Departmental 4th quarter 2010 performance report & Millennium Development Goal update, Committee budget vote adoption

Meeting report

The Committee elected Ms Ruth Magau (ANC) to fill the role of Acting Chairperson in the absence of the Chairperson, who had other commitments.

Adoption of outstanding minutes and report on the Department’s budget vote
The Committee adopted its Committee Report on the Department’s budget vote, with no amendments.

The Committee adopted minutes of meetings held on 18 January, 16 February, 2 March, 23 March and 30 April with minor amendments.  
 
Mr K Mubu (DA) raised concern that the Committee’s meetings did not start on time, despite some members of the Committee arriving early at the appointed venue. He proposed, and it was accepted by the Committee, that future meetings should be scheduled for 10:00.

Department of International Relations and Cooperation : Fourth Quarter 2010/11 Performance Report
Mr Asogan Moodley, Chief Financial Officer, Department of International Relations and Cooperation presented the 4th Quarter Performance Report for 2010/11. He reported that the Department of International Relations and Cooperation (DIRCO or the Department) had been allocated R4.7 billion for the last financial quarter ending on 31 March 2011. It had spent R4.4 billion of that allocation, representing 94% expenditure. There was R1.057 billion spending out of the allocated R1.2 billion for Programme 1: Administration. That represented 85% expenditure. The reasons for under-spending on Programme 1 were due to delays in some of the capital expenditure projects in Washington, London (SA House) and Abuja. He expanded that in Washington, government had purchased the Chancery and official residence in October 1940. No major renovations had been done since the purchase of the properties, which meant that these facilities had become worn and outdated beyond repair. The Embassy had also grown to such an extent that all staff of DIRCO and its partner departments could not longer be housed in the Chancery, so that another building had to be rented for partner departments, immigration and civic services staff.  DIRCO had conceptualised a multi-year upgrade project, estimated to cost R206 million, and the design phase of this had been completed in 2010. DIRCO had expected to receive approval for the design from the local authorities, appoint a contractor and commence with construction works, in the 2010/11 financial year. However, because both buildings were classified as historic, any changes were subject to legislative approval, and a detailed public participation process was required, prior to approval of plans, which led to significant delays in finalizing the design and obtaining local authority approvals.

In London, DIRCO commenced a project, in the 2010/11 financial year, to refurbish two passenger and one goods elevator in South Africa House, involving both the hoisting equipment and lift cabins. The Jackson Lift Group was appointed to do the work. However, shortly after commencement of work, asbestos was found. Since this was a hazardous material that was legislated against in most European countries, DIRCO then was obliged to appoint a specialist to conduct studies both to determine the extent of the asbestos and recommendations to deal with it. The studies resulted in the asbestos needing to be removed by a specialist contractor, resulting in unavoidable delays on the refurbishment work.

In Abuja, construction of a Chancery and official residence had commenced in 2009, but had, since inception, been plagued by slow overall progress by the contractor, as well as claims for extension of time. Finally, following discussions between high ranking officials of DIRCO, and the Chief Executive Officer of the construction company, the residence was completed in October 2010. However, both DIRCO’s own security and ICT requirements and the state of the construction environment in Nigeria required that at least 95% of the materials and equipment for the Chancery project had to be imported, and this added to delays. By end March, most of the project was completed. The hand over and relocation of staff was expected to happen in the first half of 2011/12.

Mr Moodley then outlined Programme 2: International Relations, in which DIRCO spent R2.385 billion of the adjusted appropriation, although spending was recorded as 100%. For Programme 3: State Protocol and Public Diplomacy, DIRCO received R233 million, and had spent R204 million. This was 89% spending. The reasons for underspend included a vacancy of Chief of State Protocol, and an upgrade of public diplomacy to a separate branch. For Programme 4: International Transfers, the Department had received R828 million, and had spent R754 million, or 91%. Under spending resulted from transfers to the African Union (AU) and the Southern African Development Community (SADC) only being processed in the period after 31 December 2010. Fluctuations in the exchange rate and assessments were also contributing factors.   
 
Discussion
Mr K Mubu (DA) asked how the Department monitored the expenditure of its contributions to the AU and SADC.

Mr Moodley responded that the Department had a unit that worked closely with the AU, SADC and other bodies with whom the Department was involved, and it would monitor expenditure of the Department’s contributions. More information would be provided after consultation with the Africa Branch.
 
Mr B Skosana (IFP) asked whether the contributions to the AU and SADC were standard amounts, or whether they were dependant on the budgets of those organisations.

Mr Moodley responded that the contributions were calculated as a percentage of each country’s gross domestic product.

Ms L Jacobus (ANC) asked whether the delays in the capital expenditure projects mentioned would have a financial impact. She asked also about the impact of renovations for South Africa House in London.

Mr Moodley replied that the Abuja project had incurred additional costs of R16 million and the London project additional costs of R3 million. Although the Department owned the South Africa House building, the land on which it was built was owned by the British government. The Department had entered into a one-hundred year lease deal, which expired in 2020
.   
Ms Bernice Africa, Chief Director: Property and Facilities Management, DIRCO, replied that insofar as South Africa House was concerned, the asbestos issue could affect the finances, for if a decision were taken to remove the asbestos, this could add R100 000 to the renovation costs. The delays in Abuja and Washington could affect the final price either way. A contract adjustment factor was included in the construction contract for each project, which allowed the Department to pay directly for construction materials, and this might avoid adding extra final costs to the projects. A rollover of R52 million for the Abuja property, and a rollover of R12 million for the Washington project, were expected in the current financial year. She added that since DIRCO owned South Africa House, any renovations would be at its own cost. In the case where DIRCO leased or rented properties, it would not renovate or alter.

Mr S Mokgalapa (DA) asked whether the under-spending on Programme 1 could be attributed partially to lack of capacity. He asked whether the Department was still contributing to the African Renaissance Fund (ARF) even though the Fund was soon to be replaced by the South African Development Partnership Agency (SADPA).

Mr Moodley explained that the Department still contributed to the ARF and would continue to do so until SADPA officially replaced the Fund. When the ARF was replaced, the funds from that Fund would be transferred to SADPA.
 
Mr Ganga Tsengiwe, Acting Deputy Director General: Human Resources, DIRCO, confirmed that there had been challenges with capacity around the Public Diplomacy work and so DIRCO had elevated this programme to Branch level. The Deputy Director General post for that branch had been filled, as well as some Chief Director positions. DIRCO was focusing on filling key management posts. The position of Chief of State Protocol had been advertised and hopefully would be filled soon.

Mr E Sulliman (ANC) sought clarity on the figures noted for Programme 2. 

Mr Moodley replied that the amount was R2.3 billion.

Mr Mubu noted that the Pan African Parliament (PAP) had not been mentioned in the presentation and asked for a report on the construction of the PAP headquarters. He asked whether there would be an escalation in costs for that construction.

Mr Moodley responded that the PAP fell under the responsibility of the Department of Public Works (DPW). 

Mr Skosana asked whether the diplomatic education programme gave good value for money, and whether it showed tangible results. He commented that it did not seem to be taken seriously enough.

Mr Moodley replied that the diplomatic education programme was indeed valuable.             

Mr Mokgalapa asked whether the vacancies to which Mr Tsengiwe referred were at a middle management level. He also asked what the capacity situation was at a lower level.

Mr Tsengiwe responded that most of the Department’s vacancies were at a managerial or senior level. There was now a wider pool of potential staff available to the Department, due to the Cadet programme.

Ms C September (ANC) asked how much money would be rolled over to the current financial quarter from the previous quarter. She asked why the capital expenditure figures were shown in DIRCO’s budget, as opposed to the DPW’s budget. 

Mr Moodley replied that there would not be any roll over of funds from the previous financial year to the current financial year, other than those mentioned on capital expenditure. National Treasury would only approve a rollover if it was satisfied that the underspending of capital expenditure budgets had been beyond the DIRCO’s control.

Ms Africa noted that the decision to record the capital expenditure under DIRCO, and not DPW, was one taken and followed since 1999.

Ambassador Jerry Matjila, Acting Director General, DIRCO, said that the Department owned several buildings in foreign countries, but there needed to be more discussion on the value of having chanceries in other African countries. Maintenance of properties abroad was another issue needing to be addressed. Jobs could be created through “mobile maintenance units”, which could assist with South African embassy buildings abroad.

Ms W Newhoudt-Druchen (ANC) asked about quotas in multi-national forums such as the United Nations. She also wanted to know more about vacancies in the Department.

Mr Moodley responded that there were outreach programmes in place to try to assist South Africans applying for jobs in organisations which had quotas.

Ambassador Matjila added that there were high expectations of South Africa, due to its reputation as a “beacon of hope” on the African continent. South African quotas in multi-national forum organisations had in part been filled by people who were South African citizens but had left the country after 1994. There was some reluctance on the part of some multi-national organisations to employ more South Africans, as the quotas had grown at a steady pace over time.
 
Ms September suggested that the Department send bi-monthly written reports to the Committee around the filling of the vacancies, since this was an important matter needing close monitoring.

Mr Mokgalapa supported Ms September’s proposal.

Progress on the Millennium Development Goals: Briefing by DIRCO
Ambassador Jerry Matjila, Acting Director General, DIRCO, briefed the Committee on South Africa’s progress towards achieving its Millennium Development Goals (MDGs).

The Millennium Declaration encapsulated a set of seven uniquely identifiable goals, which had to be met by 2015 in order to effectively mitigate the debilitating situation of global poverty. These goals had been grouped into four categories, as follows:
(a) MDG 1: elimination of extreme poverty and hunger,
(b) MDGs 2, 3, 4 and 5 were related to the empowerment of women and gender equality
(c) MDGs 4, 5 and 6 were health related
(d) MDG 7 related to the environment.

In addition, MDG 8 bound all goals together by creating the requisite international environment or framework within which the other goals must be achieved.  The United Nations Secretary-General had created a MDG Project Team within his office. This was headed by internationally-renowned Professor Jeffery Sachs. This Project Team utilised the resident expertise of the UNDP to undertake constant appraisal on the successes and challenges, as well as make the interventions necessary for the achievement of the MDGs.

Even though much progress had been made in some areas, this had been negatively affected by lack of progress, or even negative trajectories in other areas, which tended to offset the gains. The most pertinent example was the increase in the number of people living in conditions of extreme poverty and hunger, which increased global poverty, homelessness and unemployment.

As fundamental prerequisites and achievements at the national level, there was emphasis on issues of governance, rule of law, anti-corruption measures, democracy, accountability and transparent, free and fair electoral processes. All these were necessary for the creation of an environment conducive to investment, which would help achieve the MDGs. The biggest challenge facing the African Continent was the lack of an electronic statistical database for the MDGs.  The Association of African Statisticians was currently grappling with that challenge.

The South African report on the MDGs, which was presented to the United Nations in September 2010, had highlighted that South Africa would, to a large extent, comply with its MDG commitments, except possibly in the areas of HIV/AIDS. Other areas of concern related to adult literacy rates, the Gini Coefficient, purchasing power parity and food security. He noted that extreme poverty and hunger persisted in the country. The Anti-Poverty War Room, located in the Presidency, was continuing its efforts to conduct country wide household surveys to determine the percentage of people living in extreme poverty and hunger.

The responsibility of National coordination for achievement of the MDGs in South Africa fell under the Social Protection and Community Development (SP&CD) Cluster and Ministries. Statistics South Africa (StatsSA) played a pivotal role in supporting these initiatives, by providing the necessary statistics to determine and monitor the situation in the country. The Director-General for Social Development, as Chair of the SP&CD Cluster, regularly briefed Parliament on developments in this regard.
 
Mr Matjila stressed that it was also imperative for South Africa to develop policy in the context of the SADPA that could assist South Africa’s neighbouring states to achieve their own commitments.  The SADC Framework, especially its Strategic Indicative Plan for the Organ (SIPO) on Politics, Defence and Security Cooperation and its Protocol, should ideally work together with SADPA to achieve these objectives.
 
Discussion
Ms Jacobus asked whether conflicts on the African Continent had been taken into account when the MDGs were first formulated. She pointed out that conflicts impacted upon the ability of countries to achieve their goals.

Mr Skosana asked whether post-election violence on the Continent, and economic development issues, were likely to conspire to prevent the attainment of MDGs.

Ambassador Matjila agreed that that conflicts did have a negative impact on the attainment of the MDGs. Prior to the financial crisis of 2008, DIRCO had been optimistic that the MDGs would be achieved across the Continent. However, this financial crisis, as well as some subsequent conflicts, had damaged the ability of some countries to attain their goals, and he highlighted the impact of the situation in Egypt and Libya.

Ms September commented that the MDGs were a profound manner of trying to address some of the issues that affected developing countries. She asked whether the area of HIV/AIDS was the only area where South Africa might fail to meet its MDGs. She also asked to what extent South Africa assisted other countries in the region. She asked what the plans were to deal with the remaining half of the problems addressed by the MDGs in 2015.

Mr Mokgalapa commented that South Africa was a country showing the highest inequalities in regard to poverty and hunger. He asked how it could live up to world expectations that it could alleviate those problems.

Ambassador Matjila replied that when the MDGs were launched in 2000, it was hoped that the setting of goals to halve some of the problems affecting the Continent would act as an incentive and spur to deal with other outstanding issues. In a sense, the MDGs could be seen as motivation for further change.

Ms Newhoudt-Druchen asked what other countries on the continent were doing to assist people with disabilities, bearing in mind the MDGs. She also enquired how the African Peer Review Mechanism (APRM) assisted in the attainment of the MDGs

Ambassador Matjila responded that South Africa was doing its best to assist countries throughout the region to achieve the MDGs.

The meeting was adjourned.