ATC161025: Budgetary Review and Recommendation Report of the Portfolio Committee on International Relations and Cooperation, dated 25 October 2016

International Relations

Budgetary Review and Recommendation Report of the Portfolio Committee on International Relations and Cooperation, dated 25 October 2016
 

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

 

1. Introduction

 

1. The mandate of the Committee

 

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

 

1.2 Purpose of the Budgetary Review and Recommendation Report

 

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

 

In compiling this report, the Committee as mandated by section 5 of the Money Bills Procedures and Related Matters Amendment Act 2009, based the assessment of the Department on its service delivery plan as outlined in the 2015 State of the Nation Address. The Committee linked domestic priorities to the Department’s Medium Term Strategic Framework for the period 2014 – 2019 and aligned the information to priorities and measurable objectives as set out in the strategic plan.

 

The Committee examined the expenditure report as published by the National Treasury, commonly known as section 32 Reports of the Public Finance Management Act (PFMA) 1999 (Act 1 of 1999). Reference was also made to the Auditor General’s report on the 2015/16 Budget Vote 6 and the Department’s Annual Report, which contains the Department’s service delivery information, reflecting its performance in 2015/16 reporting period.

 

1.3 The core function and mandate of the Department

 

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

 

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

 

1.4        Measurable Objectives of the Department

 

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

 

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

 

During the reporting period, the thrust of the work of the Department remained anchored on these overarching priorities as confirmed by the January 2015 Cabinet Lekgotla and the 2015 State of the Nation Address (SONA). In its work on these priorities, the Department is supported by the following activities:

 

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

 

2.         Policy focus areas

 

2.1        Analysis of the Department’s prevailing strategic and operational plan

 

The Annual report reflects the highlights of a number of diplomatic activities carried out by the Department including its Missions abroad. At the time of reporting, South Africa’s representative drive had grown from 34 in 1994 to 126 diplomatic missions in 2015/16, situated in 109 countries throughout the world.

 

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

 

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

 

2.2        2015 State of the Nation Address

 

In his 2015 State-of-the-Nation Address[4], President Jacob Zuma indicated that there would be continuity in South Africa’s foreign policy, and the consistent theme of foreign policy playing a role in the development of Africa and South Africa would remain. He further indicated that South Africa’s foreign policy would be aligned to the National Development Plan. President Zuma stated that South Africa would continue to contribute to building a better Africa, and that South Africa continued to support peace and security and regional economic integration in the continent.

 

The President mentioned a number of key outcomes resulting from these efforts, including the fact that the African Capacity for Immediate Response to Crises (ACIRC), of which South Africa is a contributing and founding member, has been operationalised. The South African National Defence Force and South African Police Service continued to participate diligently in the conflict prevention and peacekeeping on the continent.

 

South Africa also continued to support conflict resolution initiatives in Lesotho, Sri Lanka and South Sudan, led by the Deputy President[5]. He further said foreign policy should remain aligned to the National Development Plan (NDP). Regarding South-South cooperation, it was noted that economic cooperation with South Africa’s BRICS partners was strengthened when the first two intergovernmental agreements were concluded on the occasion of the sixth BRICS Summit. This was the Agreement on the New Development Bank and the Treaty Establishing a Contingent Reserve Arrangement[6]. (Presidency 2016).

 

The President discussed the importance of South Africa’s North-South Dialogue, by noting that countries of the developed North would remain important strategic partners for South Africa through which the country is able to advance its national and foreign policy. President Zuma emphasised that South Africa has a valuable partnership with the European Union, such as the infrastructure Investment Programme for South Africa valued at approximately R1.5 billion.

 

The President highlighted that the renewal of the African Growth and Opportunity Act beyond September 2015; and a pledge to support African-led peace initiatives on the continent, are among the significant outcomes of the United States (US)-Africa leadership Summit held in the US last year[7]. President Zuma also touched briefly on South Africa’s policy of participating in institutions of global governance. In this regard, President Zuma stated that at a multilateral level, 2015 marked the 70th anniversary of the United Nations (UN) which brings into sharp focus the need to transform the UN Security Council and other international institutions (Presidency 2015).

 

The President made mention of efforts to have national liberation heroes, Moses Kotane and JB Marks reburied in South Africa. In this regard, President Zuma thanked the government and people of the Russian Federation for looking after the remains of those liberation heroes with dignity for so many decades (Presidency 2015). This can be seen as a good example of the importance of South Africa’s bilateral relations and the need to further strengthen ties with our strategic partners in years to come.

 

2.3        Alignment to National Development Plan (NDP) and the 2015 MTBP Statement and the 2014-2019 Medium term strategic framework.

 

In Chapter 7 of the National Development Plan (NDP) entitled “Positioning South Africa in the world”, the National Planning Commission argued that government’s global and regional policy-making stance should be South Africa-centric and improve South Africa’s integration in the region, on the continent, among developing countries, and in the world with measurable outcomes. The National Planning Commission also argues that policy-making should be guided by the following principles and objectives[8]:

 

• Focus on what is achievable without over-committing to possibilities of regional and continental integration.
• Foreign Policy should be evaluated on a regular basis to “ensure that national interests are maximised”.
• Remain an influential member of the international community;
• Deepen cooperation with Brazil, Russia, India and China as part of the BRICS group while promoting regional and continental integration;
• Stabilise the regional political economy through increased integration and cooperation; and

 

Achieve measurable outcomes related to food, energy, education, health, transport and communication infrastructure, national defence, adjustment to climate change and economic growth to benefit all South Africans[9].

 

2.4        Service delivery environment

 

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

 

The plan states that: the country’s foreign policy should be shaped by the interplay between diplomatic, political, security, environmental, economic and regional dynamics that define international relations; the country position itself as one of Africa’s powerhouses, leading development and growth on the continent; and integration with the Brazil-Russia-India-China-South Africa group of countries should be deepened[10]. In this regard the Department, contributes to the realisation of the plan’s development goals by continuing to support regional and continental processes, responding to and resolving crises, strengthening regional integration, contributing to an enabling trade environment, increasing intra-African trade, and championing sustainable development and opportunities in Africa.

 

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

 

As such, the integration of the Southern African Development Community (SADC) and regional neighbours is critical for the economic development of the region and for South Africa’s global competitiveness. South Africa would continue to use structured bilateral mechanisms and high level engagements to reinforce and expand cooperation in the political economic, and social and security spheres. This would be for the purposes of contributing to the achievement of national priorities[11].

The Committee in its analysis of the Annual report 2015/16, observed that the Department continued with its concerted efforts to execute South Africa’s international relations strategy to address the country’s domestic challenges. In this regard, the National Development Plan enjoins the Department to contribute towards addressing the identified triple challenges of poverty, inequality and underdevelopment. The NDP requires the Department to create a better life for all South Africans while meeting the country’s international obligations in a dynamic and complex global terrain. In this vein, South Africa’s foreign policy objectives remained predicted on the country’s national interest and identity.

 

In terms of trade and foreign direct investments generated through bilateral relations mechanisms facilitated by the Department, data from the South African Revenue Services (SARS)[12], showed a significant growth of South Africa’s exports to Africa amounting to around R166 million, Europe R238 million, America R100 million, Asia R301 million. Noted also are many European and American companies doing business in South Africa and creating the much needed employment with spin-off of alleviation of poverty.

 

2.5        Global delivery environment

 

During the reporting period, the Department continued to operate in an unpredictable and volatile world, characterized by the inexorable shift to a multipolar world with the rise of new powers in the South. It operated in an ever-changing environment, but through a consistent and principled approach to the implementation of diplomacy. South Africa is now a respected member of the international community with a dynamic and independent foreign policy that speaks to domestic priorities. During this time, South African foreign policy and diplomacy had to respond to global drivers and trends that influenced both the international system and the pursuit of South Africa’s domestic priorities.

 

The emergence and growth of new economic powers continued to shift the balance of the global distribution of power. This continued to challenge the established political order and place pressure on international organisations to reflect new political and economic realities.

 

2.6        Major highlights in the work of the Department in 2015/16 financial year

 

During this reporting period, South Africa actively participated in collective regional peace and security efforts. South Africa was involved and it continues to play a leading role in the restoration of constitutional normalcy in Lesotho as mandated by the Southern African Development Community (SADC). South Africa was also part of the collective which contributed towards resolving the resurgent instability in the Eastern Democratic Republic of Congo, Burundi and South Sudan, among others. South Africa continued to play a role towards the broader continental security agenda through its membership of the African Union Peace and Security Council (AUPSC).

 

South Africa is aware of the inextricable link between regional stability and prosperity. It therefore participated in the signing of the SADC-East Africa Community (EAC),-Common Market for Eastern and Southern Africa (COMESA) Tripartite Free Trade Area in June 2015 in Egypt. There were outstanding issues on which negotiations were to ensue, before South Africa signs the Agreement. These negotiations are a building bloc towards the conclusion of negotiations for the Continental Free Trade Area Agreement by 2017.

 

Pursuant to its commitment to the ideal of Pan-Africanism, it was reported that South Africa spared no energy in finding solutions to African challenges through collective and individual country efforts. South Africa hosted the 25th African Union (AU) Ordinary Session of Heads of State and Government Summit, which approved Agenda 2063’s first Ten-Year Implementation Plan and funding mechanisms. The continent believes that Agenda 2063 will deliver the Africa that the continent wants. Moreover, the continent has committed to silence the guns by 2020 as a guarantee for economic prosperity.

 

South Africa hosted the AMANI Africa11 training exercise in Lohatla, in the Northern Cape in 2015. Subsequent to the exercises, a detailed assessment was conducted and concluded to determine the continent’s readiness to replace the African Capacity for Immediate Response to Crises (ACIRC) with the African Standby Force (ASF). Due to challenges of funding facing the African Union programmes, South Africa contributed to the Summit’s decision in Kigali to therefore extend the mandate of ACIRC. South Africa was re-elected, during the January 2016 Summit, to serve for another two-year tenure on the African Union Peace and Security Council (2016-2018). This was received as an extended opportunity to further entrench peace and security in Africa.

 

The centrality of Africa also found expression in the Department’s engagements in formations of the South, such as Brazil, Russia, India, China, and South Africa (BRICS). Within this grouping, milestones were achieved in creating alternative sustainable development and infrastructure financing mechanisms through the establishment of the BRICS New Development Bank (NDB) in 2015. South Africa is in the process of establishing the NDB African Regional Centre following its endorsement as the host by the BRICS leadership.

 

South Africa’s commitment to Africa’s prosperity was again demonstrated during South Africa’s hosting of the Forum on China-Africa Cooperation in Johannesburg in December 2015. The summit adopted the Johannesburg Plan of Action which will support the realisation of the Agenda 2063 Vision. South Africa also utilised the occasion to emphasise the central role of the AU Commission in coordinating Africa’s strategic partnerships.

 

It was reported that globally, the nations of the world witnessed the expiry of the Millennium Development Goals and the subsequent adoption of the Sustainable Development Goals (SDGs). For its part, South Africa, under the able leadership of Ambassador Kingsley Mamabolo, coordinated the formulation of the G77 plus China positions during the negotiations and the adoption of the SDGs in its capacity as chair of this largest group of nations. Similarly, South Africa ensured the unity of the G77 and China in the lead-up to the adoption of the landmark Climate Change Paris Agreement. The Paris Agreement signifies the successful conclusion of the Durban Platform for Enhanced Action initiated by South Africa in 2011.

 

South Africa aspires for a United Nations (UN) which is responsive to the needs of the global South and the world’s poor majority. In this regard the Department continued its advocacy for the reform of the United Nations (UN), particularly its Security Council, with a view to entrench its relevance and increase representation.

 

The Department continued to pursue the African Agenda and Agenda of the South within its strategic engagements with the countries of the North. Engagements with the European Union (EU) enabled South Africa to secure an EU commitment to support Africa’s socio-economic development path and the continent’s peace and security initiatives.

 

The Public Diplomacy branch was able to hold events and engaged the public in communicating tenets of South Africa’s foreign policy, thus ensuring a better understanding by both national and international audiences. The 2nd Annual Ubuntu Awards were held to honour South Africans who in their own ways, advance the tenets of South Africa’s foreign policy.

 

A new structure for the Department was operationalised. Different components were realigned to ensure improved execution of South Africa’s foreign policy. This would bring about an effective and efficient execution of the Department’s international programme.

 

The Foreign Service Bill was tabled in Parliament. The Bill is being processed by the Portfolio Committee as required. The Committee publicised the Bill in newspapers in South Africa as required. There has been very low rate of response or interest from the members of the public. As a result of this inadequate public participation, the Committee has resolved to hold a stakeholders seminar in Pretoria towards the end of November 2016. This seminar will bring about all interested stakeholders ranging from the general public, students, academia, civil society, labour, and all not listed here but relevant.

 

Then the Committee has planned to undertake a Study Tour to Canada, and Algeria to learn best practices on oversight over Foreign Service. This would also include an oversight trip to the South African Mission at the United Nations, in order to assess the country’s impact on the agenda of this important body.

 

3.         Overview and assessment of the financial and non-financial performance of programmes of the Department and its entity for the 2015/16financial year

 

3.1        Financial expenditure trends of the Department and its entity

 

Department budget and expenditure summary

 

Table 1: Total expenditure for the 2015/16 financial year[13]

Programme (R'000)	Final Appropriation R’000	Actual Expenditure R’000	Total percentage spent %
Administration	1 381 600	1 381 471	100%
International Relations	3 506 175	3 640 379	103,8%
International Cooperation	525 201	523 051	99,6%
Public Diplomacy and Protocol	363 557	333 222	91,7%
International Transfers	734 321	766 641	104,4%
Total	6 510 854	6 644 764	102,1%

Source: Annual Report of the Department of International Relations and Cooperation 2015/16

 

The Department continued to operate in an uncertain international environment and budget constraints. It received an appropriated allocation of R6, 510 854 billion for the 2015/16 financial year after the adjustment estimates. The actual expenditure for 2015/16 was 102 per cent amounting to R6, 644 764 of the final appropriation. This constituted a net overspending of R134 million. The Department has requested an amount of R500 000 million as additional funds for its operations.

 

The Department recorded foreign exchange losses amounting to R134 million, due to expenditure incurred in missions abroad and payment of membership contributions to international organisations of which South Africa is a member. However, the Department also recorded savings on programmes 3 and 4, which was as a result of cost-containment measures implemented during the hosting of summits of the African Union (AU) and the Forum on China-Africa Cooperation (FOCAC). The unspent operational budget was viremented to cover overspending in Programme 5[14].

 

Departmental receipts

 

Departmental receipts are generated from the following: interest earned from Mission’s bank accounts; rent on state-owned property; refunds received through Value-Added Tax (VAT) returns from Missions related to purchases of previous financial years; foreign exchange rate gains; and proceeds of asset disposals. According to the Annual Report of the Department, in the 2015/16 financial year, the revenue collected decreased from R35.1 million to R34.4 million in comparison with the estimated revenue due to the depreciation of the Rand. [15]

 

3.2        Analysis of financial performance of the Department and its entity for the 2015/16 financial year

 

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

 

Programme 1: Administration

 

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

 

The expenditure for the programme was R1. 4 billion which represented an increase of 12 per cent as compared to the 2014/15 financial year. The increase in expenditure was due to the spending on construction projects for the missions in Dar es Salaam, in Tanzania and Lilongwe in Malawi.

 

Programme 2: International Relations

 

The Department reported that expenditure in this programme increased significantly from R3.1 billion in 2014/15 to R3.6 billion in 2015/16 at a nominal growth rate of 16 per cent. This was mainly attributed to the depreciation of the Rand against other major foreign currencies. The depreciation of the Rand resulted in high exchange rates, thus increasing operational costs incurred in missions abroad, including salaries and wages as well as lease payments for office and residential accommodation. Consequently, the expenditure for Programme 2 has exceeded the budget by R134 million.

 

Programme 3: International Cooperation

 

Under this Programme the expenditure increased from R485.1 million in 2014/15 to R523.1 million in 2015/16, at the nominal growth rate of eight per cent. The underspending, which is regarded as savings was as a result of the cost-containment measures that were implemented for operational expenditure.

 

Programme 4: Public Diplomacy and Protocol Services

 

Expenditure for Programme 4 increased from R275.9 million in 2014/15 to R333.2 million in 2015/16, which represents an increase of 21 per cent as compared to the 2014/15 financial year. The underspending, regarded as savings, were of cost-containment measures that were implemented during the Summits of the African Union and the Forum on China-Africa Cooperation.

 

Programme 5: International Transfers

 

The Programme had an overspending resulting from foreign exchange rates losses in relation to the payment of membership fees and South Africa’s compulsory assessment contributions to the international organisations such as the UN, AU and Southern Africa Development Community (SADC). The expenditure for 2015/16 of R734 million has decreased as compared to the 2014/15 expenditure of R863 million.

 

Virements and roll-overs

 

The Department did not receive approval for the virement of funds between the different programmes. It also did not receive approval for the roll-over unspent funds during the 2015/16 financial year.

 

Unauthorised, fruitless and wasteful expenditure

 

The Department reported to have spent R6, 645 billion of the R6, 510 billion of the adjusted appropriation, which resulted in an unauthorised expenditure of R166 million. This was attributed to foreign exchange losses due to unavoidable depreciation of the Rand against other foreign currencies. As a result of these, the Department has an accumulated unauthorised expenditure amounting to R382 million, for which it was said concurrence from National Treasury was awaited.

 

Future plans of the Department – Foreign Service Bill 2015

 

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

 

Public-Private Partnership Agreements

 

The Department continued to service the existing Public-Private Partnership Agreement (PPPAs) with Main Street 717 (Pty) Ltd, concluded in 2009. This is done through quarterly meetings of senior managers as well as monthly operational meetings for operational managers. In addition, the meetings also deal with other governance and operational issues. The term of the PPPA is 25 years, ending in 2034. The total cost incurred in relation to the agreement for the financial year 2015/16 is as follows: R 199 573 for 2014/15; and R188 745 for 2015/16.

 

New or proposed activities – South African Development Agency

 

In addition, the Department is continuing with plans to activate the South African Development Partnership Agency (SADPA) and finalise the Partnership Fund for Development Bill. The process is aimed at repealing the African Renaissance and International Cooperation Fund Act, 2000 (Act 51 of 2000), in order to support South Africa’s outgoing development cooperation policy by providing funding and technical support for the development initiatives. It is envisaged that SADPA Bill will be ready for tabling in 2016/17.

 

Agency services

 

It was reported that the Department renders agency services on behalf of other departments, public entities and provinces that have staff members stationed abroad. These services are also rendered where departmental delegations, including institutions, travel abroad for official purposes. The challenge has been that the Department pays for operational costs of the departments which have personnel abroad, resulting in delays by those departments to reimburse the affected missions.

 

The Department has so far managed to have a Memorandum of Understanding with the Department of Home Affairs, to ensure that the requisite operational budget for the Home Affairs component is according transferred to the Department. The purpose of the MOU is to set out the administrative arrangements concerning cooperation between the Department and the relevant departments at South African missions, including the payment of advance payments by partner departments.

 

However, there has not been further agreements with other affected departments. This has resulted in revolving payment claims remaining in the financial statements of the Department and affecting liquidity in the missions.

 

The African Renaissance and International Cooperation Fund

 

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

 

Performance information

 

During the reporting year, the core of the Department’s work of conducting South Africa’s foreign policy remained predisposed towards Africa and South-South cooperation. The objectives described in its Annual Performance Plan (APP) 2015/16, are based on South Africa’s National Development Plan (NDP).

 

3.3        Analysis of non-financial service delivery performance of the Department and its entity for the 2015/16 financial year

 

The Committee considered and analysed the Annual Report of the Department of International Relations and Cooperation for the 2015/16 financial year. In its analysis of the report, the Committee also enlisted input from the National Treasury, Department of Performance, Monitoring and Evaluation and the Office of the Auditor-General.

 

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

 

The performance of the entity, the African Renaissance and International Co-operation Fund (the ARF) for 2015/16 is also assessed in this report.

 

3.4.       Non-financial performance per Programme

 

3.4.1     Programme 1: Administration

 

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

 

The Department reported that in the 2015/16 financial year, it was not able to reduce the average time taken for filling vacant posts from 5.3 months in 2014/15, to the national average of four months. This was attributed to the delay caused by approval of the new organisational structure. Only 49 critical posts were filled within the four-month turnaround time. The full implementation of the structure would be done during the 2016/17 financial year, since budget responsibility codes could only take effect from 1 April 2016. In terms of Human Resource Management, the main challenge reported by the Department was meeting equity targets of representation of women at Senior Management (SMS) Level and people with disabilities.

 

During the reporting period, the Performance Management and Development System (PMDS) policy was revised through consultation with organised labour. The policy was disseminated among managers and employees. This led to improved level of compliance for filing of signed performance agreements; and steps were taken on those who failed to file within time.

 

Although there is a noticeable improvement in the handling of labour disputes within stipulated timeframes, the capacity of management to address grievances and handle disciplinary cases within the prescribed timeframes is still a challenge. More so, inadequate cooperation by managers largely contributed to the delayed finalisation of cases. However, the Department reported that the labour relations matters are receiving attention.

 

The Employee Wellness Centre continued to provide 24-hour support services to all employees and their family members both at head office and missions. Hundred per cent of all 617 referrals were attended to within 24 hours of receipt during the 2014/15 financial year.

 

There was notable improvement regarding performance agreements. During the reporting period, 100 per cent of SMS members concluded and filed their performance agreements, which is 256 out of 256. Furthermore, 95 per cent (260 out of 274) of eligible SMS performance appraisals were conducted.

 

Of the eight disciplinary cases that were initiated and finalised during the period under review, 62.5 per cent (5 out of 8) were completed within the prescribed period of 90 days. With regard to grievances, only 42.2 per cent (17 out of 36) were concluded within the prescribed 30 day period.

 

The Policy, Research and Analysis Unit (PRAU) continued to provide strategic foreign policy research on global trends and intensified engagement with stakeholders, including academics, business, labour and civil society. Stakeholder engagements will be further enhanced through cooperation with the Cabinet-approved 19-member South Africa Council on International Relations (SACOIR) as well as the Association of Former Ambassadors, High Commissioners and Chief Representatives launched in 2015. A Mediation Support Unit was established to assist with the largest soft power tool for South Africa, mediation. The Research Unit also launched the Gertrude Shope Annual Dialogue Forum on Conflict Resolution and Peace-Making during Women’s Month in August 2015.

 

It was reported that a new service provider for ICT governance was sourced to optimise the performance of the network infrastructure, in terms of connectivity and strengthen network by hardening systems to protect against penetration. It was said that the rollout of the new network and security infrastructure would be conducted over 18 months. However, it was observed that the target for having an ICT Plan was actually not achieved. This was attributable to the delay in appointing a service provider. It was also observed that according to the Audit Committee’s report, a number of missions visited warrant urgent intervention in the provision of ICT. The ICT systems used were reported as exceedingly inappropriate to ensure security of information handled by some missions.

 

It was reported that South African missions abroad assisted and provided consular assistance to all cases reported about South African nationals in distress abroad. During the reporting period, the Department facilitated to free six South Africans held captive by terrorists in Mali; assisted 56 nationals trapped following an earthquake in Nepal; and assisted 40 nationals with suspected links to the Islamic State to safely return to South Africa after returning from Syria via Turkey. The Department further showed that the families of nationals who met their untimely demise have also been assisted with repatriation of their mortal remains.

 

However, the Committee observed that there were some missions which did not or delayed to extend consular services to deserving nationals in distress. Relatives of those who perished in Nigeria were a point of reference, with the Committee seeking to know how they were assisted through the difficult processes of identifying their loved ones. With regard to the Registration of South Africans Abroad (ROSA), the Committee further observed the challenges with the utilisation of ROSA, as most times the system would be down. The Department acknowledged that ICT issues plus concerns over the security of information filled in by travelling nationals were being examined to ensure a secure and effective system.

 

Asset management remained a serious and recurring challenge. The Department reported that it has put in place additional measures in an effort termed ‘asset clean-up’, consequent to the negative audit outcomes in 2013/14 and 2014/15. The responsibility of asset management was given to branch managers who were given additional tools. The Department also reported to have dedicated time and effort to the identification of heritage assets with its collection of works of art. It was reported that this project remained work in progress with consultations taking place with National Treasury and the Department of Arts and Culture. The Committee observed that asset management remained a huge challenge exposing the Department to recurring qualified audit opinions. It was further observed that the Department was slow in finding a solution to the root causes of this challenge as further reported in the Auditor-General’s report 2015/16.

 

3.4.2     Programme 2: International Relations

 

Main objective: The purpose of this programme is to promote policies, strategies and programmes to advance South Africa’s national priorities through strengthened political, economic and social relations with targeted countries.[16]

 

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

 

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

 

In terms of the Africa sub-Programme there were engagements in each region. In Southern Africa, the NDP advocates that South Africa should implement a focused regional integration strategy. In response to that, South Africa remained engaged in a Bi-national Commissions at head of state level with the Democratic Republic of Congo and Mozambique. In 2015, President Jacob Zuma also respectively hosted and had consultations with the President of the Republic of Zimbabwe, President Robert Mugabe; and President Filipe Nyusi of the Republic of Mozambique. As a result of the Department’s bilateral engagements in the region, South African total exports to the region amounted to R254.1 billion and total imports amounted to R66 billion (South African Revenue Service, 2015).

 

With regard to East Africa region, South Africa’s foreign policy remained on the support for the consolidation of peace and political stability. President Zuma engaged on the prevailing conflict situation with his South Sudan counterpart, President Salva Kiir. Both leaders reaffirmed the position that the implementation of the Arusha Agreement must be reinforced. In line with the objective of intensified economic diplomacy and the realisation of the high economic growth rate in certain East African economies, the Department aimed its other economic efforts at further increasing intra-African trade.

 

South Africa’s economic footprint in the Central Africa region has improved significantly during the period under review. South Africa, through the assistance of the Independent Electoral Commission of South Africa (IEC) donated1 200 computers and 15 vehicles to the Government of the Central African Republic in support of their presidential and parliamentary elections.

 

The Department was involved in a series of engagements in North Africa. President Zuma undertook a State Visit to Algeria and Egypt in March and April 2015. In Algeria, President Zuma and President Abdelaziz Bouteflika consulted on regional and international issues of mutual concern, including the issue of self-determination for the people of Western Sahara, together with laying the foundation for stronger economic ties. President Zuma was accompanied by a business delegation with the aim of deepening business to business relations.

 

Deputy Minister Landers represented the Government of the Republic of South Africa at the 40th Anniversary of the proclamation of the Saharawi Arab Democratic Republic in February 2016. This demonstrated South Africa’s continued support for the struggle of the Saharawi people in their efforts towards self-determination.

 

In Egypt, President Zuma and President Abdel Fattah Al Sisi discussed bilateral, continental and international issues of mutual concern. The visit also served to revive bilateral relations following the events of the so-called ‘Arab Spring’ in early 2011.

 

In terms In the North-East Asia and Oceania region, t2015 was an extremely busy year in the relations between South Africa and China. A vast array of activities were organised by China to celebrate the ‘Year of China in South Africa-2015’. The highlight of the year was the successful State Visit by President Xi Jinping to South Africa in December 2015. The outcome of the visit was the 23 agreements singed to the value of R107 billion. Then the equally successful Forum on China-Africa Cooperation (FOCAC) Summit also took place.

 

Ten new measures were announced by China, aimed at addressing bottlenecks hampering Africa’s trade and development. These were inadequate infrastructure, lack of professional and skilled personnel and shortage of funding. With regard to relations with Japan, over 150 000 South Africans are already employed by local Japanese companies.

 

South Africa and India enjoy a strategic partnership and these were deepened through a Joint Mechanism of Cooperation, held in Durban in May 2015. Honourable Minister Maite Nkoana-Mashabane led the South African delegation and it was agreed to expand cooperation in the areas of mining, information technology, finance, agriculture and agro-processing.

 

With regard to the Middle East region, South Africa’s relations with the Gulf States are managed through structured bilateral mechanisms such as Joint Commissions, partnership forums and bilateral consultations. President Zuma paid successful State Visits to the Kingdom of Saudi Arabia and the United Arab Emirates (UAE), in March 2016.The Department created a positive momentum in consolidating and elevating South Africa-Iran political and economic relations in the post-nuclear sanctions era.

 

In the Americas and the Caribbean, South Africa’s bilateral relations with North America remained cordial and continued to strengthen. South Africa’s partnership with countries of the North is a pillar of its foreign policy and has continued to expand during the last year. South Africa’s engagements with the United States of America (USA) were conducted through structured mechanisms; and the structured mechanisms with Canada were conducted through the Annual Consultative Forum.

 

North America remains an important source of FDI; tertiary exchanges, scholarships and vocational training; technology transfer and capacity-building for the youth and women. The United States investments in South Africa increased from R1.2 trillion in 2012 to about R2 trillion in 2014. The renewed market access for South African goods under the African Growth and Opportunity Act (AGOA) has allowed South Africa to increase exports of agricultural products and other value-added products. AGOA created over 62 000 jobs in South Africa in 2014.

 

It was reported that the election of a new liberal government in Canada has offered an opportunity to revitalise and strengthen relations bilaterally, regionally and on a multilateral level. The new government seems to seek to restore Canada’s global standing. Opportunities for investment and partnerships in mining and beneficiation have been explored with Canada.

 

Latin America and the Caribbean remain South Africa’s strategic partners in the region. Agreements were signed with several Caribbean Community (CARICOM) countries to strengthen cooperation in education and culture. During the reporting year, Deputy President Cyril Ramaphosa visited Mexico and Cuba. In 2014, South African business intensified efforts to set up operations in Cuba. These were PGBI Engineers and Constructors (sugar co-generation); Matrix Yatchts (water vessels); MTN (communications); also resulting in an increase of South Africa’s medical and engineering students studying in Cuba.

 

The Economic Assistance Package to Cuba is at the implementation stage and will expire in at the end of 2016.The deployment of Cuban engineers, doctors and technical experts throughout the country, bears testimony to the focus of bilateral relationship with Cuba on South Africa’s domestic priorities. Several visits by the Minister and Deputy Ministers in this region were also reported.

 

In strengthening bilateral relations with Western Europe during the 2015/16 financial year, South Africa specifically focused on advancing the priorities of government as envisaged in the NDP. The strategic approach taken was to use the planned structured engagements as a platform to identify key sectors in which Europe offers comparative advantage, such as innovation and research. Focus was placed on sectors such as renewable energy, skills and vocational training, science and technology.

 

One of the new Government priorities that show particular potential for engagement with European countries is the Blue Economy, facilitated through Operation Phakisa. It was factored into discussions during several structured engagements.

 

Western Europe remained a key strategic region for South Africa and dialogue partner from the global North. Western Europe accounted for about 26 per cent of South Africa’s total global trade in 2015, and remained South Africa’s largest source of foreign direct investment (FDI), with bilateral FDI into South Africa having grown five-fold and creating over 350 000 direct jobs in the decade since 2004[17].

 

This region remained a key market for in-bound tourism. The United Kingdom, Germany, France, the Netherlands and Italy ranking as top 10 leading countries for overseas tourists.

 

In 2015/16, structured and high level engagements were held with Germany, Switzerland, the UK, the Netherlands, Italy, Spain, Ireland and Belgium. Focal areas of discussions included increased investment and joint projects in the energy sector, in mineral beneficiation and agro-processing. These partnership areas are in line with the implementation of South Africa’s five national priorities, the Nine-Point Plan and the NDP.

 

President Zuma undertook a Working Visit to the Russian Federation to meet with Russian President, Vladimir Putin, in May 2015; as well as participated in the Brazil, Russia, India, China and South Africa (BRICS) Summit hosted by Russia in July 2015. Discussions between South Africa and Russia centred on South Africa’s priority development areas such as energy, skills development, mineral beneficiation, market access and Operation Phakisa. South Africa is also looking forward to hosting the President of Russia on an Official Visit during the 2016/17 financial year to further strengthen political and economic relations.

 

Central and Eastern Europe, Nordic and Baltic countries

 

The Department also reported on a series of bilateral meetings held with Russia, Turkey, Hungary, Poland and Sweden. Many countries of this region regard South Africa as a strategic partner on the African continent and a springboard for doing business with the rest of Africa. As a result of this approach, a number of Trilateral Development Cooperation comes through South Africa to reach deserving beneficiaries in Africa. Areas of cooperation with South Africa included agriculture and rural development; defence and military; health; education skills development; energy; water and waste management and space technology.

 

3.4.3     Programme 3: International Cooperation

 

The purpose of this programme is to facilitate participation in international organisations and institutions in line with South Africa’s national values and foreign policy objectives[18].

 

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

 

In its response to the NDP narrative, the Department has divided this programme in the following sub-programmes and strategic objectives:

 

3.4.3.1  Sub-programme: Global System of Governance

 

In its multilateral activities, President Zuma and Honorable Minister Maite Nkoane-Mashabane represented South Africa at the General Debate of the United Nations General Assembly in September 2015. The international significance of 2015 has been that it was the 70th Anniversary of the creation of the UN. It was also the 70th Anniversary of the end of the Second World War; the 70th Anniversary of the use of atomic bombs; the 50th Anniversary of the Convention on the Elimination of All Forms of Racial Discrimination; the 20th Anniversary of the Beijing Platform for Action; the 15th Anniversary of Resolution 1325 on Women, Peace and Security; and the target date for the attainment of the Millennium Development Goals (MDGs).

 

South Africa successfully concluded its tenure as the Chair of the G77 plus China. Under the able stewardship of Ambassador Kingsley Mamabolo, South Africa represented the views of the developing countries on the outcome of the adopted Sustainable Development Goals (SDGs).

 

South Africa’s participation remained focused on the call for the Reform of the United Nations, especially the UN Security Council.

 

South Africa participated in the G20 forum and supported the G20’s focus on the industrialisation of Africa, which is in line with the aspirations of the NDP. At the First Conference of States Parties to the Arms Trade Treaty (ATT) that took place in Cancun Mexico. The Department lobbied extensively for the appointment of Mr Dumisani Dladla as Interim Head of the ATT based in Geneva.

 

3.4.3.2  Sub-programme: Continental Cooperation

 

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

 

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

 

In response to this narrative, during the reporting period, South Africa successfully hosted the African Union (AU) Summit at very short notice, following the Republic of Chad’s withdrawal to host it. South Africa also continued to host formal sessions of the Pan African Parliament (PAP), in line with its undertakings in the Host Country Agreement. At the AU Summit in Addis Ababa in January 2016, South Africa was re-elected to the AU Peace and Security Council (AUPSC) for a further term of two years. The AUPSC also works in support of peace-building and post-conflict reconstruction as well as humanitarian action and disaster management.

 

South Africa hosted the Johannesburg FOCAC Summit in December 2015. Ten new measures were announced by China in support of Africa’s development and integration. To facilitate the implementation of the measures, China pledged to provide US$60 billion as funding support.

 

The African Capacity for Immediate Response to Crises (ACIRC), is an interim measure pending the operationalisation of the African Standby Force (ASF) and its Rapid Deployment Capacity (RDC). An assessment was made on the state of readiness of the ASF to take command. Although the results were positive, the mandate of ACIRC had to be extended further due to inadequate funding from member states of the AU to finance the operationalisation of ASF.

 

3.4.3.3  Sub-programme: Southern African Development Community (SADC)

 

The NDP provides that South Africa should implement a focused regional integration strategy. In response to this narrative, the Department continued to support the consolidation of democracy, peace and security in the region. South Africa participated in successful election observer missions to Tanzania and the Seychelles. Deputy President Ramaphosa continues his responsibilities as SADC’s Facilitator to the Kingdom of Lesotho. SADC also considered the report of the SADC Independent Commission of Inquiry into Lesotho.

 

President Zuma, as Chair of the Southern African Customs Union (SACU), invited his counterparts for the inauguration of the SACU headquarters in Windhoek, Namibia in November 2015. South Africa participated in the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) –SADC Tripartite Summit in Egypt in June 2015. The Tripartite Free Trade Area (TFTA) was launched at this occasion. However, South Africa did not sign the Agreement establishing the TFTA, due to some outstanding issues that still need to be negotiated.

 

3.4.3.4  Sub-programme: South-South Cooperation

 

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

 

In its response to the NDP, South Africa successfully completed its one-year term as Chair of the Group of 77 plus China, at the start of January 2016. South Africa was able to coordinate the G77 in the negotiations on the 2030 Agenda for Sustainable Development, which was adopted by the UN in September 2015.South Africa’s implementation of the NDP and the Nine-Point Plan would consequently serve as the foundation for its implementation and achievement of not only the 2030 Agenda for Sustainable Development, but also of Africa’s Agenda 2063.

 

The Indian Ocean Rim Association (IORA) met in 2015. South Africa influenced the Association to prioritise the Ocean Economy for generating sustainable economic growth and employment. This would support the aspirations of Operation Phakisa. Operation Phakisa has since been streamlined through the work of the Department and its diplomatic missions abroad. India, Brazil, South Africa (IBSA) forum continued to function through the IBSA Trust Fund for Poverty Alleviation. The political structures of IBSA had not met. The 7th BRICS Summit was held in Ufa, Russia in July 2015. The BRICS leaders announced their respective domestic ratification processes for the establishment of the New Development Bank (NDB) in Shanghai; and South Africa designated to host the Regional Centre of the Bank.

 

3.4.3.5  Programme 4: Public Diplomacy and State Protocol

 

The NDP provides that Public Diplomacy is fundamental to South Africa’s projection of soft power. In its implementation of this advocacy, the Department approached the programme as indicated below:

 

The strategic objectives of this programme are as follows:

 

• To provide strategic public diplomacy direction nationally and internationally to ensure a better understanding of South Africa’s foreign policy;
• To advance a positive projection of South Africa’s image through communication strategies on South Africa’s foreign policy positions and programmes nationally and internationally.[19]
• To provide effective State Protocol services.[20]

 

The Department continued to implement its robust Public Diplomacy Strategy, which further contributed to a positive projection of South Africa’s image. Seventeen public participation programmes (PPPs) were undertaken by principals to educate and inform the public at home and abroad about the mandate, engagements and the underlying foreign policy principles which South Africa stands for. Public diplomacy exceeded its annual plans in terms of coverage and dissemination of the good work being done in the conduct of South African foreign policy.

 

Protocol Services were rendered to the President and Deputy President during 242 incoming and outgoing State and Official Visits. The Department also facilitated international travelling by provinces and local municipalities during the reporting period. A total of 30 658 VIPs were assisted through the State Protocol Lounges and the department facilitated 5 special ceremonial events.

 

3.4.3.6  Programme 5: International Transfers

 

The purpose of this programme is to honour South Africa’s financial obligations and voluntary contributions to international organisations.[21]

Under this programme, the Department reported that South Africa diligently honoured its dues and on time. However, the activities of the programme were impacted upon by foreign exchange fluctuations.

 

3.5.       Public Entity: Overview of the Annual Report 2015/16 of the African Renaissance and International Cooperation Fund

 

The Department, in consultation with the National Treasury, is responsible for the administration of the African Renaissance Fund, which was established in terms of Act 51 of 2000. This fund is under the control of the Director-General of the Department who must account for all payments into and out of the fund. An Advisory Committee was appointed to make recommendations to the Ministers of International Relations and Cooperation and Finance on the disbursement of funds, as provided for in the African Renaissance and International Cooperation Fund Act, 2000.[22]

 

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

 

• cooperation between the Republic of South Africa and other countries, in particular African countries
• promotion of democracy and good governance
• prevention and resolution of conflict
• socio-economic development and integration
• humanitarian assistance
• Human resource development.[23]

 

The Fund is managed by the Department and payments are made on behalf of the Fund by the Department once concurrence is received from the Minister of Finance. This has resulted in the opening of control accounts (Payables and Receivables) in the accounting records of the Department and these accounts are reconciled to the records of the Fund. The financial statements of the Fund are prepared separately from the Department as the Fund is registered as a Schedule 3A Public Entity in terms of the Public Finance Management Act (PFMA), 1999 (Act 1 of 1999). All transactions and information arising from the work of the Fund are audited by the Auditor-General South Africa on an annual basis.[24]

 

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

 

During the reporting year, the ARF processed payments totalling R1 006 151.01, with respect to South African deployment of Election Observer Missions for elections in Mozambique, Tanzania and the Seychelles.

 

The ARF processed payments totalling R4 783 127.93 for Africa Capacity Building Foundation Project.

 

In an effort to support socio-economic development and integration, the entity processed payments of R6 633 023.43 for the implementation of the Cuban Medical Brigade Project in Sierra Leone. It also processed payments of R4 666 933.38 for the Rice and Vegetable Production project in Guinea Conakry.

 

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

 

4.         Report of the Auditor-General of South Africa, the Financial and Fiscal Commission 2015/16 on the Department of International Relations and Cooperation and its entity

 

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

 

There has been a trend however in the Auditor-General’s audit opinions. There has been a noted regression from ‘clean audit opinion in 2009/10, to ‘unqualified audit opinion with findings on pre-determined objectives and/or compliance with laws and regulations’ in 2010/11; 2011/12 and 2012/13. For the 2013/14, 2014/15 and 2015/16 reporting years, the Auditor-General has expressed a ‘qualified audit opinion’.

 

4.1        The Department

 

Regarding the financial statements of the Department as at 31 March 2016, the Auditor-General expressed a qualified audit opinion. The overall financial performance of the Department was reported as good, and financial statements presented fairly, in all material respects, the financial position of the Department as of March 2016.

 

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

 

The Department has as part of its assets, a number of original works of art and paintings by renowned South African artists. Some of these paintings exhibit the characteristics of heritage assets as described by the Modified Cash Standard as well as section 3(2) (i) (v) of the National Heritage Resources Act, 1999 (Act No. 25 of 1999). The Department has not undertaken a comprehensive assessment of all works of art and paintings currently included as part of movable assets in the furniture and office equipment category to determine which of these assets meet the criteria to be recognised as heritage assets.

 

The works of art and paintings that do meet the heritage asset criteria should have been recognised as heritage assets in accordance with the requirements of the Modified Cash Standard. As a result the Auditor General was not able to determine the impact on the classification of works of art and paintings of R172 324 511 in 2015/16 financial year.

 

The Department did not maintain an updated asset register in accordance with the requirements of the Modified Cash Standard. This, together with the ineffective system of control over assets had an impact on the amounts recognised as tangible capital assets and minor assets. Consequently, tangible capital assets and minor assets were understated by R25 246 593 (2015-16).

 

Goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by treasury regulation 16A6.1.

 

Goods and services of a transaction value above R500 000 were procured without inviting competitive bids, as required by treasury regulation 16A6.1.

 

Effective and appropriate steps were not taken to collect all money due to the Department, owed by other departments of government.

 

The accounting officer has been slow in addressing the significant deficiencies noted over his oversight regarding financial reporting, compliance and related internal controls due to an overall lack of accountability. The accounting officer was also slow in addressing the significant deficiencies noted in prior year regarding asset management and compliance with legislation. The leadership of the Department did not hold those responsible for failing to execute their allocated job responsibilities.

 

The lack of implementation and enforcement of a consequence management process within the Department. This has resulted in repeat audit findings without any consequences for employees who continuously fail to execute their allocated job responsibilities, breach legislative prescripts and fail to honour commitments made to address findings.

 

Key officials involved in the financial reporting process lack the required competencies to fully comply with the requirements of the Modified Cash Standard.

 

Disciplinary steps were not taken against officials who made or permitted fruitless and wasteful expenditure to the amount of R1 850 000; and those responsible for irregular expenditure.

 

The accounting officer has requested an investigation into allegations of impropriety at the Public Diplomacy branch. This investigation has been concluded in December 2015.

 

The accounting officer had requested an investigation into the allegations of theft of $32000 and local currency at the South African Consulate General in South Sudan.

This investigation was concluded in April 2016.

 

4.2        The findings of the Auditor General on the African Renaissance and International Cooperation Fund

 

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

 

The accounting authority did not submit financial statements for auditing within two months after the end of the financial year as required.

 

The accounting authority did not take adequate and effective and appropriate steps to prevent and detect irregular expenditure as per requirements of section 51(1) (b) (ii) of the PFMA.

 

Money from old projects not required for immediate use was not invested, as required by section 7 (1) of the ARF Act.

 

The Department has undertaken to address the concerns raised.

 

5.         Findings by the Committee

 

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

 

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

 

1. The Department has received a qualified audit opinion for the third year running in 2015/16. The Auditor-General has recommended steps to be taken to rectify the situation in areas reported on such as asset management, ICT issues, internal control, addressing apparent incompetence by officials, especially in the Governance branch, lack of consequence management on those who caused irregular, wasteful and fruitless expenditure and leadership inability to address repeat findings; and non-compliance with laws and regulations of supply chain management. There is a concern that it is already into the 2nd quarter of the 2016/17 financial year, not much improvement has been reported on these challenges.

 

1. The African Renaissance Fund has received an unqualified audit opinion with findings for the 2015/16 financial year.
2. During the reporting year, the Department also incurred an unauthorised expenditure, resulting to overspending on the overall budget to the amount of R134 million. The recurring challenge with the Department is that it is slow to solicit deviation from National Treasury as required by law. This then results in accumulated unauthorised expenditure over time.

 

5.     The Department was very slow in responding to offers by the Auditor General and National Treasury to help it address root causes of the recurring audit queries. Only one workshop has been organised thus far. There is a need to also engage the South African Reserve Bank about the calculations of departmental budgets affected by foreign exchange fluctuations.

 

6.     The cost drivers for the Department are incurred in foreign currency. The high numbers of Locally Recruited Personnel (LRPs) in the missions; lease payments for a huge property portfolio are very costly; some state-owned properties abroad are old and dilapidated with related high cost for their maintenance.

 

7.     The Department’s proposed organisational functional structure review was approved by the Minister of International Relations and Cooperation on 31 March 2015. The structure has been finalised, and the question was whether it has aligned the mandate of the Department to capacity needs.

 

8.     The Audit and Risk management committees ought to be the first line of defence and also act as early warning systems to assist the Department to rid itself of the repeated negative audit outcomes. Both the Audit and AG’s Office had recommended that that the office of the Chief Financial Officer should conduct a skills audit in the unit, to be able to identify root causes of repeat findings. However, the recommendations from these bodies have not been implemented since 2013 by the Department.

 

9.     South Africa did not sign the Agreement launching the Tripartite Free Trade Area in Egypt, in June 2015. It was not immediately clear whether negotiations had begun to clear those issues that South Africa had concerns with. The purpose of the tripartite free trade area is to advance regional economic integration.

 

10.  South Africa was commended for its ability to coordinate the Group of 77 plus China and championed the position of developing countries on the 2030 Agenda for Sustainable Development. The able leadership of Ambassador Kingsley Mamabolo was applauded by all.

 

11.  It was of great concern that the senior management (SMS) were not signing performance agreements within the prescribed timeframes. It would be difficult to determine whether officials were performing their duties. The same level of management were not keen to attend meetings aimed at addressing audit findings.

 

12.  It was observed that a sizeable number of officials were leaving the Department, contrary to it being known as an employer of choice. It was observed that there was no structural flexibility to absorb official returning from Missions, hence they leave to join the private sector.

 

13.  The Committee recommended the establishment of the office of the Chief Operations Officer in the Department. This was aimed to assist the Department address the challenges of recurring operational issues, which tended to mar the performance and image of the Department. A person who would not necessarily be a diplomat; with financial management skills; administrator; a home defender who would be handling operational matters and ensuring implementation of plans when the Director General travels on diplomatic work, would have been ideal for the kind of issues to be addressed. It has further been observed that generally the diplomatic staff of the Department are not necessarily inclined to handle administrative issues. This has been prevalent at headquarters and also in the Missions.

 

14.  It became apparent that the Risk Management unit is not adequately capacitated (2 officials) to deal with the huge mandate of the Department including Missions abroad. On the other hand, the Finance unit had capacity, but lack commitment and dedication to perform their duties and address the root causes of serial issues causing a qualified audit opinion for 3 years running.

 

15.  The Department has heritage assets in the form of works of art and paintings acquired before 1 April 2002. According to the Modified Cash Standard system, all heritage assets acquired before 1 April 2002, must be measured at cost and, if cost is not available, at R1. The Department believes the auditing of all these assets would be very costly. Treasury, however trains chief financial officers in government on how these heritage assets could be assessed and consequently recorded in accordance with the requirements. The Department is yet to take up this opportunity and the offer to assist with auditing assets offered by the Auditor General. With regard to heritage assets, the Department of Arts and Culture has assisted other departments to quantify and categorise such assets.

 

1. General asset management deficiencies continue to negatively influence the outcome of audit reports of the Department. The asset management strategy developed in 2014/15 financial year, of using the barcodes, was not regarded an appropriate fit for the huge property portfolio, in 126 missions, under the control of the Department.

 

1. In order to track progress and or challenges with regard to the performance of the Department to address some of the challenges raised, quarterly meetings between the Committee and the Audit and Risk Management committees would be of importance.

 

1. There is a recurring challenge of financial misstatements being drawn by the Department and presented to National Treasury and the Auditor General for budget purposes. The Audit committee had recommended a skills audit in the financial branch, and that exercise has not yet happened.

 

1. The Department’s ICT infrastructure remained outdated, exposing foreign policy related information to related risks including cyber-crime.

 

1. Property maintenance activities continued to be managed by individual missions abroad through annual maintenance plans. Execution of such plans could not be verified by the Department for the second year running.

 

1. There were challenges with regard to the Memorandum of Understanding on revenue management and collection on behalf of other departments which have officials attached to Missions abroad. So far, only the Department of Home Affairs has signed with the Department. There are unpaid claims by other departments for agency services rendered by the Department in the missions abroad.

 

1. Consequence management was not effectively applied. Wrongdoers were not immediately subjected to requisite disciplinary measures. Leadership of the Department has been slow or reluctant to take recommended remedial action.

 

1. The operationalisation of the South African Development Partnership Agency (SADPA) will be effected in 2016/17.There are unresolved issues of governance between National Treasury and the Department.

 

1. The Committee noted that investigations into allegations of impropriety in the Public Diplomacy branch and disappearance of monies in the Consulate General in Juba, South Sudan, have been concluded and appropriate actions have been taken. It was further noted that a further investigation has been ordered into possible misapplication of donations and sponsorships at the South African embassy in Abidjan, Ivory Coast.

 

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

 

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

 

1. On the Minister’s continuous absence from the Committee’s meetings, including failure to answer Questions for Oral Reply, the Committee expressed its outmost disquiet and deep disappointment. The Minister’s apology for that specific day of considering the 2015/16 Annual Report of the Department was accepted on the strength of the reasons advanced. The Committee directed the Chairperson of the Committee to write to the Minister and the Chief Whip of the Majority Party on the Committee’s concerns as stipulated above.

 

6.         Conclusions

 

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

 

The Committee unanimously expressed satisfaction that the Department has utilized its budget in accordance with its plans for 2015/16. The Department was regarded as having demonstrated full accountability to Parliament and the people of South Africa on resources spent, both human and financial, and how it contributed in the achievement of South Africa’s national priorities. The Department was applauded for continuing to position South Africa as a respected member of the international community, with a dynamic and independent foreign policy that speaks to the country’s domestic priorities.

 

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

 

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

 

7.         Recommendations

 

The Committee is of the opinion that overall the Department has performed according to the goals it had set itself for the 2015/16 reporting period. The 2015/16 budgetary allocations of the Department were generally aligned to the national strategic priorities outlined in the 2015 State-of-the-Nation Address, as well as its strategic direction in terms of its Medium Term Expenditure Framework. The qualified audit report, if rectified, will also be a positive indication of commitment of purpose by the Department to diligently execute its mandate.

 

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

 

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

 

1. Identify and hold dedicated training programmes for the officers responsible for financial statements, procurement, supply chain management and asset management, to ensure that serial challenges in these areas are addressed.

 

1. Conduct a skills audit in the Finance unit to determine whether there is appropriate capacity to address the root causes of recurring qualified audit opinions for the past three years.

 

1. Deal with serial recurring issues raised in the Auditor General’s report especially on supply chain, ICT, asset management and consequence management, compliance with rules and legislation.

 

1. Conduct a comparative study on best practices from other countries on the management of Locally Recruited Personnel; alleviation of the impact of foreign exchange fluctuations; and asset management; and report on turnaround strategies to be taken to effect lessons learned.
2. Liaise with the Office of the Auditor General and National Treasury regarding a workable strategy for auditing and keeping a reliable asset register for all assets at headquarters and at Missions abroad.

 

1. Liaise with the South African Reserve Bank, National Treasury, Department of Public Service and the Office of the Auditor General on mitigation options to address the challenges brought onto the budget of the Department by foreign exchange fluctuations.

 

1.  Address capacity challenges in the Risk Management unit, to facilitate adequate coverage of the Department’s work which extends to Missions as well.

 

1. Conduct an assessment on the cost-effectiveness of long term acquiring or leasing of state-owned properties abroad, in order to address challenges of office and residential accommodation for Missions abroad.

 

1. The office of the Chief Accounting Officer should have the necessary mandate and capacity to deal with and oversee the implementation of turnaround strategies aimed at addressing the root causes of qualified audit opinions.

 

To the Committee:

 

The Committee should meet the Audit and Risk management committees quarterly, to be appraised of progress or otherwise regarding efforts to address recurring issues raised by both the Audit committee and the Auditor General.

 

To Parliament:

 

Parliament should consider the importance of the oversight requirement for the Committee which is currently not favoured by the prevailing oversight model. There is a need for the Committee to conduct a study tour as it has a Bill before it; and has to conduct oversight on South African Missions abroad, at least once a year.

 

Report be considered.

 

 

Sources

 

• Annual Report 2015- 2016 Department of International Relations and Cooperation.
• Strategic Plan, 2015- 2020, Department of International Relations and Cooperation.
• National Treasury, Vote 5: International Relations and Cooperation, Estimates of National Expenditure 2015.
• Zuma, J.G. 2015, State of the Nation Address at the Joint Sitting of Parliament. Cape Town.
• The African Renaissance and International Cooperation Fund Act 2000
• Standing Committee on Appropriations: 4th Quarter Expenditure Report 2015/16 financial year.

Presentations by other departments.

 

 

 

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[1] Constitution of the Republic of South Africa 1996

[2] Department of International Relations and Cooperation Annual Report 2015-2016 p22

[3] Annual Report of the Department of International Relations and Cooperation 2015/16

[4] Zuma J State of the Nation Address 2015

[5] Presidency 2015

[6] Presidency 2016

[7] Presidency 2015

[8] National Planning Commission, 2011

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

[10] Ibid

[11] Ibid

[12] January to December 2015 (excluding BLNS),

[13] Annual Report of the Department of International Relations and Cooperation 2015/16

[14] Ibid

[15] Annual Report of the Department of International Relations and Cooperation 2015/16

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

[17] Annual Report of the Department of International Relations and Cooperation 2015/16

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

[19] Annual Report 2015/16 of the Department of International Relations and Cooperation

[20] Ibid

[21] Department of International Relations and Cooperation Annual Performance Plan 2015-2016.

[22] Annual Report 2015/16 of the Department of International Relations and Cooperation.

[23] Annual Report 2015/16 of the African Renaissance and International Cooperation Fund

[24] Ibid