The Department of International Relations and Cooperation brief the Portfolio Committee on its Annual Report for 2015/16 as well as the Annual Report for the African Renaissance Fund for the same peiod. Even though there had been considerable achievements for the Department abroad, the audit outcome was a qualified audit outcome. The Department spent 102% (R6.6 billion) of its appropriated allocation of R 6.5 billion, which represent a net overspending of R134 million due to foreign exchange fluctuations. The performance and achievements of each of the four programmes were presented and the reasons for underachievement explained. Governance, Human Resources and the Financial Report were also presented. The Committee was given insight into the governance of the DIRCO. On human resources management the number of filled posts was 2 233, vacant posts were 331. The vacancy rate was 12.9% compared to 14.8% in the previous financial year. On financials the DIRCO had spent 102 %( R6.6bn) of its appropriated allocation of R6.5bn which represented a net over spending of R134m. Over expenditure was thus by 2.1% which was mainly attributable to foreign currency fluctuations. Under the year under review the DIRCO’s audit report was qualified on financials and unqualified on performance. Discussions between the Auditor General’s Office of SA and the DIRCO were taking place to resolve issues.
The report on the African Renaissance and International Co-operation Fund (ARF) noted that:
• It had provided much needed assistance to the people of Namibia due to the severity of the drought
• Food security project in Guinea Conakry has continued to yield positive results
• Collaborated with global partners in efforts to contain the spread of the Ebola virus disease in West Africa
• South Africa has also recorded a milestone in its hosting of the Square Kilometre Array (SKA) following launch of Meerkat. The ARF has contributed R120 million for implementation of the project in other African countries. Ghana has been completed and will be launched later in the year.
There were eight performance indicators which were all achieved. Appropriated funds for 2015/16 was R145.637 million; Accumulated surplus from 2014/15 R1.612 billion; Committed funds as multiyear projects were R838.965 million; Approved grants for 2015/16 was R161.733 million. The Fund incurred irregular expenditure of R1.2 million, and the Accounting Authority had not condoned R131 000, but ultimately the audit outcome of 2015/16 was a clean. Available funds on 31 March 2016 totalled R1.562 billion.
The Committee undertook to perhaps consider going paperless in 2017 as part of a pilot project initiated by parliament. Members were concerned that the DIRCO had received a qualified audit opinion for the third consecutive year. This could only mean that the DIRCO had not put in place interventions over the past three years to sort out issues. Had the DIRCO put an action plan in place now? The DIRCO having put in place cost saving measures was asked what its savings would have been if the savings had not been offset by over expenditures. The DIRCO was asked to provide the Committee with a list of its five key cost saving measures. Members felt that information and detail on complaints and on fraud and corruption was lacking from the briefing. This was considered vital information since fraud and corruption was rife in government institutions. The DIRCO undertook to provide the Committee with the information and detail that it needed. Members were dissatisfied with the structure of the DIRCO’s reporting to the Committee. The structure did not give reasons why indicators had not been achieved. The DIRCO was also asked whether there was cooperation between SA and its BRICS partners on tourism. How was tourism promoted in Africa? Members could not understand what the difficulty was in verifying heritage assets at missions. It was such an important issue that it affected the audit outcome of the DIRCO. It had to be resolved. Members asked whether the audit outcome impacted upon the upgrade/downgrade of SA’s credit rating status. The DIRCO was asked what the status of the BRICS Bank at present was. Members asked whether it was necessary for the DIRCO to have such a huge footprint across the world ie 126 missions. It was a huge expense to have so many missions. Could the number not be reduced? It needed to be a serious consideration as currency fluctuations would always affect the cost of operations abroad. Members emphasised the need for consequence management where things were not going according to plan. The Committee would perhaps in the future schedule a meeting to discuss the matter of SA disassociating itself from the International Criminal Court (ICC).
Mr M Rayi (ANC) was disappointed that he had only received the briefing document the day before.
The Chairperson apologised to Mr Rayi and said that members needed to forward their new email addresses to secretarial staff.
Mr W Faber (DA, Northern Cape) wished for the Committee to go paperless. Electronic applications would be used which was not only fast but also more efficient. He noted that there were committees in parliament that were part of the pilot project for the myParliament App. He suggested that the Committee volunteer to become part of this.
The Chairperson appreciated the proposal by Mr Faber but said that there were four members of the Committee that did not yet have their tools of the trade as yet. It could however be done in 2017.
Mr B Nthebe (ANC, North West) agreed that it could be done in 2017.
Mr J Londt (DA, Western Cape) appreciated the good work that Mr S Mthimunye (ANC, Mpumalanga) as whip had done to improve the attendance of members to Committee meetings over the last 3-4 weeks.
Briefing by the Department of International Relations and Cooperation (DIRCO) on its Annual Report 2015/16
Ms Delores Kotze, Chief Director: Planning, Monitoring & Evaluation, DIRCO, gave an overview of activities that the Department was engaged on. One highlight was that the Department’s new organisational structure had been approved and was being implemented in phases. The Committee was provided with a comprehensive breakdown of performance information in terms of the DIRCO’s Programmes ie Administration; International Relations; International, Continental & South-South and North-South Cooperation; and lastly Public Diplomacy & State Protocol.
An annual target had been set to adhere to all five aspects of corporate governance of Information Communication Technology (ICT) however actual performance was that only four aspects were adhered to. Targets on having financial systems integrated had also not been achieved. Two construction and one renovation targets had not been met due to limited budgets. However the DIRCO had surpassed its skills training programme target of 94 with an actual achievement of 128.
International Relations Programme
A total of 29 out of the 34 planned structured mechanisms and 39 out of the 58 planned high level visits had been achieved. DIRCO had surpassed its targets on planned engagements with different government ministries, engagements with chambers of commerce etc. A total of 111 out of 112 planned trade and investment seminars had taken place. Targets on tourism promotion events had also been surpassed by far.
International, Continental & South-South and North-South Cooperation Programme
On international cooperation, specifically climate change SA in its role as Chair of the G77 & China was instrumental in the adoption of the Paris Agreement and its supporting decisions on climate change. On disarmament, nuclear security and non-proliferation SA continued with its promotion of peaceful uses of nuclear energy and the safety and security of nuclear energy. It had also concluded a host country agreement to host the African Commission on Nuclear Energy (AFCONE). On continental cooperation SA had participated in two election observer missions. On South-South and North-South cooperation the seventh BRICS Summit had concluded the establishment of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). The Strategy for the BRICS Economic Partnership had also been adopted and the SA-BRICS Strategy had been reviewed. The DIRCO had also affirmed European Union collaboration with SA in the field of the Ocean Economy in sharing knowledge and technologies.
Public Diplomacy & State Protocol Programme
On public diplomacy the DIRCO had managed 19 media briefings, 197 media statements and 10 opinion pieces, surpassing targets set in most instances. A total of 12 targeted public participation programmes had been undertaken to create greater awareness of SA’s foreign policy priorities. On state protocol, protocol services were provided by the DIRCO at 5 special events. It had also facilitated 30 658 dignitaries through state protocol lounges.
The Committee was given insight into the governance of the DIRCO. On human resources management the number of filled posts was 2 233, vacant posts were 331. The vacancy rate was 12.9% compared to 14.8% in the previous financial year. On financials the DIRCO had spent 102 %( R6.6bn) of its appropriated allocation of R6.5bn which represented a net over spending of R134m. Over expenditure was thus by 2.1% which was mainly attributable to foreign currency fluctuations. Under the year under review the DIRCO’s audit report was qualified on financials and unqualified on performance. Discussions between the Auditor General’s Office of SA and the DIRCO were taking place to resolve issues.
Briefing by the African Renaissance Fund (ARF) on its Annual Report 2015/16
Dineo Mathlako, Head, African Renaissance Fund Secretariat, explained that the ARF was a reactive fund that responded to requests for assistance from recipient countries. The Committee was provided with detail on some of the projects of the ARF. The implementation of the Cuban Economic Package which required Cuba to purchase South African goods had yielded positive results. Phase 1 of the Namibian Drought Relief Project had also been successfully completed with Phase 2 having commenced. In addition SA had further recorded a milestone in its hosting of the Square Kilometre Array (SKA) following the launch of Meerkat. The ARF had contributed R120m for the implementation of the project in other African countries. On the performance of the ARF it had met its target of having 100% of its requests received responded to timeously. The ARF had received 13 project proposals and 8 of them had been approved. The ARF had also met its target of 100% of approved disbursement to support democracy and good governance. Payments totalling just over R1m had been made for SA’s deployment of election observer missions in Mozambique, Tanzania and Seychelles. To support cooperation between SA and other countries the ARF had 100% of approved disbursements processed with a payment of R27.1m towards the Cuban Economic Package. The Committee was also given insight into some of the projects that were considered during the period under review. ARF performance on governance was also elaborated upon. On the financials of the ARF, total available funds as at 31 March 2016 was just over R1.5bn. The ARF had accumulated a surplus of R140m to which National Treasury had given its approval.
Mr Mthimunye noted that the Committee had in its previous engagement with the ARF requested that the Committee be provided with a list of its projects.
Ms Mathlako apologised and said that she was under the mistaken belief that she would have to make a presentation on the projects to members in a separate meeting.
The Chairperson pointed out that it would be difficult to schedule another meeting with the ARF and that submitting the list of projects to the Committee would suffice.
Mr Mthimunye said that he had made the request over 6 months ago. He felt that departments needed to take the Committee seriously.
The Chairperson said that the issue of departments taking the Committee seriously would be discussed by members at another time.
Mr J Mthethwa (ANC, Kwa-Zulu Natal) was concerned that the DIRCO had received a qualified audit report for a third consecutive year. It meant that the DIRCO had not implemented interventions to sort out issues. He noted that Mr Donald Trump winning the presidential elections in the USA would have an impact on rand/dollar exchange rates. DIRCO had already attributed it’s over expenditure to exchange rate fluctuations.
Mr Gideon Labane, Chief Audit Executive, DIRCO, admitted that the audit qualification for three years in a row was a concern. There were mainly two reasons for this. The first was that moveable assets could not be located on the floor or in the asset register at missions. There were always delays on information on assets at missions. A new online asset management system had been implemented. Missions could now update assets online but it was early days. The second issue was the determination of whether an asset was a heritage asset or not. Certain works of art had to be assessed. At the time of the audit there was no curator to do the assessment. Curators had to be appointed. Terms of reference had been developed in order to appoint reliable curators. It was hoped that this would address issues.
Mr Londt asked if it was correct that the DIRCO had savings elsewhere that had been offset by the over expenditure. How much would the savings have been had if it not been for the over expenditure?
On DIRCO receiving a qualified audit report, he asked how SA’s image overseas was affected. He noted that Programme 3 spoke about human rights but SA was disassociating itself with the International Criminal Court (ICC). He would have liked the DIRCO’s political heads to have addressed the issue.
Ms Kotze, on savings utilised, referred to the DIRCO expenditure report on page 36. She reiterated that savings had been offset by over expenditure that had been made. There was not much savings.
The Chairperson was not sure whether it was fair to expect the DIRCO to respond to the ICC issue. It was a matter being dealt with by the Department of Justice and Constitutional Development.
Mr Londt was sure that the ICC issue came up when there were international engagements. He was just curious to know how much would have been saved based on the DIRCO’s cost saving measures.
The Chairperson explained that cost saving measures could be the choice of buying/renting a property in the city centre or opting to do so on the outskirts of a city. Information that members had requested would be provided by the DIRCO. Perhaps the DIRCO could provide the Committee with its five key cost saving measures.
Mr L Magwebu (DA, Eastern Cape) had concerns over issues of governance. He referred to page 32 of DIRCO’s Annual Report which spoke about mechanisms to deal with complaints. How were complaints dealt with? The Committee needed more information on the number of complaints, the nature of complaints etc. He asked how long it took to resolve complaints and how were they resolved. He felt that information was also not forthcoming on fraud and corruption. It was a concern since fraud and corruption was rife in government institutions. Members needed information on how many cases there were and what the allegations were. What was the monetary value of the fraud and corruption? On page 383 of the Annual Report only niceties were reflected on donations and gifts. What was the nature of donations? The total was well over a R1m. He also asked who received the gifts and sponsorships. What was the monetary value? Page 43 of the Annual Report spoke about a audit deficit on security information due to capacity problems. Yet the DIRCO had made 161 appointments. Why was staff not directed to where they were needed?
Mr Kgabo Mahoai, Acting Director-General, DIRCO, noted the concerns of members that more information was needed. The additional information would be provided.
Ms Kotze, on complaints, explained that most were of a consular nature. There was a complaints mechanism in place. It so happened that South Africans abroad when they for example lost a passport they would complain about the service that was rendered to them. Customer feedback was also obtained. Members would be provided with detail. On fraud and corruption cases she noted that the Standing Committee on Public Accounts (SCOPA) had also requested a list. The same list would be provided to the Committee. On audit security she noted that the DIRCO was going through organisational restructuring. Audit security had been done at lower level. It was a matter that would be dealt with. On financial donations she responded that National Treasury required donations received and given to be set out clearly.
Mr Rayi was not happy with the structure of DIRCO’s reporting to the Committee. There was no information on why indicators had not been achieved. He asked how the BREXIT had affected SA on agriculture and science and technology. He asked whether there was cooperation on tourism between SA and its Brazil, Russia, India, China and SA (BRICS) partners. He noted that the National Development Plan (NDP) spoke about integration with Africa. How was tourism promoted in Africa? He also asked why only 83% of senior management service had signed performance agreements.
Mr Mahoai, on reporting, said that a prescribed template was used. The impact of BREXIT had not been determined as yet. The status quo remained. One effect of the BREXIT announcement was that the gap between the rand and the pound had closed a bit. SA had good relationships with both the United Kingdom and the European Union. It was hoped that SA would not lose out on any benefits. On tourism the DIRCO had identified top ten leading countries. A BRICS Summit had been held recently. There were Memorandums of Understanding (MOUs) per sector. By 2018 it was hoped to relax the business visa so that tourism could be facilitated.
Mr Mthimunye, on the verification of heritage assets, did not understand how the DIRCO could say that it lacked capacity ie curators. He noted there were dedicated government departments that dealt with these types of heritage issues. He asked what the impact of the audit outcome had been. Did it impact upon the upgrade/downgrade of SA’s status? The BRICS Bank was supposed to have been operational by February 2016. Work had only been done on having a domicilium confirmed. What was the status at present? Even if a template was used for reporting it was difficult for members to verify what was being said. The DIRCO was asked to provide the Committee with quarterly reports. He noted that it had been a while since the Minister of International Relations and Cooperation or her deputies had attended a meeting of the Committee.
Mr Mahoai, on the verification of heritage assets, said it was about what the modified standard required. DIRCO had met with the Department of Arts and Culture and its entities and was told that there were no curators. However a person who met the requirements of a curator could be sourced. The issue was about classifying the works of art. DIRCO had gotten advice to develop terms of reference for the curator that was needed. On the audit findings on financial statements the qualification received was based the classification of whether assets were heritage assets or not. After the audit findings the DIRCO had met with the Auditor General of SA’s Office to identify the root causes of the issues and what could be done to resolve them. The DIRCO required missions to verify assets on a weekly basis. He conceded that the DIRCO tried to stay within the template of reporting. It was however not an excuse to deny members of information. Information requested would be provided.
The Chairperson responded that he was aware that there was a cabinet meeting but that no formal apologies had been received from the Minister or Deputy Ministers. In the past Deputy Ministers had attended meetings. He said that quarterly reports were a good idea but it would be discussed in the Committee’s management meeting.
Mr Matsebe responded that the reason why no formal apologies were made was that Deputy Minister Lwellyn Landers had hoped to attend the meeting. It however did not work out that way. There was no time for written apologies.
Mr Labane stated that the BRICS Bank had opened in Shanghai. There were delays in respect of the African leg of it. An inter-ministerial committee had looked into the matter and a temporary place was found in Sandton. Work was being done to find a permanent place. The African Regional Centre would open in SA and in Africa. The BRICS Bank was operational already.
Mr Faber asked whether it was really necessary for the DIRCO to have such a huge footprint across the world ie 126 missions. Why could non performing embassies not be closed down? It was a huge expense. A strategy was needed as fluctuations in currency did not help matters. He asked whether the DIRCO after its third qualified audit report had put an action plan in place. He was concerned that in the next annual report the same issues would surface.
Mr Mahoai, on over expenditure due to currency fluctuations, stated that the issue was about budgeting. DIRCO had budgeted for R9/1$. National Treasury gave the DIRCO guidance. The spot rate was R12. He conceded that currency fluctuations were beyond the DIRCO’s control. It came down to planning. With time challenges on audit findings would be overcome.
The Chairperson said that to increase investment in SA, SA had to be present in more countries. SA’s ambassadors had to consider different options - for instance consular offices versus embassies. It was true that SA could not have embassies just for the sake of it.
Mr Nthebe on the 30 day payment requirement of suppliers asked what the problem to verify suppliers details was. How long could verification possibly take? The 30 day requirement was achievable as other departments were complying with it. Suppliers’ livelihoods depended on them receiving payments on time. He emphasised the need for consequence management where things were not done as they should be. He spoke about the dire conditions of SA’s consular house in Zambia. Were there plans to renovate it? He referred to page 33 and pointed out that not even 50% of grievances had been resolved. It was a serious issue. On the issue of the ICC he proposed that a meeting could be scheduled on it. The Department of Justice and Constitutional Development was driving the issue.
Mr Mahoai, on consequence management, stated that the DIRCO had not received a qualification. Irregular expenditure had been disclosed. There could be different reasons for irregular expenditure. It could be unintended expenditure or due to financial misconduct. Most of the irregular expenditure related to supply chain processes. It was being addressed.
Mr Labane on the 30-day period said it related more about interdepartmental claims like those of the South African Police Services (SAPS), Department of Home Affairs and the Department of Defence. It was not about suppliers and service providers.
Ms Kotze stated that she would get back to the Committee on the Zambia consul office issue.
Ms M Dikgale (ANC, Limpopo) spoke to Programme 2 where the Japanese had made an investment that would create 150 000 jobs. Which criteria had been used so that all provinces could benefit from the 150 000 jobs that had been created?
Ms Kotze on investments by foreign companies said it all depended on the area which they went to. For example the Koreans had invested in Durban. Foreign companies followed normal recruitment processes.
Minutes dated 2 November 2016 was adopted as amended.
The meeting was adjourned.
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