[panel panel-style="transparent" title="ECONOMIC%20DEVELOPMENT%20-%20RURAL%20DEVELOPMENT" sub-title="COMPLETED%20SPENDING%20REVIEWS%20" title-size="20" separator-color="primary"]
[accordions title-text-size="14px" icon-close="ion-ios-arrow-up" icon-open="ion-ios-arrow-down"]
[accordion title="Assessment%20of%20the%20Biofuels%20Incentive%20Model"]
"A SR was commissioned to estimate the costs and test the robustness of the incentives that had been proposed for stimulating bio-fuels production in SA. The review concluded that the proposed scheme was deficient in a number of respects, making it both more expensive than initially anticipated and more generous to producers than it needed to be. The SR identified weaknesses in the conceptualisation of the incentive scheme. These included: • The inappropriateness of guaranteeing a 15% return on assets rather than on equity, especially when claw-back provisions kick in only after actual returns exceed 20%; • The inappropriateness of allowing “incentive double-dipping” by allowing subsidised firms to qualify for accelerated depreciation incentives; and • A lack of clarity about whether incentives should be paid on biofuel produced or biofuel delivered to refineries. In addition, the SR identified numerous weaknesses in the model that had been generated to estimate the cost of the biofuel incentive that collectively made it unsuitable for policy purposes. Reworking the numbers, the SR estimates that the cost of the biofuel incentive will be substantially higher than that projected in the original model."
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[/accordion]
[accordion title="Land%20Restitution"]
"Since the inception of the Commission in May 1995, R29.3 billion has been spent on this programme. To date, it has settled 85% of the approximately 60 000 claims lodged and the majority of these (92%) were finalised through financial compensation. About 87% of the claims were in urban areas, which were relatively straightforward to settle. The number of claims settled per year has been falling since 2002; in the last five years, only 2 808 claims were settled, at an average of 562 per year. Before the recent reopening of the claims process, two remaining liabilities needed to be addressed: (a) Outstanding claims numbered 8 733, and could be settled over five years at an estimated cost of R16.9 billion. (b) The Commission’s Commitment Register stood at R4.8 billion in March 2012. This register includes all claims where the research has been completed and the claim has been awarded (settled), but the legal transfer has not occurred (not finalised). The disbursement of these payments have been put on hold because of the change in grant policies. This process needs to be expedited. A regulatory impact assessment study by the Department of Rural Development and Land Reform suggests that reopening the claims process could see 397 000 new claims being registered. Based on current trends, it could cost between R230 billion and R265 billion to settle these claims, as well the 8 733 outstanding claims, over 20 years. Should a policy decision be taken to award a higher proportion of claims in terms of land rather than money, the fiscal cost could reach R490 billion over this period. This would entail additional expenditure averaging R24 billion per year, as against the R3 billion currently being spent, which does not appear viable. While the Commission is no longer mandated to implement post-settlement support, it still performs this function in practice. Both funding and operational responsibility for post-settlement support should be removed from the Commission, to enable it to focus on its core mandate of finalising the outstanding claims and settling the new ones."
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[/accordion]
[accordion title="Micro%20Agricultural%20Funding%20Institution%20of%20South%20Africa%20(MAFISA)"]
"MAFISA (the financial support pillar of the Comprehensive Agriculture Support programme) is a R1 billion programme to provide loans to small and micro-producers and processors in the agriculture sector. MAFISA provides capital to a system of financial intermediaries appointed by DAFF, which extend micro-loans to beneficiaries. These beneficiaries pay 8% interest on the loans, and the intermediaries carry the risk of default. The study shows that MAFISA is only viable at default rates below 5%, which is probably unrealistic in the agricultural environment. Thus the model may well be inherently flawed. Should government wish to continue with MAFISA or similar programmes, a workable risk-sharing structure would be needed. There is also a policy coordination problem, in that a number of grant instruments ‘compete’ with these loans in agriculture. Treasury has recently withdrawn MAFISA’s funds and is waiting for payment of the outstanding loans. Much of the outstanding book is unlikely to be recovered. The study also found evidence of unexplained transfers of excess amounts to specific intermediaries."
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[/accordion]
[accordion title="Provincial%20Nature%20Reserves"]"The review finds that as a group, the science councils are not effective in partnering with the private sector. Mintek is an important exception, as is the CSIR, to a lesser extent. For every R1 that government invests the science councils as a group, only R0.62 in private income is generated. (For Mintek, this ratio is 1:1.69 and for the CSIR, 1:1.04.) The international norm for this efficiency ratio is 1:1. While private income as defined in the study includes income from state-owned corporations, on aggregate this comprises less than 1% of total income of the councils. The analysis suggests that effective partnering between science councils and the private sector depends on two variables: i) the degree to which a council interprets sector partnerships as part of its mandate, and ii) the maturity and willingness of the relevant industry to partner with the council. This is determined in turn by the structure of the industry (e.g. mining vs pharmaceuticals) and the council’s efforts to maintain good partnerships. It is clear from the study that partnerships with the private sector have not been a sufficiently explicit policy objective. While this objective can fruitfully be pursued in a number of cases, government should note that it might not be an appropriate approach for all science councils."
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[/accordion]
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