ATC141027: Budgetary Review and Recommendation Report of the Portfolio Committee on International Relations and Cooperation, dated 24 October 2014

The Budgetary Review and Recommendation Report of the Portfolio Committee on International Relations and Cooperation, dated 24 October 2014

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

1. Introduction

1.1 The mandate of the Committee

The Portfolio Committee on International Relations and Cooperation (the Committee) 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 (the Department), its policies, financial spending patterns, administrative issues, and it holds the Department accountable for its operations and functions. The Committee is an important mechanism for ensuring oversight over the conduct of South Africa’s international relations and cooperation policy.

1.2 Purpose of the Budgetary Review and Recommendation Report

In accordance with section 5 of the Money Bills Procedures and Related Matters Amendment 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 Procedures and Related Matters Amendment Act 2009, based the assessment of the Department on its service delivery plan as outlined in the 2013 State of the Nation Address. The Committee linked domestic priorities to the Department’s Strategic Plan 2012 – 2017 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 2013/14 Budget Vote and the Department’s Annual Report, which contains the Department’s service delivery information, reflecting its performance in 2013/14 reporting period.

1.3 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.

1.4 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;
• Enhancing the African Agenda and Sustainable Development;
• Provide strategic Public Diplomacy direction nationally and internationally;
• Provide effective State Protocol services;
• Strengthening political and economic integration of the Southern African Development Community (SADC);
• Strengthening of South-South Relations;
• Strengthening of Relations with the formations of the North;
• Strengthening of Political and Economic Relations;
• Participation in the Global System of Governance and
• 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 2013 Cabinet Lekgotla and the 2013 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.

2. Policy focus areas

2.1 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 126 diplomatic missions in 2014, in 109 countries throughout the world.

During the reporting period, the Department remained focused towards Africa and South-South cooperation; ensuring that South Africa’s foreign relations contribute to an environment that is conducive to sustainable economic growth and development; and serve as a basis for addressing government’s identified urgent priorities. In support of government’s key targets, outlined in the medium term strategic framework, the Department’s priority was be to pursue African development and enhanced international cooperation.

President Jacob Zuma in his 2013 State-of-the-Nation Address focused on domestic imperatives and the creation of jobs. The President announced that South Africa should position itself as a regional trans-shipment hub for Sub-Saharan Africa and deliver on the regional integration agenda of the New Partnership for Africa’s Development (NEPAD). South Africa has committed to integrating Sub-Saharan Africa, and supporting the North-South Road and Rail Corridor, which is part of the African Union’s (AU) NEPAD Presidential Infrastructure Championing initiative. To the Department the message meant enhancing economic diplomacy as a vehicle for addressing domestic challenges.

In pursuing its mandate in respect of economic diplomacy, the Department continued to reflect a bias towards Africa, the Southern African Development Community (SADC), and towards support for South-South formations. It is believed that economic diplomacy in the region will support an integrated development strategy for the Southern African Custom Union (SACU), SADC and the continent that includes investment promotion and industrial development. For this policy to succeed there should be a close partnership with government, business and labour. It has been advocated by followers of foreign policy trends that economic diplomacy has the potential to attract foreign direct investment to South Africa and Africa.

The Department continued to operate in an uncertain international environment and budget constraints. It received a budget allocation of R5, 754 646 billion for the 2013/14 financial year after the adjustment estimates. The actual expenditure for 2013/14 was 102 per cent amounting to R5, 871 296 of the final appropriation. This constituted an unauthorized expenditure of R116, 7 million. The Department attributed that to the depreciation of the Rand against other foreign currencies. It was further due to the expenditure for the facilitation and provision of protocol services to the heads of state/government attending the State Funeral of former President Nelson Mandela.

Due to its huge global footprint, the Department became vulnerable to the unforeseeable depreciation of the Rand against major currencies, which affected its operations abroad. This has resulted in some of the major capital projects, such as the renovations in Washington and building of official residence in Tokyo, and other operations being suspended. The weakening of the local currency had serious negative implications for the Department’s budget.

The year 2014 has been regarded as a special year for the democratic dispensation of South Africa, since the nation was celebrating 20 ^th anniversary of Freedom. The 126 missions abroad have been engaged since the beginning of the year, to market the successes of South Africa over the last two decades. South Africa continues to be respected and admired for its successful transformation, and its independent and constructive foreign policy.

With regard to the continent, last year, on May 2013, South Africa along with sister countries of Africa, celebrated the 50 ^th anniversary of the founding of the Organisation of African Unity (OAU) and its successor, the African Union (AU). The OAU/AU played a pivotal role in the defeat of colonialism and apartheid, and now it’s focusing on bringing about socio-economic development, peace, security and stability on the African continent.

During the reporting period, the Department continued to operate in an unpredictable and volatile world, characterized by the inexorable shift to a multipolar world with the rise of new powers in the South. The new evolving global order was reported to be often characterized by narrow national interests enjoying pre-eminence over the principles of multilateralism and international rule of law. Other factors included increasing global interconnectivity and interdependence where major economic, health and climate change crises leave nobody untouched; the growing role of varied non-state actors; new global migration trends; new forms of warfare; and the appearance of new and disruptive technologies.

It therefore executed its mandate against the background of an ever-changing political and economic environment. In order to survive in this environment, South Africa had to shape its domestic and foreign policies to respond to global drivers and trends.

3. Overview and assessment of the financial and non-financial performance of programmes of the Department and its entity for the 2013/14 financial year

3.1 Financial expenditure trends of the Department and its entity

Department budget and expenditure summary

Table 1: Total expenditure for the 2013/14 financial year ^[3]

Programme (R'000)	Final Appropriation	Actual Expenditure	(Over)/Under Expenditure
Administration	1 327 802	1 267 196	60 606
International Relations	2 761 000	2 892 877	(131 877)
International Cooperation	452 012	451 689	323
Public Diplomacy and Protocol	261 459	281 553	(20 094)
International Transfers	952 673	977 981	(25 608)
Total	5 754 646	5 871 296	(116 650)

Source: Annual Report of the Department of International Relations and Cooperation 2013/14

The Department spent 102 per cent (R5.9 billion) of its appropriated allocation of R5, 8 billion, which represented a net shortfall of R116, 7 million. This constituted an unauthorised expenditure as a result of circumstances beyond the Department’s control. The situation was attributable to the depreciation of the Rand against other foreign currencies as well as the provision of protocol services for the State Funeral of former President Nelson Mandela. The Department also incurred foreign exchange losses in missions abroad and payment of membership contributions for organisations which South Africa is a member.

These amounted to R132 million and R25, 6 million respectively. However, the Department also recorded under-spending on its infrastructure projects due to the cash-flow shortfall as a result of the negative impact of foreign exchange rate fluctuation. [4] The Committee was provided with a briefing on the 4 ^th Quarter Expenditure Report for 2013/14 published by the National Treasury, and clarity was given regarding the unauthorised expenditure.

In 2006/7 financial year, the Department also reported an unauthorised expenditure amounting to R98 million as a result of foreign exchange losses which remain unresolved. Thus, the total unauthorised expenditure amounted to R215.6 million, for which National Treasury’s consideration is awaited.

Operational expenditure

The largest element of operational expenditure in 2013/14 was R2.9 billion spent under the International Relations programme mainly on compensation of employees and goods and services. The next largest element was R1.3 billion under the Administration programme, followed by R450.7 million under the International Cooperation programme, primarily for goods and services and compensation of employees. The significant increase in expenditure relates to cost escalation in property leases, property payment, operating payments for the department’s foreign property portfolio.

Presently, the department spends approximately R575 million per annum towards operational leases for 800 rented chanceries, residences and housing where no state owned accommodation is available .The state-owned property portfolio consists of 133 offices and residential accommodation and has an estimated market value of R4.6 billion.

Another increase in expenditure relates to the travel and subsistence budget of the department which is linked to the operations of the department abroad. Overall, Programme 1 has underspent by R53.6 million on the total available funds for 2013/14 mainly due to the rescheduling or deferral of capital projects relating to the construction of new or the refurbishment of existing chanceries and residential accommodation abroad as part of the department’s mitigation measure to minimise the impact of foreign exchange loss.

Figure 1 – Comparison of nominal expenditure at end 2012/13 and end 2013/14, by programme

Figure 2 – Comparison of nominal expenditure at end 2012/13 and end 2013/14, by economic classification

Source: National Treasury: Vote 5: International Relations and Cooperation prepared for the Standing Committee on Appropriations 4 ^th Quarter financial report

Programme spending trends aligned to service delivery of the Department and its entity

Programme 1: Administration: The Department reported that the expenditure for the programme was R1 267 billion which represented an increase of three per cent as compared to the 2012/2013 financial year. The increase was due to the inflationary adjustments mainly on office accommodation related to unitary fees for the Head Office Campus.

Programme 2: International Relations : The Department reported that expenditure in this programme increased significantly from R2 453 billion in 2012/13 to R2 892 billion in 2013/14 at a nominal growth rate of 18, 26 per cent. The Department noted that this was attributable to the depreciating rand against other major currencies. The depreciation of the Rand resulted in high exchange rates which increased operational costs incurred in missions abroad, including salaries, wages, residential and office accommodation lease payments. As a consequence, the expenditure for Programme 2 exceeded the budget by R132 million.

Programme 3: International Cooperation: The expenditure increased from R368 979 million in 2012/13 to R451 675 million in 2013/14. This programme’s expenditure was also affected by foreign exchange fluctuations. The increased expenditure was as a result of the depreciating Rand against other major currencies. The depreciation of the Rand resulted in high exchange rates which increase operational costs incurred in foreign currency.

The programme underspend by R7 314 million which was mainly visible under the sub-programme Global System of Governance, due to a number of scheduled meetings that did not take place as planned, including ECOSOC, International Maritime Organisation (IMO), and the Convention on the Conservation of Antarctic Marine Living Resources (CCAMLR), among others. The programme overspent by R323 000.00.

Programme 4: Public Diplomacy and Protocol Services: The expenditure decreased from R292 096 million in 2012/13 to 281 553 million in 2013/14. The decrease in expenditure was mainly due to once-off expenses related to the hosting of the 5 ^th Brazil-Russia-India-China-South Africa (BRICS) Summit. In 2013/14, the programme also facilitated and provided protocol services to heads of state/government attending the State Funeral of former President Nelson Mandela. Main costs incurred related to expenditure associated with receiving the various Heads of State and foreign dignitaries who converged on South Africa, these included accommodation, travel and subsistence and other forms of diplomatic courtesies.

The event was unforeseen and unavoidable, and the expenditure was incurred after the adjustment process was finalised. As such, the Department did not have an opportunity to request additional funding to cover the expenditure. It could not absorb it within the Department’s baseline due to a budget shortfall created by the foreign exchange losses. The programme realised an unauthorised expenditure of R 20 094 million.

Programme 5: International Transfers

The Department honoured its membership contributions to international organisations in full, including contribution to the organs of the AU that are located in South Africa such as the Pan-African Parliament and the New Partnership for Africa’s Development Secretariat ad the African Peer Review Mechanism. The expenditure increase was also attributable to higher exchange rates. The transfer payments increased to R977 981 million in the 2013/14 from R937 755 million transferred in the 2012/13 financial year. The programme realised an unauthorised expenditure of R25 608 million in foreign exchange rates losses in relation to payment of membership fees and assessed contributions to the United Nations, African Union and Southern African Development Community.

Transfers to Departmental Agencies and Accounts to the end of the financial year were R485.4 million, all of which was to the African Renaissance and International Cooperation Fund: Operations transfer. This represents a decrease of R33.2 million, or 6.4 per cent, when compared with the previous financial year. An amount of R28.5 million was shifted from the African Renaissance and International Cooperation Fund during 2013/14 for the operationalisation of the South African Development Partnership Agency and to increase the transfer payment to the African Union Commission: Office of the Chairperson

Additional information

During the reporting year, virement of funds amounting to R6, 9 million were made after the adjustment estimates were concluded in relation to over expenditure. The over expenditure was as a result of foreign exchange fluctuation, on the assessed contribution within Programme 5. Virements were also made with savings realized from Programme 1 to Programme 4.

Departmental receipts are normally generated from interest earned from Mission’s bank accounts; rent on state-owned property; refunds received through Value-Added Tax (VAT) returns from Missions related to purchases of previous financial years; foreign exchange rate gains; and proceeds of asset disposals, such as redundant furniture and fixtures. According to the Annual Report of the Department, in the 2013/14 financial year, the amount collected decreased from R46, 7 million in 2012/ 2013 to R36, 6 million in comparison with the estimated value ^[5] .

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. On 25 May 2013, Africa celebrated the 50 ^th anniversary of the founding of the Organisation of African Unity (OAU) and its successor, the African Union (AU). The occasion was of particular importance to South Africa because of the pivotal role played by the OAU/AU in the defeat of colonialism and apartheid. The OAU/AU is now focusing on bringing about socio-economic development, peace, security and stability on the African continent. As at the end of the reporting year, the Department continued to have representation in 126 diplomatic missions in 109 countries abroad.

3.2 Analysis of non-financial service delivery performance of the Department and its entity for the 2013/14 financial year

The Committee considered and analysed the Annual Report of the Department of International Relations and Cooperation for the 2013/14 financial year. In its analysis of the report, the Committee also enlisted the input from the following: the Department of Performance, Monitoring and Evaluation, Statistics South Africa and 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 2012-2017. It is also measured against Government’s key priorities identified in the President’s State-of-the-Nation Address (SONA) of February 2013 and the Government’s Medium Term Strategic Framework 2009-2014. 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 2013 Estimates of National Expenditure (ENE); the 2013 State of the Nation Address; the Delivery Agreement for Outcome 11 (2009-2014) as well as the Department’s Strategic Plan 2012-2017.

The performance of the entity, the African Renaissance and International Co-operation Fund (the ARF) for 2013/14 is also assessed in this report.

3.3. Performance per Programme: Achievements

3.3.1 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 informed that it did not enter into a new Public Private Partnership Agreement (PPPA); it continued to service the existing PPPA with Main Street 717 (Pty) Ltd concluded in 2009. In terms of the relationship, the PPPA designed, constructed, co-financed, and maintains a suitable and sustainable working environment in the form of the headquarters of the Department.

Through a Design and Construction Subcontract as well as a Facilities Management Subcontract, the PPPA incorporates the carrying out of the works, the installation, commissioning, operation and maintenance of facilities, including the repair, renewal or replacement thereof, the management and provision of the services and the performance of all other obligation of the Private Party under this PPPA from time to time. The term of the PPPA is 25 years, ending in 2034. The total cost incurred in relation to the agreement for the financial year 2013/14 is reported as R189 344 million.

The Department continued to operate in a very unpredictable and insecure global environment which was caused in part by the severe global economic downturn. That also had a negative impact on the Department’s operational budget as the South Africa’s Government’s budget came under pressure, albeit at a time of greater international demands and obligations. Despite the challenge, through successful implementation of diplomacy, South Africa was reported as a respected member of the international community with a dynamic and independent foreign policy that speaks to domestic priorities. However the service-delivery environment was faced with risks (among others) pertaining to: the increased divergent messages abroad of South Africa’s image; the use of obsolete and outdated technology and possible increase of cyber-attacks on the publications produced by the Public Diplomacy branch.

The Diplomatic Academy acted in concert with South Africa’s foreign policy by imparting knowledge and skills to senior African women diplomats from African countries. The training covered mediation, post-conflict reconstruction and development, regional integration, diplomatic training and public diplomacy. The training was envisaged in alignment with the women empowerment vision of the AU Agenda 2063. Intensive training was also undertaken by the Academy on economic diplomacy as an integral part of the diplomatic training programme and mission preparatory courses.

The Department reported that in the first three quarters of the 2013/14 financial year, the average time taken for filling vacant posts was reduced to seven months. In the last quarter, the Department managed to achieve the target of filling vacancies within the four-month target. Furthermore, 30 interns were appointed by the Department. In terms of Human Resource Management, the main challenge reported by the Department was meeting equity targets of representation of women at Senior Management (SMS) Level and people with disabilities. Only four out of a target of 12 at SMS were appointed and no employees with disabilities were appointed during the year under review. Reflecting on other targets, the Department noted that the Diplomatic Academy presented several training courses and workshops during the 2013/14 financial year. [6]

Notably, the Department also reported that it piloted the Organisational Functionality Assessment (OFA) toolset introduced by the Department of Public Service and Administration (DPSA) aimed at improving functionality of Departments. The results of this toolset indicated that the structure of the Department should be reviewed. The proposed draft structure was developed and was still being consulted with various interested parties. [7]

It was reported that during the year under review, it was clear that the Department’s information and communications technology (ICT) policies and infrastructure no longer met the modern communications requirements of the Department. It was recognised that it was in serious need of modernisation.

The Department noted that asset management remained a challenging task as it has to deal with about 270 000 pieces of assets spread over 126 missions worldwide.

There were pockets of deviation reported from the pre-determined objectives. These included the non-compliance by some officials of the Department with filling of performance agreements and appraisals; not paying suppliers or service providers within the required 30 days; grievances not finalised within 30 days; not able to perform risk assessments for the Department because of limited human resource available to address the additional demand; and challenges with supply chain management.

In order to mitigate some of the challenges that featured in Programme 1: Administration, the Department reported it has realigned its procurement process from a decentralised to a centralised approach to enhance its service-delivery improvement plans. This included appointments of senior management members to serve in three bid committees; namely specification, evaluation and adjudication. The Department has also undertaken to increase capacity to ensure the implementation of risk management activities in the Department and also with missions abroad.

3.3.2 Programme 2: International Relations

Main objective: The purpose of this programme is to promote relations with foreign countries, participate in international organisations and institutions in line with South Africa’s national values and foreign policy objectives. The strategic objectives of this programme were as follows:

In terms of strategic objectives, this programme includes the promotion of policies, strategies and programmes to advance South Africa’s national priorities through strengthened political, economic and social relations with targeted countries. [8]

South Africa conducted a range of bilateral engagements through Africa; Asia and the Middle East; Americas and the Caribbean; and Europe. In terms of the Africa sub-Programme there were engagements in each region. In Southern Africa , South Africa remained engaged with developments in the Democratic Republic of Congo (DRC). In particular, following the 9 ^th Session of the Bi-National Commission as well as a two-day visit to Kinshasa in 2013, the Memorandum of Understanding (MoU) between the DRC and South Africa on the development of the Grand Inga Hydro-Power Project was signed which is expected to generate 40 000 megawatts of electricity. The Annual Report also indicated that South Africa would benefit as an off-taker of electricity from Grand Inga. [9]

In the year under review, South Africa also conducted visits to Namibia, Lesotho, Botswana, Mozambique and Zimbabwe which were premised on strengthening strategic ties. In East Africa , South Africa conducted bilateral engagements with South Sudan, Uganda, Ethiopia and Burundi. In Central Africa , South Africa conducted bilateral engagements with the Democratic Republic of Sao Tome and Principe on 29 August 2013 which was focused on capacity-building in the fields of water and health.

In terms of West Africa , President Zuma undertook a working visit to Nigeria in April 2013 and the Republic of Senegal from the 1st to the 2 ^nd of October 2013 as well as a State visit to Ghana from the 25th to 27 ^th of November 2013. In North Africa , the Department reported that President Zuma paid an official visit to Algeria at the invitation of President Abdelaziz Bouteflika on 15 April 2013 to discuss the strengthening of the South Africa-Algeria BNC of Cooperation (BNC). The Department noted that South Africa continued to support to self-determination of the people of Western Sahara and is committed to its programme of humanitarian assistance to the Government of the Saharawi Arab Democratic Republic (SADR). South Africa has continued to try and strengthen bilateral cooperation with Libya.

The Department further reported that the then South African Minister of State Security Dr Siyabonga Cwele visited Egypt in his capacity as Special Envoy of President Zuma to support efforts of strengthening democratic processes. [10]

In terms of the Asia and Middle East sub programme, In Central and East Asia , President Zuma paid a working visit to Japan on 4 June 2013 to hold talks with Prime Minister Shinzo Abe to strengthen ties. South Africa hosted the 7 ^th Policy Consultative Forum with the Republic of Korea (POK) in Pretoria on 12 August 2013 and from the 4 ^th to the 8 ^th of November 2013 Deputy Minister Ebrahim visited the Republic of Korea, a visit which coincided with the 15 ^th anniversary of the establishment of diplomatic relations.

In the South Asia region , the Department reported that structured bilateral meetings were held with Pakistan, Sri Lanka and Pakistan. In the South-East Asia region , President Zuma paid an Official visit to Malaysia from the 26 ^th to the 27 ^th August 2013. A bilateral meeting between Minister Maite Nkoane-Mashabane and her counterpart, Minister Marty Natalegawa was held. A Working visit by Deputy Minister Ebrahim to Myanmar was conducted. The Department also reported that the Deputy Minister for International Economic Relations of the Philippines, Ms Laura Del Rosario, conducted a bilateral visit at the invitation of Deputy Minister Ebrahim. She was hosted by Deputy Minister Fransman where issues such as health, education, agriculture, trade and investment and skills development were discussed.

In the Oceania region , South Africa participated in the 5 ^th Senior Officials Meeting held in Canberra in May 2013 where a Bilateral Plan of Action was adopted. The Department also announced that in April 2013, the Foreign Minister of New Zealand paid a visit to South Africa. Meanwhile, Sir Don McKinnon, Special Envoy of the New Zealand Prime Minister visited South Africa in March 2014 as part of their seat on the UN Security Council for the period 2015 to 2016. [11]

In the Middle East Region , South Africa conducted its relations through structured bilateral mechanisms such as point commissions, partnership forums and bilateral consultations. Engagements of this nature were conducted with Qatar, Iran and Saudi Arabia. South Africa continued to pursue its economic re-engagement with the Republic of Iraq. President Zuma also authorised the signing of a MoU on Bilateral Consultations with the Hashimite Kingdom of Jordan. The Department also reported on its activities related to the Palestinian question during the 2013/14 financial year which included a range of activities aimed at contributing positively to the crisis. [12]

The Americas and the Caribbean sub programme comprise of activities in North America as well as Latin America and the Caribbean. In North America, bilateral engagements were conducted with the United States of America and Canada. These consisted of a working visit by President Barack Obama to South Africa from 29 June to 1 July 2013 and a visit by President Kgalema Motlante to Canada in November 2013. In terms of Latin America , the Minister and Deputy Minister of the Department undertook several high-level visits to Latin America and the Caribbean from the 2 ^nd to the 9 ^th of September 2013. The visit included Venezuela, Peru, Ecuador, Cuba, Colombia as well as Trinidad and Tobago. [13]

In terms of Western Europe, the French President Francois Hollande conducted a State Visit from the 14 ^th to the 15 ^th of October 2013; and Deputy President Motlanthe visited the United Kingdom from the 15 ^th to the 17 ^th September 2013. The Deputy President also met with Princess Astrid of the Kingdom of Belgium in October 2013. The Department also reported on a series of Bilateral Meetings held by Minister Maite Nkoane-Mashabane with counterparts from Germany, Sweden and the Netherlands. [14]

In terms of Central and Eastern Europe , President Zuma undertook a Working Visit to the City of Sochi in the Russian Federation on the 16 ^th of May 2013. This was followed by a delegation led by President Zuma to the G20 engagement in St Petersburg from the 5 ^th to the 6 ^th of September 2013. This was preceded by a Ministerial visit to Moscow and St Petersburg to have bilateral meetings with Minister Sergey Lavrov and Minister Sergey Donskoi, Minister of Natural Resources and the Environment on the 2 ^nd of September 2013.

Minister Maite Nkoane-Mashabane also undertook an Official Visit to Minsk, Belarus in September 2013 for bilateral consultations. Deputy Minister Fransman undertook working visits to Azerbaijan, Belarus, the Czech Republic and Romania for political consultations. Deputy Minister Fransman also hosted the Undersecretary of the State in the Polish Ministry of Foreign Affairs on the 10 ^th of July 2013.

These consultations served as preparatory meetings for the Official Visit of Prime Minister Donald Tusk to South Africa in October 2013 at the invitation of Deputy President Kgalema Motlanthe. Deputy President Kgalema Motlanthe paid a reciprocal visit to Poland on the 14 ^th of March 2014 at the invitation of Polish Prime Minister Tusk. To conclude, the Department reported in this programme that Minister Nkoane-Mashabane hosted Mr Elmar Mammadyarov of the Foreign Affairs of the Republic Azerbaijan for political consultations on 21 February 2013.

3.3.3 Programme 3: International Cooperation

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 [15]

This programme has the following sub-programmes and strategic objectives:

3.3.3.1 Sub-programme: Global System of Governance

The strategic objective of this programme is to participate in the global system of governance to enhance international responsiveness to the needs of developing countries and Africa, in particular through a reformed and strengthened multilateral system.

The highlights under the sub-programme included the attendance of South African delegation led by President Jacob Zuma to the general debate of the 68 ^th Session of the United Nations General Assembly (UNGA) in September 2013. Addressing the General Assembly, the President used the opportunity to highlight South Africa’s priorities in the United Nations (UN) and internationally for the year ahead. The President also challenged the UN membership to not celebrate the 70 ^th anniversary of the UN in 2015, without a reformed UN Security Council (UNSC). The challenge was acknowledged and repeated by many member states.

South Africa continued to promote the importance of strengthening and sustaining effective partnerships between the UN, regional and sub-regional organisations, especially on the enhanced implementation of Resolution 2033. The resolution provides for increasingly allowing the African Union (AU) to respond to conflicts in a proactive and rapid manner, limiting the escalation of conflict and human suffering in cases where the UN processes take a longer time to deploy. The situation in the Central African Republic and the Democratic Republic of Congo were cases in point.

Since assuming its membership in the UN Human Rights Council in January 2014, South Africa has played a major role in cardinal issues such as the realisation of the right to development, the attainment of millennium development goals (MDGs) and the configuration of the priorities for the post-2015 global development agenda. Furthermore, during the reporting period and in pursuance of the human rights agenda, South Africa played a prominent role in structures which have a primary focus on the promotion of democracy, good governance, rule of law and accountable electoral processes, including deepening of democracy and accountability at global level.

The year 2013 marked the first year of South Africa’s three-year membership of the UN Economic and Social Council (ECOSOC). South Africa participated in the debate which re-affirmed ECOSOC as a principal body for policy review, policy dialogue on issues of economic and social development and for follow up to the MDGs.

In terms of the Post-2015 Development Agenda, in 2013 South Africa and Ireland were appointed to follow up on efforts made towards achieving the MDGs. South Africa has served as a Co-chair of the G20 Development Working Group since its establishment in 2010. During 2013, South Africa called for the implementation of G20 decisions that were aimed at limiting the impact of the global economic crisis on developed and developing countries and preventing the occurrences of similar crises in the future.

Under the UN auspices, during the reporting year, South Africa provided humanitarian assistance to a number of countries during crises caused by natural disasters, emergency situations and armed conflict. Such countries included Namibia, Sudan, Democratic Republic of Congo and the Philippines.

In terms of Global Systems of Governance the Director-General noted that the Department continued to support South Africa’s proactive role in global multilateral organisations such as the United Nations (UN), Bretton Woods Institutions and the G20. The Director-General emphasized that in addition to the Department supporting the reform of the UN Security Council, since assuming its position in the UN Human Rights Council on 1 January 2014, South Africa has focused on the Post-2015 Development Agenda as well as the strengthening of the UN Economic and Social Council (ECOSOC). [16]

3.3.3.2 Sub-programme: Continental Cooperation

Strategic Objectives: Enhance the African Agenda and Sustainable Development; South Africa’s foreign policy remained predisposed towards Africa and South-South Cooperation. To this end, on the 25th of May 2013, South Africa along with other African countries, celebrated the 50 ^th anniversary of the founding of the Organisation of African Union which later became the African Union (AU). The year-long celebrations provided the continent with an opportunity to reflect not only the achievements and prospects, but also the challenges facing the continent in relation to integration and socio-economic development.

The Department further noted that South Africa continued to engage the AU and its structures and was elected to the AU Peace and Security Council (AUPSC) for the period 2014 to 2016. South Africa also made an important contribution to the development of the African Common Position on the Post-2015 Development Agenda. She also contributed to the decision on the development of the AU Agenda 2063 as a plan that will chart Africa’s development trajectory over the next 50 years. The Department also assisted in hosting the 50 ^th anniversary of the Pan-African Woman’s Organisation (PAWO) which works towards the elimination of all forms of discrimination against women. [17] In honour of the memory of the life of the late esteemed member of the Order of Mapungubwe, former President Nelson Mandela, the AU Summit in January 2014 decided to name the Large Conference Hall of the AU Conference Complex the ‘Nelson Rolihlahla Mandela Conference Hall’.

In addition, South Africa hosted a successful Consultative Summit on the African Capacity for Immediate Response to Crises (ACIRC) in November 2013. The AU Assembly then decided in January 2014 to operationalise the ACIRC. Speaking further on peace and security matters, it was noted that South Africa, as part of the SADC Facilitation Team, contributed towards the resolution of the political impasse in Zimbabwe. South Africa also participated in the SADC Observer missions to Zimbabwe harmonised elections (July 2013); Swaziland (September 2013) and Madagascar (October and December 2013).

The Department also acted in support of South Africa’s Presidential Special Envoy who assisted in the successful constitutional mediation process in Madagascar which led to successful elections. The Department also contributed to mediation efforts to bring about stability in the Democratic Republic of Congo, the Central African Republic and South Sudan. [18]

South Africa participated in the Extraordinary Session of the Assembly of the AU on Africa’s relationship with the International Criminal Court (ICC) that took place in October 2013. The Assembly reiterated the AU’s unflinching commitment to fight impunity and promote human rights and democracy. The Assembly further decided to fast-track the process of expanding the mandate of the African Court on Human and People’s Rights (ACHPR) to also try international crimes (genocide, war crimes and crimes against humanity) committed on the African soil. The Assembly also decided that African states parties to the ICC should propose relevant amendments to the Rome Statute. The Department continued to provide logistical and substance support to the Pan African Parliament sessions.

The Department provided substantive support to President Zuma during his participation at the New Partnership for Africa’s Development (NEPAD) Heads of State and Government Orientation Committee in Addis on 29 January 2014. The Assembly commended President Zuma for his political commitment, strategic support and the impressive update on the progress towards the implementation of the Presidential Infrastructure Champion Initiative (PICI), as well as the status report on the North-South Corridor.

3.3.3.4 Strengthen political and economic integration of SADC

South Africa participated in the 34 ^th SADC Summit held in Lilongwe, Malawi in August 2013. The key outcomes included an update on the mid-term review of the Regional Indicative Strategic Development Plan (RISDP). A decision was taken to negotiate a new Protocol on the Tribunal and outstanding technical issues on the SADC Regional Development Fund.

3.3.3.5 Sub-programme: South-South Cooperation

With regard to achievements reflected on South-South cooperation, South Africa’s role in terms of the Brazil, Russia, India, China and South Africa (BRICS) as well as the India, Brazil, South Africa (IBSA) Dialogue Forum had been noted. Following the successful hosting of the Fifth BRICS Summit on 27 March 2013, South Africa in its capacity as the BRICS Chairperson, was responsible for the implementation of the eThekwini Declaration and Action Plan. This included the establishment of the BRICS New Development Bank. It was also noted that the Department anchors the Secretariat for the Indian Ocean Rim Association. [19]

3.3.3.5 Sub-programme: North-South Cooperation

The highlight under this sub-programme was the South Africa- European Union (SA-EU) summit in Pretoria in July 2013. Some of the outcomes related to the agreement to support South Africa’s infrastructure programme; and a partnership in the area of rural electrification. This was with initial target of 300 000 households in remote areas of South Africa.

3.3.4 Programme 4: Public Diplomacy and State Protocol

The purpose of this programme is to provide an effective State Protocol service to Heads of State and Government and designated dignitaries and render advisory services to various stakeholders. Additionally, this programme seeks to advance a positive projection of South Africa’s image through communication strategies on South Africa’s foreign policy positions and programmes nationally and internationally. [20]

The strategic objectives of this programme are as follows:

• To provide strategic public diplomacy direction nationally and internationally to ensure a better understanding of South Africa’s foreign policy; and
• To provide effective State Protocol services. [21]

Programme 4 consists of the following sub-programmes:

• Sub-programme Public Diplomacy: promotes a positive projection of South Africa’s image, communicates foreign policy positions to both domestic and foreign audiences, and market and brand South Africa by utilising public diplomacy platforms, strategies, products and services. [22]

• Sub-programme State Protocol: facilitates incoming and outgoing high-level visits and ceremonial events as well as coordinates and regulates engagement with the local diplomatic community. It also provides protocol advice and support to the various spheres of government, facilitates the hosting of international conferences in South Africa and manages the State Protocol Lounges (SPLs) and guesthouses. [23]

In the reporting period, the Public Diplomacy sub-programme launched a 24 hour online radio station in October 2013. This was to promote South Africa’s foreign policy objectives and promote a positive of South Africa. The Department also issued 535 media statements and conducted 41 regular media briefings by principals. The Department intensified its engagements with citizens of South Africa through 21 Public Participation Programmes (PPP). The Ubuntu Magazine is distributed extensively domestically to all stakeholders as well as through business lounges at OR Tambo and Cape Town international airports.

In October 2013, the Department hosted a series of events in celebration of the former liberation leader and diplomat the late OR Tambo. The Department has also intensified its use of social media to communicate South Africa’s foreign policy to a wider audience. In terms of the State Protocol sub-programme, the Department reported that it provided logistical support for various state events and international visits and in so doing created a conducive environment for the furtherance of South Africa’s foreign policy. [24]

3.3.5 Programme 5: International Transfers

The purpose of this programme is to honour South Africa’s financial obligations and voluntary contributions to international organisations. [25]

This programme provides for South Africa’s contribution with regard to membership of international organisations such as the: United Nations (UN), African Union (AU) and Southern African Development Community (SADC). It also provides for transfers to the African Renaissance and International Cooperation Fund. [26]

3.4 Challenges regarding service delivery

The Department had identified that its ICT infrastructure would need upgrading as a matter of urgency. It further acknowledged the need to improve on management of its assets which comprise 270 000 pieces spread over 126 Missions abroad. It realised the challenge it has of paying all suppliers who rendered services within the prescribed 30 days; grievances not resolved within 30 days; limited capacity delaying risk assessment and management activities; and the delay in filling vacancies. It highlighted that it did not meet its target regarding the full operationalisation of SADPA. It also highlighted the challenge with the increased divergent messages abroad on South Africa’s image.

4. Consideration of Reports of Committee on Public Accounts (SCOPA)

There are no SCOPA resolutions for the reporting year 2012/13.

There is an unauthorized expenditure of R98.918 million, which occurred in 2006/07, relating to the overspending of the vote or main division within the vote. This amount will remain in the financial statements of the Department because a resolution on the status of the unauthorized expenditure from SCOPA is still awaited.

5. Report of the Auditor-General of South Africa, the Financial and Fiscal Commission 2013/14 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 five years.

There has been a trend however in the Auditor-General’s audit opinions. There has been a noted regression from ‘clean audit opinion in 2009/10, to ‘unqualified audit opinion with findings on pre-determined objectives and/or compliance with laws and regulations’ in 2010/11; 2011/12 and 2012/13. For the 2013/14 reporting year, the Auditor-General has expressed a ‘qualified audit opinion.’

5.1 The Department

Regarding the financial statements of the Department as at 31 March 2014, the Auditor-General expressed a qualified audit opinion. The overall financial performance of the Department was reported as good, with issues which the Auditor-General advised should be addressed. These were as follows:

1. In terms of movable tangible capital assets and major capital assets, the Department did not maintain an updated asset register in accordance with the requirements of the Modified Cash Standard. This when combined with the ineffective system of control over assets had an impact on the amounts recognised as tangible capital assets and minor capital assets. As such, tangible assets and minor capital assets were understated by R24 938 000. The Auditor General noted that like the previous financial year the financial statements presented fairly, in all material respects, the financial position of the Department as at 31 March 2014. [27]

2. In terms of Predetermined Objectives, the Auditor General performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for Programme 2: International Relations, Programme 3: International Cooperation and Programme 4: Public Diplomacy and State Protocol. In this regard the Auditor General raised no material findings on the usefulness and reliability of the reported performance information for the selected programmes.

3. Regarding compliance with legislation, the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and were not supported by full and proper records, as required by section 40(1)(a) and (b) of the PFMA. Material misstatements identified by auditors in the submission of financial were not adequately correct, thus resulting in the financial statements receiving a qualified audit opinion. However, the financial statements were subsequently corrected.

4. Goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations as required by Treasury regulation 16A6.1. In addition, contracts and quotations were awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state. [28]

5. The contractual obligations and money owed by the Department were not settled within 30 days or an agreed period, as required by section 38 (1) (f) of the PFMA and treasury regulation 8.2.3. In addition, effective steps were not taken to prevent unauthorised, irregular as well as fruitless and wasteful expenditure as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1. [29]

6. Other issues of compliance related to transfers, revenue management, asset management, consequence management and departmental oversight of the public entity. In terms of transfers, funds were transferred to entities without such transfers being subject to the entity establishing effective, efficient and transparent financial management and internal control systems as required by section 38(1)(j) of the PFMA.

7. Effective and appropriate steps were not taken to collect all money due to the Department as required by section 38(1) (c) (i) of the PFMA and Treasury regulations 11.2.1, 15.10.1.2(a) and 15.10.1.2(e). In terms of asset management, proper control systems to safeguard and maintain assets were not adequately implemented as required by section 38(1) (d) of the PFMA and treasury regulation 10.1.1(a). [30]

8. Regarding the consequence management, effective and appropriate disciplinary steps were not taken against officials who had made or permitted irregular as well as fruitless and wasteful expenditure by section 38(1)(h)(iii) of the PFMA and Treasury regulation 9.1.3. In terms of departmental oversight of the entity (the African Renaissance Fund), the accounting officer did not ensure that oversight and governance of the performance reporting process of the ARF were effective as required by treasury regulation 26.1.1. [31]

9. The internal controls need to be strengthened to ensure greater accountability. The Auditor General did however reflect on an investigation that was undertaken on the administration processes at the South African High Commission in Ghana. The investigation concluded on the 31 ^st of October 2013 and resulted in disciplinary proceedings being instituted against one employee. The aforementioned disciplinary proceedings were currently in progress. [32]

5.2 The Department’s response to Auditor-General’s concerns

Risk mitigation mechanisms utilised by the Department

On matters of Risk Management, the Department has reviewed and updated its Risk Management Policy and developed a Risk Management Strategy for the implementation of the policy. In addition, the Department appointed the Risk Management Committee consisting of external independent individuals and members of senior management of the Department. The Department also appointed an Audit Committee also comprised of independent person who would advise the Accounting Officer on issues of Risk Management. [33]

The Department reported it has developed the Fraud and Corruption Prevention Policy and Strategy as part of its commitment to managing fraud and corruption risks and to promote ethical conduct. In an effort to minimise conflict of interest, the Department has appointed an ethics officer to facilitate the submission of SMS (Senior Management) financial disclosures on behalf of the Ministry which resulted in a 100 per cent submission of financial disclosure. The Department has also implemented a process whereby all officials who are involved in Supply Chain Management processes sign the Code of Conduct. In addition, officials who are involved in adjudication processes are also required to declare in writing any conflict of interest. In terms of recruitment, selection and placement; panel members are required to sign a declaration and vested interest certificate to minimise conflict of interest. [34]

In terms of how the Department addresses any concerns raised in the Auditor General’s reports, the Annual Report of the Department reflected that during the 2012/13 financial year, it has emphasized that has since developed a turnaround strategy to deal effectively with non-compliance. [35]

Reflecting further on adequately addressing non-compliance, the Department noted that that during the beginning of the 2013/14 financial year, Internal Audit developed the “Rolling Three-Year Strategic Plan” as well as the Operation Plan for 2013/14. Another important mechanism developed was the Chief Directorate: Internal Audit which is responsible for the internal audit function of the Department. It is directly accountable to the Accounting Officer and reports to the Audit Committee. Internal Audit assesses, evaluates and offers recommendations for improving on the Department’s system of internal controls and governance. Internal Audit also assesses and evaluates the Departmental Performance Information.

5.3 The African Renaissance and International Cooperation Fund (ARF)

The purpose of the ARF is to promote economic cooperation between the Republic of South Africa and other countries, by granting and/or rendering of other financial assistance in respect of post conflict development projects in such countries. Loans or other financial assistance are granted in accordance with an agreement entered into by the country in question and the Minister of International Relations and Cooperation (the Minister). Assistance granted is subject to such terms and conditions as may be agreed upon by that country and the Minister, acting in each case in consultation with the Minister of Finance. [36]

The activities under the ARF are governed by the African Renaissance and International Cooperation Fund Act, 2000 (Act 51 of 2000) (ARF Act).

Organisational Structure of the Fund

An Advisory Committee has been established to manage the Fund and also to make recommendations to the Minister and the Minister of Finance on the disbursement of funds through loans, grants or other financial assistance. The Advisory Committee consists of the Director-General (DG) of the Department or the delegate of the DG, three officers of the Department appointed by the Minister, and two officers of the National Treasury appointed by the Minister of Finance. The recommendations of the Advisory Committee are sent to the Minister for approval. The Minister then writes a letter seeking concurrence from the Minister of Finance. Once concurrence is secured, the funds are disbursed as per the arrangements in the project proposal. At the start of the 2012/13 financial year, the ARF Advisory Committee made recommendations pertaining to the areas of focus. [37]

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. [38]

The Director-General is the Accounting Officer of the ARF in terms of the Public Finance Management Act (PFMA). The DG has established a Secretariat to assist with disbursement of the funds as well as monitoring an evaluation. The Secretariat provides administrative support to the Advisory Committee.

According to the Annual Report 2013/14 of the ARF, an amount of R485 million (2013: R517 million) was appropriated and subsequently transferred by the Department to the ARF. The interest received of R93 million (2013: R74 million) from investments, relates to the amount deposited with the Corporation for Public Deposits in the South African Reserve Bank.

In terms of expenditure, during the 2013/14 financial year, the ARF recorded an expenditure of R41 million as compared to R1 070 million in the 2013/14 financial year. The significant decrease is attributable to the delay in considering the project’s proposal by the Advisory Committee while governance measures were sought in addressing the 2012/13 audit report, particular relating to irregular expenditure. However, the R1 070 million includes multiyear projects of which R229 million was recorded as a disbursement to the recipients in 2013/14 financial year. Requests for funding amounting to approximately R300 million were received in 2013/14 and is under consideration. [39]

The Findings of the Auditor General

In the Annual Report for the 2013/14 financial year, the Auditor General noted that the reported performance information: contributes to an integrated, democratic, peaceful and prosperous continent through development assistance, capacity building and humanitarian assistance, objectives are useful and reliable, in all material respects, in accordance with the identified performance management and reporting framework. [40]

The Auditor-General’s report 2013/14 on the ARF highlight that the ARF secretariat was still not yet adequate for monitoring and evaluating its operations. The ARF does not possess the features of other public entities due to it being placed within the Department. With regard to its procurement of services portfolio, the ARF does not have in place the requisite policies, procedures and processes to play its recently assumed role of assisting in addressing domestic priorities.

During the 2013/14 financial year, Auditor-General pronounced an unqualified audit opinion on the performance of the ARF as follows:

i) Strategic planning and performance management

The strategic plan for 2013/14 of the ARF was not submitted timeously for approval by the executive authority.

ii) Non-compliance with quarterly reporting requirements

The entity failed to report timeously on its quarterly performance to the executive authority.

iii) Ineffective systems of financial and risk management and control

The entity did not provide a framework on how its operational activities should be carried out; the secretariat of the fund did not have terms of reference; the accounting officer failed to ensure that a risk management strategy was implemented; contracts between the entity and projects implementing agencies were not concluded; and funds were spent in excess of the amount concurred by the minister of finance.

iv) No approved delegation of authority

The fund did not have a documented and approved delegation of authority that indicated the responsibilities of the officials delegated to monitor the activities of the fund.

v) Internal audit unit

No internal audits were conducted on the activities of the ARF during the reporting year.

vi) Procurement and contract management

Supply chain management prescripts were not followed and deviations were not properly motivated.

vii) Expenditure management

The accounting authority did not take adequate and effective steps to prevent and detect irregular expenditure.

viii) Other reports: Investigations

An external firm performed an investigation on irregular expenditure reported in 2012/13 annual report. The outcome of the investigation confirmed that there was no financial loss incurred by the State and the irregular expenditure was condoned.

b) Audit Committee’s findings

The Audit Committee of the Department confirmed that the Department’s implementation plan for audit issues raised in 2012/13 have been adequately resolved except for the following:

• No policies and procedures,
• No terms of reference for secretariat and advisory committee, and
• No organisational structure.

The Department has informed that the ARF has undergone a self-assessment and review as a consequence of the Auditor-General’s findings regarding irregular expenditure in 2012/13. It has been reported that the Department instituted an investigation into the circumstances of the irregular expenditure and measures were taken in that regard.

The Committee noted the critical factors informing the challenges with regard to the performance of the ARF. With regard to other concerns raised by the Auditor-General, the Department undertook to: enhance performance where needed; regularly conduct asset verifications; pursue the investigations into the non-compliance matters and implement proper oversight mechanisms over the ARF. It was reported that the appointment of the chief audit officer has been finalised.

The Committee also undertook to: assist and guide the Department on possible governance framework for the ARF; and meet the audit committee at least once a year to monitor the Department’s compliance with audit matters.

6. 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 Department has been operating under a tight budget in the past financial year. Its mandate continued to grow and it had to respond to global drivers and trends that influenced both the international system and the pursuit of South Africa’s domestic priorities.

2. During the reporting year, the Department has recorded an unauthorized expenditure of R116, 7 million. Circumstances beyond its control, such as, the protocol services required for the funeral of former President Nelson Mandela and unavoidable foreign currency fluctuations contributed to the situation. Follow up with Treasury is needed in order to obtain confirmation condoning the expenditure.

3. The Department has commenced implementing the National Development Plan’s vision of ‘organisational transformation’ aimed at making the Department more efficient and effective. The process is commissioned in conjunction with the Department of Public Service and Administration.

4. The Auditor-General’s audit findings for 2013/14 have expressed a qualified audit opinion with regard to the Department’s performance. The Auditor-General has recommended steps to be taken to rectify the situation in areas reported on such as internal control, governance, leadership and compliance with laws and regulations.

5. Greater collaboration on statistical and research information were considered necessary to assist the Department in identifying potential trading partners in Africa and the world.

6. The Department’s ICT policy and infrastructure no longer met the modern requirements.

7. Asset management remains a challenging task for the Department, which has to deal with about 270 000 pieces of assets spread over 126 missions.

8. Suppliers were not paid within the 30 days requirement.

9. The Department is facing challenges with operational matters which have been reoccurring in previous financial years

10. A number of municipalities and departments owed the Department an amount equivalent to R480 million. The Department was slow in collecting or the debtors were slow in paying back the money due.

11. There is overall limited capacity in the Department despite the growing mandate. The slow pace in filling vacancies was noted as a concern. Some senior management level personnel have left the Department.

12. Consequence management was not effectively applied. Wrongdoers were not immediately subjected to requisite measures.

13. The number of bilateral commissions in pursuance of economic diplomacy have grown.

14. The initiative by the AU in establishing ACIRC as a mechanism for immediate response to crisis is a commendable step

15. Registration of South Africans Abroad (ROSA) as a program is not being adequately marketed and publicized.

16. The Department did not meet its targets regarding the operationalisation of the South Africa Council on International Relations (SACOIR), the operationalisation of the South African Development Partnership Agency (SADPA) and the finalisation of the Foreign Service Bill.

17. There are soft diplomacy issues which the Committee (Parliament) could be engaged in to achieve a desired objective. Parliamentary diplomacy was seen as important in the conduct of international relations. Involvement within the BRICS processes, trade negotiations, and climate change issues, were cited as examples.

18. There were still challenges with the coordination of para-diplomacy activities. Some municipalities and provinces still conduct foreign policy activities without the requisite coordination by the Department. There could be many messengers but with one message.

19. It was regarded as of great importance that the citizens of this country were kept informed about the notable strides by the emerging economies of the South: BRICS, especially with regard to the establishment of the BRICS Development Bank. There would be a need for the Department and relevant departments to commence with ratification processes for the agreement establishing the BRICS Bank in member states.

20. 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.

21. Public diplomacy programme still faces challenges as a tool for communicating South Africa’s foreign policy both locally and internationally.

22. Increased research capacity in the Department was welcomed as positive development for purposes of early warning regarding developing trends and threats to the health of South African foreign policy.

7. Conclusions

Overall performance by the Department in the reporting year has been satisfactory and the Committee is encouraged by the efforts undertaken to contribute towards improving lives of fellow South Africans; a stable and secure continent; and creating a better world for all.

The Committee is so far satisfied that the Department has utilized its budget in accordance with its plans for 2013/14. A lot of significant achievements were reported, and concerns raised show there is still room for improvement. The issues raised by the Auditor-General warrant undivided attention of the Accounting officer to ensure that there is no recurrence. There will always be room for improvement. The Committee regards this as work in progress and the Department should make the necessary adjustments in service delivery where needed. The Committee went further to applaud the Minster for her swift action in addressing concerns raised through the establishment of a task team in the Department, which will monitor compliance with issues raised by the Auditor-General concerning governance, leadership and compliance with supply chain rules both under the Department and its entity.

The Department has responded to some of the concerns raised by the Committee as follows: The agreement establishing the BRICS Bank will soon be tabled in Parliament for ratification processes. Revenue collection would be easier to manage in the future as Cabinet has directed that departments requiring assistance, pay in advance. The issue of the asset register is given priority, missions would rent full furnished apartments to curb the challenges of owning movable assets. Creating a position for the chief operations officer was on the cards; and the Chief Audit Officer had been filled. Economic diplomacy and training of diplomats in this field was a deliberate decision by the Department. The ACIRC is aimed at addressing negative forces in the continent. So far, 13 countries have committed to the initiative to ensure Africa was able to deal with its own security challenges.

8. Recommendations

The Committee is of the opinion that overall the Department has performed according to the goals it had set itself for the 2013/14 reporting period. The 2013/14 budgetary allocations of the Department were generally aligned to the national strategic priorities outlined in the 2013 State-of-the-Nation Address, as well as its strategic direction in terms of its Medium Term Expenditure Framework. The qualified audit report, when rectified, will still be a positive indication of commitment of purpose by the Department to diligently execute its mandate.

The Committee acknowledges that in general there are challenges facing the Department, with specific reference to the ARF, which can have a bearing on its service delivery programs. In the midst of the international environment of a global meltdown, the missions abroad have to deal with decreased support for developmental assistance from cooperating partners.

The unpredictable foreign exchange portfolios, have been negatively affecting the operations of the Department, especially in the Missions, where the bulk of its activities take place. The Department has accordingly operated within a tight budget despite its growing responsibilities.

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 one month of the adoption of this report by the National Assembly:

1. The upgrading of the ICT infrastructure should enjoy priority as well as training of ICT officials. The new comprehensive ICT strategy should be implemented, including modernising the infrastructure and system of the Department.

2. A progress report should be compiled regarding the completeness of an asset register and asset audit of all assets under the responsibility of the Department locally and abroad. Such a report should be shared with the Committee before the end of November 2014.

3. The Department should enhance its marketing strategy regarding the registration of South Africans travelling abroad. The information should be disseminated in the Missions abroad and also locally to make citizens aware before they travel.

4. The Department should give regular updates regarding performance of missions abroad for the Committee to monitor alignment of the mandate to domestic priorities.

5. The necessary political intervention should be sought to address the challenges of proper coordination of para-diplomacy activities conducted abroad by municipalities and provinces.

6. The issue of reform of the UN systems should remain alive. The UN General Assembly, where a big number of African countries are represented, should also be used to raise awareness in this regard.

7. Regular consultations be held with Statistics South Africa in order to determine strategic trading patterns and investments.

8. The position of a chief operations officer dedicated to operational matters of the Department should be considered.

9. Concerns raised by the Auditor-General on the Department and the African Renaissance Fund should be attended to as a matter of urgency to avoid repeat non-compliance issues.

Report to be considered.

Sources

§ Annual Report 2013- 2014 Department of International Relations and Cooperation.

§ Strategic Plan, 2012- 2017, Department of International Relations and Cooperation.

§ National Treasury, Vote 5: International Relations and Cooperation, Estimates of National Expenditure 2013.

§ Zuma, J.G. 2013, 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: 4 ^th Quarter Expenditure Report 2013/14 financial year.

Presentations by other departments