Department of International Relations and Cooperation (DIRCO) 2012 Strategic Plan

Meeting report

Department of International Relations and Cooperation (DIRCO) 2012 Strategic Plan Presentation
Introduction
Ambassador Jeffrey Matjila, DIRCO Director-General, briefed Members on the Strategic Plan 2012/17 and the Annual Performance Plan 2012/13. The Department's Plans were now fully aligned and compliant with Outcome 11 Delivery Agreement and Management Performance Assessment Tools (MPAT) and to the National Treasury Guidelines of August 2010. The Department had realigned its programmes, for example, the former third programme (International Relations and Cooperation) was now Programme 2. The programmes were to be revisited with the National Treasury as they no longer spoke to the expanded activities of the Department. When Members voted on the Department's budget, the Vote was based on these four programmes. He reviewed the Department's four programmes and foreign policy initiatives. (Slides 2-4)

South African Development Partnership Agency (SADPA) to replace African Renaissance Fund
Firstly, the South African Development Partnership Agency (SADPA) and the Partnership Development Fund was the first of the new initiatives and the Department hoped to complete it this year. The Partnership Development Fund would replace the present African Renaissance and International Cooperation Fund (ARF) (ARF Act (No. 51 of 2001) and would be a separate juristic person. At present Ambassador Matjila was Chairperson of the board and Accounting Officer of the ARF. The new proposals called for a separate entity. At first it had been intended to make changes to the ARF, but these would have been too many, so it was thought better to form a new entity. There would be a board of trustees to ensure proper and effective use of funds, to form policy and exercise oversight and advise the Minister. The board would make proposals regarding concurrence of Ministers of International Relations and Cooperation and Finance on the approval of projects. The Head of SADPA would be the accounting authority. SADPA would have a strong emphasis on project and programme management, and monitoring and evaluation.

SADPA would coordinate all South Africa's outgoing development cooperation commitments. Many Government departments were doing much good work internationally, especially in Africa, such as the Department of Trade and Industry (the dti) and the Department of Defence (DoD), but there had been no coordination of these programmes. SADPA intended to make sure that all these programmes were under one roof and to provide for direct transfer of funds from multiple sources and foreign donors directly. The Department had been approached by a number of development agencies. An example was its assistance with the census in the Democratic Republic of Congo in 2004 when the Department had received collaboration from Sweden. It had also received cooperation from the Public Service Commission (PSC). The Department wanted to ensure that this was properly aligned and institutionalised with the Public Finance Management Act (No. 1 of 1999) (PFMA) and Treasury Regulations (TR).

The ARF had not been proactive. It had reacted to requests. It had been a solidarity fund which had reacted to emergencies such as Somalia, and recently the explosion in the Democratic Republic of Congo. With SADPA there would be more certainty as to expenditure.

The Department had made studies of how development funds in the United Kingdom, Norway and Serbia were held accountable and audited. The Department was now developing a Bill to replace the ARF Act. It was also be discussing with a number of agencies to see how the Department could cooperate while still observing its supply chain management requirements. Moreover, there was an increased demand for trilateral cooperation. Time frames were very important for the Department. It had been hoped by 01 April to begin to phase in SADPA and phase out ARF, and transfer all the assets of ARF to SADPA. It had been hoped to have a Chief Executive Officer of SADPA already. However, the likelihood of implementation was around June 2012. The Department sought Members support.

The SADPA would have more funds than the ARF. Ambassador Matjila, gave details of ARF appropriations and how consolidation of funds from other governmental entities, together with implementation of the SADPA revenue formula, would enable SADPA to have 'very substantial' funds at its disposal for the South African Development Fund for the continent. (Slides 5-7).

Foreign Services Bill
This was the second of the Department's new initiatives. The Current Legal Framework was that the Public Service of South Africa was established in terms of section 197 of the Constitution 1996 . The Public Service was governed by the Public Service Act 1994 (PSA) . The Department was a Schedule 1 department and was regulated by the PSA. The Conditions of Service applicable to the Foreign Service (the Foreign Service Dispensation) were determined by the Minister for Public Service and Administration in terms of Section 3(3) (c) of the PSA. The current reality was that the mandate of the Department was not legislated, nor articulated in the Constitution. The role and responsibility of the Department with regard to Foreign Policy would be strengthened. The role of the Head of Missions (HOM) as co-ordinator needed to be strengthened. The rationale for a legal instrument was that the Department operated in an international environment that was not taken into account by the PSA. There was need to take into account the different legal systems of various countries; to consider cultures of the countries within which the Department operated; and that the Department was bound by international obligations, treaties and protocols , offered assistance to South Africans abroad, might purchase properties and assets abroad, conduct financial transactions abroad, had an oversight role over other Government departments on international relations, was the custodian on international law and international agreements within Government, regulated and accredited foreign representation and interaction with the organs of state, and provided employment in Missions abroad. However, as Ambassador Matjila pointed out, the Foreign Service was not separately identified as a national service in the PSA, unlike Defence, Security and the Police, and if appointing an ambassador, this Act was a constraint. (Slides 7-10)

Situational analysis
Ambassador Matjila gave an overall situational analysis. The global environment was characterised by major shifts in global, economic and social dynamics. New poles of influence had emerged. Until ten years previously there had been uni-polarity in the world. Now there was realignment and new economic powers, including the emergence of the Brazil, Russia, India, China and South Africa (BRICS) group of nations. China was bailing out Europe. It had been unthinkable for communist countries to help capitalist countries financially. There were new media and social networks, and free flow of information and ideas. The Department no longer had any monopoly of information and this called for raising the level of skills of diplomats. One saw the impact of the power of ordinary people, marginalised people and civil society in the Middle East and North Africa (MENA) region. Now the South African economy was linked with these new powers. There was a notable growth in South-South trade. Regional and preferential trading was proliferating as the World Trade Organisation was not delivering the goods. Globalisation continued to shape the world at an accelerated pace.

The Southern African Development Community (SADC) region was relatively stable. Intra-SADC trade had grown by a significant 155% since the implementation of the Protocol on Trade in 2000. However, as a proportion of total SADC trade, intra- regional trade remained relatively low. South Africa currently conducted its foreign policy in an uncertain global environment and a successful foreign policy was a sine qua non for achieving South Africa’s domestic priorities. The global meltdown had adversely affected SADC countries, but there was a determination in SADC towards greater integration. It was hoped by 2014 to have a customs union of SADC countries, and by 2017 monetary union (slide15).

Global growth (graph, slide 16) and world output in advanced, emerging, and developing economies were indicated (table, slide 17)

Various impacts on the political, social, and economic developments in Europe were indicated. These included developments in North Africa and the Middle East and Chinese investments in Europe and Africa (chart, slide 18).

Asia had overtaken Western Europe to become Africa's largest trading partner, and south-south trade grew from 28% to 50% of Africa's total (graph, slide 19).

However, it was worrying that inter-African trade was still at only 11%, whereas trade within Europe was around 80%. Europe could withstand the shocks from the global economic crisis, because so much of its trade was within itself; this was not the case with Africa, which relied to the extent of 89% on external trade. The Department sought to address this.

The growing role of foreign direct investment (FDI) in Africa from developing Asia was indicted (bar chart, slide 20). South Africa was a significant investor in the continent, followed by China and by Malaysia. However, last year China had overtaken South Africa as an investor in Africa, especially in mining infrastructure and manufacturing.

Trade between South Africa and BRICS
Total trade and bilateral trade between South Africa and BRICS was indicted in bar charts, slides 21-22).
There was no such growth between South Africa and other countries.

Economic opportunities
Projected Investment opportunities in four categories - consumer sector (banking, telecommunication,
consumer goods), agriculture, resources, and infrastructure were indicated (bar chart, slide 23).

South African exports and imports by country
These were indicated by a bar chart (slide 24). This slide was especially important as it indicated the need for South Africa to adjust to new poles of economic growth.
 
Africa: major political and economic trends
A map illustrated major political and economic trends in Africa, with particular reference to moderate to strong economic growth, conflict hotspots, elections, stable outlook, and monitoring (map, slide 25).

The Department was sure that Egypt would stabilise. It recognised the need to monitor South Sudan, and central Africa as many resources were expended to stabilise this region with a view to enhancing intra-African trade.

The changes in South Africa had stimulated very positive developments in the continent.

Socio-economic development trends
 Socio-economic development trends were indicated with reference to intra-African trade and the impact of the global financial crisis. Intra-African trade remained low compared with other regions. In SADC it was 51%. Asia was manufacturing because it did not have raw materials. (bar chart and map, slide 26).

South Africa's top export markets in the European Union (EU) 2011
The top export markets in the European Union 2011 were illustrated by means of a pie chart. Germany was South Africa's biggest market in Europe (slide 27).

High level organisational structure
Ambassador Matjila explained the high level organisational structure. (Organogram, slide 29).

Enhanced African Agenda and Sustainable Development
South Africa would host the Africa Diaspora Summit in May 2012, and was still a champion of NEPAD as it ensured linkages to outcomes that supported South Africa’s national priorities such as: job creation, integration, infrastructure development, partnerships (G8, G20, Forum on China-Africa Cooperation (FOCAC), Tokyo International Conference on African Development (TICAD), Africa-India, Africa-Turkey; Africa- US ), Governance (APRM), and prioritised capacity building programmes. President Zuma’s Presidential Infrastructure Championing Initiative (PICI) gave impetus to Africa’s infrastructure development within the Programme for Infrastructure Development in Africa (PIDA) .

SADC political integration
The Department sought to participate in high level SADC meetings in pursuit of SADC cohesion; and participate in the review of the jurisdiction of the SADC Tribunal.

SADC economic integration
The Department sought to support and monitor the implementation of the SADC Free Trade Association (FTA); support and monitor negotiations on the Tripartite FTA and the SADC Custom Union; and support and monitor the Southern African Customs Union (SACU) work programme (SACU Industrial Development Policy, Revenue Sharing Formula review and Common Negotiating Mechanism). Economic integration raised issues of the possible risks of a single currency. German officials had visited South Africa to learn its experiences with the former dual rand. It had to be asked if South Africa was ready to forego its rand in the cause of monetary union. South Africans had not woken up to this reality. He asked Members to prepare constituents for the likely consequences of economic integration, including free movement in the region (slide 32).

Strengthening political and economic integration of SADC
The Department sought SADC peace, security and stability:
• South Africa continued to chair the SADC Organ on Defence, Politics and Security Cooperation for 2011/12
• Synergy in Peace and Security processes at United Nations (UN), African Union (AU) and SADC levels
• Continued pursuit of negotiated political solutions in Zimbabwe and Madagascar (South Africa was championing Zimbabwe abroad)
• Deepening democratisation and good governance in the Region through participation and leadership in SADC Electoral Observer Missions and the operationalisation of the SADC Electoral Advisory Council . (Slide 33)

Strengthening South-South relations in order to advance the development agenda
South Africa would be hosting the Fifth BRICS Summit (2013). A BRICS south-south development bank was to be discussed at the Fourth BRICS Summit (29 March 2012 in New Delhi). The new economy in BRICS countries (green BRICS) was also to be discussed. South Africa was hosting the 8th India, Brazil and South Africa (IBSA) Trilateral Ministerial Commission in 2012. (Slides 34-35)

Participating in the global system of governance
Ambassador Matjila referred to South Africa’s non-permanent membership of the United Nations Security Council (UNSC). South Africa had some challenges with Morocco over Western Sahara, but it needed Morocco in the Security Council to work with South Africa and had found some accommodation on African issues (slide 37). Last year all the BRICS countries were members of the Security Council. South Africa was considering how to maintain the BRICS alliance when the three IBSA countries would be outside the Security Council.

There was now debate on whether South Africa should host the Global Climate Fund (slide 39). To do so would be good for South Africa's balance of payments and for local procurement.

There had been heavy debate in Geneva earlier in the month on the rights of people with different sexual orientation, which South Africa had spearheaded last year. However, this year African countries had not walked out – only members of the Organisation of the Islamic Conference (OIC). (See slide 40)

Top five export classes per AU region
The top five export classes per AU region – North, West, East, Southern, and Central Africa – were listed (slide 47). Africa, by and large, still exported raw materials. Part of integration was to ensure that Africa moved away from exporting raw materials to exporting value-added products.

South African trade with Africa
South African trade with Africa was indicated by bar chart (slide 48). South Africa still dominated trade in the continent because it had diverse products, unlike the other countries.

South African exports and imports by regions
These were indicated by bar charts (slides 49-50).

State Protocol Services
The roles of State Protocol Services included managing state protocol lounges, guest houses and related facilities, facilitating accreditation of heads of diplomatic and consular missions, and managing implementation of the Diplomatic Immunities and Privileges Act. The Department sought the Committee's advice on who was eligible for a South African diplomatic passport - so many people, including Members of Parliament, chiefs and kings, bishops, chief executive officers of companies, and chief executive officers of state enterprises, wanted one. Another issue was who should go through the protocol section, and use the guest houses (slides 54-55).

Public diplomacy
Public diplomacy included a comprehensive understanding and appreciation of what the South Africa (SA)
brand stood for and how it contributed to the global multilateral governance system (slide 56).

Financial Management
Mr Asogan Moodley, CFO, reviewed objectives and outcomes in financial management (slide 57) and 2012/13 Medium Term Expenditure Framework (MTEF) estimates (table, slide 58), the indicative baseline allocation as per the strategic objectives of the Department (table, slide 59), the objectives and outcomes for supply chain management (SCM) (slide 60), for information and communication technology (slide 61), for property and facilities management (slide 62), and consular services (slide 63).

Mr Moodley noted that the Department was on track. Its goal was to achieve unqualified audit opinions, ensure funds were used economically and effectively, and conform to SCM procedures, PFMA and Treasury Regulations. The asset register had been audited by the Auditor General and good progress had been made. There had been progress in training ICT staff.

Organisational strengthening
Mr Ganga Tsengiwe, Deputy Director-General (DDG): Human Resources briefed the Committee on the Department's establishment (table, slide 64), employment equity (table, slide 65), the strategic objectives of human resources (slide 66), diplomatic training (slide 67), the International School (slide 68), administration management training (slide 69), language training (slide 70), generic skills development (slide 71), and international transfers (slide 72). He noted that the vacancy rate was 13.5 % against the national norm of 10%. It was hoped to achieve the norm early in the new financial year. However, the Department was vulnerable to a revolving vacancy rate, since vacancies at missions, when staff were transferred to other missions, were filled internally. The Foreign Service Bill would improve the situation. Another challenge was to maintain employment equity in terms of the law. The percentage of staff with disabilities was 1.5%, and it was hoped to increase this to 2% by 2014; the percentage of female senior management staff had increased to 36% (in the last two months to 41%), and it was hoped to increase this to 50%, the Department's target, by 2014.

Discussion
Mr A Nyambi (ANC – Mpumalanga) welcomed the detailed presentation but noted a common tendency for departments to regard the National Assembly as Parliament in its entirety and wanted the Department to be correct. Both Houses constituted Parliament. To leave out the relevant select committee in making submissions was a disservice and ignored the Constitution. Moreover, the National Council of Provinces was the only House in the country where there was representation of all levels of Government and representation of the interests of all the provinces.

Ambassador Matjila replied that the Department had many invitations. He acknowledged that he had forgotten to write a letter to the Chairperson of the Select Committee. He noted the Member's comment. There was a time limitation. There was a roster of the planned meetings and it would be sent to the Chairperson.

Mr Nyambi asked about the vacancy rate; it was not something that one could be proud of, in spite of the special reasons given by the Department. He requested a particular time frame in view of the challenges of unemployment as referred to in the State of the Nation Address (SONA).

Mr Tsengiwe agreed that the ideal would be to have no vacancies. Posts for transferred officials to missions were filled only from head office. When the post was filled from there, a vacancy was opened. However, within four years, those people who were posted had to come back. The Department was asking itself how to ensure that this revolving cycle did not result in posts not being filled because the incumbents would return, or to ensure that, even if that was the case, the Department would at least have only a reserve in case nominations were for people from outside. In the last few months, the Department had tried to reduce the rate from 17% and had succeeded in reducing it to 13.1%. If it could reduce the rate to 10% the Department would have an opportunity to implement its strategy of linking the transferred official's vacated post with what the Department would fill through the normal public service recruitment and selection. The Department was acutely aware that it must avoid having vacancies.

Mr Nyambi said that from the presentation it was clear that the Department was focused. The challenge was for the Department to isolate matters and events of particular concern for Parliament, and inform Parliament in good time. He submitted that it would assist Members if the Department could be very specific in presenting on certain issues, like diplomatic passports. Members needed enough time to prepare themselves for deliberations.

Mr K Sinclair (COPE – Northern Cape) supported South Africa's involvement in BRICS, but it was necessary to be realistic. South Africa was the baby of BRICS. How did the Department see this arrangement coming to fruition? Would it not be better to motivate for the 'S' in BRICS to be inclusive of the SADC initiative?

Ambassador Matjila replied that South Africa should stay in BRICS. South Africa had quadrupled its gross domestic product (GDP) in 15 or 16 years. If South Africa could beneficiate its products, it could, in the next ten years, double its GDP. He suggested that when South Africa hosted the BRICS summit, Members should take part in the preparation and in the meetings themselves. South Africa should lobby for more market access. He suggested that South Africa could increase its production of soya and reduce soya imports from Brazil. This would have a big impact on the pharmaceutical and food industries, and alone would have a big impact on the GDP. There were three areas of high quality meat in South Africa. If one added value to that meat, there would be increased opportunities for employment. South Africa had yet to develop a substantial agricultural and commodity beneficiation strategy. China was beneficiating everything, while South Africa was hardly doing so. Brazil in the last 15 years had begun to beneficiate. Moreover, nothing left India raw. Coal should also be beneficiated. Steel and diamonds should be beneficiated. If South Africa could implement the Industrial Policy Action Plan (IPAP), the situation would improve. South Africa was well-endowed with strategic rare metals. In order to mobilise the state-owned enterprises (SOEs), it was necessary to retool the vocational colleges to provide enough qualified manpower. He thought that the answer to the Member's concern was to invest in beneficiation.

Mr Sinclair asked what South Africa's approach to the conflict in the Horn of Africa was.

Mr Sinclair, in commenting on tensions between South Africa and Nigeria, observed that the northern part of Africa might be starting 'to retaliate' with Nigeria adding its weight.

Mr Sinclair emphasised the Department's need to improve on employment equity (slide 65). There were 13 positions in the top management but they were filled only with blacks and Indians – males and females.

Mr Tsengiwe replied that the Department sought to fill vacancies from the designated groups that were under-represented. The designated groups currently targeted were women and disabled. The Department believed that it was one of the departments that was very representative in terms of racial groups. It was possible that at certain levels there could be under-supply or over-supply. The Department, however, recognised its obligations under the Constitution.

Mr Sinclair commented on renovations in the various missions. In some instances there were very expensive projections. Were such projections justified?

Mr Moodley replied that the cost of construction abroad was very high, and gave examples, such as the renovation in Washington. The Department was now engaged with the National Treasury and the Department of Public Works. These projections were market-related.

Mr Sinclair asked about the participation of a public private partnership (PPP). What was this PPP and how long was the term.

Mr Moodley identified the PPP, Imbumba – Aganang. The period was 25 years. The money paid to the PPP was to pay off the fees as well as the assets (all the desks and chairs, except ICT asses) within the Department, as well as facilities management and maintenance. In the last five years of the agreement, the Department would do a comprehensive assessment of the building and the PPP would fix everything so that when the building was transferred to the Department it would be in very good condition.

Mr B Mnguni (ANC – Free State) asked if Department wanted to be exempted from the normal conditions of employment under the Basic Conditions of Employment Act. What would best suit the Department?

Mr Mnguni said that in Europe regional integration had been motivated by the threat from Russia. In southern Africa the motivation had been economic. However, some economists thought that this was not the right solution, as South Africa had its own interests as a nation. Would economic integration work? Market conditions in the SADC countries were not the same. The same could be asked about inter-African trade. There was intra-Africa trade than intra-Europe trade perhaps because of infrastructure constraints and lack of skills. Moreover, Africa was the last to be freed from colonisation. Africa was also developing slowly because of wars between tribes who were still scrambling for the riches that belonged to the colonists previously. He asked the Department's views.

Mr Mnguni thought that South Africa was seen as losing its grip on the New Partnership for African Development (Nepad). It was possible that South Africa's economy would be overtaken by that of Nigeria in ten years' time. Nepad was key as it was asking for economic integration, at least within SADC. South Africa was importing more food than it used to. The argument was that there was not enough land or that there was not enough support for farmers – hence land went fallow. Therefore one imported more food and this had implications for food security. One thought of Somalia where there had been famine and the threat of starvation. He asked how SADC should address these issues.

Mr Mnguni thought that there might be civil war in Sudan within a month or two unless there was some political intervention. He asked how to address the situation?

Mr Mnguni said that there was a perception that South Africa was protecting Zimbabwe, since it did not want to see liberation struggle heroes, such as President Robert Mugabe, deposed. What was the theory behind this 'slow trading' towards Zimbabwe as far as SADC was concerned?

The Chairperson urged the Department to have serious discussion with the dti on the use of facilities at missions. He had questions which he would have wished to ask on Taiwan, and on SADC as a legislative body, but, because of time constraints, he would postpone his questions to the next meeting. He commented on the Department's beautiful new building in Pretoria and suggested having the next meeting, when the Director-General was available, in Pretoria.

Ambassador Matjila replied that the Department would invite the Committee to have meeting at its new building.

The Chairperson said that it would be a priority in the next quarter. He thanked the Department and assured it of the Committee's assistance. It would be helpful to receive time-lines for the Bills which the Department wanted to put before the Committee.

The meeting was adjourned.