DIRCO & African Renaissance Fund Quarterly Performance Reports

Meeting report

The Chairperson welcomed everyone to the briefing by the Department of International Relations and Cooperation (DIRC) and the African Renaissance Fund on their quarterly reports for the fourth quarter of 2018/19. She invited the head of the delegation to introduce his team.

Mr Kgabo Mahoai, Director-General, DIRCO, introduced his delegation. The delegation comprised of amongst others Mr Caiphus Ramashau, Chief Financial Officer (CFO), Ms Delores Kotze, Chief Director: Planning, Monitoring & Evaluation, and Ms Lerato Sempo African Renaissance Fund Secretariat.

Mr T Mpanza (ANC) noted the presence of Mr Caiphus Ramashau, the Department’s CFO, and sought clarity about the status of the investigations involving him.

Mr Mahoai clarified that the matter which arose last year, involving him was concluded in May 2019. Mr Ramashau was found not guilty on all charges levelled against him.

Mr D Moela (ANC) suggested that the Committee be provided with a formal update on the CFO’s status. He proposed the CFO be excused from the meeting pending formal communication by the Department. 

Ms T Msane (EFF) agreed and added that as per minutes of the last meeting, the Committee resolved that the DG would give an update on the CFO’s status by way of a formal report.

Members agreed.

The Chairperson excused CFO Ramashau from the meeting pending formal correspondence from the Department on his status. The Committee would not want to run its affairs as if it was a kangaroo court.

Mr Mahoai said the Department will avail the said report as soon as possible. He apologised for not having formally communicated prior.

Briefing on Department’s Quarterly Report
Mr Mahoai summarised the Department’s performance during the period under review. As at 31 March 2019, the Department recorded expenditure amounting to R 6.4 billion which represents 97% of the appropriated budget of R 6.553 billion. The Department spent 104% on compensation of employees (CoE) due to CoE ceiling which did not cover the filled posts. Spending under goods and services was 95% due to favourable exchange rates. Spending under transfer and subsidies was 98% mainly due to the transfer payment for the South African Development Partnership Agency (SADPA) which was not paid due to its non-operationalisation. Spending under capital assets was 29% due to capital project that has been put on hold. As at 31 July 2019, the Department had finalised its 2018/19 financial year audit and received a qualified audit opinion, on two major areas, namely; asset and cash management as well as material findings on supply chain management. Out of the 126 countries that the Department runs operations in, some of them do not have bank accounts hence the flagging by the Auditor-General. He added the Department had revised its audit turn-around strategy and the scope was as follows: identifying root causes; making recommendation of the appropriate remedial action; and developing an audit implementation plan within the short to medium-term.

Ms Kotze said the Department’s performance information reflects the achievement of targets in the 2018/19 Annual Performance Plan. Bilateral political and economic engagements provide an important basis for the strengthening of political, economic and social partnerships. South Africa’s national interest is pursued through engagements such as structured bilateral mechanisms, high level visits and various economic diplomacy initiatives undertaken at the missions abroad. This resulted in an increase in the sales of manufactured value-added exports from the Industrial Policy Action Plan (IPAP) priority sectors to the value of R408 million. The total value of commitment in the investment pipeline amounted to R12 billion.

Spending for the fourth quarter increased at an average rate of 4% as compared to the same period in 2017/18. The increase in expenditure trend was mainly on the below cost drivers which is based on annual escalations of: compensation of employees; foreign municipality; finance leases (PPP) and other office accommodation in South Africa. The expenditure on the following cost drivers reduced in 2018/19: accommodation and office leases at missions due to revision of rental norms and vacant posts; and schooling allowance due to vacant posts abroad. On the Vote Expenditure analysis, total expenditure for the Department for the fourth quarter amounted to R1.8 billion or 27.1% of the appropriation. Expenditure was 11.3% higher than projected expenditure for the period.

For Programme 1 (Administration): total expenditure for the fourth quarter amounted to R483.9 million or 32.0% of the programme’s total appropriation. Expenditure was 22% higher than what had been projected, mainly due to the following: the delay in the receipt of invoices for office accommodation leases for United Nations Developmental Programme (UNDP) and African Union Organs; and the high spending on unitary fees for head office building occasioned by the delay in verification processes of previous months claims that were only concluded in March 2019.

For Programme 2 (Foreign relations): total expenditure for the fourth quarter amounted to R821.9 million or 24.3% of the programme’s total appropriation. Expenditure was 38.1% higher than what had been projected due to the Department exceeding the compensation of employees ceiling that was implemented by National Treasury. Compensation of employees ceiling was less than the filled positions.

For Programme 3 (International Cooperation): total expenditure for the fourth quarter amounted to R136.9 million or 26% of the programme’s total appropriation. Expenditure was 26.1% higher than what had been projected, mainly due to the Department exceeding the compensation of employees ceiling that was implemented by National Treasury. Compensation of employees ceiling was less than the filled positions.

For Programme 4 (Public Diplomacy & State Protocol): total expenditure for the fourth quarter amounted to R71.4 million or 20.2% of the programme’s total appropriation. Expenditure is in line with the projections.

For Programme 5 (International Transfers): total expenditure for fourth quarter amounts to R264.3 million or 34.1% of the Programme’s total appropriation. Expenditure was 37.7% lower than what had been projected, mainly due to 2019 assessed membership contribution for African Union that was paid in the second quarter of the financial year.

African Renaissance Fund quarterly report
Ms Sempo took the Committee through the ARF’s performance and financial report. 100% of requests had been reviewed during the obtaining period as follows: project proposal to the ARF for assistance for the Zanele Mbeki Development Trust to sustainably operate the African Women in Dialogue Programme for 5 Years (2019-2023); Project Proposal to the ARF for funding assistance to deploy a South African expert to Juba, South Sudan to serve on the Independent Boundaries Committee; and project proposal to the ARF for funding assistance with participation in the SADC Electoral Observation Mission, 2018/2019 and 2019/2020.

On democracy and good governance, three disbursements were processed and approved to support these causes as follows: payment of R1.5 million for South African Intervention and contribution to the Kingdom of Lesotho Peace Process; payment of R6.5 million to support the presidential Election in Madagascar; and payment of R279 769 for South African participation in the AU Election observer mission in Madagascar and DRC. The three project proposals reviewed in quarter four, had subsequently been approved in quarter one of 2019/20. South Africa’s contribution to the Madagascar election was warmly received. A peaceful and politically stable Madagascar presents economic opportunities for South Africa, as well as the region as a whole, through increased bilateral trade and investment. The World Food Programme and the UN Women South Africa Multi-Country Office have been implementing a joint programme on capacity-building supported by South Africa’s eSwatini contribution. The programme aims to enhance the capacity of women farmers to manage and grow their businesses, increase their income and create sustainable jobs and livelihoods.

Discussion
Mr X Nqola (ANC) welcomed the briefing and commented on the Department’s audit status as per the Auditor-General’s audit opinion. He referred to the New York project and it being mired by maladministration allegations. As the matter was before the courts and the allegations were still to be tested, the sub judice rule applies such that the Committee could not discuss it extensively. He suggested the Department furnish the Committee with a formal report on this. He made reference to a 15 March conference on the conflict in the Western Saharan region. South Africa’s solidarity with the people of that region was reaffirmed during the conference. The reaffirmation ought to be emphasised as the support from the international community is crucial. He asked about progress on the Israel-Palestine dispute. South Africa needed to be consistent in its support of those fighting for their freedom.

Mr D Moela (ANC) said it was problematic that some diplomatic missions were having to make do with cash transactions rather than using banking systems. This clearly presented an array of security challenges. On unmet targets, what were the mitigating factors as these were not explained in the report? Was the Department paying performance bonuses?

Rev K Meshoe (ACDP) asked whether countries benefiting from ARF were African. What were the minimum requirements to apply for ARF? He wanted to know the number of officials sitting on the ARF committee.

Ms Msane appreciated the presentation and indicated there has to come a time when the Committee would not tolerate excuses for documents not sent to Members timeously. It is disarming for Members when relevant information is not made available on time. Referring to the AG’s audit opinions, how was it possible that the Department could operate without an up to date asset register?  She wanted the names of countries where SA’s diplomatic missions were using cash or cash equivalents for their day-to-day operations? She sought clarity about the relationship between ARF and the Zanele Mbeki Foundation.
Large sums of money were being spent on compensation of employees, for incompetent people in some cases. This was a case of poor accountability which could not be tolerated and should be rectified. She identified the absence of deadlines for commitments being made by the Department as a challenge that had to be corrected.

Mr M Chetty (DA) asked how much cash payments by SA’s diplomatic missions amounted to as well as the security cost of using cash payments. He believed this must stop forthwith. He asked for the number of disputed invoices and their cash value.

Mr D Bergman (DA) noted that the Fifth Parliament’s Committee spoke about the Foreign Missions Bill. He wanted to get a sense of SA’s diplomatic missions’ personnel, particularly information on qualifications, experience and tenure.

Mr B Nkosi (ANC) identified the need for a clear operations and governance roadmap for the ARF. What could be done to ensure there will be no further regressions and people are held accountable for their actions? He asked about the Department’s asset acquisition policy and the capacity to implement it.

The Chairperson said the Department had to give a comprehensive response to questions relating to cash payments by diplomatic missions. Why was there no capacity building programmes undertaken by the Department? The New York matter was sub judice and hence would not be discussed at this stage. However, the New York deployees must be removed as they were compromising bilateral relations between USA and South Africa. Discussions should be had with the Minister on this. She noted the promotion of SA as an investment destination, identified as a target by the Department. Why was there no mention of Brand SA, which has this target as its foundational mandate? Brand SA should take centre-stage in the promotion of SA as this is their core mandate.

Ms Kotze replied that the Department was working closely and together with Brand SA and Tourism SA as well as other national departments in promoting the country. On management of the Performance Management & Development System (PMDS), the Department was busy with moderation processes following the audit opinions from the AG. The Department was also in the process of phasing out performance bonuses due to financial constraints as per government directive.

Ms Sempo said it was not necessarily only African countries that were beneficiary of the ARF. The selection of beneficiaries is informed by SA’s foreign policy objectives. For instance, Cuba, a Latin American country, was also a recipient of the fund. The ARF advisory committee is composed of six officials and chaired by the DG of DIRCO. The committee advises the Ministers on the basis of set objectives. The Zanele Mbeki Foundation was an implementing agent and was not necessarily being paid any money. Allocations are made towards capacity-building periodically, but none were committed during the quarter under review. On SADPA, the progress to-date was that a first gazette was dispatched and the expectation was the Minister, in consultation with Treasury and the Department of Public Service and Administration, will gazette its operationalization soon. The operationalization would be done parallel to the drafting of the SADPA Bill.

Mr Mahoai highlighted that diplomatic missions transacting in cash were in countries such as Sudan and Iran, where banking systems are defunct. To reach such destinations and defray expenses, funds are sent to a nearby country and collected periodically as and when the need arises. The Committee will be furnished with further details on this by way of a written report. The Middle East has grown volatile exponentially and there were tensions in the peace process. The current trajectory of events in the Israel-Palestine conflict were that there has been a systematic erosion of the possibility of having a viable two-state settlement. The Committee could call the Department to explain this further in future. The rest of the information asked by Members will be availed in writing. 

The Chairperson said the Department would be expected to provide the Committee with its assets register, turnaround and property management strategy, and the rest of the responses to Members’ questions in writing, within a week. She assured the Department that the Committee’s oversight during this term will be robust. She thanked everyone for the engagements.

The meeting was adjourned.