Annual Report and Financial Statements: Department briefing

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International Relations

20 October 2004
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FOREIGN AFFAIRS PORTFOLIO COMMITTEE
20 October 2004
ANNUAL REPORT AND FINANCIAL STATEMENTS: DEPARTMENT BRIEFING

Acting Chairperson:
Mr M Ramgobin (ANC)

Relevant documents
Presentation on Annual Report 2003/4
Department 2003/4 Annual Report
Synopsis of Annual Report 2003/4

SUMMARY
The presentation outlined the Department's foreign policy principles and guidelines; the actions taken on key strategic priorities; consolidation and implementation of the 'African agenda'; multilateral partnerships and human resource management programmes; its revenues, expenditure and the Auditor-General's report on its financial statements; the foreign currency system, and the programme for the African Renaissance and International Co-operation Fund.

During the following discussion, Members sought clarity on activities of the African Renaissance Fund (ARF); the Department's assistance missions in Africa; South Africa's role in the Non-Proliferation Treaty (NPT) and the status of the USA's Comprehensive Test Ban Treaty (CTBT); whether the Department had any plans to overcome its unfunded vacancies, and about any humanitarian efforts in Sudan.

MINUTES
The Chair apologised that he would have to leave the meeting to receive the Prime Minister of Tanzania, but would return as soon as was possible. He requested Dr Ayanda Ntsaluba, Department Director-General, not to go through the Department's Annual Report for 2003/4 'with a fine-tooth comb', but should instead indicate the Department's policy objectives and their measurability. A brief global picture of the Department's finances should be sketched, as well as whether the finances supported the achievement of the Department's objectives.

Department briefing
The Director-General stated that the Department had largely achieved success in priority areas, and had not overspent its budget. Surplus funds had been returned to National Treasury because of the number of vacancies within the Department, and thus the surplus funds related largely to personnel costs. Treasury then returned the funds to the Department via a roll-over for capacity projects, such as the building of the Berlin and Kinshasa embassies.

There had been pressures placed on the Department in 2003/4 because in 2002, Cabinet had decided to scale up the Department, and so they were currently filling new posts. It could not however adjust the operational component of its budget to accommodate this increased capacity. For this reason, in September 2004, the Department had informed Treasury of its intention to perform this exercise properly, to ensure that sufficient funds were allocated to fill the vacancies as part of the Adjustments Estimate.

The Director-General apologised for the late tabling of the Annual Report. At the end of July 2004, the Auditor-General picked up a problem with the Department's financial statements which required the Department to resubmit its Annual Report. Yet this problem did not relate to the 2003/4 years but stretched back to 1991/1992. The Department did the reconciliation but then experienced problems with some of the records from that financial year. The Department realised that it could not delay the already late tabling of its Annual Report any further, and thus tabled this version of the report that reflected an irreconciled amount of R11 million, which was then qualified by the Auditor-General.

The Director-General then outlined the Department's foreign policy principles and policy guidelines, the action taken on key strategic priorities for 2003/4, the consolidation and implementation of the African agenda, multilateral partnerships and co-operation and its human resource management programmes.

Mr M Apleni, Department Chief Financial Officer (CFO), dealt with the financial statements and the Auditor-General's report; the foreign currency system and the programme for the African Renaissance and International Co-operation Fund.

Discussion
Mr L Joubert (IFP) asked the Department to clarify the 56% variance from its budget. The CFO responded that this was a typing error in the presentation, and there was actually a 5.6% diversion.

Mr Joubert sought the historical figures of previous financial years, so that Members could compare them. Secondly, he requested information on the progress made with regard to the Department's new Head Office.

The Director-General replied that the new head office would be acquired via the Department's public-private partnership arrangements. The Department has already complied with most of the Treasury regulations, and in about a week, the Department would have complied fully and the proposal would then be submitted to Treasury. The absolute end-point would be to request proposals for tenders before December 2004, but the ultimate cut-off date would be December 2006. The only site that would accommodate the Department's needs would be government land, because the inner city of Pretoria did not have sufficient space. All this would be resolved before the Department went to the private sector for proposals.

Ms P De Lille (ID) asked the Department to explain whether the new assets register being developed, meant that the Department had not had one before. The CFO replied that the Department had always had one, but it was now being changed to comply with the Public Finance Management Act (PFMA). This process should be completed by March 2005.

Ms De Lille and Ms A Njobe (ANC) sought clarity on the possibility of long-term loans being written off. The CFO responded that the decision to write off the loans had to be done by the Minister, in concurrence with the Minister of Finance.

Ms Njobe asked the Department to provide examples of the activities the African Renaissance Fund (ARF). The Director-General replied that the ARF had replaced the International Co-operation Fund (ICF) that had funded a number of projects. These projects were funded in countries as loans. The ARF Act stipulated that the ARF would take over the ICF assets and liabilities. Some of the countries involved indicated that they were not in a position to make good their debt, and the Department was currently placing pressure on those countries to respond.

The Acting Chair sought clarity on the Department's assistance missions in Africa. The Director-General responded that these programmes included the major areas between South Africa and Rwanda as part of South Africa's contribution to their reconciliation, especially strengthening the health sector. Rwanda had begun recruiting doctors from Cuba and the South African government had agreed to assist with part of the remuneration as part of a two-year process. South Africa was also working with Lesotho to improve its status as a 'least developed country'.

Mr Nkosi, Chief Director: Africa, stated that the LISA project between Nigeria, Namibia and South Africa was aimed at assisting the reconciliation and reconstruction of Sierra Leone. The project has not yet been implemented, and South Africa, Nigeria and Namibia would each be contributing R30 million. The implementation had been delayed because Sierra Leone wanted to submit a new project proposal that asked South Africa to assist its government in providing electricity around Freetown because it was experiencing frequent power cuts. Eskom was currently engaged in negotiations with both the Presidency and Minister of Energy of Sierra Leone, and the governments of Namibia and Nigeria would also be consulted to decide whether the original plan could be adapted.

The Acting Chair sought clarity on South Africa's role in the Non-Proliferation Treaty (NPT), as well as on the status of the USA's Comprehensive Test Ban Treaty (CTBT).

The Director-General responded that some of the countries that committed to the CTBT had begun reneging on their commitments. In 2005, Government wished to review all elements of the major weapons taken, and was concerned with some implications of the binding treaties. Deputy-Minister Pahad was currently ascertaining the extent of the commitment of the major players.

Adv Z Madasa (ACDP) asked the Department to explain its unfunded vacancies, and the Department's plans to overcome this problem. The Chief Director: Human Resource Development, replied that it was difficult to focus on the unfunded inputs until they were fully funded. The Department has begun funding some of these.

The Director-General added that there was a finite number of personnel the organisation could employ. This process should thus be done incrementally to ensure the organisation had the necessary capacity to absorb personnel. Secondly, the Department currently housed its staff in six buildings, and has just acquired two more. This made the management of the Department very difficult, especially in those buildings where the Department had to share floors with other businesses.

Adv Madasa asked whether any humanitarian efforts had been put in place in Sudan, either by or via the Department.

The Acting Chair asked whether the Department has engaged NGO's such as Gift of the Givers.

The Director-General replied that the Department was currently exploring three approaches. Firstly, the Department was talking to a number of western countries to facilitate airlift capacity. The process had begun by consulting Parliament's Peace and Security Cluster in July 2004. Secondly, the Department did support South African based NGO's. Thirdly, there had been a request for government to look at the land-based facilitation of assistance in Sudan.

The meeting was adjourned.

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