Presentation to the Select Committee on Trade and International Relations DIRCO 11 May 2016

2 The Department of International Relations and Cooperation is in the process of tabling a Bill which gives effect to the mandate derived from the Constitution of South Africa The draft White Paper on South Africa’s Foreign Policy was approved by Cabinet and is currently with Parliament Under MTSF Outcome 11, Government seeks to “Create a better South Africa and contribute to a better and safer Africa in a better world” through: –Enhanced African Agenda and sustainable development –Regional integration –Reformed global governance institutions, and –Trade and investment INTRODUCTION

Therefore the Department’s spending focus over the medium term will be on:  sustaining economic and political relations,  participating in the global governance forums,  enhancing operational capacity by strengthening policy and coordination in relation to outgoing South African development cooperation through the operationalization of SADPA  Pursuit of Agenda 2063  Processing of Foreign Service Bill through Parliament  undertaking of various infrastructure projects, and implementing the property management strategy 3

4 In its execution of SA’s foreign policy DIRCO is informed by SA’s global stature where SA: is a respected, active and responsible global citizen. -hosts the second largest number of foreign representation in the world and has a current global footprint of 125 Missions -Is regarded as a champion for protection and promotion of human rights -Advocates for disarmament and the peaceful resolution of disputes -Place Africa central in its Foreign Policy which forms the basis for cooperation with countries of the South and the North. - Champions cooperation and partnership over competition in the global arena. South Africa’s Current Global Stature

South Africa’s Global Footprint Missions per Region Africa Bilateral – 46 Africa Multilateral – 1 Americas & Caribbean – 17 Europe – 27 Asia & Middle East – 32 Multilateral -2 Total: 125 5

6 Rise in terrorism – decentralised and splinter groups make it difficult to fight the increasing terrorist attacks Slow economic growth – global economy expected to grow 3,2% in and developing country growth 5,3% in the same period Currency fluctuations and low oil prices- countries dependent on oil exports becoming increasingly inward looking Shifting political ideological implications- The emergence of nationalistic and conservative governments New trend in trade and economic patterns – Asia and the Middle- East surpassed Europe as SA’ number one trading partner -Europe remains one of SA’s main strategic trading block while it continues to recover from the impact of the global financial crisis The changing global environment impacts the execution of DIRCO’s mandate

The Changing Global Environment Growing influence of new formations and regional groupings: Brazil, Russia, India, China, South Arica (BRICS), Group of 20,(G20),Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa (CIVETS ), Indian Ocean Rim Association (IORA) -BRICS countries share a common vision to be pursued through economic cooperation, sharing of technical expertise, knowledge and experience to address their own domestic and international challenges -Lack of adequate infrastructure and industrial capacity obstacle in intra-African regional trade. 7

The Changing Global Environment Growing impact of non-state actors and social movements: growing social disparities, economic and financial volatility, insecurity and scarce resources New global opportunities and frontiers: The ‘New Economies’ - the Blue Economy, the Green Economy and the Knowledge Economy; exploration and utilisation of outer space (SKA project, satellites for communication, defence and environmental surveying) and advances in technologies Operation Phakisa seeks to harness and leverage some of these sectors as part of NDP implementation 8

Programme 1: Administration Strategic Objective2016/17 TargetMTSF Target Effective management of resources through sound administration and good governance Payments within 30 days Clean administration Compliance matters, i.e. Demand Management Plans, financial statements Asset Management for state owned enterprises Effective HR management to ensure that adequate and sufficient skilled resources are in place and that performance is monitored Effective HR management, i.e. recruitment, grievances, disciplinary matters Reduce vacancy rate to 10% Integrated departmental systems Fully integrated systems Accredited training, research and institutionalized mediation capacity 81 training programmes Two PCRD and mediation capacity building Training programmes meet accreditation standard Principals informed of unfolding foreign policy developments Interpreting & translations on request Four research papers 9

Programme 2: International Relations Bilateral engagements are the basis for strengthening political and economic relations and provide the platform to advance national priorities and to lobby for support for multilateral engagements and common positions The performance indicator on political work is predicated on the implementation of Structured Bilateral Mechanisms (BNCs, JCCs, JNCs and others) and reciprocal High-Level visits The performance indicator on economic diplomacy measures the work that Missions undertake to increase value added exports; attract Foreign Direct Investment to priority sectors (NGP and IPAP); promote tourism; encourage development cooperation; promote the removal of non tariff barriers through:  Hosting or participating in trade seminars and tourism promotion,  Engagements with chambers of commerce, high level investors, relevant government ministries

Programme 2: International Relations Strategic Objectives 2016/17 TargetMTSF Target South Africa’s political, economic and social relations strengthened and consolidated Utilise 48 structured bilateral mechanisms and 46 high level visits in pursuit of South Africa’s national interest, particularly the five national priorities and the nine point plan and pursuing the interest of the continent and the global South Outcomes of the structured mechanisms and high level visits to contribute towards the five national priorities and the nine point plan Economic diplomacy initiatives, engagements, networking opportunities and identified processes utilised in order to identify and explore opportunities in the areas of the five national priorities and the nine point plan:  112 trade and investment seminars  126 engagements with Chambers of commerce  64 engagements with targeted government ministries  86 high-level potential investors  67 tourism promotion events Outcomes of economic diplomacy initiatives to contribute to economic development and growth 11

Programme 3: International Cooperation Sub-programme 3.1: Global Governance South Africa is committed to multilateralism and a rules-based international order and to this end participates and plays an active role in all for a of the United Nations system and its specialised agencies, funds and programmes With particular focus on peace and security, sustainable development (social, economic and environmental protection) and promotion of human rights and humanitarian affairs, international crime and international law -Advocate for UNSC reform to curb unilateral actions taken outside the United Nation’s peace and security mechanisms in various regions

Programme 3: International Cooperation Strategic Objective2016/17 TargetsMTSF Target To advocate for the reform and strengthening of the global system of governance and its effectiveness, fairness and equity, whiled defending multilateralism and international rule of law, in the advancement of peace, prosperity and social justice Negotiated and influenced the outcomes of 25 multilateral meetings and processes to reflect South Africa’s national interests on peace and security, sustainable development (social, economic and environmental), human rights and humanitarian affairs, international crime and international law Remain an influential member of the international community Outcomes of the identified meetings and processes reflecting SA’s national interest 13

Sub -programme 3.2 Continental & Regional Cooperation South Africa will promote the implementation of Africa’s Vision 2063 to contribute to the socio-economic development of the African continent. South Africa will continue to focus on implementation of the continental integration agenda, regional economic integration and finding African Solutions to African problems through: -Strengthening the AU and its structures -Contribution towards entrenchment of democracy (election observations) -Participating in peace missions, and PCRD (Peace, Conflict, Reconstruction and Development) initiatives -Promotion of Good Governance (APRM) & protection of Human Rights -Contributing to socio-economic development through the implementation of the New Partnership for Africa’s Development (NEPAD)

Programme 3 (Continental Cooperation) Strategic Objectives 2016/17 TargetMTEF Target To consolidate the African Agenda Promote democracy, good governance, human rights, peace and security on the continent in pursuit of Africa’s Vision 2063 through participation in:  Four AU & AUPSC meetings  Two PAP sessions  Two APRM Summits  Two ACHPR sessions  Two NEPAD Summits 80% resolutions, decisions, outcomes reflecting SA’s national interests and in support of democracy, good governance, human rights, peace and security and aligned to Africa’s Vision

Programme 3 (South – South & North – South) Strategic Objective2016/17 TargetMTSF Target South relations strengthened and consolidated 2 strategies for SA’s engagement Participate in 19 identified meetings and processes of organisations of the South in pursuit of South Africa’s national interest, particularly the five priorities and the nine point plan and pursuing the interest of the continent Five strategies for SA’s engagement with identified formations Outcomes of the identified meetings and processes reflecting SA’s national interest To leverage relations with the North in advancement of national and continental priorities, as well as the interest of the South Utilise four identified meetings and processes of formations of the North in pursuit of South Africa’s national interest, particularly the five priorities and the nine point plan and pursuing the interest of the continent and the global South Outcomes of the identified meetings and processes reflecting SA’s national interest 16

Programme 4 Sub-programme 4.1: Public Diplomacy Strategic objectives2016/17 targetMTSF Target To create a better understanding and awareness of South Africa’s foreign policy through targeted public diplomacy partnerships and platforms Implement Public Diplomacy Strategy utilising targeted partnerships and platforms:  160 media statements  10 opinion pieces  67 publications  18 media briefings  12 Public Participation Programmes  Photography services and  speeches Enhance understanding and awareness of South Africa’s foreign policy 17

Programme 4 Sub-programme 4.2: State Protocol Strategic objectives 2016/17 targetMTSF Target To provide professional State Protocol services through the facilitation of state events, visits and diplomatic accreditation Providing protocol and consular services on request to service:  Principals  Three spheres of government  Resident foreign diplomats (diplomatic immunities & privileges)  South African Citizens abroad (consular services)  South African Citizens whishing to use SA issued documents abroad, e.g. certificates (legalisation services) Proved 100 % of requested protocol and consular services 18

MTEF ALLOCATION 19 1.The Department received its MTEF allocation letter which took the following areas into consideration: i.Greater alignment between the allocation of resources and the strategic objectives of government ii.Shifting resources away from less urgent priorities or non-performing programmes iii.Political decisions on the alignment of resources across functions iv.Achieving an appropriate balance between capital and current (operational) spending v.Strengthen the implementation of the cost-containment guidelines that limit spending on non-essential items

DIRCO SITUATION ANALYSIS 20 ROOT CAUSES Foreign exchange fluctuation Unfunded priorities IMPLICATIONS Under achievement of targets as per the APP Incur unauthorised expenditure Operating an overdrawn accoun t CHALLENGES AND THREATS Budget cuts/baseline reduction Cash Management Cash liquidity

MTEF ALLOCATIONS: 2016/ / /172017/182018/19 R' MTEF ALLOCATIONS BASELINE INCREASES: Compensation of employees: 2015 public sector wage settlement BASELINE REDUCTIONS ( ) ( ) ( ) Locally recruited staff establishment - ( ) ( ) ARF ( ) ( ) ( ) Use of satellite mission stations ( ) ( ) ( ) Goods and services: Cost containment measures ( ) ( ) ( ) Compensation of employees reduction - ( ) ( ) Budget transfer - DHA ALLOCATED BUDGET

Baseline assessment R’ / /17 Approved baseline 6,510,854 5,888,651 Compensation of employees 2,980,7312,767,354 Compulsory goods and services 2,070,6021,930,249 Lease payments: missions 1,008,723973,803 Lease payments:HO including PPP 309,507318,922 Education allowance 132,62297,007 Foreign Municipality 122,27893,797 Municipal charges for diplomatic missions in South Africa 38,72132,400 Medical services 43,126 36,000 Computer services including Bandwidth 297,537268,122 Transfer costs including insurance 84,56277,600 33,52632,598 Transfers and subsidies 586,240513,842 Capital Expenditure: Building 209,285281,136 Recapitalisation 154,0378,831 Operational expenditure 509,959387,239 22

PLANNED MEASURES TO INCREASE OPERATIONAL BUDGET 23 1.Planned to reduce operating leases abroad: i.Fast track the acquisition of properties ii.Utilized the available land for construction iii.Revamp and rehabilitate unoccupied properties abroad for occupation iv.Furnished apartments 2. Planned to reduce transfer cost: i.Insurance to be carried by the third party ii.Insured items not to be included in the third party; i.e motor vehicle

24 BUDGET ALLOCATION Programmes 2015/2016 Adjusted Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Administration 1,381, International Relations 3,506, International Cooperation 525, Public Diplomacy and Protocol 363, International Transfers 734, Total 6,510, Economic Classification Compensation of employees 2,986, Goods and services 2,575, Transfer payments 740, Payments for capital assets 209, Total 6,510,

25 Programme 1: Administration Programme 1 Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Ministry 6, Departmental Management 16, Audit Services 19, Financial Management 128, Corporate Management 695, Diplomatic Training, Research and Development 68, Foreign Fixed Assets Management 149, Office Accomodation 296, Total 1,381,

26 Programme 1 – Econ Classification Programme 1 - Econ Class Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Econonic Classification Compensation of employees 397, Goods and services 807, Transfer payments 1, Payments for capital assets 175, Total 1,381,

27 Programme 2: International Relations Programme 2 Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Africa 1,182, Asia and middle east 837, Americas and caribbean 585, Europe 900, Total 3,506,

28 Programme 2 – Econ Classification Programme 2 - Econ Class Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Compensation of employees 2,127, Goods and services 1,344, Transfers and subsidies 4, Payments for capital assets 30, Total 3,506,

29 Programme 3 – Econ Classification Programme 3 - Econ Class Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Compensation of employees 321, Goods and services 201, Transfer and subsidies Payments for capital assets 2, Total 525,

30 Programme 3: International Cooperation Programme 3 Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Global system of governance 283, Continental cooperation 154, South-south cooperation 3, North-south dialogue 83, Total 525,

31 Programme 4: Public Diplomacy Programme 4Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Public Diplomacy Total Economic Classification Compensation of employees Goods and services Transfer and subsidies Payments for capital assets Total

32 Programme 4: State Protocol & Consular Services Programme 4Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 State Protocol & Consular Services Total Economic Classification Compensation of employees Goods and services Transfer and subsidies Payments for capital assets 56 Total

33 Programme 5: International Transfers Programme 5Prog Appropriation 2016/17 Budget allocation R’000 Indicative baseline 2017/18 R’000 Indicative baseline 2018/19 R’000 Departmental agencies 154, Membership contribution 580, Total 734, Economic Classification Transfer payments 734, Total 734,

UNFUNDED MANDATES 34 1.COL Adjustment 2.AU assessment 3.ICT Back Office refresh 4.Full funding of the new structure

African Renaissance and International Cooperation Fund Annual Performance Plan 2016/17

STRUCTURE OF THE PRESENTATION 1.Introduction 2.The utilisation 3.Programme annual performance plan 4.Committed funds 5.MTEF Allocation Available funds 7.Conclusion

37 1. Introduction The African Renaissance and International Co-operation Fund was established in terms of Section 2(1) of the African Renaissance and International Co-operation Fund Act, 2000 (Act No. 51 of 2000) and subject to direction of the Minister under the control of the Director-General (DG).

38 The Minister must, in consultation with the Minister of Finance, establish an Advisory Committee consisting of the following members: The Director-General or the delegate of the Director-General; Three officers of the Department appointed by the Minister; and Two officers of the Department of Finance appointed by the Minister of Finance. The Advisory Committee must make recommendations to the Minister and the Minister of Finance on the disbursement of funds through loans or other financial assistance. 2. The Utilisation Of Fund

39 Loans or other financial assistance are granted in accordance with an agreement entered into by the country in question and the Minister of International Relations and Cooperation (hereafter referred to as the Minister). Assistance granted is subject to such terms and conditions as may be agreed upon by that country and the Minister, acting in each case in consultation with the Minister of Finance. 2. The Utilisation Of Fund

3. Programme Performance Indicators Strategic objective OBJECTIVE STATEMENT TARGET To promote democracy and good governance Support the holding of democratic elections in identified countries on the continent 100% of approved disbursement to support democracy and good governance processed To contribute to human resource development Develop and provide identified training programmes 100% of approved disbursement to support capacity-building processed To support socio-economic development and integration Support the implementation of socio- economic development and integration projects 100% of approved disbursement to support socio-economic development and integration processed

3. Programme Performance Indicators STRATEGIC OBJECTIVE OBJECTIVE STATEMENT TARGET To provide humanitarian assistance and disaster relief Assist countries that are in need of humanitarian assistance and disaster relief 100% of approved disbursement for humanitarian assistance processed To support cooperation between South Africa and other countries Implement bilateral and trilateral cooperation agreements 100% of approved disbursement for cooperation processed To contribute to PCRDSupport PCRD efforts on the continent 100% of approved disbursement for PCRD processed

4. Committed Funds R’000 Committed funds – existing multi year projects Democracy and good governance Socio-economic development and integration Humanitarian assistance Human resource development Cooperation between South Africa and other countries in particular African countries Prevention and resolution of conflict The committed funds consist of multi year projects that are currently being implemented.

5. MTEF Allocation 2016/17 R’ /18 R’ /19 Indicative baseline Reduction Appropriated funds

Available Funds 2016/17 R’000 Appropriated funds31 Accumulated Surplus Available funds Section 7(2) of the ARF act of 2000 no 51 “Any unexpended balance in the Fund at the close of any financial year must be carried forward as a credit in the Fund to the next succeeding financial year”.

7. Conclusion The reduction in appropriated funds is due to the cost containment measures implemented by the National Treasury. The ARF has an accumulated surplus of R 1, 7 billion that will enable it to carry out its mandate. DIRCO has completed all the steps for establishment of SADPA - the business case has been approved, draft Partnership Fund for Development Bill has been drafted and the proposed institutional arrangements in place. We are in the process of finalizing institutional arrangements with National Treasury. Once this is finalized, the draft bill will be re-submitted to Cabinet for approval to Gazette for Public comment.

Thank you