ATC150514: Report of the Portfolio Committee on International Relations and Cooperation on the Budget Vote 6: Department of International Relations and Cooperation, dated 13 May 2015

International Relations

Report of the Portfolio Committee on International Relations and Cooperation on the Budget Vote 6: Department of International Relations and Cooperation, dated 13 May 2015
 

The Portfolio Committee on International Relations and Cooperation (the Committee), having considered the Budget Vote 6: International Relations and Cooperation of the Department of International Relations and Cooperation (the Department), reports as follows:

 

1. Introduction
    

The Committee met on 15 April 2015, both in the morning and afternoon, to consider the Department’s Strategic Plan 2015-2020 and the Annual Performance Plan (APP) 2015-2016. The Committee further discussed the African Renaissance and International Cooperation Fund’s (ARF) Strategic Plan 2015-2018 and its Annual Performance Plan 2015-2016, together with the overall budget allocation for 2015-2016.

 

In preparation for the Committee’s deliberations on the budget allocation, the Committee received two sessions. The first session was aimed at enhancing the knowledge base for Members of the Committee on the international relations sector. The presentations were further intended to give a general overview of what the focus of the Department would be for the next five years; and the trends that were influential to the South African foreign policy. For the first part, the presenters were Ms L Mosala, Content Adviser and Mr D Madlala, Committee Researcher. The second session 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 2015-2016 financial year.

 

1.  Political overview of the global situation under which the Department operates

 

The international environment under which the Department conduct its work is succinctly captured in the following observations by the Minister in the 2015/2020 Strategic Plan:

 

“The current global environment is characterised by shifts in political, economic, social and cultural dynamics that impact on all parts of the world and include the realignment of new economic powers.  The role of new media and social networks, innovation, climate change, heightened demand for scarce resources and the changing nature of conflict and insecurity have changed the way diplomacy is conducted.  Therefore, in order for South Africa to be effective in meeting its challenges, it must shape its domestic and foreign policies to respond and adopt to global trends that are influencing the International system and therefore impacting on its national interests.”

 

Flowing from the aforesaid observations the Department presented various developments within the United Nations Organisation (UNO), European Union (EU), African Union (AU), Southern African Development Community (SADC) and many other multilateral institutions in which South Africa serves, eg:  G20, G77, World Trade Organisation (WTO), International Monitory Fund (IMF), World Bank and the Pan African Parliament (PAP), to mention but a few.

 

There are also new developments and relations between and among states for instance in the Americas, Europe, Middle East, Asia and Africa, all of which have a bearing in how South Africa ensures the pursuance of its own strategic interests.

Together with other African states, South Africa, is currently playing a pivotal role, in bringing about peace-building, peace-making and peace-enforcement within the African continent. 

 

1. Presentations in the first session

 

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. The presentation highlighted an analysis of the strategic plan of the Department and the ARF for the next five years. Key elements identified related to the trending sector issues, performance environment, organisational environment and the examination of whether the strategic objectives broadly linked to the National Development Plan.

 

The strategic objectives were also analysed to establish their linkages to the resources allocated. Possible areas for oversight were also identified for consideration by the Committee in its subsequent engagement with the Department. The presentation also pointed out that the Strategic Plan of the Department had linked strategic objectives to the National Development Plan and the aspirations of the 2015 State-of-the-Nation address.  The Committee had to ensure that the plans of the Department were aligned to the budget.

 

Mr Madlala’s contribution was on the expenditure focus of the Department for the medium term 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 subsequent discussion with the Department.

 

The Committee’s attention was drawn to the fact that, per directive from National Treasury to all departments, this financial year the Department received a reduced budget of R5, 698.6 billion, compared to a R5, 871.3 billion allocated in 2014/15. The expenditure trends in different programmes of the Department were explained for further consideration by the Committee.

 

1. Observations and concerns raised by the Committee

 

In the first session, the Committee sought more information on the following:

 

1. Whether the prescripts of the National Development Plan (NDP) in the new strategic plan emanated from the old or revised Chapter 7 of the NDP. There would be a need for a workshop on the NDP for capacity-building of members on the relevant chapter.

 

1. It would be important to know to what extent the Department engaged consultants and for which services.

 

1. It would be essential to know how the Department intended to implement and achieve its strategic goals with a reduced budget allocation. It was important for Department to indicate which non-essential services would be affected. It was cautioned that the Department should not do away with services that were central to the effective discharge of its mandate.

 

 

 

1. It was of great concern that Cabinet took a decision in 2009 for the establishment of the South African Development Partnership Agency (SADPA), but that has still not been implemented. It would benefit the Committee to know what challenges were facing the Department with regard to establishing the Agency.

 

1. It would be useful to understand the challenges facing the Department with regard to unpaid operational costs for the personnel of other departments based in missions abroad. The Department has raised a need for formal agreements (MOUs) with the said departments. The departments mentioned as having personnel in some of the missions included Home Affairs, Intelligence, Trade and Industry, Health, Agriculture, Defence.

 

1. More information was sought into whether the Public Private Partnerships (PPPs) policy is effective and what were the benefits. The local property portfolio of the Department is under this arrangement.

 

1. There should be more information as to what would happen to the current Deputy Directors-General (DDGs) when the new organogram is implemented.

 

1. It would be essential that the Minister is in attendance when discussing important documents that are tabled, like the Five Year Strategic Plan of the Department. The Committee would like to spend quality time with the Minister and her deputies to discuss, interrogate and interpret various International developments.

 

1. It would be useful to know the challenges with regard to the operationalization of the South African Council on International Relations (SACOIR).

 

1. In the context of the reform of the International Institutions there would be a need for a dedicated briefing on the International Criminal Court and South Africa’s obligations thereto.

 

1. In view of the fact that Provinces and Municipalities do engage in international MOUs.  The Department will have to explain how it will ensure that such MOUs and other agreements are not in conflict with South Africa’s national interests.

 

1. Responses by the presenters

 

Matters which required further clarification were responded to. These included the fact that the Locally Recruited Personnel (LRPs) would be provided for in the envisaged Foreign Service Bill; and that a detailed background on the operations of the ARF and its challenges would be sent to the member who requested information. The Committee resolved that the rest of the questions and concerns should be directed to the Department when presenting its budget vote.

 

1. Briefing by the Department on its Budget Vote 6: International Relations and Cooperation

 

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 further indicated that South Africa remained committed to keep alive the issues regarding the plight of the people of Western Sahara in their quest for self-determination; the continuing struggle of the people of Cuba to have the United States remove the economic embargo imposed on them over decades; as well as the conflict between Palestine and Israel.

 

1. Overview of the Department’s Medium Term Strategic Framework 2015-2020

 

It was reported that the overall mandate of the Department is to work for the realization of South Africa’s international relations policy objectives. The foundation of South Africa’s foreign policy is built on a desire to promote South Africa’s national interest and values, the African Renaissance and the creation of a better world for all[1].

 

It was highlighted that the Department derived its responsibility from the Constitution of South Africa 1996 and the National Development Plan, which was further detailed in the 2014-2019 Government’s Medium Term Strategic Framework (MTSF). Chapter 7 of the National Development Plan envisioned South Africa as a globally competitive economy and an influential, leading member of the international community. The plan saw South Africa as promoting and contributing globally to sustainable development, democracy, the rule of law, human rights, and peace and security.

 

The Department was also reported guided by the White Paper on South Africa’s Foreign Policy which directed the future focus of the Department. Outcome 11 of government’s 2014-2019 medium term strategic framework, under which Government sought to “Create a better South Africa and contribute to a better and safer Africa in a better world”, was said to further articulate the vision of South Africa in the regional, continental and international arenas.

 

During the course of the medium term, the spending focus would be on sustaining economic and political relations; participating in the global governance forums; enhancing operational capacity by strengthening policy and coordination in relation to outgoing South African development cooperation and to tabling of the SADPA Bill. Focus would also be on doing work related to the African Union Agenda 2063, to determine the Africa the people of South Africa want; including reviewing of the current legislative framework governing the Department’s operations abroad; tabling the Foreign Service Bill; undertaking of various infrastructure projects; and implementing the property management strategy.

 

In its execution of South Africa’s foreign policy, the Department is informed by South Africa’s current global status where the country was a respected, active and responsible global player. South Africa hosted the second largest number of foreign representation in the world and has a global footprint of 126 missions. South Africa is regarded as a champion for protection and promotion of human rights; and was an advocate for disarmament and the peaceful resolution of disputes. The country has placed Africa central in its foreign policy which forms the basis for cooperation with countries of the South and the North; and is known to champion cooperation and partnership over competition in the global arena.

 

South Africa was said to operate in a changing global environment which impact on the way the Department execute its mandate. The shift in political ideologies has brought about the emergence of nationalistic and conservative governments, which have been reducing development aid to developing countries.

The new trends in trade and economic patterns have resulted in Asia and Middle East surpassing Europe as South Africa’s number one trading partner. In two decades, trade with Asia and Middle East was said to have increased significantly, and so was the case in trade with Africa. It was pointed out that however, Europe remained South Africa’s main strategic trading bloc, while the region continued to recover from the impact of the global financial crisis.

 

The changing global environment has brought about new formations and regional groupings which include: Brazil, Russia, India, China, South Africa (BRICS); the Group of 20 (G20); Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa (CIVETS) and the Indian Ocean Rim Association (IORA). These new formations have brought about a growing influence in the global economic sphere. It was noted that South Africa attached great importance to its membership of BRICS.

 

BRICS as a formation may not be geographically wholly south. However, the fundamental principle is that the BRICS countries share a common vision to be pursued through economic cooperation, sharing of technical expertise, knowledge and experience to address their own domestic and international challenges.

 

The Department highlighted that the emerging trend has indicated that China has become the second biggest economy in the world after the United States. Brazil, Russia and India were placed 7th, 8th and 10th respectively. South Africa recognised this new configuration and, as a result, was paying more attention to these countries.

 

The Department indicated that the changing global environment has also brought about the growing impact of non-state actors and social movements, and their growing role towards influencing the direction of international relations. These movements have been brought about by the growing social disparities, economic and financial volatility, insecurity and scarce resources.

 

The mandate of the Department was said to be also responding to new global opportunities and frontiers which have introduced new economies such as; the Blue economy, the Green economy and the Knowledge economy, utilisation of outer space (such as the SKA project); and advances in technologies. These were seen as new economic frontiers for job creation and mobilisation of resources to address domestic challenges. Operation Phakisa sought to harness and leverage some of these sectors as part of implementing the aspirations of the National Development Plan.

 

The Department conducted its affairs and operations in a global environment, with circumstances and conditions which were often vastly different and diverse from the policy context which governs the Public Service within South Africa. The Department was therefore intending to table a Foreign Service Bill to cater for the unique work environment in which it operates. It was envisaged the Bill would allow the Department to fulfil its administrative and management responsibilities within the framework of the South African legislation. It would also create the necessary flexibility to address the challenges posed by it operating in a global level.

 

The Department has also noted an increase in economic migration figures in the world. However, infrastructure and provision of service has remained lagging behind, resulting in socio-economic and political implications. It has also noted trends in regionalism, where cooperation for mutual benefit was encouraged as opposed to protectionism.

The Southern African Development Community (SADC) was said to have acquired new allies who would assist the region re-industrialise in order to achieve regional integration.

 

South Africa was elected as a chair of the Group of 77 plus China for 2015. South Africa was well placed to spearhead the position of Africa and the South on the Post-2015 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.

 

1. Situational analysis around the world.

 

The Department gave a situational analysis which underlined a continued formation of new political and economic groupings. South Africa and African economies were increasingly linked to these new economic powers.

 

Foreign policy is conducted 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 Government’s own budget came under pressure, albeit at a time of greater international demands and obligations.

 

The international environment is characterized by major shifts in global political, economic, social and cultural dynamics that impacted on different parts of the world. The shifts include: the emergence of new economic powers; the new phenomenon of media and social networks which leave governments faced with the increased tension between upholding freedom of speech and expression, while seeking to manage the flow of information; environmental change; heightened demand for scarce resources and the changing nature of conflict and insecurity. In order to survive in this environment, South Africa had to shape its domestic and foreign policies to respond to global drivers and trends[2].

 

Globalisation has continued to accelerate the shift in the balance of political and economic power towards the emerging economies. The trading patterns continue to shift to new markets, with notable growth in South-South trade between the emerging economies. A lack of adequate infrastructure and industrial capacity remained a significant obstacle to stimulating intra-African regional trade. Intra-African trade was essential as an important driver of development and regional integration in Africa, as was the case with other regions of the world like the European Union and Asia.

 

The world population growth is skewed across the wealth lines with the developed world dealing with an aging population, and developing countries experiencing a youth bulge. This demographic pattern has huge social and political impact as well as serious economic consequences in the developing countries.

 

South Africa was implementing its diplomacy of Ubuntu towards achieving its national interests within a very complex and dynamic environment. South Africa’s national interest was largely based on eradicating poverty, unemployment and inequality. The main element was that South Africa’s national interest is, however, not framed in narrow nationalistic terms, it recognised the importance of others in the region and on the continent[3].

 

1. Distribution of the Budget

 

According to the 2015 Estimates of National Expenditure (ENE), the Department has been allocated a reduced budget of R5, 698.6 billion, compared to a R5, 871.3 allocated in 2014/15. Cabinet has approved budget reductions which would be effected on non-essential goods and services, compensation of employees and transfers to the ARF. The reduction would be effected over three years.

 

The Department would allocate its budget in alignment with its strategic objectives. The spending focus in the Medium Term Expenditure Framework (MTEF) period would be on advancing national priorities through economic and political bilateral relations; participating in global governance forums; advancing a rules-based multilateral system; a sustainable developed and economically integrated Africa; and the regional integration of the Southern African Development Community (SADC). There would be a concerted focus on economic diplomacy to contribute to South Africa achieving the vision and goals contained in the NDP.

 

1. Participation in Global Governance Forums

 

In the medium term, the Department would continue to participate in international meetings. This would be with the aim of influencing the outcomes of such forums to reflect national interest, and agendas of Africa and the South, especially on issues relating to resolution of international conflicts and address underdevelopment and eradication of poverty. The reform of the United Nations (UN) system would remain on the agenda. For the period from January to December 2015, South Africa would be negotiating as Chair of the Group of 77 (G77) plus China.

 

1. Continental Cooperation

 

Over the medium term, the Department would continue to participate in multilateral forums, including the African Union (AU) structures. The medium term tasks the Department with increasing the uptake of South Africa’s quota in AU structures from 30 per cent (which translates to 8 of 27 posts filled) to 60 per cent (16 posts filled).

 

The Department would remain committed to regional integration through its participation in the Southern African Development Community (SADC). The Department would remain involved in reviewing the SADC Regional Indicative Strategic Development Plan (RISJDP) as well as conceptualising the process for establishing a Free Trade Area led by the Department of Trade and Industry. In addition, the Department would continue to promote post-conflict reconstruction and development as well as participate in political reform in the Great Lakes region.

 

Over the medium-term, the Department would also focus on the operationalisation of the tripartite agreement between South Africa, Angola and the Democratic Republic of Congo (DRC) in support of the peace and security framework agreement for the Great Lakes Region.

 

The Department would continue supporting work related to deploying the SADC intervention brigade in the DRC, working with the Department of Defence to operationalise the AU peace and security architecture, and participating in the political processes to restore order and stability in the Central African Republic, the DRC, Libya, Somalia and South Sudan. The ENE added that these and other activities were funded over the medium term from R9.4 billion in the International Relations programme (Programme 2) and R1.5 billion in the International Cooperation programme (Programme 3).[4]

 

1. South-South Cooperation

 

South Africa was committed to strong cooperation among countries and groupings of the South. It would continue to support the development of common positions on political, economic, social and human rights issues essential for an effective response in addressing the historic marginalisation of countries in the South. For the period from January to December 2015, South Africa would negotiate as Chair of the Group of 77 (G77) plus China. In the medium term, South Africa would participate in meetings, among others, of the Non Aligned Movement, G77 plus China, 7th BRICS summit, the India, Brazil, South Africa (IBSA) ministerial, and the Forum for China-Africa Cooperation (FOCAC) summit.

 

1. North-South Cooperation

 

In the medium term, South Africa would continue pursuing the beneficial political and economic relations with countries and formations of the North. These remained as major actors in the international system and substantial sources of development assistance and foreign direct investment. South Africa would have engagements with the European Union; Korea; Nordic countries and with Tokyo International Conference on African Development (TICAD), which would hold its summit for the first time in Africa later this year.

 

1. Enhancing the Department’s Operational Capacity

 

According to the 2015 ENE the Department had intended to redefine its outgoing development cooperation over the medium-term. The Department has planned to table the Partnership Fund for Development Bill. The Bill which would seek to repeal the African Renaissance and International Cooperation Fund Act (2000) and provide a legislative framework for the establishment of the South African Development Partnership Agency. Cabinet has approved budget reductions of R335.3 million in 2015/16, R467.1 million in 2016/17 and R168.5 million in 2017/18 which would be effected on non-essential goods and services, compensation of employees and transfers to the African Renaissance and International Cooperation Fund. The fund was reported to have sufficient cash reserves to absorb the impact of the reductions and its operations would not be affected.[5]

 

Within the context of working in a global environment which is not defined by the public service regulations of South Africa, the Department would table the Foreign Services Bill over the term of Parliament. Both the work associated with development cooperation and development of the Foreign Services Bill were funded in the Administration programme (Programme 1) of the Department.[6]

 

It has been reported in the 2015 ENE that the Department’s international property portfolio consisted of 133 state owned properties and 800 rented properties. Presently, the Department has to spend approximately R575 million per year on leases where it did not own property. High rental costs were worsened in countries whereby the lease property market was not well regulated. Over the medium-term the Department would assess the viability of an acquisition and disposal strategy which would be comprised both a risk assessment and cost-benefit analysis. The intention of such an approach would be a shift from rental to ownership of properties and potential utilisation of other mechanisms such as public private partnerships (PPPs).

 

Over the medium-term, the Department would be completing the construction of chanceries and official residences in Tanzania, Malawi and the Netherlands. The Department would also enter into PPPs partnerships for constructing chanceries on vacant state owned land in India, Saudi Arabia, Senegal, Mali, Botswana and Uruguay. Spending on infrastructure increased from R205.2 million in 2011/12 to R213.5 million in 2014/15, and was expected to increase to R223.7 million in 2017/18. The funding was earmarked for infrastructure development, the acquisition of land and buildings, and the renovation or refurbishment of state owned infrastructure.[7]

 

All state owned properties are maintained annually from operational funds allocated to individual missions. At present, the Government owns 25 chanceries, one consulate, 35 official residences, 66 staff houses, 16 plots of vacant land and one parking bay[8].

 

1. Expenditure trends for departmental programmes

 

Table 1 Budget Allocation-International Relations and Cooperation

 

Programme	Adjusted appropriation	Budget			Nominal % change	Real % change
R million	2014/15	2015/16	2016/17	2017/18	2014/15-2015/16
Administration	1 428.4	1 418.5	1 468.7	1 535.3	-0.69 per cent	-5.24 per cent
International Relations	3 056.8	2 931.7	3 131.4	3 304.0	-4.09 per cent	-8.49 per cent
International Cooperation	484.8	466.9	483.5	512.2	-3.69 per cent	-8.10 per cent
Public Diplomacy and Protocol Services	309.3	246.3	256.4	270.7	-20.37 per cent	-24.02 per cent
International Transfers	825.0	635.2	603.5	921.1	-23.01 per cent	-26.53 per cent
TOTAL	6 104.3	5 698.6	5 943.5	6 543.3	-6.65 per cent	-10.92 per cent

Source: Estimates of National Expenditure 2015

 

Table 1 illustrates the medium term expenditure estimates and describes the changes in allocations from the years 2014/15 and 2015/16. For programme 1: Administration, the nominal change was -0.69 per cent and the real change was -5.24 per cent. Programme 2: International Relations has a nominal change of -4.09 per cent and the real change of -8.49 per cent.

 

Programme 3: International Cooperation, had a nominal change of -3.69 per cent and a real change of -8.10 per cent. Programme 4: Public Diplomacy and Protocol Services experienced a nominal change of -20.37 per cent and a real change of -24.02 per cent. Finally, Programme 5: International Transfers experienced a nominal change of -23.01 per cent and a real change of -26.53 per cent.

 

Overall, the budget allocation for the Department declines by R405.7 million in 2015/16 from the previous financial year. As a result, the reduction was effected to all five programmes in 2015/16.

 

The Cabinet-approved budget reductions were to be effected on non-essential goods and services, compensation of employees and the transfers to the African Renaissance Fund. The current situation has been reflected within the sub-programme on compensation of employees receiving R2 526 213 billion as opposed to R2 701 642 billion in the 2014/15 financial year.

 

The item non-essential goods and services receives R2 247 271 billion as opposed to R2 220 279 billion in the 2014/15 financial year. Reductions have been reflected on computer services, operating leases, travel and subsistence and operating payments. The item transfers and subsidies would receive an amount of R641 187 million as opposed to R872 276 million received in 2014/15 financial year. Reductions have been reflected on funds to the ARF, and on transfers of fees to international organisations and foreign countries.

 

In response to budget reductions, the Department has undertaken to implement the following additional cost containment measures:

 

• Review of the organisational functional assessment for both Head Office and missions abroad;
• Review the provision of support services for the daily operations missions;
• Enhancing information and communication technology through modernising and implementing of an enterprise resource planning system; and
• Implementation of property management strategy.

 

The Department cautioned that the 2015 medium term allocation did not cater for the foreign exchange fluctuations. As a result, the Department remained vulnerable to foreign exchange rate losses, which necessitated a review of how the foreign operations would be supported. The Department would address the shortfall in the usual manner, through the adjustment estimates budget process later in the year.

 

1. Expenditure per programme

 

1. Programme 1: Administration

 

The programme has been allocated R 1, 418.5 billion for 2015/16 financial year.

The purpose of the programme was to provide leadership, management and support services to the Department.

It consisted of four budget sub-programmes, and it was aimed to develop overall policy and manage the Department with the intention of ensuring an efficient, effective, economical and fully capacitated Department.

 

The programme was responsible for spending on corporate services, office accommodation and foreign fixed assets, compensation of employees, travel and subsistence, operating payments, leases, computer services and capital expenditure.

 

Expenditure under this programme has been increasing largely due to the challenge of managing a geographically decentralised Department that has to incur expenditure in multiple currencies. Currency fluctuations affect budget totals as they were not predictable.

 

The Departmental Management sub-programme adjusted appropriation was R15.6 million in 2014/15 with an expenditure estimate of R16.4 million in 2015/16. In addition, the Audit Services Sub-programme adjusted appropriation was R21.1 million in 2014/15 with an expenditure estimate of R19.8 million in 2015/16.[9]

 

The 2015 ENE also indicated that the Financial Management sub-programme adjusted appropriation was R124.4 million in 2014/15 with an expenditure estimate of R131.0 million in 2015/16. The Corporate Services sub-programme adjusted appropriation was R687.8 million in 2014/15 with an expenditure estimate of R642.6 million in 2015/16. The Diplomatic Training, Research and Development sub-programme adjusted appropriation was R60.5 million which has an expenditure estimate of R66.5 million.

 

In terms of the Foreign Fixed Assets Management sub-programme, the adjusted appropriation was R221.3 million in 2014/15 which would increase to R223.8 million in 2015/16 in terms of the estimated expenditure. Finally, regarding the Office Accommodation sub-programme, the adjusted appropriation was R282.9 million in 2014/15 which would increase to R312.2 million in 2015/16 in terms of the estimated expenditure.[10]

 

1. 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. It is aimed to contribute to the realisation of national priorities through strengthened bilateral cooperation with individual countries of the South and the North, prioritising increased exports of South African goods and services; increase Foreign Direct Investment (FDI) with technology transfers into value-added industries and mineral beneficiation; as well as increased inbound tourism and skills enhancement.

 

Sub-programmes

 

• Africa embraced relevant national priorities by strengthening bilateral cooperation with individual countries in Africa. This would be achieved 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.[11]

 

• Asia and Middle East embraced relevant national priorities by strengthening bilateral cooperation with individual countries in Asia and the Middle East. This would be achieved 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.[12]

 

• Americas and Caribbean embraced relevant national priorities by strengthening bilateral cooperation with individual countries in the Americas and the Caribbean. This would be achieved 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.

 

• Europe embraced relevant national priorities by strengthening bilateral cooperation with individual countries in Europe. This would be achieved 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.

 

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, Americas and Caribbean, Asia and the Middle East.[13]

 

According to the 2015 ENE, while there were increases in expenditure between the audited outcome figures in 2013/14 and the adjusted appropriation in 2014/15 for each sub-programme, there would be a reduction in expenditure for each sub-programme in 2015/16.

 

1. Programme 3: International Cooperation

 

The programme was aimed at facilitating participation in international organisations and institutions in line with South Africa’s national values and foreign policy objectives.

 

Sub-programmes

• Global System of Governance: It is intended to provide 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.[14]

 

• Continental Cooperation: It is intended to provide for the enhancement of the African Agenda and sustainable development.[15]

 

• South-South Cooperation: It is intended to provide for partnerships with countries of the South in advancing South Africa’s own development needs and the aspirations of the African Agenda. It is also intended to create political, economic and social convergence for the fight against poverty, underdevelopment and the marginalisation of the South.[16]

 

• South-North Dialogue: It is intended to provide for South Africa’s bilateral and multilateral engagements. It is also intended to consolidate and strengthen relations with organisations of the North, and to advance and support national priorities, the African Agenda and the developmental agenda of the South.[17]

 

The spending focus over the medium term would be towards achieving this programme’s strategic objectives in the Global System of Governance and Continental Cooperation sub-programmes. Spending would be mainly on compensation of employees, operating leases payments, and travel and subsistence.[18]

 

According to the 2015 ENE, while there were increases in expenditure between the audited outcome figures in 2013/14 and the adjusted appropriation in 2014/15 for each sub-programme, there would be a reduction in estimated expenditure for each sub-programme in 2015/16. The North-South Dialogue sub-programme has an adjusted appropriation of R74.3 million in 2014/15 and an estimated expenditure of R76.3 million in 2015/16.

 

1. Programme 4: Public Diplomacy and Protocol Services

 

The programme was aimed to communicate South Africa’s role and position in international relations in the domestic and international arenas, and provide protocol services.

 

• Public Diplomacy was aimed to promote a positive projection of South Africa’s image; communicate foreign policy positions to both domestic and foreign audiences; and market and brands South Africa by using public diplomacy platforms, strategies, products and services.[19]

 

• Protocol Services was aimed to: facilitate incoming and outgoing high level visits and ceremonial events; coordinate and regulate engagement with the local diplomatic community; provide protocol advice and support to the various spheres of government; facilitates the hosting of international conferences in South Africa; and manage state protocol lounges and guesthouses.[20]

 

According to the 2015 ENE, the audited outcome of the Public Diplomacy sub-programme was R74 million in 2013/14 and the adjusted appropriation was R62.8 million in 2014/15, which was a reduction for this sub-programme. The Public Diplomacy sub-programme would experience a further reduction in 2015/16 to a figure of R62.3 million. In the past the Committee has felt that the Public Diplomacy sub-programmes budget should increase to ensure that the foreign policy of South Africa is effectively communicated to the people of South Africa and the world.

 

The Protocol Services sub-programme had an adjusted appropriation of R246.5 million in 2014/15 which was an increase from the R207.6 million audited outcome of 2013/14. However, it is projected that the estimated expenditure for 2015/16 would be R183.9 million which represented a decrease from 2014/15.

 

1. Programme 5: International Transfers

 

The purpose of the programme was to fund membership fees and transfers to international organisations such as the united Nations Organisations, African Union, Southern African Development Community, Pan African Parliament, G20, G77, World Trade Organisation to mention but a few.

 

Sub-programmes

 

• Departmental Agencies facilitated the transfer to the African Renaissance and International Cooperation Fund, a public entity of the department.[21]

 

• Membership Contribution facilitated transfers to international organisations.[22]

 

According 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. The adjusted appropriation for the Departmental Agencies sub-programme was R285.6 million in 2014/15 and the estimated expenditure for 2015/16 would be R154.0 million.

 

This would be the result of the reduction in the appropriation to the African Renaissance and International Cooperation Fund which would eventually be replaced by the South African Development Partnership Agency once the African Renaissance and International Cooperation Fund Act is repealed by the Development Partnership Fund Act.

 

The adjusted appropriation for the Membership Contribution sub-programme was R538 million in 2014/15 and the estimated expenditure for 2015/16 would be R481.2 million. This sub-programme was very sensitive to currency exchange, the anticipated reduction could be the result of the once-off costs associated with hosting the next African Union Summit in June 2015.

 

1. Long-term infrastructure and other capital plans

 

Due to the uniqueness of its mandate, the Department has to execute its mandate beyond the borders of South Africa. This phenomenon has placed high demand on the Department for the provision of accommodation, facilities, goods and services that allow optimal efficiency and effectiveness in the execution of its mandate. Apart from providing for its own needs, the Department was also responsible for facilitating the provision of accommodation and movable assets for partner departments which have representation abroad[23]. Currently South Africa is represented in 108 countries globally and conducts business from 126 diplomatic and consular missions.

 

The Department was thus responsible for two distinct property portfolios: the local property portfolio comprising its Head Office building in Pretoria; state protocol lounges at three international airports in Cape Town, Durban and OR Tambo; two diplomatic guesthouses; as well as office accommodation for the United Nations, Pan African Parliament and the NEPAD Secretariat.

 

The international property portfolio comprise chanceries, official residences and staff houses. The majority of staff houses were leased while a small number were state-owned. The Department projects that it would continue to prioritise acquiring land and properties; and assess existing properties to determine which ones would require renovations or maintenance works.

 

Public Private Partnerships (PPPs)

 

The Headquarters of the Department and guesthouses were constructed under a PPPs arrangement. The same facilities management company maintained the properties on behalf of the Department. The Department has to pay a unitary fee for the services, amounting to R101 million per annum for the Office and guest houses. The PPPs agreement would continue until September 2034.

 

1. African Renaissance and International Cooperation Fund

 

The Department has one entity, the African Renaissance and International Cooperation Fund (ARF). After 1994, the democratic government took a deliberate decision to establish a fund, to promote development assistance and consolidate peace and reconstruction in Africa and elsewhere in the world. The fund was thus established in 2000 pursuant to an Act of Parliament, the African Renaissance and International Cooperation Fund Act (Act no. 51 of 2000).

 

The fund was piloted to give practical effect to the vision of an African Renaissance, being the revival of economic and social development agenda for Africa.  This would include promotion of democracy and good governance, the prevention and resolution of conflicts, socioeconomic development and integration, human resource development and infrastructure development. Thus, the strategic approach of the ARF was couched in pursuance of South Africa’s foreign policy objectives as well as Africa’s developmental agenda.

 

The ARF is located in the Department, under the supervision of the Director-General. The ARF’s activities were administered and managed by its advisory committee, which would comprise representatives from the Department and National Treasury. This committee would make recommendations to the two ministers for concurrence to fund all its projects. Until this financial year, the ARF did not have any personnel and allocations were earmarked for the funding of projects. It has been completely supported and administered by the Department.  Transfers to the Fund were included in the monies appropriated to the Department. Countries in need of assistance apply for funding from the fund.

 

On 2 December 2009, Cabinet approved the proposal from the Department for the establishment of the South African Development Partnership Agency (SADPA)[24]. It is aimed to function as a body/agency to manage, coordinate and facilitate all South African official outgoing development cooperation programmes and projects. The legislative process for establishing the agency was under way, with the Partnership Fund for Development Bill reportedly 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. However, the Committee has not been made aware of the tabling of the Bill in Parliament.

 

It was reported in the 2014 Estimates of National Expenditure that the expenditure on projects declined significantly, since 2006, due to strategic and operational inefficiencies within the fund. However, during 2014/15 financial year, a process of implementing restructuring began in order to address the inefficiencies in the operations of the ARF. The fund was able to appoint a full time secretariat for a period of six months as part of the transitional arrangements towards establishing SADPA. The fund also adopted terms of reference for the Advisory Committee; and furthermore, the Accounting Officer appointed the audit and risk committees; while the Department developed an operational framework and adopted policies and procedures relevant to the ARF.

 

1. Observations and concerns raised by the Committee

 

1. While acknowledging that it was a Government directive affecting all departments to receive reduced medium term budget allocations, it was noted that it is a double blow to the Department, as the reduced budget would still be subjected to foreign exchange fluctuations. There was a further concern whether the budget cuts would not have adverse effect on the audit outcome at the end of the medium term period.

 

1. Due to its unique mandate, the bulk of operations and conduct of foreign policy by the Department were to occur outside the country, and the Department was expected to attract foreign investment for the benefit of South Africa. It was envisaged that the reduction in overall budget had the potential to render the work of the Department very difficult in its effort to respond to domestic priorities.

 

1. Similar concerns regarding the reduced budget of the Department were raised with regard to medium term allocations to the ARF, amounting to R154 million. The issue at hand was whether the budgetary cuts would not adversely affect the mandate and operations of the ARF in furtherance of the African Agenda. An issue was also raised regarding whether the available reserved funds would be transferred to a newly established Agency in the future.

 

1. The notion of a One-Stop-Shop for the promotion, through Seminars, of the country as a tourist destination and a viable place for trade, was regarded as a noble one, however, the line departments should also contribute financially. This was seen as a cost saving area. More information was sought regarding whether the planned seminars and structured bilateral mechanisms were aligned to the reduced budget.

 

1. Concerns were further raised on the poor conditions of the ICT systems in the embassies and the Department.  More information was required as to how the project of upgrading the ICT infrastructure of the Department would be impacted upon by the reduced budget.

 

 

1. Despite indications that the new premises of the Pan African Parliament (PAP) would be ready by 2016, it was noted that the issue of providing PAP with dedicated premises for its office accommodation has been on the table for a while. The Department should inform the Committee where the challenges were in this regard.

 

1. The increased investments that have come to South Africa could be largely due to the increased South Africa’s footprint throughout the world, and the Department has to be commended. 

 

Reduction of South Africa’s footprint in the world would compromise the flow of such investments. Clarity was sought on whether South Africa House in London is leased or is owned by South Africa. Further elaboration was sought on the significance of opening a mission in Colombia.

 

1. It was noted that one of the new trends in economy is the Blue Economy. High seas piracy was seen as having potential of creating risks for the type of activities envisaged. The Department could elaborate more on South Africa’s collaboration with other countries to curb the scourge of piracy. 

 

1. It was noted that the hosting of the African Union mid-year summit in June 2015, at Sandton City, was not previously envisaged. A budget projection was necessary in order to give a scenario of what should be expected.

 

1. A reason was sought as to why reforms were seemingly only called for the United Nations Security Council, and not all UN system with its agencies. It was felt that the Five Permanent members were abusing the veto power in decisions taken in the UN Security Council.

 

1. An assessment was sought as to the attitude of other African countries on the outcomes of the United States-Africa Leadership Summit and the renewal of the African Growth and Opportunity Act (AGOA).

 

1. The mentioned processes for reviewing and reprioritisation in Missions was a welcome initiative.

 

1. Further elaboration was sought regarding how the Department would link the process of review of leases in the Missions with the reduced budget and reprioritisation of Missions.

 

1. South Africa defines Africa as being central to its foreign policy. Furthermore, South Africa subscribes to the principle of Africa providing its own solutions to African challenges. As a result, the country would have to honour revised assessment fees for membership to continental organisations.

 

1. There was an important role envisaged for Public Diplomacy in the wake of attacks on foreign nationals. There was therefore a concern over the budget cuts over time on this programme.

 

1. Information was also required relating to the vacancy rate and how the issue was to be addressed within the reduced budget.

 

1. The commendable legacy of the activities of the ARF in Africa and elsewhere in the world must be documented; the good work as a tool of South Africa’s foreign policy must be continued under SADPA when established. Furthermore, amongst the good work of the ARF, should be prioritisation of Voter Education and the updating Voters Roll in some of the African countries.

 

1. A concern was raised that, when Mozambique experienced floods, South Africa’s response was quick; but with a similar floods situation in Malawi, the response was slow.

 

1. More information was required regarding whether the ARF was dealing with both loans and financial assistance. The other issues were on how many loans it gave out and whether they have been serviced; the type of training offered under the ARF; and the criteria used for assistance.

 

1. More information was sought as to whether other international models were studied in readiness to South Africa establishing its own development agency. It was further highlighted that the improvements in governance issues of SADPA would address the challenges experienced by the ARF.

 

1. Responses by the Department

 

1. The Department responded that the budget cuts were not expected to hugely affect its national programmes. The only challenge was the exchange rate fluctuations which it would have to encounter along the way.  In response to these budget adjustments, the Department has embarked on a number of mitigating and cost saving measures in order to achieve its strategic objectives albeit with less money in the purse.

 

1. The Department would normally require packaged information from line departments, for example, information on tourism and trade opportunities, then the embassies would embark on the activities as budgeted for. The Department has been enlisting assistance from line departments.

 

1. It would be unfortunate if a decision was to be taken that South Africa’s footprint in the world be reduced. The existence of missions was seen as a driver for more markets and for attracting Foreign Direct Investment for South Africa. Colombia was a new very attractive emerging market and was part of the new forum of emerging economies, Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa (CIVETS)

 

1. With regard to the ARF, the budget cuts would be of no impact on its operations in Africa or elsewhere in pursuit of the African Agenda 2063. The fund was reported to have sufficient cash reserves (R1 billion) to absorb the impact of the reductions and its operations would not be adversely affected. It was reported that processes were underway for the Department to table a Bill for the repeal of the ARF Act and provide for the establishment of the South African Development Partnership Agency (SADPA). The existing funds in the ARF would thus be transferred to the new agency, SADPA, when established.

 

1. South Africa would need to secure the sea lines around its territory to facilitate a piracy free corridor for the shipping traffic around its territory. There is a need for a strong and capable defence systems and modern equipment to satisfactorily protect the shores. Operation Phakisa which is aimed to boost the blue economy would be creating coastal cities providing stop-overs for repairs of shipping vessels passing around the shoreline.

 

1. Attacks on Foreign Nationals was a sad phenomenon in South Africa; more so when it occurred on the eve of South Africa hosting the mid-year African Union summit in June 2015. There was a need to look at the migration policy, border management, illegal foreign nationals, poverty and unemployment and illicit goods. Office in provinces where both foreigners and locals could be orientated of the importance of welcoming other Africans into the country as an expression of Ubuntu.

 

1. The issues regarding reforms of other institutions of global governance were on the table. The United States congress has not considered the review and ratification of the laws relating to the governance of the International Monetary Fund (IMF). African countries aspire to have the African Growth and Opportunity Act (AGOA) renewed for all in 2015.

 

1. The South African mission in Egypt has attended all court hearings relating to and paid visits to the South African man detained in Egypt. The concern raised with the mission was that the gentleman has a dual citizenship.  In Chicago, there were challenges with the service provider for use of the diplomatic bag, as such delays in transporting documents were inevitable. The visa office in London was very busy, and since it is detached from the main diplomatic precinct, there were communication problems being experienced, which would soon be addressed in consultation with the Department of Home Affairs.

 

1. The agreement between BRICS countries for currency swap was currently before parliaments of the member states. South African Parliament should consider and ratify the agreement. (However, the Committee was not yet aware of the tabling of the agreement in question).

 

1. The lease agreement for the Pan African Parliament has been extended for another five years, pending the eventuality of building its headquarters by 2016. The process of identifying a suitable site was in the process of finalisation in collaboration with the Department of Public Works. The Department would honour the call made by the Committee for a dedicated briefing on the update on the matter. 

 

1. There was indeed a need for documenting the good work carried on under the ARF. There was also a need to support and improve democratic institutions in Africa. Voter education, voters roll have been areas that the country has requested the Independent Electoral Commission to focus on in relevant countries, to ensure that citizens of those countries have access to democratic processes. Police and defence training, how to run government administration and ploughing of rice training have been some of the activities under the ARF in South Sudan, Chad, the Democratic Republic of Congo, to mention a few.

 

1. The criteria for funding under the ARF has been in response to requests made by needy countries, or through requests made by United Nations agencies. The response to assist Mozambique was faster as there were already in existence, bilateral mechanisms for search and rescue between the Defence forces; no such mechanism existed with Malawi. However, South Africa had quickly responded to the UN request for financial assistance to Malawi before being there physically.

 

1. The Department has visited a number of countries, including the United Kingdom, Sweden, Canada, Brazil, Turkey, for international best practice in identifying a model for SADPA. All assets of the ARF would be transferred to the new agency. There have been no loans except for the credit line created for the Cuba agreement on economic assistance; and the R1 billion reserve would be properly recorded.

 

 

1. Conclusions

 

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

 

The Department has been operating on a shoe-string budget year after year. This year in particular, it has a reduced budget which would further be affected by the imminent foreign exchange currency fluctuations. Its main operations abroad have previously been affected by currency fluctuations.

 

However, the Committee was encouraged by the Department’s commitment and resolve to achieve its strategic objectives albeit with a reduced budget. Graduation from the qualified audit opinion baseline should be the Department’s goal for the medium term; and it should adhere to and implement the cost containment measures it has agreed upon with National Treasury.

 

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 prescribed 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 for the Department’s 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.

 

1. 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 Parliament of this report:

 

The Minister should consider:

 

15.1 Reprioritising expenditure for the achievement of key strategic objectives of the        Department and those of the African Renaissance Fund, while navigating with the reduced budget which will further be impacted upon by foreign exchange fluctuations.

 

15.2.     Presenting on the progress with regard to the processes towards providing Pan African Parliament with permanent office accommodation.

 

15.3.     Sharing with the Committee the outcomes of processes for reviewing and reprioritisation in the missions.

 

15.4.     Giving an update on the progress regarding a review being undertaken by the Department on the practice of leasing as opposed to purchasing property in the missions.

 

15.5.     Prioritising public diplomacy programme as an instrument for promoting a positive projection of South Africa’s image nationally and internationally. The public diplomacy strategy should be strengthened.

 

15.6.     Documenting the legacy of the good work the African Renaissance Fund has contributed in Africa and elsewhere since 2001, the intervention of South Africa in post conflict reconstruction, mediation, human development, good governance, democracy and humanitarian situations across the continent should be commended and documented accordingly as reference point for the work South Africa has been engaged in, without any expectation of compensation, in the continent to better the lives of the African peoples.

 

15.7.     Presenting on the strategy for Department’s contribution to aspirations of the Operation Phakisa initiative, and its focus on the blue economy as a new diplomatic concept in growing the economy utilising the ocean resources.

 

15.8.     Approaching the departments which have personnel in the missions abroad and finalising Memoranda of Understanding (MoUs) necessary for effecting transfer of payments for operational costs of the concerned personnel to the Department.

 

15.9.     Presenting a detailed report on the status of processes aimed to finalise the operationalization of the South African Council on International Relations (SACOIR).

 

15.10.   Presenting an update report on the implementation of property management strategy.

 

The Committee recommends that the Budget Vote: 6 International Relations and Cooperation be passed.

 

Report be considered.

 

 

Sources:

State of the Nation Addresses February 2014 and February 2015

The African Renaissance and International Fund Act 2000

Department of International Relations and Cooperation Strategic Plan 2015-2020

Department of International Relations and Cooperation Annual Performance Plan 2015-2016

African Renaissance and International Fund Strategic Plan 2015-2018

African Renaissance and International Fund Annual Performance Plan 2015-2016

Department of International Relations and Cooperation briefings 2014 to 2015

National Treasury Estimates of National Expenditure 2015

 

 

 

 

---

[1] Department of International Relations and Cooperation, Strategic Plan 2015-2020

[2] Department of International Relations and Cooperation, Strategic Plan 2015-2020

[3] Department of International Relations and Cooperation, Strategic Plan 2015-2020

[4] Ibid

[5] Ibid

[6] National Treasury Estimates of National Expenditure 2015

[7] Ibid

[8] Department of International Relations and Cooperation, Annual Performance Plan 2015/16, pg 108

[9] National Treasury Estimates of National Expenditure 2015

[10] Ibid

[11] National Treasury Estimates of National Expenditure 2015

[12] Ibid

[13] Ibid

[14] Ibid

[15] Ibid

[16] Ibid

[17] National Treasury Estimates of National Expenditure 2015

[18] Ibid

[19] National Treasury Estimates of National Expenditure 2015

[20] Ibid

[21] National Treasury Estimates of National Expenditure 2015

[22] Ibid

[23] Department of International Relations and Cooperation Strategic Plan 2015-2020

[24] African Renaissance and International Cooperation Fund: Strategic Plan 2015-2018