The real story of the missing R500 million from ALHA’s account

#Missing R500 Million

The Auditor General’s (AG) recent findings against the department of agriculture, land reform and rural development’s (DALRRD) entity, the Agricultural Land Holding Account (ALHA), were nuanced. 

Earlier during the week, reports sensationalized the missing R500 million without taking the time to reflect on the entire AG’s Report. 

ALHA was established in terms of the Provision of Land and Assistance Act of 1993, which allows the state to proactively target and acquire land, and merge this with the demand or need for land. 

By 2017, ALHA had managed to acquire 222 640 hectares of land with 102 287 hectares allocated to smallholder farmers. 

Since the merger of the department agriculture and the then department rural development and land reform, DALRRD has been on a transitioning period with many of the functionaries collapsing due to delays in submissions and approvals.  

According to some policy analysts and insiders at the department, it was not surprising that DALRRD was unable to account for the R566 million out of the R2, 292 billion paid out. 

The AG said management had provided them various reasons why the balance remained unaccounted, which includes, among others, “inadequate project management and monitoring by the entity, poor record keeping by the entity where some farmers provided information to provincial offices, farmers that are were not cooperative or not responsive; and funds not used for the intended purpose as per the approved business plans”.

Furthermore, the AG’s report highlighted proactive steps taken by management to recover the funds. 

According to the report, management sought legal advice from the State Attorney office, consulted grant beneficiaries, appointed consultants to perform site visits and took legal action to recover grants unaccounted for. 

Against this backdrop, the AG had glaringly noted that ALHA’s current year’s fruitless and wasteful expenditure decreased significantly compared to prior year.

“The bulk of the fruitless and wasteful expenditure incurred in the prior years relates to the SRR projects where grants were provided to rescue some projects. An investigation on the SRR projects had been commissioned and completed,” the AG said.

SRR (Strengthening Relative Rights) was introduced to make fundamental changes to land relations and factors of production by addressing issues of land hunger, extreme land concentration. 

ALHA’s funds, under this policy, was used to purchase commercial farms for purposes of transferring them for state ownership.  

Compared to the number of Proactive Land Acquisition Strategy (PLAS) farms identified for incubation and training of agricultural graduates, ALHA was able to account for all the monies spent and received. SRR was complex ground for ALHA with no control on the levers of implementation as this functionary was outsourced to the National Empowerment Fund. 

AG’s main gripe was not so much as the funds and its beneficiaries, but the procurement system used by AHLA. 

“The significant irregular expenditure incurred in ALHA was as a result of non-compliance with SCM prescripts in instances where implementing agents were used,” said the AG. 

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