ATC140711: Report of the Portfolio Committee on International Relations and Cooperation on the Budget Vote 5: International Relations and Cooperation, dated 9 July 2014

International Relations

Report of the Portfolio Committee on International Relations and Cooperation on the Budget Vote 5: International Relations and Cooperation, dated 9 July 2014

The Portfolio Committee on International Relations and Cooperation (the Committee), having considered the Budget Vote 5: International Relations and Cooperation of the Department of International Relations and Cooperation (the Department), reports as follows:

1. Introduction

The Committee met on 2 July 2014, both in the morning and afternoon, to consider the Department’s Annual Performance Plan (APP) 2014-2015, which is based on the Department’s Strategic Plan 2013-2018. The Committee further discussed the African Renaissance and International Cooperation Fund’s Strategic Plan 2014-2017 and its Annual Performance Plan 2014-2015, together with the overall budget allocation for 2014/15 The purpose of the first part of the meeting was to enhance the knowledge base of members of the Committee on the international relations sector; while the second part was primarily for the Department and its entity to outline updates in the strategic plans, and demonstrate the alignment of its annual performance plans to its budget for the 2014/15 financial year.

In preparation for the Committee’s deliberations on the budget allocation, the Committee received a series of presentations aimed at giving a general overview of what the international relations sector entails, and the trends that are influential to the South African foreign policy. For the first part, the presenters were Mr L Sigwela, Committee Secretary; Ms L Mosala, Content Adviser; Mr D Madlala, Committee Researcher and Dr S Zondi, Executive Director :Institute of Global Dialogue.

2. Presentations in the first session

Mr Sgwela’s presentation was on the budget process. The information was meant to unpack the budget processes in Parliament.

Ms Mosala’s presentation examined the international relations sector; its drivers, key role players, the mandate of the Department, the role of the Committee and the linkages for purposes of oversight, between the Department and its entity and the Committee. Possible areas for oversight were also identified for consideration by the Committee in its subsequent engagement with the Department. The presentation also pointed out the need for the Committee to ensure that the plans of the Department were aligned to the budget; the National Development Plan and the 2014 State-of-the-Nation address.

Mr Madlala’s contribution was on the expenditure focus of the Department for the MTEF period. The appropriation to the Department was discussed, including the activities for which it was intended. The presentation was meant to create a scenario for the Committee to engage with the intended budget allocation in readiness to a discussion with the Department later that day. The expenditure trends in different programmes of the Department were explained for further consideration by the Committee.

Dr Zondi’s input was on the trends influential to South Africa’s foreign policy since 1994. The pertinent question was whether the baseline for South African foreign policy has changed since 1994, or reflects an element of continuity. The baseline was said to be human rights, centrality of Africa (geostrategic); importance of political and economic integration of Southern African Development Community (SADC); solidarity with the countries of the South, and the relationship with other the developed countries of the North for trade and investment. It was argued that there has been change of the name of the Department, but the underlying principles of the foreign policy have remained constant, and adapting to change as it developed.

It was suggested that the Committee could enhance its oversight on issues affecting the Department including: how South Africa would position itself as one of the leading powers in Africa, as indicated in the National Development Plan; South Africa should continue with alliances which would add value to the region such as the Group of 77 plus China, Non Aligned Movement, Brazil-Russia-India-China-South Africa (BRICS) forum; and India-Brazil-South Africa (IBSA). It was further suggested that in its participation in global governance, South Africa should continue to defend the interests of the developing countries.

Dr Zondi highlighted the importance of the emerging powers and forums of the South to which South Africa was a member. Although BRICS membership was regarded as not wholly geographically south, but ideologically it represented the aspirations of the South. He pointed out to the contestation by some countries in the North, fearing that BRICS would win certain countries that have dependency on the World Bank, on the notion of a BRICS Development Bank aimed at funding some projects of developing countries which would otherwise not qualify under the Bretton Woods institutions.

South Africa was said to have emerged from a strategist orientation, with four elements underpinning its approach. It was said to be reformist, thus participating in international organisations and keeping the agenda of reform alive. It was also regarded as Pan Africanist, in that it placed Africa at the centre of its engagement with the world; and strived to preserve the independence and self-reliance of the continent. It was further said to be ideologically eclectic, in that it was neither Marxist, socialist, liberal nor capitalist; and that it was a multilateralist, in that it acted in conjunction with all concerned on issues of global governance, and strived to work as a collective and build relations. This particular strategic orientation would be difficult to sustain in the face of the changing environment.

For oversight purposes, the Committee was drawn to the issues which were considered important that the Department carried them through. These included the establishment of the South African Development and Partnership Agency (SADPA); the revision of the ‘White Paper’ on foreign policy, with the new concept of ‘UBUNTU’, to align it to the National Development Plan (NDP), and the operationalisation of the South African Council for International Relations (SACOIR); discussions around the code of conduct for South African companies abroad; professionalization of diplomacy as a career, and to have a set ratio between career diplomats and politically deployed personnel.

Also raised were the operationalisation of the Coordinating mechanism for activities of international nature by municipalities and provinces (para-diplomacy), in order to avoid being penetrated by other countries through provinces as opposed to enter the country at the national level; conducting outreach programmes to address the perceived elitist nature of foreign policy; the enhancement of public diplomacy through media interface including use of the UBUNTU Radio; involvement of business in support of international relations policy; and increasing interface with intellectuals.

It was also highlighted that the Department consider the directives provided for in the 2014 SONA, such as that Southern Africa and Africa be seen as trade and investment zones; foreign policy be aligned to the NDP; development of economic partnerships with developing countries and consideration of developed countries as economic partners; and ensure the implementation of international agreements and obligations. He continued to point out that the ‘blue region’ was increasingly becoming important. The Indian Ocean region was strategic as a shipping lane, a trade route and security zone for emerging powers around south Atlantic and he even wondered if it could be an inverse of the North Atlantic Treaty Organisation.

Dr Zondi also referred to the implications of the provisions of the NDP such that, with economic diplomacy, there was a need for a dialogue on what constituted ‘national interest’; the examination of types of regional agreements the country should have, and whether it should have bi-national commissions with every country or with strategic partners; focus on an audit of foreign representation in terms of whether the country should maintain its current global footprint; and the importance of a strengthened research and analysis capacity to support the Department keep in step with changing nature of international relations.

3. Observations and concerns raised by the Committee

3.1 The Committee sought more information as follows:

3.11 The role South Africa would play regarding the situation in the Middle East. Furthermore, whether before South Africa makes an intervention to a situation of another country, it would make an intelligent analysis of the situation.

3.12 The type of oversight strategy the Committee could put in place for its work over bilateral and multilateral missions abroad.

3.13 Whether the circumstances that caused the R100 million over expenditure, were related to the funeral the late former President Nelson Mandela or there were other factors at play.

3.14 There was need to explore modalities engaged by South Africa in aligning its domestic imperatives with its international obligations and whether South Africa was stretching itself with regard to its representation abroad. The important element was for South Africa to get value for money in terms of its missions abroad.

3.15 It was suggested that South Africa needed to be aggressive on its public engagement. It was regarded important for South Africa to know what the general public think about Government’s decisions relating to international relations, and to explain certain decisions taken to avoid misconception. There was a need to brief both the South African and international media and the South African society at large.

3.16 The Indian Ocean was regarded as of strategic importance for South Africa. It has become a route by which South Africa will increase trade with the countries in the Far East and the North.

3.17 Whether Treasury would make provision for currency fluctuation when allocating the budget and how that would normally be built into the budget.

3.2 Responses by the presenters

3.21 It was explained that the Committee’s oversight function was limited by the Parliamentary oversight model which prescribes that the committees may travel abroad for study tours, and not necessarily on oversight. According to the prevailing model, oversight visits were only envisaged internally within the borders of South Africa. As a consequence of that, the Committee has not been able to follow up on the projects of the ARF and the activities of the missions abroad.

3.22 With regard to the Assets register, there was an audit which was taken in all the 125 South African missions abroad. The outcome was that some of the properties which were reported to be there were not there, and the ones which were reported were there were not recorded.

3.23 The overspending was not only as the result of the state funeral of the late former President Nelson Mandela, but also as the result of expenditure relating to the marketing and protocol support services for the hosting of the 17 th Conference of the Parties to the UN Framework Convention on Climate Change and the BRICS summit. These activities increased spending on travel and subsistence, venues and facilities, and communication services over this period International Transfer, Funeral, support the African Union (AU) Commission.

4. Briefing by the Department on its Budget vote 5: International Relations and Cooperation

4.1 Presentation by the Department

Deputy Minister Luwellyn Landers gave a political overview of the global situation under which the Department had to operate. He highlighted that South Africa’s engagement with the world has been on the increase since 1994. He attributed that to, among others, South Africa’s unique international profile which evolved from its liberation from apartheid; effects of globalisation; and the changing nature of diplomacy and international relations.

South Africa finds itself operating in a changing global environment. This was characterised by many factors including the shift in global political, trade and economic patterns; growing influence of the emerging economies of the South; impact of non-state actors and social movements and new global opportunities and frontiers including the ‘blue and green economies and knowledge economy.

He continued to share South Africa’s global standing as a respected, active and responsible global citizen. The country was reported to be a host to the second largest number of foreign representation in the world, with a global footprint of 125 missions abroad plus Gaza, covering 180 countries. South Africa has constantly championed human rights, disarmament and peaceful resolution of disputes; the development of the South and the centrality of Africa in its foreign policy. The ‘Diplomacy of Ubuntu’ has earned global respect and affords South Africa with a unique voice of legitimacy and influence.

Then the Acting Director-General, Mr Mahoai, in his presentation recalled that according to the South Africa’s Constitution, the President has the ultimate responsibility for the foreign policy and international relations of South Africa. The Minister of International Relations is entrusted with the formulation, promotion and execution of South Africa’s foreign policy and with daily conduct of its international relations.

The Department was working for the realisation of South Africa’s foreign policy objectives. These were to be achieved through coordinating and aligning South Africa’s international relations abroad; monitoring developments in the international environment; communicating government’s policy positions; developing and advising government on policy options. Its mandate extended to creating mechanisms and avenues for achieving objectives; protecting South Africa’s sovereignty and territorial integrity; contributing to the creation of an enabling international environment for South African business; sourcing development assistance and assisting South African citizens abroad.

5. Overview of the Department’s Medium Term Strategic Framework (MTEF) 2014-2016

The Department’s budget vote was reported informed by South Africa’s strategic vision for the country, region, continent and the world. In pursuit of the country’s foreign policy objectives, it would be acting in support of Government’s medium term strategic objectives and the twelve strategic outcomes. Outcome 11 focussing on external relations is the responsibility of the Department. It has also taken due cognisance of the recommendations in Chapter 7 of the National Development Plan 2030. It reported as fully aware of the great responsibility placed on it to contribute to a better life for all in South Africa and in Africa. It has thus undertaken to achieve the mandate through pursuing the high-level objectives of the enhanced African Agenda and sustainable development; strengthen political and economic integration of the Southern African Development Community (SADC); strengthen South-South relations; strengthen relations with the strategic formations of the North; participate in global system of governance; and strengthen political and economic relations.

During the course of the medium term, the spending focus would be on advancing national priorities through economic and political bilateral relations; participating in global governance fora; advancing an equitable, just and representative rules-based multilateral system; a sustainable developed and economically integrated Africa; and the regional integration of the Southern African Development Community (SADC). Greater impetus would also be directed towards strengthening policy and coordination in relation to outgoing South African development cooperation.

South Africa was aware that regional integration should be pursued through a three-pronged approach, namely, regionally, continentally and globally. In order to build greater productive and export capacity, including global competiveness across the region, it would be necessary to advance a developmental integration agenda in Southern Africa. The agenda should combine trade integration, infrastructure development and sector policy coordination.

The Committee was made aware that the previous budget programme dealing with International Relations has since been divided into two budget programmes. International Relations would be focussing on Bilateral Relations and International Cooperation programme would deal with Multilateral Relations. The split was reported as allowing for a more focussed approach to planning.

The annual performance plan (APP) of the Department and that of its entity were reported to be significantly different from previous APPs. They were far more detailed in their approach, and were compliant with the Framework for Management Performance Assessment (MPAT). To this end, the Office of the Director-General has established a new unit called Strategic planning, Monitoring and Evaluation Management. The unit is to coordinate and evaluate the strategic planning and monitoring processes of the Department.

The Department intended tabling a new Bill that would repeal the African Renaissance Fund (ARF), and establish a new fund, the Partnership Fund for Development. Then the South African Development Partnership Agency (SADPA) would be established as a strategic entity for all outgoing development cooperation.

Two planned policy options were reported on. Notably, these have not changed from the information given since 2012/13. These related to the establishment of SADPA and the tabling of a Foreign Service Bill to cater for the unique work environment in which the Department operates. The Bill was expected to create the necessary flexibility to address the challenges posed by operating at the global level.

South Africa was elected as a member of the Economic and Social Council (ECOSOC) for the period 2013-2015. The main focus would be in shaping the implementation of the post-2015 United Nations Development Agenda.

Economic diplomacy would be prioritised given its importance in promoting South Africa’s value-added exports and attracting Foreign Direct Investment (FDI). Focus would be on skilling diplomats, including Heads of Mission, in the tools of economic diplomacy.

6. Situational analysis

The Department gave a situational analysis which underlined a continued trend of South Africa, Africa and the broader South’s socio-economic development being slowed by challenges of the developed countries. The global environment continued to be characterised by a major shift in global, economic and social dynamics. These included the realignment of new economic powers, new media and social networks; environmental change; heightened demand for scarce resources and the changing nature of conflict and insecurity. The new economic powers were influencing the balance of the global distribution of power, resulting in the formation of new political and economic groupings. South Africa and African economies were increasingly linked to these new economic powers.

Africa’s economic integration in pursuit of increased intra-continental trade has become more important in light of the current global economic environment. Efforts to built infrastructure in the continent would be intensified to improve connectivity of African economies. These would create new value chains and facilitate the movement of goods within the continent. Africa has abundant natural resources; however, political stability and good governance should be entrenched.

South Africa was potentially at the heart of global shipping routes. It was believed that the southern part of South Africa should reposition itself to play an increasing role in shipping networks due to problems associated with the use of the Suez Canal. The Indian and south Atlantic oceans were becoming very strategic for trade and investment for South Africa.

7. Distribution of the Budget

According to the Estimates of National Expenditure 2014, the Department was expected to be allocated R5.7billion for the 2014/15 financial year. However, over the medium term, expenditure was expected to increase to R6.4 billion owing to inflation related adjustments made across all programmes. These would include provision for rental increases, unitary fees incurred for the head office building, and salaries for transferred officials and Locally Recruited Personnel. The Department’s growth trend (budget) has been decreasing over a seven year period. Taking into consideration the projected foreign exchange loss, the budget growth would further decrease to an annual average rate of 2.3 per cent.

The bulk of the Department’s allocation over the medium term would be directed towards spending on compensation of employees, travel and subsistence, operating leases, transfer payments to international organisations and departmental agencies, and payments for capital assets in the Administration, International Relations and International Transfers programmes.

According to the Treasury Estimates of National Expenditure (ENE) 2014, these programmes support the 125 South African diplomatic missions abroad, the management of the Department’s diverse assets and property portfolio, and facilitate transfers to international organisations as membership fee contributions. These activities are to be carried out by the personnel on the Department’s funded establishment of 5 040 posts, of which 2 375 are additional to the approved establishment. The Department’s establishment includes 2 270 posts for personnel employed in the South African diplomatic missions abroad who are paid in the local currency of that country. This would make expenditure on compensation of employees, specifically in the International Relations and International Cooperation programmes, vulnerable to fluctuations in the exchange rate.

The Department has planned to fill some of the critical vacancies over the medium term to address capacity requirements in key competency areas such as economics, development, international relations and diplomatic affairs. This was expected to increase spending on compensation of employees from R2.4 billion in 2013/14 to R2.7 billion in 2016/17.

The ENE has noted that expenditure on consultants over the medium term was expected to increase once the Department began the ICT modernisation project and infrastructure development. Expenditure in the Administration programme over the medium term was expected to increase to support other departmental objectives, such as the operationalisation of the South African Council of International Relations, and the finalisation of the Foreign Services Bill and the Partnership Fund for Development Bill. Once enacted, the latter bill would repeal the current African Renaissance International Cooperation Fund Act (2000) and facilitate the operationalisation of the South African Development Partnership Agency, which would supports the development of the African continent and the regional integration of the SADC. This was expected to increase spending on legal consultants, communication and compensation of employees over the medium term.

The ENE stated that the Department received Cabinet approved additional allocations of R25.2 million over the medium term for capacity building for the South African Development Partnership Agency, R80 million to cater for all the logistical arrangements and the diplomatic and protocol services to be rendered by the Department with other departments during the inauguration of the president in 2014, and R115.1 million as a voluntary contribution to the African Union (AU) Commission.

The Budget also includes a Cabinet approved reduction of R576.8 million over the MTEF period, which the Department was to effect on the transfer to the African Renaissance International Cooperation Fund and expenditure on non-core items of goods and services. The fund would use its accumulated reserves to sustain itself, if needed, so the reduction was not expected to have an adverse effect on service delivery.

Spending on infrastructure increased from R134.5 million in 2010/11 to R203 million in 2013/14 and was expected to increase to R236 million over the medium term. The allocation earmarked for infrastructure would go towards the construction of new state owned chanceries, official residences and staff accommodation abroad, and the completion of existing renovation and refurbishment infrastructure projects abroad. In particular, the Department was expected to complete the construction of chanceries and official residences in Dar es Salaam (Tanzania) and Lilongwe (Malawi), and progress substantially with the construction of chanceries in Kigali (Rwanda) and Mbabane (Swaziland), over the medium term.

The Department would engage the private sector for the development of chanceries and official residences on vacant state owned land in New Delhi (India), Riyadh (Saudi Arabia), Dakar (Senegal), Bamako (Mali), Gaborone (Botswana) and Montevideo (Uruguay) through development agreements or public private partnerships.

Expenditure trends for departmental programmes

Table 1 Budget Allocation-International Relations and Cooperation

Programme

Adjusted appropriation

Budget

Nominal % change

Real % change

R million

2013/14

2014/15

2015/16

2016/17

2013/14-2014/15

Administration

1 320.7

1 396.3

1 393.3

1 441.1

5.72 per cent

-0.45 per cent

International Relations

2 768.1

2 810.2

3 002.3

3 225.4

1.52 per cent

-4.41 per cent

International Cooperation

459.0

486.4

541.3

560.2

5.97 per cent

-0.22 per cent

Public Diplomacy and Protocol Services

254.5

317.2

250.3

265.9

24.64 per cent

17.36 per cent

International Transfers

952.4

744.3

846.8

918.0

-21.85 per cent

-26.41 per cent

TOTAL

5 754.7

5 754.4

6 034.0

6 410.6

-0.01 per cent

-5.84 per cent

Source: Estimates of National Expenditure 2014

Table 1 illustrates the changes in allocations from the years 2013/14 and 2014/15. For programme 1: Administration, the nominal change is 5.72 per cent and the real change is -0.45 per cent. Programme 2: International Relations has a nominal change of 1.52 per cent and the real change of -4.41 per cent. It would be noted that in previous years the Department had four programmes, however it has split its International Relations and Cooperation Programme into two programmes namely: Programme 2: International Relations and Programme 3: International Cooperation. Programme 3: International Cooperation had a nominal change of 5.97 per cent and a real change of -0.22 per cent. Programme 4: Public Diplomacy and Protocol Services experiences a nominal change of 24.64 per cent and a real change of -17.36 per cent. Finally, Programme 5: International Transfers experiences a nominal change of -21.85 per cent and a real change of -26.41 per cent.

7.1 Expenditure per programme

Programme 1: Administration

The programme was reported responsible for policy development and management of the Department. The programme has been allocated R1, 396.3 billion for the 2014/15 financial year. Over the medium term, spending in this programme was expected to be on providing property and office management services to the Department, as well as modernising its ICT infrastructure. Thus the bulk of the Department’s budget over the medium term was allocated to the Corporate Services, Office Accommodation and the Foreign Fixed Assets Management subprogrammes for spending on compensation of employees, travel and subsistence, operating payments, leases, computer services, and capital expenditure.

According to the ENE, the allocations to the Office Accommodation subprogramme over the medium term provided for the locally based property portfolio, which consists of the head office building, VIP and protocol services lounges in three international airports, two diplomatic guesthouses as well as accommodation for the United Nations (UN) agencies in South Africa, the Pan African Parliament and the secretariat for NEPAD.

E xpenditure over the seven-year period increased largely due to the challenge of managing a geographically decentralised department that incurs expenditure in multiple currencies. This was particularly the case for spending on remuneration and incentive packages for personnel deployed in foreign missions, official and residential accommodation, and goods and services. This was the reason for the significant increase in spending in the Foreign Fixed Assets Management subprogramme between 2010/11 and 2013/14, as the Department acquired property for the mission in Geneva, Switzerland in 2011/12, built chanceries and official residences in Tokyo and Washington in 2012/13, and provided for increases in lease payments and municipal rates paid for state owned properties and embassies in foreign missions. Other related expenditure increases were in terms of legal and contract management fees for the public private partnership contracts.

Programme 2: International Relations

The programme was reported responsible for strengthening political, economic and social relations with targeted countries to advance South Africa’s national priorities. The programme has been allocated R2, 810.2.billion for the 2014/15 financial year. The spending focus over the medium term would be on promoting relations through political and socio-economic development.

Subprogrammes

  • Africa would embrace relevant national priorities by strengthening bilateral cooperation with individual countries in Africa, particularly through focusing on increasing exports of South African goods and services, foreign direct investment with technology transfers into value added industries and mineral beneficiation, and inbound tourism and skills enhancement. In 2013/14, foreign representation continued through 47 diplomatic missions in Africa, which facilitated 8 structured bilateral mechanisms and 37 level engagements during state visits to promote national priorities. By the end of September 2013, 3 structured bilateral mechanisms and 4 trade and investment seminars had been held to promote South Africa’s national priorities, investment and tourism. This subprogramme had a staff complement of 330 in 2013/14.

  • Asia and Middle East would embrace relevant national priorities by strengthening bilateral cooperation with individual countries in Asia and the Middle East, particularly through focusing on increasing exports of South African goods and services, foreign direct investment with technology transfers into value added industries and mineral beneficiation, and inbound tourism and skills enhancement. In 2013/14, foreign representation continued through 32 diplomatic missions, which facilitated 7 structured bilateral mechanisms and 15 high level engagements during state visits to promote national priorities. By the end of September 2013, 7 structured bilateral mechanisms and 27 trade and investment seminars had been held to promote South Africa’s national priorities, investment and tourism. This subprogramme had a staff complement of 236 in 2013/14.

  • Americas and Caribbean would embrace relevant national priorities by strengthening bilateral cooperation with individual countries in the Americas and the Caribbean, particularly through focusing on increasing exports of South African goods and services, foreign direct investment with technology transfers into value added industries and mineral beneficiation, and inbound tourism and skills enhancement. In 2012/13, foreign representation continued through 18 diplomatic missions, which facilitated 5 structured bilateral mechanisms and 7 high level engagements during state visits to promote national priorities. By the end of September 2013, 2 structured bilateral mechanisms and 19 trade and investment seminars had been held to promote South Africa’s national priorities, investment and tourism. This subprogramme had a staff complement of 143 in 2013/14.

  • Europe would embrace relevant national priorities by strengthening bilateral cooperation with individual countries in Europe, particularly through focusing on increasing exports of South African goods and services, foreign direct investment with technology transfers into value added industries and mineral beneficiation, and inbound tourism and skills enhancement. In 2013/14, foreign representation continued through 28 diplomatic missions, which facilitated 6 structured bilateral mechanisms and 18 high level engagements during state visits to promote national priorities. By the end of September 2013, 6 structured bilateral mechanisms and 38 trade and investment seminars had been held to promote South Africa’s national priorities, investment and tourism. This subprogramme had a staff complement of 223 in 2013/14.

The spending focus over the medium term would continue to be on facilitating socioeconomic development by strengthening bilateral cooperation with individual countries, particularly throughout the rest of Africa, Europe, Asia and the Middle East. The increase in expenditure in all the subprogrammes between 2012/13 and 2013/14 related to improvements in conditions of service, the continued provision of support to the 125 diplomatic missions, the hosting of trade and investment seminars, and engagements with chambers of commerce to promote South Africa as an investment destination.

The deterioration of the Rand against most major currencies also contributed to the increase in expenditure over this period, as a significant proportion of the programme’s expenditure is denominated in foreign currencies. As the Rand has continued to deteriorate, expenditure on compensation of employees, property payments and operating payments, venues and facilities is set to continue rising over the medium term. This would allow the Department to undertake over 819 economic diplomacy activities to attract investment and tourism, as well as 34 structured bilateral and 65 high level engagements to strengthen political relations.

Programme 3: International Cooperation

Purpose - Participate in international organisations and institutions in line with South Africa’s national values and foreign policy objectives.

The programme was reported responsible for participation in international organisations and institutions in line with South Africa’s national values and foreign policy objectives. The programme has been allocated R486.4 million for the 2014/15 financial year.

Objectives

  • Contribute towards a reformed, strengthened and, multilateral system that is based on equal rules and that would be responsive to the needs of developing countries and Africa, in particular, by participating in the global system of governance on an ongoing basis.

  • Strengthen the African Union (AU) and its structures by:
    • providing financial and technical support for operationalising the African Court of Justice and AU financial institutions by March 2014; and
    • providing ongoing financial support for the operations of the Pan African Parliament in terms of the country host agreement.

  • Contribute to the political and economic integration of African regions by supporting the implementation of the tripartite summit comprising the Common Market for Eastern and Southern Africa, the East African Community and the SADC on establishing a free trade area between the summit countries by March 2014.

  • Improve governance and capacity in the SADC secretariat on an ongoing basis by implementing the secretariat’s job evaluation plan and assisting with the recruitment process on an ongoing basis.

  • Contribute towards the New Partnership for Africa’s Development (NEPAD) process for socioeconomic development in Africa by participating in the African Peer Review Mechanism and submitting the African Peer Review Mechanism country report when required.

  • Strengthen bilateral, trilateral and multilateral interest and relations within the Brazil-Russia-India-China South Africa group of countries dialogue forum through continuous active participation in forum structures.

  • Strengthen political solidarity, economic cooperation and socio-cultural relations with Asian countries by participating in the New Asian-African Strategic Partnership structures over the medium term.

Subprogrammes

  • Global System of Governance provides for multilateralism and a rules-based international order. This would entail participating and playing an active role in all forums of the UN system and its specialised agencies, and funding programmes that promote the principles of multilateral activity. In 2013/14, South Africa participated in the 67th UN General Assembly and contributions were made to agenda items dealing with the peaceful resolution of conflict in Africa and Syria. During the 23rd session of the UN Human Rights Council, South Africa’s position in the negotiation of resolutions in the area of political and socioeconomic reforms was advanced. This subprogramme had a staff complement of 161 in 2013/14.

  • Continental Cooperation would provide for the enhancement of the African Agenda and sustainable development. In 2013/14, South Africa participated in the election observer missions to Zimbabwe, Swaziland, Mali and Guinea; and served on the NEPAD steering committee, where the country’s position on domestic resource mobilisation was presented. This subprogramme had a staff complement of 69 in 2013/14.

  • South-South Cooperation would provide for partnerships with countries of the South in advancing South Africa’s own development needs and the needs of the African Agenda; and creates political, economic and social convergence for the fight against poverty, underdevelopment and the marginalisation of the South. In 2013/14, South Africa participated in various meetings, including the 12th meeting of Commonwealth foreign affairs ministers held in New York in September 2013, the 13th ministerial meeting of the Group of 77 (G77) and China, and the BRICS meeting to monitor and assess the level of implementation of resolutions from the fifth BRICS summit and prepare for the next summit. The fourth Forum on China-Africa Cooperation served to achieve political consensus on the implementation modalities for the forum’s development cooperation under the Beijing Declaration and Platform for Action. This subprogramme had a staff complement of 8 in 2013/14.

  • South-North Dialogue would provide for South Africa’s bilateral and multilateral engagements to consolidate and strengthen relations with organisations of the North to advance and support national priorities, the African Agenda and the developmental agenda of the South. In 2013/14, the Department hosted the sixth South Africa-European Union (EU) summit. Key outcomes of the summit included: the establishment of the Structured Dialogue Forum on Human Rights, the creation of a maritime security cooperation subcommittee, the creation of an infrastructure fund of R1.4 billion (€100 million), a partnership in rural electrification, and an agreement to establish a South African-EU business council. This subprogramme had a staff complement of 28 in 2013/14.

The spending focus over the medium term would be on: participating in the UN system of governance through South Africa’s elective membership of the UN Economic and Social Council (ECOSOC); and contributing to the integration of the SADC through supporting regional infrastructure programmes. The bulk of the spending over the medium term towards achieving these objectives occurs in the Global System of Governance and Continental Cooperation subprogrammes, mainly on compensation of employees, operating leases payments, and travel and subsistence.

The Department would continue playing a supportive role over the MTEF period to the AU and its structures through the hosting and funding arrangement for the Pan African Parliament, and providing capacity and technical assistance to the President in his role as the chair of various infrastructure initiatives under the New Partnership for Africa’s Development (NEPAD). The latter would include projects such as the AU-NEPAD presidential infrastructure championing initiative, and the North-South road and rail corridor project for the effective implementation of the Africa action plan 2010-2015. This ongoing role was set to further increase spending in the Continental Cooperation and South-South Cooperation subprogrammes over the medium term.

Programme 4: Public Diplomacy and Protocol Services

Purpose - Communicate South Africa’s role and position in international relations in the domestic and international arenas and provide protocol services.

Public diplomacy was reported to provide strategic public diplomacy direction and state protocol services both nationally and internationally. The programme has been allocated R317.2 million for the 2014/15 financial year.

The spending focus over the medium term would be on enhancing programmes for creating public awareness both locally and abroad

Subprogrammes

  • Public Diplomacy promotes a positive projection of South Africa’s image; communicates foreign policy positions to both domestic and foreign audiences; and markets and brands South Africa by using public diplomacy platforms, strategies, products and services. In 2013/14, the Department provided coverage on ministerial and deputy ministerial activities by holding 24 media briefings and issuing 373 press releases, including facilitating 8 public participation programmes and awareness campaigns. This subprogramme had a staff complement of 81 in 2013/14.

  • Protocol Services facilitates incoming and outgoing high level visits and ceremonial events, coordinates and regulates engagement with the local diplomatic community, provides protocol advice and support to the various spheres of government, facilitates the hosting of international conferences in South Africa, and manages state protocol lounges and guesthouses. In 2013/14, the department provided protocol services for 66 incoming and 61 outgoing state and official visits, including the South Africa-EU and SADC organ troika summits and the congress of the Pan African Women’s Organisation. This subprogramme had a staff complement of 221 in 2013/14.

According to the ENE, the spending focus for Programme 4 over the medium term would be on: enhancing programmes that create public awareness of South African international policy and disseminate national priorities, policies and programmes locally and abroad; and facilitating incoming and outgoing diplomatic visits to South Africa. Pursuing this objective would require significant spending on compensation of employees, property payments for diplomatic guesthouses, venues and facilities, and advertising.

The projected increase in spending on goods and services and compensation of employees over the medium term was due to a once-off allocation of R80 million in 2014/15 for the 2014 presidential inauguration, and to bring the Sefako Mapogo Makgatho presidential guesthouse and the South African Council on International Relations into operation. The additional spending on compensation of employees would allow the Department to increase the number of personnel in the programme from 349 in 2013/14 to 354 in 2016/17.

Expenditure increased between 2010/11 and 2013/14 due to the operationalisation of the Soutpansberg diplomatic guesthouse in Pretoria and renovations to other diplomatic guesthouses and protocol lounges. In addition, expenditure relating to the marketing and protocol support services for the hosting of the 17 th Conference of the Parties to the UN Framework Convention on Climate Change and the BRICS summit increased spending on travel and subsistence, venues and facilities, and communication services over this period.

Programme 5: International Transfers

Purpose - Fund membership fees and transfers to international organisations such and the United Nations (UN), African Union (AU), and the Southern African Development Community (SADC).

The programme was reported to provide South Africa’s contribution with regard to membership fees of international organisations, and facilitates transfers to the African Renaissance and International Fund (ARF). The programme has been allocated an amount of R744.3 million for the financial year 2014/15.

The major spending focus over the medium term would be on making transfers to the ARF and timeous payment of South Africa’s membership fees to international organisations.

Subprogrammes

  • Departmental Agencies facilitates the transfer to the African Renaissance and International Cooperation Fund, a public entity of the department. In 2013/14, this subprogramme’s total budget was transferred in full to the entity.

  • Membership Contribution facilitates transfers to international organisations. In 2013/14, this subprogramme’s total budget was transferred accordingly for payments of all membership fees to international organisations.

Accor ding to the ENE the spending focus for Programme 5 over the medium term would be on making transfers to the public entity and timeous payment of South Africa’s membership fees to international organisations. To give effect to a Cabinet approved reduction of R540.3 million over the medium term, the Department cut the transfer to the African Renaissance and International Cooperation Fund. R220.3 million of this was reprioritised to bring the South African Development Partnership Agency into operation, provide for the 2014 presidential inauguration and increase voluntary contributions to the AU Commission.

Implementation of cost containment measures

The Department has held discussions with Treasury regarding its foreign currency related operations and a number of measures to be further explored in order curb costs that have been identified. These would include:

Foreign exchange mechanism; review of appointments of Locally Recruited Personnel; utilisation of technology in conduct of foreign policy; and a funding model - acquisition strategy for properties abroad.

8. Public entities and other agencies

African Renaissance and International Cooperation Fund

The African Renaissance and International Cooperation Fund was established under the African Renaissance and International Cooperation Fund Act (2000). The fund is mandated to:

  • enhance cooperation between South Africa and other countries, in particular African countries;
  • promote democracy and good governance;
  • work for the prevention and resolution of conflicts;
  • promote socioeconomic development and integration; and

· provide humanitarian assistance and human resource development.

The ARF’s activities are administered and managed by its advisory committee, which comprises representatives from the Department and National Treasury. This committee makes recommendations to the two ministers for concurrence to fund all its projects. In its current format, the ARF does not have any personnel and allocations are earmarked for the funding of projects. It is completely supported and administered by the Department. Plans to set up an agency to administer the fund’s operation, including the monitoring of its projects are well under way. Positive development was noted of a Strategic plan 2014-2017 and Annual Performance Plan 2014-2015 which would facilitate the Committee’s oversight on the activities of the ARF, against targets set by it as an agency of the Department.

The fund’s strategic goals over the medium term are to:

  • continue to develop operational policy and guidelines;
  • continue to build capacity to deal with urgent cases requiring humanitarian and/or emergency assistance;
  • address concerns relating to the question of supply chain management and procurement, including finalising a database of approved service providers;
  • address concerns relating to the monitoring and review of the implementation of projects, including increasing visits to projects in the countries concerned, and making more use of the department’s bilateral desks for implementing projects, and the respective missions in the monitoring and follow up process; and
  • support projects that contribute to South Africa’s foreign policy priorities, particularly in relation to the consolidation of the African Agenda.

According to the ENE, the spending focus of the African Renaissance and International Cooperation Fund over the medium term would be on: providing coop eration funding for initiatives between South Africa and other countries that relate to the promotion of democracy and good governance, the prevention and resolution of conflicts, socioeconomic development and integration, humanitarian assistance and relief, human resource development, and infrastructural development. The Fund has been allocated R277.560 million for the 2014/15 financial year. Cabinet has approved a reduction of R540.3 million over the medium term to the transfer to the African Renaissance and International Cooperation Fund. The Fund would use its accumulated reserves to sustain itself such that there is not an adverse effect on service delivery.

Expenditure on projects declines significantly over the seven-year period due to strategic and operational inefficiencies within the fund. A process of restructuring was currently under way and would result in the establishment of a new agency, the South African Development Partnership Agency, which is meant to improve the coordination of South Africa’s diverse development partnerships. The legislative process for establishing the agency was under way, with the Partnership Fund for Development Bill currently before Parliament. Once enacted, the Bill would repeal the African Renaissance and International Cooperation Fund Act (2000), resulting in the integration of functions and the transfer of reserves and assets from the fund to the agency.

9. Observations and concerns raised by the Committee

9.1 The budget allocation for 2014/15 was still not adequate for the expanding mandate the Department is charged with. The Department should look into reprioritisation of resources to more urgent priorities. The annual performance plan should adequately reflect the focus and priorities in 2014 SONA and NDP such as economic diplomacy, increased intra-Africa trade and closer cooperation with the forums in the South.

9.2 The element of continuity with human rights baseline in South African foreign policy’s trends since 1994 should be reflected accordingly.

9.3 The oversight strategy for activities of the missions abroad should be explored.

9.4 The bilateral-national commissions with other countries were considered too many, and running the risk of being misinterpreted, losing criteria and having strategic relations with almost all countries.

9.5 A need was identified for further deeper discussions on the nature and operational framework of the African Renaissance Fund. It was also cautioned against the adoption of the reported operational inefficiencies of the African Renaissance Fund over to the new partnership fund, SADPA. It was however noted that the Department has developed a strategic plan and annual performance for the ARF. A need was expressed for the Committee to conduct oversight in project areas of the ARF, for purposes of assessing impact on the ground.

9.6 The decision by government to create the Management Performance Assessment Tool Framework (MPAT) was an important step in monitoring compliance by departments with good governance practices. It was noted that in response to this requirement, the Office of the Director-General has established a unit which will monitor compliance with MPAT.

9.7 Para-diplomacy was a newly recognised notion under which provinces and municipalities could be authorised to engage their counterparts abroad. In order to avoid the increasing risk of uncorrelated foreign policy postures, the Government approved ‘Measures and Guidelines for the Coordination of South Africa’s International Engagements’. A further discussion on the challenges to the implementation of the guidelines was needed.

9.8 There was a need to examine the criteria for opening embassies and missions abroad. That also translated into the need for the Committee to strengthen oversight on assets of government under the purview of South Africa’s missions abroad.

9.9 It was highlighted as important that the activities of the Department were aligned to the 2014 SONA and the aspirations of the National Development Plan, with emphasis on intra-Africa trade.

9.10 The Committee noted that the Department was responsible for the project of delivering the headquarters of the Pan African Parliament. It was however not clear what the challenges were in that regard.

9.11 A perception was raised with regard to South Africa being used by the other BRICS countries in furtherance of their own strategic interests into Africa.

9.12 Maintaining a diplomatic footprint in Africa was welcomed and considered strategic and positive.

9.13 The Indian Ocean shipping lane passage by shipments was regarded very strategic for the country, for linking the west with the east.

9.14 The best model for acquisition of property for missions abroad would require deeper examination by the Committee to be in a position to recommend buying or leasing.

9.15 The issue of fluctuation of foreign exchange currencies was to be studied further; however it was cautioned not to be used as excuse for non-compliance with financial regulations.

9.16 The issue of filling quotas for employment allocated to South Africa in international organisations was regarded important. A dedicated discussion on the matter was agreed on.

9.17 The NDP provides for the streamlining the Department and missions to improve effectiveness. It was noted that such an issue was a contested terrain between the Department and the NDP and needed further examination.

9.18 There was a need for an update on the projects funded under the African Renaissance Fund (ARF). It was referred to as the only entity under the Department

9.19 There was a need for an update report on the outcome of investigations, as commissioned by the Minister of International Relations and Cooperation, on the irregular expenditure under the ARF. The situation was reflected in the Auditor General’s 2013/14 report.

9.20 A request was made that the Department provide the Committee with the details of all multilateral institutions that South Africa is a member; and how many South Africans work there and at what levels; to ascertain value for the money South Africa is paying towards membership.

9.21 A concern was raised that it was disappointing that since 2009 there was still non compliance on ICT matters, sought reasons why the Department was not moving with speed.

10. Responses by the Department

10.1 Political and economic considerations inform the establishment of embassies and missions abroad. Prior 1994, South Africa had embassies mostly in Europe because of the country’s political history. Post-1994, the Department began opening embassies and missions in Africa in response to the change to a democratic landscape.

10.2 The plan has been to open missions or embassies in all African countries. History has taught the Department that it becomes an advantage to have early presence in small countries, as these countries tend to become lucrative markets later on. In the future, the Committee will be briefed in the event of embassies being opened.

10.3 South Africa ought to be exporting more into Africa. As the most diverse economic region in Africa regarding resources utilisation, South Africa should be exporting at least 60 per cent of finished products. With the Department of Trade and Industry’s resolution to value-add through the implementation of the Industrial Policy Action Plan 3 (IPAP3), it was believed that during 2014-19, the investment in technology transfer should be able to create a basket of products and services.

10.4 The Government’s implementing agent for the building of the headquarters of the Pan African Parliament (PAP), is the Department of Public Works (DPW). Construction on the site in Midrand has not gone ahead due to related environmental impact assessment issues. Given the project’s budget escalations as reported by DPW, National Treasury has advised that alternative procurement methods be considered. The Department has escalated the lack of progress on the project through its principals to the political leadership of the responsible department. The new target is to complete the headquarters of the Pan African Parliament by 2016.

10.5 It was important to put to good use the ship lane traffic passing around the southern tip of Cape Town. South Africa was granted its application for some additional land under the sea at the southern tip, making it the largest country in Africa.

10.6 The Department has accordingly applied to Treasury for the unauthorised spending due to the funeral of the late President Mandela.

10.7 It was agreed that a better way should be explored of dealing with the challenge of fluctuations of foreign exchange currencies.

10.8 The issue of whether to buy or lease property for missions abroad has pros and cons to it. It requires further consideration.

10.9. Streamlining of missions to strategic interest as provided for in the NDP was regarded important. Missions were opened for political and strategic reasons; as a result further engagement was needed on the matter.

10.10 All funds within the ARF at the time of establishing SADPA would be transferred to the new agency. The outcome of the investigation into the irregularities in the activities of the ARF would be shared with the Committee in due course.

10.11 Provisions of the PFMA were binding on the activities of the ARF, and the reported inefficiencies were being addressed. One of the remaining issues for negotiations on the establishment of SADPA was the concurrence mechanism which currently required two ministers to give such a go-ahead before assistance is approved.

11. Conclusions

After discussions during the briefing, the Committee concluded as follows:

The Department has been operating on a shoe-string budget year after year. Its main operations abroad have been affected by currency fluctuations. The Department has to carry out its mandate within unpredictable, at times turbulent, external environment to advance South Africa’s national interest. The National Development Plan dictates that the Department should position itself to assume greater leadership role in Africa, leading development and growth in the continent. The interplay between foreign policy and national interest continue to be the baseline of their success in the conduct South Africa’s foreign policy. Following from the above conclusions, it has, therefore, become important to have continued clear and focus driven plans which remain aligned to the budget allocated.

12. The Committee’s recommendations

Having considered the Strategic plan and the Budget Vote of the Department and its entity, the Committee recommends that the Minister should consider the following and report on progress within three months of adoption by the National Assemblyof this report:

12.1 Addressing concerns relating to the monitoring and review of the implementation of projects under the ARF. The Portfolio Committee further recommends that this should include increasing Oversight Visits to selected projects in the countries concerned by visits of South African Missions/ Embassies in their countries of deployment.

12.2 DIRCO projects of building Chanceries abroad have to be informed and guided by political stability assessments and analyses of such countries. Cost effectiveness and due diligence whether to buy or rent properties have also to be considered with the view to reduce cost related to lease accommodation, in keeping with the proposed funding model.

12.3 Local Municipalities and Metro’s needs to first seek DIRCO consent of authorisation on agreements to be entered into between them and other Local Authorities abroad. Furthermore twinning of Local Cities with cities abroad including agreements on cultural and economic and or trade arrangements have always first seek the ratification and approval of DIRCO as per DIRCO Constitutional Mandate vested in the Constitution of RSA under Section 231. This will ensure coordination of continuing practices of Para-diplomacy among spheres of government to prevent the risk of different foreign policy pronouncements.

12.4 Introducing a policy requirement that all officials at DIRCO head office and missions abroad undergo economic diplomacy training and re-orientation programme. This would ensure that economic diplomacy forms the basis for aligning foreign policy to domestic priorities and in line with the National Development Plan.

12.5 Advancing a developmental integration agenda in Southern Africa combining trade integration, infrastructure development and sector policy coordination. The integration of SADC remains critical for the economic development of the region and for South Africa’s global competitiveness.

12.6 Speedily finalising the processes of providing the Pan African Parliament with its own headquarters as agreed to in the Host Agreement with the African Union. This should be done in consultation with the Department of Public Works.

12.7 Directing the Performance Monitoring unit in the Director General’s office to provide the Committee with performance reports on a quarterly basis.

12.8 Strengthen the Public Diplomacy Programme.

The Committee recommends that the Budget Vote 5: International Relations and Cooperation be passed.

Report to be considered.

Sources:

State of the Nation Address February and June 2014

The African Renaissance and International Fund Act 2000

Department of International Relations and Cooperation Strategic Plan 2013-2018

Department of International Relations and Cooperation Annual Performance Plan 2014-2015

Department of International Relations and Cooperation briefings 2013 to 2014

African Renaissance and International Cooperation Fund Strategic Plan 2014-2017

African Renaissance and International Cooperation Fund Annual Performance Plan 2014-2015

National Treasury Estimates of National Expenditure 2014

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