400 000 households in informal settlements with access to secure tenure rights and basic services: o Target for 2014 achieved o 2013/14: Total number of households assisted: 87 064 o Total number of households assisted to date: 447 780 households o Represents 111,9% of 2014 target

21. NATIONAL UPGRADING SUPPORT PROGRAMME 21 National Upgrading Support Programme: –Performance 2013/14 : Progress from 35 Municipalities to 50 Municipalities; –Achieved 96% of the 2014 target -Technical assistance in place in 47 of 49 NUSP Municipalities plus additional 3 Municipalities that requested support; –The 50 Municipalities represents more than 700 informal settlements;

22. INCREASED PROVISION OF WELL- LOCATED RENTAL ACCOMMODATION 22 PROVINCETOTAL DELIVERY (1 April 2013 To 31 March 2014) TARGET FOR 2015/ 2016 % OF 2015 TARGET EC742636 2.8 FS5741745 38.9 GP1 0831200 90.2 KZN660865 76.3 LP61683 8.9 MP20679 260.7 NC3320 0 NW00 0 WC2 7141139 238.3 Total5 7048347 68.3

23. ACTIONS TAKEN TO ADDRESS CHALLENGES 23 Revision of current Social and Rental Housing Policies in process; Development of back yard rental policy receiving attention; Declaration of additional restructuring zones being attended to; Monitoring tool for private rental to be put in place; National Department will also undertake the design and costing of higher density housing typologies;

24. ACCREDITATION AND ASSIGNMENT OF MUNICIPALITIES The annual target of undertaking 6 Workshops to capacitate the municipalities about the Accreditation Implementation Protocol was achieved. The annual target of conducting 6 workshops to capacitate provinces and municipalities on the assignment of human settlements functions to municipalities was achieved. The annual target of assessing 6 municipalities for accreditation at level 2 was not achieved, instead an assessment for the readiness of the 6 Metro municipalities to receive level 3 accreditation was conducted namely : City of Johannesburg, City of Tshwane, Ekurhuleni Metro, City of Cape Town, City of Tshwane and eThekwini Metro. 24

25. ACCREDITATION AND ASSIGNMENT OF MUNICIPALITIES To assist the 6 Metros with capacity and subsidisation of the operational costs at the conclusion of the assignment of housing functions, the Municipal Human settlements Capacity Grant to the tune of R900 million was introduced over an MTEF period starting at the 2014/2015 financial year. 74% of 2014 target achieved with: –Level 1: 8 District/ Local Municipalities; and –Level 2: 20 Metros/ District Municipalities/ Local Municipalities; 4 implementation protocols still outstanding, namely Mangaung Metro, Nelson Mandela Metro, Tlokwe and Rustenburg; No Metro was assigned. National Treasury in the process to resolve the funding procedures and transferring of assets and projects. 25

26. OUTPUT 3: EFFICIENT UTILISATION OF LAND FOR HUMAN SETTLEMENTS DEVELOPMENT An additional 3 831.2 hectares of land was released by the HDA for future human settlements development. Over the four year period of Outcome 8, a total number of 11 308.7 ha (both donated and acquired) of land was released representing 180,9% of the 2014 target. Land Assembly Strategy developed and will be submitted to Human Settlements MINMEC - land pipelines with selected Provinces have been developed to facilitate forward planning and budgeting. HDA commenced with discussions with relevant Provinces and Municipalities to assist with packaging of released land for development 26

27. OUTPUT 4: IMPROVED PROPERTY MARKET Mortgage Default Insurance Scheme: – Although various discussions were held between the National Department, National Treasury and the Reserve Bank an agreement could not be reached and approval of MDI is still outstanding. Finance Linked Individual Subsidy: – Revised Policy implemented in April 2012 – need for additional amendments identified and are receiving attention; – An additional 24 projects and 1 372 subsidies were approved in the 2013/14 financial year; Long term fixed interest rate instrument In view of the low interest rate environment and without immediate steep inflationary expectations at the time, the instrument will not benefit households and will therefore be reconsidered when the market environment has changed 3 27

28. PERFORMANCE : DEVELOPMENT FINANCE INSTITUTIONS: LOANS GRANTED 28 INSTITUTION TOTAL DELIVERY (1 APRIL 2013 TO 31 MARCH 2014 2015 TARGET NHFC (Mortgage Loans) 0 149 NHFC (Incremental Loans) 4 0004 761 NHFC (Value of approvals: Strategic Investment) 72 000 96 499 NHFC (Leverage) 85 439 11 478 RHLF 44 610 49 667 NURCHA19832 800

29. IMPROVED PROPERTY MARKET 29 During the same period the total number of loans made available by Banks to the GAP market was 68 028. Total contribution by the DFIs and Banks towards the 2014 target: 134 907 loans by the NHFC (mortgage loans, incremental loans, wholesale funding and leveraging); 176 754 loans by RHLF; Construction of 10 093 units financed through 54 loans granted by NURCHA; and 162 800 loans to the affordable market by the Banks; and

30. CONSOLIDATION OF DFI’s 30 Phase 2 of the rationalisation process commenced. Phase 2 makes provision for the development of a business case and draft enabling legislation for a consolidated Entity.

31. JOB CREATION The delivery of,48,193 serviced cites and 105,936 houses during the 2013/2014 financial created 53,278 employment opportunities. 31 National TOTAL EMPLOYMENT CREATED DirectIndirectInducedTotal Serviced Stand 6,0106032,7969,408 Top Structure 22,4923,74617,63243,869 Total 28,5024,34920,42753,278

32. ENHANCING SERVICE DELIVERY VIA PROFESSIONALISATION Fledgling Scholarship programme benefiting some 347 beneficiaries since inception. Annual investment by Department is at R 9 million p.a. Bachelor of Human Settlements Development Degree (BHSD) offered via Nelson Mandela Metropolitan University (NMMU). Chair for Human Settlements Development and Management hosted by Nelson Mandela Metropolitan University (NMMU) to develop the body of knowledge in the sector. Cabinet Approval for the Degree and the Chair.

33. SELECTED PERFORMANCE INDICATORS AS PER 2013/2014 STRATEGIC PLAN: PROGRESS STATUS BY PPMU BRANCH The Klarinet Project, located in the Mpumalanga Province, within the jurisdiction of the Emalahleni Local Municipality, has to date, delivered 1788 housing units while 62 foundations, 67 wall plates and 186 roofs are in the process of being constructed. 5500 units in the first phase of the Khutsong Project, 3 434 are complete, 4976 foundations have been laid and 4428 wall plates constructed. In the Sweetwaters Project in the City of Johannesburg, 1000 units have been completed and occupied in the adjacent Tulamtwana project. In the Drommedaris Project in the Drakenstein Municipality, 974 housing units have been completed and handed over while in the Duncan Village Project in the Buffalo City Municipality, 5354 housing units have been completed in this project. On the N2 Gateway project, situated, within the jurisdiction of the City of Cape Town, a total of 11,400 units have been completed of the planned 16 083 units that were planned in Phase 1 of the project. 33

34. SELECTED PERFORMANCE INDICATORS AS PER 2013/2014 STRATEGIC PLAN: PROGRESS STATUS BY PPMU BRANCH Construction of houses in the Zanemvula Project, situated in the Eastern Cape, within the jurisdiction of the Nelson Mandela Bay Metropolitan Municipality, is ongoing and to date, 6181 new units have been completed and 1970 units rectified Lerato Park Project, situated in the Sol Plaatje Local Municipality, 491 units have been completed. In so far as the mining towns was concerned, it was firstly necessary to request funding from National Treasury and R1,1billion was subsequently approved for informal settlement upgrading in the identified mining towns The donation of land (with 850 serviced sites) by the Lonmin mining company will assist in providing subsidized housing for the mining community in Rustenburg. 34

35. ANNUAL REPORT PRESENTATION AS AT 31 MARCH 2014 FINANCIAL PERFORMANCE

36. MTEF Allocation 36 Rand thousand Medium term estimates 2013/142014/15 2015/16 Indicative 2016/17 Indicative Administration422,399425 905445 612472 038 Human Settlements Policy, Strategy and Planning 84,05589 39694 299100 332 Programme Delivery Support226,922298 475307 715325 404 Housing Development Finance 27,377,08729 707 61631 994 73633 554 818 Total28,110,46330 521 39232 842 36234 452 592 Grants and transfers to entities constitute 97% of the total allocation.

37. Allocation MTEF: Transfer payments Transfer Payments R`000 2013/142014/15 2015/16 Indicative 2016/17 Indicative Conditional Grants Human Settlements Development Grant16 983 87217 084 36918 532 57620 409 567 Urban Settlements Development Grant9 076 90610 284 68410 654 77311 231 861 Municipal Human Settlements Capacity Grant-300 000 Rural Households Infrastructure Development: Direct Grant106 72147 62451 000124 599 Human Settlements Development Grant: Indirect Grant 899 177975 399 Rural Households Infrastructure Development: Indirect Grant 100 53965 50067 328 Sub Total26 268 03828 681 35430 581 07632 066 027 Entities Social Housing Regulatory Authority: Operational32 15133 48034 56036 392 Social Housing Regulatory Authority: Capital Restructuring Grant 904 103827 5431 195 8601 287 049 Housing Development Agency97 497101 047104 615110 160 Community Schemes Ombuds Services20 00040 00053 00028 000 Sub Total1 053 7511 002 0701 388 0351 461 601 Total27 301 78929 683 42431 969 11133 527 628

38. Summary of Adjustment Budget Programme R`000 Original budget Rollovers Approved Unallocated during 2013 ENE Declared Unspent Funds Adjusted Allocation 1. Administration422 399 000 2. Human Settlements Policy, Strategy and Planning 84 055 000 3. Programme Delivery Support 226 922 000 -20 000 000206 922 000 4. Housing Development Finance 27 377 087 000120 539 00044 454 000 27 542 080 000 Total28 110 463 000120 539 00044 454 000-20 000 00028 255 456 000

39. Adjustment Estimate Rollover approved –R100.5 million Rural Household Infrastructure Grant –R17 million Community Schemes Ombud Service: Capitalisation –R3 million Community Schemes Ombud Service: startup funding

40. Adjustment Estimate Unallocated during 2013 ENE –R44 million Human Settlements Development Grant: Disaster relief Declared Unspent Funds –R20 million National Upgrading Support Programme

41. Annual Expenditure per Programme as at 31 March 2014 41 Programmes R`000 Final AllocationExpenditureVariance % Spent 1. Administration 404 599299 448105 15174% 2. Human Settlements Policy, Strategy and Planning 86 24573 32712 91885% 3. Programme Delivery Support 193 20290 797102 40547% 4. Housing Development Finance 27 571 41027 239 416331 99499% Total 28 255 45627 702 988552 46898%

42. Reasons for underspending Funds provided for the Special Investigation Unit (SIU) have not been fully utilized. –Under spending is due to the SIU not invoicing the Department or not providing the department with supporting documentation on work performed and invoiced. –The Department held various meetings but could not resolve the matter. Funds provided for the leasing of additional office accommodation have not been fully utilised. –The unspent portion of the Property Management portfolio is in respect of leasing of both 240 and 260 Justice Mahomed Street buildings. –The Department of Public Works (DPW) entered into a seven year lease agreement on behalf of the Department for these buildings, effective from 01 January 2011 to 31 December 2018. –A dispute arose between the DPW and the landlord that led to a delay in planned building refurbishment and tenant installation as well as the subsequent occupation of the additional office accommodation. i.e. (260 Justice Mohamed Street building) Delay in the implementation of the National Upgrading Support Programme (NUSP) which takes up 30% of the Branch’s budget has contributed to the current low spending rate 42

43. REASONS FOR UNDER SPENDING CONT. –Other major contributing factor applicable throughout the Department is under spending on compensation of employees which amounted to R38.4 million and can be attributed to the following: Delays experienced in qualification verification by the South African Qualifications Authority (SAQA) for candidates who have been recommended. A meeting was arranged between the Department and SAQA in the 3rd Quarter and improvement has been seen. Posts that had to be re -advertised due to the fact that no suitable candidates could be found. Problems are experienced with non-disclosure of criminal records on applications disqualifying selected candidates 43

44. Transfer payments as at 31 March 2014 Transfer Payments R`000 Total Allocation Expenditure Variance % Spent Human Settlements Development Grant 16 983 872 -100% Urban Settlements Development Grant 9 076 906 -100% Disaster Relief Grant 44 454 -100% Rural Households Infrastructure Development 240 370215 31025 06090% Social Housing Regulatory Authority: Operational 32 151 -100% Social Housing Regulatory Authority: Capital Restructuring Grant 904 103585 849318 25465% Housing Development Agency 97 497 -100% National Urban Reconstruction and Housing Agency 100 000 -100% Nelson Mandela University 3 949 -100% Bursaries Scheme 4 2204 553(333)108% UNHABITAT 1 1001 0752698% Community Schemes Ombud Service 17 000 -100% Total 27 505 62227 162 615343 007 99%

45. HUMAN SETTLEMENTS DEVELOPMENT GRANT EXPENDITURE: 31 MARCH 2014 45 Provinces DoRA Allocation 2013/14 Additional Disaster Reallocation / (Stopped) Total Available Actual Transfer Amount Received by Province Amount Spent by Province % Spen t R'000 Eastern Cape 2,523,803 - - 100% Free State 1,120,936 - 230,000 1,350,936 100% Gauteng 4,108,399 - - 4,095,445100% KwaZulu-Natal 3,235,428 40,156 57,000 3,332,584 3,333,979100% Limpopo 1,324,742 1,368 (644,000) 682,110 303,44944% Mpumalanga 1,124,332 1,764 - 1,126,096 1,014,82690% Northern Cape 395,724 - 207,900 603,624 577,45096% North West 1,224,537 - 117,000 1,256,637 1,341,523107% Western Cape 1,925,971 1,166 32,100 2,044,137 1,959,23796% Total 16,983,872 44,454 - 17,028,326 16,500,64897%

46. Delivery Performance of HSDG as at 31 March 2014 46 Province Annual Delivery Targets Delivery Performance as at 31 March 2014 Variance Delivery sites Variance Delivery Top Structure Total Variance Delivery Sites (units) Top Structure (units) Total Delivery Targets Sites (units) Top Structure (units) Total Delivery Performance Eastern Cape 15,31620,341 35,657 11,720 12,646 24,3663,596 7,695 11,291 Free State 5,0288,341 13,3697,203 6,920 14,123-2,175 1,421-754 Gauteng 13,17330,351 43,5248,959 22,352 31,3114,214 7,999 12,213 KwaZulu-Natal 3,36225,377 28,7392,790 29,151 31,941572-3,774-3,202 Limpopo 4937,382 7,87568 3,080 3,148425 4,302 4,727 Mpumalanga 3,31916,404 19,7237,578 8,126 15,704-4,259 8,278 4,019 Northern Cape 4,7341,735 6,4692,875 2,464 5,3391,859-729 1,130 North West 2,11014,092 16,202305 9,362 9,6671,805 4,730 6,535 Western Cape 6,62913,414 20,0436,695 11,835 18,530-66 1,579 1,513 Total 54,164137,437 191,60148,193 105,936 154,1295,971 31,501 37,472

47. PERFORMANCE OF THE USDG AS AT 31 MARCH 2014 47 YEAR TO DATE (01 JULY - 31 MARCH 2014) EXPENDITURE Municipality Allocated Funds National Rollovers Total Available Transferred Funds Spent by Municipality Variance Spent vs Transferred Variance Spent vs Total Available Spent as % of Total Available Unspent as % of Total Available R'000 Buffalo City613,305176,875790,180613,305409,323203,982380,85751.8%48.2% Nelson Mandela Bay 727,986 - 341,504386,482 46.9% 53.1% Mangaung596,719129,450726,169596,719333,054263,665393,11545.9%54.1% Ekurhuleni1,584,91269,5091,654,4211,584,912906,707678,205747,71454.8%45.2% City of JHB1,488,87770,3471,559,2241,488,877607,204881,673952,02038.9%61.1% City of Tshwane1,290,611 - 791,087499,524 61.3%38.7% eThekwini1,580,999 - 1,007,292573,707 63.7%36.3% City of Cape Town 1,193,49766,2761,259,7731,193,497486,797706,700772,97638.6%61.4% Total9,076,906512,4579,589,3639,076,9064,882,9684,193,9384,706,39550.9%49.1%

48. Urban Settlements Development Grant Expenditure as at 30 June 2014 48 YEAR TO DATE (01 JULY - 31 MARCH 2014) EXPENDITURE Municipality Allocated Funds National Rollovers Total Available Transferred Funds Spent by Municipality Variance Spent vs Transferred Variance Spent vs Total Available Spent as % of Total Available Unspent as % of Total Available R'000 Buffalo City613 305176 875790 180613 305789 503677100%99.9%0.1% Nelson Mandela Bay 727 986 - -100%100.0%0.0% Mangaung596 719129 450726 169596 719651 13775 032100%89.7%10.3% Ekurhuleni1 584 91269 5091 654 4211 584 9121 444 715209 706100%87.3%12.7% City of JHB1 488 87770 3471 559 2241 488 8771 435 796123 428100%92.1%7.9% City of Tshwane1 290 611 - 1 245 78144 830100%96.5%3.5% eThekwini1 580 999 - -100%100.0%0% City of Cape Town 1 193 49766 2761 259 7731 193 497973 226286 547100%77.3%22.7% Total9 076 906512 4579 589 3639 076 9068 849 143740 220100%92.3%7.7%

49. Spending Performance as at 30 June 2014 Description Total Available Funds Expenditure on Total Available Funds Variance on Total Available Funds % Spent on Total Available R'000 Spatial Development and the Built Environment 2 198 306 1 972 799 225 50789.7% Transport 2 027 440 1 808 658 218 78289.2% Water 1 679 533 1 548 862 130 67192.2% Sewerage 1 878 893 2 067 819 (188 926)110.1% Solid Waste Management 163 374 147 130 16 24490.1% Electricity 917 898 748 206 169 69281.5% Socio-Economic Amenities 405 867 365 275 40 59290% Local Economic Development and Job Creation 228 650 100 992 127 65844.2% Vat 89 402 -100% Total 9 589 363 8 849 143 740 22092.3%

50. FINANCIAL PERFORMANCE - BCM Buffalo City Services 2013/14 Adjusted budget YTD Expenditure% Water 78,537,212 78,537,213 100% Sanitation (waste water) 190,031, 698 100% Electricity 38,667,450 100% Roads & Storm Water 314,288,283 314,156,492 100% Human settlements programme 141,031,375140,430,865 100% Transport 23,999,295 23,999,294 100% Solid Waste Management 3,684,205 3,680,008 100% TOTAL 790,179,608 789,503,174 100%

51. NON-FINANCIAL PERFORMANCE - BCM The 100% expenditure of the Metro was on the following: 1 729 serviced sites 3,7 ha of land procured 56 km of roads resealed 406 km roads rehabilitated 56 km storm water drainage installed 8 km pedestrian walkways constructed 143 water service points (taps) installed for informal settlements dwellers 622 households (RDP) have been provided with access to free basic level of potable water connections 1 082 new households (RDP) with sewer connections 448 sanitation service points installed 64 178 connections for backlog in the provision of basic sanitation services 51

52. NON-FINANCIAL PERFORMANCE - BCM The 100% expenditure of the Metro was on the following: 281 090 households have been provided with kerb-side waste removal services in formal areas 1 500 street lights installed 517 households(RDP) provided with electricity connections 7 project of waste minimization projects have been initiated 10 community halls have been developed 6 sports fields developed 8 parks developed 13 cemeteries developed 1 fire safety and emergency facility developed 669 jobs created through EPWP and other municipal programmes 52

53. FINANCIAL PERFORMANCE - NMBM 53 Nelson Mandela Bay Services 2013/2014 Adjusted Budget YTD Expenditure% Servicing of sites 171,261,100 171,758,447 100% Upgrading of gravel roads and provision of stormwater 64,227,488 64,227,469 100% Provision of bulk sanitation services 224,698,222 224,262,039 100% Provision of bulk water services178,397,400 178,397,334 100% TOTAL 727,986,000 727,986,000 100%

54. NON-FINANCIAL PERFORMANCE - NMBM The 100% expenditure of the Metro was on the following: 43.73 ha of land procured for Greenfields development 4 012 sites serviced 10 informal settlements upgraded (in-situ) 1 informal settlements upgraded - relocation 3.31 km graveled roads 20.45 km tarred roads rehabilitated 1.46 km storm water drain installed 3.58 km pedestrian walkways constructed 773 households (RDP) connected to water 773 households (RDP) connected to sanitation 2 459 households (RDP) connected to electricity 77 new street lights 366 high mast lights installed 1 sport field developed 11 886 jobs created through EPWP

55. FINANCIAL PERFORMANCE MANGAUNG Mangaung Services2013/2014 Adjusted Budget YTD Expenditure % Engineering Services (Sanitation, Roads and Waste) 343,686,390326,112,47295% Water Services199,223,636180,577,38391% CENTLEC (Electricity)52,631,58031,383,50160% Planning44,189,51253,416,08197% Social Services35,129,15428,029,60680% Corporate Services28,806,89227,017,89994% Human Settlements and Housing 11,502,0784,599,61540% TOTAL726,169,242651,136,55790%

56. NON-FINANCIAL PERFORMANCE MANGAUNG The 90% expenditure of the Metro was on the following: 2 181 title deeds transferred to eligible beneficiaries 3 informal settlements upgraded - relocation 1 km of paved road 55 km of roads resurfaced 1 km of storm water drainage installed 18 km pedestrian walkways constructed 1 475 formal domestic consumers receiving water services 1 500 water service points (taps) installed for informal settlements 500 households (RDP) provided with water connection 3 625 units provided with access to free basic water 1 550 formal domestic consumers receiving sewerage services 450 households (RDP) provided with sewer connection 56

57. NON-FINANCIAL PERFORMANCE MANGAUNG The 90% expenditure of the Metro was on the following: 165 464 households with weekly-kerb waste removal services 23 130 households in informal settlements with access to waste removal 26 high mast lights installed in informal settlements 552 households (RDP) were connected to electricity 17 862 households provided with access to free basic electricity 1 community hall constructed 3 sports fields constructed 2 parks developed 1 swimming pool developed 6 cemeteries developed 1 687 jobs created through EPWP 57

58. FINANCIAL PERFORMANCE - EKURHULENI Ekurhuleni Services 2013/2014 Adjusted Budget YTD Expenditure % Disaster & Emergency27,054,35026,194,22797% EMPD13,650,0007,407,38055% Energy214,300,000208,774,77497% Environmental Resources Management 1,110,0001,106,92299% Human Settlements64,066,53829,333,38046% Roads and Storm water573,721,860502 814 61387% Health and Social Development 66,860,00065,849,99498% Economic Development35,650,00033,872,19295% SRAC127,975,000123,394,31196% Transport Planning and Provision 35,700,00029,257,36381%

59. FINANCIAL PERFORMANCE - EKURHULENI Ekurhuleni Services 2013/2014 Adjusted Budget YTD Expenditure% Water & Sanitation182,200,000151, 837,29083% Erwat- Wastewater treatment 50,000,000 100% Interim sanitation services (Chemical toilets) 160,916,650154,349,24596% Waste Management (land fill sites) 31,700 00029,217,41792% Real Estate37,600,00031,306,05083% Human Settlement USDG (Opex) 31,566,282-0% TOTAL1,654,420,6801,444,715,15787%

60. NON-FINANCIAL PERFORMANCE - EKURHULENI 60 The 87% expenditure of the Metro was on the following: 48 serviced sites 1 486 title deeds transferred 283 KMs of roads paved 374 KMs of graveled roads 350 KMs of roads surfaced/ rehabilitated 107 KMs of storm water drainage installed 64 KMs of pedestrian walkways constructed 1 bus terminal constructed 7 bus stops constructed 2 148 formal domestic costumer receiving water and sanitation services 154 water services points (taps) installed for informal settlements dwellers

61. NON-FINANCIAL PERFORMANCE - EKURHULENI 61 The 87% expenditure of the Metro was on the following: 597 288 households in informal settlements with access to refuse removal 222 300 households (RDP) with access to refuse removal 12 waste minimization projects initiated 55 high mast lights installed in informal settlements 7 647 households (RDP) provided with electricity connections 1 sports field and stadia developed 5 clinics developed 1 fire safety and emergency facilities developed 11 242 jobs created using the EPWP

62. USDG Projects – FY 13/14 2013/2014 Adjusted Budget YTD Expenditure % Expenditure R’000 Formalisation of Informal Settlements 254,524 303,873119.4% Bulk, Link and Internal Infrastructure(water, sewer, Electricity; Roads & Storm-water) 899,162 796,07585.3% Electrical (Substations & Streetlights) 125,715 117,34193.3% Mixed Rental / Hostel Upgrade 96,138 85,65789.1% Land Acquisition 20,000 19,65498.3% Upgrade of Community Centres & Sport fields 50,090 49,30698.4% FINANCIAL PERFORMANCE – CITY OF JOHANNESBURG

63. USDG Projects – FY 13/14 USDG Budget Quarter 4 Expenditure% Expenditure R’000 Upgrade Of Clinics 30,730 23,24775.6% Upgrade Of Landfills 46,865 34,14372.9% Upgrade Of Parks & Cemeteries 36,000 35,72699.2% Total 1,559,224 1,465,02294% FINANCIAL PERFORMANCE – CITY OF JOHANNESBURG

64. NON-FINANCIAL PERFORMANCE – CITY OF JOHANNESBURG The 94% expenditure of the Metro was on the following: 20 ha of land procured for greenfield development 35 ha procured for brownfield development 1 440 km of roads graveled 242 km of roads resurfaced 18 km of roads resealed 750 000 formal domestic consumers receiving water and sewerage services 3 069 households (RDP) provided with water connections 967 households provided with access to potable water 783 sanitation services points (toilets) installed for informal settlements dwellers 64

65. NON-FINANCIAL PERFORMANCE – CITY OF JOHANNESBURG The 94% expenditure of the Metro was on the following: 789 982 households with weekly-kerb waste removal in formal areas 185 738 households in informal settlements with access to refuse removal 4 waste minimization projects initiated 415 412 formal households with access to basic electricity 1 610 high mast lights installed in informal settlements 1 562 households (RDP) connected to electricity 3 846 households provided with access to free basic electricity 1 Parks and 1 Garden constructed 2 clinics constructed 1 cemetery completed 34 markets developed 7 Fire and safety emergency facilities developed 55 082 jobs created through EPWP 65

66. City of Tshwane Municipality Services 2013/2014 Adjusted Budget YTD Expenditure% Agriculture and Environmental Management 24,000, 0007,604,39031.68% Housing & Sustainable Human Settlements 469, 824, 650445,971,29194.92% Water and Sewer491,735,544489,558,66899.56% Electricity56,150,00055,157,13398.23% Sports and Recreation(SRAC) 10,000,0009,700,27097.00% Transport198,190,806198,611,55599.85% Project management and design (technical assistance) 40,000,00039,177,93697.94% Total1, 290,611, 0001,245,781,24397% FINANCIAL PERFORMANCE – CITY OF TSHWANE

67. NON-FINANCIAL PERFORMANCE – CITY OF TSHWANE 67 The Metro has spent 97% on the following: 221 ha. of land procured for human settlements development 160 ha. of land proclaimed (township establishment completed) 2 176 KMs roads paved 1 555 KMSs of storm water drainage installed 6 905 water service points (taps) installed for informal settlement 463 782 households (RDP) provided with water connections 434 924 of formal domestic customers receiving sewerage services 541 612 households with weekly kerb-side waste removal services in formal areas 158 households in informal settlements with access to refuse removal 150 000 households (RDP) with access to refuse removal

68. NON-FINANCIAL PERFORMANCE – CITY OF TSHWANE 68 The Metro has spent 97% on the following: 686 659 formal households with access to basic electricity 45 high mast lights installed 15 963 households provided with access to Free Basic Electricity 14 libraries developed 1 480 fire safety and emergency facilities developed 30 000 jobs created using the EPWP

69. FINANCIAL PERFORMANCE – ETHEKWINI Ethekwini ServiceBudget 2013/14 R’000 Expenditure R’000 % Built Environment1,3881 510109% Fully Subsidies Housing150179119% Ablution Blocks, Interim Services 293558190% Sanitation19813568% Water41122338193% Roads and Storm water Control 11711699% Electricity24714165% Social facilities200% LED and Job Creation1577137% Zone Plans90647% Township Renewal1036471% TOTAL1,581 100%

70. NON-FINANCIAL PERFORMANCE – ETHEKWINI 70 The 100% expenditure of the Metro was on the following: 25 509 ha. of land acquired for human settlements development 715 ha. of land procured for green field development 16 471 ha. of land procured for brown field development 21 informal settlements with upgrading plans 16 269 sites serviced 904 title deeds transferred 119 pedestrian walkways constructed 26 KMs of paved roads 1 bus terminals constructed

71. NON-FINANCIAL PERFORMANCE – ETHEKWINI 71 The 100% expenditure of the Metro was on the following: 1 129 water services points (taps) installed for informal settlements dwellers 16 269 households (RDP) provided with water connections 7 348 consumers provided with access to a free basic level of potable water 1 129 sanitation service points (toilets) installed for informal settlement dwellers 16 269 households (RDP) provided with sewer connections 1 270 452 households in informal settlements with access to refuse removal 16 317 households (RDP) provided with access to refuse removal 37 483 formal households with access to basic electricity 16 269 households (RDP) provided with electricity connections 342 932 households provided with access to free-basic electricity 36 752 jobs created using the EPWP

72. City of Cape Town ServiceBudget 2013/14 Expenditure% Electricity Services233 484 000193 388 82282.8% Solid Waste services24 975 00024 974 920100% Water services191 369 300149 711 65578.2% Parks 45 742 24038 929 51485% Sport, Recreation and Amenities 51, 268, 30034 011 39666% Library services11 427 9038 795 16977% Infrastructure and maintenance 212 540 331187 606 06488.3% City of Cape Town Transport 23 844 02323 516 60298.6% Health Services6 148 6262 957 39748.1% FINANCIAL PERFORMANCE – CITY OF CAPE TOWN

73. City of Cape Town ServiceBudget 2013/14 Expenditure% Existing Settlements31,914,02315,560,69348.8% New Settlements190,053,601132,733,50769.8% HS Strategy & Planning 60,000,00053,828,33889.7% Urbanisation (incl. in- situ upgrades) 95,476,81149,031,43351.4% Urban Regeneration 5,000,00000% Spatial Planning and Urban Design 354,209 100% Project Pre-Planning38,536,34420,188,33952.4% Project management Fees 17,714,963 100% Province Allocation (Metro Projects) 19,923,120 100% Total 1,259,772,794973,226,14777.3% FINANCIAL PERFORMANCE – CITY OF CAPE TOWN

74. NON-FINANCIAL PERFORMANCE – CITY OF CAPE TOWN The 77% expenditure of the Metro was on the following: 8 120 sites serviced 6 151 title deeds of sale agreements signed with identified beneficiaries 12 KMs roads resealed 123 roads rehabilitated 10 KMs pedestrian walkways constructed 1 bus terminal constructed 80 bus stops constructed 610 533 formal domestic customers receiving water services 4 827 service points (taps) installed in informal settlements 21 716 toilets installed in informal settlements 74

75. NON-FINANCIAL PERFORMANCE – CITY OF CAPE TOWN The 77% expenditure of the Metro was on the following: 1 068 572 consumer units provided with access to free basic water 596 155 formal domestic consumers receiving sewerage services 837 533 households provided with solid waste removal 837 533 households provided with access to basic electricity 38 303 job opportunities created through EPWP 75

76. RESPONSE TO AUDITED OUTCOMES 2013-14

77. AUDITOR’S OPINION Unqualified opinion with emphasis of matters

78. EMPHASIS OF MATTERS IN THE AUDIT REPORT Material underspending of the vote The department has materially underspent the budget on programme 2, spent R12 433 000 of its allocation of R 87 773 000 in respect of Programme Implementation Facility. The department spent R108 589 000 of its allocation of R133 649 000 pertaining to implementation of the RHIG. The department was also allocated an amount of R106 721 000 to be transferred to municipalities; however these transfers were only transferred in March 2014 and a significant portion of these grants were unspent at 31 March 2014.

79. EMPHASIS OF MATTERS IN THE AUDIT REPORT CONT. Predetermined objectives - Programme 2, 3 and 4 Changes to objectives, indicators and targets not approved Material changes were made to indicators and targets reported in the annual performance report without these changes being approved by the Minister Consistency of indicators and targets Reported indicators and targets were not consistent with those in the approved annual performance plan.

80. EMPHASIS OF MATTERS IN THE AUDIT REPORT CONT. Measurability of indicators targets Departmental target were not specific. Auditor General could not measure the required performance. Reliability of reported performance information Significantly important targets were not reliable when compared to the source information or evidence provided.

81. EMPHASIS OF MATTERS IN THE AUDIT REPORT CONT. Non-Compliance with laws and regulation Strategic planning and performance management Effective, efficient and transparent systems of risk management and internal control with respect to performance information and management was not in maintained as required by section 38(1)(a)(i) of the PFMA. Annual financial statements, performance and annual reports The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework as required by section 40(1) (b) of the Public Finance Management Act.

82. EMPHASIS OF MATTERS IN THE AUDIT REPORT CONT. Human resource management and compensation Funded vacant posts were not filled within 12 months as required by Public Service Regulation 1/VII/C.1A.2. A human resource plan was not in place as required by Public Service Regulation 1/III/B.2(d). Asset management and liability management Proper control systems to safeguard and maintain assets were not implemented, as required by section 38(1)(d) of the Public Finance Management Act and Treasury Regulation 10.1.1(a).

83. MANAGEMENT’S REPONSE REGARDING AUDIT OUTCOME An action plan has been developed as a tool to address all the findings raised by the Auditor General. An action plan was populated with all the findings and circulated to responsible Deputy Director Generals and the Chief Directors for planed actions that are aiming at addressing the findings and mitigating/eliminating the risk of the similar audit finding being raised again in future.

84. MANAGEMENT’S REPONSE REGARDING AUDIT OUTCOME CONT. Planned actions are monitored on a monthly basis by the CFO branch, whereby managers are required to provide progress and evidence to support what has been done. The progress is reported to the Auditor General, Audit Committee and EMT. Auditor General provides a feedback on a quarterly basis in a form of a Dashboard Report whereby the Director General is expected to come up with commitments that will address discrepancies identified during the assessment.

85. THANK YOU “We have come a long way – Celebrating 20 Years of Freedom!”