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Presentation to the Portfolio Committee on Housing held on 10 May 2006 – ROOM 146 Marks Building – CAPE TOWN. Presentation Topics. Introduction Mandate Funding Framework List of Board Members Corporate Governance Strategic Plan including Budgets – Focus on the MTEF 2005/6 and 2006/7

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  1. Presentation to the Portfolio Committee on Housing held on 10 May 2006 – ROOM 146 Marks Building – CAPE TOWN

  2. Presentation Topics • Introduction • Mandate • Funding Framework • List of Board Members • Corporate Governance • Strategic Plan including Budgets – Focus on the MTEF 2005/6 and 2006/7 • Key Challenges • Specific Challenges in Relation to Delivery • Equity/Procurement/BEE and Contribution to ASGISA • Way Forward

  3. 1.Introduction • Presentation will cover the following: • Establishment • Mandate and Expanded Mandate • Funding Framework by both Shareholders • Board Representation • Corporate Governance and alignment to the Policy Framework on Public Entities and DPSA Requirements • Key Strategic Plan, including Budgeting covering 2005/6 and 2006/7 • Key Challenges and Proposed Corrective Measures • Specific Challenges in relation to Delivery • Equity Issues • Way Forward

  4. 2. Establishment and Mandate • Servcon was established in 1995 • Its Agreement was renewed in 1998 to dispose a further 33 386 ring-fenced portfolio by 31 March 2006 and/or when the last property has been transferred to the last Servcon client; • Mandate was to Normalize Non-Performing Properties – Status of Redundancy to Liquidity

  5. 2. Establishment and Mandate… • Servcon expanded Mandate over the Contractual Period: • Relocation Assistance Programme– 25/10/04; • Incentivized Vacant Possession: End of 2003/4; • Eviction of Defiant Occupants – Ended 30/9/04 • PHD Normalization Programme – Started in 2003/4 • Special in Situ Rightsizing Programme – 25/10/2004 • Properties outside Servcon – Under Consideration but most PHDs wants that to form part of the Normalization Programme • Special Purpose Vehicle on Land and Landed Props.

  6. 3. Funding Framework • Banks contributes 50%: Operational Costs • Government contributes 50%: Operational Costs • NDoH: Restructuring of Servcon and incidental costs regarding exiting Banks • PHDs: • Incidental Subsidy Amounts – Qualified Beneficiaries • Normalization Programme

  7. 4. List of Board Members • Current Servcon: • Banking Association (BASA): • BASA; Nedbank; ABSA; FNB; STBANK • Government • NDoH; Treasury; SAPS; Justice; GPPHD; WCPHD • BNG Re-aligned Servcon: • Ministerial Appointments as soon as the current portfolio has been finalized and/or Signed Sale of Shares Agreement

  8. 5. Corporate Governance • Compliant; • King Finance – 95%: • Same Chairperson since 1998 • Chairperson heading Audit/Remuneration Com. • PFMA – 100%; • DPSA Requirements – 100%: • Model used to Restructure Servcon • Policy Framework of Public Entities – 95%: • Model used to Restructure Servcon • Materiality Requirements Met

  9. 6. Strategic Plan and Budgets • Strategic Plan in place cover the period 2004/6 to 2009/10 • Finalization of the Ring-Fenced Portfolio; • Normalization Programme of PHD owned or managed properties – Designated Portfolio; • Use of Servcon expertise post 31 March 2006; • Land identification and acquisition for Integrated Housing Development - BNG

  10. 6. Strategic Plan and Budgets RESTRUCTURED SERVCON Land ParcelLanded Properties Identification (Data) Identification (Data) Receipt/Acquisition Receipt /Acquisition Holding Holding Mixed Use Program Mixed Use Program Disposal Disposal/ Management

  11. 6. Strategic Plan and Budgets… • Financial Year 2005/6: • Budget R59m • Expenditure R59m • Servcon Cost-Sharing Concept: R40m • CIDA R19m • Financial Year 2006/7: • Budget R60m • Servcon Budget R35m • Restructured Servcon R25m • PHD Normalization is dependent on Approved Designated Properties for the year KZN; WC;GP; EC

  12. 7. Key Challenges • Specific PHDs having delayed transfer of incidental Special in Situ Rightsizing Programme; • Normalization Programme of PHDs: • Delayed understanding; • Misunderstood Value-Adding to PHDs; • Outside Servcon Portfolio – Facilitative Role; • Stalled process accommodating other PHDs to benefit through the Normalization Programme

  13. 8. Specific Challenges • Exited Banks from Servcon: • Qualified VOETSTOOT sale of Shares; • Continued Normalization Programme: PHDs have now motivated for a linked SPV/ Normalization Programme • Restructured Servcon: • Finalization on the Capitalization Programme • Inter-Departmental Linkages; • Private Sector Raising of Funds

  14. 9. Equity/Procurement/BEE and contribution to ASGISA • Equity: Servcon will be restructured into a 100% State Owned Section 32 Company with the Capacity to transact as a Private Entity and yet accountable to the Minister; • Procurement is according to applicable Corporate and Government Requirements; • BEE – Process is still being determined but Service Level Agreement require following applicable Process • ASGISA – Rapid Housing Delivery Models

  15. 10. Way-Forward • Finalized Ring-Fenced Portfolio – targeted 30 June 2006; • Normalization Programme – PHDs recommended to the Minister a Linked Process – Redundant Portfolio; Portfolio outside of Servcon; Shack Audit; Rectification Quantification Programme etc • Restructured Servcon Business Case articulated and will be presented to the DG within the next 7 Days

  16. KE A LEBOGA

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