The Budgetary
Review and Recommendation Report of the Portfolio Committee on International
Relations and Cooperation, dated 24 October 2012
1. Introduction
1.1
The role of
the Committee
The Portfolio Committee on International
Relations and Cooperation (the Committee) is a committee of Parliament mandated
by the sections 55 & 92 of the Constitution of South Africa,[1]
to oversee and ensure accountability in the formulation and conduct of South
African foreign policy. Consequently, the Committee conducts oversight on
activities of the Department of International Relations and Cooperation (the
Department), its policies, financial spending patterns, administrative issues,
and holds the Department accountable for its operations and functions. The
Committee is an important mechanism for ensuring oversight and conduct of
In accordance with section 5 of the Money
Bills Amendment Procedure and Related Matters Act No.9 of 2009, National
Assembly, through its committees, must assess the annual performance of each
national department and submit Budgetary Review and Recommendations Reports
(BRRRs) for each department, for tabling in the National Assembly. These
reports will be considered by the Committee on Appropriations when it is
considers and reports on the Medium Term Budget Policy Statement (MTBPS) to the
House.
In compiling this report, the Committee as
mandated by section 5 of the Money Bills Amendment Procedures and Related
Matters Act 2009, based the assessment of the Department in its service
delivery plan as espoused in the 2011 State of the Nation Address. The Committee
linked domestic priorities to the Department’s Strategic Plan 2011 – 2014 and
aligned the information to priorities and measurable objectives as set out in
the strategic plan. The Committee examined the expenditure report as published
by the National Treasury, commonly known as Section 32 Reports of the Public
Finance Management Act (PFMA). Reference was also made to the Auditor-General’s
report on the 2011 Budget Vote and the Department’s Annual Report, which contains
the Department’s service delivery information, reflecting its performance in 2011/12
reporting period.
1.2 The Legislative Mandate of the
Department
The overall mandate of the Department is to work
for the realization of
2. Department’s Strategic Priorities and Measurable Objectives
2.1 Strategic Plan of the Department
The Department’s strategic objectives as
prioritised in its 2011-14 Strategic Plan comprise the following broad points to enable the Department to fulfill its
mandate:
2.2 Measurable Objectives of the Department
The Strategic plan is categorized into 6 key
priority areas for the reporting year, aimed at responding to the domestic
priorities as announced by government for the reporting year as follows:
During the reporting period, the thrust of the
work of the Department remained anchored on these overarching priorities as
confirmed by the January 2011 Cabinet Lekgotla and the 2011 State of the Nation
Address (SONA). In its work on these priorities, the Department is supported by
the following activities:
3. Analysis of the Department’s Prevailing Strategic and Operational Plan
During the reporting period, the Department
remained focused on ensuring that
In response to President Zuma’s
clarion call in his 2011 SONA for the alignment of the international relations
policy to domestic priorities such as job creation and poverty alleviation,
activities underlining economic diplomacy have been prominent. Quite evidently,
President Zuma has led many delegations comprising the South African business
fraternity to various countries in Africa, Asia and
.
In pursuing its mandate in respect of economic
diplomacy, the Department continued to reflect a bias towards
The
Department continued to operate in an uncertain international environment and
budget constraints. It received a budget allocation of R5, 153 billion for the
2011/12 financial year after the adjustment estimates. The 2011/12 budget
depicts an increase of R438 million in comparison to the 2010/11 budget
allocation. The increase is attributable to an additional R200 million
transferred from the Department of Environmental Affairs for the hosting of the
17th Conference of the Parties (COP17) to the United Nations
Framework Convention on Climate Change, and savings from inflation-related
adjustments with regard to a number of operational items. Environmental
diplomacy has become one of the main international focus areas with serious
consequences for the future of the climate change regime and domestic
economies. During the reporting period, the Department spent 97,5 per cent of
its appropriated allocation.
It operates in a dynamic environment that
combines varying legislative and monetary regimes that impact on its foreign
policy operations.
The Department executed its mandate against the
background of an ever-changing political and economic environment. The
international environment is characterized by major shifts in global political,
economic, social and cultural dynamics that impacted on different parts of the
world and include: the emergence of new economic powers; the new phenomenon of
media and social networks; environmental change; heightened demand for scarce
resources and the changing nature of conflict and insecurity. In order to
survive in this environment,
During the reporting period, the global economic
crisis continued to accelerate the shift in the balance of political and
economic power towards the emerging economies. The trading patterns continued
to shift to new markets, with notable growth in South-South trade between the
emerging economies. The consequence of these changes resulted in the Department
pursuing
One of the biggest changes witnessed during the
reporting period occurred in the Middle East and
4. Analysis of Section 32 Expenditure Reports
Vote
5: Department of International Relations and Cooperation (the Department)
As at the end of the fourth quarter, the Department
had spent R5.020 billion or 97.4 per cent of its adjusted or available
budget of R5.153 billion. Under spending of R133.304 million or 2.6 per cent is
mainly under goods and services under programmes 1 and 2. This was as a result of
reprioritisation of funds within the baseline to cater for unfunded priorities
through scaling down on missions’ operating expenditure and deferment of other
funded projects. This was done mainly to cater for the budget shortfall for the
hosting of the 17th United Nations Framework
Convention on Climate Change (COP17/CMP7) and the African Diaspora Summit.
Figure 1: Comparison between actual and
projected expenditure per programme
Source National Treasury
·
Programme1: Administration: As at the end of the fourth
quarter, the Administration programme had spent R1.162 billion or 93.8 per cent
of its available budget of R1.239 billion. The under spending is mainly under
payments for capital assets as a result of poor planning.
·
Programme 2: International Relations and
Cooperation: Total
expenditure under this programme as at the end of the fourth quarter amounted
to R2.551 billion or 98.1 per cent of its available budget of R2.610 billion.
Although this programme has under spent by a marginal 1.9 per cent, it has over
spent on its compensation of employees by over 20 per cent, of which details
are included under the analysis of economic classification.
·
Programme 3: Public Diplomacy and Protocol
Services: As at the
end of the fourth quarter this programme had spent R487.453 million or 98.6 per
cent against its available budget of R494.402 million. Under spending is mainly
under compensation of employees due to vacant posts. Although the programme has
under spent its overall budget, goods and services recorded an over spending as
a result of the late payments of invoices for the hosting of the 17th
United Nations Framework Convention
on Climate Change
(COP17/CMP7) conference held in
·
Programme 4: International Transfers: As at the end of the fourth
quarter, this programme had spent R819.585 million or 100 per cent of its
available budget of R819.585 million. Although spending has been slow in the
first three quarters, spending of the total budget was achieved in this quarter
because most of the transfers to foreign organisations and the African
Renaissance Fund were made in March 2012.
Figure 2: Comparison of actual and projected
expenditure by economic classification
Source National Treasury
As at the end of the fourth quarter, expenditure for the Department
amounted to R5.020 billion or 97.4 per cent of its available budget of R5.153
billion. Under spending of R133.307 million or 2.6 per cent is mainly under goods
and services in programmes 1 and 2 due to reprioritisation of funds and under
payments for capital assets.
Current Payments: The Department
spent R3.920 billion or 99.7 per cent of its available budget of R3.931 billion
of current payments, under spending its budget by a marginal R11.533 million or
0.3 per cent.
·
Compensation of
employees: Spending on compensation of employees amounts to R1.934 billion or 116
per cent of the available budget of R1.666 billion. The over spending is as a
result of a higher than budgeted for cost of living adjustment (COLA) for the locally
recruited personnel under programmes 1 and 2.
·
Goods and
services: Spending on goods and services amounts to R1.934 billion or 88.4 per
cent of its available budget of R2.193 billion. The under spending is
attributable to a departmental reprioritisation of funds within the baseline.
This was in order to fund the shortfall in the budget for costs associated with
the hosting of the COP17/CMP7
conference in November to December 2011 and also realise savings that were to
be spent on the African Diaspora summit.
·
Other: a significant
amount under other expenditure relates mainly to interest and rent on land
which amounts to R46.995 million or 65.4 per cent of the available budget of
R71.914 million.
·
Transfers and
subsidies spent R827.962 million or 100 per cent of its available budget of R827.680
million, including transfers to households. The international transfers to
international organisations spent R819.588 million or 100 per cent of its final
appropriation.
·
Payments for
capital assets: An amount of R230.603 million or 65.4 per cent was
spent against the available budget of R352.639 million, under spending by R122 million
or 34.6 per cent. The under spending is as a result of deferment of some
projects to cater for the unfunded projects and is recorded mainly under
machinery and equipment under the Administration programme.
·
Payments for
financial assets: A re-evaluation of the cash book resulted in the
department realising R41.991 million which was used to augment budget pressures
under operations.
The department made virements amounting to R9.645 million from goods and
services under International Relations programme to International Transfers.
Amounts of R207.538 million was also shifted between the Administration,
International Relations and Public Diplomacy and Protocol Services programmes,
mainly from savings under goods and services to compensation of employees and
payments for capital assets.
Some of the Departmental achievements in the fourth quarter include the
following:
·
Presentation to the 4th
·
President Zuma reported to the 26th NEPAD’s Heads
of State and Government Orientation Committee meeting on progress regarding the
Presidential Infrastructure Championing Initiative (PICI) as part of the 18th
Session of the African Union (AU)
·
Hosted an Extraordinary Meeting of the Double
Troika and an Inter-State Politics and Defence Committee (ISPDC) on the
SADC candidate for the African Union Commission (AUC), and provided feedback on
·
Hosted an Extraordinary SADC Double Troika ISPDC in
February 2012 during which the intention of
·
Hosted the United States/South
5. Analysis of the Department’s Annual Report and Financial Statements
The Portfolio Committee on
International Relations and Cooperation considered and analysed the Annual
Report of the Department of International Relations and Cooperation for the 2011/12
financial year.
The focus of the assessment is on
the performance of the key programmes of the Department comprising of
Administration, International Relations and Cooperation, Public Diplomacy and
International Transfers. The Department’s performance is measured against its
own set targets as identified in the Strategic Plan of 2011-2014. It is also
measured against Government’s key priorities identified in the President’s
State of the Nation Address of February 2011 and the Government’s Medium Term
Strategic Framework 2010-2015. 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 2011 Estimates of National Expenditure (ENE); the
2011 State of the Nation Address; the report of the Department of Monitoring
and Evaluation; as well as the Department’s Strategic Plan 2011-2014. The analysis gives special attention to
Programme Two, International Relations and Cooperation, as it is the Programme
which executes the core functions of the Department. The Department’s African
Renaissance and International Co-operation Fund report for 2011/12 is also assessed
in this report.
It is important to mention that the
Committee noted that the 2011-2014 Strategic Plan, as a basis for the Annual
report, did not have ‘SMART’ objectives. As they are, the objectives make it
very difficult to assess performance of the Department as they have no
measurable outcomes, timeframes nor targets for service delivery. However, it
was reported that the Auditor-General intervened before the Annual report was
tabled, taking the management of the Department through a course to assist it
to come up with ‘SMART’ objectives. The result has been that the report shows
some improvements, whereas the linked Strategic plan remains not specific to
targets.
5.1 Performance per
Programme
5.1.1 Programme One: Administration
Main objective: The Programme is
responsible for overall policy development and management of the Department.
Achievements: Consular services were rendered to South
Africans affected by among others, piracy and kidnappings in
The Department completed the
construction of a new Chancery in
The Department also purchased an
official Residence in
The Information and Communication Technology
(ICT) programme saw the completion of the Voice over Internet Protocol (VOIP).
This provides an integrated communications infrastructure for telephone, email
and other applications between missions and head office. The financial
statements were submitted on time as required by the National Treasury. The
Department managed its cash flow in compliance with the Public Finance
Management Act, 1999 (PFMA) requirements.
In response to President Zuma’s call
to assist with employment of the youth, the Department recruited 50 young
unemployed graduates in a year-long internship programme.
A Youth Directorate has been
established in the office of the Director-General in line with the National
Youth Development Agency (NYDA) requirements, to advance the interests of the
youth internationally. The Department filled 285 posts, 134 of which were
internal promotions and 151 external appointments.
Challenges: However, the
Auditor-General has granted a financially unqualified report with findings. The
report and the Internal Audit raised questions with regard to the strategic
objectives of the department in some incidents not being ‘SMART’, and at times
supply and chain management rules and regulations not being followed in
procurement situations.
There is still no visible coherent
link between
The Department was not able to
complete the processes listed below despite their undertaking: the White Paper on Foreign Policy, Foreign
Service Bill, processes for the establishment of the South African Development
Agency (SADPA) and the establishment of the South African Council on
International Relations (SACOIR). The
percentage of women in senior management level is still very low, it’s
currently about 36 percent overall.
The Department continues to render
agency services to other partner departments stationed abroad and also for
delegations travelling abroad. These services included the payment of
expenditure on behalf of other departments, as well as revenue collection and
repatriation for the Department of Home Affairs. The missions have not been
able to provide supporting documents, like copies of receipts, in some instances,
leaving the Department unable to claim all the monies owed to it due to lack of
proof of payment.
Main objective: The function of
this Programme is to promote bilateral and multilateral relations. It also
facilitates the Department’s participation in international organisations and
institutions, in pursuit of
Achievements:
The UN tenure coincided with South Africa’s
term in the African Union Peace and Security Council and assuming a seat as the
Chairperson of the SADC Troika. The positions in the UN and Africa reaffirmed
commitments and actively positioned
During the reporting period, South
Africa was fully involved through SADC mediation and facilitation in Zimbabwe
and Madagascar; seeking peace and a political solution in Libya; and continuing
its leadership role in the Post-Conflict Reconstruction and Development (PCRD)
process in Sudan, which made a small but a significant contribution to the
creation of the 54th state in Africa, South Sudan. One of the
highlights during the reporting period was the successful hosting of the
historic COP17 in December 2011. The Presidency of South Africa secured the
second commitment period of the Kyoto Protocol, a key outcome for
In order to strengthen the political
and economic integration of SADC,
In furtherance of the AU’s all inclusive
development agenda, a successful Global African Diaspora Conference was held on
25 May 2012. Significantly, this year,
As part of the
Brazil-Russia-India-China-South Africa (BRICS) forum,
A total of 106 bilateral and
multilateral agreements were signed during the reporting period. Of importance
were those relating to space technology as a new race is developing for space
science to be used for economic development purposes. Under the relations with
the strategic countries of the North, the EU continued to be the strong partner
to
The Agreement on Extended Health
Cooperation with
Challenges: There is a vast
area of activities in which
The Palestinian question remains unresolved,
denying the establishment of a viable Palestinian state.
Main objective: Among the main
tasks of the Programme is to provide an effective State Protocol service as
well as to “communicate an understanding of
Achievements: The Department has
created accounts for new social media platforms to communicate and interact
with a wider audience to intensify the understanding of foreign policy. These
are: facebook, twitter, u-Tube and other publications. The number of diplomatic
missions opening in
Challenges: Public diplomacy is
seen as a methodology rather than a tool for advancing national interest. Every
time there is a need for a virement, funds are diverted from these programmes
as it is not such a priority.
6. Consideration of Reports of Committee on Public Accounts (SCOPA)
With reference to previous audit reports, SCOPA
has made some observations relating to unauthorized expenditure in the 2006/7
financial year to the amount of R98, 918 million which is still awaiting
authorization. The unauthorized expenditure related to the overspending of the
vote or a main division within the vote. SCOPA’s resolution on this case is
still awaited.
There are no SCOPA resolutions for the reporting
year 2011- 2012
7. Consideration of Other Sources of Information
7.1 The State-of-the-Nation address
The 2011 State of the Nation Address outlined a set of key
strategic objectives to be pursued by the Department during the financial year
2011/12. There was a clear indication of continuity in policy perspective,
regarding pursuit of economic diplomacy and aligning foreign policy to domestic
priorities. Africa and SADC featured prominently for the realisation of a
better
7.2 Report of the Auditor-General of
The Auditor-General’s audit opinion from 2010/11
has remained unchanged in 2011/12 reporting year. The office has expressed an
unqualified audit opinion with findings on the pre-determined objectives for
the periods 2010/11 and 2011/12, hence there was a regression in audit opinion
from clean in 2009/10 to ‘unqualified with findings on pre-determined
objectives and/or compliance with laws and regulations as follows:
a.
Goods and services with a
transaction value between R10 000 and R500 000 were procured without inviting
at least three written price quotations from prospective suppliers as per
supply chain management rules.
b.
The financial statements and other
information which were to be included in the 2011/12 annual report were not
checked for completeness and accuracy before submission for audit.
c.
Indicators on the performance
information were not well defined and targets not specific and measurable.
d.
The management of the Department did
not report on progress made in achieving measurable objectives to the executive
authority on a quarterly basis as required.
e.
Financial statements were submitted
for auditing having not been prepared in all material aspects in accordance to
all accounting standards. These were subsequently corrected.
f.
Employees performed remunerative work
outside their employment without written permission from the relevant authority
as legally required.
g.
Awards were made to suppliers who
did not submit tax certificates for compliance.
h.
The usefulness of the annual
performance report was put in doubt as performance targets were neither
specific nor measurable; performance indicators were neither verifiable nor
well defined.
i.
The Accounting officer did not
ensure the existence of transparent systems of internal control, showing
performance plans monitoring systems and reporting details to measure output
j.
Payments due to creditors were not
often settled within 30 days from receipt of an invoice as required by the
Public Finance Management Act, 1999 (PFMA).
k.
Leadership and accounting officer
needs to improve the level of oversight responsibility on reporting and
compliance with regulations at all times.
l.
Leadership should regularly review
management reporting best practices, mentioned practices failed to detect
misstatements of financial statements and performance information submitted for
audit.
m.
The asset management information was
not regularly updated for completeness and accuracy.
It may be appropriate for the Department to
address the concerns raised by the Auditor-General and state how it aims to
ensure that these problems do not recur. A report back to the Committee is
crucial as this is the second time laxity with office procedures has been
reported.
The African Renaissance and International Cooperation Fund (ARF):
The purpose of the ARF is to promote economic
cooperation between the
An amount of R 450, 370 million for 2011/12 was
budgeted for transfers to the Department’s public entity, the African
Renaissance Fund.
The Auditor-General has pointed out that as the
ARF is a Schedule 3A public entity, hence it has been recommended that a
separate accounting system be acquired for the entity. The Fund financed the
following seven projects during the report period:
The Auditor-General pronounced unqualified audit
opinion with material findings on the performance of the Fund as follows:
It is important for the Department to iron out
outstanding issues relating to proper management of the ARF before SADPA comes
into place to ensure seamless transition and smooth start by the envisaged
agency.
7.3 Source:
The Department of Performance Monitoring and Evaluation
The assessment by the Department of Performance Monitoring
and Evaluation has the same results as the Auditor-General’s report.
8. Committee’s Observations
9. Conclusion
Overall performance by the Department in the
reporting year has been satisfactory. The Committee is encouraged by the
efforts undertaken to contribute towards improving lives of fellow South Africans;
a stable and secure continent; and creating a better world for all.
The Committee is so far satisfied that the
Department has utilized its budget in accordance with its plans for 2011/12. A
lot of significant achievements were reported, and some concerns raised which
show there is still room for improvement. The issues raised by the
Auditor-General warrant undivided attention of the Accounting officer to ensure
that there is no recurrence. There will always be room for improvement. The
Committee regards this as work in progress and the Department should make the
necessary adjustments in service delivery where needed.
10. Recommendations
The Committee is of the opinion that overall the
Department has performed according to the goals it had set itself for the 2011/12
reporting period. The 2011/12 budgetary allocations of the Department were
generally aligned to the national strategic priorities outlined in the 2011
State of the Nation Address, as well as its strategic direction in terms of its
Medium Term Expenditure Framework. The unqualified audit report with findings,
when rectified, will still be a positive indication of commitment of purpose by
the Department to diligently execute its mandate.
The Committee acknowledges that in general there
are challenges facing the Department which can have a bearing on its service
delivery programs. In the midst of the international environment of a global
meltdown, the missions abroad have to deal with decreased support for
developmental assistance from cooperating partners.
The unpredictable foreign exchange portfolios,
have been negatively affecting the operations of the Department, especially in
the missions, where the bulk of its activities take place.
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 publication of this report:
1)
In pursuit of the African
Renaissance Fund activities in
2)
In its multilateral engagements, the
Department should seek funding for the operationalisation of the NEPAD
Presidential Infrastructure Initiative in order to create jobs and improve the
lives of the poor in
3)
There should be regular physical
verification of all assets globally, as well as continuous update of the Asset
register to ensure its accuracy and completeness.
4)
A refresher workshop for middle and senior
management on creation of ‘SMART’ objectives and targets; supply chain
management; asset management and property management would be of benefit for
future compliance with audit requirements.
5)
Performance contracts should be
signed as required and assessments must be completed for all senior management
staff to be able to fairly distribute performance dues and also to gauge the
performance of this level of officers that they are able to deliver on the
mandate as required.
6)
In the light of recent natural and man-made
disasters, there is a need for a continuous and vigorous popularization
campaign for ‘
7)
Training of internal language
personnel could reduce spending on secured external consultants for translation
of documents and communication with foreign missions. Security of information
should also be considered. A deliberate programme for learning languages of the
countries of the South, especially Mandarin, should be adopted, as
8)
The predisposition towards
9)
Public diplomacy should keep the
world and the country abreast of what constitutes South African foreign policy
through proactive information packages of decisions to be taken, or immediately
after they have been communicated.
10)
The Department should give regular
updates regarding performance of missions abroad for the Committee to monitor
alignment of the mandate to domestic priorities.
11)
A regular update on the activities of the
Youth directorate should be made to the Committee.
12)
Research and development should be
strengthened in order for
13)
Regular consultations, engagements
and lobbying of the permanent five countries in the UN Security Council is of
great importance. Seeking a common ground with the African Group in the UN
Security Council is paramount for the Department’s prevalence in the Council.
14)
A coordination mechanism should be
created between departments for identifying which strategic organizations should
be targeted to field South Africans for available positions.
15)
The Department should cooperate with
Committee in shaping the route of international discourse where issues of
national interest feature.
16)
There should be feedback on the Department’s
response to the Auditor-General’s report with findings.
17)
The Department should report, on a
quarterly basis, progress with regard to points 1,2,3,6 and 7 above.
Report to
be considered.
Sources
§
Annual Report 2011- 2012 Department
of International Relations and Cooperation.
§
Strategic Plan, 2011- 2014,
Department of International Relations and Cooperation.
§
Treasury, Vote: International
Relations and Cooperation, Estimates of National Expenditure 2011.
§
Zuma, J.G. 2011, State of the Nation
Address at the Joint Sitting of Parliament.
§
The African Renaissance and
International Cooperation Fund Act 2000
§
Assessment of the performance of the
Department of International Relations and Cooperation, by the Department of
Monitoring and Evaluation- The Presidency.