presentation to the select committee dirco. 2 the department of international relations and...

Presentation to the Select Committee

DIRCODIRCO

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INTRODUCTION

INTRODUCTIONTherefore the department’s spending focus over the medium term will be on:sustaining economic and political relations, participating in the global governance forums, enhancing operational capacity by strengthening policy and coordination in relation to outgoing South African development cooperation and to table the SADPA BillAgenda 2063review of the current legislative framework governing the department’s operations abroad, tabling the Foreign Service Billundertaking of various infrastructure projects, and implementing the property management strategy

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• In its execution of SA’s foreign policy DIRCO is informed by SA’s global stature where SA:

• is a respected, active and responsible global citizen.- hosts the second largest number of foreign representation in the

world and has a current global footprint of 125 Missions- Is regarded as a champion for protection and promotion of

human rights - Advocates for disarmament and the peaceful resolution of

disputes- Place Africa central in its Foreign Policy which forms the basis

for cooperation with countries of the South and the North.- Champions cooperation and partnership over competition in the

global arena.

South Africa’s Current Global Stature

South Africa’s Global Footprint

Missions per Region

Africa Bilateral – 46

Africa Multilateral – 1

Americas & Caribbean – 17

Europe – 27

Asia & Middle East – 32

Multilateral -2

Total: 125

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• Shifting political ideological implications- The emergence of nationalistic and conservative governments reduced development aid to developing countries (0.4% drop in 2012)

• New trend in trade and economic patterns – Asia and the Middle-East surpassed Europe as SA’ number one trading partner

- In two decades, trade with Asia and the Middle-East increased 19-fold from R40.2 billion in 1994 to R760.2 billion in 2013

- In the same period, trade with Africa increased 35-fold from R11.6 billion to R385 billion

- Europe remains SA’s main strategic trading block while it continues to recover from the impact of the global financial crisis

The changing global environment impacts the execution of DIRCO’s mandate

The Changing Global Environment

• Growing influence of new formations and regional groupings: Brazil, Russia, India, China, South Arica (BRICS), GROUP OF 20,(G20) ,Colombia, Indonesia, Egypt, Turkey, South Africa (CIVETS ), Indian Ocean Rim Association (IORA)

• SA attaches importance to its membership of BRICS

- China is the second biggest economy in the world after the USA, while Brazil and Russia and India are placed 7th, 8th and 10th respectively

- BRICS countries share a common vision to be pursued through economic cooperation, sharing of technical expertise, knowledge and experience to address their own domestic and international challenges

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The Changing Global Environment

• Growing impact of non-state actors and social movements: growing social disparities, economic and financial volatility, insecurity and scarce resources

• New global opportunities and frontiers: The ‘New Economies’ - the Blue Economy, the Green Economy and the Knowledge economy; exploration and utilisation of outer space (SKA project, satellites for communication, defence and environmental surveying) and advances in technologies

• Operation Phakisa seeks to harness and leverage some of these sectors as part of NDP implementation

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Global Trends that Impact on SA’s Influence

• Economic migration: More than half of global population is urbanised ( as compared globally, Africa accounts for only 40%)

- There is an increased number of mega-cities in developing countries

- However, infrastructure and the provision of service is lagging behind and has socio-economic and political implications.

• Regionalism: economies of scale, eroding sovereignty, protectionism vs cooperation for mutual benefit

- This occurs while developing economies are moving, steadfastly, towards consumer-oriented economies

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Global Trends that Impact on SA’s Influence• The future role of global governance institutions (UNSC, BWI):

Reform or Replace.

- The impact of the global financial crisis led to increased voices for reform of international financial architecture

Overview of the MTEF allocation 1. In terms of government priorities of doing more with less, the allocation to

the department over the medium term include Cabinet approved reductions

of R335.3 million in 2015/16, R467.1 million in 2016/17, and R168.5 million

in 2017/18, which the department has to effect on compensation of

employees due to vacant posts, goods and services and the transfer to the

African Renaissance and International Cooperation Fund.

2. The Department has proposed additional cost saving measures to unlock its

fixed cost overhead expenditure items and mitigate the budget shortfall

envisaged, including to accommodate some of the new priorities identified

for implementation.

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Overview of the MTEF allocation

3. In response to the budget reduction the department is implementing the

following additional cost containment measures:

a) Review of the organisational functional assessment for both Head Office

and missions abroad

b) Review of the provision of support services for the missions’ operations.

c) Enhancing information and communications technology through

modernising and implementation of an enterprise resource planning

system.

d) Implementation of property management strategy

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Overview of the MTEF allocation

4. The 2015 MTEF allocation does not cater for the foreign exchange

fluctuations as a result the department remains vulnerable to foreign

exchange rate losses, which necessitates a review of how the foreign

operations are supported. The department will address the shortfall

through the adjustment estimates budget process.

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Programme 1: Administration Purpose Strategic objectives

Provide strategic leadership, management and support services to the department

• To manage resources efficiently and effectively through sound administration and good governance

• To implement effective HR management to ensure that adequate and sufficiently skilled resources are in place and that performance is monitored

• To provide effective training and research in support of departmental strategic objectives

• To establish an adequate, effective and efficient system of internal controls and corporate governance

• To establish a culture of risk management, governance and ethical behavior to ensure improved internal control environment and performance

MTEF allocation (R’ million)

2015/16 2016/17 2017/18

1 418 521 1 468 670 1 535 289

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Programme 1 MTEF targetsKey Result Area MTEF TargetICT Financial, HR and administration systems integrated

Financial Management Procurement 100% aligned to Demand Management Plan100 % compliance with 30-day payment

Security 252 fieldwork investigations for vetting per annum36 security inspections, 36 security awareness sessions, 36 security audits

Property Management Two construction and 17 renovation projects completed

Human Resource Management

Improve turnaround times to meet the DPSA standards, 4 months to fill vacancies, grievances handled within 30 days and disciplinary cases finalized within 90 days

Skills Development 282 training programmes (94 per annum)Six training programmes to international participants

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Programme 2: International Relations MTSF sub-outcome

Strategic objectives Purpose

SA’s national priorities advanced in bilateral engagements

• To strengthen and consolidate SA’s political, economic and social relations through the outcomes of structured bilateral mechanisms and high-level engagements reflecting national priorities, the African Agenda and the Agenda of the South

• To promote relations with foreign countries

MTEF allocation (R ’million)

2015/16 2016/17 2017/18 2 931 657 3 131 439 3 303 979

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Programme 2: International Relations • Bilateral engagements are the basis for strengthening political and

economic relations and provide the platform to advance national priorities and to lobby for support for multilateral engagements and common positions

• The performance indicator on political work is predicated on the implementation of Structured Bilateral Mechanisms (BNCs, JCCs, JNCs and others) and reciprocal High-Level visits

• The performance indicator on economic diplomacy measures the work that missions undertake to increase value added exports; attract Foreign Direct Investment to priority sectors (NGP and IPAP); promote tourism; promote the removal of non tariff barriers through:

Hosting or participating in trade seminars and tourism promotion, Engagements with chambers of commerce, high level investors, relevant

government ministries

Programme 2 Key Result Area Annual target MTEF TargetPolitical engagements through structured bilateral mechanisms and high level engagements

34 BNC58 high-level engagements

102 BNC174 high-level engagements

Economic diplomacy initiatives

112 trade and investment seminars

336 trade and investment seminars

126 engagements with Chambers of commerce

378 engagements with Chambers of commerce

64 engagements with targeted government ministries

192 engagements with targeted government ministries

86 high-level potential investors

258 high-level potential investors

67 tourism promotion events

201 tourism promotion events

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Programme 3: International CooperationMTSF sub-outcome Strategic objectives Purpose

An equitable and just System of Global Governance

To enhance international responsiveness to the needs of developing countries and Africa through negotiations and influencing processes in the Global Governance System towards a reformed, strengthened and equitable rules-based multilateral system

Participate in international organisations and institutions in line with SA’s national values and foreign policy objectives


2015/16 2016/17 2017/18

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Programme 3: International CooperationSub-programme 3.1: Global Governance

• South Africa is committed to multilateralism and a rules-based international order and to this end participates and plays an active role in all for a of the United Nations system and its specialised agencies, funds and programmes

• With particular focus on peace and security, sustainable development (social, economic and environmental) protection and promotion of human rights and humanitarian affairs, international crime and international law

- Advocate for UNSC reform to curb unilateral actions taken outside the United Nation’s peace and security mechanisms in various regions

Programme 3: International CooperationSub-programme 3.1: Global Governance

• Ensure South Africa’s compliance with international law –

- the provision of legal advise and opinions on issues relating to international law, e.g. extending the continental shelf to significantly increase South Africa’s territory, International Criminal Court, International Court of Justice, Law of the Sea etc

Sub-programme 3.2: Continental & Regional Cooperation

MTSF sub-outcome Strategic objectives Purpose• An economically integrated

Southern Africa; • Political cohesion within

Southern Africa to ensure a peaceful, secure and stable Southern African region;

• A Peaceful, secure and stable Africa;

• A sustainable developed and economically integrated Africa

To enhance the African Agenda

To strengthen political and economic integration and development of SADC

To participate and play active role in continental and regional structures to contribute and enhance efforts for sustainable development and peace and security

MTEF allocation (R ’million) 2015/16 2016/17 2017/18

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Sub -programme 3.2Continental & Regional Cooperation

• South Africa will align its foreign policy engagements with Africa’s Vision 2063 to contribute to the socio-economic development of the African continent.

• South Africa will continue to focus on implementation of the continental integration agenda, regional economic integration and finding African Solutions to African problems through:

- Strengthening the AU and its structures- Contribution towards entrenchment of democracy (election observations)- Participating in peace missions, and (Peace, Conflict, Reconstruction and

Development (PCRD) initiatives- Promotion of Good Governance (APRM) & protection of Human Rights- Contributing to Socio-economic development ( implementation of the New

Partnership for Africa’s Development (NEPAD)

Sub-programmes 3.3 & 3.4South-South & North South Cooperation

MTSF sub-outcome Strategic objectives Purpose

• Strong, mutually beneficial South-South cooperation & Beneficial relations with strategic formations of the North

• To strengthen and consolidate South-South relations by utilising membership and engagements with groupings of the South to advance South Africa’s foreign policy To advance and leverage national priorities, the African Agenda, and the Development Agenda of the South with the formations of the North

To pursue cooperation among countries and groupings of the South and the development of common positions on political, economic, social and human rights issues and to harness emerging collective political and economic influence of countries of the South in pursuit of the Development Agenda.To pursue a developmental agenda approach with strategic formations of the NorthFocus: BRICS; IBSA; EU; TICAD


2015/16 2016/17 2017/18 466 945 483 470 512 165

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Programme 3Key Result Areas Annual Target MTEF TargetMultilateral structures and process engaged in to enhance the responsiveness of the multilateral system to SA’s needs and needs of developing countries

21 multilateral meetings100% approved requests for humanitarian assistance disbursed100% of Legal Services rendered

80% resolutions, decisions, outcomes reflecting SA’s national interests

AU structures and process Six AU structures Two PAP sessionsTwo APRM Summits

16 AU structuresSix PAP sessionsSix APRM Summits

100% election observer Missions

100% election observer Missions

SADC structures and process 11 SADC structures 33 SADC structures

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Programme 3Key Result Areas Annual Target MTEF TargetSouth –South 2 strategies

18 meetings and processes of organisations of the South

Five strategies for SA’s engagement with identified formations56 meetings and processes of organisations of the South

North -South Eight meetings and processes of formations of the North

24 meetings and processes of formations of the North

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Programme 4Sub-programme 4.1: Public Diplomacy

Strategic objectives Purpose Focus

• To create a better understanding and awareness of South Africa’s foreign policy through targeted public diplomacy partnerships and platforms

• Advance a positive projection of South Africa’s image through communication strategies on South Africa’s foreign policy positions and programmes nationally and internationally

• Media briefings, statements and opinion pieces

• Publications (Statutory publications as well as internal electronic publications

• Public participation programmes (PPP)


2015/16 2016/17 2017/18 246 280 256 439 270 713

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Programme 4Sub-programme 4.2: State Protocol

Strategic objectives Purpose Focus

• To provide professional State Protocol services through the facilitation of state events, visits and diplomatic accreditation

• Provide a professional State Protocol service to heads of state and government and designated dignitaries and render advisory services to various stakeholders

• Protocol services for state and ceremonial events, incoming and outgoing state visits

• Immunities and privileges provided for the Diplomatic Corps

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Programme 4Key Result area Annual target MTEF target

Media briefings, media statements, public participation programmes (PPP), publications

18 Media briefings160 media statements12 PPPs67 publications

54 Media briefings480 media statements36 PPPs201 publications

Protocol Services & diplomatic immunities and privileges, diplomatic passports and appointment of foreign and SA heads of mission

100% as per request 100% as per request

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PROGRAMMES

FINAL APPOPRIATION

R’000 EXPENDITURE

R’000 VARIANCE

R’000 %SPENT

ADMINISTRATION 1,346,780 1,238,370 108,410 92%

INTERNATIONAL RELATIONS 3,122,923 3,122,565 358 100%

INTERNATIONAL COOPERATION 485,327 485,154 173 100%

PUBLIC DIPLOMAC&PROTCOL SERVICES 286,580 275901 10,679 96%

INTERNATIONAL TRANSFERS 862 712 862 712 0 100%

TOTAL 6,104,324 5,984,704 119,620 98%

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Vote Expenditure as at 31 March 2015

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Vote Expenditure as at 31 March 2015

STANDARD ITEMS

FINAL APPOPRIATION EXPENDITURE VARIANCE %

SPENTR’000 R’000 R’000

COMPENSATION OF EMPLOYEES 2 713 335 2 712 842 493 100%

GOODS AND SERVICES 2 211 747 2 199 656 12 091 99%

INTEREST AND RENT ON LAND 46 598 46 594 4 100%

TRANSFERS AND SUBSIDIES 868 976 868 962 14 100%

DEPARTMENTAL AGENCIES 277 560 277 560 - 100%

FOREIGN GOV & INTER ORG 585 152 585 152 - 100%

HOUSEHOLS (H/H) 6 264 6 250 14 100%

PAYMENT OF CAPITAL ASSETS 263 984 156 651 107 333 59%

BUILDINGS & OTHER STRUCTURES 227 167 120 569 106 598 53%

MACHINERY & EQUIPMENT 36 817 36 082 735 98%PAYMENTS 6 104 640 5 984 705 119 935 98%

2014/15 Expenditure Preliminary OutcomeProgramme 1: Administration

•The underspending is as a results of the following:

1.The Hague project was delayed due to the following:

the request from the contractor to increase the contract cost by more

than 30 per cent as allegedly attributable to the fact that they have

under quoted the adjudicated bid.

the uncovering of asbestos during the demolition phase, which the

contractor declared a dispute and subsequently served notice to

cancelled the contract with cost

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2014/15 Expenditure Preliminary Outcome

2. Dar es Salaam was delayed due to:

a dispute with the service provider on payment of the advance

payment (deposit) by the department which led to the suspension of

the project by the services

3. Lilongwe was delayed due to:

Unexpected flooding that took place over a period of 22 days of which

the construction was called off during that period.

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4. Slow spending was also as a result of the insufficient cash flow

available to meet the department's operational needs due to the impact

of the foreign exchange rate fluctuation. The unspent operational

budget has been shifted to cover overspending in Programme 2 and 5.

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Programme 2: International Relations

• The programme reported an expenditure of R3.1billion. The programme

had recorded an overspending as a result of depreciation of the Rand

against other major currency. As a consequence the expenditure for

programme 2 has exceeded the budget.

• The overspending was covered from the unspent funds of Programme 1

due to insufficient cash flow available to meet the department's

operational needs due to the impact of the foreign exchange rate

fluctuation.

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Programme 3: International Cooperation

•The expenditure for the programme was R 485 million. The

underspending is as a result of the office accommodation for PAP

that has not be concluded.

Programme 4: Public Diplomacy and Protocol

•The underspending is as a result of late claims received from

partner department for the 2014 Presidential Inauguration

activities. The amount has been requested for roll over.

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• Programme 5: International Transfers

• Programme 5 had an overspending as well resulting from

foreign exchange rates losses in relations to the payment of

membership fees and South Africa's compulsory assessment

contribution to the international organisations.

• The overspending was also covered from unspent funds of

programme 1 and 4 resulting from insufficient cash flow

available to meet the department's operational needs due to the

impact of the foreign exchange rate fluctuation.

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2015 Budget allocation per programme

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Programmes

2015/16 2016/17 2017/18 2014/15 – 2017/18

MTEFAverage annual growth

% of expendit

ureR ‘000 % %

Administration 1 418 521 1 468 670 1 535 289 2.4% 24.1%

International Relations 2 931 657 3 131 439 3 303 979 2.6%

51.1%

International Cooperation 466 945 483 470 512 165 1.8% 8.0%Public Diplomacy and State Protocol 246 280 256 439 270 713 -4.3% 4.5%International Transfers 635 231 603 538 921 105 3.7% 12.3%

Total 5 698 634 5 943 556 6 543 251 2.3% 100.0%

2014 Budget allocation per Economic Classification

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Econ. Classification

2014/15 OUTCOME

2015/16 2016/17 2017/18MTEF % OF 2015

BUDGET

R ‘000Compensation of Employees 2 701 642 2 526 213 2 624 889 2 784 205 43.4%

Goods and Services 2 220 279 2 247 271 2 422 749 2 541 408 39.5%Transfers and Subsidies 872 276 641 187 609 970 927 957 12.4%

Payments for Capital 152 411 283 963 285 948 289 681 4.7%

Total 5 946 610 5 698 634 5 943 556 6 543 251 100.0%

2014 ACTUAL EXP. & 2015 MTEF ALLOCATIONS

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2015 MTEF Baseline assessment

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2015/16 2016/17 2017/18

Approved baseline 5 698 634 5 943 506 6 543 251

Compensation of employees 2 526 213 2 624 889 2 784 205

RSA salaries

1,218,236

1,285,239 1,362,354

Foreign allowance 671,821 694,551 744,497 Locally Recruited Personnel Salaries and benefits

636,156 645,099 677,354

Compulsory goods and services 1 745 042 1 930 249 2 029 793

Transfers and Subsidies 481 194 506 707 448 097

Capital Expenditure: Building 233 109 286 116 289 865

Recapitalisation 154 037 96 831 431 483

Operational expenditure 559 039 498 714 559 808

Total Allocated 5 698 634 5 943 506 6 543 251

2015 MTEF Compulsory Goods & Services

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2015/16 2016/17 2017/18

a)Lease payments 898,858 1,036,332 1,099,727

b)- Schooling fees 89,648 96,457 99,878

c)-Special Travelling Privileges 42,890 48,799 57,230

d)- PPP payments 210,640 221,061 236,834

e)- Municipality fees 85,998 88,560 95,173

f)- Computer services ( Bandwidth) 130,816 124,622 105,800

g)-Security contracts at missions 28,353 36,915 39,800

h)- Medical services 28,500 32,300 37,468 i)- Municipal charges for diplomatic missions in South Africa 28,900 32,400 37,900

j)-Transfer costs including insurance 94,303 94,303 94,303

l)-Other Computer services(Transversal systems and applications) 106,136 118,500 125,680

African Renaissance and

International Cooperation

Fund

STRUCTURE OF THE PRESENTATION

1. Introduction

2. The utilisation

3. Programme performance plan

4. MTEF Allocation

5. Conclusion

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1. Introduction

1) The African Renaissance and International Co-operation

Fund was established in terms of Section 2(1) of the African

Renaissance and International Co-operation Fund Act, 2000

(Act No. 51 of 2000) and subject to direction of the Minister

under the control of the Director-General (DG).

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The Minister must, in consultation with the Minister of Finance, establish an Advisory Committee consisting of the following members:

•the Director-General or the delegate of the Director-General;

•three officers of the Department appointed by the Minister; and

•two officers of the Department of Finance appointed by the Minister of Finance.

•The Advisory Committee must make recommendations to the Minister and the Minister of Finance on the disbursement of funds through loans or other financial assistance.

2. The Utilisation Of Fund

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• Loans or other financial assistance are granted in accordance

with an agreement entered into by the country in question and

the Minister of International Relations and Cooperation

(hereafter referred to as the Minister). Assistance granted is

subject to such terms and conditions as may be agreed upon

by that country and the Minister, acting in each case in

consultation with the Minister of Finance.

2. The Utilisation Of Fund

3. Programme Performance IndicatorsSTRATEGIC OBJECTIVE OBJECTIVE

STATEMENTTARGET

To promote democracy and good governance

Support the holding of democratic elections in identified countries on the continent

100% of approved disbursement to support democracy and good governance processed timeously

To contribute to human resource development

Develop and provide identified training programmes

100% of approved disbursement to support capacity-building processed timeously

To support socio-economic development and integration

Support the implementation of socio-economic development and integration projects

100% of approved disbursement to support socio-economic development and integration processed timeously

3. Programme Performance Indicators

STRATEGIC OBJECTIVE OBJECTIVE STATEMENT

TARGET

To provide humanitarian assistance and disaster relief

Assist countries that are in need of humanitarian assistance and disaster relief

100% of approved disbursement for humanitarian assistance processed timeously

To support cooperation between South Africa and other countries

Implement bilateral and trilateral cooperation agreements

100% of approved disbursement for cooperation processed timeously

To contribute to PCRD Support PCRD efforts on the continent

100% of approved disbursement for PCRD processed timeously

4. MTEF Allocation

2015/16R’000

2016/17R’000

2017/18R’000

Indicative baseline 366 750 412 478 433 102

Reduction -212 713 -315 647 -1 619

Appropriated funds 154 037 96 831 431 483

5. Conclusion

During 2014/15 the Fund implemented the following:

a)Appointed full time secretariat for a period of six months as part of the transitional arrangements.b)Adopted terms of reference for Advisory Committee as well as Secretariat.

c)The Accounting Officer appointed the audit and risk committees.

d)Developed an operational framework and adopted DIRCO policies and procedures relevant to ARF.

Thank you

presentation to the select committee dirco. 2 the department of international relations and...

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