PRESENTATION ON THE TURN AROUND STRATEGY FOR THE RECAPITALIZATION AND DEVELOPMENT PROGRAMME

PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT AND LAND REFORM

DATE: 18 FEBRUARY 2015

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Introduction Problem StatementKey issues raised at the Public HearingsObjectives of the Strategy/PlanWhat Needs to be done: StrategyAutomated RADP Management systemProject Plan for the review of RADP Policy

PRESENTATION OUTLINE

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INTRODUCTION

The Portfolio Committee on Rural Development and Land Reform held Public hearings on 3 February 2015. Various Stakeholders and Role players including farmers and strategic partners shared their views and experiences in the implementation of the Recapitalization and Development Programme (RADP).

The Department of Rural Development and Land Reform (DRDLR) was given an opportunity to present the findings on the evaluation process conducted by DPME and the recommendations. The findings by DPME indicated that even though the Recapitalisation and Development Programme (RADP) has made some progress towards achieving its intended objectives, there is room for significant improvement.

One key finding was that strengthening the RADP is the second-best solution; however, the RADP should continue in the interim while a lasting solution is sought.

The best and lasting solution would entail a redesign and overhaul of all public agricultural support programmes and doing away with existing silos of funding for agricultural support services. This would entail the establishment of an all-inclusive fund to support land acquisition, extension services and mentorship, agricultural finance and market access.

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INTRODUCTION CONTINUE…

The farmers or beneficiaries and strategic partners also made their presentation regarding their experiences in the implementation of the programme there were success stories presented which indicates that if the programme is implemented properly, the main objectives of the programme will be achieved: that is to rekindle the class of black commercial farmers which were destroyed by the 1913 Natives Land Act.

At the same time there were very bad experiences that were presented by members of the public, farmers and strategic partners including civil organizations that were invited. These bad experiences alerted the Department and the Committee to look at the Programme and consider implementation of urgent interventions.

The Department is currently attending to key specific project issues that were raised during the hearings eg. Mount Nebo matter in the North west, where the matter is currently with the State Attorney, Ilanga Farmers Co-operative, Ebenezer restitution claim (not yet settled on the farm), Stellenbosch Small Farm Holdings Trust (Commonage farmers) and the farmers in the Eastern Cape where the study by Professor Hall was conducted. The date to visit these farmers with Professor Hall has been set for March 2015. Other urgent administration matters raised by Grain SA are being attended.

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COMMENTS FROM THE PUBLIC HEARINGS

Lack of transparency and communication to SP’s and farmers

Requirements from Technical committee unrealistic and no standardization of requirements.

Deviations from business plans

Cumbersome process for approval of grants/funds

Constant change of RADP Policy

Repeated requirement of Project and Financial Reporting

Non user friendly system for reconciliation of expenditure

Non compliance on the usage of RADP funds by farmers and strategic partners

When should a farmer exit the recap programme – entry and exit mechanism for farmers.

Compensation of Mentors too small.

Need sectorial approach for SLA with DRDLR not “one size fits all”

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COMMENTS FROM THE PUBLIC HEARINGS

Fraud and corruption by some strategic partners

Selection criteria of farms for RADP support.

Delays in the disbursement of funds.

Department neglected the commonage programme.

Post settlement support to restitution farms: RADP is not an appropriate programme to provide support to farms acquired in terms of Restitution e.g. Ebenezer Land restitution.

Strategic partnership becomes a pre-condition to receiving RADP support.

Restitution subsidize the Redistribution programme in terms of post settlement support.

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PROBLEM STATEMENT• Good programme badly implemented by officials

• RADP benefiting only few, especially those that are politically connected.• RADP is a waste of money, too expensive per capita, per job and never reaches the farmers on time,

disbursement of funds long after being required by the farmer results to wasteful expenditure• Deviation from approved Business Plans• Slow implementation of the RAD due to late payment• Lack of reports for the released trenches• Coordination of Stakeholders especially on project support• Alignment of Business Plan and Contracts• Models of SP (Mentorship, Contract farming, etc.)• Procurement of goods and services by Strategic partners and farmers not monitored and accounted• Registration of the Assets acquired by RADP funds• None alignment of lease agreement with RADP contracts• Insurance on the projects• Defaulters not held accountable

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PROBLEM STATEMENT CONTINUE… • Delays in release of tranches• Creation of commitment to DRDLR due to prior approval by farmers and strategic partners• Lack of communication on changes of BP and policies to SP and Beneficiaries• Price variation between Standard costs and BP• Quality of services by contractors and sub-contracting appointed by strategic partners• Termination of SP contracts after the release of the Money by farmers• No re-investment by farmers and strategic partners in the farms• Conflict management btw beneficiaries• Profit deposited in the private account• Fraudulent activities on the Joint bank accounts by farmers colluding with SP.• Reimbursement of beneficiaries from RADP funds• Lack of separation of roles and responsibility between CPA/Land holding entity or leasing

entity and Business Entities or operating company

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OBJECTIVES OF THE TURN AROUND STRATEGY

The aim of the RADP Turnaround Strategy is to establish a unified approach in the implementation of the programme, and address the findings emanating from all the evaluation studies and audits conducted in the programme eg. DPME, M&E evaluation and the AG audit findings. The Strategy seeks to achieve the following objectives:

Maximizing impact of current and future budget and resources spend on the programme, Better coordinated approach for efficient and effective use of RADP funds and other

funding from other role players, Re-alignment of existing farmer support programmes both internal and external, Make financial services accessible to a large segment of the needy farmers, Promote and support linkages and support with all relevant value chain interventions in

the APAP, Ensure contractual obligations are enforced and defaulters are held accountable. Ensure equitable distribution of RADP funding and promotion of own equity contribution

by farmers and strategic partners, Disbursement of funds from the programmes must be aligned to commodities and

season. 

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STRATEGY: WHAT NEEDS TO BE DONE?

RADP approval to be scheduled annually to coincide with commodity cycles e.g.

in November like CASP. (Early in March a meeting will be called to disburse

RECAP money)

Commodity development to help us develop disbursement calendars for each

commodity (in two weeks the Provinces should have these calendars).

RADP to be equitably redistributed and to bring in own equity element to it –

Differentiation.

Focus on small-holders, in Mega Agri-Parks, convene land reform commodity

study group.

Infrastructure development on Land Reform farms to be driven by RID to reduce

costs.

 

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STRATEGY: WHAT NEEDS TO BE DONE?

FIX problem at source by selecting winners in commodities and good

farms that are farmable by establishing District Land Commodities

Establish panel for business plan valuation/appraisal that include

industry players (at DLC or Provincial level)

Develop an automated RADP project management system,

Alignment with the integrated funding model developed with DAFF,

National Treasury and Land Bank to ensure maximum support for Land

reform beneficiaries/ farmers.

Finalize the RADP implementation manual.

Review the RADP Policy to address the shortcomings identified.

 

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WHAT NEEDS TO BE DONE? CONTINUEE…

Enforce contractual conditions and hold defaulters

accountable.

Invest in continuous knowledge improvement for Staff, Farmers

and Strategic Partners as a compulsory requirement. (Train

people in their area of performance)

Invest in modernisation of the application system for both land

acquisition and RADP applications. (Electronic System)

 

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WHAT NEEDS TO BE DONE? CONTINUEE…

Relationship between the beneficiaries/farmers and

implementers/project officers is very important (Beneficiaries are by-

passing processes by approaching Top Management at National Office

which results in them not acknowledging the presence of a project

officer);

Land Acquisition needs to be included in point one above;

Clear criteria on projects selection is very important; and

Monitoring and Evaluation of implementation.

 

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AUTOMATED RADP MANAGEMENT SYSTEM:

The Department with its ICT Unit is currently developing an Automated RADP management system. Based on the above mentioned challenges in the RADP Business processes, the following modules will be developed:

Electronic Application System module. Business plan module. Financial Module. (Funds disbursement model and expenditure monitoring module) Reporting module. (Monthly and quarterly reports on business plan implementation,

impact (jobs created, training and production) Monitoring and Evaluation module.

 

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BUSINESS CASE:

 Based on the above models, the following business process is proposed: Application Module:

1. Phase one: Development of the electronic application system: ITC develops an electronic RADP application system at a District Office, Provincial and National

level. Determine the various functionalities at the different 3 levels above (capturing of applicant

information, verification, processing, authorization and approval). Define different system users (District system controller, Provincial system manager, authorizing

officer and approval officer). Processing and capturing of prioritized RADP applications in an electronic system after registration

on the BAS system by District system controller. Following information is required:

Part one: Applicant information: NB: Documents eg. ID copies will be scanned and saved on the system. - RSA bar-coded identity document and applicant details

- Spouse details - Contact details and physical address for the applicant - Registered property descriptions.

- Lease contract details or copy of title deed - Legal entity registration certificate and registration number. - Applicant banking details. - accountant details for the applicant. - SARS certificate

- Tax certificate number

 

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BUSINESS CASE CONTINUE…

 Part Two: Strategic partner information; - RSA bar-coded identity document and applicant details;

- Spouse details, if any; - SP physical address and contact details; - Form of strategic partnership;

- Legal entity registration certificate and registration number; - SP banking details; - Accountant details for the applicant; - SARS certificate; and

- Tax certificate number. Part Three: Business Plan information: after approval by NLARCC and MCM( approved memorandum approved by DDG and signed Business plan are source documents): - capture total funds approved;

- Capture funds as per approved trenches; - Itemize the funds as per approved Business plan( eg. Tractor, mentorship fees,

production inputs etc); - develop item codes per item in the business plan against the budget to control over

expenditure per item; - make provision for deviation with the approved funds; and - make provision for approved additional funds.  

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BUSINESS CASE CONTINUE…

 Business Plan Module:

Part one: Business Plan approval: - capture date of approval by DLC or DSC, PTC, NLARCC and MCM - Capture key commodities to be funded ( eg. Crops( maize, beans,

potatoes, citrus - capture current levels of production - capture projected income, expenditure and net profit

- job creation targets, and targeted training. - projected production levels eg. Estimated yields per enterprise. Part two: Approved business plan information( approved memorandum approved by DDG and signed Business plan are source documents)

- capture total funds approved - Capture funds as per approved trenches - Itemize the funds as per approved Business plan( eg. Tractor, mentorship

fees, production inputs etc) - develop item codes per item in the business plan against the budget to

control over expenditure per item. - make provision for deviation with the approved funds. - make provision for approved additional funds.  

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BUSINESS CASE CONTINUE…

 Financial Module: Two parts of this model are being proposed: Funds disbursement model and Expenditure reporting model.

Part one: Funds Disbursement module: ( funds will not be transferred to a joint account) - Capture supplier information on the system based 3 quotations from the

SP, beneficiary and verified by the project officer.

- Capture confirmation of delivery of goods and services from the project officer( confirmation certificate signed by project officer is a source document)

- Based on approved funds on the system, capture amounts from invoices received on the system by district system controller, checked by the ASD in the District.

- Scan and load verified copies of invoices on the system - Authorize payment based on verified, captured invoices by the provincial

System manager at PLAS Finance unit. - Approve payment and transfer funds to the supplier or pay mentorship

fees to the bank account captured on the system – PLAS Trading account National Office.

- capture projected income, expenditure and net profitNB: Procurement of goods and services will be based on 3 quotations from potential suppliers via a project adjudication committee. The appointed supplier will submit all relevant details for capturing into the system including account details.  

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BUSINESS CASE CONTINUE…

Part two: Expenditure Module: ( funds will not be transferred to a joint account) - Provide monthly expenditure reports per project.

- Print expenditure per item code to monitor over expenditure per item

- provide reports on any deviation per item per project.- alert district system controller to capture new invoices once

expenditure is 80% or above on transferred funds.- Authorize and Process trenches once expenditure is above

80% of the total fundstransferred. -

- Link the process to part one processes.NB: The proposed module above will assist to avoid over expenditure on approved items, delays in the release of trenches, non-compliance in submitting invoices, mismanagement of joint accounts and manage the ageing report.

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BUSINESS CASE CONTINUE…

 Reporting Module: - monthly expenditure reports per project.

- SP Ageing reports- provide reports on any deviation per item per project.- provide reports on the number of farms recapitalized per

month, per Quarter and per annum- Provide details of expenditure per Trench released in order to

process subsequent trenches. - Provide monthly and quarterly performance reports per project ( jobs created, farmers trained and production levels.

- Load all POE from SP for reporting purposes.

NB: The proposed module above will assist the branch to provide accurate performance reports to M&E with valid POE.

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BUSINESS CASE CONTINUE…

 Contract management Module: - capture all RADP contracts on the system.(SLA and Tripartite

Agreement) - Processing of contracts at District level by legal officer- legal compliance checking by DD legal at PSSC- Verification of contracts and support by Director LRD- Vetting of contracts by Strategic institutional Partnerships

National office- Provide monthly and quarterly performance reports per

project ( jobs created, farmers - Approval of contracts by DDG LRD.

NB: The proposed contract management module will ensure that all the RADP contracts are generated and approved electronically to avoid any discrepancies in the various forms of contracts based on each forms of SP. Electronic contracts will be tailor made to meet special conditions inline with each forms of Strategic partnership.

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PROJECT PLAN FOR THE REVIEW OF THE RADP POLICY AND THE MANUAL

Activity TIME FRAME

Undertake a desk top review of existing RADP policy and RADP manual in line with the legal compliance audit findings, findings of the DPME review, Internal Audit findings, findings of the audit conducted by the Office of the Auditor-General, proposals from workshops conducted by the Department and the process for selection of beneficiaries of RADP and also interview CD RAD’s staff

2 weeks

1-13th March 2015

Design and submit the framework of amended RAD policy and RADP manual in line with the legal compliance audit, findings of the DPME review, Internal Audit findings, findings of the audit conducted by the Office of the Auditor-General, proposals from workshops conducted by the Department and the process for selection of beneficiaries of RADP

1 week

13th – 21st March 2015

Present and collect feed-back for framework of amended RADP policy and RADP manual in line with the legal compliance audit findings, findings of the DPME review, Internal Audit findings, findings of the audit conducted by the Office of the Auditor-General, proposals from workshops conducted by the Department and the process for selection of beneficiaries of RADP to CD RAD’s staff and the members of the project steering committee;

2 days

23rd and 24th March

2015

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PROJECT PLAN ON RADP POLICY AND MANUAL CONTI…..

Incorporate inputs and submit first version of RADP policy and RADP manual2 weeks

24th March – 6th April

2015Present and collect feed-back for first version of RADP policy first version of RADP manual to CD: RAD’s staff and the project steering committee;

2 days

8th and 9th April 2015

Incorporate inputs and submit second version of RADP Policy and Manual of amended RADP policy

2 weeks

9th April – 22 April 2015

Present collect feed-back second version of RADP policy with CD RAD staff and PSSC ‘s

2 days

28th and 29th April 2015

Incorporate inputs and submit 3rd version of RADP policy to CD’s RAD staff and PSSC’s

2 weeks

29th April-11th of May

2015 Present third version of RADP policy to all the relevant branches of the Department namely Land Redistribution and Development, Rural Infrastructure Development (RID) and Rural Enterprises and Industry Development (REID) 

2 days

12th and 13th May 2015

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Incorporate and submit inputs into fourth version of RADP policy to CD RAD’s staff and all branches of the Department namely Land Redistribution and Development, Rural Infrastructure Development (RID) and Rural Enterprises and Industry Development (REID)

2 week

14th -25th of May

2015

Present fourth version of RADP policy to external stakeholders 1 day

28th of May 2015

Incorporate and submit inputs for fifth version of RADP policy to CD RAD’s staff and external stakeholders

1 week

28th May- 4th of June

2015Incorporate inputs and submit final version of RADP policy to CD RAD staff and members of project steering committee t

1 week

4th-11th June 2015

Submit final version of RADP policy to CD RAD staff for editing 1 week

11th – 18th June 2015

Resubmit edited final version of RADP policy to CD RAD’s staff for submission to Minister of Rural Development and Land Reform

1 week

18th -25th June 2015

PROJECT PLAN ON RADP POLICY AND MANUAL CONT…

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Finalizing amendment of RADP manual

Present and collect feed-back of second version of RADP manual with CD RAD staff and PSSC ‘s

1 day

1st July

Incorporate inputs and submit final version of RADP manual to CD’s RAD staff and PSSC’s

2 weeks

1st -14th July 2015

Incorporate inputs and submit final version of RADP manual to CD RAD staff and members of project steering committee

4 days

14th -18th July 2015

Submit final version of RADP policy to CD RAD staff for editing 4 days

18th -22nd July 2015

Resubmit edited final version of RADP manual to CD RAD’s staff for submission to Minister of Rural Development and Land Reform

1 week

22nd July – 29th July 2015

PROJECT PLAN ON RADP POLICY AND MANUAL Cont …

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Thank You

Ngiyabonga