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3. The Budgetary Review and Recommendation Report of the Portfolio Committee on International Relations and Cooperation, dated 24 October 2018

The Portfolio Committee on International Relations and Cooperation (the Committee), having considered the performance and submission to National Treasury for the medium term period of the Department of International Relations and Cooperation (the Department), reports as follows:

1. Introduction

The Portfolio Committee received the presentation on the Annual Reports 2017/18 of the Department of International Relations and Cooperation and its entity on 17 October 2018.

1. The mandate of the Committee

The Portfolio Committee on International Relations and Cooperation, is a committee of Parliament mandated by the sections 55 and 92 of the Constitution of South Africa,[1] to oversee and ensure accountability in the formulation and conduct of South African foreign policy. Consequently, the Committee conducts oversight on activities of the Department of International Relations and Cooperation, its policies, financial spending patterns, administrative issues, and it holds the Department accountable for its operations and functions. The Committee is thus mandated by the Constitution to legislate, conduct oversight over the Department and also facilitate public participation. The Committee may also investigate any matter of public interest that falls within the foreign policy area of responsibility. The Committee is thus an important mechanism for ensuring oversight over the conduct of South Africa’s international relations and cooperation policy.

1. Purpose of the Budgetary Review and Recommendation Report

In accordance with section 5 of the Money Bills Amendment Procedures and Related Matters Act 2009 (Act No.9 of 2009), the National Assembly, through its committees, must assess service delivery performance of each national department and submit Budgetary Review and Recommendation Report (BRR Report) for each department, for tabling in the National Assembly. The process allows the National Assembly to evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on forward use of resources. These reports will be considered by the Standing/Select Committees on Appropriations and Finance, respectively, when they make recommendations to the Houses of Parliament on the Medium Term Budget Policy Statement (MTBPS).

In compiling this report, the Committee as mandated by section 5 of the Money Bills Amendment Procedures and Related Matters Act 2009 (Act No.9 of 2009), based the assessment of the Department on its service delivery plan as outlined in the 2017 State of the Nation Address. The Committee linked domestic priorities to the Department’s Medium Term Strategic Framework for the period 2014 – 2019 and aligned the information to priorities and measurable objectives as set out in the strategic plan.

The Committee examined the expenditure report as published by the National Treasury, commonly known as section 32 Reports of the Public Finance Management Act (PFMA) 1999 (Act 1 of 1999). Reference was also made to the Auditor-General’s report on the 2017/18, Budget Vote 6 and the Department’s Annual Report 2017/18. The Annual report contains the Department’s service delivery information, reflecting its performance in 2017/18 reporting period.

1. The core function and mandate of the Department

The overall mandate of the Department is to work for the realization of South Africa’s international relations policy objectives. In terms of the provisions of the Constitution, the President of the Republic of South Africa bears the overall responsibility for the country’s foreign policy and international relations. However, the Department is entrusted with the formulation, application and implementation of South Africa’s foreign policy which is derived from South Africa’s domestic priorities[2].

The Minister of International Relations and Cooperation (the Minister) assumes overall responsibility for all aspects of South Africa’s international relations, albeit in consultation with the President. The Minister also liaises and consults with members of the Cabinet on overlapping issues and on the priorities and programmes of other departments that bear an international relations element. In the same breath, other Cabinet ministers are required to consult the Minister on their international role.

1. Measurable Objectives of the Department

The Department had identified the following strategic objectives for implementation during the reporting year, aimed at responding to the domestic priorities as announced by government for the reporting year as follows:

• Efficient, effective, economical and fully capacitated Department;
• Enhanced the African Agenda and Sustainable Development;
• Provide strategic Public Diplomacy direction nationally and internationally;
• Strengthen political and economic integration of the Southern African Development Community (SADC);
• Strengthen of South-South Relations;
• Strengthen of Relations with strategic formations of the North;
• Strengthen Political and Economic Relations;
• Participate in the Global System of Governance;
• Provide effective Protocol Services;
• Strengthen Multilateralism through financial contributions.

During the reporting period, the thrust of the work of the Department remained anchored on these overarching priorities as confirmed by the January 2017 Cabinet Lekgotla and the 2017 State-of-the-Nation-Address (SoNA). In its work on these priorities, the Department is supported by the following activities:

• Organisational support;
• Rendering of professional services and
• Organisational strengthening.

1. Policy focus areas

1. Analysis of the Department’s prevailing strategic and operational plan

The Annual Report reflects the highlights of a number of diplomatic activities carried out by the Department including its Missions abroad. At the time of reporting, South Africa’s representative drive had grown from 34 in 1994 to 124 diplomatic missions in 2017/18, situated in 109 countries throughout the world.

During the reporting period, the Department remained focused towards implementing strategies and mechanisms to bolster regional and continental political and economic integration. These are the apex priorities of South Africa’s foreign policy[3]. The inherent foreign policy outlook guided the Department’s engagements in Africa, and with partners in the global South, developed nations of the North as well as in multilateral relations.

It ensured that South Africa’s foreign relations contributed to an environment that is conducive to sustainable economic growth and development; and serve as a basis for addressing government’s identified urgent priorities. The Department’s priority was to pursue African development and enhanced international cooperation. This was in support of government’s key targets, as outlined in the medium term strategic framework.

1. 2017 State-of-the-Nation Address

In his 2017 State-of-the-Nation Address[4], President Jacob Zuma indicated that there would be continuity in South Africa’s foreign policy, and the consistent theme of foreign policy playing a role in the development of Africa and South Africa would remain. He further indicated that South Africa’s foreign policy activities would remain aligned to the National Development Plan. President Zuma stated that South Africa is honoured to chair the Southern African Development Community (SADC) starting from August 2017. It would utilise the tenure to fast track the implementation of the SADC Industrial Strategy.  President Zuma also noted that South Africa would continue to accelerate the integration agenda through the implementation of SADC-COMESA-East African Community Free Trade Area[5].

The President further pointed out that South Africa would continue with its involvement in mediation efforts, peacekeeping operations, and peace-making initiatives in Lesotho, Democratic Republic of Congo, Burundi, Mozambique, South Sudan, Somalia and Libya. He further noted that the South African National Defence Force represented the country well in the peacekeeping missions. The President also noted that trade with the traditional partners in the west remains a significant contributor to our economy, and South Africa would continue to partner with the United States and work together on issues of mutual interest such as the full renewal of African Growth and Opportunity Act[6].

The President reiterated that South Africa values its relationship with the Peoples Republic of China. China is one of South Africa’s most important and key strategic partners, and South Africa recognises the PRC ‘as the sole government and authority representing the whole of China’[7]. South Africa reiterates its position and commitment to the ‘One China Policy’ and we consider Taiwan as an integral part of the PRC.

President Zuma highlighted that at continental partnership level, the Joint Africa-European Union (EU) Strategy remains an important long-term framework for continued cooperation. He pointed out that the Economic Partnership agreement with the EU came into force in September 2016, thus providing new market access opportunities for South African products[8].

The President pointed to the fact that the BRICS New Development Bank had recorded encouraging progress. South Africa welcomed the Goa BRICS Heads of State and Government decision to establish the BRICS Rating Agency so that they can assist one another in assessing the BRICS economic paths.

President Zuma concluded by reflecting that South Africa would continue to pursue the reform of the international system because the current configuration undermines the ability of developing countries to contribute and benefit meaningfully.

He recognised that 2017 marked the 50th anniversary of the occupation of Palestine, and that the expansion of Israeli settlements undermines global efforts aimed at realising the two state solution and the Oslo accord. President Zuma reiterated South Africa’s support for the Palestinian course[9].

Similarly, he went further, South Africa hoped that the readmission of Morocco to the African Union should serve as a catalyst to resolve the Western Sahara issue.

1. Alignment to National Development Plan (NDP) and the 2017 MTBPS and the 2014-2019 Medium Term Strategic Framework

In Chapter 7 of the NDP entitled “Positioning South Africa in the world”, the National Planning Commission argued that government’s global and regional policy-making stance should be South Africa-centric. It should also improve South Africa’s integration in the region, on the continent, among developing countries, and in the world with measurable outcomes. The National Planning Commission also argues that policy-making should be guided by the following principles and objectives[10]:

• Focus on what is achievable without over-committing to possibilities of regional and continental integration.
• Foreign Policy should be evaluated on a regular basis to “ensure that national interests are maximised”.

• Remain an influential member of the international community;
• Deepen cooperation with Brazil, Russia, India and China as part of the BRICS group while promoting regional and continental integration;
• Stabilise the regional political economy through increased integration and cooperation; and
• Achieve measurable outcomes related to food, energy, education, health, transport and communication infrastructure, national defence, adjustment to climate change and economic growth to benefit all South Africans[11].

1. Service delivery environment

In its examination of the Annual report of the Department, the Committee observed that the Department had aligned itself with the prescripts of Chapter 7 of the National Development Plan entitled “Positioning South Africa in the world”. (National Planning Commission (2011): One of the objectives of the national development plan is to enhance South Africa’s position in the region and the world, and to increase trade and investment.

The plan states that the country’s foreign policy should be shaped by the interplay between diplomatic, political, security, environmental, economic and regional dynamics that define international relations. The country should position itself as one of Africa’s powerhouses, leading development and growth on the continent. Integration with the Brazil-Russia-India-China-South Africa group of countries should be deepened[12]. In this regard the Department is doing its part in contributing to the realisation of the plan’s development goals. These are achieved through continuing to support regional and continental processes, responding to and resolving crises, strengthening regional integration, contributing to an enabling trade environment, increasing intra-African trade, and championing sustainable development and opportunities in Africa.

The Department recognises that the NDP proposed expansion of South Africa’s trade and global market share. To achieve this, a greater productive and export capacity and global competiveness across the region needs to be built. The Department’s strategic focus is thus to advance a developmental integration agenda in Southern Africa. This would be achieved by combining trade integration, infrastructure development and sector policy coordination.

As such, the integration of the Southern African Development Community and regional neighbours is critical for the economic development of the region. It is also seen as critical for South Africa’s global competitiveness. South Africa would continue to use structured bilateral mechanisms and high level engagements to reinforce and expand cooperation in the political economic, and social and security spheres. This would be for the purposes of contributing to the achievement of national priorities[13].

The Committee in its analysis of the Annual report 2017/18, observed that the Department continued with its concerted efforts to execute South Africa’s international relations strategy to address the country’s domestic challenges. In this regard, the National Development Plan enjoins the Department to contribute towards addressing the identified triple challenges of poverty, inequality and underdevelopment. The NDP requires the Department to create a better life for all South African. This it should do while meeting the country’s international obligations in a dynamic and complex global terrain. In this vein, South Africa’s foreign policy objectives remained predicted on the country’s national interest and identity.

1. Global delivery environment

During the reporting period, the Department’s international relations programme continued to be implemented within a global environment that was characterised by changes in global politics which have resulted in complex shifts that require an astute foreign policy strategic stance from South Africa. The post-World War II consensus that put human rights, peace and development as core components of the global political infrastructure has been weakened significantly. It was noted that there was a general rightward shift in politics in Europe. Some of the rightward shifts could be attributed to concerns around migration from conflict zones in mostly North Africa and the Sahel regions[14].

However, it was observed that there was a general right-wing populism that is racist, anti-migrant and anti-establishment. This was most noticeable in the stance taken by the current United States of America (USA) Government in relation to all of these factors, including an assault on the key aspects of multilateralism related to regulation trade (World Trade Organisation) and human rights (UN Human Rights Council)[15].

It was reported that the right-wing populism has seen a resurgence of narrow nationalism and even nativism throughout Europe, Eastern Europe and the USA. It has been further observed that the conflation of narrow nationalism, which pivots away from multilateralism and unilateral stances relating to trade, peace and security, is reminiscent of a world that gave rise to the two World Wars and the tensions of the Cold War[16]. The conflicts in North Africa, the Maghreb and the Sahel were indicative of regional conflicts that have the potential to become global in nature.

As a result of the fluid international political environment, it was noted that South Africa would need to develop a foreign policy stance that strengthens the bridging role. South Africa has played the role over the last 24 years between the different global blocs premised on a largely independent foreign policy orientation[17]. This would allow South Africa to contribute to strengthening and democratising the global multilateral system. South Africa’s interest is that it fosters peace, stability, prosperity, equality and human rights for all people, especially in Africa, and work towards establishing equality between countries. It is South Africa’s considered view that equality, democracy and prosperity within countries cannot be established without working towards equality between countries.

Despite the inherent undemocratic nature of the United Nations Security Council (UNSC), with the domination of the permanent five, South Africa’s view has been that the UNSC and organs linked to the UN, created a global multilateral public order that provided for a rules-based system to deal with issues such as global peace and security, development, human rights and trade.

During the reporting period, the Southern Africa Development Community (SADC) region remained politically stable. South Africa, however, would continue to impress on partners and work with them to consolidate democracy and peace for development. South Africa has accordingly discharged its SADC sanctioned mediation responsibility in Lesotho, which culminated in the elections, which were declared free and fair. In a similar vein, South Africa has ensured that its objectives of regional integration within SADC, were also intertwined with its objectives of the African Union (AU) and enhancing the African Agenda. The adoption and launch of the Continental Free Trade Area, as well as the signing of the Kigali Declaration on 21 March 2017, took the country a step closer towards regional and continentally integrated economy[18].

Similarly, the SADC-East African Community-Common Market for Eastern and Southern Africa Tripartite Free Trade Area (TFTA), strengthened the resolve for regional integration. It is anchored on market integration, infrastructure development and industrial development. The TFTA Agreement was signed by 22 states, including South Africa, out of 26 member countries, on 7 July 2017 in Kampala, Uganda.

South Africa has witnessed efforts to entrench protectionism and elitism in the era of the Fourth Industrial Revolution. While the said era has its advantages, South Africa would not shy away from the reality that it has demonstrated the potential to further alienate the majority of the poor worldwide and for that reason. It would otherwise proactively manage its effects.

South Africa assumed the Chairship of SADC in August 2017 for the period 2017/18 under the theme: “Partnering with the Private Sector in Developing Industry and Regional Value Chains”. South Africa’s undertaking during the chairship was to continue to bolster economic growth in the region. This included having a dedicated focus on harnessing the participation and enhanced cooperation of the regional private sector in the implementation of the SADC Regional Industrialisation Strategy and Roadmap[19].

It was reported that South Africa intends to use its third tenure in the UNSC to promote the maintenance of international peace and security. It would do this through advocating for the peaceful settlement of disputes and inclusive dialogue. It would also advocate for close cooperation between the UNSC and other regional and sub-regional organisations.

1. Major highlights in the work of the Department in 2017/18 financial year

During this reporting period, South Africa maintained a wide and healthy diplomatic presence in all regions of the world. This was in support of its global international relations agenda with Africa as central to its foreign policy. South Africa’s engagements and priorities on the African continent remain focused and poised on the strengthening of bilateral relations; the promotion of peace, security and stability; economic cooperation and integration; and the overall enhancement of the African Agenda[20].

South Africa continued engagements with strategic partners is a response to addressing South Africa’s national priorities as reflected in the National Development Plan. Accordingly, the year under review witnessed strengthened bilateral political and economic relations through the 27 structured bilateral mechanisms and 28 high-level visits engaged in. The outcomes of these engagements would manifest through the direct and indirect investment by South Africa’s key partners in strategic sectors of our economy.

South Africa has served as a member of the AU Peace and Security Council for two consecutive terms from 1 April 2014 to 31 March 2016 and 1 April 2016 to 31 April 2018, respectively. This has been a service as part of the collective efforts by African Union (AU) member states aimed at promoting and advancing peace, security, stability and development on the continent.

During this reporting period, South Africa continued to consolidate the work done in the previous two terms, including but not limited to the membership of the AU High Level Committee on Libya; Chairship of the AU High Level Ad Hoc Committee on South Sudan; membership of the Guarantors of the Arusha Peace Agreement; and leading the Championship on the AU-United Nations (UN) Cooperation on Peace and Security. South Africa is committed through these and other efforts towards the attainment of one of the goals of Agenda 2063, namely, “Silencing the Guns by 2020”.

South Africa remained irrevocably committed to the realization of the goals of Agenda 2063 Africa’s blueprint and vision for an integrated, prosperous and peaceful continent, “the Africa We Want”. In this regard, it was reported that South Africa supported the launch of both the Protocol on the Free Movement of Persons in Africa and the African Continental Free Trade Area, launched in January and March 2018 respectively, which are two of Agenda 2063’s flagship programmes. These two initiatives were seen as a manifestation of the Pan-African vision of continental unity and integration in line with South Africa’s vision of a better Africa and a better world[21].

In pursuit of promoting regional political and economic integration, South Africa assumed the Chairship of the Southern African Development Community in August 2017, under the theme: “Partnering with the Private Sector in Developing Industry and Regional Value Chains”. During its Chairship, South Africa worked towards the implementation of the identified deliverables and the handover report for the Chairship to Namibia from August 2018.

As a keen proponent of the value of multilateralism, South Africa, during the Regular Session of the 72nd Session of the UN General Assembly (UNGA72), strove to achieve a number of objectives. These included defending the primacy of multilateralism; advocating for stronger coordination between the AU and the UN, especially in the resolution of conflicts in Africa; lobbying for South Africa’s candidature for a non-permanent seat on the UN Security Council for the period 2019 to 2020; and highlighting the primacy and centrality of the 2030 Agenda for Sustainable Development and the Paris Climate Change Agreement[22].

On 20 September 2017, South Africa signed the Treaty on the Prohibition of Nuclear Weapons. The gesture reflected South Africa’s continued commitment towards the achievement of a world free from the existential threat. The threat is posed by nuclear weapons and ensuring that nuclear energy is used for peaceful purposes only.

South Africa continued, in the year under review, with the implementation of its mandate of advancing South Africa’s interests in the global system, in the areas of the evolution of international human rights norms and standards. Successful deliberations between the World Food Programme and the Government of the Republic of South Africa, culminated in an agreement towards the positioning of South Africa as the host of the largest UN Humanitarian Response Depot[23].

South Africa’s sustainable development (economic, social and environment) interests continued to be promoted in a range of multilateral organisations and forums during 2017/18. It was reported that South African experts, through their elected membership of subsidiary committees, commissions and other ad-hoc mechanisms of the UN System, had contributed to the strengthening of global governance over a wide range of mechanisms and issues.

South Africa continued to use its membership of the G20 to advance its national interest and the African Agenda and to amplify the voice of the South more broadly. South Africa participated at Head of State level in the G20 Leaders’ Summit in Hamburg, Germany, in July 2017. The summit resulted in consensus on various developmental matters that are consistent with Agenda 2063.

South Africa continued to leverage all Brazil, Russia, India, China and South Africa (BRICS)-related engagements and actions to advance the country’s national interests. The forums were used to promote regional integration and advocate for a more inclusive global governance system[24]. In terms of purely economic benefits, bilateral trade between South Africa and its BRICS partners amounted to US$29 billion in 2017 and China remains South Africa’s biggest export destination (followed by India, Brazil and Russia in BRICS)[25]. South Africa assumed the Chairship of BRICS in January 2018.

South Africa assumed the Chairship of the Indian Ocean Rim Association (IORA) in October 2017. It also had the honour of a South African national, Ambassador Dr Nomvuyo Nokwe, being elected as the Secretary-General of the organisation for the next three years. IORA is a dynamic organisation consisting of coastal states bordering the Indian Ocean. South Africa would use its membership to integrate the IORA programme with its own Operation Phakisa to realise the potential of the Blue Economy.

The Department continued to render consular assistance to South Africans travelling, working, studying and living abroad. Consular Services continued to provide legalisation services for public documents and attended to general consular enquires.

However, the predetermined Compensation of Employees ceiling remained a challenge to the Department[26]. The Department has since implemented initiatives and personnel-reduction strategies, which include filling only critical vacant posts and the rationalisation of the Locally Recruited Personnel establishments. It was reported that non-critical Locally Recruited Personnel posts have been abolished and some Locally Recruited Personnel have also been retrenched.

The Department has since formulated a Public Diplomacy strategy[27] which would talk to the communication strategy which has been in place. The Public Diplomacy branch was therefore able to hold events and engaged the public in communicating tenets of South Africa’s foreign policy. This was to ensure a better understanding by both national and international audiences. The Department steadily worked hard to improve the comprehension of South Africa’s international engagements by international and domestic audiences.

The Foreign Service Bill was tabled in Parliament in 2015. The Bill is being processed by the Portfolio Committee on International Relations and Cooperation as required. The Committee publicised the Bill in newspapers in South Africa as required. There was a low rate of responses or interest from the members of the public. As a result of this inadequate public participation, the Committee held a stakeholders’ seminar in Pretoria towards the end of November 2016. This seminar brought about interested stakeholders ranging from the general public, students, academia, civil society, labour, and all not listed here but relevant.

Then the Committee undertook a Study Tour on the Bill to Canada, from 9-16 September 2017. The aim was to learn best practices on the management of foreign missions. It also gave an opportunity to compare with existing legislation in Canada, areas of complementarity and differences. This also included an oversight visit to the South African High Commission in Ottawa. This was to assess the implementation of the mandate of South Africa’s Foreign Policy in the area of accreditation.

The Committee also conducted an Oversight visit to Namibia in order to assess the status of state-owned properties located in Windhoek and Walvis Bay. The oversight was undertaken in order to assist the Committee to finalise clause 8 of the Foreign Service Bill 2015, and advance an adjudicative determination on the custodianship and maintenance of state-owned properties abroad.

1. Overview and assessment of the financial and non-financial performance of programmes of the Department and its entity for the 2017/18 financial year

1. Financial expenditure trends of the Department and its entity

The Department continued to operate in an uncertain international environment and budget constraints. At the end of the reporting year, the Department had a preliminary expenditure amounting to R5.9 billion, which is 93,5%, against the available budget of R6.4 billion. This has resulted in lower than projected spending by the amount of R414.9 million or 6,5 per cent[28].

The low spending was reported mainly due to the Department deferring some of its planned capital projects, and delays in acquiring land for two missions in New York. Furthermore, there was a notable appreciation in the exchange value of the rand against the US dollar in the last quarter of the financial year. This resulted in savings in foreign currency-denominated goods and services of the Department.

Table 1: Total expenditure for the 2017/18 financial year[29]

Source: Annual Report of the Department of International Relations and Cooperation 2017/18

1. Analysis of financial performance of the Department and its entity for the 2017/18 financial year

Spending trends per programme were aligned to service delivery of the Department and its entity.

1. Programme 1: Administration

The Department reported that during the period under review, the Programme continued to provide support with regard to the development of the overall policy and management of the Department. This was achieved through efficient, effective and economical utilisation of scarce resources.

The expenditure for Programme 1 was at R1,2 billion or 78,7% of the total available budget of R1,6 billion for the 2017/18 financial year. It thus represented an underspending or R333,1 million or 21,3%. The underspending was mainly attributable to the Department momentarily deferring the commencement of new capital projects and delays in finalising the acquisition of land for the two missions in New York.

The bulk of the expenditure incurred was for goods and services and capital assets; and related to the international property portfolio and domestic properties, respectively. Specific expenses incurred by the Department were in terms of operating leases and operating payments for the foreign municipal charges and rental costs. These costs were for the Pan African Parliament and United Nations offices, as per the respective host country agreements. In addition, the Department also has finance lease payments related to the unitary payments of the Public Private Partnership (PPP) contract of the head office building.

1. Programme 2: International Relations

This programme’s preliminary expenditure for 2017/18 amounted to R3,5 billion or 99,1% of the total available budget of R3,5 billion for the financial year. It represented an underspending of R30,7 million or 0,9%. Compensation of employees, and goods and services accounted for the bulk of expenditure under this programme. This was particularly cost of living allowances paid to transferred officials and operating leases paid for office and residential accommodation in missions. The underspending under the programme was mainly as a result of foreign exchange gains realised on foreign currency-denominated expenses.

1. Programme 3: International Cooperation

Under this programme, the preliminary expenditure for 2017/18 amounted to R445, 3 million or 98,3% of the total available budget of R453,2 million for the financial year. This represented an underspending of R7,8 million or 1,7%. As with Programme 2 International Relations, compensation of employees, and goods and services accounted for the bulk of expenditure under this programme. This was particularly cost of living allowances paid to transferred officials and operating leases paid for office and residential accommodation in missions. The underspending under the programme was mainly as a result of foreign exchange gains realised on foreign currency-denominated expenses, including cost containment measures implemented by the travelling.

1. Programme 4: Public Diplomacy and Protocol Services

The programme’s preliminary expenditure for 2017/18 amounts to R270,4 million or 94,5% of the total available budget of R286,2 million for the financial year. This represented an underspending of R15,7 million or 5,5%. The under spending is mainly due to the Department implementing cost containment measures on travel.

The major cost drivers under this programme related to compensation of employees and travel and subsistence.

1. Programme 5: International Transfers

The programme’s preliminary expenditure for 2017/18 amounted to R581,1 million or 95.5% of the total available budget of R608,6 million for the financial year. This represented an underspending of R27,5 million or 4,5%. The underspending mainly emanated from the arears contribution for the African Union, following the adoption of a new scale of assessment as per the resolution on self-reliance in June 2015. The savings were also realised due to the appreciation in the exchange value of the rand against the US dollar; affecting membership contributions to foreign and international organisations.

1. Virements

It was reported that the National Treasury approved the use of unspent funds of R17,96 million appropriated under goods and services and payments for capital assets in Programme 2: International Relations and Programme 4: Public Diplomacy and Protocol Services. The funds were to be used for transfers and subsidies for the payment of Locally Recruited Personnel severance packages (R17,5 million) and leave gratuities (R455 000).

Furthermore, the National Treasury approved to shift R15,5 million within transfer payments in Programme 5: International Transfers. The main sources of these savings were reported as:

• R5,1 million of the voluntary component of the membership contribution to the United Nations;
• R3,1 million of the voluntary component of the membership contribution and reprioritised funds from the Southern African Development Community (SADC);
• R1,6 million from the India Brazil South Africa Trust Fund, owing to a downward adjustment of the revised scale of assessment;
• R1,4 million from the United Nations Development Programme in Southern Africa (UNDP); and
• R4,3 million from other transfer payments.

These funds were shifted to defray excess expenditure in transfers payments to the African Union (R15,2 million) as membership contributions; Organisation for Economic Cooperation and Development (R12 000); United Nations Technical Cooperation (R272 000).

1. Unauthorised expenditure

The Department did not incur unauthorised expenditure during the year under review. It was reported that the unauthorised expenditure incurred in the 2016/17 financial year amounted to R416 million and is awaiting authorisation by Parliament.

1. Fruitless and wasteful expenditure

As disclosed in Note 32 to the annual financial statements, a total amount of R3,5 million (2016/17: R2,2 million) was been recorded as fruitless and wasteful expenditure during the year under review. Fruitless and wasteful expenditure mainly arose from the costs incurred by missions on vacant properties, which could not be disposed of by the Department.

1. Irregular expenditure

The National Treasury noted the suspected incidences of irregular expenditure, involving transactions valued at R35,4 million. According to the March 2018 monthly expenditure report, these transactions occurred between April 2017 and February 2018.

In Note 31, a total amount of R255,9 million (2016/17: R366,7 million) was identified as irregular expenditure during the year under review. Irregular expenditure arose as a result of contravention of Supply Chain Management (SCM) legislation.

1. Supply Chain Management

The Department revised the SCM Framework in line with the new SCM prescripts issued by National Treasury in an effort to prevent irregular expenditure as required by Section 38 of the Public Finance Management Act (PFMA), 1999 (Act 1 of 1999). In addition to this, the SCM checklists for contracts, quotations and bids were also developed and implemented during the year under review.

During the year under review, the challenges experienced in SCM by the Department were in the areas of compliance with the 30-day payment period, matters of non-compliance with procurement processes, lack of appropriate skills as well as vacancies in critical positions.

The above challenges are being addressed through the creation of a contract management unit, which would include, among others, expertise with law of contract. The unit would also and strengthening of the demand management unit, which would deal with, among other things, upcoming events/summits/conferences as outlined in the Annual Performance Plan of the Department.

Root causes have been identified and analysed for tracking through an audit action plan. Job evaluation for posts in SCM was conducted in preparation for the advertisement of critical posts.

1. The African Renaissance and International Cooperation Fund

The African Renaissance and International Cooperation Fund (ARF) is administered by the Department. In strengthening the governance issues of the ARF, the Department has developed an operational framework; appointed a full-time ARF secretariat; shared internal audit and appointed an audit committee; as well as developed a risk management plan.

1. Public-Private Partnership Agreements

The Department continued to service the existing Public-Private Partnership Agreement (PPPAs) with Main Street 717 (Pty) Ltd, concluded in 2009. This is done through quarterly meetings of senior managers as well as monthly operational meetings for operational managers. In addition, the meetings also deal with other governance and operational issues. The term of the PPPA is 25 years, ending in 2034. The total cost incurred in relation to the agreement for the financial year 2017/18 is as follows: R188,7 million for 2015/16, R220,1 million for 2016/17, and R234,2 million for the 2017/18 financial year.

1. Future plans of the Department – Foreign Service Bill 2015

The Department has tabled the Foreign Service Bill during the 2015/16 financial year for processing by the Parliament. The Bill is aimed at, among others, the establishment of a single foreign service for the Republic of South Africa; for the administration and functioning of the Foreign Service; and for the establishment of mechanisms that enhance the execution of international relations. The Foreign Service Bill, 2015 has been tabled in Parliament and referred to the Portfolio Committee on International Relations and Cooperation.

It was reported that the Department intends to undertake a review of the organisational structure to align to current developments, challenges and changes in order to deliver on South Africa’s foreign policy and government priorities.

1. New or proposed activities – South African Development Agency

In addition, the Department is continuing with plans to activate the South African Development Partnership Agency (SADPA) and finalise the Partnership Fund for Development Bill. The process is aimed at repealing the African Renaissance and International Cooperation Fund Act, 2000 (Act 51 of 2000), in order to support South Africa’s outgoing development cooperation policy by providing funding and technical support for the development initiatives. Finalisation of the Partnership Fund for Development Bill, aimed at repealing the African Renaissance and International Cooperation Fund Act, 2000 (Act 51 of 2000) is in progress.

1. Performance information

During the reporting year, the core of the Department’s work of conducting South Africa’s foreign policy remained predisposed towards Africa and South-South cooperation. The objectives described in its Annual Performance Plan (APP) 2016/17, are based on South Africa’s NDP.

1. Analysis of non-financial service delivery performance of the Department and its entity for the 2017/18 financial year

The Committee considered and analysed the Annual Report of the Department of International Relations and Cooperation for the 2017/18 financial year. In its analysis of the report, the Committee also enlisted input from the Office of the Auditor-General.

The focus of the assessment was on the performance of the key programmes of the Department comprising of Administration, International Relations, International Cooperation, Public Diplomacy and Protocol Services and International Transfers. The Department’s performance was measured against its own set targets as identified in the Strategic Plan of 2015-2020. It was also measured against Government’s key priorities identified in the President’s State-of-the-Nation Address (SoNA) of February 2017 and the Government’s Medium Term Strategic Framework 2014-2019. Other key measures comprise of the moral values and principles that underpin the country’s foreign policy. The source documents for this analysis include the 2017 Estimates of National Expenditure (ENE); the 2017 State-of-the-Nation Address; the Delivery Agreement for Outcome 11 (2014-2019) as well as the Department’s Strategic Plan 2015-2020.

The performance of the entity, the African Renaissance and International Co-operation Fund (the ARF) for 2017/18 is also assessed in this report.

1. Non-financial performance per Programme

1. Programme 1: Administration

Main objective: The purpose of the programme is to develop overall policy and manage the Department with the intention of ensuring an efficient, effective, economical and fully capacitated department.

During the reporting period, the Department managed to maintain the vacancy rate at 9,4%, which is below the national average vacancy rate of 10%. In order to remain within the ceiling placed on the compensation of employees, the Department continued to fill only critical posts at Head Office and missions abroad.

During the reporting period, the Department finalised the outcomes of the annual performance assessments and effected payment of incentives by 31 March 2018 as per the amended Public Service Regulations, which came into effect in August 2016. The filing of performance management documents electronically led to improved record management and an improved rate of compliance with the applicable prescripts on the submission of performance agreements, performance appraisals and performance assessments. Through the electronic compliance tracking system, the Department achieved 100% submission of performance agreements by eligible Senior Management Service (SMS) members.

It was further reported that the internship group of 56 participants who were enrolled in the Departmental Internship Programme successfully completed their internship contract by 31 March 2018.

The annual trends report on labour relations cases was produced and shared with managers at different levels. This was to sensitise them about the significance of their role in processing grievances and misconduct cases. As a result, it was reported that there has been a decrease in labour relations cases, as most managers now have a better understanding and appreciation of the labour relations procedures, including the Code on Disciplinary Procedure.

The Department has implemented corporate governance in line with the Information Technology and Communications (ICT) Policy Framework as per the Department of Public Service and Administration requirements. Governance structures (ICT Strategic Committee, ICT Steering Committee and ICT Operational Committee) have been established and ICT plans are discussed and approved through these governance structures. It was reported that the upgrade of the network and security infrastructure has been completed and it was being optimised.

After the milestone decision of the African Union (AU) Summit of Heads of States and Governments in January 2017 to grant the Pan-African Women’s Organisation (PAWO) the status of a Special Agency of the AU, the Department organised an inter-generational dialogue on “Building a Strong Women’s Movement in Africa” during the 55th anniversary of Pan-African Women’s Day on 31 July 2017. The dialogue recognised this historic achievement as well as focused on revitalising PAWO as a vehicle towards building a progressive women’s movement in Africa.

The Department also hosted a celebration of Women’s Month in August as a tribute to the more than 20 000 women who marched to the Union Buildings in Pretoria on 9 August 1956 in protest against the extension of pass laws to women. The dialogue on “Women Empowerment and Gender Equality in the Workplace” was held on 30 August 2017, targeting all women in DIRCO.

Furthermore, in partnership with the UN Women South Africa Multi-Country Office, the department hosted an Ideathon to bring the knowledge, experience and creativity of all stakeholders working to end violence against women and girls to develop creative and innovative solutions to prevent and respond to the challenge of gender-based violence.

A Man’s Annual Forum was also launched with men participating in a dialogue discussing pertinent issues related to masculinity, and their role in society, workplace challenges and achievements.

During the reporting period, the Department facilitated and provided consular assistance to all cases reported about South African nationals in distress abroad. This included attending to 84 cases of South African nationals in distress abroad, 235 civil processes, 115 new prisoner cases, 165 mortal remains cases, 22 cases of the whereabouts of South African citizens, one adoption, 6 abductions and 36 extradition requests.

The Office of the Chief State Law Adviser (International Law) (OCSLA (IL)) provided legal advice and support to government departments, including DIRCO, on all aspects of international law. In addition, OCSLA (IL) also advised on legal matters relating to the operations of the Department and its missions, while also coordinating and managing all litigation matters.

Supply chain and asset management

The Department embarked on the revision of the financial delegation of authority as well as training of senior management members serving in three bid committees, namely: specification, evaluation and adjudication. It also worked on its invoice-tracking system to improve and monitor the turnaround time in adherence to 30-day payment period.

1. Programme 2: International Relations

Main objective: The purpose of this programme is to promote policies, strategies and programmes to advance South Africa’s national priorities through strengthened political, economic and social relations with targeted countries.[30]

The National Development Plan’s narrative is that South Africa should engage political and economic relations as important vehicles for promoting South Africa’s national priorities. Engagements with the individual countries of the South and the North should contribute to the five national priorities, including, prioritising increased exports of South African goods and services; increasing Foreign Direct Investment (FDI) with technology transfers into value-added industries and mineral beneficiation; as well as increased inbound tourism and skills enhancement.

In response to the aspirations of the NDP, the Department has adopted an Economic Diplomacy policy as a driver towards its contribution to addressing domestic challenges. The Department conducted a range of bilateral engagements through Africa; Asia and the Middle East; Americas and the Caribbean; and Europe.

South Africa’s national priorities advanced in the fields of education, rural development, security and health through 27 structured bilateral mechanisms and 28 high-level engagements focusing on the following sectors Secured development assistance and training opportunities in sectors such as:

Mining, energy, police, ICT, agriculture, textiles, tourism, education, research, skills development, manufacturing, science and technology and investment in the oil and gas sectors.

Sub-programme: Africa

In terms of the Africa sub-Programme there were engagements in each region.

Since the dawn of democracy in 1994, South Africa has placed Africa at the centre of its foreign policy. This is largely influenced by the liberation history, which was anchored in Pan-Africanism and South-South solidarity. South Africa’s national interests are inseparably linked to the well-being of the continent and aim to promote continental unity, peace, security and prosperity.

South Africa continued to support the continental initiatives and efforts to advance continental integration. The African Agenda 2063 and its Action Plan, the recent signing of the Continental Free Trade Agreement (CFTA) in Kigali and many other efforts are seminal developments in the determined journey towards an integrated, united, peaceful, and prosperous continent[31].

While the positive developments and advances made are recognised, there is acknowledgement that some countries on the continent continue to face security and instability challenges.

Work still needs to be done to ensure that the people of Somalia, South Sudan, Mali, Libya, Central African Republic, Democratic Republic of Congo (DRC) and Lesotho will enjoy peace and stability.

Guided by its foreign policy imperatives, South Africa continued to commit to play an active role in resolving these crises. Efforts to entrench democracy, rule of law and good governance on the continent are bearing fruit as can be seen in the conducting of regular and successful elections.

The continent has emerged as one of the most important and strategic regions for South Africa’s economic development. For example, South Africa’s total trade with Africa stood at R11,4 billion in 1994. In 2017, South Africa’s total trade with Africa stood at R429 billion[32] Southern Africa takes up 80%. It is against this background that the Department of International Relations and Cooperation has prioritised Economic Diplomacy, including promoting South Africa as a tourist destination.

The Southern Africa region remained one of the significant regions of Africa. Its importance to South Africa could be attributed to long-standing historic bonds, regional affiliation to Southern African Development Community (SADC) and its geographic positioning. The region has remained relatively stable, though harshly affected by drought and slow economic growth.

With regard to Southern Africa, the NDP advocates that South Africa should implement a focused regional integration strategy. In response to that, in 2017 South Africa remained engaged in the seven Bi-national Commissions (BNCs), at head of state level. In pursuit of promoting regional political and economic integration, South Africa assumed the Chairship of SADC in August 2017, under the theme: “Partnering with the Private Sector in Developing Industry and Regional Value Chains.

As Chair of SADC, South Africa has been involved with the SADC Organ in matters relating to the promotion of peace and security in the region as a whole. Furthermore, South Africa would be participating in SADC electoral observer missions (SEOMS), which would be covering the elections in the region for 2018, including in Zimbabwe, Madagascar and the DRC.

In Tanzania, two Memoranda of Understanding (MoUs) were signed, the first in the field of transport, and the second in the field of biodiversity and conservation. In the DRC, the respective heads of state called for the full implementation of the Grand Inga Treaty that was signed in Kinshasa on 29 October 2013. Further discussions were held on matters relating to peace and security in the region and advancing bilateral cooperation.

South Africa had a successful engagement with Zimbabwe, which resulted in the strengthening of relations between the two countries, particularly with regard to economic relations, and the signing of five MoUs. These were in the fields of cross-border coordination on frequency spectrum; information and communications technologies; energy; environment and conservation; and sports and recreation.

Upon his election as President of the Republic of South Africa in February 2018, President Cyril Ramaphosa undertook a number of visits to the region to pay courtesy calls on neighbouring heads of state, with the aim of further strengthening and consolidating our historic bilateral relationships. President Ramaphosa paid courtesy call visits on President Lourenço of Angola and President Hage Geingob of Namibia on 2 March 2018; and former President Seretse Khama Ian Khama of Botswana on 3 March 2018.

The visits formed part of a long-standing tradition in the region, whereby newly elected heads of state pay courtesy calls on the neighbouring countries.

With regard to East Africa region, there have been regular interactions between South Africa and the respective countries in the East African region.

The East Africa region provides South Africa with great opportunities in terms of strengthening bilateral political relations and expanding our Economic Diplomacy footprint. The region is also a key variable in terms of the continent’s peace and security dynamics and migration issues, while at the same time, it boasts huge potential in advancing South Africa’s agenda with regard to Operation Phakisa and the Oceans/Blue Economy.

President Uhuru Kenyatta paid a Working Visit to South Africa from 11 to 13 January 2018. The Working Visit was aimed at strengthening the bilateral relations between South Africa and Kenya. The meetings provided an opportunity for both countries to address matters of migration, trade and investment, which would form part of a proposed future State Visit to be conducted by President Kenyatta to South Africa in the 2018/19 financial year. During the visit, President Kenyatta also paid a courtesy call on the newly elected leader of the governing party, President Ramaphosa.

South Africa’s economic footprint in the North and Central Africa region has improved significantly during the period under review. The region remained an important area of consideration in terms of the complex and broader geopolitical and security environment on the continent. The region poses great potential economically, but also has its limitations from within the spectra of peace and security.

The newly appointed Minister of International Relations and Cooperation, Ms Lindiwe Sisulu, hosted her Saharawi counterpart, Minister Bulahi Sid, Foreign Minister of the Saharawi Arab Democratic Republic (Western Sahara) on 29 March 2018 in Pretoria. There was a signing of the MOU on Technical Assistance and the Exchange of Notes on Humanitarian Assistance to the Western Saharawi Refugee Camps. The MoU forms part of the political and humanitarian assistance that the South African Government is extending to the people of Western Sahara.

Sub-programme: Asia

The Department was involved in a series of engagements in East Asia and Oceania. The countries of East Asia and Oceania have cooperation agreements with South Africa in wide-ranging scientific and technical areas of expertise and have become important skills-development partners. Japan, the Republic of Korea (ROK) and Australia contributed substantially to the skills development priority of South Africa.

Japan has increased its total number of Africa Business Education students’ intake from South Africa to 103 Master’s degree candidates. These were all linked to completing internships at Japanese companies afterwards. The Republic of Korea (ROK) has offered South Africa numerous skills-development training opportunities. The Japan International Cooperation Agency has agreed to launch a three-year Specialised Artisans Training pilot project for South Africans, focusing on the automotive and energy sectors, in July 2018, and to be rolled out to South African colleges, thereafter.

China remained South Africa’s number one trading partner globally. The volume of bilateral trade between the two countries increased year-on-year from R294 billion (US$25,42 billion) in 2015 to R300 billion (US$25,93 billion) in 2016. The total trade figure for 2017 stood at R319 billion (US$27,57 billion). South Africa continued to work towards increasing exports to China and in October 2017, and became the first African country to export beef to China – a positive development, which indicated great progress with regard to the opening of markets for each other’s products.

Sub-programme: Middle East

With regard to the Middle East region, the pursuit of South Africa’s domestic priorities in the Middle East region continued in particular with countries of the Levant. The region is perceived as one of the most diverse and complex regions globally, and the work of South Africa continued to face widening and increasingly intersecting conflicts, having a deleterious impact on the region in all spheres.

The conflict between Palestinian and Israel feeds into the wider regional dynamics and has impacted negatively on peace, economic development, socio-political progression and security throughout the region. For South Africa, the question of Palestine remained at the core of the situation in the Middle East and the Middle East Peace Process stayed as one of the central issues shaping international relations within the region and the world.

South Africa remained firmly convinced that continued dialogue in support of a peaceful solution would be the only viable option that could effectively address the issue.

South Africa’s relations with the Gulf States comprising countries of the Gulf Cooperation Council, has focused on regular high-level interaction and the continued management of relations through structured bilateral mechanisms. The primary focus of the strategic engagement with the region has leaned towards an economic agenda, while still retaining the political dynamic, given the increasing politicisation currently underway in the Middle East at large[33].

Sub-programme: Americas

In the North America, South Africa has cordial relations with the countries of North America, managed through high-level structured bilateral mechanisms, such as the South Africa-United States (US) Strategic Dialogue at Ministerial level, and the South Africa-Canada Annual Consultations at Director-General level.

The US is South Africa’s third-largest trading partner and a major source of development cooperation. Bilateral trade increased from R95,6 billion in 2010 to a high of R161,5 billion in 2017. South Africa was the largest trade partner for the USA in sub-Saharan Africa, accounting for 34% of the total trade between sub-Saharan Africa and the US. The US is the largest single source of Foreign Direct Investment (FDI) in South Africa with over US$50 billion. The approximate value of the development assistance that is received annually from the US is US$520 million.

South Africa and Canada continued working on strengthening and diversifying bilateral economic ties, while enhancing cooperation in the sectors of mining and mineral beneficiation, aquaculture, transportation, environment, ICT and arts and culture.

In the Latin America and the Caribbean, South Africa maintained cordial relations with countries in the region through structured bilateral mechanisms and high-level engagements. This was done in pursuit of South Africa’s national priorities, with particular focus on expanding economic ties with the region. Countries of Latin America and the Caribbean view South Africa as a priority partner and gateway to the continent.

South Africa continued to build on existing solid relations with Cuba. The relations continued to explore further opportunities for development, particularly in cooperation in education, defence, science and technology, agriculture, health services, infrastructure development, housing and water and sanitation.

South Africa’s health workforce capacity has been increased through the Nelson Mandela/Fidel Castro Medical Training Programme since its inception in 1996. Approximately 2 700 South African students are currently studying medicine in Cuba under the Extended Health Cooperation Agreement signed in 2012. Some 591 qualified medical doctors have been trained and have been distributed in various public health facilities throughout the country.

The National Department of Health was preparing for the return of 800 South African students who were due to complete their medical training in Cuba in June 2018. At the same time, also in terms of the expanded agreement, approximately 400 Cuban doctors are delivering their services, often in the most remote parts of South Africa. The 2012 agreement has since expired and would be renewed during the course of 2018 through negotiations by both South Africa and Cuba.

Sub-programme: Europe

In strengthening bilateral relations with Western Europe during the 2017/18 financial year, Western European states remained among the key trading partners for South Africa. According to figures from the South African Reserve Bank for end 2016, Western European countries accounted for R1,2 trillion in global FDI stock in South Africa while South African FDI into these countries constituted R665 billion of the total global stock.

Consequently, bilateral economic cooperation was high on the agendas of the various structured consultations and high-level engagements undertaken during the reporting period, with The Netherlands, France, Ireland, Switzerland, Spain and Portugal. Science and technology was one of the key drivers of the bilateral relationship with Western European partners and has created many opportunities for South African researchers to access funding through European Union (EU) mechanisms.

The majority of Western European partners are moving from an aid approach to an economic development cooperation approach with South Africa. This assistance has generally been focused around the NDP goals and priorities, e.g. job creation and economic growth. Western European countries also provided the majority of South Africa’s tourist arrivals outside of the SADC region and have continued to show significant growth since 2016, leading to job creation in the tourism industry.

The Nordic countries remained very important cooperation partners for South Africa. The cooperation was mainly in the fields of science and technology, space technology, environment, renewable energy, Blue Economy, education, capacity-building, skills development, water waste management and gender equality.

1. Programme 3: International Cooperation

Main objective: The purpose of this programme is to facilitate participation in international organisations and institutions in line with South Africa’s national values and foreign policy objectives[34].

The NDP has provided that South Africa’s national interest and the country’s obligations to the global community should be articulated in relation to sustainable environment; global economy; international flow of migrants, human freedom and international cooperation. Furthermore, South Africa should be positioned to be efficient and effective in regional regimes and institutions, in the country’s multiple international affiliations, especially in BRICS, and the global South, in multilateral relations and in institutions of global governance. South Africa should also strive to remain an influential member of the international community and stay at the forefront of political and economic developments.

In its response to the NDP narrative, the Department remained committed to garner support for its domestic priorities, promote the interests of the African continent, advance democracy and human rights, uphold justice and international law in relations between nations, seek the peaceful resolution of conflicts and promote economic development through regional and international cooperation in an interdependent world.

The Department has divided this programme in the following sub-programmes and strategic objectives:

Sub-programme: Global System of Governance

South Africa participated in the Regular Session of the 72nd Session of the United Nations General Assembly (UNGA72). The annual UNGA session commenced with the customary high-level General Debate, which was held in New York from 19 to 25 September 2017.

As a keen proponent of the value of multilateralism, South Africa strove to achieve a number of objectives, which included defending the primacy of multilateralism; advocating for stronger coordination between the African Union (AU) and the UN, especially in the resolution of conflicts in Africa; lobbying for South Africa’s candidature for a non-permanent seat on the UN Security Council (SC). for the period 2019 to 2020; and highlighting the primacy and centrality of the 2030 Agenda 2030 for Sustainable Development and the Paris Climate Change Agreement.

On 20 September 2017, South Africa signed the Treaty on the Prohibition of Nuclear Weapons. The act of signing reflected South Africa’s continued commitment towards the achievement of a world free from the existential threat posed by nuclear weapons and ensuring that nuclear energy is used for peaceful purposes only.

The adoption of this treaty on 7 July 2017 followed an inclusive negotiating process in which South Africa played a prominent role. South Africa continued in the year under review with the implementation of its mandate of advancing South Africa’s interests in the global system in the areas of the evolution of international human rights norms and standards. South Africa’s sustainable development (economic, social and environment) interests continued to be promoted in a range of multilateral organisations and fora during 2017/18.

Sub-programme: Continental Cooperation

Strategic Objectives: Enhance the African Agenda and Sustainable Development; and Strengthen political and economic integration of SADC.

In the area of continental multilateralism, South Africa was instrumental in negotiations leading to the finalisation of the African Continental Free Trade Agreement (AfCFTA) and the Single African Air Transport Market. Furthermore, the AfCFTA was adopted during the 10th Extraordinary Summit of the AU, in Kigali, Rwanda, during March 2018.

The AfCFTA would bring together the 55 member states of the AU, covering a market of more than 1,2 billion people, including a growing middle class and a combined gross domestic product of more than US$3,4 trillion. Former President Jacob Zuma hosted a reception in Addis Ababa, Ethiopia in January 2018. It was meant to mark the launch of the international programme of the year 2018 as the centenary of South Africa’s first democratically elected President, Nelson Rolihlahla Mandela.

South Africa’s term in the AU Peace and Security Council (AUPSC) came to an end in March 2018. During it tenure in the AUPSC, the country utilised its membership to accelerate efforts to strengthen and capacitate the AU Peace and Security Architecture (APSA), in particular the effective operationalisation of the pillars dealing with conflict prevention; crises and conflict management, as well as post-conflict reconstruction. It is important to also note that during the 30th Ordinary Session of the Assembly, South Africa presented its first progress report on the AU-United Nations (UN) Cooperation in Peacekeeping Missions.

With regard to continental cooperation, the NDP advocates that South Africa’s foreign policy should be driven by a clear understanding of our national, regional and continental priorities in a multipolar world, where the geostrategic politics of the continent is central to global, political and economic competition for natural resources and market share.

Sub-programme: Regional Integration: Southern African Development Community (SADC)

The NDP provides that South Africa should implement a focused regional integration strategy. In response to this narrative, the Department continued to support the consolidation of democracy, peace and security in the region. Deputy President Ramaphosa would continue his responsibilities as SADC’s Facilitator to the Kingdom of Lesotho.

South Africa was elected as Incoming Chair of SADC from August 2017 to August 2018. As Incoming Chair, South Africa would be afforded the opportunity to give guidance on policy direction in terms of the SADC Integration Agenda.

Sub-programme: South-South Cooperation

The NDP enjoins South Africa to improve collaboration and cooperation, through deeper integration and increased trade with its regional partners in Africa and the global South, in general. Particular emphasis should be placed on the role that South Africa can play in mediating the role and influence of the BRICS group.

In its response to the NDP, former President Jacob Zuma attended the Ninth BRICS Summit in Xiamen, China, from 4 to 5 September 2017, hosted under the theme “BRICS: Stronger Partnership for a Brighter Future”. The meeting issued the Xiamen Declaration, which reflected the consensus of the leaders on issues such as a continued commitment to peace, security, development and cooperation in global and regional affairs. In addition, the summit also adopted the Xiamen Action Plan, while four agreements/memoranda of understanding (MoUs) were signed.

Under the Indian Ocean Rim Association (IORA), South Africa hosted the 17th IORA Council of Ministers (CoM) Meeting in Durban on 18 October 2017, during which South Africa assumed the IORA Chair from Indonesia, and the United Arab Emirates (UAE) the Vice Chair, from 2017 to 2019. The meeting took place under South Africa’s Chairship theme: “IORA – Uniting the Peoples of Africa, Asia, Australasia and the Middle East through Enhanced Cooperation for Peace, Stability and Sustainable Development”. This encompassed South Africa’s view that the Indian Ocean region should be characterised as a region of peace, stability and development.

India, Brazil, South Africa (IBSA) dialogue partnership

South Africa and the IBSA countries continued to focus on reducing poverty in least developed countries though the IBSA Fund for Poverty Alleviation. To date, the IBSA Fund has approved the disbursement of almost US$30 million to developing countries in the Global South.

North-South cooperation

South Africa remained strongly committed to its Strategic Partnership with the EU, which has created a platform for engagement at various levels, not only on bilateral matters, but also on matters pertaining to regional, continental and global challenges. The EU, as a bloc, is South Africa’s largest trading partner (total trade increased from R150 billion in 2000 to R599,86 billion in 2017)[35].

South African exports to the EU increased from R64 billion in 2000 to R262 billion in 2017 and foreign investment (representing 77% of total foreign direct investment [FDI] in the country), making a significant contribution towards job creation and industrialisation in South Africa. South Africa is mindful that development cooperation from the EU, which is a pillar of the Strategic Partnership and that is informed by South Africa’s NDP 2030, contributes substantially to South Africa’s national priorities (total assistance provided from 1994 to 2017 amounted to more than €3 billion).

1. Programme 4: Public Diplomacy and State Protocol

Main objective: The NDP provides that Public Diplomacy is fundamental to South Africa’s projection of soft power. In its implementation of this advocacy, the Department continued to enhance public understanding of South Africa’s foreign policy engagements by both local and international audiences.

The NDP states that: “It is important to develop a more sophisticated Public Diplomacy Strategy that encompasses more than a communications function. Public Diplomacy should use new media platforms, forums and social networks, as well as people-to-people initiatives”. In response to the NDP directive, the department drafted the Public Diplomacy (PD) Strategy, which encompassed more than a communication plan.

The strategy addresses the need for the implementation and management of South Africa’s reputation through the utilisation of people-to-people initiatives and new media platforms. South Africa’s diplomatic missions remain critical to our foreign policy implementation and play a pivotal role in branding and marketing the country. Heads of mission are therefore at the coalface of South Africa’s international relations. The PD Strategy enjoins us to work closely with like-minded institutions such as Brand SA, South African Tourism, etc. to chart a uniquely South African image that aims to bring much-needed investment and tourism opportunities to our shores.

Protocol Services

The Department continued to provide advisory services to government departments in the hosting of international conferences and summits. The Department also collaborated with the Southern African Development Community countries by providing guidance and support on protocol-related issues.

1. Programme 5: International Transfers

Main objective: The purpose of this programme is to honour South Africa’s financial obligations and voluntary contributions to international organisations.[36] Under this programme, the Department reported that South Africa diligently honoured its dues and on time. However, the activities of the programme were impacted upon by foreign exchange fluctuations.

1. Public Entity: Overview of the Annual Report 2017/18 of the African Renaissance and International Cooperation Fund

The Department, in consultation with the National Treasury, is responsible for the administration of the African Renaissance Fund, which was established in terms of Act 51 of 2000. This fund is under the control of the Director-General of the Department who must account for all payments into and out of the fund. An Advisory Committee was appointed to make recommendations to the Ministers of International Relations and Cooperation and Finance on the disbursement of funds, as provided for in the African Renaissance and International Cooperation Fund Act, 2000.[37]

The objectives of the ARF are to promote economic cooperation between the Republic of South Africa and other countries by granting loans and/or rendering other financial assistance in respect of development projects in such countries. Therefore, the ARF enables the South African Government to identify and fund, in a proactive way:

• cooperation between the Republic of South Africa and other countries, in particular African countries,
• promotion of democracy and good governance,
• prevention and resolution of conflict,
• socio-economic development and integration,
• humanitarian assistance, and
• human resource development.[38]

The Fund is managed by the Department and payments are made on behalf of the Fund by the Department once concurrence is received from the Minister of Finance. This has resulted in the opening of control accounts (Payables and Receivables) in the accounting records of the Department and these accounts are reconciled to the records of the Fund. The financial statements of the Fund are prepared separately from the Department as the Fund is registered as a Schedule 3A Public Entity in terms of the Public Finance Management Act (PFMA), 1999 (Act 1 of 1999). All transactions and information arising from the work of the Fund are audited by the Auditor-General South Africa on an annual basis.[39]

The ARF has remained an important tool for the enhancement of South Africa’s development cooperation on the continent and with other identified partners.

During the reporting year, the ARF reported the provision of financial assistance in respect of drought relief to the Republic of Namibia, which was signed on 15 June 2015. The drought relief project would bring to life 104 dry boreholes. Drilled and capped boreholes were to be equipped with solar and/ or mechanical power and pumps. The ARF processed payments totalling R9 647 914.67 for the Namibia Drought Relief Project as per the objectives of the project plan in support of skills development and capacity building.

The ARF continued to provide support to stimulate bilateral trade between South Africa and Cuba, including establishing business-to-business relations between the two countries as well as incorporating the involvement of commercial banks in supporting transactions through inspiring confidence by exposing Cuba’s credit worthiness in repaying. Increased food security in Cuba; has established sound relations and channels for future exports of South African products to Cuba. Processed payments totalling R98 155 034.14 for the Cuba Economic Package.

In the reporting period, the ARF supported South African Election Observer Missions (SEOMs) in Lesotho in June 2017. Elections were declared were peaceful, transparent, free and fair and credible, and reflecting the will of the people of Lesotho. In Angola ON 23 August 2017 declared held in a fair, free and peaceful environment by the SEOM during. The elections were held in a peaceful environment and declared free and fair. The ARF processed payments totalling R252 141.03 for the South Africans who participated in the election observer missions in Lesotho and Angola.

The ARF also provided support to the Liberian Presidential and legislative elections project. The overall objective of the project was to enable the Independent Electoral Commission (IEC), through funds provided by the ARF, to provide electoral assistance to the NEC of Liberia to enable it to deliver free, fair and credible elections. technical assistance was significant as it enhanced the capacity of the Liberian NEC to conduct provided with technical equipment, which was installed in the identified various centres. The total disbursed amount for the project was R14 324 047.59.

During the reporting period, Swaziland requested the South African Government to support, through the World Food Programme (WFP), a development project for young orphans and vulnerable children. South Africa, through the ARF, has made a donation of R40 million towards the Swazi project.

The WFP is working with farmers from three provinces in South Africa: North West, Limpopo and the Free State. Food items such as maize meal, pulses and vegetable oil were procured and distributed between July 2017 and March 2018. The ARF processed payment of R16 033 466.77 for the Emergency Food Assistance Project to the Government of the Kingdom of Swaziland as per the objectives of the project.

1. Rice and vegetable production project in Guinea (Conakry)

The ARF supported the Rice and vegetable production project in Guinea (Conakry). The project is meant to improve food security in Guinea by increasing the production, quality and value of rice and vegetable products. Demand-driven therefore continuing. some 25 200 people have benefitted from the project in a direct manner. Indirect beneficiaries estimated at 100 000. The ARF processed payments totalling R1 762 023.83 for the Rice and Vegetable Production Project in Guinea (Conakry).

The Burundi capacity-building project also received funding from the ARF. The overall objective of the project was to train 26 Burundian diplomats to a level compatible with those attained by South African diplomats and to inculcate a similar viewpoint and background frame of reference regarding world affairs.

The IDTP assisted in providing skills that will enable Burundian diplomats to engage equitably and effectively in the global diplomatic arena by providing much-needed training. The funds for the project covered air travel, airport shuttles, ground transport, accommodation, food and beverages and the graduation ceremony. Processed payments totalling R866 839.99 for the International Diplomatic Training Programme (IDTP) Burundi Diplomatic Training.

An amount of US$1,000,000 (Processed payment of R11,2 million) was confirmed to have been paid into the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) project by the Government of South Africa towards humanitarian assistance to women and children in Gaza, Palestine.

The project was a response to the devastation caused during the 50 days of hostilities in Gaza in the year 2014, which was unprecedented, with widespread fatalities and injuries, as well as extensive damage to homes, schools, clinics and other key civilian infrastructure.

1. The ARF financial report 2017/18

The appropriated funds for the 2017/18 financial year was R22 243 million, and the actual expenditure was R42 084 million, with an over expenditure of R19 841million. The Fund also received interest of R147 million (2017: R176 million) from investments, relates to the amount deposited with the Corporation for Public Deposits in the South African Reserve Bank. There was also interest accrued of R1,2 million on the loan granted.

During the current financial year, the ARF incurred irregular expenditure of R598 000 due to non-compliance with Supply Chain Management processes.

The ARF was reported in the process of applying for exemption from South African Revenue Service. No provision has been made for taxation as public entities are exempt from income tax in terms of Section 10 of the Income Tax Act, 1962 (Act 58 of 1962).

It was reported that a request was made to National Treasury as per section 53(3) of PFMA to retain surplus incurred in the current financial year ending 31 March 2018 with an amount of R623,1 million. Should approval not be granted, the ARF would be required to declare a distribution to National Treasury through DIRCO. The ARF considers the cash balance sufficient to pay over the surplus.

1. Active projects

During the 2017/18 financial year, the ARF received a total of 13 requests for funding. Of the 13 requests, eight were recommended by the ARF Advisory Committee to the value of R219 202 580.60 for the approval by the Minister of International Relations and Cooperation and the Minister of Finance on the disbursement of funds through loans or other financial assistance. Five requests are still under consideration. The ARF disbursed a total amount of R152 241 468.15 in the period under reporting.

The Committee found that the overall performance of the ARF is good, and cautioned against supply chain management challenges. The ARF was working in line with the aspirations of the NDP in pursuing a peaceful and prosperous Africa. The Committee urged the Department to publicise the good work done through this foreign policy instrument.

1. Report of the Auditor-General of South Africa 2017/18 on the Department of International Relations and Cooperation and its entity

The findings of the Auditor-General on the overall financial performance of the Department of International Relations and Cooperation has remained good, in terms of its financial statements, in all material respects reflecting an alignment of expenditure to the pre-determined objectives. There have been, however, issues of concern persistently highlighted by the Auditor-General which seemingly gradually affected the findings over a period of eight years.

There has been a noted pendulum swing on the performance of the Department, from a qualified audit opinion in 2015/16, to an ‘unqualified audit opinion with material findings on pre-determined objectives and/or compliance with laws and regulations’ in 2016/17, and to again a qualified audit opinion in the 2017/18 financial year.

1. The Department

Regarding the financial statements of the Department as at 31 March 2017, the Auditor-General expressed a qualified audit opinion with emphasis of matter.

The Auditor-General reported that the basis for a qualified opinion was with regard to movable tangible capital assets. The report elaborated that The Department did not maintain a reliable asset register in accordance with the requirements of the modified cash standard, due to ineffective system of internal control over asset management.

Some of the assets listed in the asset register could not be physically verified and some assets were not recorded in the asset register. As a result, he was unable to obtain sufficient appropriate audit evidence that all movable tangible capital assets are appropriately disclosed. He could not confirm this by alternative means. Consequently, he was unable to determine whether any adjustments were necessary to movable tangible capital assets stated at R 725 963 000 in note 39 to the financial statements.

The Auditor-General further expressed an emphasis of matter as disclosed in note 31 to the financial statements, that the Department incurred irregular expenditure of R 373 697 000, as it did not follow a proper tender process. The other matter is with regard to the accounting officer, that he did not ensure that financial statements were free from material misstatements. Material misstatements of disclosure items identified by the auditors in the submitted financial statements were subsequently corrected and the supporting records were provided, resulting in the financial statements receiving an unqualified audit opinion with material findings.

The Auditor-General raised concerns which rendered the Department the material findings, and has advised should be addressed. These were as follows:

1. Leadership

There has been limited response by accounting officer in addressing the significant deficiencies noted over his oversight regarding the financial reporting process, including detailed reviews of the financial reports by delegated officials, compliance and related internal controls. Although an action plan to address audit findings was compiled by management, the plan was ineffective in timeously addressing the reported control deficiencies as the plan was presented towards the end of the 2017-18 financial year. This will not serve the purpose it was intended for as the appropriate level of management did not monitor the status of addressing the findings and the implementation of controls was not effected throughout the financial year.

1. Procurement and contract management

Some of the goods and services with a transaction value below R500 000 million were procured without obtaining the required price quotations, as required by treasury regulation 16A6.1. Similar non-compliance was also reported in the prior year.

Some of the contracts were extended or modified without the approval of a properly delegated official as required by section 44 of the PFMA and treasury regulation 8.1 and 8.2.

Some of the contracts were awarded to suppliers whose tax matters had not been declared by the South African Revenue Services to be in order, as required by treasury regulations 16A9.1(d).

Some of the contracts were awarded to bidders based on evaluation/adjudication criteria that differed from those stipulated in the original invitation for bidding, in contravention of treasury regulations 16A6.3(a). This non-compliance was identified in the procurement processes for the design, construction, operation, maintenance and finance of office and residential accommodation for the South African Diplomatic Missions in Manhattan, New York City.

1. Financial and performance management

Senior management involved in the asset and compliance management process did not take accountability to address previously reported deficiencies as repeat findings were noted in this regard. There was inadequate review of annual financial statements and annual performance report as material misstatements were noted on the disclosure items in the annual financial statements, and indicators and targets respectively.

1. Consequence management

The Auditor-General was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure in the 2016-17 financial year, as required by section 38(1)(h)(iii) of the PFMA. This was due to no proper and complete records having been maintained as evidence to support the investigations into irregular expenditure. was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred fruitless and wasteful expenditure as required by section 38(1) (h)(iii) of the PFMA.

This was due to proper and complete records that were not maintained as evidence to support the investigations into fruitless and wasteful expenditure.

1. Expenditure management

Effective steps were not taken to prevent irregular expenditure amounting to R373 697 million as disclosed in note 31 to the annual financial statements, in contravention of section38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1. The majority of the irregular expenditure disclosed in the financial statements was caused by contracts that had been extended without following SCM prescripts and non-compliance with treasury regulations and the PFMA. Irregular expenditure amounting to R 117 720 000 was incurred on design, construction, operation, maintenance and finance of office and residential accommodation for the South African Diplomatic Missions in Manhattan, New York City.

Effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R3 569 000, as disclosed in note 32 to the annual financial statements, in contravention of section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1. The majority of the fruitless and wasteful expenditure was caused by lease payments of unoccupied properties abroad.

1. Other reports

At the Department’s request, an independent consultant investigated the irregular expenditure findings raised in the 2015-16 audit report. The outcome of the investigation was finalised on 28 April 2017. This has resulted in some of the key officials being charged and put on precautionary leave.

The Department conducted an investigation on allegation of fraud and theft at one of its missions and the matter is currently at the disciplinary hearing stage.

1. The findings of the Auditor-General on the African Renaissance and International Cooperation Fund

The activities under this entity are governed by the African Renaissance and International Cooperation Fund Act, 2000 (Act 51 of 2000) (ARF Act). The Auditor-General rendered an unqualified audit opinion with emphasis of matter. Overall, the performance of the entity has improved significantly since it has a permanent secretariat. The Auditor-General found the following issues:

With regard to asset management, the AG reported that Section 7(1) of the ARF Act prescribes that any money in the fund that is not required for immediate use must be

invested by the Director-General, and may be withdrawn when required. The money from old projects that was not required for immediate use was only paid by the related party in two late payments, which resulted in the fund not earning investment income for the whole year.

This issue of money from old projects not required for immediate use not being invested, as required by section 7 (1) of the ARF Act, was also a finding in 2015/16 and 2016/17 and it has not been addressed. The Committee strongly advocated against this practice, and in its meeting of 28 February 2018, resolved that this should never happen again. In that meeting, the Department undertook to stop the practice.

The Auditor-General also raised an issue with the submission of financial statements which had material misstatements. It was reiterated that the Accounting Officer has the responsibility to ensure that the preparation and presentation of financial statements is as required by the PFMA, Standards of GRAP and the ARF Act. It was cautioned that such misstatements could either be due to fraud or error.

The Auditor-General reported that the Public Protector investigated allegations of maladministration relating to the improper appointment of a service provider during the 2012/13 financial year. Even though these allegations were substantiated, the necessary corrective actions were already taken by the key role players. The outcome of the investigation was finalised on 13 November 2017.

The Internal Audit reported satisfied that the internal audit function is operating effectively and that it has addressed the risks pertinent to the entity in its audits.

The External Audit committee also reported that it reviewed the entity’s implementation plan for audit issues raised in the prior year and were satisfied that the matters have been adequately resolved.

1. Findings by the Committee

After due deliberations on the contents of the Annual Report of the Department and its entity, the Committee made the following findings:

1. The overall service delivery performance of the Department in achieving its pre-determined objectives was regarded good and healthy.  This was despite the fact that the Department has to carry out its mandate within an unpredictable, at times turbulent, external environment to advance South Africa’s national priorities. Its budget is continuously under pressure and exposed to Rand fluctuations despite the fact that its mandate continued to grow.

1. The Department has received a qualified audit opinion with emphasis of matter in 2017/18. The regression was regarded unfortunate and highly unacceptable as it was reported evident in all senior management levels.

1. The Auditor-General has recommended steps to be taken to rectify the situation in areas reported as problematic. These are those such as asset management, contract management; the increasing irregular expenditure patterns; ICT issues; internal controls; addressing apparent incompetence by officials; especially in the Governance branch; lack of consequence management on those who caused irregular, wasteful and fruitless expenditure; leadership inability to address repeat findings; and non-compliance with laws and regulations of supply chain management (SCM).

1. The African Renaissance Fund (ARF) has received an unqualified audit opinion with findings for the 2017/18 financial year. The major challenge with the entity is that its unspent monies are kept by the Department and not deposited back into the ARF’s investment account to accrue interest. This is contrary to section 7(1) of the ARF Act 2000.

1. During the reporting year, the Department recorded an increase of irregular expenditure total of R374 million from previous years. It was not clear whether there was a system in place to detect causes of irregular expenditure. The Auditor-General had noted irregular expenditure also included an amount of R600 000 incurred under the ARF processes. These included awarding contracts to service providers with no tax certificates verified by SARS; contracts awarded without acquiring the required three quotes; and expired services contracts being extended without due authorisation.

1. The Department incurred a fruitless and wasteful expenditure of R4 million in the reporting period. This was, among other things, due to payments being made for cleaning and security services engaged for the upkeep of vacant state-owned properties abroad. It was also reported as due to flight cancellations by officials of the Department without valid reasons.

1. There was appreciation for the openness by the Department on the real root causes of the operational challenges in the Department. In this regard it was noted that investigations were underway facing the former Director General and the Chief Financial Officer, on supply chain management irregularities with regard to the New York acquisition of land to build project. The initial hearing has been set for the 29 October-2 November 2018. The Committee would be kept informed once the investigations have been completed.

1. There was non-compliance with supply chain management (SCM) prescripts, when awarding contracts to a company for the acquisition of land for two buildings in New York. The contract was awarded to a service provider who was not amongst the companies which initially submitted tender applications. Furthermore, the contracts were awarded to bidders based on evaluation criteria that differed from those stipulated in the original invitation for bidding, in contravention of Treasury Regulations 16A6.3(a).

The Department had signed and paid R117 720 000 on design, construction, operation, maintenance of office and residential accommodation for the South African Diplomatic Missions in New York. The initial terms were for a building covering 40 000 square meters, however the successful bidder was working on a 20 000 square meters instead.

1. There was evidence of lack of contract management in that contracts were modified or extended without the approval of a properly delegated official as required by section 44 of the PFMA and Treasury Regulations.

1. There is increased spending on residential accommodation in Missions.

1. It was reported in 2016/17 that a joint Cabinet Memorandum was being finalised between National Treasury and the Department on the review of the African Renaissance Fund (the ARF), to address challenges of the low disbursement rate. More information was sought on the developments with the review.

1. The Department delayed to invest money in the Fund that was not required for immediate use was only paid by the Department in two late payments. This resulted in the Fund not earning investment income for the whole year, contrary to section 7(1) of the ARF Act. In its meeting of 28 February 2018, the Committee had strongly cautioned the Department that such practice should not happen again.

1. The Audit Plan of Action, meant to address the root causes of recurring findings, was only released at the end of the financial year. It was regarded a fruitless exercise to try implementing the plan that late.

1. During the reporting period, South Africa assumed the chairship of the following formations: for SADC in August 2017; for the BRICS in January 2018; for IORA in October 2017; served as a member of the AU Peace and Security Council for two consecutive terms from April 2014 to March 2016, and in April 2016 to April 2018. The Committee applauded the Department for a job well done.

1. South Africa successfully lobbied for its candidature for a non-permanent seat on the UN Security Council for the period 2019 to 2020. It also highlighted the primacy and centrality of the 2030 Agenda for sustainable Development and the Paris Climate Change Agreement.

1. The predetermined compensation of employees ceiling remained a challenge to the Department. This is due to the volatility of the nature of the benefits accorded to the transferred staff stationed abroad, as well as payment of salaries and wages to the Locally Recruited Personnel.

1. The internship group of 56 participants who were enrolled in the Departmental Internship Programme successfully completed their internship contract by 31 March 2018.

1. It has been a recurring challenge that the financial statements of the Department are submitted to the Auditor-General with mistakes, and misstatements. Both the Audit Committee and Auditor-General’s office had recommended that that the Department should conduct a skills audit in the unit, to be able to identify root causes of repeat findings. However, the recommendations from these bodies have not been implemented since 2013 by the Department.

1. A need was identified for a dedicated session between the Committee and senior level management at the Department (Chief Directors, Deputy Director Generals (DDGs) and Director General), to discuss the recurring challenges that renders the Department amenable to qualified audit opinions. The second meeting would be with the political leadership of the Department.

1. The committee identified the serial challenges on the overall performance of the Department since 2014. These related to the outdated ICT systems, non-compliance with SCM requirements, asset management, governance structure of the ARF, consequence management, contract management, leadership taking responsibility to implement recommendations from relevant structures mandated to monitor performance and skills and training in Financial and Asset management units.

1. The Trade and Investment Promotion in the Office of the Chief Operating Officer was operationalised. An Economic Diplomacy Strategy was developed for Department. Provincial and local government economic development agencies were also engaged.

1. The Department did not maintain a reliable asset register on movable assets, due to ineffective system of internal control over asset management. Some of the assets listed in the asset register could not be physically verified and some assets were not recorded in the asset register.

1. It was noted that there were still delays in payments of service providers within the DPSA’s requirement of a 30-day rule. Delays in the verification of invoices by end users was identified as a cause for the delay.

1. The Committee highlighted that since 2014, the Department has had notable achievements in the implementation of South Africa’s Foreign Policy. Through the work of the Department and Missions abroad, South Africa has gained recognition in its promotion of multilateralism in global governance and is a respected global player, who champions the aspirations of developing countries, including those of Africa and the Global South.

1. The existence and completeness of the Asset register has been a thorny recurring issue with the Department. For a short while in 2017, a Net Trace system was put in place to reconcile entries in the missions and headquarters on-line. There has been some improvement in that heritage assets were identified and valuated. However, the Department has since regressed on the matter of the completeness of the Asset Register for movable assets.

1. ICT deficiencies in the Department have been a recurring matter since 2010. The previous annual plans of the Department have provided for turnaround strategies to address this issue, but to no avail. This is regarded as a serious matter in terms of security of information between missions and the headquarters, and between the missions themselves. The implementation of the infrastructure refresher plan has taken more than three years to take off.

1. The Risk and Audit committees have reported that they need to have regular meetings with the Minister, in order to raise issues which might have impact on the performance of the Department.

1. The Department reported that it is continuing with the plans to operationalise the South African Development Partnership Agency (SADPA), in order to support South Africa’s outgoing development cooperation policy by providing funding and technical support for development initiatives. Finalisation of the Partnership Fund for Development Bill, aimed at repealing the African Renaissance and International Cooperation Fund Act, 2000 (Act 51 of 2000), is said to be in progress. The Committee has raised a concern that Cabinet approved the migration from the ARF to the South African Development Partnership Agency in 2009. The processes around the establishment of SADPA have been painstakingly slow.

1. In the 2016/17 Annual Report of the ARF, the Department reported that the Rice and Vegetable Production Project in Guinea Conakry was completed and closed, with a close out report. It was further reported that the project was handed over to the people and the President of Guinea Conakry. In 2017/18 reporting year, the ARF has yet disbursed an amount of R1 762 023 for the same project.

1. Under Programme 1, the bulk of the expenditure incurred by the Department are in terms of operating leases and operating payments for the foreign municipal charges and rental costs for the Pan African Parliament, the United Nations offices and the African Union’s NEPAD and APRM offices. According to the Host Agreement signed with the African Union in 2004, South Africa was to provide headquarters accommodation for the PAP.

1. South Africa’s contribution to peace, security and stability on the continent continued to grow considerably. The country has been supporting the African Union, United Nations and SADC efforts aimed at promoting peace and security. South Africa has been re-elected to the African Union Peace and Security Council (AUPSC).

1. The Auditor-General reported that the Public Protector investigated allegations of maladministration relating to the improper appointment of a service provider during the 2012/13 financial year. Even though these allegations were substantiated, the necessary corrective actions were already taken by the key role players. The outcome of the investigation was finalised on 13 November 2017.

1. At the Department’s request, an independent consultant investigated the irregular expenditure findings raised in the 2015-16 audit report. The outcome of the investigation was finalised on 28 April 2017. This has resulted in some of the key officials being charged and put on precautionary leave.

1. The Department conducted an investigation on allegation of fraud and theft at one of its missions and the matter is currently at the disciplinary hearing stage.

1. Responses by the Department

The Department responded to the Committee’s discussions as follows:

1. During the review of its organisation structure, the Department created the position of the Chief Operations Officer (COO), as per recommendation of the Portfolio Committee. The current role of the COO is, among others, to oversee operations, strategic planning, monitoring and evaluation as well as transformation and transversal programmes. The role of the COO was being reviewed to ensure that it covers the responsibility for the management and supervision of all support functions within the Department, including governance and administration.

This is being done to allow the Director General to focus on the strategic leadership to the Department and provide primary support to the Minister and the President in their respective mandates as custodians of South African foreign policy.

1. An Audit Action Plan has been developed as per the audit report (qualification & matters emphasized thereto). A quality review by AGSA, Internal audit and the Audit Committee has been conducted. The Audit Steering Committee (ASC) would be revived and new members appointed by the end of October 2018.

1. New bid committee members have been appointed with effect from 01 September 2018 and have received training by National Treasury on the 24 August 2018 in respect of Head Office findings. New Chair and Deputy Chair of Bid Adjudication Committee (BAC) have been appointed at DDG level. Financial Delegations of Authority in respect of threshold values have been reviewed to allocate responsibilities to relevant senior officials. The review of the SCM policy has been finalized to bring it into line with National Treasury practice notes and instructions.

1. A project plan has been developed for the complete asset verification project starting with the missions from 1 September 2018, ending on 30 October. A team with clear roles and responsibilities has been identified with representatives from Financial Management, Asset Management, Strategic Support Units of the Line Function Branches, and Office of the (Chief Financial Officer (CFO).

Meetings are held every Monday and reports to the Director General Forum (DGF) weekly. A Memo communicating clear process and reporting/feedback lines sent to missions via the branches. Disposal process of redundant movable assets for 62 missions is underway. Priority has been given to missions without Corporate Services Managers and missions with backlog and those that have been identified as having challenges be it personnel or otherwise.

1. A Director in the Office of the CFO has been allocated to be the contact person to coordinate the requests for information from the Auditor-General (AG). Any delays will be directly escalated to the Director General (DG).

1. The property portfolio in Namibia was acquired in early 1990’s during the RSA / South West Africa negotiations on the independence of Namibia. During the time, it was agreed that the RSA Government will retain properties for diplomatic purposes in both Windhoek (where the embassy was stationed) and Walvis Bay (where it had a consulate). The Consulate was to be operational only during the transitional phase and closed down 2 years after independence, when the need for accommodation in Walvis Bay ceased.

1. At the time of the DPW disposal initiative from 2009-2013, all unused properties were rented out to private citizens under formal lease agreements. As part of the disposal plan, these leases were terminated to be able to provide vacant possession to new owners. Following the failure to sell all of the unused properties, the Department has been unable to rent the properties out again, which has led to the properties being vacant for a prolonged period and vandalised.

1. Following the oversight visit and engagement with the Portfolio Committee on International Relations, the following projects has been initiated: Procurement of furniture for the Official Residence Additional maintenance to the Chancery, Official Residence and 7 occupied properties Identification of 5 properties for renovation in order to terminate the current Government leases; Assessment of 6 remaining superfluous properties with a view to alternative use, renting out or other type of disposal.

1. The Pan African Parliament headquarters project to build is the responsibility of the Department of Public Works (DPW). DPW identified professionals to manage the project around 2004/2005. A contractor was appointed and excavation took place. The project was stopped by the Department of Environmental Affairs (DEA) given that a wetland was identified on site. DPW litigated. DIRCO will engage with DPW to request for update.

1. Further action will be taken against officials who will be implicated when investigations into current cycle is completed.

1. The Guinea Conakry project was closed in the 2016/17 (31 March 2017) financial year. The payment that was made in the 2017/18 financial year relates to severance (termination of contract) packages for the employees of the project as per the law of Guinea Conakry. When the project ended employees were entitled to certain remuneration as per the labour law of Guinea Conakry.

1. The Department is in the process of gazetting the operationalisation of SADPA. SADPA is expected to be operational in January 2019. The Minister has to gazette after consultation with the Ministers of DPSA and National Treasury.

1. Conclusions

Overall performance by the Department in the reporting year has been commendable. The Committee is encouraged by the efforts undertaken to contribute towards a better life for all in South Africa; striving for a stable and secure continent; and creating a better world for all.

The Committee unanimously expressed satisfaction that the Department has utilised its budget in accordance with its plans for 2017/18. The Department was regarded as having demonstrated full accountability to Parliament and the people of South Africa on resources spent, both human and financial, and how it contributed in the achievement of South Africa’s national priorities. The Department was applauded commended for continuing to position South Africa as a respected member of the international community, with a dynamic and independent foreign policy that speaks to the country’s domestic priorities.

The Committee noted serial weaknesses highlighted by the Auditor-General. It further welcomed the acknowledgement and commitment by the Department, to improve in the scores of the Department for good management practices measured against the standards set in the Management Performance Assessment Tool Framework, issued by the Department of Performance Monitoring and Evaluation in the Presidency.

The Committee committed to have a dedicated session between the Committee and senior level management at the Department (Chief Directors, Deputy Director Generals, COO and Director General), to discuss the recurring challenges that renders the Department amenable to qualified audit opinions. A similar meeting would be held with the political leadership of the Department.

The Department also expressed determination and undivided attention to pursue best practices in the areas of human resources, financial, supply chain, asset management and information and communications technology, as raised by the office of the Auditor-General. The Committee noted that there is room for improvement with necessary adjustments in service delivery.

1. Recommendations

The Committee is of the opinion that overall the Department has performed according to the goals it had set itself for the 2017/18 reporting period. The 2017/18 budgetary allocations of the Department were generally aligned to the national strategic priorities outlined in the 2017 State-of-the-Nation Address, as well as its strategic direction in terms of its Medium Term Expenditure Framework. The unqualified audit report with material findings, if rectified, would take the Department to a clean audit. That would demonstrate a positive indication of commitment of purpose by the Department to diligently execute its mandate.

In order to further assist the Department to enhance its performance, the Committee recommends that the Minister ensures that the Department implements the following and report to the Committee within three months of the adoption of this report by the National Assembly:

1. Identify and hold dedicated training programmes for the officers responsible for financial statements, procurement, supply chain management and asset management, to ensure that serial challenges in these areas are addressed.
2. Conduct a skills audit in the Finance unit to determine whether there is appropriate capacity to address the root causes of recurring qualified audit opinions for the past four years.
3. Develop an asset acquisition strategy and assess the possibility of leasing out or disposing of unused state-owned properties abroad.
4. Deal with serial issues raised in the Auditor General’s report especially on supply chain, ICT, asset management and consequence management, compliance with rules and legislation.
5. Upgrade ICT infrastructure of the Department and missions abroad, and capacitate the staff involved in the implementation of the ICT refresher plan to avoid exposing foreign policy related information to related risks.
6. Liaise with the South African Reserve Bank, National Treasury, Department of Public Service and the Office of the Auditor General on mitigation options to address the challenges brought onto the budget of the Department by foreign exchange fluctuations.
7. Ensure that the office of the Chief Operations Officer (COO) has the necessary resources and delegated responsibilities to deal with serial issues even before they occur, and the office act as an inspectorate in consultation with the risk and internal audit committees.
8. Investigate and report on the circumstances that led to incidences of irregular expenditure to the amount of R374 million.
9. Investigate and report on the circumstances that led to delay in finalising the acquisition of land for the construction of two properties in New York.
10. Strictly comply with Section 7(1) of the African Renaissance Fund Act which prescribes that any monies in the Fund not immediately used must be invested into its account at the Reserve Bank.
11. With the experience in the AU Peace and Security architecture, consider establishing a database of South African experts in mediation skills and leverage the skills as a tool of soft power in exporting South Africa’s Foreign Policy.
12. Report on how the activities of the Missions have marked the international programme of the year 2018, as the centenary of South Africa’s first democratically elected President, Nelson Mandela.
13. Compile a progress report on the circumstances impacting on the conclusion of inter-departmental negotiations relating to the establishment of the South African Development Agency (SADPA).
14. Ensure the existence, full implementation and monitoring of the Audit Action Plan to address root causes of serial operational challenges contributing to the negative audit outcomes for the Department.
15. Compile a progress report on the processes relating to the provision of permanent headquarters for the Pan African Parliament.
16. Conduct investigations on the awarding of contracts in the pilot project for land acquisition in New York.
17. Resuscitate the Audit Steering Committee, including the appointment of chairperson.
18. Conclude investigations and report on the outcomes into the allegations against the Chief Financial Officer (CFO) as well as the former Director-General with regards to the SCM issues in the project for land acquisition in New York.
19. Clarify the role of Corporate Services Managers in the Missions, and ensure they have the necessary financial and administrative skills.
20. Strengthen internal control systems in order to take reasonable care to prevent and detect irregular, fruitless and wasteful and unauthorized expenditure.
21. Report on actions taken on all instances of irregular, fruitless and wasteful expenditure, as required by section 38(1)(h) of the PFMA.
22. Require management to regularly report on disciplinary matters.
23. Conduct a culture survey to establish the causes of culture of impunity and low staff morale.
24. Consider reviewing the organisational structure to align it to current developments and new demands on South Africa’s Foreign Policy and government priorities.
25. Where criminality has been established, refer such cases to the law enforcement agencies.
26. Create and table a turnaround strategy on measures being put in place in order to have a credible asset register in place to avoid a regression on the audit outcome.
27. Table a detailed plan on ways to reduce expenditure on the compensation of the Locally Recruited Personnel over the MTEF.
28. Improve recordkeeping with regard to the requests for State Protocol Lounges services and keep an updated list of the VIPs processed through the lounges.

To National Assembly:

The National Assembly should consider the importance of the oversight requirement for the Committee which is currently not favoured by the prevailing Parliamentary Oversight Model. There is a need for the Committee to conduct oversight, at least once a year, on South African Missions abroad. This would allow the Committee to monitor causes of irregular expenditure and non-compliance with supply chain management issues. These mentioned areas are recurring and impact on the service delivery path of the Department.

The Committee should be allowed to attend the annual Heads of Missions Conference in order to sharpen oversight on foreign policy trends and priorities discussed during these conferences. The South African Missions abroad are the implementing mechanisms of the South Africa’s Foreign Policy.

The National Assembly should allow the Committee as a whole to conduct state of readiness oversights visits where the Department is responsible for facilitating the hosting of international conference with a foreign policy undertone. Furthermore, the Committee should be allowed to attend international conferences held in South Africa in pursuance of South Africa’s Foreign Policy.

Report to be considered.

Sources

• Annual Report 2017-2018 Department of International Relations and Cooperation.
• Annual Report 2017/18 African Renaissance Fund
• Strategic Plan, 2015- 2020, Department of International Relations and Cooperation.
• National Treasury, 2017, Vote 6: International Relations and Cooperation, Estimates of National Expenditure 2017.
• Zuma, J.G. 2017, State of the Nation Address at the Joint Sitting of Parliament. Cape Town.
• The African Renaissance and International Cooperation Fund Act 2000
• Standing Committee on Appropriations: 4th Quarter Expenditure Report 2017/18 financial year.
• Presentations by other departments.

[1] Constitution of the Republic of South Africa 1996

[2] Department of International Relations and Cooperation Annual Report 2017-2018

[3] Annual Report of the Department of International Relations and Cooperation 2017/18

[4] Zuma J State-of-the-Nation-Address 2017

[5] Zuma J: State-of-the-Nation-Address 2017

[6] Ibid

[7] The Presidency, 2017

[8] The Presidency 2017

[9] Zuma J, State of the Nation Address 2017

[10] National Planning Commission, 2011

[11] The National Development Plan, Chapter 7: Positioning South Africa in the World)

[12] Ibid

[13] Department of International Relations and Cooperation, Annual Report 2017/18

[14] Ibid

[15] Department of International Relations and Cooperation, Annual Report 2017/18

[16] Ibid

[17] Ibid

[18] Department of International Relations and Cooperation, Annual Report 2017/18

[19] Ibid

[20] Department of International Relations and Cooperation, Annual Report 2017/18

[21] Department of International Relations and Cooperation, Annual Report 2017/18

[22] Department of International Relations and Cooperation, Annual Report 2017/18

[23] Ibid

[24] Department of International Relations and Cooperation, Annual Report 2017/18

[25] Standing Committee on Appropriations, 4th Quarter Expenditure Report 2017/18

[26] Ibid

[27] Department of International Relations and Cooperation, Annual Report 2017/18

[28] Standing Committee on Appropriations, 4th Quarter Expenditure Report 2017/18

[29] Annual Report of the Department of International Relations and Cooperation 2017/18

[30] Department of International Relations and Cooperation Annual Performance Plan 2017-2018

[31] Department of International Relations and Cooperation Annual Report 2017/18

[32] Department of Trade and Industry 2017 Statistics report

[33] Department of International Relations and Cooperation, Annual Report 2017/18

[34] Department of International Relations and Cooperation Annual Performance Plan 2017-2018

[35] Department of International Relations and Cooperation, Annual Report 2017/18

[36] Department of International Relations and Cooperation Annual Performance Plan 2017-2018.

[37] Annual Report 2017/18 of the Department of International Relations and Cooperation.

[38] Annual Report 2017/18 of the African Renaissance and International Cooperation Fund

[39] Ibid