INTRODUCTION

1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT AND LAND REFORM TUESDAY 12 OCTOBER 2010 BYKWAZULU-NATAL INGONYAMA TRUST BOARDREPRESENTED BY:

2. The purpose of this presentation is to appraise the Portfolio Committee on the following: • Ingonyama Trust Board in general. • Performance of Ingonyama Trust Board for 2009/10, on its programs as highlighted in the strategic plan and achievements. • Financial Performance for 2009/10. • Management action plans put in place to respond to the report of the Auditor – General. • Challenges and constraints. INTRODUCTION

3. LAND OWNERSHIP The Trust is the largest landowner in the Province with a total extent of 2,773,875 hectares held under some 1600 individual titles. Land is owned in all of the 10 Districts and Metro Municipal areas and the ITB is probably the largest individual landowner. Population Based on information supplied by the Bureau of Statistics the number of persons residing on Trust land as at the year 2001 census was estimated at 4,558,698.

4. BACKGROUNDThe Ingonyama Trust was established in 1994 by an Act of Parliament – Act No 3 of 1994 with His Majesty the King as the sole Trustee. An amendment Act in 1997 established a Board to actually administer the affairs of the Trust. CORE BUSINESS • The Board sees real estate as its major activity. The core business of the Trust is to manage the land for the “material benefit and social well being of the individual members of the tribes”. However, no alienation or burdening of the land may occur without the written permission of the relevant traditional or community authority. VISION • To improve the quality of life of the people living on Ingonyama Trust land by ensuring that land usage is to their benefit and in accordance with the laws of the land. MISSION • To provide the best possible land management systems to communities who live on Ingonyama Trust land. OBJECTIVES • To formulate and implement policy; • To provide an effective land administration system; • To create a climate which encourages development; and • To extend security of tenure in accordance with both customary and statutory law always subject to the Constitution of the Republic of South Africa, 1996.

5. CORPORATE GOVERNANCE AND STRUCTURE MANAGEMENT STRUCTURE The Board has the following management structure: • The Executive Authority in terms of the Public Finance Management Act (Act 1 of 1999) (PFMA) is the Minister of Rural Development and Land Reform. • The sole Trustee of the Ingonyama Trust is His Majesty King Zwelithini Goodwill ka-Bhekuzulu. • An Audit Committee is constituted in terms of the PFMA. • The Accounting Authority in terms of section 49 of the PFMA is the Board. • The internal administrative costs of the Board are met from a transfer payment from the National Department of Rural Development and Land Reform, (i.e. voted by Parliament), The operational costs are met from 10% of funds accruing through the Trust.

6. SECRETARIAT THE BOARD IS ASSISTED IN ITS DAY TO DAY WORK BY A FULL TIME SECRETARIAT. THE SECRETARIAT’S WORK CONSISTS OF THE FOLLOWING CATEGORIES: • Real Estate Management; • General Administration; • Financial Administration; • Managing The Board’s Agents And Service Providers; • Engaging With Numerous Organs Of State; • Engaging With The Private (Commercial) Sector. • Interaction With Various Traditional Leaders And Government Departments.

7. OUR PORTFOLIO IS QUITE DIVERSE AND INCLUDES: Residential, Agricultural, Game Parks, Conservation Areas, Forests, Woodlots, State Domestic, Mining and many Commercial Developments such as: • Shopping Centres • Hotels • Filling Stations • Housing Projects • Aquaculture and Farms

8. PERFORMANCE ANALYSIS 2009/10TRANSFER OF FORMER KZ R293 TOWNS • The Board continued to engage with the Municipalities to facilitate the take over of the land which has vested in them. • 2 out of the 6 Towns remained at year end to be transferred.

9. TRANSFER OF LAND USED FOR STATE DOMESTIC • In terms of our legislation, property used for State Domestic purposes prior to April 1994 vests in various organs of State • The Board is working with the Department of Public Works to address the matter

10. ALLOCATION OF LAND FOR HOUSING DEVELOPMENT • THE BOARD APPROVED 23 APPLICATIONS FOR DEVELOPMENT AGREEMENTS • THESE COVERED A TOTAL OF 22 500 HOUSING UNITS

11. GRANTING OF LEASES • The Board sees real estate management as its major core function and during the year continued to encourage development on its land which will be of benefit to the various communities, not only from a rental income point of view but also through employment and other opportunities. This can include shareholdings and seats on company Boards. • As at 31 March 2010 the Board had granted 566 leases generating R 16 621,202 per annum (straight lining lease income amount ) by way of income.

12. REGISTRATION OF LAND VESTING IN THE TRUST AND CONSOLIDATION OF TITLES • The DRDLR still has to complete the transfer of some 300 parcels of land to the Trust. Most of these parcels were to have been transferred to the Trust’s predecessors-in-title following various proclamations and Commissions but for one reason or another have never been transferred. • A Committee was established to fast track the project. Land parcels were divided into Four categories: • Cat.1 Properties to be endorsed in favor of ITB 65: 16 Endorsed by March; • Cat.2 Properties to be surveyed 3: Maps done for all by March; • Cat.3 Properties contested 126; and • Cat4. Properties endorsed in error 23.

13. MINERAL RIGHTS AND ROYALTIES • Subject to the provisions of the Mineral and Petroleum Resources Development Act 2002, the Board continued to monitor the development of the mining potential on Trust land for the benefit of the communities. This is done by way of mining surface rights leases on Trust land. • During the year under review R16 675,189 was received by way of royalty income.

14. The Board generates revenue from its trading activities (such as leases and royalties) and also receives a transfer payment from the Department of Rural Development and Land Reform. FINANCIAL PERFORMANCE 09/10

15. FINANCIALPERFORMANCE (continued)

16. DISBURSEMENT OF FUNDS TO TRADITIONAL BENEFICIARIES • During the year the number of Traditional Councils qualifying for funding totaled 103 • The amount disbursed totaled R 3 337 604.00. • The Board is concerned about the slow take up of funds by the Traditional Councils and is investigating alternative methods for the release of funds. • The Traditional Councils are encouraged to create structures such as Community Development Trusts to act as conduits for monies receivable from the Board in respect of mining royalties, leases and other income.

17. AUDITOR-GENERAL’S BASIS FOR QUALIFIED OPINION AND OUR RESPONSES • Valuation of land holdings – Departure from Accounting Standards to value land. Our response: The Board wishes to make it clear that the decision not to value land is not to defy any accounting standard but was made purely on cost versus benefit considerations. The core business of the Trust is to manage land for the “material benefit and social well being of the individual members of the communities for which the land is held in Trust.” Revenue derived from this land management is distributed to the communities in accordance with the Boards’ disbursement policy. The costs for valuing 2.7 million hectares of land could involve fees of several million rand which would have a serious impact on the cash resources available for the benefit and well being of the various communities. The knowledge of knowing the value of the land will in no way materially benefit the inhabitants or the Trust particularly as the Board has a policy not to alienate or dispose of land held in freehold except in exceptional circumstances. -------------------------------------------------------------------------------------------------------------------------------------------------- • Incompleteness of Royalty revenue Our response The request for the Board to institute overall controls on mineral extractions is a challenge on its own. As this would entail employing personnel to check and re – check every ton of coal and every cubic meter of sand extracted by lessees on Trust Land. Internal controls are however in place to ensure correct receipting and recording of funds received. Independent royalty audit certificates are obtained from major mining operators and mining leases will be amended to require them to submit these regularly.

18. CHALLENGES AND CONSTRAINTS RATES One of the downsides of owning land which is substantially occupied by the beneficiaries in terms of the Ingonyama Trust legislation is the absence of accurate and adequate records of tenure particularly by Municipalities and the Deeds Office. This results in the various Municipalities sending rates accounts to the Board whereas they should have been sent to the various occupiers. As a result, the Board’s debt in terms of the newly introduced Municipal Property Rates Act, Act 6 of 2004 could be inflated. It will be noted that since the inception of the Board the issue of rates has been a thorny one. The Board intends to commission land audits in order to help alleviate this problem. In the meantime the Board is in dispute with eThekwini Municipality over the payment of rates and the matter is the subject of a dispute in terms of the Inter Governmental Relations Framework Act, Act 13 of 2005.

19. FINANCIAL AND HUMAN RESOURCES The Board is mindful of the important role it can play in rural development and land reform but until now has been hampered by capacity and budgetary constraints. A new organogram had been approved with the concurrence of the Director General DRDLR and the process of recruitment is currently being finalized. ILLEGAL OCCUPATIONS Illegal occupations are however on the increase both from private individuals and even organs of state. Subject to budgetary constraints field officers are being appointed to identify such occupations following which the Board intends to take appropriate action. As a first step in the formalization process and in order to prevent illegal occupations, the Board intends to commission land audits in order to identify occupations in key areas. The Board continues to be aware of land claims on Trust land and endeavors to co-operate with the Commission to resolve such claims in order that the Trust can perform its functions as land owner-in-law. However it has been difficult to get full information on claims on Trust land. CHALLENGES AND CONSTRAINTS(CONTINUED)

20. ROYALITIES The provisions of the Mineral and Petroleum Resources Development Act 2002, that directs mining companies to pay royalties directly to the National Fiscal seem to create challenges as companies can not remit their payments before they can get clarity on the matter. CHALLENGES AND CONSTRAINTS(continued)

21. EMPHASIS AND OTHER MATTERS • Contingent liability – property rates dispute with Ethekwini Our response No provision has been made because the Board contends that it is not liable. ---------------------------------------------------------------------------------------------------------------- • “Awaiting approval ’’ from National Treasury to retain Accumulated Surpluses. Our response • No request has been made to National Treasury for retaining any surplus. The Board generates income from which at its discretion 90% accrues to Traditional Communities and 10% is held for operational purposes. The Board has never been approached by National Treasury to surrender any surplus

22. Thank You...