With the festive season upon us, Vumelana Advisory Fund’s CEO Peter Setou has made a clarion call to CPAs to seize this opportunity for internal reflection and strategic planning. By focusing on optimising their operations now, they can ensure a smooth and prosperous new year.
According to Setou, the low level of governance and administrative capacity among land reform beneficiary communal property institutions (CPIs) results from limited resources and the absence of incentives to drive compliance with legislative and other requirements for land reform beneficiaries.
CPAs important for community development
“Over the years, beneficiaries of the land reform programme have grappled with sound governance, which among other things, includes effective record keeping, overall financial management, administrative oversight, managing member expectations, and effectively running the assets they have acquired,” he said.
He said key areas of good governance for CPIs include the establishment of basic governance arrangements, including up-to-date constitutions and properly elected governing bodies, systematic management of relationships with members, encompassing an up-to-date member register, and clear policies defining members’ rights and obligations.
“Effective day-to-day administration with established operating policies and requisite skills and resources is also essential, including transparent financial management with independent audits and clear reporting to members,” he said.
Lack of good governance
Setou points out that a lot of the in-fighting at CPAs happens because of a lack of governance. “Furthermore, we have found that CPAs that are not well-governed normally struggle to attract private investors to support them in making their land productive, while those that are well-governed are more likely to attract investors to their land enterprises,” he said.
He added that it is critical that good governance becomes the order of the day and highlighted that transparent financial management in CPAs is paramount, requiring independent audits and clear reporting to members.
“In addition, efficient management of the community property, aligned with agreed-upon member policies, plays a crucial role in ensuring the sustained success of these institutions.
“Working collaboratively with some private sector institutions, Vumelana has developed the Communal Property Institution Support Programme, specifically designed to empower CPIs in effectively implementing good governance practices within their CPIs.”
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‘We need a workable plan’
Setou explained that the CPI support programmes are designed to address various governance aspects including overall institutional development and governance support, which involves beneficiary verification, account preparation, annual general meeting (AGM) coordination, reporting on AGM outcomes, and preparation for inaugural board meetings.
“As the festive season downtime approaches, this is an opportune time for CPI committee members to put their house in order. This is the right time to assess whether communal property associations (CPAs) are following basic governance arrangements and effectively managing the day-to-day administration of their CPAs.”
According to Setou in 2014, to foster good governance practices among CPAs and trusts benefitting from the land reform programme, Vumelana initiated the Vumelana Good Governance Award. He said it was designed to encourage effective governance within these entities and is registered under the Communal Property Associations (CPA) Act and the Trust Property Control Act.
Between 2014 and 2016, Vumelana awarded R1.2 million to seven communities, acknowledging their commitment to sound governance practices.
“However, the initiative has temporarily been put on hold due to the dependency on sponsorships to facilitate the award. We would hope that the government and other private sector players could contribute towards sponsoring this initiative as it will create an incentive for CPAs to do more in the area of good governance and this will in turn promote sustainable land reform.”
“We have witnessed the impact that good governance can have on CPAs, ranging from attracting the necessary investments to their land enterprises to promoting sound leadership, and sustainability of businesses owned by the communities, “he said.
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