Presentation to the Select Committee DIRCO

2 The Department of International Relations and Cooperation derives its mandate from the Constitution of South Africa and the NDP vision which is further detailed in the MTSF provide an overall mandate and scope for all work done by national, provincial and local government and informs SA’s foreign policy The draft White Paper on South Africa’s Foreign Policy was approved by Cabinet and submitted to 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 and to table the SADPA Bill  Agenda 2063  review of the current legislative framework governing the department’s operations abroad, tabling the Foreign Service Bill  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 Shifting political ideological implications- The emergence of nationalistic and conservative governments reduced development aid to developing countries (0.4% drop in 2012) New trend in trade and economic patterns – Asia and the Middle-East surpassed Europe as SA’ number one trading partner -In two decades, trade with Asia and the Middle-East increased 19-fold from R40.2 billion in 1994 to R760.2 billion in In the same period, trade with Africa increased 35-fold from R11.6 billion to R385 billion -Europe remains 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, Egypt, Turkey, South Africa (CIVETS ), Indian Ocean Rim Association (IORA) SA attaches importance to its membership of BRICS -China is the second biggest economy in the world after the USA, while Brazil and Russia and India are placed 7th, 8th and 10th respectively -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 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

9 Global Trends that Impact on SA’s Influence Economic migration: More than half of global population is urbanised ( as compared globally, Africa accounts for only 40%) -There is an increased number of mega-cities in developing countries -However, infrastructure and the provision of service is lagging behind and has socio-economic and political implications. Regionalism: economies of scale, eroding sovereignty, protectionism vs cooperation for mutual benefit -This occurs while developing economies are moving, steadfastly, towards consumer-oriented economies

10 Global Trends that Impact on SA’s Influence The future role of global governance institutions (UNSC, BWI): Reform or Replace. - The impact of the global financial crisis led to increased voices for reform of international financial architecture

Overview of the MTEF allocation 1.In terms of government priorities of doing more with less, the allocation to the department over the medium term include Cabinet approved reductions of R335.3 million in 2015/16, R467.1 million in 2016/17, and R168.5 million in 2017/18, which the department has to effect on compensation of employees due to vacant posts, goods and services and the transfer to the African Renaissance and International Cooperation Fund. 2.The Department has proposed additional cost saving measures to unlock its fixed cost overhead expenditure items and mitigate the budget shortfall envisaged, including to accommodate some of the new priorities identified for implementation. 11

Overview of the MTEF allocation 3.In response to the budget reduction the department is implementing the following additional cost containment measures: a)Review of the organisational functional assessment for both Head Office and missions abroad b)Review of the provision of support services for the missions’ operations. c)Enhancing information and communications technology through modernising and implementation of an enterprise resource planning system. d)Implementation of property management strategy 12

Overview of the MTEF allocation 4.The 2015 MTEF allocation does not cater for the foreign exchange fluctuations as a result the department remains vulnerable to foreign exchange rate losses, which necessitates a review of how the foreign operations are supported. The department will address the shortfall through the adjustment estimates budget process. 13

Programme 1: Administration PurposeStrategic objectives Provide strategic leadership, management and support services to the department To manage resources efficiently and effectively through sound administration and good governance To implement effective HR management to ensure that adequate and sufficiently skilled resources are in place and that performance is monitored To provide effective training and research in support of departmental strategic objectives To establish an adequate, effective and efficient system of internal controls and corporate governance To establish a culture of risk management, governance and ethical behavior to ensure improved internal control environment and performance MTEF allocation (R’ million) 2015/162016/172017/

Programme 1 MTEF targets Key Result AreaMTEF Target ICTFinancial, HR and administration systems integrated Financial ManagementProcurement 100% aligned to Demand Management Plan 100 % compliance with 30-day payment Security252 fieldwork investigations for vetting per annum 36 security inspections, 36 security awareness sessions, 36 security audits Property ManagementTwo construction and 17 renovation projects completed Human Resource Management Improve turnaround times to meet the DPSA standards, 4 months to fill vacancies, grievances handled within 30 days and disciplinary cases finalized within 90 days Skills Development282 training programmes (94 per annum) Six training programmes to international participants 15

Programme 2: International Relations MTSF sub- outcome Strategic objectivesPurpose SA’s national priorities advanced in bilateral engagements To strengthen and consolidate SA’s political, economic and social relations through the outcomes of structured bilateral mechanisms and high-level engagements reflecting national priorities, the African Agenda and the Agenda of the South To promote relations with foreign countries MTEF allocation (R ’million) 2015/162016/172017/

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; 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 Key Result AreaAnnual targetMTEF Target Political engagements through structured bilateral mechanisms and high level engagements 34 BNC 58 high-level engagements 102 BNC 174 high-level engagements Economic diplomacy initiatives 112 trade and investment seminars 336 trade and investment seminars 126 engagements with Chambers of commerce 378 engagements with Chambers of commerce 64 engagements with targeted government ministries 192 engagements with targeted government ministries 86 high-level potential investors 258 high-level potential investors 67 tourism promotion events 201 tourism promotion events 18

Programme 3: International Cooperation MTSF sub-outcomeStrategic objectivesPurpose An equitable and just System of Global Governance To enhance international responsiveness to the needs of developing countries and Africa through negotiations and influencing processes in the Global Governance System towards a reformed, strengthened and equitable rules-based multilateral system Participate in international organisations and institutions in line with SA’s national values and foreign policy objectives MTEF allocation (R ’million) 2015/162016/172017/18 19

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 Sub-programme 3.1: Global Governance Ensure South Africa’s compliance with international law – -the provision of legal advise and opinions on issues relating to international law, e.g. extending the continental shelf to significantly increase South Africa’s territory, International Criminal Court, International Court of Justice, Law of the Sea etc

Sub-programme 3.2: Continental & Regional Cooperation MTSF sub-outcomeStrategic objectivesPurpose An economically integrated Southern Africa; Political cohesion within Southern Africa to ensure a peaceful, secure and stable Southern African region; A Peaceful, secure and stable Africa; A sustainable developed and economically integrated Africa To enhance the African Agenda To strengthen political and economic integration and development of SADC To participate and play active role in continental and regional structures to contribute and enhance efforts for sustainable development and peace and security MTEF allocation (R ’million) 2015/162016/172017/18 22

Sub -programme 3.2 Continental & Regional Cooperation South Africa will align its foreign policy engagements with 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 (Peace, Conflict, Reconstruction and Development (PCRD) initiatives -Promotion of Good Governance (APRM) & protection of Human Rights -Contributing to Socio-economic development ( implementation of the New Partnership for Africa’s Development (NEPAD)

Sub-programmes 3.3 & 3.4 South-South & North South Cooperation MTSF sub- outcomeStrategic objectivesPurpose Strong, mutually beneficial South-South cooperation & Beneficial relations with strategic formations of the North To strengthen and consolidate South-South relations by utilising membership and engagements with groupings of the South to advance South Africa’s foreign policy To advance and leverage national priorities, the African Agenda, and the Development Agenda of the South with the formations of the North To pursue cooperation among countries and groupings of the South and the development of common positions on political, economic, social and human rights issues and to harness emerging collective political and economic influence of countries of the South in pursuit of the Development Agenda. To pursue a developmental agenda approach with strategic formations of the North Focus: BRICS; IBSA; EU; TICAD MTEF allocation (R ’million) 2015/162016/172017/

Programme 3 Key Result AreasAnnual TargetMTEF Target Multilateral structures and process engaged in to enhance the responsiveness of the multilateral system to SA’s needs and needs of developing countries 21 multilateral meetings 100% approved requests for humanitarian assistance disbursed 100% of Legal Services rendered 80% resolutions, decisions, outcomes reflecting SA’s national interests AU structures and processSix AU structures Two PAP sessions Two APRM Summits 16 AU structures Six PAP sessions Six APRM Summits 100% election observer Missions SADC structures and process11 SADC structures33 SADC structures 25

Programme 3 Key Result AreasAnnual TargetMTEF Target South –South2 strategies 18 meetings and processes of organisations of the South Five strategies for SA’s engagement with identified formations 56 meetings and processes of organisations of the South North -SouthEight meetings and processes of formations of the North 24 meetings and processes of formations of the North 26

Programme 4 Sub-programme 4.1: Public Diplomacy Strategic objectivesPurposeFocus To create a better understanding and awareness of South Africa’s foreign policy through targeted public diplomacy partnerships and platforms Advance a positive projection of South Africa’s image through communication strategies on South Africa’s foreign policy positions and programmes nationally and internationally Media briefings, statements and opinion pieces Publications (Statutory publications as well as internal electronic publications Public participation programmes (PPP) MTEF allocation (R ’million) 2015/162016/172017/

Programme 4 Sub-programme 4.2: State Protocol Strategic objectivesPurposeFocus To provide professional State Protocol services through the facilitation of state events, visits and diplomatic accreditation Provide a professional State Protocol service to heads of state and government and designated dignitaries and render advisory services to various stakeholders Protocol services for state and ceremonial events, incoming and outgoing state visits Immunities and privileges provided for the Diplomatic Corps 28

Programme 4 Key Result areaAnnual targetMTEF target Media briefings, media statements, public participation programmes (PPP), publications 18 Media briefings 160 media statements 12 PPPs 67 publications 54 Media briefings 480 media statements 36 PPPs 201 publications Protocol Services & diplomatic immunities and privileges, diplomatic passports and appointment of foreign and SA heads of mission 100% as per request 29

PROGRAMMES FINAL APPOPRIATION R’000 EXPENDITURE R’000 VARIANCE R’000 %SPENT ADMINISTRATION 1,346,7801,238, ,41092% INTERNATIONAL RELATIONS 3,122,923 3,122, % INTERNATIONAL COOPERATION 485, , % PUBLIC DIPLOMAC&PROTCOL SERVICES 286, ,67996% INTERNATIONAL TRANSFERS % TOTAL 6,104,324 5,984, ,62098% 30 Vote Expenditure as at 31 March 2015

31 Vote Expenditure as at 31 March 2015 STANDARD ITEMS FINAL APPOPRIATION EXPENDITURE VARIANCE % SPENT R’000 COMPENSATION OF EMPLOYEES % GOODS AND SERVICES % INTEREST AND RENT ON LAND % TRANSFERS AND SUBSIDIES % DEPARTMENTAL AGENCIES % FOREIGN GOV & INTER ORG % HOUSEHOLS (H/H) % PAYMENT OF CAPITAL ASSETS % BUILDINGS & OTHER STRUCTURES % MACHINERY & EQUIPMENT % PAYMENTS %

2014/15 Expenditure Preliminary Outcome Programme 1: Administration The underspending is as a results of the following: 1.The Hague project was delayed due to the following:  the request from the contractor to increase the contract cost by more than 30 per cent as allegedly attributable to the fact that they have under quoted the adjudicated bid.  the uncovering of asbestos during the demolition phase, which the contractor declared a dispute and subsequently served notice to cancelled the contract with cost 32

2014/15 Expenditure Preliminary Outcome 2.Dar es Salaam was delayed due to:  a dispute with the service provider on payment of the advance payment (deposit) by the department which led to the suspension of the project by the services 3.Lilongwe was delayed due to:  Unexpected flooding that took place over a period of 22 days of which the construction was called off during that period. 33

2014/15 Expenditure Preliminary Outcome 4.Slow spending was also as a result of the insufficient cash flow available to meet the department's operational needs due to the impact of the foreign exchange rate fluctuation. The unspent operational budget has been shifted to cover overspending in Programme 2 and 5. 34

2014/15 Expenditure Preliminary Outcome Programme 2: International Relations The programme reported an expenditure of R3.1billion. The programme had recorded an overspending as a result of depreciation of the Rand against other major currency. As a consequence the expenditure for programme 2 has exceeded the budget. The overspending was covered from the unspent funds of Programme 1 due to insufficient cash flow available to meet the department's operational needs due to the impact of the foreign exchange rate fluctuation. 35

2014/15 Expenditure Preliminary Outcome Programme 3: International Cooperation The expenditure for the programme was R 485 million. The underspending is as a result of the office accommodation for PAP that has not be concluded. Programme 4: Public Diplomacy and Protocol The underspending is as a result of late claims received from partner department for the 2014 Presidential Inauguration activities. The amount has been requested for roll over. 36

2014/15 Expenditure Preliminary Outcome Programme 5: International Transfers Programme 5 had an overspending as well resulting from foreign exchange rates losses in relations to the payment of membership fees and South Africa's compulsory assessment contribution to the international organisations. The overspending was also covered from unspent funds of programme 1 and 4 resulting from insufficient cash flow available to meet the department's operational needs due to the impact of the foreign exchange rate fluctuation. 37

2015 Budget allocation per programme 38 Programmes 2015/162016/172017/182014/15 – 2017/18 MTEF Average annual growth % of expendit ure R ‘000% Administration %24.1% International Relations % 51.1% International Cooperation %8.0% Public Diplomacy and State Protocol %4.5% International Transfers %12.3% Total %100.0%

2014 Budget allocation per Economic Classification 39 Econ. Classification 2014/15 OUTCOME 2015/162016/172017/18 MTEF% OF 2015 BUDGET R ‘000 Compensation of Employees % Goods and Services % Transfers and Subsidies % Payments for Capital % Total %

2014 ACTUAL EXP. & 2015 MTEF ALLOCATIONS 40

2015 MTEF Baseline assessment /162016/172017/18 Approved baseline Compensation of employees RSA salaries1,218,2361,285,239 1,362,354 Foreign allowance 671, ,551744,497 Locally Recruited Personnel Salaries and benefits 636, , ,354 Compulsory goods and services Transfers and Subsidies Capital Expenditure: Building Recapitalisation Operational expenditure Total Allocated

2015 MTEF Compulsory Goods & Services / / /18 a)Lease payments 898,858 1,036,332 1,099,727 b)- Schooling fees 89,648 96,457 99,878 c)-Special Travelling Privileges 42,890 48,799 57,230 d)- PPP payments 210, , ,834 e)- Municipality fees 85,998 88,560 95,173 f)- Computer services ( Bandwidth) 130, , ,800 g)-Security contracts at missions 28,353 36,915 39,800 h)- Medical services 28,500 32,300 37,468 i)- Municipal charges for diplomatic missions in South Africa 28,900 32,400 37,900 j)-Transfer costs including insurance 94,303 l)-Other Computer services(Transversal systems and applications) 106, , ,680

African Renaissance and International Cooperation Fund

STRUCTURE OF THE PRESENTATION 1.Introduction 2.The utilisation 3.Programme performance plan 4.MTEF Allocation 5.Conclusion

45 1. Introduction 1)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).

46 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

47 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 timeously To contribute to human resource development Develop and provide identified training programmes 100% of approved disbursement to support capacity-building processed timeously 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 timeously

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 timeously To support cooperation between South Africa and other countries Implement bilateral and trilateral cooperation agreements 100% of approved disbursement for cooperation processed timeously To contribute to PCRDSupport PCRD efforts on the continent 100% of approved disbursement for PCRD processed timeously

4. MTEF Allocation 2015/16 R’ /17 R’ /18 R’000 Indicative baseline Reduction Appropriated funds

5. Conclusion During 2014/15 the Fund implemented the following: a)Appointed full time secretariat for a period of six months as part of the transitional arrangements. b)Adopted terms of reference for Advisory Committee as well as Secretariat. c)The Accounting Officer appointed the audit and risk committees. d)Developed an operational framework and adopted DIRCO policies and procedures relevant to ARF.

Thank you