September 19, 2023

Over R500 million in subsidies to farmers not counted in farmland account

  • The Agriculture Land Holdings Account (ALHA) cannot account for the more than R500 million it has paid out to farmers in the form of subsidies.
  • Therefore, the ALHA audit opinion regressed to a qualified audit with conclusions.
  • The former Ministry of Rural Development and Land Reform obtained an unqualified audit with conclusions.

The Agricultural Land Account (ALHA) cannot account for more than R500 million – about a quarter – of the conditional grants it paid to farmers in fiscal year 2019/2020, found the Auditor General of ‘South Africa (AGSA).

AGSA presented its findings on the former Department of Rural Development and Land Reform and ALHA to the Portfolio Committee on Agriculture, Land Reform and Rural Development.

In January, the commission heard that the ministry could not submit the annual report of the former Ministry of Rural Development and Land Reform within the extended deadline, as the ALHA was still working with AGSA and the National Treasury to finalize its financial statements.

The department achieved an unqualified audit with conclusions for the fifth year in a row, while the ALHA went from an unqualified audit with conclusions to a qualified audit with conclusions.

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AGSA provided the following reason for qualification: “Management did not adequately assess grants which indicated funds should be repaid by grantees who did not comply with the terms and conditions of the grant agreement. This was mainly due to tracking of grant spending. “

On March 31, 2019, 1.726 billion rand out of 2.292 billion rand was reconciled and confirmed by the ALHA that the funds were used in accordance with business plans.

The reasons were as follows:

  • Inadequate management and monitoring of the project by the entity.
  • Poor record keeping by the entity where some farmers provided information to the provincial offices.
  • Farmers who are not cooperative or who do not respond.
  • Funds not used for intended purposes in accordance with approved business plans.
  • The AGSA noted that the ALHA in previous years had explored various avenues to determine the extent of grants that must be repaid or what legal steps could be taken to recover the funds.

“Based on our audit, we identified several indicators that confirm that some of the funds are owed to the entity in accordance with the conditions set in the grant contracts. Therefore, a detailed valuation should have been carried out and these funds should be accounted for accordingly ”read AGSA’s report to the committee.

The AGSA found that the department and the ALHA “failed to take effective and appropriate measures to prevent irregular spending.”

Agriculture, Agrarian Reform and Rural Development Minister Thoko Didiza said before the presentation that internal controls were a “huge challenge” and asked the Special Investigation Unit (SIU) to ‘investigate.

She added that repeated discoveries should not become the norm.

After the presentation, the chairman of the committee, Mandla Mandela, said that if officials were involved in wrongdoing, they should fully comply with the law and the money should be recovered.

The committee will discuss the annual report with the ministry at a later date.

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