ATC201207: Portfolio Committee on International Relations and Cooperation Budgetary Review and Recommendation Report 2019/2020

International Relations

Portfolio Committee on International Relations and Cooperation Budgetary Review and Recommendation Report 2019/2020     Chairperson:   Hon Tandi Mahambehlala MP

 

Table of Contents

 

1. Introduction

 

1. The scope of the report
2. The Committee

        1.3 The purpose of the report

         1.4 The Department

         1.5 Measurable Objectives of the Department

 

2. Policy focus areas of the Department

 

3. Presentation of the Annual Report

 

4. Analysis of the Annual Report and Financial Statements of the Department

 

5. Analysis of the Annual Report and financial statements of the ARF

 

6. Consideration of the Report of the Auditor-General on the Department of International Relations and Cooperation 2019/20

 

7. Findings by the Committee

 

8. Responses by the Department

 

9. Conclusions

 

10. Recommendations

 

 

 

 

 

 

The Budgetary Review and Recommendation Report of the Portfolio Committee on International Relations and Cooperation, dated 3 December 2020

 

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

 

1. Introduction

 

The Portfolio Committee received the presentation on the Annual Reports 2019/20 of the Department and the African Renaissance Fund, on 26 November 2020. The Committee also received presentations from the Auditor-General, and the Risk Management and Audit Committees on the annual performance of the Department and the entity.

 

1. The scope of the report

 

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 2019 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 2019 Estimates of National Expenditure (ENE); the 2019 State-of-the-Nation Address; 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 2019/20 is also assessed in this report.

 

1. Mandate of the Committee

 

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

 

1. Purpose of the Budgetary Review and Recommendation Report

 

In accordance with section 5 of the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009), the National Assembly, through its committees, must assess service delivery performance of each national department and submit Budgetary Review and Recommendation Report (BRRR) 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).

 

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 2019/20, Budget Vote 6 and the Department’s Annual Report 2019/20. The Annual report contains the Department’s service delivery information, reflecting its performance in 2019/20 reporting period.

 

1. The core function and mandate of the Department

 

The overall mandate of the Department is to work for the realisation 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[3]. In the same breath, other Cabinet ministers are required to consult the Minister on their international role.

 

1. Measurable Objectives of the Department

 

The Department’s overall mandate is to work for the realisation of South Africa’s foreign policy objectives. It achieves this through implementing identified strategic objectives aimed at responding to the domestic priorities as announced by government for the reporting year. This is done by:

 

 Coordinating and aligning South Africa’s international relations abroad;

 Monitoring developments in the international environment;

 Communicating government’s policy positions;

 Developing and advising government on policy options, and creating mechanisms and avenues for achieving objectives;

 Protecting South Africa’s sovereignty and territorial integrity;

 Contributing to the creation of an enabling international environment for South African business;

 Sourcing developmental assistance; and

 Assisting South African citizens abroad[4].

 

During the reporting period, the thrust of the work of the Department remained anchored on these overarching priorities as confirmed by the January 2019 Cabinet Lekgotla and the 2019 State of the Nation Address (SoNA). In its work on these priorities, the Department is supported by the following activities:

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

 

1. Policy focus areas

 

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

 

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 125 diplomatic missions in 2019/20 in 108 countries abroad, and through the accreditation of more than 160 countries and organisations resident in South Africa. The extended footprint also put the resources of the Department under pressure, especially within the current constrained fiscal environment in South Africa.

 

The Department has a dynamic role to play in the improvement of the lives of South Africans. This is achieved through identifying strategic opportunities for skills and knowledge development, targeted investments, and growing markets for South Africa’s products and services. This way, the Department ensures that international relations work is linked and responds to domestic imperatives.

 

During the reporting period, the Department remained focused towards implementing strategies and mechanisms to bolster regional and continental political and economic integration. These are the apex priorities of South Africa’s foreign policy[5]. 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.

 

1. 2019 State-of-the-Nation Address.

 

In his February 2019 State-of-the-Nation Address[6], President Cyril Ramaphosa designated foreign policy as one of the government’s priorities. Priority seven, relates to ‘a better Africa and world’. The President confirmed the impetus of South Africa’s Foreign Policy towards multilateralism and a rules-based international system; commitment to global peace and security including sustainable economic growth; and the integration of South Africa’s economy with those of the neighbours and the rest of the continent[7]. President Ramaphosa went further to say that the African Continental Free Trade Area would improve the movement of goods and services, capital and means of production across the continent[8].

 

The President further pointed out that within the Southern African Development Community (SADC), priority would be on development of cross-border value chains in key sectors such as energy, mining and mineral beneficiation, manufacturing, infrastructure and agro-processing[9]. President further elaborated that in order to gain economic development, the SADC region must be peaceful and stable and address conflicts within the region. South Africa would use its membership of the UN Security Council to promote the peaceful resolution of disputes particularly on the African continent[10].

 

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

 

In Chapter 7 of the NDP entitled “Positioning South Africa in the world”, the National Planning Commission argued that government’s global and regional policy-making stance should be South Africa-centric. It should also improve South Africa’s integration in the region, on the continent, among developing countries, and in the world with measurable outcomes. The National Planning Commission also argues that policy-making should be guided by the following principles and objectives[11]:

 

• 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[12].

 

1. Service delivery environment

 

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

The plan states that the country’s foreign policy should be shaped by the interplay between diplomatic, political, security, environmental, economic and regional dynamics that define international relations. The country should position itself as one of Africa’s powerhouses, leading development and growth on the continent. Integration with the Brazil-Russia-India-China-South Africa group of countries should be deepened[13].

 

In this regard the Department is doing its part in contributing to the realisation of the plan’s development goals. These are achieved through continuing to support regional and continental processes, responding to and resolving crises, strengthening regional integration, contributing to an enabling trade environment, increasing intra-African trade, and championing sustainable development and opportunities in Africa.

 

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

 

The Committee in its analysis of the Annual Report 2019/20, 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. This it should do while meeting the country’s international obligations in a dynamic and complex global terrain. In this vein, South Africa’s foreign policy objectives remained predicted on the country’s national interest and identity.

 

The narrative of Africa being the bedrock of South Africa’s foreign policy gained more credence during the current stint as a non-permanent member of the United Nations Security Council (UNSC) for the period 2019 to 2020. South Africa was endorsed by the African Union (AU) in 2018 to take up this position. This was reported as a demonstration of confidence in South Africa’s leadership and the country’s resolve to place African issues high on the agenda of the UNSC. Dealing with the root causes of conflict on the continent remained central to South Africa’s work as the Chair of the AU from January 2019.

 

1. Opening remarks by the Chairperson of the Portfolio Committee, Ms T Mahambehlala MP

 

In her opening remarks, the Chairperson said that the Committee came together in the midst of a litany of international developments, which had a bearing on South Africa’s Foreign Policy. From the presidential elections in the United States (US); elections in Tanzania, Cote d’Ivoire, Burkina Faso, and with others to follow towards the end of the year. She highlighted the irony that rigging and vote stealing claims emerged in the “first world”. This was not in an African country where these so-called old democracies believe it is a norm in Africa, that a defeated candidate is bound to contest elections. She indicated that the Committee would have time to deal with these issues later.

 

Notwithstanding bad publicity about her, the Committee took note and appreciated the fact that Consul General Sunduza, in the South African office in Los Angeles, was making an early impact on arrival in that part of the world.

 

The Chairperson further indicated that the Committee applauded her for having been unanimously nominated by the L.A. Area Chamber of Commerce, to the position of 2021 Vice Chair and 2022 Chair of the Diplomatic and Commercial Officers Group. South Africa and indeed Africa, would benefit from her youthful and energetic search for effective avenues to enhance economic diplomacy, which is much desired to address the triple challenges facing South Africa. The incoming leaders were carefully nominated to ensure that the prestige and momentum of the Group initiative continues. The Committee would look forward to her leadership, on behalf of South Africa, in the coming year.

 

The Chairperson noted that the annual reports are a very important yardstick of the performance trajectory of the Department. They acted as strong monitoring tools which show whether the Department is taking into consideration the oversight interventions of the Portfolio Committee, and the audit outcomes of the Auditor General. The reports would demonstrate whether the Department is improving its performance.

 

The Chairperson recalled that in the Committee meeting of 9 October 2019, with the Audit and Risk committee and the Auditor-General (AG), it was identified that the root cause for the qualified audit opinion was the non-implementation of the Audit Action Plan. There was not much ground covered to redress the situation. Inadequate capacity in the Finance Branch was identified as a serious concern.

 

The audit finding on cash and cash equivalents was found to be linked to lack of required capacity in the Finance Branch. Basic accounting skills and knowledge required to reconcile what was in the cashbook and what was in the bank statements was lacking, by both the Corporate Service Managers in Missions and Branch Finance at headquarters.

 

Ms Mahambehlala argued that this was recognised as another pointer to lack of capacity in the Finance Branch. The Committee recommended a skills audit process in the Finance Branch. It also became apparent to the Committee that recurring operational challenges evolve around the Finance Branch. There were continuous signs of lack of knowledge, poor performance and lack of the necessary skills. The Chief Financial Officer (CFO) expressed a view that he did not agree with some of the findings in the report of the Auditor General of 2018/19. The Committee was dismayed how then he would assist the Department to address the root causes of the operational challenges.

 

It was further pointed out that, it transpired in the same meeting, that some contracts with service providers were irregularly awarded. One such is the bandwidth contract provided by the BT Communications for which the CFO was charged but not found guilty. The question then became, what was to happen with that irregularly awarded contract? It was noted that most of the irregular expenditure was caused by contracts that were extended/varied without approval from National Treasury.

 

It was identified, in the same meeting, that issues with cash and cash equivalents were picked up from 2013/14; the challenges with asset register were also experienced in 2013/14; so was the submission of financial statements with misstatements were identified in 2013/14, same as the challenges with the Asset register; and by coincidence the CFO also started to act in that office in 2013.

 

In the Committee meeting of 30 0ctober 2019, the CFO explained to the Committee that the challenge with cash and cash was that there were capacity constraints in the Finance Branch. He had pointed to the fact that Corporate Services Managers who deal with finances of missions, were sent to this Branch when they arrive back to the Department, and they often lacked the necessary skills. However, it was noted that the Branch had not yet trained the officials as required.

 

It was further recalled that the CFO challenged the findings of the AG on the New York pilot project in that same meeting. The Department was reminded to pay attention to the recommendations in the Oversight report on the New York project. The Committee expected to get a full report on the misrepresentation by the Department, that land was procured, for which R118 million had already been paid.

 

The Chairperson further demonstrated that the Finance Branch was again contributing to the root causes of the qualified audit opinion in 2019/20, on receivables. The lack of capacity in the Finance Branch again contributed to the negative audit outcome. The Committee took note that National Treasury advised the Department on this issue. Then, this reclassification of R188 million should have been accompanied by a thorough analysis by a competent accountant.

 

The Chairperson could not understand why the Finance Branch had to wait for the Auditor General to make a finding for such an obvious process. This posed a looming risk that the Department could have moved to write-off the amount.

The Chairperson highlighted that the Committee commend the Department for its consistent and positive outcome on performance reporting. It was found interesting to note the difference in the manner the Department was managing performance information better than its annual financial statements. The Department was urged that the best practices in this area should be emulated to the Finance branch.

 

The Chairperson concluded by pointing out that over the two years in the UN Security Council, South Africa handled its membership very well. The Committee further wished it well in its last presidency in December. She also hoped that President Ramaphosa, as the Chair of the African Union (AU), was receiving the necessary support from the Department, under the stewardship of Minister Naledi Pandor.

 

1. Presentation on the annual service delivery performance of the Department in 2019/20 financial year

 

Mr Kgabo Mahoai, the Director-General (DG) of the Department, gave an overview and Ms Kotze added details of the annual performance of the Department. In his presentation, Mr Mahoai pointed out that during the reporting period, the Department continued to discharge its mandate of coordinating and implementing South Africa’s foreign policy. This is, inter alia, grounded in the ideals of Pan-Africanism and a commitment to multilateralism, with the African Union (AU) at its core and, as a fundamental principle, the consolidation of the African Agenda. Therefore, Africa remained the focal point of South Africa’s foreign policy during the reporting period.

 

The DG reiterated that multilateralism remains a focal point of South Africa’s foreign policy. Engagements were premised on the need to advance the priorities reflected in the National Development Plan (NDP) and the development priorities of developing countries. It was said that with its near universal membership and vast agenda, the United Nations (UN) remains the most important multilateral institution and the centre of global governance. Therefore, engagement with, and active participation in the UN and its processes, were of vital importance to South Africa and the advancement of its foreign policy priorities. Multilateral engagements, including among countries and groupings of the South and, in turn, their engagements with the North, advanced South Africa’s foreign policy priorities through pursuit of regional integration and promotion of Africa’s development.

 

The DG highlighted that, significantly, South Africa occupied key global leadership positions in the period under review. In this regard, towards the end the reporting period, South Africa assumed the Chairship of the AU for the year 2020, under the theme: “Silencing the Guns: Creating Conducive Conditions for Africa’s Development”. This was in addition to South Africa having been elected to serve on the UN Security Council (UNSC) for a two-year period (2019 – 2020). Since taking up the non-permanent seat, South Africa has managed to encourage closer cooperation between the UNSC and other regional and sub-regional organisations, particularly the AU. South Africa further emphasised the role of women in the resolution of conflict and presided over the UNSC in October 2019.

 

South Africa’s first Voluntary National Review (VNR) on implementation of the UN 2030 Agenda on Sustainable Development was presented to the UN. A new national coordination structure, designed by the Department and other stakeholder departments was established. This structure is intended to provide a platform for the integrated domestication of the UN 2030 Agenda, AU Agenda 2063 and SADC’s Regional Indicative Strategic Development Plan (RISDP), respectively.

 

Regarding bilateral relations, South Africa’s continued engagements with strategic partners was a response to addressing the country’s priorities, as reflected in the NDP. Structured bilateral mechanisms (SBMs) and high-level visits provided strategic platforms and tools to advance and promote bilateral relations and cooperation with partner countries. These mechanisms were utilised to advance the national interest, as well as to establish a common position on issues relating to the global and continental agendas, respectively. The convening of such engagements is subject to agreement on suitable dates between the relevant partner countries. During the year under review, several planned mechanisms were successfully held, while several others were postponed, for a variety of reasons.

 

The Department indicated that one of the main focus areas of the majority of these interactions was economic diplomacy. The outcomes of such engagements are manifested through direct and indirect investment by key partners in strategic sectors of our economy.

 

With regard to Public Diplomacy, the Department continued to work towards an increased understanding of South Africa’s foreign policy engagements by both local and international audiences. Various platforms were used involving the Principals, including media briefings and public participation programmes. The platforms stimulated debate through dialogue, opinion pieces and public lectures on topical issues in the purview of international relations.

 

The Department continued to facilitate the arrival and departure of dignitaries through the State Protocol Lounges. It provided hospitality services to the President, Deputy President, Minister and Deputy Ministers of International Relations and Cooperation, and also provided protocol support to the second and third spheres of government. As host to one of the largest concentration of diplomats globally, the Department also provided support to the foreign diplomatic and consular officials accredited to South Africa.

 

The Department rendered consular assistance to South Africans travelling, working, studying and living abroad. The last quarter of the year under review also coincided with the outbreak of the global COVID-19 pandemic. Global economies slowly grounded to a halt. The Department has had to provide consular assistance to South African citizens abroad, who, due to unforeseen events, became stranded, distressed and, even, destitute as a result of the COVID-19 pandemic and global lockdown that ensued.

 

3.1       Analysis of performance

The Department reported that the achievement rate of the 2019/20 targets is at 68%, which is significantly lower than the previous year, 2018/19, (86%). Although the lower level of achievement may be attributed to the outbreak of COVID in the last quarter, however, it was also indicative of other underlying causes. The percentage of targets achieved was not demonstrating the impact of South Africa’s foreign policy objectives.

One possible cause was identified as the type of performance indicators and targets for the period under review. Although in line with the previous planning framework from the National Treasury and the Department of Planning, Monitoring and Evaluation (DPME), was focused more on compliance with the framework and responding to the audit requirements for predetermined objectives (PDOs) of the Auditor-General of South Africa (AGSA). This resulted in the Department following a qualitative approach in the indicators, which made it difficult to actually determine the outcomes and impact of the work. In addition, it also left the Department at the behest of the exogenous factors as to when counterpart would set dates for the meetings and, if the meetings were not set, then this reflected as “not achieved”.

 

The second possible cause was that, due to the fact that it was an election year, the availability of Principals for high level engagements was affected by the election work in the first two months of the financial year. Furthermore, various Branches postponed targets from the first quarter to the later quarters and left implementation until the last minute. It should be noted that Missions in various countries were impacted by the early outbreak of the coronavirus which led to the COVID-19 pandemic before Head Office was impacted.

 

The reports reflect the activities completed, rather than the analysis of the outcomes and impact of the engagements. A possible underlying cause is the indicator and target setting, where the Department focussed on the number of engagements and was not specific on what it wanted to achieve through these engagements. To mitigate for that, the new planning cycle has improved indicators and target setting by opting for the development of country strategies for engagement. The intention is for South Africa to identify strategic areas of engagement. This, in turn, would improve the reporting to reflect outcomes in the long term.

 

The audit outcome in respect of performance reporting for the Department as audited by AGSA was found to be useful and reliable with no material findings thus achieving unqualified opinion for the third consecutive year.

 

When it comes to financial reporting, while the result is a qualified audit opinion based on ‘unexplained’ receivables, the Department found it necessary to acknowledge that there were some milestones achieved from the audit of the previous year, namely:

• The Department was able to resolve the recurring qualified opinion on moveable asset management from the past few years.
• The Cash and Cash Equivalents prior year qualification material misstatements was also resolved.

 

3.2       Other Matters

 

3.2.1    Irregular expenditure:

The Department reported that it has not yet overcome the challenge of irregular expenditure. This emanated from contracts awarded not in compliance with applicable laws and supply chain management processes in previous years but whose services were still being rendered to the Department.

However, the Department reported that the majority of these have either been terminated albeit after the reporting period or are in the process of coming to the end. The DG also demonstrated that the resultant consequence management in respect of areas where investigation reports recommendations were clear, were at various stages of implementation, and progress on these would be reported to the Committee in subsequent briefings.

 

3.2.2    Unauthorised expenditure

 

The Department incurred unauthorised expenditure of R245 million resulting from the overspending on compensation of employees (COE). The 2019/20 financial year COE ceiling was not sufficient to cover the cost for the already filled positions in the Department. The Department was thus exploring various options to reduce spending on COE.

 

3.2.3    Fruitless and Wasteful Expenditure

 

The Department has incurred fruitless and wasteful expenditure of R1 625 000 during the reporting period. The main source is the management of transition of occupation of residence between incoming Heads of Mission and the outgoing ones. Often, rental is continued in anticipation to avoid the tedious new procurement process of securing suitable and cost effective accommodation abroad.

 

It was reported that all reported incidents of fruitless and wasteful expenditure have been assessed in line with the National Treasury Framework. It was determined that it would be impractical to hold anyone liable to date until and unless the Department has found a better mechanism for the overall mastery of the foreign property market dynamics.

 

3.2.4    ICT updates

 

It was reported that ICT did not meet its 2019-2020 strategic targets. There were delays in the acquisition of Infrastructure modernisation imperatives and computers. Despite the fact that ICT did not achieve its targets, it was reported that there has been significant progress in certain aspects of ICT including the development, adoption and approval of Digital Strategy through the Ministerial ICT Task Team.

Furthermore, the following short-term interventions have been achieved:

• Acquisition of Microsoft software licenses, products and services through the Microsoft Enterprise Agreement (implementation is currently underway);
• Renewal of Email security (Proofpoint) licences (Implementation has been completed); and
• Renewal of McAfee endpoint security (anti-virus and anti-malware) licenses (implementation is underway).

 

1. Overview and assessment of the financial performance of the Department for the 2019/20 financial year

 

1. Financial expenditure trends of the Department

 

The Department continued to operate in an uncertain international environment which is volatile, uncertain, complex and uncertain (VUCA) and with budget constraints. At the end of the 2019/20 financial year, the Department spent R6, 310 billion, which represents 97% of the adjusted appropriation. The expenditure is lower by less than 1% in comparison to R6, 370 billion spent in 2018/19 financial year.

 

The Department managed to maintain its spending within the reduced budget allocation in the implementation of the Annual Performance Plan. This was attained through the implementation of cost saving measures, such as revision of rental norms and standards, reduction on the international travel and doing more with less through the introduction of efficiency in the operation of the missions.

 

However, the Department had to navigate the impact of the budget cuts experienced on the compensation of employees, which unfortunately, has resulted in the expenditure exceeding the budget ceiling by R246 million. Conversely, the Department’s effort to delay the placement of officials to missions abroad for December 2020 placement cycle were not sufficient containing the spending within the main division of the vote. As a result, the high spending on compensation of employees constituted unauthorized expenditure and contributed to the low levels of liquidity and requires attention going forward.

 

The Department’s inherent risk of foreign exchange rate fluctuation remains a challenge as the department’s obligation in    respect to the South Africa's commitment are levied if foreign currencies whilst the budget estimates are projected in Rand.  Thus for the period under review the Department had to propose virement of funds to the value of R47 million to meet South Africa's international obligation through the engagement with the National Treasury. Consequently, discussion with National Treasury and South African Reserve Bank are underway in finding a mitigating strategies to this inherent risk.

 

 

 

 

 

 

 

 

 

Table 1: Total expenditure for the 2019/20 financial year[14]

 

Programme (R'000)	Final Appropriation R’000	Actual Expenditure R’000	Total percentage spent (%)
Administration	1 698 484	1 294 910	76,2%
International Relations	3 069 527	3 313 934	108,0%
International Cooperation	538 543	541 104	100,5%
Public Diplomacy and Protocol	298 886	289 046	96,7%
International Transfers	903 075	871 050	96.5%
Total	6 508 515	6 310 044	97,0%

Source: Annual Report of the Department of International Relations and Cooperation 2019/20

 

1. Analysis of financial performance of the Department per programme for the 2019/20 financial year

 

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

 

1. Programme 1: Administration

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

 

This programme’s expenditure is R1,294 billion in 2019/20, which represents 76.2% of the adjusted appropriation. The expenditure is lower than R1,355 billion spent in 2018/19, which represents a decrease of 4%. The decrease in expenditure was mainly as a result of delays in implementation of the infrastructure plan as well as delays in the acquiring of Information and Communications Technology (ICT) services as was initially planned in the 2019/20 financial year.

 

1. Programme 2: International Relations

This programme’s expenditure is R3,313 billion in 2019/20, which represents 108% of the adjusted appropriation. The overspending which resulted in unauthorised expenditure was experienced on Compensation of Employees (COE) due to COE ceiling implemented by National Treasury. It did not cover the total cost for the filled positions as well as the depreciation of Rand against major foreign currencies which impacted expenditure incurred in missions abroad.

 

The 2019/20 expenditure is lower than R3,377 billion spent in 2018/19, which represents a decrease of 2%. The decrease is mainly due to the implementation of cost-containment measures, as well as the postponement of the transfer of officials to missions in the December cycle as a measure to contain costs in relation to the compensation of employees.

 

1. Programme 3: International Cooperation

The expenditure is R541 million in 2019/20, which represents 100.5% of the adjusted appropriation. The overspending which resulted in unauthorised expenditure of R2,6 million was experienced on Compensation of Employees (COE) due to COE ceiling implemented by National Treasury. It did not cover the total cost for the filled positions as well as the depreciation of Rand against major foreign currencies which impacted expenditure incurred in missions abroad. The 2019/20 expenditure is higher than R526 million spent in 2018/19 which represented an increase of 3%. The increase is due to expenditure relating to South Africa’s election to serve as a non-permanent member of the United Nations Security Council (UNSC) for the period 2019 to 2020.

 

1. Programme 4: Public Diplomacy and Protocol Services

Programme 4 expenditure is R289 million in 2019/20, which represents 96.7% of the adjusted appropriation. The expenditure is lower than R353 million spent in 2018/19, which represented a decrease of 18%. The decrease is due to the expenditure relating to the hosting of the 2018 Brazil, Russia, India, China and South Africa (BRICS) Summit.

 

1. Programme 5: International Transfers

Programme 5 expenditure is R871 million in 2019/20, which represents 96.5% of the adjusted appropriation. The expenditure is higher than R759 million spent in 2018/19, which represented an increase of 15%. The increase is due to the increase in South Africa’s membership contribution to the African Union (AU), and Southern African Development Community (SADC).

 

1. Audit outcomes 2019/20

 

The Department received a qualified audit opinion on the 2019/20 financial statement. This was based on limitation of scope due to insufficient appropriate audit evidence to support the amount disclosed in the disallowance account (receivables) with matters of emphasis.

 

4.2.6.1 Action to be taken:

The 2019/20 audit action plan is being updated to incorporate the new matter and enforce measures to prevent recurrence thereof, as well maintain the matters that have been successfully resolved. The Department would secure services of an independent service provider to conduct a forensic investigation and to be completed by end of February 2021. It would also adopt a financial strategy as per the Microsoft time lines.

 

4.2.6.2 Unauthorised expenditure

The Department reported that measures to reduce cost on compensation of employees are being put in place.

 

4.2.6.3 Irregular Expenditure

The Department incurred irregular expenditure of R217 034 000. In the majority of the cases, investigations have been conducted and finalized. The Department is in the process of implementing the recommendations pertaining to consequence management.

 

4.2.6.4 Fruitless and Wasteful Expenditure

The Department incurred fruitless and wasteful expenditure of R 1 625 000. All reported fruitless and wasteful cases have been assessed in line with the Fruitless and Wasteful Expenditure framework, and no liability was determined.  The next step would be to recommend that the amount reported be written-off.

 

1.  Public Entity: Overview of the Annual Report 2019/20 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 and International Fund (ARF), 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 of Finance on the disbursement of funds, as provided for in the African Renaissance and International Cooperation Fund Act, 2000.[15]

 

The objectives of the ARF are to promote economic cooperation between the Republic of South Africa and other countries in particular African countries,

through:

• promotion of democracy and good governance,
• prevention and resolution of conflict,
• socio-economic development and integration,
• humanitarian assistance,
• human resource development, and
• cooperation between South Africa and other countries[16]

 

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.[17]

 

The ARF is set up as a public entity. However, it does not yet have all the features necessary, like other public entities, due to its placement within the Department’s structures. The ARF is still faced with challenges of a governance nature, due to it being located within the Department and utilizing the Department’s procurement processes. The entity does not have its own systems of financial and project management, and all its processes are manual. The ARF secretariat comprise of employees of the Department. The critical position of a Project Manager could not be filled due to the ceiling imposed on compensation of employees. The ARF has remained an important tool for the enhancement of South Africa’s development cooperation on the continent and with other identified partners.

 

The Committee considered and analysed the Annual Report of the ARF for the 2019/20 financial year. In its analysis of the report, the Committee also enlisted input from the Office of the Auditor-General, the Audit Committee and the Internal Audit.

The ARF Annual Report encompasses the achievements recorded during the 2019/20 financial year in pursuit of the objectives and targets as set out in the Revised Strategic Plan for 2015 – 2020.

 

The ARF has achieved a consecutive unqualified audit opinion without findings.

 

1. The ARF financial report 2019/20

 

In terms of the Act, the appropriated funds, among other sources, consists of money appropriated by Parliament for the Fund. During the year under review, an amount of R46 272 million was appropriated to the Fund. The Fund also received interest of R64 million from investments, which relates to the amount deposited with the Corporation for Public Deposits in the South African Reserve Bank.

 

During the 2019/20 financial year, the ARF processed R63.4 million in disbursements towards humanitarian assistance, the promotion of democracy and good governance, prevention and resolution of conflict and human resource development in Africa.

 

5.3       Projects processed during the reporting period

 

5.3.1    Independent Boundaries Commission Project (IBC)

The project objective was to provide tangible support to the Intergovernmental Authority on Development-led peace process in South Sudan within the broader framework of the African Union (AU). A High-level Ad Hoc Committee on South Sudan was mandated by the AU, through the capacitating of key transitional mechanisms established under the Revitalized Agreement on the Resolution of Conflict in the Republic of South Sudan.

 

South Africa's support to the peace process in South Sudan, through the work of the IBC, was considered an essential demonstration of the country's commitment to the AU's conflict-prevention and peace building agenda. Moreover, it constituted a core component of the AU's Master Roadmap on “Silencing the Guns by the Year 2020”. The entity processed payments totalling R576 925, 62 for South African intervention and contribution to the Independent Boundaries Committee (IBC) for South Sudan.

 

5.3.2    The Transformation Initiative (ITI)

The Central African Republic (CAR) project’s goal is to strengthen peace prospects in CAR through support for national reconciliation, transitional justice processes and security sector reform. With various activities having been carried out, notably advisory and capacity development support, the project is currently well on its way towards achieving the anticipated outcomes. Though there was still quite a lot of work required in CAR, given the still fragile peace agreement, there was hope that the various efforts being played by the various stakeholders, including the ITI, would over time start to realise more and more positive results.

 

5.3.3    Lesotho Peace Process

Southern African Development Community (SADC) appointed a Special Envoy/Representative to the Kingdom of Lesotho. The Special Envoy was to act as liaison and representative of the SADC facilitator to the Kingdom of Lesotho. The then Deputy President Cyril Ramaphosa was appointed, together with a constitutional expert to serve in the reform process in Lesotho.

 

President Ramaphosa appointed former Deputy Chief Justice, Dikgang Moseneke, after his appointment as President of South Africa to lead the Lesotho reform process.

It was reported that the desired outcome of the facilitation process is for Basotho to find a lasting solution which would lead to political and security stability in the Kingdom of Lesotho. The outcomes of this project would also serve South Africa’s national interests due to its proximity to the Kingdom of Lesotho.

 

The entity processed payments totalling R7 355 696.46 for South African intervention and contribution to the Kingdom of Lesotho Peace Process as per objectives of the project.

 

5.3.4    Southern African Election Observer Mission (SEOMs)

Once a member state holding elections has confirmed the date, an invitation is extended to the Southern African Development Community (SADC) Secretariat to send a mission (SEOM) to observe the elections. The Secretariat would then extend invitations to member states to contribute observers to form part of the SEOM.

 

The holding of regular democratic elections would strengthen democracy and good governance on the continent. Five elections observer mission were supported during the year in Malawi, Mozambique, Botswana, Mauritius and Namibia. The ARF funded the logistical arrangements of the Department’s component that participated in the observation. The entity processed payments totalling R443 078.44 for South African participation in the 2018/19 AU Election Observer Mission as per objectives of the project.

 

5.3.5    The annual African Woman Dialogue

The dialogue was held from 4 to 8 November 2019 in South Africa, attended by no less than 1 000 women from all 55 African countries. Women are regarded the main victims of wars and violent conflicts. While these women of Africa share common experiences, there was no platform for them to share these experiences and help support their healing, development and upliftment. The entity processed payments totalling R12 130 000.00 to support capacity-building for the Annual Woman in Dialogue.

 

5.3.6    Namibia drought-relief project

The project has been completed in five regions (Omaheke, Kunene, Kavango East and West) in Namibia giving access to water to many communities and livestock. The entity processed payments totalling R3 423 033.45 for the Namibia drought relief project.

 

The ARF recorded no surplus, and therefore no money was handed over to National Treasury for the reporting period.

 

1. Report of the Auditor-General of South Africa 2019/20 on the Department of International Relations and Cooperation and its entity

 

The findings of the Auditor-General indicated that the financial statements presented fairly, in all material respects, the financial position of the Department as at 31 March 2020. The entity’s financial performance and cash flows for the year, then ended in accordance with Modified Cash Standards (MCS) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA). The Department has received a qualified audit opinion with emphasis of matters for 2019/20.

There has been a noted pendulum swing on the financial management performance of the Department. The audit outcomes are from a qualified audit opinion in 2015/16, to an ‘unqualified audit opinion with material findings on pre-determined objectives and/or compliance with laws and regulations’ in 2016/17, to successive qualified audit opinions in 2017/18, 2018/19 and 2019/20.

 

1. The Department

 

Regarding the financial statements of the Department as at 31 March 2020, the Auditor-General expressed a qualified audit opinion with emphasis of matters.

The Auditor-General reported that the basis for a qualified opinion was with regard to receivables. The uncorrected misstatements for cash on hand and investment foreign that was identified in 2018/19 audit of the Department, and was reclassified to current receivables –disallowance and damages. The restated and current year amount of R188 million in disallowance and damages could not be substantiated by supporting audit evidence. This has resulted in a limitation of scope.

 

The Auditor General further had emphasis on the following matters:

 

6.1.1    Unauthorised expenditure

As disclosed in note 11 to the financial statements, the Department incurred unauthorised expenditure of R246 968 000. This is due to the overspending on compensation of employees (COE). The National Treasury has implemented a ceiling on COE which does not cover the cost for the filled positions as well as the depreciation of Rand against major currencies which impacted expenditure incurred in foreign currency.

 

6.1.2    Irregular expenditure

As disclosed in note 31 to the financial statements, the Department incurred irregular expenditure of R 217 034, as it did not follow proper tender processes. The expenditure is on ongoing multi-year contracts. The areas of concern were that procurement of goods and services through these transversal contracts was not in accordance with Treasury Regulation (TR)16A6. Three quotations were not obtained as required by TR16A6 with insufficient documentation on deviations process. Awards were made to suppliers who did not submit declarations as required by TR16A8.3; and contracts were extended/modified without approval from National Treasury, in accordance with TR16A.6.

 

6.1.3    Fruitless and wasteful expenditure

The other matter is with regard to fruitless and wasteful expenditure to the amount of R1 625 000 incurred by the Department in the reporting year. This was disclosed in note 32 to the financial statements. It was as a result of payments made on unoccupied properties abroad, where plans to put the properties to better use were abandoned, as well as unutilised flight tickets.

6.2       Performance information

The Auditor-General did not identify any material findings on the usefulness and reliability of the reported performance information for a sample on Programme 2.

The Auditor-General raised concerns with compliance with legislation. The material findings on compliance with specific matters in key legislation were as follows:

6.3       Compliance with legislation

6.3.1   Annual financial statements and annual report

The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and/or supported by full and proper records, as required by section 40(1)(a) and (b) of the PFMA. Material misstatements of revenue, liabilities and disclosure items identified by the auditors in the submitted financial statements were corrected and/or the supporting records were provided subsequently. However, the uncorrected material misstatements and/or supporting records that could not be provided resulted in the financial statements receiving a qualified opinion.

6.3.2   Expenditure Management

Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R7 256 000, as disclosed in note 31 to the annual financial statements, as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1. The majority of the irregular expenditure was caused by contracts that were extended/varied without approval from the National Treasury.

Effective steps were not taken to prevent fruitless and wasteful expenditure amounting to RI 625 000, as disclosed in note 32 to the annual financial statements, as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1. The majority of the fruitless and wasteful expenditure was caused by payments made on unoccupied properties abroad.

6.3.3    Consequence management

The Auditor-General was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred fruitless and wasteful expenditure as required by section 38(1)(h)(iii) of the PFMA. This was due to the fact proper and complete records were not maintained as evidence to support the investigations into fruitless and wasteful expenditure.

6.3.4   Procurement and contract management

In some of the transversal contracts that the Department entered into, the terms and conditions were not the same, leading to non-compliance to National Treasury regulations 16A6.6.

Some of the contracts were awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state, which is prescribed, in order to comply with treasury regulation 16A8.3. Similar non-compliance was also reported in the prior year. This non-compliance was identified in the procurement processes where the Department had deviated from competitive bidding.

Some of the contracts were extended or modified without the approval of a properly delegated official as required by section 44 of the PFMA and Treasury regulations 8.1 and 8.2. Similar non-compliance was also reported in the prior year.

1. Internal control deficiencies

The accounting officer has exercised his oversight regarding financial reporting, compliance and related internal controls. However, it was not effective due to inadequate review of the annual financial statements and compliance with applicable laws and regulations.

Although an action plan to address audit findings was compiled and implemented by management and the accounting officer, the plan was not effective in timeously addressing all the reported control deficiencies.

 

Management's monitoring controls over record management were not effective to ensure that all receivables transactions recorded in the financial statement are supported by sufficient and appropriate evidence.

Management reviews of the annual financial statements (AFS) were not adequate as they did not prevent, detect and correct material misstatements on the annual financial statements before they were submitted for audit.

Management involved in compliance monitoring processes did not take accountability to address previously reported deficiencies and non-compliance with legislations, as repeat findings were noted in this regard.

 

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

 

In the Auditor-General’s opinion, the financial statements presented fairly, in all material respects, the financial position of the African Renaissance and International Cooperation as at 31 March 2020. They also presented fairly its financial performance and cash flows for the year then ended, in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA).

Consequently, the ARF received an unqualified audit opinion without findings in 2019/20 financial year.

 

Overall, the performance of the entity has improved significantly since it has a permanent secretariat. The Internal Audit and the Audit and Risk committee reported satisfied that the internal audit function is operating effectively and that it has addressed the risks pertinent to the entity in its audits.

 

1. Findings by the Committee

 

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

 

1. The audit on performance reporting of the Department was found to have been useful and reliable in accordance with the applicable criteria defined in the reporting frameworks. The audit outcome on performance information has been positive for the past three years.
2. The Department received a qualified audit opinion on the 2019/20 financial statement based on limitation of scope due to insufficient appropriate audit evidence to support the amount disclosed in the disallowance account (receivables) with matters of emphasis. The internal control deficiencies as identified by the Auditor-General were as a result of weaknesses in financial internal controls relating to foreign cash collections and transfer process by missions; and ineffective record keeping/management process in place to maintain information that supports all financial information reported in the annual financial statements. These were confirmed and endorsed by the Department.

 

1. A concern was raised that the preparation of financial statements remains a challenge for the Department. Material adjustments on misstatements had to be effected to the Annual Financial Statements (AFS) submitted for audit.

 

1. It was noted that transactions of this nature require a Finance Team that is adequately qualified to deal with complex accounting standards within diverse multi-currency environment. Foreign exchange gains or losses require high level skills and frequent reconciliation exercises performed on time. It transpired that record keeping of financial transactions remained a challenge in both missions and headquarters. There is no daily reconciliation of transactions, to unpack receivables and payables. The information on record, when reconciling should be able to unpack what the receivables are composed of, it should be manageable to trace all the gains and losses and be able to explain and record all transactions as they happen.

 

1. Compliance with applicable legislation is another area of concern for the Department especially in supply chain management (SCM).

 

1. The Department continued with contracts which were irregularly awarded. One such contract is the bandwidth contract provided by the BT Communications for which the CFO was charged but not found guilty. The Department incurred irregular expenditure of R217 million in the current year. The majority of irregular expenditure was caused by contracts that were extended/varied without approval from National Treasury.

 

1. The Department incurred unauthorised expenditure of R247 million in the reporting year. This is due to the compensation of employees ceiling implemented by National Treasury which does not cover cost for the filled positions.

 

1. A concern was raised that almost 80% of personnel titled state accountants in the finance branch, had matric and no basic accounting qualification.

 

1. Previous recommendations of the Committee were with regard to the improper fit where the finance branch also was responsible for supply chain and property management. There is a causal link between the irregular expenditure on state-owned properties abroad and lack of skills in built environment in the Finance branch.

 

1. The Committee called for a forensic investigation on the awarding of contracts and asked the Director General to report to the Committee on a quarterly basis.

 

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

 

1. The African Renaissance Fund has received an unqualified audit outcome without findings (clean audit). The Committee commended the ARF for continuously performing well and presenting fairly, financial statements of the entity.

 

1. It was noted that 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. ICT problems in the Department have been a recurring matter. Previous reports by the Department have provided for turnaround strategies to address this issue, but to no avail.

 

During discussions, the Committee also raised the following issues:

1. It was asked whether there is value for money in Public Diplomacy and Protocol under programme 4. Clarity was sought on the amount of money allocated for running Ubuntu Radio.

 

1. It was noted that some of the contracts were awarded to suppliers who had no tax clearance by the South African Revenue Services; and to bidders who did not submit the required declarations as required by National Treasury.

 

1. By not unpacking the required evidence of what contributed to the R188 million reclassified into disallowances and damages, created an opportunity for the Department to move for a write-off of the funds.

 

1. The Committee requested a list of South Africans occupying positions in multilateral bodies.

 

1. It was reported that transferred officials with comorbidities were asked to travel back home without due consideration of the risks associated with COVID-19.

 

1. Clarity was further sought as to what the African Renaissance Fund does that the Department is not doing to also obtain a clean audit.

 

1. The Committee unanimously resolved that, based on the recurring findings of the Auditor General and the challenges of the Department in addressing the matters in the Finance branch, the Committee would require the Department to investigate receivables, if there is evidence of wrongdoing, have the Department referred to the scrutiny of the Standing Committee on Public Accounts (SCOPA).

 

1. Responses by the Department

 

The Department responded to the Committee’s findings and observations as follows:

 

1. The Director-General thanked the Committee for the opportunity to make an input and gave the Committee assurances that the matters raised would be addressed. With regards to R188 million, that could not be explained which has resulted in a material misstatement, the Department has drafted terms of reference for forensic investigation and the deadline is end of February 2021. This would give the Department enough time to address the finding before the end of the financial year.

 

The preliminary assessment has confirmed that there were weaknesses in the foreign cash management and ineffective record keeping. The Department is embarking on a forensic investigation, which it had initially asked the Auditor-General to do as early as October 2019, but the AGSA felt conflicted and declined to assist. The Department expressed a concern that the AGSA responded too late about its inability to conduct the specialised audit. This left the Department in a predicament, and had to proceed without the benefit of an independent investigation.

 

1. The Department incurred unauthorised expenditure in the reporting year. This was because of the unavoidable overspending on compensation of employees on Programmes 2 and 3. The ceiling set by National Treasury falls far too low from the actual incumbents at headquarters and those in the missions abroad. The Department has since tabled a proposal at Cabinet level to reduce the number of South Africa’s missions abroad. However, closing down of missions would not be an immediate process, as in diplomacy there would be negotiations with receiving states to effect the changes. The details of the proposal would be shared with the Committee at the appropriate time.

 

1. The fruitless and wasteful expenditure was caused by delays in occupying accommodation for the head of mission and or officials transferred abroad. Such accommodation remains vacant for months before the next person arrives on posting. This could be due to other administrative matters which have to be undertaken prior to departure of such officials, including security clearance and the Agrément issued by the receiving state for incoming head of mission. Furthermore, the Department is paying for the upkeep (electricity, water, cleaning, security) of vacant state-owned properties abroad.

 

1. It was accepted that the Finance Branch was indeed the albatross that contributes to the recurring negative outcome of the Department. However, processes were in underway to improve the recurring misstatements in annual financial statements. Lack of the required knowledge and skills in the Finance Branch was also acknowledged. Compliance in the missions had not been monitored in order to assist them on the preparation of reports for the compilation of financial statements.

 

1. The Department would be best guided by the Committee on how to assist the Finance Branch. Due to the ceiling imposed on compensation of employees in the past three years, the Department could not recruit new employees including qualified accountants as vacancies are frozen. It is however, planning to recruit personnel accredited by the institute of chartered accountants in near future or through other means.

 

1. The Department has had irregularly awarded contracts with service providers and some which were also extended without authorisation by National Treasury. These included a company named BT Communications, for which the Chief Financial Officer (CFO) was charged but not found guilty. The Department reported that it has fulfilled all the requirements to have the expenditure to be condoned as there were no losses. The Department was considering motivating to National Treasury to have the matter related to this particular contract condoned as soon as possible. Two other contracts relating to computer leasing which had been extended beyond their contracted period, as well as the storage facilities services have since been terminated even though it was after the reporting period.
2. The Department undertook to submit the Audit Action Plan once the internal processes have been finalised; do a presentation on South Africa’s tenure in the UN Security Council; provide progress report on consequence management so far undertaken; provide a full list of South Africans working in international organisations abroad; as well as submit a skills audit report conducted by the PSETA, much as the Audit Committee was not happy with it.

 

1. A report on the root causes for not paying service providers within the prescribed 30 days’ period has been finalised. It emerged that among others, one service provider such as MTN or Vodacom would submit many invoices for the many subscribers, which have to be verified individually therefore not performed on time. That results into delayed payments. The Department has undertaken to implement the recommendations of the report.

 

1. Under human resource, there were 12 cases of misconduct, and six were categorised as other. These included three cases of unauthorised absence, two of insubordination and one on assault.

 

1. Missions have since confirmed that they continued to extend consular services to South Africans abroad throughout the lockdowns necessitated by the pandemic. Some services were offered online.

 

1. The Department confirmed that the financial statements of the African Renaissance Fund (ARF) are prepared by the ARF secretariat. The fund is a schedule 3 entity listed in the PFMA. Its financial statements are prepared in accordance with standards of Generally Recognised Accounting Practices (GRAP), including any interpretations, guidelines and directives issued by the Accounting Standards Board. It was also confirmed that the Director General is also the Accounting Authority of the Fund. On the other hand, the statements of the Department are prepared in accordance with the Modified Cash Standards. The Finance Branch of the department prepares the statements.

 

1. The US, through USAID continues to support the HIV programmes in schools in the country based on the cordial relations between South Africa and the United States.

 

1. Waiver of visas with some of the Gulf States is not based on reciprocity and was initiated based on South Africa’s national interest.

 

1. The genesis of Ubuntu Radio station was the need to fulfil the Public Diplomacy mandate of communicating South Africa’s foreign policy objectives, posture, achievements and milestones daily to both the domestic and international audience. Due to budgetary constraints, the online radio has proven as the cost effective mode of communication for this purpose, at around R7000 a month on streaming costs.

 

1. Progress has been made in Douala in 2008 for the operationalization of the African Stand-by Force. Joint military exercises, Amani Africa, have taken place hosted by South Africa, proving the state of readiness by SADC for a joint rapid response. The readiness of other regions will be discussed in the coming AU Extraordinary summit on the Silencing of Guns, scheduled for 6 December 2020.

 

1. South Africa remains committed to fight terrorism. It has expressed concern in the developments in Cabo Delgado, which seek to undermine AU efforts to silence the guns. South Africa is not in the AU Peace and Security Council. Lesotho hosted the AUPSC. The AUPSC, has expressed its concern on terrorism in Africa.

 

1. The AU instruments on the promotion of human rights and democracy in the continent, should be a basis for leaders in Africa not to suppress popular demands and mass mobilisation.

 

1. President Ramaphosa has reiterated South Africa’s position on the call for the Reform of the UN Security Council, in line with the aspirations contained in the Ezulwini Consensus, for Africa to obtain two permanent seats. The UNSC should be democratic and represent the views of all regions comprising the community of nations.

1. Conclusions

 

Non-financial 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 expressed satisfaction that, except for the possible effects of the qualified audit opinion, the financial statements present fairly, in all material respects, the financial position of the Department as at 31 March 2020, as also indicated by the Auditor-General. Department has utilised its budget in accordance with its plans for 2019/20. The Department was regarded as having demonstrated full accountability to Parliament and the people of South Africa on resources spent, 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 a new and other serial weaknesses highlighted by the Auditor-General. It further welcomed the acknowledgement and commitment by the Department, to improve in addressing operational challenges, consequence management and maintaining clean governance approach. The Accounting Officer and Senior management and in particular the Finance branch, were regarded as critical in addressing the recurring challenges that renders the Department amenable to qualified audit opinions. Their attitude to and knowledge of their work, cooperation and attendance of meetings where these issues are addressed, were regarded as important links for enhancing the performance of the Department.

 

The Department also expressed determination and undivided attention to pursue best practices in the areas of consequence management, expenditure management, contract management, financial management, supply chain, 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.

 

With regard to the ARF, the Committee found that the overall performance of the ARF as good, and cautioned against the slow pace of migrating to an agency, the South African Development Partnership Agency (SADPA) as directed by Cabinet in 2009. The ARF was noted as working in line with the aspirations of the NDP in pursuing a peaceful and prosperous Africa. The Committee urged the Department to publicise the good work done through this foreign policy soft power instrument.

 

1. Recommendations

 

The Committee is of the opinion that overall the Department has performed according to the goals it had set itself for the 2019/20 reporting period. The 2019/20 budgetary allocations of the Department were generally aligned to the national strategic priorities outlined in the 2019 State-of-the-Nation Address, as well as its strategic direction in terms of its Medium Term Expenditure Framework 2014-2019. An undertaking by the Department to improve on weaknesses identified by the Auditor-General, and working towards a clean audit, would demonstrate a positive indication of commitment of purpose by the Department to diligently execute its mandate.

 

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

 

1. Maintain the standard of unqualified opinion on performance reporting and apply the strategies used to improve the financial reporting.

 

1. Immediately conduct a forensic investigation into the unexplained transactions totalling R188 million and report to the Committee on the findings, recommendations and implementation thereof.

 

1. Consider approaching the Office of the Accountant-General in National Treasury, to conduct a thorough competency assessment of the finance function, as well as provide support to the identified skills deficiencies in the Finance Branch.

 

1. Recruit new employees including qualified accountants, including personnel accredited by the institute of chartered accountants in near future or through other means. Conduct a skills audit in the Finance branch to determine whether there is appropriate capacity. Capacitate the branch accordingly to address the root causes of recurring qualified audit opinions.

 

1. Review the organisational structure and separate Finance branch from property management.

 

1. Terminate all irregularly awarded contracts with service providers and report on a quarterly basis to the Committee.

 

1. The Accounting officer should show what steps will be taken as remedial action on those responsible for root causes of negative audit outcomes for the Department, and report quarterly.

 

1. Fast-track processes aimed at upgrading the ICT infrastructure to safeguard information. Further investigate whether the irregularly awarded contracts relating to information technology have any bearing on the blockages on progress relating to the modernisation project.

 

 

To the National Assembly:

 

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

 

1. The Committee should also be allowed to attend and monitor the participation of South Africa in multilateral forums related to Foreign Policy. This is to assess the impact of the Department’s participation on the outcomes of those organisations.

 

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

 

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

 

Report be considered.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sources

 

• Annual Report 2019-2020 Department of International Relations and Cooperation.
• Annual Report 2019/20 African Renaissance Fund
• Strategic Plan, 2015- 2020, Department of International Relations and Cooperation.
• National Treasury, 2019, Vote 6: International Relations and Cooperation, Estimates of National Expenditure 2019.
• Ramaphosa, C. 2019, 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 2019/20 financial year.
• Presentations by other departments.

 

---

[1] Constitution of the Republic of South Africa 1996

[2] Department of International Relations and Cooperation Annual Report 2019-2020

[3] Ibid

[4] Department of International Relations and Cooperation Annual Report 2019-2020

[5] Annual Report of the Department of International Relations and Cooperation 2019/20

[6] Ramaphosa C, State of the Nation Address 2019

[7] Presidency, 2019

[8]Ibid

[9]Ibid

[10]Ibid

[11] National Planning Commission, 2011

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

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

[14] Annual Report of the Department of International Relations and Cooperation 2019/20

[15] Annual Report 2019/20 of the African Renaissance and International Cooperation Fund

[16] Ibid

[17] Annual Report 2019/20 of the African Renaissance and International Cooperation Fund