Department Annual Report 2006: briefing

FOREIGN AFFAIRS PORTFOLIO COMMITTEE
25 October 2006
DEPARTMENT ANNUAL REPORT 2006: BRIEFING

Chairperson: Ms F Hajaig (ANC)

Documents handed out:
Department’s Annual Report presentation
India- Brazil-South Africa Dialogue Forum presentation

SUMMARY
A delegation from the Department of Foreign Affairs briefed the Portfolio Committee on aspects of its 2006 annual report as well as their achievements of the past year and their policy priorities for the coming year. A reduced committee (as many members were in the DRC as election observers) sought to shed more light on certain aspects of the report but in general commended the department on the improvements, especially with regards to its unqualified audit and progressive strategies.

MINUTES

Chairperson’s introduction

The Chairperson opened proceedings by apologizing for the lack of attendance as a large number of members were observing the presidential elections being held in the Democratic Republic of Congo (DRC). She welcomed the Department of Foreign Affairs (DFA) delegation that included Dr A Ntsaluba (Director General), Mr M Apleni (Chief Financial Officer (CFO)), Ambassador P January-Bardill (Deputy Director General), Mr A Moodley (Head of Internal Auditing), Ambassador M Roakwema (Chief Director: Latin America) and Ms A Moulton from the office of the Director-General (DG).

DFA 2006 Annual Report presentation

Dr Ntsaluba opened the presentation by outlining the principles of South African foreign policy such as human rights. He then reviewed the Department’s financial statements which contained figures for the department’s budget which amounted to R2.7 billion of which 98% (about R2.6 billion) was spent – contrasting to previous years of under-expenditure. Highlights of the Annual Report were given as the revamping of the IT system (which was outdated and should be completed by December); full compliance with the Public Finance Management Act on corporate governance; the new head office; the mission financial systems (which would provide prompt feedback on expenditure when the IT system is completed) as well as overall improvements in financial management. Dr Ntsaluba went into detail about the issues the Auditor General had with the department’s 2004/05 financial statements which focused on debt management especially to other departments in the form of foreign currency transactions for accommodation and the likes which had as yet been unpaid. He went into the strategies which led to the great improvements and finally the unqualified audit for the 2005/06 financial year. He covered issues concerning the African Renaissance Fund of which questions on the concurrence letters have been cleared and copies were handed to the Chair. The DG then went into detail about the Human Resources policies of the department covering the merging of the Foreign Service Institute (FSI) and Human Resources Management to form the Human Capital Management section; the filling of vacant posts; the speed of recruitment and staff retention as well as various training programs and employment equity.

Dr Ntsaluba spoke about areas which he believed deserved a special mention including the department’s progress internationally in the past year. He said that the Nordic countries especially supported the Pan-African Parliament, that the department had just completed a review of the White Paper on peace missions, that South Africa had acquitted itself well in the the Non-Aligned Movement (NAM) and that there could be no assessment of their impact on the G77 talks as yet. He went on to describe relations with countries such as China with which they were discussing a free trade agreement, the slow progress with India owing to the change in government in that country, the full implementation of the Trade, Development and Cooperation Agreement (TDCA) and its review and the substantial lobbying of the European Union (EU) over various matters. Other matters concerned the reform of the United Nations (UN) and the Security Council, international terrorism and human rights, the fact that no light had been shed on the World Trade Organisation (WTO) disappointments in Hong Kong, nuclear activity, the Middle East peace process and the Kimberley process amongst others.

Discussion

Mr D Gibson (DA) commended the department’s unqualified audit but asked how the qualification of depreciation and assets would change when the guidelines for departmental asset recording changed as is proposed. In addition to this, when representing Parliament in recent ACP/EU meetings he was surprised to hear that South Africa’s membership fees had not been paid, but the department had set aside R2.2 million for this purpose. He asked the DG to look into this matter before the next meeting in Barbados coming up shortly.

The CFO responded that the department was changing from a cash to an accrual accounting system and that assets would be recorded as such with depreciation from an as yet unspecified date instead of direct expenses. The department had been asked to record their assets in groups (according to years bought etc) and this would be adjusted so obtain the “proper value” of assets.

The DG responded to the question on the ACP/EU payments by guaranteeing Mr Gibson that he would look into it, but said that he was unaware of this.

Professor B Turok (ANC) asked the DG for clarification on the Africa Institute (AI) to dispel “rumors” he had heard. He also asked the department to outline their role in regards to Official Development Assistance (ODA) and specifically noted that the ODA issues with Europe were political relationships between the donor and the country receiving aid, not just technology transfers. He noted that information that ambassadors provided to MPs abroad about the countries’ domestic policy as well as background was a big help.

The DG said that the AI problems had been amicably resolved, that the Chief Executive had left and that there were plans to further link the organization to the DFA. He thanked Prof Turok for the recommendation about the ambassadors and said that feedback was vital to the efficiency and effectiveness of the department’s missions. The department was involved in ODA indirectly and they provided support for these relationships via their ambassadors in Brussels.

Dr C Mulder (FF Plus) asked what strategy the department had for stabilising the incomes of officials at overseas missions with regards to the exchange rate. He also enquired if budgets for post-conflict states such as the DRC were increasing. He also questioned the department’s concentration on French teaching for trainees and asked if this was still the major diplomatic language or if this was specifically used for African countries.

The CFO explained that the department had been in talks with the Treasury to stabilise the incomes of the officials in question by hedging against the exchange rate but in order to mitigate some of the risk the Treasury would set the focus rates and make adjustment estimates in September to make up for possible deviations from this rate. The difference would be recorded as forex gain or loss in the department’s annual report.

The DG concurred with the reports that there had been increased cost in supporting the DRC democratic process but said the United Nations (UN) had requested that the department help with the funding of the transportation for the elections which was a major cost. He said that with regards to other countries, humanitarian aid was increased where desperately needed.

Ambassador January-Bardill replied that French was still the major diplomatic language and it was the department’s strategy to equip their officials with knowledge of the language as well as an understanding of the host countries’ official language where necessary.

Mr Gibson asked why there were vast amounts owing to the Department of Home Affairs which was already under strain.

Mr Moodley answered that they do indeed owe Home Affairs money but they had made a substantial payment recently; however the money was returned and thereafter they have made monthly payments.

The Chair enquired if there was a permanent location on the cards for the Pan-African Parliament (PAP) and whether the assistance given to the Saharan people was a once off payment or not.

The DG said that there was humanitarian support in the Sahara region but that efforts needed to be continued if not increased in areas such as Algeria where help was desperately needed. This could also take the form of lower level support such as helping their mission in RSA to conduct its affairs. He also said that the location of the PAP had not been made public as Public Works was negotiating over the preferred location.

Mr L Labuschagne (DA) asked the department what their policy was on the placement of career diplomats, why the annual report contained few “problems” but was so substantial in size, why little attention was paid to relatively important countries such as Zimbabwe and lastly that no mention was made of rather important happenings such as the African Union (AU) disagreeing with RSA on a proposal for UN reform. He also mentioned that it was worrying that there were no replacements made available for seasoned staff who would possible shortly retire. He also questioned whether the diplomats in question did not risk identifying too closely with their host country and becoming biased towards that country.

The DG said that succession planning was a valid point but that at the moment with a high intake of staff, experienced members were required in order to play “mentorship” roles. He added that with regards to the report, the department had aimed for cohesion in that many issues were dealt with in depth in past reports and that issues such as Zimbabwe had been rather “quiet” over the past year. He noted that mandated issues had to be dealt with as first priorities in the writing of the report.

Ambassador January-Bardill said that there was an 8-week training period for these diplomats which covered a HR briefing on department policy, desk work to become accustomed to protocol and FSI training which was more theoretical. This was encouraged but, she said, was difficult to make compulsory.

The meeting was adjourned.