16 February 2007
The Department of Housing, Local Government and Traditional Affairs is
continuously striving to improve the quality of homes constructed, through
integrated efforts within the Department as well as through forging
partnerships with other departments, parastatals and financial institutions,
with particular reference to building management capacity at municipal level.
The Department is also working closely with housing support institutions like
the National Home Builders Registration Council in ensuring quality products.
Continuous engagement with municipalities is also undertaken in the preparation
of Municipal Housing Development Plans.
Further, the Department is also building the capacity of municipalities and
as a result, to date two municipalities, namely Buffalo City and the Nelson
Mandela Metro, have been accredited to level one status. Significant progress
has been realised with regard to the upgrading of informal settlements. This
programme of informal settlement upgrading is part of the comprehensive plan
for the creation of Sustainable Human Settlements: Breaking New Ground, which
is aimed at the eradication of shacks and informal settlements. It also
includes the provision of social and economic amenities.
To date a total of six pilot projects are underway as follows: Zanemvula in
the Nelson Mandela Metro, Duncan Village in Buffalo City, Elliotdale in
Mbhashe, Ngangelizwe in King Sabatha Dalindyebo, Thornhill in Ndlambe as well
as Siyanda in Mnquma local municipality. Since 1994 a total of 471 housing
projects have been under implementation throughout the province. Out of this,
191 projects have been completed, whilst 280 projects are at various stages of
implementation.
For 2006/07 the Conditional Grant Allocation is R761 994 million. By January
2007, the Department has expended 40.7% of its Conditional Grant budget for
2006/07. This is R310 137 969 of the allocation of R761 994 000.
Despite significant progress in housing delivery in the province, a number
of negative factors have led to serious under-expenditure of the Conditional
Grant. In terms of the what the media perceive as a delay to demolish the
wooden houses in the Dimbaza housing project, tendering processes as required
by Public Finance Management Act (PFMA) and other administrative processes had
to first kick in prior to the appointment of the contractor by Thubelisha Homes
who is the developer for the project.
As far as the Department is aware, Thubelisha Homes was ready to demolish
the houses before December, but the beneficiaries requested that the process be
delayed since they wanted to celebrate Christmas in their wooden houses.
Reports in the possession of the Department state that a total of 85
applications have been received and the departmental staff, in conjunction with
the municipal staff, are performing an ongoing registration process. In
addition, the Department had asked the national Department of Housing to grant
permission to override the system where a beneficiary happened to be declined
due to double subsidisation.
These beneficiaries did benefit previously under the Discount Benefit
Subsidy Scheme for the houses they are in. The request for 43 who were declined
by the system is with National Government and we are expecting results next
week due to the lengthy process it takes for this particular activity.
Due to insufficient supporting documentation for the ability to complete the
form, beneficiaries have been sent back to collect the required documentation
and the activity had to either be re-started or finalised depending on the
information they previously provided. The Department has maintained an ongoing
project and Performance Review Programme which has involved the analysis of
performance by project within each district as part of the Project Management
Plans (PMPs) and Project Implementation Plans (PIPs) developed for each
project. These activities have required continuous interaction with
municipalities to identify and implement support interventions as required. It
has however become evident that over and above the administrative and
operational challenges involved, the corrective measures required should focus
on two areas of strategic significance which are the emerging contractor
capacity and municipal capacity shortfalls.
The following have been identified as the broader cross-cutting factors that
have impacted negatively on delivery outputs:
* Use of Peopleâs Housing Process (PHP) delivery vehicle, with the
predominant involvement of Emerging Contractors, whose effectiveness is
hampered by skills and resource constraints. The PHP is, by definition, a
delivery vehicle with a developmental focus that is not necessarily consistent
with rapid execution, especially given the various levels of role-player
involved, layers of communication, coordination requirements etc.
* The majority of developers are municipalities, also with capacity challenges.
Added to the challenge of municipal capacity shortfalls (e.g. absence of
dedicated Housing Units,) has been a lack of dedicated focus on the part of the
municipal role-players involved due to the so-called 'unfunded mandate'
argument.
* The Provincial Policy which requires construction of 40 sq m size units
against 30 sq m National Norm, on which subsidy allocation is based. The 40 sq
m versus 30 sq m paradigm has had the effect of introducing an up-front
budgetary constraint.
Most of the emerging contractors involved, have ended up experiencing
serious cash-flow difficulties in large measure due to comparatively low
margins. Quality of workmanship has also been a major 'casualty' due to the
tendency to have to cut corners. While all these measures were introduced for
sound developmental reasons, they have collectively exerted a negative impact
at the operational level, and this has been building up over the years to what
is now possibly the highest point.
To offset the abovementioned constraints, the Department is determined to
assist the delivery programme by taking over the implementation of previously
unblocked projects which are slow moving. In this regard, procurement relating
to the Sweetwaters Project is currently being finalised. Cash flow is expected
from this project before financial year-end. To meet this challenge, the
Department has established a programme of engaging established contractors who
will embrace emerging contractors along appropriate sub-contracting lines. The
use of established contractors is also intended to ensure greater delivery at
scale, as well as higher levels of quality assurance
To further extend the scope of these interventions, the following projects
have been identified for implementation through established contractors using
accelerated procurement processes.
Where projects are already underway as part of pre-existing municipal
processes, the Department will insist on higher-level performance to ensure
that the expected delivery and expenditure targets are met.
The basic focus of the entire strategy outlined above is for the recovery
expenditure expected from ongoing projects in Alfred Nzo, OR Tambo, Chris Hani,
Cacadu District Municipalities, Nelson Mandela Bay and Buffalo City
Municipality to be such that the entire balance of the 2006/07 allocation (R471
m i.e. R762 m minus R291 m spent up to Dec 2006) is disbursed on the basis of
confirmed site presence, with clearly defined cash-flows linked to construction
programme.
For further information, please contact:
Mbulelo Linda
Government Communications Manager
Tel: (040) 609 5337
Cell: 082 495 3067
E-mail: mbulelo.linda@dhlgta.ecape.gov.za
Issued by: Department of Housing, Local Government and Traditional Affairs,
Eastern Cape Provincial Government
16 February 2007
