Departmental Quarterly Performance Report, October-December 2012

1. Departmental Quarterly Performance Report October- December 2012 Mr. Thabane Zulu Director-General

2. Content • Quarterly Performance Plan Monitoring • Overall Departmental Performance • Communication and Outreach • Delivery Agreement (Outcome 8) • Job Creation • Accreditation of Municipalities • Entities performance • Financial issues • Challenges • Strategic Mitigation Measures

3. QUARTERLY PERFORMANCE PLAN MONITORINGENTERPRISE ARCHITECTURE

4. OVERALL DEPARTMENTAL PERFORMANCE (THIRD QUARTER)ENTERPRISE ARCHITECTURE

5. COMMUNICATION AND OUTREACH KEY • Bothasig Gardens Social Housing project • Cornubia Integrated Housing development Project Launch • World Toilet Summit • Prep meeting for the UN Habitat International Conference on Women Empowerment • Habitat for Humanity • Department of Science and Technology • Cities Support Programme (Department of National Treasury) • Department of Mineral Resources • Local Government Turnaround Strategy- Cogta • Secured stakeholder sponsorship to: 1. Booysens family in Clan Williams, Western Cape 2. 16 days of Activism Against abuse of Women and Children • World Urban Forum Report back meeting

6. OUTCOME 8 – PROGRESS REPORT • Reported Performance : 1 April 2010 to 30 September 2012: • Number of households provided with upgraded services: 131 668 households -represents 32,9% of 2014 target; • Number of affordable rental accommodation delivered: 29 664 units (including private rental) – represents 37,1% of 2014 target; • Well located state land released to Municipalities for human settlements development: 7 477,5 ha; • Total number of loans granted to the affordable property market: 181 078

7. JOB CREATION The delivery of 4074 serviced stands and 7087 completed houses created an estimated 5287 jobs during the third quarter of 2012/13 financial year.

8. SANITATION : JOB CREATION SUMMARY

9. SANITATION JOB CREATION PROJECT SCOPE Sanitation : Job Creation • The overall scope of the project is to provide support to municipalities to adopt and implement Job Creation principles in the delivery of sanitation services within the EPWP context. • Below are the project outputs : • Provision of extensive rollout of support to 50 municipalities in creating job opportunities with clear tangible results over a three (3) year period • Screening of beneficiaries in identified municipalities and facilitation of training (short courses, skills courses and Learnerships) for 1,200 participants from funding to be provided through collaborative partnerships such as, e.g. the ESETA. • Facilitation of registration of youth in the National Youth Development Agency (NYDA) Youth Service Programme as well as the National Home Builders Registration Council (NHBRC) as SMMEs.

10. SANITATION JOB CREATION PROJECT SCOPE Sanitation : Job Creation • Assistance to the National Department and Municipalities to source additional funding from funding institutions such as SETAs for skills development of beneficiaries on sanitation related functions and the promotion of job creation. • Facilitating linkages between various job creation processes in infrastructure development, health and hygiene, agriculture (food gardening and livestock), marketing and environmental fields as part of the War on Poverty Initiative • Ensuring promotion of sanitation technology that enhances labour-intensive methods to create job opportunities in implementation of sanitation programmeEighteen (18) new municipalities country wide have already been identified for rollout of programme support. • Job creation-specific situational assessment was conducted and draft support plans have in 9 of the 18 newly identified municipalities.

11. SANITATION PROJECT PROGRESS- ROLL OUT OF SUPPORT • 13 support plans for the 13 previously supported municipalities are in place. • 17 DHS-Municipalities MoAs (now changed to Collaboration Agreements)were developed to commit DHS and municipalities on implementation of job creation programme support. • Training requirements of the 17 job creation sites were consolidated for a possible intervention by the DBSA. • Tonga Precast job creation site in Mzinti at Nkomazi Local Municipality is currently being resuscitated. Beneficiaries undergoing training done by the appointed training provider. • A multi-stakeholder partnership has also been forged by the Sanitation Job Creation Programme, Ehlanzini District Municipality, Nkomazi Local Municipality, SEDA Mpumalanga and the service provider appointed by Ehlanzini DM to resuscitate the Prefab Factory. About 35 beneficiaries underwent some training.

12. SANITATION PROJECT PROGRESS- ROLL OUT OF SUPPORT • 27 already supported municipalities were successfully engaged on the screening process. Project screened a total of about 986 beneficiaries the anticipated accredited sanitation related training and short skills development programmes. • Funding to the tune of R7.8 Million was secured from the EWSETA for training of 65 learners at 5 municipalities (Amajuba, Blouberg, Joe Morolong, Moretele and Eden Municipalities) where 13 learners were to be trained in each of these municipalities in Community Water, Health and Sanitation Promotion at NQF Levels 2 to 4. • Participation in the Youth in Human Settlements Forum is ongoing to ensure inclusion of the Sanitation Job Creation Programme beneficiaries in DHS training and SMME development opportunities.

13. SANITATION CHALLENGES • Getting municipal support, buy-in and commitment on rollout of the Sanitation Job Creation Programme proved to be a deterrent due to a number of factors such as municipal staff turnover or inadequate municipal capacity. Municipalities tend to commit where there is financial support. Political intervention deters rollout progress. Access to relevant and key strategic municipal documents proved difficult at some instances. • Delays by municipalities in providing comments and inputs to the developed documents such as the support plan further delayed programme implementation. • Municipal buy-in on adoption of appropriate and relevant technology options that enhance job creation opportunities is quite crucial. • Availability of budget for training of local beneficiaries. Securing funding for providing accredited training to the identified candidates has proved to be far more challenging than originally envisaged. Municipalities do not have budgets to co-fund training of local communities.

14. SANITATION CHALLENGES • The screening process does raise expectations for employment opportunities by the candidates, which needs to be carefully managed. • Delays by the department in signing key agreements (EWSETA MoU, MoA’s with municipalities, etc) impact on implementation of support to municipalities. • Very few municipalities have accurate and adequate SMME databases that can be accessed to promote registration of such institutions.

15. SANITATION: RURAL HOUSEHOLD INFRASTRUCTURE PROGRAMME

16. RHIP FINANCIAL PERFORMANCE - OCTOBER – DECEMBER 2012

17. ACCREDITATION OF MUNICIPALITIES • The total number of Municipalities accredited to date is 26 - Level 1 = 7, Level 2 = 16, Level 2 with conditions = 3. • Gauteng Provincial Department of Housing and Local Government has concluded Implementation Protocols with its three Metros. • Western Cape Department of Human Settlements and the City of Cape Town has also finalised their Implementation Protocol. • Northern Cape has concluded the signing of the Implementation protocol with Frances Baard District Municipality, while a few clauses need further attention before the conclusion of the implementation protocol with Pixley ka Seme District Municipality.

18. ACCREDITATION OF MUNICIPALITIES • Eastern Cape and Kwa-Zulu Natal have not met the deadlines, but are working towards concluding the implementation Protocols. • The assignment process for the six Metros which were accredited during 2011/2012 is in an advanced stage. The Provinces are being assisted through Capacity and Compliance Panel of the National Department to prepare a submission to the Fiscal and Financial Commission as required by the Municipal Systems Act.

19. SOCIAL HOUSING REGULATORY AUTHORITY • SHIP 3A: 6 Projects from 4 SHI’s delivering 1818 units, contracting finalised in Dec 2013 • SHIP 3B: 6 Projects from 6 SHI’s delivering 3525 units, contracting finalised in Jan 2013 • Successfully launched the Fleurhof Views, Madulammoho project during Oct 2012 • SHIP Team completed site visits to KZN • Presented the economic study to motivation to increase the Restructuring Capital Grant to MinMec Nov 2012 • The National Rental Project Pipeline presented to MinMec Nov 2012 • 5 Provincial Priority project approved for implementation yielding a further 5742 units over the next 2 years • A number of Guidelines have been identified for development in the current financial year.

20. SOCIAL HOUSING REGULATORY AUTHORITY • A revised regulatory framework has been developed which sets out a smart and cutting edge approach to regulation of the sector • All compliance conditions for the third quarter have since become subject of the renewal of accreditation for the 2013/2014 period. • Seven currently pre-accredited SHIs with stock have been recommended for intervention grants to see them to full compliance and progression to conditional accreditation. • Badiri is subject to legal intervention. • The reporting tool for the 3rd quarter has been received and currently being assessed, feedback will be given to the SHI’s in January 2013. • 9 Tenant Income Audits and Tenant Satisfaction Surveys were conducted in the current quarter, the results are being verified and will be communicated to the SHIs in due course. • 2 Building Conditions audits were conducted and 7 more will be conducted in the Fourth quarter.

21. SOCIAL HOUSING REGULATORY AUTHORITY • Tools to conduct both the Tenant and Building Audits were developed in the third quarter. Workshops are being arranged to present the tools to the sector. • A 5 Fully Accredited SHIs- all applied and two full accredited SHIs at commencement of accreditation period, 3 SHIs have been monitored and upgraded to full accreditation • 14 – Conditionally accredited SHIs – 3 SHIs were upgraded from pre-accreditation to conditional accreditation to make up the 14 conditionally accredited • 13 applied; and • 1 (Indiza Terra) accreditation withdrawn • 14 – Pre-accredited • 12 applied; and • 2 failed to apply – Badiri and Vusani • New Applications: • 12 applications received and assessed • Assessments scheduled to be completed by February 2013.

22. HOUSING DEVELOPMENT AGENCY • 6795 hectares of state land released for human settlements in Madibeng, Rustenburg and Maluti-a Phofung Municipalities. • 2 Johannesburg Inner City Properties acquired by the Agency for affordable rental housing development. • Joint meetings with all parties are taking place around the key pieces of Denel and Nasrec land earmarked for human settlement development • IP signed with Rustenburg Local Municipality • Engagements with KZN on land support taking place • Outreach programme continues in  various provinces • The development of the Bendor site  in Polokwane, Limpopo progressing well.    • Completed informal settlement enumeration and rapid assessments, as well as technical plans developed  for informal settlements in Limpopo and Free State. Tools and templates for informal settlement upgrading developed. • Free State office operational • Plans have been developed with the Northern Cape Province for support work around planning and pipeline projects.

23. NATIONAL URBAN RECONSTRUCTION HOUSING AGENCY • The Rural Housing Programme commenced in October 2012 with the construction of 5 pilot houses. • Transfer of the R20million from NDHS towards the Contractor Finance and Development Programme (CFDP). The Implementation Plan is under review in line with the reduced programme budget. • Started using the PIC facility with the first loan signed in May 2012. • The extension of the OPIC facility repayment date has been approved to February 2015. This will give NURCHA the opportunity to collect outstanding debt from the contractors. • Provision for bad debts remain high at R117 million. NURCHA is looking into appropriate mitigation measures to address the bad debts.

24. RURAL HOUSING LOAN FUND • 13 195 loans were granted by intermediaries during the quarter and this took to number of loans year to date to 35 778, which compares favourably to the annual target of 38 202. • Cash disbursed in Q3 alone was close to R41 million compared to R44 million disbursed in the first half of the year92% of loans granted was used a housing related purpose, in line with the RHLF mandate and this was above the set target of 80%.

25. RURAL HOUSING LOAN FUND • RHLF funding remains critical in enabling borrowers in the lowest end of the market to improve their housing conditions as evidenced by the fact that 66.7% of loans were accessed by borrowers below R3 500 income threshold. • Income from core business for the quarter was slightly below the budget at almost R10m again a quarter target of R10.5m. For the year to date, income from core business reached was R28.4m against a target of R30m. • Operating surplus after tax achieved for the quarter was at R4.7m, better than the target of R3m. For the first three quarters, surplus after tax was R11.8m against the three quarter target of R8.3m

26. NATIONAL HOME BUILDERS REGISTRATION COUNCIL

27. NATIONAL HOUSING FINANCE CORPORATION • The NHFC approved 13 new projects in the third quarter totaling R660 million • R101 million was disbursed during the third quarter against a target of R159 million • The NHFC acquired 10 new intermediaries to do business with • In total, 4 751 beneficiaries benefitted from the NHFC in the third quarter • 1 500 jobs were created through funding provided • A total of 3 494units were delivered in the third quarter against a target of 3 087

28. ESTATE AGENCY AFFAIRS BOARD • There were 1448 New Registrations in 2012 for October–December compared to 1395 in 2011. • There were 20515 Renewals in 2012 for October–December compared to 20666 in 2011. • 425 inspections were performed compared to 300 target for the quarter. • 63% of the 224 candidates who set for the NQF Level 4 PDE passed. • 67% of the 43 candidates who set for NQF Level 5 PDE passed. • 252 of Estate Agents applied and qualified for exemption from the PDE as per statutory requirement. • 7 Stakeholder Awareness Workshops were performed compared to expectation of 3. • R3,3 million free media publicity was received by EAAB. • EAAB operating costs were 16,84 % below budget compared to a target of 5%.

29. FINANCIAL ISSUES MEDIUM TERM ESTIMATES

30. ADJUSTMENT ESTIMATES SUMMARY

31. ADJUSTMENT ESTIMATES SUMMARY Cont… • Rollovers approved • R11 million for the leasing of office accommodation; and • R2.5 million for furniture and equipment. • Declared savings. • R138.878 million has been identified by National Treasury as a saving on the Rural Household Infrastructure grant.

32. EXPENDITURE PER PROGRAMME31 DECEMBER 2012

33. EXPENDITURE PER PROGRAMME31 JANUARY 2013 (PRELIM.)

34. AREAS IDENTIFIED AS BEING AT THE HIGH RISK OF UNDER SPENDING

35. Current PROGRESS • CD: Internal Audit, Risk Management And Special Investigation • R3.2 million has been paid in November bringing the total expenditure to R8.1 million or 18% of total allocation. • Invoices amounting to R16 million has been received and are being processed. • Property Management • R2.1 million has been paid in December bringing the total expenditure to R12.7 million or 31%. • The following amounts contribute to under spending: • Total amount payable if 260 Justice Mohamed had been occupied is R7.3 million annually • Rollover of R13.5 million. • The problems around the additional office accommodation is getting attention and indications are that it will be resolved within the foreseeable future.

36. Current PROGRESS • CD: Business Inform Management • Total expenditure at 31 January 2013 amounted to R19 million of a budget of R43.7 million (44% of allocation). • On the SITA account the total amount outstanding to be paid is R5.9 million. • R4.2 million relates to current invoices which were processed in January. • R1.7 million relates to invoices still outstanding of the previous financial year for which supporting documentation are still outstanding. • Underspending amounting to about R10 million is expected.

37. Current PROGRESS • CD: Programme Implementation Support (NUSP) • 5 bids for the appointment of service providers to provide participatory base planning support to informal settlement Upgrading Projects have been advertised on 2 November 2012 bulletin with closing date of 27 November 2012. • The bids were evaluated on 29 January 2013 by the bid evaluation committees. • A challenge with the delays in evaluation of bids was experienced. • 5 bids amounting to about R2 million for the development of an informal settlement upgrading programme in various municipalities have been awarded.

38. SAVINGS DECLARED • The following savings have been declared • CD: Internal Audit, Risk Management and Special Investigation – R18 million proposed to be used to fund shortages within the Department. • Property Management – R 10 million. • CD: Programme Implementation Support – R20 million proposed to be used to fund shortages on CD: Communication has been approved as a virement which was approved in January 2013. • CD: Human Settlements Planning – R2 million will be used to fund shortages in CD: Inter Governmental Relations and was shifted.

39. PROPOSALS FOR ADDRESSING UNDER SPENDING • Main reasons for under spending: • Tender process for the issuing of tenders starts very late in the financial year. Tenders needs to be started as soon as possible. • Process to fill vacancies is undertaken. • Where service level agreements are used, the updating of such must be done early enough to avoid delays. • Programme managers to declare savings as soon as identified.

40. GRANTS TRANSFER AND PAYMENTS 31 DECEMBER 2012

41. Preliminary GRANTS AND TRANSFER PAYMENTS31 JANUARY 2012

42. HUMAN SETTLEMENTS DEVELOPMENT GRANTEXPENDITURE AS AT 31 DECEMBER 2012

43. PreliminaryHUMAN SETTLEMENTS DEVELOPMENT GRANT EXPENDITURE 31 JANUARY 2013

44. OTHER MILESTONES (31 DECEMBER 2012) Total budget of R3.167 billion

45. DELIVERY PERFORMANCE AGAINST TARGETS31 DECEMBER 2012

46. URBAN SETTLEMENTS DEVELOPMENT GRANT EXPENDITURE AS AT 31 DECEMBER 2012

47. CHALLENGES • The lack of appropriate prioritization of strategic priorities by Provinces and Municipalities • The lack of a medium and long term programme and project pipeline in Provinces and Municipalities. • The lack of bulk and link infrastructure to implement projects in municipalities. • The lack of appropriate technical skills and experience in Provinces and Municipalities. • Inadequate alignment of the strategic and performance plans of the Provinces and Municipalities to the National Human Settlements Priorities

48. STRATEGIC MITIGATION MEASURES • The Department has initiated a process to assist with the development of medium and long term programme and project pipelines. • The Department has put in place a process to improve funding for bulk and link infrastructure which includes the extension of the USDG to municipalities other than the Metropolitan Municipalities. • The Department has initiated a process including NUSP to allow for skills and expertise support to Provinces and Municipalities. • The Department has undertaken an extensive process of support to Provinces and Municipalities to assist to improve Business Plan prioritization. • The Department has put in place measures to improve monitoring, evaluation and compliance including oversight visits to Provinces and Municipalities

49. Thank You