Department of International Relations and Cooperation Strategic and Annual Performance Plan 2013

Meeting report

The Chairperson congratulated Ms C September (ANC), who had been duly appointed as the Chief Whip of the Portfolio Committee on International Relations and Cooperation.

Briefing by the Department of International Relations and Cooperation

Ambassador Jerry Matjila, Director-General (DG), Department of International Relations and Cooperation (DIRCO), said that the strategic plan 2013-2018, which had been tabled in Parliament, was based on the marching orders of cabinet, the medium term expenditure framework (MTEF), the delivery agreement of Outcome 11, the State of the National Address (SONA) and the National Development Plan (NDP). However, it was always subject to change since part of the plan was based on the understanding that the environment it operated in was characterised by major shifts in global, political, social, economic and cultural dynamics. These included: new economic powers, new media and social networks, heightened demand for scarce resources and changing nature of conflict and insecurity.

The DG presented a situational analysis of global economies and markets which DIRCO was monitoring closely.

The percentage changes in the global share of GDP from 1990 to 2011 were:

Japan 14% to 8%
EU 33% to 25%
US 26% to 21%
Brazil 2% to 4%
India 1% to 3%
Russia 2% to 3%
China 2% to 10%
South Africa 1% and 1%

Between 2011 to 2018, yet another shift would take place and this would reflect on the 2013-2018 plan. Between 1980 and 1995, BRICS (Brazil, Russia, India, China, South Africa) accounted for 10% of the global share of GDP; in 2050 it was expected to be at about 40%; and in 2018 it would be at around 32%.

South Africa was potentially at the heart of global shipping routes and DIRCO’s perspective was that the southern part of South Africa should reposition itself to play an increasing role in shipping networks by 2013/14 due to problems associated with the use of the Suez Canal. South Africa should position itself within BRICS and deploy resources and open more linkages in terms of global trade within CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa). The GDP of Sub-Saharan African countries also continued to rise and were potentially key countries to drive the African economy.

Part of DIRCO’s mandate was to ensure that through domestic policy, government could meet domestic challenges and give direction to Ambassadors to ensure that South Africa had the resources to meet the domestic challenges and meet government accountability in terms of the benefits for its citizens. The budget increase R150 billion (1994) to R1.2 trillion (2013) was unprecedented in modern times. The Committee should be mindful that through economic diplomacy, DIRCO had to open markets for exports, attract partners, investments and technology and converge with the Industrial Policy Action Plan (IPAP) plan in terms of beneficiation and job creation. Regarding trade, IPAP 3 made a lot of sense, to increase beneficiation and value add and close the gap between increase exports and imports.

The majority of exports went to EU (27%), BRICS (21%), US (7%), SADC (5%) and Japan (5%). CIVETS accounted for 2% of exports, and this was an avenue for increasing exports through deployment of resources and increased revenue collection. DIRCO was focusing on exporting finished products from raw materials rather than exporting the raw product and importing the finished product. (see handout for list of top 10 imports and exports).

By and large, tourists to South Africa came from SADC (70%) and DIRCO was learning from Thailand to accommodate and care for own region tourist arrivals with appropriate facilities at point of entry, in the cities, hotels, etc. While tourists from EU (15%) and USA (4%) were the most important resource, South Africa saw SADC arrivals as an invitation rather than a resource and had neglected to recognise the role of the tourist economy in accommodating these arrivals.

Missions abroad were about planned expansion of the GDP and were undertaken after a solid case was made for what was expected from the mission. The number of missions abroad in 1994 was 36. In 2002 this number grew to 92 and in 2013 it was at 126 missions. Clearly, missions were investment centres to increase opportunities for South Africa. DIRCO had missions in 47 of the 54 African countries and aimed to open one in every country in Africa. In 2013-2018 planning, DIRCO was considering shifting resources from some missions abroad towards missions to countries such as Columbia and Bangladesh, which appeared to be the markets and value of tomorrow.

The budget vote for 2013/14-2015/16 was in the Annual Performance Plan documents and would be taken to parliament when the Minister presented her Vote Speech on 30 May 2013. DIRCO was performing well and had lobbied to Treasury and successfully received an increase of 1% in the baseline allocation.

The strategy for filling vacancies was to decrease the turnaround time from the current 7.9 months to 4 months and the strategy filing and appraising performance agreements was to increase the rate from 95% (2012/13) to 100%. Training in languages to improve the effectiveness of officials posted abroad was also a priority within the administration programme.

Bilateral International Relations of programme 2 included the targets and desired outcomes for strengthening political and economic relations with the countries that DIRCO would be visiting in the year (page 44 to 54). In terms of programme 3, Multilateral Diplomacy, the Minister was currently in New York, invited by the Secretary-General of the United Nations, to interact on issues where South Africa normally lead in terms of resolution of conflict. South Africa’s responsiveness to developing countries was expected to increase due to the UN believing that South Africa should partake increasingly in terms of responsibility. Finances would be a factor in determining to what extent South Africa would be able to participate. South Africa was also expected to be part of the movement towards a nuclear-free world.

South Africa was preparing to deploy 80 monitors/observers to Zimbabwe. One group would be deployed one month prior to and a second group two months prior to the elections and have presence there until a new announcement was on the ground. The current Zimbabwean parliament was expected to be dissolved on June 26 and a new administration had to be elected four months after that (October). The election date of a new parliament was still to be determined, but was expected to be around September. SADC would send the largest-ever observer mission of elections (400 people) to Zimbabwe, with South Africa contributing 180 people, consisting of civil society, parliament and officials.

Mr Caiphus Ramashau, Acting Chief Financial Officer and Deputy Director-General, DIRCO, presented on the 2013/14 budget. The economic challenges facing DIRCO were: daily fluctuations of the exchange rate (forex) in terms of the missions; inflation; slow global economic activity in terms of partnerships; and expectation of South Africa’s role in pursuance of South-South cooperation and BRICS. The challenge was limited resources but DIRCO was committed to realising expectations with the allocated funds.

The MTEF allocation had increased by 5.3% for 2013/14, 5.7% for 2014/15 and 5.1% in 2015/16. However of the increase over the MTEF period, the real amount was greater (R6.2 billion) but the magnitude (nominal amount) was less when taking in consideration forex rate of exchange and inflation. The proposed baseline allocation (R2013/14) was R5.5 billion, of which compensation to employees was 41% of the budget, goods and services (obligatory expenses) represented 27%, earmarked funds 19%, and operations represented only 11% of the budget (R629 million).

On review of how to do more with limited resources, challenges were: in the developing countries DIRCO had to honour and abide by the host country’s laws and regulations to increase the retirement age from its own, which was 65 years old; rental and monitoring of the property lease agreements abroad for the 106 missions was challenging; state owned properties required infrastructure renovations and maintenance (R200 million was not sufficient to acquire new property); and demand for increased participation in international fora.

Discussion
Ms L Jacobus (ANC) asked for clarity on the role of the AU in curtailing the unconstitutional overthrow of governments, conflicts, etc. The AU had an organ for Peace and Security and would have a particular role to play in that regard.

Ambassador Matjila replied that today the AU Peace and Security Council (AUPSC) was the primary entity for peace and security in every region on the continent. For example, South Africa reformulated its foreign policy on the Central African Republic (CAR) from the cue taken from the AU pronouncements on changes in CAR. However, in 2011/12 it was agreed that the AUPSC did not have the capability for conflict resolution and it was agreed that the UN Peace and Security Council would interact with the AUPSC on conflict prevention, conflict resolution and stabilisation of the continent. With the agreed-upon conflict resolutions, South Africa could move into Mali, CAR and Somalia. SADC was advanced in terms of capacitated regional brigades to respond to the resolutions.

The Chairperson commented that while there was evident value in hosting various bodies, but they cost a great deal. He suggested that it would be wise to undertake a review of the bodies South Africa wished to host on the basis of the value those bodies brought to the country, particularly because DIRCO operated on a shoe-string budget year after year. Payment of DIRCO officials accounted for 41% of the total budget, while the norm was 35% and DIRCO could not fill vacant posts. Perhaps it was time to prioritise spending.

Mr B Elof (DA) asked if there was a performance audit on missions to determine whether every one of them were worthwhile as the expense placed a burden on the country.

Mr I Davidson (DA) said that while there was cabinet resolution to open missions in every country, it was not clear in the strategic plan why this should happen. He felt economic diplomacy had to be of key importance and that the strategic plan should explain why there should be a mission and what follow-up would be performed. BRICS was an amalgam of five countries, but the real interest was China and India. He also said that huge inputs for missions were evident but there was not a sense of outcomes of missions.

Ambassador Matjila replied that the decision to open a mission went through a number of processes in government. It was not a decision by DIRCO only and was not taken lightly. The reality was that SA was part of Africa and belonged there. Without the respect of its neighbours in its back yard, SA had no standing. When opening missions, both political and economic reasons were taken into account and the decisions by skilled bureaucrats in cabinet were based on where SA should be positioned in 2002, 2010 and 2030. Before 1994 most missions were in Europe, Taiwan, Lilongwe, mostly for political reasons. Some countries in Africa such as Malawi were approached for political reasons to stabilise the country. SA had a presence were in Japan and Taiwan, but not yet in India and China and had to go there for economic and political reasons. It was in Uruguay and Paraguay but now wanted to be in Brazil and Mexico for political and economic reasons. In Eastern Europe Poland, Bulgaria and Hungary were also major political and economic countries to be targeted. There was constant assessment of prospects and on what direction SA should move.

History had taught that throughout the past two centuries of diplomacy that in some cases benefits came immediately and sometimes benefits came later. DIRCO always prioritised, moved on, stabilised and this was constant. A budget increase, for example, would cause DIRCO to re-prioritise.

Mr Elof congratulated DIRCO for having more missions in India than in the UK.

Mr S Ngonyama (COPE) said that the global shift in economies beckoned him to question the extent to which South Africa was focused on strategic targets and if the economic strategy on Africa was evaluated for how much money South Africa was putting in versus the outcome.

Ambassador Matjila replied that South Africa sold 100% value-added products/ finished goods in Africa and this revived the companies of South Africa. This was evident in the motor industry components section and job creation in the Eastern Cape and Pretoria. Also, if SA succeeded in getting the 1065 locomotives and developed a strategy to revive the railway industry of the 1950’s 60’s, markets would open up. There were already requests from Africa for new and used locomotives. Furthermore, Africa’s build infrastructure could only be obtained in SA.

DIRCO worked closely with the Department of Public Enterprise to find markets for industries which were building capacity. More information could be given on the various African prospects. So, while at times it was not always obvious why SA undertook missions, there was always balancing of political and economic reasons. Zimbabwe needed stabilising but it was a huge market for SA.

For this reason, DIRCO was working together with Development Bank South Africa (DBSA) to build fast roads and toll-gates in Zimbabwe, as the crisis in Zimbabwe would not be forever. It was also working on roads to mines in Zambia and on railways in the SADC region.

The DG agreed that DIRCO should share with the Committee in the DIRCO strategy why it was opening missions such as in South Sudan and Columbia, before waiting for another meeting with the Committee. This was documented in the Annual Performance Plan (APP).

Mr B Skosana (IFP) commented that international perspectives on power and security included food security, which was looming strongly on the continent. He also commented that with convergence of the US and Euro-Atlantic forces, as well as China with the Asian forces, in the African continent - which would bring trade and commerce to the continent - South Africa would play a role in protecting political and economic sovereignty within the continent. Another issue was that national powers, including super-powers, had all at some point raised the issue of human rights abuses in China. Only the previous day, the Minister had been forceful about the projection of South Africa’s foreign policy use of Ubuntu. Thus, the issue of human rights had to be raised with China, just as it had been with Zimbabwe.

Mr Ngonyama asked to be guided by DIRCO on the type of strategy that existed with China or if there was one-way traffic which may hit the balance of payment of South Africa.

This question was partially answered below.

Ms Jacobus asked if SA had the capacity to export finished products and what DIRCO was doing to build capacity.

Ambassador Matjila agreed that ideally, as the most diverse economic region in Africa regarding resource utilisation, SA should be exporting at least 60% of finished products. With the Department of Trade and Industry (DTI)’s resolution to value-add through IPAP 3, it was hoped that during the next administration (2014-19) the investment in technology transfer should be able to create a basket of products to sell abroad.

The presidents of China and SA had agreed that increasingly SA would sell value-add and China would invest more in SA, not only in mining but mining beneficiations. SA still had cheaper energy. DIRCO’s strategy to export finished products included the Department of Higher Education training artisans to produce these goods and services.

Mr Elof asked what programmes existed to assist companies to export finished products.

Ambassador Matjila replied that DIRCO handled the bulk of interface (160 missions) with the private sector in this regard, while DTI (24 missions) took the lead role.

Mr Davidson said that the departmental priorities were not reflected in the document. There were number of programmes, but it was not clear which programmes were important.

Mr Ramashau replied that priorities were indeed aligned but with limited resources it was difficult to have a set plan.

Mr Elof asked if the property in Namibia had been sold or if it was standing empty.

Mr Ramashau replied that the process to dispose of the property in Namibia had been re-started by DIRCO and that it would final disposal be handled by Department of Public Works, which would also be disposing of property standing empty in Zurich and Berlin.

Ms Jacobus suggested that DIRCO should look at the cost effectiveness of building or buying property for missions.

Mr Elof asked if there could be one rather than three embassy buildings in the small countries to offset the burden of renovations.

Mr Ramashau replied that the comments were noted and the cost-effectiveness and handling of leases would be examined.

Ms C Dudley (ACDP) asked if the build in Washington DC was on track and how it would impact on the lives of South Africans.

Mr Ramashau replied that construction of the building was on track and was within budget. The property would be finalised in September.

Ms Dudley asked if DIRCO was at all involved in the earmarked funds from Treasury for the elections in Zimbabwe.

Ambassador Matjila replied that all SACD national divisions received funds from the African Renaissance Fund (ARF).

Ms Skosana commented that the reorganisation of internal structures within DIRCO to include monitoring and evaluation should be in synergy with the same informing principles of the Presidency and that the strategic plan, informed by the President, the global shifts in economic systems, and the APP should include practical interlock with those systems.

Ambassador Matjila replied that feedback from Treasury and the Office of Monitoring and Evaluation in the Presidency was that DIRCO was one of the first departments to fully align its strategic plan/APP with all five programmes.

Mr E Sulliman (ANC) congratulated DIRCO on its 100% spending on the financial report on the programmes. The only concern was the 92.4% spending on administration. He asked what the reasons were for this and how DIRCO planned to solve the problem.

Mr Ramashau replied that there had been challenges in the final implementation of the property network infrastructure for communication but the strategic plan had adopted a plan to rehabilitate this infrastructure.

Ms Sulliman asked how DIRCO would handle the public diplomacy and protocol services with the R55 million (-18.2%) reduction in the allocation.

Mr Ramashau replied that this allocation was for once-off for projects for the Diaspora Conference and African Cup of Nations which were in the past and had been erased from the current plan. Therefore this would not affect the baseline allocation going forward.

The Chairperson asked if the Committee could at some stage be given an indication of the current African Renaissance Fund projects - where they were being undertaken and the cost of each one.

Ambassador Matjila replied that the list of ARF programmes would be submitted to the Committee with a footnote on why each programme was necessary. DIRCO was consulting with the Department of Public Service Administration to gazette the South African Development Partnership Agency (SADPA) to ultimately be able to receive the funding for development cooperation.
           
The Chairperson said that implementation of the Management Performance Assessment Tool (MPAT) was encouraging. He wished to sensitise the Director-General to the fact that, as in all departments, since MPAT was located in the office of the Director-General, whoever spoke from the structure spoke with the authority of the Director-General. 

Ambassador Matjila noted the Chairperson comments.

The following questions would be answered in writing due to time restraints:
Ms Jacobus suggested that the Committee should have a workshop on DIRCO programmes to determine how the Committee could monitor whether they were worthwhile.
Mr Ngonyama also asked for clarification on whether South Africa benefited by being involved and contributing economically to CAR (Central African Republic) as this had to be balanced.
Mr Ngonyama asked how South Africa was positioned with Europe.
Mr Davidson said that CIVETS and economic diplomacy were not mentioned in the document.
Mr Davidson said that for one tourist, eight jobs were created, but he did not get a sense of where they were coming from. He asked if DIRCO was investing in analysing a target population that would benefit South Africa.
Mr Elof asked how DIRCO established whether SADC visitors were tourists or immigrants.
Mr Elof said that the American market was one of the most lucrative in the world but there had not been American immigrants coming to the country.
Ms September asked if DIRCO had received calls that BRICS should play a larger role in certain particular events, activities or countries. She asked because when the MPs met with the EU it appeared to be so.
Ms Dudley also asked how making Japanese stock more competitive was benefiting South Africa.
Mr Elof asked if inflation and the weakness of the rand were included in the nominal and real amounts presented in the annual budget.
Ms Jacobus asked if DIRCO collaborated with the national carrier, SAA, in order to facilitate tourism. For example, there was an interest by South Africans to go to Cuba but SAA did not fly to Cuba.
Ms Jacobus suggested that not only staff but heads of mission and diplomats should learn the language of the host country.
Ms September asked if DIRCO had a programme for language training to Members of Parliament.
Ms September asked for justification of DIRCOs participation in groups such as the Commonwealth.
Ms Jacobus asked if DIRCO was up to date with membership subscription payments and if other countries were coming to the party with paying for their subscriptions.
Ms September said that she could not find the motivation for the splitting the programmes International Relations and Cooperation as the one could not exist without the other. She asked whether it was an accounting matter or a matter of practice and how it was going.
Ms September asked why expenditure on consultants would increase and what the motivation for that was as opposed to having units within DIRCO which could strengthen its capacity.
Mr Elof asked how the 80 monitors for the Zimbabwe elections would be recruited, if they would be trained and if this had been included in the budget.
Ms Dudley asked how the observers would be kept safe in Zimbabwe.
Mr Ngonyama asked if there was a concrete plan of action with South Africa’s involvement in Israel and Palestine. It seemed both players respected South Africa and it was thus a soft target.
The Chairperson said that despite cabinet having laid out the measures and guidelines for coordination of international activities, paradiplomacy continued. He asked how DIRCO was resolving the issue.

The Chairperson concluded that the outstanding questions could be answered in writing. There was still adequate time to receive the responses before the budget vote. If necessary, DIRCO would be called back to the Committee. He thanked DIRCO for the presentation.

The meeting was adjourned.