DIRCO & ARF 2022/23 Annual Performance Plan; with Deputy Ministers

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International Relations

04 May 2022
Chairperson: Mr S Mahumapelo (ANC)
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Meeting Summary

International Relations   

Strategic Plan

African Renaissance International Fund     

In a virtual meeting, the Department of International Relations and Cooperation (DIRCO) and the African Renaissance and International Co-Operation Fund (ARF) presented their Strategic Plans, budget and 2022/23 Annual Performance Plans to the Portfolio Committee.

DIRCO reported that it was allocated a budget of R6.6 billion which increased by an average of 1.3% compared to the prior financial year. In addition, the Department’s spending was largely affected by the exchange rate fluctuation of main currencies as well as local currencies as 60% of the Department’s budget allocation was spent abroad.

The Committee welcomed the new Director-General (DG), Mr Zane Dangor, and hoped the new DG will have a productive stay at the Department. During the discussions, Committee Members raised the issue of property management at the DIRCO and the lack of progress that has been made. Members asked what progress has been made on the milestone report and asked the DIRCO to submit a detailed report on property management from the Department of Public Works and Infrastructure (DPWI). The Committee wanted to know how the process was unfolding, what property was owned by DPWI and what was owned by the DIRCO. The issue of the cost of renting property was also raised.

Members also raised issue with the DIRCO’s growing wage bill, and the Committee wanted to know why there is a shortfall and why is there such a large component of staff at the DIRCO. Committee Members questioned the DIRCO on cost of compensation of employees and what mitigating plans the DIRCO had in place for this growing wage bill. The DIRCO and the ARF were asked to justify their donation to Cuba while they could not afford to pay employees.

The Committee also raised concern about how the DIRCO has not changed the way they report their progress.  The DIRCO was questioned again on how far it was on implementing its ITC strategy and whether all employees have received tools of the trade.  The issue of cutting missions was also brought up again and Members said this exercise could be used for the DIRCO to save money and cut out staff not needed.

The ARF reported that there were downward trends in fiscal allocations to it. As a result, for the next five years, the ARF has to do more with less and prioritise its allocations to maximise the impact of its interventions on the African continent, given the huge demands on its resources

Committee Members wanted to know why SADPA was being delayed and how far the process was of implementing SADPA. 

In conclusion, the Chairperson asked the DIRCO to provide detailed responses in writing on some of the questions that were unanswered by Friday.

Meeting report

The Chairperson welcomed everyone in attendance including the Deputy Minister of International Relations and Cooperation, Mr Alvin Botes, and the new Director-General of the Department, Mr Zane Dangor. There are two matters being discussed today. He said that the preferred choice would be for the Department and the African Renaissance Fund to present their Annual Performance Plans on different days and maybe that should be the case in the future, or the meeting could start earlier. This would allow Members to have in-depth discussions on both presentations. He asked both the Department and the ARF to be precise in their presentations and only focus on the important aspects. Committee Members should also be cautious of time when asking questions since there was limited time to discuss issues coming from both presentations.

Deputy Minister Opening Remarks

Deputy Minister Botes asked if he could be excused early from the meeting since he has an engagement with the USA Deputy Secretary of State, Ms Wendy Sherman. Deputy Minister Candith Mashego-Dlamini will join the Portfolio Committee’s meeting later once he has left.

He said the DIRCO has a particular focus on economic diplomacy with the aim of augmenting the Economic and Reconstruction Plan adopted by Cabinet as a means to recalibrate the South African Economy. This comes from the state of the nation address delivered by the President in February 2022, importantly during this financial year, the DIRCO’s pertinent policy priority and focus will be Africa. Therefore, the four priority areas identified by the DIRCO in its performance plan will focus on consolidating the DIRCO’s Pan African outlook and working towards the prosperity agenda of the African Union, Agenda 63. The DIRCO’s first focus will be to contribute towards a united African continent and working towards a common shared prosperity objective for the continent. Secondly, the Department will focus on enhanced regional integration and increased trade within the SADC and focus on the implementation of the African Continental Free Trade Agreement. Thirdly there will be a focus on secession between hostile groups on the continent which flowed from South Africa’s Chairpersonship of the AU. This has been identified as a contributing factor not only to peace and security but also to development. This will strengthen work the DIRCO is already doing in Mozambique and the Democratic Republic of Congo. Lastly, the Department will focus on harnessing its various multilateral bodies’ membership and enhance the key issues on the African Continent.

The Deputy Minister asked the Director-General, Mr Zane Dangor, to proceed with the presentation.

Mr Dangor thanked the Chairperson and said he looked forward to working with the Committee. He said the second part of the presentation will be done by the Acting CFO, Ms Hlengiwe Bhengu.

Department of International Relations and Cooperation Annual Performance Plan 2022/23

The DIRCO’s strategic plans are developed in a complex and dynamic global environment. This requires strategies that position the country to effectively engage in global politics, trade, and development with requisite capabilities to manage multi-layered relations within the global political and economic architecture.

The Department’s five-year strategic plans were drafted prior to COVID-19 and based on assumptions of business as usual. The outcome of the Strategic Review and Planning Session did not result in changes to the Strategic Plan and 2022/2023 Annual Performance Plan.

The Department recognises that the COVID-19 pandemic severely slowed down international relations in the previous financial year. The new normal harnesses lessons of remote work and digital diplomacy to develop a hybrid approach to international work, and altered the way we interact fundamentally.

APP focus:

Building a better South Africa

The Department, with a strengthened focus on economic diplomacy, and in order to contribute to the Economic Reconstruction and Recovery Plan, will continue to focus on the following objectives, in line with the MTSF 2019-2024 to increase Foreign Direct Investment (FDI) into South Africa and Africa, improve South African access to foreign markets, contribute to increased tourism arrivals to South Africa; and improve investor confidence.

Building a better Africa

Africa remains central to South Africa’s foreign policy and at the core of this is South Africa’s Pan-Africanist vision of unity, solidarity, and a common African destiny.  Against this, it is, therefore, important that there should be continuity in the focus areas identified for 2020-25, namely

  • a united and politically cohesive continent that works towards shared prosperity and sustainable development
  • enhanced regional integration with increased and balanced trade within SADC and on the Continent, by supporting the creation of the African Continental Free Trade Area, promotion of greater peace, security, and stability on the continent; and
  • Using South Africa’s membership and engagements in various international fora to advance the Africa Agenda

Building a better world

Being committed to multilateralism as one of the principles underpinning South Africa’s foreign policy, we continue to advocate for the reform of global governance institutions and promote participation in multilateral fora outside the UN system as a force multiplier for the overall strengthening of multilateralism.

Aligned to the above mentioned, during 2022-23, there should be a continuation of the focus areas identified for 2020-25, namely

  • Active participation in institutions of global governance, Peace, Security and Development Agenda
  • South-South Cooperation; and Cooperation with the countries of the North

Building a better DIRCO

In striving for the excellent execution of South Africa’s foreign policy, operating in a complex global environment, the Department has to adhere to government-wide regulations in a manner that complements and adds value to DIRCO’s primary mandate, namely, to utilise the Department and its expertise to achieve South Africa’s foreign policy strategic objectives.

To this end, the Department will continue to focus on areas identified for 2020-25, namely

  • Develop a capable and ethical workforce and rebuild an organisational culture guided by a shared vision and new values.
  • Review the Organisational Structure and implement effective financial management through the application of good financial management systems, including management accounting, financial accounting, supply chain management and risk and internal controls in line with the requirements of the Public Finance Management Act, 1999; and
  • Implement efficient and secure information and communication technology infrastructure and systems and implement the digital strategy.

Programme 1: Administration

  • Four progress reports on the implementation of the digital strategy
  • Unqualified audit opinion
  • Number of reports on training programmes in line with generic skills development programme
  • Maintain ISO certified quality management system
  • Two progress reports on the delivery of AU/UN languages
  • Two progress reports on the collaboration with partners to enrich training programmes of the academy
  • Six outreach initiatives to advance gender equality and women’s empowerment through gender mainstreaming
  • Two initiatives to advance youth development and empowerment
  • Two initiatives to mainstream rights of persons with disabilities
  • 100% legal services, advice and assistance provided

Programme 2: International Relations

  • 12 regional political reports, including the outcomes of structured bilateral mechanisms and high-level visits aligned to achievement of the NDP and MTSF
  • 12 quarterly progress reports on the regional trade and investment initiatives undertaken in support of the one government investment approach
  • 12 regional reports on tourism promotion events to promote South Africa as a preferred tourist destination, thereby contributing to growth in the tourism sector in support of the one government tourism approach
  • Two assessment reports of SA’s contribution towards: peace and stability, socio-economic development, good governance and democracy, and the implementation of the Revised Regional Indicative Strategic Development Plan (RISDP).

Programme 3.1: International Cooperation

Participate in initiatives of international organisations and institutions in line with South Africa’s national values and foreign policy objectives.

  • 12 reports on the outcomes of multilateral and multistate organisations reflecting South Africa's participation and interests, including that of the African Agenda on peace and security human rights and economic and social development
  • Two reports on the implementation of South Africa’s international reporting obligations
  • 60 positions identified influential multilateral bodies maintained.

Programme 3.2: Continental Cooperation

  1. Two assessment reports reflecting South Africa’s participation and outcomes of:
    • AU structures and processes
    • AU Partnership and
    • Implementation of Agenda 2063
  2. Two reports on South Africa's commitments and efforts towards peace and stability on the continent

PROGRAMME 3.3: SOUTH-SOUTH COOPERATION and PROGRAMME 3.4: NORTH-SOUTH COOPERATION

  1.  South-South Cooperation: Two reports on the outcomes of North-South engagements reflecting South Africa’s participation and interests, including that of the African Agenda
  2. North-South Cooperation: Two reports on the outcomes of North-South engagements reflecting South Africa’s participation and interests, including that of the African Agenda

Programme 4:  Public Diplomacy and Protocol and Services

Public Diplomacy-Communicate South Africa’s role and position in international relations in the domestic and international arenas and provide Protocol Services.

  • Rapid and timeous support to missions on domestic and global developments. Nine key messages distributed to missions on domestic and global developments
  • Platforms utilised to inform and promote South Africa’s foreign policy to domestic and international audiences -Making an effort to ensure that our foreign policy decision-making process reaches the grassroots. 12 Public Participation Programmes (PPP), nine opinion pieces.

Programme 5: International Transfers

Strengthen multilateralism through membership fees and contributions of South Africa fulfilling its continental and global responsibilities.

Four quarterly reports on payment of South Africa’s contribution to international organisations

Departmental allocation

The Department is allocated a budget of R 6.6 billion which increased by an average of 1.3% compared to 2021/22 adjusted appropriation of R6.5 billion. The increase is mainly on capital (infrastructure) budget.

Compensation of employees (CoE) budget remains a challenge as the Department largely relies on its personnel to perform its functions, compensation of employees is its main cost driver, accounting for an estimated 43.3 per cent. CoE ceiling increased from R2.852 billion in 2021/22 to R2.860 in 2022/23 (0.27% increase), however, the increase is not sufficient to cover the salary bill of filled positions in the Department as well as vacant critical posts.

In addition, the Department’s spending is largely affected by the exchange rate fluctuation of main currencies as well as local currencies as 60% of the Department’s budget allocation is spent abroad.

See attached for further details

Discussion:

Mr D Bergman (DA) welcomed the new DG and hoped his tenure within the Department will be very productive. He has already written to the new DG suggesting he starts with the consultant reports requested by the previous Ministers. He said the DG must use these reports as his base for improvement going forward. The Committee cannot really be critical of what has been presented today since budget cuts are a reality, the DIRCO must stretch its rand as far it can. He said the Department is expected to make tough and logical decisions. The DIRCO started making logical decisions by closing some of its embassies. However, the DIRCO needs to start looking at these issues more fundamentally, the DIRCO needs to look at what a country offers South Africa in terms of trade and what footprint it has.

 Many countries offered the DIRCO properties in prime areas which cost the DIRCO a lot of money and DIRCO can’t afford this. He emphasised that the DIRCO needs to be honest with itself as there are also some diplomats staying with their whole families. In some cases, diplomats are still renting for their adult children aged 23 and above and this rent has cost the DIRCO R280 000 a month. There needs to be a cost exercise where the DG and CFO not only look at the money the DIRCO receives but look at the footprint of countries if they do not add value they should be cut, this needs to be done objectively. He said some of the properties owned by the DIRCO are derelict and should be sold.

The DIRCO also needs to clean up its organogram and strengthen its management structure. The organogram as it stands creates “two bulls in a kraal” situation which has been the case previously. He said the Committee should actually look at the organogram and create one that is self-reliant. One person should be accountable and the final decision should rest with that person. Under that person, there should not be a second person who challenges them but a number of people who support them. This report is trying to catch up but before the DIRCO can run they need to start with crawling and go back to basics. He said he knows the DG has been at the DIRCO on an advisory role previously and he must know exactly what has been happening in this Department. He said he hoped Mr Dangor helps this Department and Consular services abroad.

Rev K Meshoe (ACDP) had a problem with the term “compensated employees” on the DIRCO APP and asked what this means, Are there employees who are not compensated and how does the DIRCO decide who gets compensated and who does not. He said this is worrying looking at the Pretoria High Court Judgement and the DIRCO wanting to donate money to Cuba. He asked how does the Department justify donating R50 million to Cuba when the DIRCO is struggling to compensate their own employees? He said a coalition of hunger relief organisations has opposed the donation and asked to have a meeting with government. He wanted to know if that meeting has happened and what transpired during that meeting and was the matter resolved.

Mr B Nkosi (ANC) appreciated the inputs made by the DIRCO and welcomed the new DG. He said on programme one it is noted that the Portfolio Committee will receive on a regular basis, several reports such as mainstreaming of the ICO, two progress reports on the delivery of the AU, a  report on UN languages, two progress reports on collaboration with partners, a progress report on six initiatives on advancing gender, two progress reports on advancing youth, two progress reports on initiatives to advance human rights and people living with disabilities and one report on legal advice received. The Committee expects the DIRCO to deliver on those initiatives. He pointed to programme two under the heading filled post and additional post.

He asked what the number of posts has been filled that has been approved and why is there additional posts particularly within the higher structures of the DIRCO. The DIRCO is losing personnel because of retirements, what are the promotion prospects of young people within the Department.  He said the Regional Innovation Plan expired in 2020 and asked has this plan had been updated.  What mitigated plans does DIRCO have in place when it comes to the diplomatic arena, such as challenges in BRICS and other structures DIRCO might be part of. He asked if it was cheaper for DIRCO to acquire property rather than rent property, DIRCO could save in the long run rather than renting. In 2020 there were five work streams working on regulations, what happened to those workstreams and can the Department report back on their work?

Ms B Swarts (ANC) welcomed the DG, she said because the DG has been part of the system, there is no question he would not be able to answer. She said the Committee raises the same issues with the Department every time they report on their APP, and it seems like no progress is made in this regard. There is still an emphasis on numbers as targets particularly report instead of impact indicators. The Committee has asked the DIRCO several times to change this.

She asked how far the DIRCO is with the process of hiring a chartered accountant; the DIRCO needs someone who knows how to deal with rands and cents. The Committee can do all the oversight it wants but if there is no Chartered Accountant it will not help the Committee do proper oversight. There is an excess of employees at the DIRCO, and this is impacting the budget negatively. ‘Why is the DIRCO looking at bringing in more staff’? The DIRCO is yet to produce a report explaining how employees are deployed to other missions and how these people qualify for those jobs. There is a problem at the DIRCO where inexperienced people get deployed to positions of importance. There is an excess of staff at the DIRCO but a lack of people who have the right qualifications and deemed critical for the Department to be functional. There needs to be staff in place that can properly handle issues at the DIRCO.

She asked to what extent has the Department dealt with challenges relating to digital transformation and asked the Department to break down its responses in specific terms. Why has the Department not prioritised implementation of the Foreign Service Act 2019 in its Annual Performance Plan? The DIRCO told the Committee about the urgent need to pass this Bill and now that it has been passed it is not prioritised. She is convinced the DIRCO does not know how to implement this Bill or the transfer of properties from Public Works. The Committee asked for a simple explanation of how the milestone report will be implemented and the DIRCO could not explain in detail.

The Committee needs a detailed report from Public Works to explain how the process is unfolding and how much rent is the DIRCO paying at various buildings including the Pan African Parliament. What lessons has the DIRCO learned from having to adjust from a pre-covid to a post-covid world? The DIRCO’s ITC processes have still not concluded, and she hoped everyone at the DIRCO has working tools. Covid cannot be used as an excuse anymore. The DIRCO always has an excuse, and the Committee has heard various times how the DIRCO blamed it on re-tendering and the National Treasury. The DIRCO should provide the Committee with a report on the progress of ITC implementation and provide staff with tools. Committee Members always foresee what recommendations the AG will make. The AG engages with the DIRCO when they compile their Audit reports and continuously provides the DIRCO with advice, the DIRCO gets informed well in advance about red flags and changes it needs to implement but the DIRCO does not listen to the Committee or the Auditor-General. The DIRCO needs to act and hire a chartered accountant. There are 12 reports on tourism, but the DIRCO does not produce critical reports on other issues. There is nothing wrong with promoting tourism, but this is not their core function.

Mr T Mpanza (ANC) welcomed the DG, he asked when all acting positions would be filled because this creates stability and people will not be able to hide behind the fact that they are acting. He asked how acting and additional staff relate to the revised organisational structure. He asked the DG to look into this matter with urgency. Why is additional staff not attached to the DIRCO’s structure? And he asked whether the DIRCO has checked for ghost workers. When last did the Department do a headcount exercise to confirm all employees? He asked what the DIRCO is planning to do with the funds it saved on travelling. He said the DIRCO should reallocate these savings to other cost centres such as employee compensation since it is increasing beyond the acceptable threshold; it is almost half of the DIRCO’s budget. The Committee has emphasised that the cutting of missions should not negatively impact South Africa’s standing on the African Continent. He said the African Continent should be spared from this exercise.

Response

Mr Dangor (DG) answered. He said there will be an assessment on how it can stretch its budget and this includes the compensation of employees. The DIRCO is a Department that is human capital centred, Diplomacy and some of the DIRCO’s key functions require warm bodies and people who understand the mission of the Department. The challenge is compensation of employees has not increased to the scope it needs to. Mr Dangor said he asked the DIRCO’s human resources to scope a few possible scenarios. The first scenario is asking National Treasury for more money which is unlikely; the second scenario is looking at where and how the DIRCO can make savings. The number of employees who are additional are linked to how ambassadors were appointed and may not be linked to how employees are employed at the DIRCO. The DIRCO might have to relook at how ambassadors are deployed and how it impacts the budget.

The quality of warms bodies employed also needs to be looked at as raised by Ms Swarts, staff at missions will be reduced with capable and qualified people, this means the functions of the missions will be able to be performed with fewer staff. The problem is that this might signal to the international community that South Africa is reducing its ambitions in the international community. Diplomatic footprint is important in the international community and affects things such as nominations to sit on international cooperation bodies such as the UN Security Council. There are other variables that will play a role, the DIRCO will do an objective assessment looking at an economic rational diplomatic footprint and how to make missions more efficient and effective so the DIRCO can do more with less. The issue around young people is linked to a lack of budget and there is an artificial block ceiling which meant that the DIRCO could not appoint staff for a very long time. There are new discussions happening around talent acquisition which will focus on bringing in young people with the right qualifications and talent.

The Cuba donation came from programme expenditure of the ARF and is not linked to compensation of employees. This has been tested in the courts on whether this decision is rational, and the courts will take that decision. The issue around property is a huge problem. Property management is a huge portfolio and requires a lot of expenditure. He said there is a new person in place in this unit and the DIRCO is comparing what properties are managed by the DIRCO and what is being managed by Public Works. Once this is finished, the DIRCO will report back to the Committee on implementation of the Foreign Service Bill. He said the draft regulations of the Bill is ready for public comments and the DIRCO also needs to ensure the Act is promulgated and as soon as this process has been concluded the Bill will be implemented.

He said acting positions arose because no new appointments could be made, people were acting in positions especially higher up in the DIRCO structures but there is a process underway to ensure these positions are filled and it was impacted by the budget. He said the DIRCO will do away with acting positions as fast as possible but in a way that does not incur any irregular expenditure.

The Chairperson said COE is presented as a challenge and the report also says the DIRCO runs short on skills to implement its programmes. He asked for clarity on this. The DIRCO also concluded a skills audit and asked how there is still a problem with a ceiling on compensation of employees.

Mr Dangor answered that the problem with a ceiling on compensation of employees happened when National Treasury found the DIRCO salary bill to be too high and capped it for example if the DIRCO had a salary bill of R20, National Treasury capped the bill at R15 and now DIRCO has a shortfall of R5 and needs to manage it. This is the shortfall the DIRCO carries every financial year. This is why the DIRCO has not added to this shortfall. 

He said DIRCO does a headcount by making it compulsory for all of its staff to go to finance and sign for their paycheck monthly if they do not sign, their paycheck is withheld. This ensures there are no ghost workers in the system.

Mr Dangor said the acting CFO, Ms Bhengu, will cover the other issues.

Ms Bhengu continued the response. She said the challenge with the COE is what is allocated to the DIRCO is not enough. National Treasury gives R2.8 billion for compensation of employees but the DIRCO needs R2.9 billion. This challenge negatively impacts service delivery and implementation of the Department’s mandate. There are critical vacant posts that go unfilled and to mitigate this, DIRCO did a skills audit to see the current staff that is employed, and what can be done to ensure the DIRCO can still deliver on its mandate. The skills audit assisted the DIRCO to focus on upskilling and reskilling existing human resources to bridge the challenge of COE.  There is a detailed explanation on page 27 in the APP on this matter.

She said there is no one who does not receive a salary hence the Auditor-General report always flags irregular expenditure, the DIRCO pays officials even though there is no budget for this. There are items such as operating leases under programme two which the DIRCO is currently paying R798 million for 1000 contracts abroad and within South Africa, this is for accommodation and renting of office space. The DIRCO also pays R176 million to municipalities, security services and maintenance costs of buildings. The operating expenditure is made of freight services, storage services, and insurance services. These items are paid for when an official is moved abroad and all these services are required. She said travel expenditure has been reallocated to other areas where there was a shortfall, however National Treasury does not allow for Departments to move a goods and services budget for compensation of employees. National Treasury is not allowing any government department to move funds to compensation of employees.  She said the DIRCO has been able to provide tools of the trade to all its employees and there was a delay in stock due to international supply chain challenges that still exist. There is a global supply shortage in electronics, but all staff received tools and were migrated to the latest software and all email boxes have been migrated to the new system. The tools of trade for missions will soon be replaced and distributed by end of June this year.

On properties, the leases that were received by the DIRCO in 1999, through the transfer from Public Works, were used to create DIRCO’s own property asset management list. This list was updated and submitted to the Portfolio Committee in February. This list also included new properties the DIRCO acquired or built and also had the total budget to maintain those properties. However, the DIRCO has not been maintaining its properties how it should be as seen through how much money is transferred back to National Treasury in unspent money on maintenance. There is a process currently underway to upgrade and maintain these properties as outlined in February to the Committee. There is a new recruit in this unit and he is an expert in this area. The unit has developed a plan which it is in the process of implementing.

Ms Swarts said yes, there should be a diplomatic footprint but how does the DIRCO determine the posting of officials to missions, and what criteria are being used for rotation. Is this done on merit, experience or on favouritism? The DG was saying he is waiting on HR to do a scope. That is not a good enough answer because it was previously raised with the DIRCO. The Committee requested the DIRCO to submit CVs of people within the property unit and none of the people who worked in property had the necessary skills to be in that unit. She asked that the Committee be provided with the following reports, a milestone report on properties, a handover report from the Department of Public Works and Infrastructure, an audit report on properties, a detailed report on officials who have been seconded to international organisations, who are partly paid and who are fully paid by the bodies and organisations they are seconded to, how many are fully paid and how many are partly paid and asked for a detailed report on why the DIRCO runs tourism promotion services and what impact does it have on tourism in South Africa. She said there is a shortfall in the budget because the DIRCO employs people it does not need. In the interest of time, the following responses can be submitted in writing by Tuesday.

The Chairperson said the submission of written responses should be done before Friday.

African Renaissance Fund Annual Performance Plan 2022/23

Ms Dineo Matlhaku, Head of Operations, led the presentation.

The African Renaissance and International Cooperation Fund remained an important vehicle in the pursuit of South Africa’s foreign policy objectives, particularly the regeneration of the African continent. Of particular importance is the seventh priority, which focuses on international relations, which the ARF contributes to “A Better Africa and World.

Strategic focus

  • The ARF will partner with other organisations to enhance South Africa’s cooperation with other countries
  • The ARF will provide technical assistance to identified countries that will hold elections within the five-year period. South Africa will further participate in the SADC Election Observer Missions funded through the ARF
  • South Africa will continue to support mediation and conflict resolution on the continent.
  • ARF will implement projects that will improve the socio-economic development and integration conditions of the recipient countries
  • South Africa will continue to play a leading role in influencing and shaping the global humanitarian system by assisting countries afflicted by humanitarian crises, occasioned by natural disasters and conflict within the continent and beyond.

Situational analysis

Official development assistance is experiencing a downward trend as evidenced by figures released by the Organisation for Economic Cooperation and Development through its Development Assistance Committee (OECD DAC). In South Africa, there have also been downward trends in fiscal allocations to the ARF. As a result, for the next five years, the ARF has to do more with less and prioritise its allocations in order to maximize the impact of its interventions on the African continent, given the huge demands on its resources.

Financial implications

ARF budget allocations over the Medium Term Expenditure Framework total R156.2 million. The 2022/23 budget is R51.1 million. The Fund has a surplus which it will request to retain from National Treasury. Projects will be prioritised as per available funding for the financial year.

Discussion

Rev Meshoe asked about the R50 million donated to Cuba, and what was the outcome of the meeting between government and various non-profit organisations. ‘What process was used to determine the amount and was the money requested by Cuba’?

Ms T Msane (EFF) asked what the status was of the impact assessment requested by the Portfolio Committee. She said the ARF has done a very bad job at handling the Cuba donation and did not properly engage South Africans. The ARF needs to better engage South Africans and inform them about the work they are doing and why their work is important.

She asked how far is the implementation of SADPA, ARF failed to mention it in its annual performance plan, and there seems to be an effort to stall the implementation of SADPA. ‘Will there be concurrence between DIRCO and ARF’?

Response

Ms Matlhaku said the issue of Cuba is going through court processes so it is not finalised. In the meeting between government and non-profit organisations, plans are being put in place for that meeting to happen.  The donation to Cuba is part of the ARF’s diplomacy work.

On the impact assessment, the ARF has written to National Treasury, through the DG, requesting additional resources to conduct an impact assessment on all of the ARF’s projects. National Treasury has assisted the ARF previously on impact assessment funding and the ARF was currently waiting on their response.

Regarding SADPA, the Minister is engaging National Treasury and the Finance Minister submitted proposals to Minister Naledi Pandor on how to proceed and two proposals finance has proposed to amend the ARF act to include all elements that would be required to run an independent development agency and there is a proposal to change the name of the ARF to SADPA. There is also the option of starting a new public entity, but National Treasury advised against this since the ARF has elements of a three A public entity. The ARF is also aware that a government component was approved and proclaimed by the President in 2013 and the Minister of Finance advised in this regard that they are willing to support a proposal to the President to remove the registration as a government component. If the SADPA is registered as a government component it will not be able to maintain surpluses and will not be able to receive funds from partners. It would make it difficult to run a development agency. These proposals are being finalised and the DG will report back on this in the next meeting.

Concurrence will remain in the new development agency and will remain between the Minister of Finance and the Minister of International Relations as a control measure.

The Chairperson asked if this means the ARF will remain until the working processes are done.

 Ms Matlhaku confimed this.

Mr Dangor said the establishment of a new public entity must ensure the accountability issues are clearly set out. The new entity could have the Minister as the accounting officer and have a separate budget vote and have the CEO as de facto accounting officer. What needs to be avoided is having dual accountability without the responsibility, meaning the DG is responsible for the ARF but has no managerial oversight to change behaviour or patterns of the entity. These are the issues that are being discussed between the DIRCO and National Treasury. Whatever entity the DIRCO and National decide on needs to be based on sound and good governance principles and accountability is ensured. Once discussions are concluded it will be tabled to the Portfolio Committee.

Deputy Minister Mashego-Dlamini thanked the Committee and said she appreciated all the issues raised. She said the DIRCO will go back and look at all the issues that were raised by the Committee and bring it back to them.

The Chairperson thanked the DIRCO and the ARF for the effort they put into compiling the reports. He also thanked the Committee Members for their robust input and for taking their oversight responsibility serious. He thanked Ambassador Losi for the work she did as Acting DG. The Portfolio Committee looks forward to the changes and responses from the DIRCO by Friday so that all amendments can be made by Saturday.

Meeting Adjourned.

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