Budgetary Review and Recommendation Report of the Portfolio Committee on International Relations and Cooperation, dated 19 October 2011
1.1††††††† The role of the Committee
The Portfolio Committee on International Relations
and Cooperation is a committee of Parliament mandated by sections 55 and 92 of
the Constitution of South Africa
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
(DIRCO), its policies, financial spending patterns, administrative issues, and
holds DIRCO accountable for its operations and functions. The Committee is an
important mechanism to ensure oversight and conduct of
In accordance with section 5 of the Money Bills Amendment Procedure and Related Matters Act (No.9 of 2009), the National Assembly, through its committees, must assess the annual performance of each national department and submit budgetary review and recommendation reports (BRRRs) for each department, for tabling in the National Assembly. These reports will be considered by the Committee on Appropriations when it is considering and reporting on Medium Term Budget Policy Statement (MTBPS) to the House.
In compiling this report, the Committee as mandated by section 5 of the Money Bills Amended Procedures and Related Matters Act, based the assessment of the Department in its service delivery plan as espoused in the 2010 State-of-the-Nation Address imperatives. The Committee linked domestic priorities to the Departmentís Strategic Plan 2010 Ė 2013 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-Generalís report on the 2010 Budget Vote. The Departmentís Annual Report, which contains the Departmentís service delivery information, reflecting its performance in 2010/11 reporting period, was also considered.
1.2††††††† The Legislative Mandate of the Department
The overall mandate of the Department is to work for the realisation of
2.†††††††† Departmentís Strategic Priorities and Measurable Objectives
2.1††††††† Strategic Plan of the Department
The Departmentís strategic objectives as prioritised in its 2010-13 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 categorised into six key priority areas for the reporting year, aimed at responding to the domestic priorities as announced by government 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 2009 Cabinet Lekgotla and the 2010 State-of-the-Nation Address. In its work on these priorities, DIRCO is supported by the following activities:
3.†††††††† Analysis of the Departmentís Prevailing Strategic and Operational Plans
During the reporting period, the Department remained focused on ensuring
The change in 2009 of the name from the Department of
Foreign Affairs to the Department of International Relations and Cooperation
also signified the refocusing of the strategic emphasis on the work of the
Department to respond to domestic imperatives. In response to President
Zumaís clarion call for 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 Departmentís other significant focus has been the alignment of its
work in order to contribute to national priorities. It pledged to undertake a
process of developing a White Paper on Foreign Policy, establishing a
consultative process with relevant stakeholders in discussions on
The Mandela era was described as the first in which South African post-apartheid
foreign policy was articulated and shaped.
The Mbeki era was characterised by heavy involvement of the presidency
in the conduct of foreign relations. Positive outcomes identified were the
projection of the African Renaissance and the New Partnership for Africaís
Development (NEPAD) and
The Zuma era, a call for realignment of foreign policy to domestic
priorities and the emphasis on economic diplomacy have taken center stage;
facilitation by South Africa in the political crisis in Zimbabwe more
pronounced; growing involvement of non-state actors in the conduct of foreign
policy under economic diplomacy drive and a more institutional approach to
diplomacy (visibly taking the lead in international issues, eg mediation). For
the Committee these analyses confirm that indeed the current trends in
international relations dictate that foreign policy focuses on pushing for both
political and economic diplomacy in order to cater for domestic priorities and
the developmental needs of the SADC region and
3.1††††††† Priority 1: Prioritisation / Consolidation of the African Agenda
The African Agenda continues to be the cornerstone of
a. African unity and integration;
New Partnership for
d. Peace and security;
e. Deepening bilateral relations.
In realisation of the African Agenda towards a unified
The African Diaspora would be actively engaged particularly in relation to the promotion of the African Agenda. A Diaspora summit would be held in May 2012 to coincide with ANC centenary celebrations.
b) New Economic Partnership for
The implementation of NEPAD programmes at the national level would be a
priority. These would be done in conjunction with the implementation of the
countryís Peer Review and through utilising the Comprehensive Rural Development
Programme (CRPD), as a platform for development and implementation of NEPAD and
SADC programmmes. The challenge is a lack of coordination among departments in
this regard. Regionally,
Within the continent, the Department would drive for the expeditious integration of NEPAD into AU structures and processes to gain the continental ownership of NEPAD. A key aspect would be the establishment of the NEPAD Planning and Coordinating Agency, which will facilitate and coordinate the implementation of the continental and regional programmes. This process has been accomplished and rules of procedure for NEPAD will be the next step towards its full transformation and incorporation into the AU structures.
Internationally, NEPAD has been positioned to form the core of
This program has suffered a huge blow when it attracted limited buy-in from
c) South African development assistance
d) Peace and security
Peace, security and stability are prerequisites for
Mediation has grown as an area of
e) Deepening bilateral relations
3.2††††††† Priority 2: Strengthening political and economic integration of SADC
As an integral part of the SADC region,
3.3††††††† Priority 3: Strengthening South-South relations
3.4††††††† Priority 4: Strengthening North-South Relations
While continuing with its participation in strategic formations of the
North, such as the Organisation for Economic Development (OECD), the Department
will focus on trade agreements with
3.5††††††† Priority 5: Participation in global system of governance
Through its participation in international forums, notably the United
Nations and its agencies,
3.6††††††† Priority 6: Strengthening political and economic relations
The focus will be on strengthening relations with African countries as a
key strategic objective for the country over the Medium Term Expenditure Framework
(MTEF) period. The focus will also be on strengthening economic cooperation to
†4. Analysis of Section 32 Expenditure Reports
Vote 5: Department of International Relations and Cooperation (DIRCO)
As at 31 March 2011, the Department spent an amount of R4.396 billion or 93.2% against the adjusted appropriation of R4.716 billion, under spending by R320.192 million or 6.8% against the adjusted appropriation at the end of the financial year. The slow spending is mainly on payments for capital assets which represents expenditure of 18.2% against its adjusted appropriation. Spending in the fourth quarter increased from R2.605 million in the third quarter to R4.396 million, which represents a 68.6% increase. Spending up to the fourth quarter is at 93.6% against the projection of R4.715 billion.
Expenditure on current payments amounted to R3.504 billion or 99.3% against the adjusted appropriation of R3.553 billion, with compensation of employees spending 96.1% and goods and services spending 97.7% against their respective appropriations. Spending against the projection for the fourth quarter is at 99.3%.
Expenditure trends per programme
Spending as at 31 March 2011 amounted to R1.061 billion or 83% against the
adjusted appropriation of R1.279 billion. The slow spending is mainly on the
sub-programme: foreign and domestic property management, due to the slow
spending on capital projects at the missions. Spending at the end of the fourth
quarter increased from R644.904 million, representing a 64.5% increase. The
missions in question are
Programme 2 (International Relations): Spending as at 31 March 2011 amounted to R2.373 billion or 99.9% against the adjusted appropriation of R2.375 billion. Spending seems to be on track in this programme; however the sub-programme: bilateral relations management has over spent its budget by 20.6%. Spending at the end of the fourth quarter increased from R1.732 billion, representing a 37% increase. However, it is also important to report that the Department had to curtail on missionsí activities subsequent to the adjustment estimates process in order to manage operations within the adjusted indicative baseline.
Programme 3 (Public Diplomacy): Spending as at 31 March 2011 amounted to R201.706 million or 86.2% against the adjusted appropriation of R233.923 million. Spending at the end of the fourth quarter increased from R147.673 million, representing an increase of 36.6%. The Unit was upgraded to a branch and therefore funded as a branch during the reporting period.
Programme 4 (International Transfers): Spending as at 31 March 2011 amounted to R754.948 million or 91.2% against the adjusted appropriation of R828.225 million. The underspending is attributable to savings of transfer payments due to foreign exchange gains during this financial year, hence the under expenditure. Spending at the end of the fourth quarter increased from R80.571 million, representing an increase of 87%. The underspending is attributable to unspent funds earmarked for the payment of membership and assessment contributions to the AU and the UN.
Expenditure trends by Economic classification
As at 31 March 2011, expenditure on current payments amounted to R3.529 billion or 99.3% against the adjusted appropriation of R3.553 billion, with compensation of employees spending 96.1% of its adjusted appropriation and goods and services spending 97.7%. Spending at the end of the fourth quarter increased from R2.447 billion, representing a 44.2% increase.
As at 31 March 2011, transfers and subsidies spent R798.461 million or 91.5% against the adjusted appropriation of R872.253 million. The underspending is attributable to savings of transfer payments due to foreign exchange gains during this financial year, hence the under expenditure on Programme 4 (International Transfers).
Payments for capital assets spent R52.685 million or 18.2% against the adjusted appropriation of R290.128 million. The underspending is attributable to savings that relates to the capital projects that will be completed in the next financial year and savings on machinery and equipment which could not be acquired during this financial year.
Revenue received and deposited
Total receipts amounted to R27.733 million as at 31 March 2011, which are from financial transactions in assets and liabilities contributing R18.177 million; interest, dividends and rent on land contributing R6.041 million and the sale of capital assets contributing R3.515 million.
Spending performance on earmarked funds
The Department reported spending on earmarked as follows:
∑ Spending on the devolution of funds from Public Works stood at R2.6 million against the earmarked allocation of R70.569 million, representing underspending of R67.966 million.†
∑ New Head Office campus (payment for capital assets) spent R149.297 million or 104% against the earmarked funds of R143.5 million, projecting to overspend by R5.797 million at the end of the financial year.
5. Analysis of the Departmentís 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 2010/11 financial year. The focus of the assessment is on the performance of the key programmes of the Department comprising Administration, International Relations and Cooperation, Public Diplomacy and International Transfers.
The Departmentís performance is measured against its own set targets as identified in the Strategic Plan of 2010-2013. It is also measured against Governmentís 10 key priorities identified in the Presidentís State-of-the-Nation Address of May 2010 and the Governmentís Medium Term Strategic Framework for 2010-2015. Other key measures comprise the moral values and principles that underpin the countryís foreign policy. The source documents for this analysis include the 2010 Estimates of National Expenditure (ENE), the 2010 State-of-the-Nation Address, as well as the Departmentís Strategic Plan for 2010-2013.† 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 Departmentís African Renaissance and International Cooperation Fund report for 2010-11 is also assessed in this report.
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.
services were rendered to †South Africans
affected by the following incidents: bombing in Stravropol and Moscow in
Russia; the Air Afriqiyah crash in Tripoli; the unrest situations in
Kyrgyzstan, Tunisia, Egypt, Libya, Cote dí Iívoire and Bahrain; flooding in
parts of Australia; the earthquake in Christchurch, New Zealand and the earthquake
in Japan. The Department completed the construction of eight staff houses in
†A total of 3 754 South Africans were registered on Registration of South Africans Abroad (ROSA) during the reporting period. The Department continued to have a proper expenditure management. It had spent 93.4% of its allocated budget by the end of the reporting period. Two hundred and ten international relations practitioners from the three spheres of Government were trained in economic diplomacy. A White Paper on Foreign Policy has been drafted.
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 ĎSMARTí, and at times
supply chain management rules and regulations were not being followed in procurement
situations. Missions in
The Auditor-Generalís report still showed problems with the capturing of data and monthly reconciliations at the missions, especially with regard to the Asset Register. Progress is still slow in filling vacancies, resulting in low staff turnover despite the huge mandate of the Department. Policy around the engagement of Locally Recruited staff in missions abroad still favours non-South Africans. Performance assessments of staff at managerial positions were not yet completed by the end of the reporting period. The Auditor-Generalís report is still highlighting the challenges of management of an entity like the African Renaissance Fund and the attainment of actual results in project areas.
There are difficulties in remotely managing
construction projects in missions resulting in delay in completing such
projects. The Consular Emergency Response Team is yet not operationalised, and
it becomes a challenge when dealing with complicated cases in locations where
conditions of war (Anton Hammerl in
objective: The function of this Programme is to promote
bilateral and multilateral relations and facilitate the Departmentís
participation in international organisations and institutions, in pursuit of
The Annual Report reported on the re-election of
President Zuma and President Tarja Halonen of
In furtherance of the spirit of ĎUBUNTUí, South Africa
extended humanitarian assistance to several disaster-hit nations including
Benin, Niger, Chad, Cuba, Chile and Japan and a contribution of about R23
million was made during the previous financial year.
In July 2010, the AU Summit endorsed President Zumaís
recommendation for prioritisation of continental cross-border infrastructure
exists a strong possibility that the G20 development agenda could be
overshadowed by the current financial crisis facing Europe and the
There is insufficient commitment by some African countries to NEPAD. There is also a shortage of resources for implementation of NEPAD programmes and projects. There is inadequate representation of South Africans in both the AU and NEPAD structures. The idea of fielding Hon Nkozasana Zuma to contest for the position of the Chairperson of the African Union Commission is being mooted. There are capacity challenges also within SADC.
New cultural dynamics unique to the
The Palestinian question remains unresolved, denying the establishment of a viable Palestinian state.
The US Official Development Assistance (ODI) could be
coming under renewed scrutiny as a result of the economic decline and the
political re-alignment. Global economic difficulties will continue to challenge
investment flows into
objective: Among the main tasks of the Programme is to provide
an effective State Protocol service as well as to ďcommunicate an understanding
The events leading to COP17 have wide media coverage. Press releases are
regularly held to inform the public about the positions taken at multilateral
forums. The Department raised R8 million in less than a week for the campaign
on the famine and drought situation in
public is still not fully engaged with the formulation of foreign policy and
trends influential to its orientation.
6.†††††††† Consideration of Reports of Committee on Public Accounts
The report was not available for the reporting year 2010- 2011.
7.†††††††† Consideration of Other Sources of Information
7.1††††††† The State-of-the-Nation Address
2010 State-of-the-Nation Address outlined a set of key strategic objectives to
be pursued by the Department of International Relations and Cooperation during
the 2010/11 financial year. The list of strategic objectives was not as
extensive as in the 2009 State-of-the-Nation Address. However, there was an
indication of continuity, but perhaps also a change in emphasis in 2010. For
instance, whilst in 2009 it was stated that Government would Ďgive impetusí to
the implementation of NEPAD, in the 2010 State-of-the-Nation Address the
President mentioned that Government ďwill focus energy on revitalising the New
†Enhancing an environment of peace and security
throughout the African continent is a key objective for Government. Having
achieved relative success in the SADC mandated facilitation role in
of the Auditor-General of
The Auditor-General expressed an unqualified audit opinion on the performance of the Department, with emphasis of matter on the following:
a. The Department incurred irregular expenditure of R526 089.00 in contravention of rules and regulations relating to supply chain management.
b. The financial statements and other information which were to be included in the 2010/11 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 were 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 without having been prepared in all material aspects in accordance with 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 a declaration of past supply chain practices such as fraud.
h. Not all senior managers entered into performance agreements for the current year as required.
i. Employees acted in higher vacant posts for an interrupted period exceeding 12 months, and in senior management positions for periods exceeding six months contrary to regulations.
j. Management did not report as required on the outcome of disciplinary proceedings related to financial misconduct.
k. Leadership and the accounting officer need 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.
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 first time laxity of 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 R461.835 million for 2010/11 was budgeted for transfers to the Departmentís public entity, the African Renaissance Fund. The Auditor-General has pointed out that as the ARF is a Schedule 3A public entity, it is recommended that a separate accounting system be acquired for the entity. The Auditor-General made the following unqualified audit opinion on the performance of the Fund, with emphasis of matter 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 a seamless transition and a smooth start by the envisaged agency.
8.†††††††† Committeeís Observations
Overall performance by the Department in the reporting year has been satisfactory and the Committee is encouraged by the commitment the Department is contributing 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 utilised its
budget in accordance with its plans for 2010-11. A lot of significant
achievements were reported.
The Committee is of the opinion that overall the Department has performed according to the goals it had set itself for the 2010-11 reporting period. The 2010-11 budgetary allocations of the Department were generally aligned to the national strategic priorities outlined in the 2010 State-of-the-Nation Address, as well as its strategic direction in terms of its Medium Term Expenditure Framework. The unqualified audit report with emphasis of matter, 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 programmes. 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. They have to source new export markets for
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 has resolved to make the following recommendations to which progress report thereto must be presented to the Committee within three months of the publication of this report:
In pursuit of the African Renaissance Fund activities
2) In its multilateral engagements, the Department must seek concrete action on international commitments on NEPAD programmes and projects as espoused by the European Union, Asean countries, China Africa forum, Japan Africa TCHAD, the US government and the UN, to mention a few.
3) There must 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 ĎSMARTí objectives and targets, supply chain management, asset management and property management would be of benefit for future compliance with audit requirements.
5) Performance contracts must be signed as required and assessments must be completed for all senior management staff to be able to fairly distribute performance awards and also to gauge the performance of this level of officers so that they are able to deliver on the mandate as required.
In the light of recent natural and man-made disasters,
there is a need for a vigorous popularisation campaign for Ď
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.
8) The Department should consider acquiring property for the missions as opposed to leasing for the purposes of housing staff and office accommodation.
9) Policies and practices for recruitment of Locally Recruited Personnel need to be looked at and the same opportunities created for South Africans residing in those countries abroad.
10) Training and necessary capacity on project management is essential for proper functioning of the ARF and its successor, SADPA.
The Department must seize the opportunity to offer
12) Regular consultations, engagements and lobbying of the permanent five countries in the UN Security Council is crucial. Seeking a common ground with the African Group in the UN Security Council is paramount for the Departmentís prevalence in the Council.
13) A coordination mechanism must be created between departments for identifying which strategic organisations must be targeted to field South Africans for available positions
14) A facility must be created for access by all to apply for positions abroad.
15) There must be feedback on the Departmentís response to the Auditor- Generalís report with emphasis of matter.
†Report to be considered.
ß Annual Report 2010- 2011 Department of International Relations and Cooperation.
ß Strategic Plan, 2010- 2013, Department of International Relations and Cooperation.
ß Treasury, Vote: International Relations and Cooperation, Estimates of National Expenditure 2010.
Zuma, J.G. 2010, State of the Nation Address at the
Joint Sitting of Parliament.
ß The African Renaissance and International Cooperation Fund Act 2000