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RECAPITALISATION AND DEVELOPMENT PROGRAMME PRESENTATION TO THE PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT AND LAND REFORM 5 NOVEMBER 2014. Background on Recapitalisation and Development Programme (RADP).
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RECAPITALISATION AND DEVELOPMENT PROGRAMMEPRESENTATION TO THE PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT AND LAND REFORM5 NOVEMBER 2014
Background on Recapitalisation and Development Programme (RADP) In 2009, the Department undertook an evaluation of the implementation of the Land Reform Programmes since their inception. • It identified that many land reform projects were not successful and thus in distress or lying fallow; • There was a lack of adequate and appropriate post-settlement support; and • Numerous properties acquired through various sub-programs (such as the Land Redistribution for Agricultural Development (LRAD) were on the verge of being auctioned or had been sold due the collapse of the project, resulting in a reversal of the original objectives of land reform.
Background cont….. • In order to address the above challenges, RECAP targets properties acquired since 1996 through the Restitution and Redistribution programmes; and • Aims to contribute to the transformation of the rural economy through establishment of enterprise and industrial development in the various agricultural value chains - • to ensure national and household food security, and • to promote job creation. • Implemented correctly, RECAP would result in a significant reduction of the rural – urban population and resource flow.
Objectives of the policy • The policy has three strategic objectives: • That Land Reform farms are 100% productive; • That the class of black fledgling commercial farmers which was destroyed by the 1913 Natives Land Act is rekindled; and • That the rural-urban population flow is significantly reduced.
Alignment of RADP with Government Mandate RADP program took cognizance of the following: • Reversing the legacy of the 1913 Natives Land Act; • The Constitution of the Republic: Section 25,26,27 and 36; • The Comprehensive Rural Development Plan (CRDP); and • Alignment with the National Development Plan(Chapter 6) and Medium Term Strategic Framework.
Intentions of the RADP Programme The policy seeks to: Provide black emerging farmers with social and economic infrastructure and basic resources required; Combat poverty, unemployment and income inequality; Reduce rural-urban migration; and Complement agricultural development programmes of the Department of Agriculture, Forestry and Fisheries (DAFF). The policy is not meant to: Substitute for, or compete with the agricultural development programmes of DAFF; Nor create a welfare program meant to provide support to so-called beneficiaries.
Overview Recapitalisation and Development Policy (key pillars of the policy) • Selection and targeting of beneficiaries The Programmetargets the following categories of propertiesrequiring and deserving support:: • Selected distressed land reform properties; • Selected properties under the administration of the Minister; • Selected sites within the former homelands and other communal areas; and • Selection of farms and properties for Recapitalisation and Development funding is guided by objectives of this Policy and other government development frameworks. The projects will be prioritized in accordance with the categories as outlined in the Agricultural Land Holding Policy and Lease and Disposal Policy.
Overview Recapitalisation and Development Policy (key pillars of the policy) Cont... The policy seeks to create developmental pathways appropriate to different categories of farmers: • Category 1: Households with no or limited individual access to land, even for subsistence production. • Category 2 – Small-scale farmers who have been farming for subsistence purposes and selling part of their produce on local markets. This may be land in communal areas, on commercial farms, on municipal commonage or on church land. • Category 3 – Medium-Scale commercial farmers who have already been farming commercially at a small scale and with aptitude to expand, but are constrained by land and other resources • Category 4 – Large-scale commercial: Well established black commercial farmers who have been farming at a reasonable commercial scale, but are disadvantaged by location, size of land and other resources or circumstances, and with real potential to grow. • In addition, the Department will select properties based on the commodity clustering approach by working together with sector departments (e.g. financial institutions, farmers, municipalities, and commodity organisations, social partners in the private and non-governmental sectors).
Institutional and governance arrangements 1. District Land Acquisition and Recapitalization Committee 2. Provincial Land Acquisition and Recapitalization Committee 3. National Land and Recapitalization Technical Committee 4. National Land and Recapitalization Secretariat Committee 5. National Land and Recapitalization Committee 6. Inter- Ministerial Technical Committee 7. Ministers Co-ordinating Committee
Delegation framework The Minister for Rural Development and Land Reform is duly authorised thereto by section 15 of the Land Reform: Provision of Land and Assistance Act, 1993 (Act No. 126 of 1993), to do land development in all acquired land reform properties. These powers have further been delegated to different officials within various line functions. (See the attached copy of Act 126 Delegations.)
Exit strategy • The model belowdemonstrates the tripartite collaboration between DRDLR, Strategic Partners (SPs) and Farmers or Entrepreneurs. The middle numbers (1-5) demonstrate the five-year involvement of DRDLR in the farm both financially and at project management level. The contribution of DRDLR will decrease from the first year to the fifth year whilst the contribution of both SPs and Farmers or Entrepreneurs will increase both financially and at project management level.
The following are key factors on RADP execution of Exit Strategy • Viability and Sustainability of the projects • Farm Assessment • Financial standing at the time of exit • Skills Development on : • Farm management , • Record Keeping , • Financial skills Development , • Market related relationship and linkages • 4. Future Business plan • 5. Commitment and Performance Report for Strategic Planning and DRDLR M& E report
Number of Farms Redistributed vs. number of Farms under Recap
Number of Farms expected to exit the five year incremental funding by end of 2016
Training and Capacity Building to Farmers in the Recapitalisation and Development Programme .
Successes and Challenges with training of farmers • Successes Training provided by strategic partners in different provinces under the RADP included cane husbandry, cane cutting, boom sprayer operator, livestock farming, crop management, concrete mixing & brick laying to erect farm houses/ storages, financial management, Supplementary feeding of livestock, feedlot, soil sampling, stock control, tractor learner driving, tractor operations and safety, basic business training, bell loader, chainsaw & brush cutter maintenance, committee training, cooperative governance, breeding of livestock, record keeping, health and safety, debushing, implement setting, vineyard monitoring etc.
Challenges • Key challenges included: • Lack of dedicated strategic partners, as they are not willing to invest in the programme and share the risk with farmers. • Lack of alignment with other departments providing support to farmers in the sector. • Steps taken to address challenges • Recap and development manual is being finalized to provide guidelines for the proper implementation of the programme. • Commodity based support will be adopted to maximize support given to farmers under land reform and this will be aligned with the Agricultural Policy Action Plan (APAP). • Collaboration of AgriSeta to assist with training • Improvement of legal contracts of Strategic Partners
Financial Management of the Recap Fund • Disbursement of funds All Recapitalisation and Development funding will be disbursed into joint project business accounts in terms of the approved Business Plan. Accounts should be registered in the name of the newly formed project’s legal entity or the new farm business account. Both the Strategic Partner and farmer/s should have co-signing rights on the joint account during the contractual period. • Monitoring compliance and financial controls (PFMA and Treasury Regulations) • The farmer/s may not unilaterally remove the Strategic Partner as a co-signatory without the written consent of the Department. • Procurement of goods and services must be approved by the project adjudication committee and signed by all parties to the agreement including the Department. • The PLAS Trading Account in the office of the Chief Financial Officer will monitor the management of the funds with financial institutions where the joint account is opened or was opened on financial control terms agreed upon by these entities.
Strengths and Weaknesses of Financial Controls Strengths Farmers can procure their required goods on time Farmers’ financial creditability will improve as they procure their services Improvement in their financial management skills Weakness Farmers deviate from the business plan by procuring assets which are not in line with approved Business Plan Farmers unilaterally remove Strategic Partners as co-signataries to the account. No proper accountability on money spent Lack of control and investment on the profit received
Plans to improve on the weaknesses Improve the contracts of all forms of partnership Use the procurement cards without withdrawing cash from the bank Direct linkage of suppliers with the procurement cards Money paid direct to suppliers through internet banking controlled by Strategic Partners Payment to be informed by the signed and agreed invoice between the farmer and the strategic partners Monthly monitoring of joint account transactions by finance team from provincial offices All deliveries of goods and services must be verified and signed off by project office before payment can be done,
Highlights of the RADP to date What is the rate ofsuccess of projects under RADP?: NB: RADP has different kinds of Strategic partnerships, namely Co-management, Contract farming, Share Equity and Mentorship. 1. Mentorship • 298 projects under mentorship and they are doing very well 2. Other Partnerships (Contract Farming, Co-management and Farm Equity • 314 projects under other Partnerships which are also doing well. NB: a) Most projects are only now starting to realize profitability because in the first three years the concentration was on infrastructure to make the farms farmable. b)the Chief Directorate through its Institutional Partnership unit is doing contract management wherein they are identifying all non compliant projects and deal with them in line with the non- compliance clauses in the contract.
