Presentation to the Portfolio Committee

DIRCODIRCO

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Situation analysis• South Africa’s engagement in the international sphere

has been on the increase since 1994; and can be attributed to:– SA’s unique international profile which evolved from

its liberation from Apartheid– The effects of globalisation– The changing nature of diplomacy & international

relations– The numerous benefits that result from international

relations• This increased engagement is placing severe pressure

on resources, policy and administrative coordination

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• Shift in global political, trade and economic patterns – center of gravity moving from traditional ‘North’ to ‘South’.

• Growing influence of new formations: Brazil, Russia, India, China, South Arica (BRICS), GROUP OF 20,(G20) ,Colombia, Indonesia, Egypt, Turkey, South Africa (CIVETS ), Indian Ocean Rim Association (IORA)

• 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 advanced in technologies.

The Changing Global Environment

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Global Trends that Impact on SA’s Influence

• A new transnational resource agenda (scarce resources fuelling tensions, protectionism and populism).

• Changing nature of conflict: internal armed conflict with regional dimensions; deployment of new technologies (robots, drones, cyber warfare, spy satellites);

• Shifting demographics: effects of global population growth, aging populations (the North, China) and youth bulge (Africa)

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Global Trends that Impact on SA’s Influence

• Economic migration: rapid urbanisation, stress on infrastructure and service delivery, social costs, political implications.

• Regionalism: economies of scale, eroding sovereignty, protectionism vs cooperation for mutual benefit.

• The future role of global governance institutions (UNSC, BWI): Reform or Replace.

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• SA has moved from being the “skunk of the world” to being a respected, active and responsible global citizen.

• South Africa currently hosts the second largest number of foreign representation in the world and has a current global footprint of 125 Mission abroad plus Gaza, covering over 180 countries.

• SA has consistently championed human rights, disarmament and the peaceful resolution of disputes, the development of the South and the centrality of Africa in its Foreign Policy.

• In a highly competitive global environment, SA champions cooperation and partnership for mutual benefit over unbridled zero sum competition.

• SA’s “Diplomacy of Ubuntu” has earned global respect and affords SA with a unique voice of legitimacy and influence

South Africa’s Current Global Standing

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

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SA’s EXPANDING CONTINENTAL FOOTPRINT:

• Africa is the second fastest growing region in the World.• Seven of the ten fastest growing economies in the World are on

the African Continent.• South Africa’s expanding footprint on the African Continent has

resulted in strong political and trade relations.• In 2013 South Africa was the biggest investor on the African

Continent. FDI outflows grew from USD 2.9 billion in 2012 to a record high USD5.6 billion. Our major investments (value add) were in telecoms, mining and retail (UNCTAD : 2014 world investment report)

• FDI inflows jumped from USD 4.5 billion to a record high USD 8.1 billion in 2013 investment mainly in infrastructure (UNCTAD : 2014 world investment report)

• .

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What informs DIRCO’S work?

Programme 1: Administration

Strategic objectives

Purpose

To achieve an efficient, effective, economical and fully capacitated department.

• To develop overall policy and manage the Department and to provide the necessary support to enable the execution of DIRCO’s mandate.

MTEF allocation (R’ million)

2014/15 2015/16 2016/17

1 396 1 393 1 441

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Programme 1

Sub-programme

Performance Areas Targets informed by

Corporates Services

Turnaround times for filling of vacancies, grievancesSMSPMDS

DPSA prescripts, 4 months for filling of vacancies

Compliance & EfficiencyConsular services

National Treasury prescriptsVienna Convention

DTRD Training & research Workplace Skills Plan (WSP)

Internal Audit Internal Control Internal Audit Framework (NT)

Risk management

Internal Control National Treasury Framework

Programme 2: International Relations MTSF sub-outcome

Strategic objectives Purpose

SA’s national priorities advanced in bilateral engagements

• To promote policies, strategies and programmes to advance South Africa’s national priorities through strengthened political, economic and social relations with targeted countries

• To promote relations with foreign countries and advance national priorities

• Sub programmes: Africa Bilateral, Asia and Middle East, Americas and the Caribbean, Europe

• Bilateral engagements is the basis for strengthening political and economic relations to develop overall policy and manage the Department and to provide the necessary support to enable the execution of DIRCO’s mandate

MTEF allocation (R ’million)

2014/15 2015/16 2016/17

2 810 3 002 3 225

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Programme 2: International Relations

• The performance indicator on political work to utilise the structured mechanisms (BNCs, JCCs, JNCs and others) to advance national priorities, to strengthen relations, to lobby for support for multilateral engagements and common positions

• The performance indicator on economic diplomacy to reflect the work that missions will undertake in order to increase value added exports; attract Foreign Direct Investment to priority sector (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 ministries

Programme 3: International CooperationMTSF sub-outcome Strategic objectives Purpose

An equitable and just System of Global Governance

Strategic objective: To participate in the System of Global Governance to enhance international responsiveness to the needs of developing countries and Africa, in particular through a reformed, strengthened and equitable rules-based multilateral system

To participate and play an active role in international organisations and institutions in line with South Africa’s national values and foreign policy objectives in order to influence outcomes and resolutions in order to promote an equitable and just System of Global Governance

MTEF allocation (R ’million)

2014/15 2015/16 2016/17

486 541 560

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Programme 3: International CooperationSub-programme 3.1: Multilateral

• With particular focus on :– Peace and security (UNSC, Disarmament, peace building)– Sustainable Development (social, economic and environment)

(Climate Change issues, post - 2015 development agenda, SA member of the Economic and Social Council (ECOSOC), G20 & Commission on Population & Development)

– Human Rights and Humanitarian Affairs (SA Member of UN Human Rights Council (HRC), UN High Commission for Refugees Executive Committee (UNHCREXCOM), Convention on Rights of Persons with Disabilities (UNCRPD), Sessions of the UN Commission on the Status of Women & other

Programme 3: International CooperationSub-programme 3.1: Multilateral

– international crime (meetings on international crime and justice to work toward countering international terrorism)

– 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-outcome Strategic objectives Purpose

• 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 and sustainable development

• To strengthen political and economic integration 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)2014/15 2015/16 2016/17

142 146 172

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Sub -programme 3.2Continental & Regional Cooperation

• With particular focus on:– Strengthening the AU and its structures– Participating in peace missions, and (Peace, Conflict,

Reconstruction and Development (PCRD) initiatives – Democracy, Good Governance (APRM) & Human Rights– New Partnership for Africa’s Development (NEPAD)– Regional Integration to increase intra-Africa trade

Sub-programmes 3.3 & 3.4South-South & North South Cooperation

MTSF sub-outcome Strategic objectives Purpose

• Strong, mutually beneficial South-South cooperation & Beneficial relations with strategic formations of the North

• To strengthen South-South relations

• To strengthen relations with strategic formations of the North to advance national priorities, the African Agenda, and the Development Agenda of the South

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.

Focus: BRICS; IBSA; EU; TICAD

MTEF allocation (R ’million)2014/15 2015/16 2016/17

76 83 85

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Sub-programmes 3.3 & 3.4South-South & North South Cooperation

MTSF sub-outcome Strategic objectives Purpose

• Strong, mutually beneficial South-South cooperation & Beneficial relations with strategic formations of the North

• To strengthen South-South relations

• To strengthen relations with strategic formations of the North to advance national priorities, the African Agenda, and the Development Agenda of the South

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.

MTEF allocation (R ’million)2014/15 2015/16 2016/17

1 327 1 403 1 468

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Programme 4Sub-programme 4.1: Public Diplomacy

Strategic objectives Purpose Focus

• To provide strategic public diplomacy direction nationally and internationally to ensure a better understanding of South Africa’s foreign policy

• To communicate South Africa’s role and position in international relations in the domestic and international arenas

• Media briefings, statements and opinion pieces

• Publications (Statutory publications as well as internal electronic publications

• Public participation programmes (PPP)

MTEF allocation (R ’million)

2014/15 2015/16 2016/17

61 62 65

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Programme 4Sub-programme 4.2: State Protocol

Strategic objectives Purpose Focus

• To provide effective State Protocol services

• To provide effective State Protocol services in line with Diplomatic Immunities and Privileges Act and the Vienna Convention 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

MTEF allocation (R ’million)

2014/15 2015/16 2016/17

256 188 201

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2014 MEDIUM TERM EXPENDITURE FRAMEWORK

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EXPENDITURE OUTCOME 2013/14

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Vote Expenditure as at 31 March 2014

2013/14

 

Adjusted Appropriation

Shifting of Funds

Virement Final Appropriation

Actual Variance Expenditure as %

 R'000 R'000 R'000 R'000 R'000 R'000 %

ADMINISTRATION 1 327 802 - (6 991) 1 320 811 1 267 196 53 615 96%

INTERNATIONAL RELATIONS 2 761 000 - - 2 761 000 2 893 211 -132 211 105%

INTERNATIONAL COOPERATION 459 003 - - 459 003 451 689 7 314 98%

PUBLIC DIPLOMACY AND PROTOCOL 254 468 - 6 991 261 459 281 553 -20 094 108%

INTERNATIONAL TRANSFERS 952 373 - - 952 373 977 981 -25 608 103%

               

Subtotal 5 754 646 - - 5 754 646 5 871 630 -116 984 102.0%

Compensation of employees 2 354 273 -7 936 - 2 346 337 2 433 733 -87 396 104%

Goods and services 2 049 009 132 018 -1 223 2 179 804 2 257 858 -78 054 104%

Interest and rent on land 57 - - 57 - 57 0%

Transfers & subsidies 965 831 -5 833 - 959 998 984 538 -24 540 103%

Payment for capital assets 385 476 -118 249 1 223 268 450 195 171 73 279 73%

Payment for financial assets - - - - 330 -330 0% Total 5 754 646 - - 5 754 646 5 871 630 -116 984 102.0%

2013/14 Expenditure Outcome• Programme 1: Administration – During the 2013/14 financial year, the expenditure

for the Programme was R1.267 billion. The increase in expenditure is due to the inflationary adjustments mainly on office accommodation related to unitary fees for the Head Office Campus.

• Programme 2: International Relations – The programme reported an expenditure of R2.892 billion in 2013/14. This is mainly attributable to the depreciation of the Rand against other major currency. The depreciation of the Rand resulted in high exchange rates, thus increasing operational costs incurred in foreign currency, including salaries and lease payments. As a consequence the expenditure for programme 2 has exceeded the budget by R131.870 million.

• Programme 3: International Cooperation – The expenditure of R451.675 million in 2013/14 is also affected by foreign exchange fluctuations. The increase in expenditure is as a result of the higher operational cost as a result of the Rand depreciation. The programme the budget underspent by R7.314 million due to deferred expenditure in the programme to minimise the impact of foreign exchange losses as well as meetings that did not take place as was planned.

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2013/14 Expenditure Outcome …continued

• Programme 4: Public Diplomacy and Protocol – The overspending is attributed to the facilitation and provision of protocol services to the Heads of State/Government attended the State funeral of the former President Nelson Mandela. The event occurred after the adjustment estimates were concluded and became unavoidable.

• Programme 5: International Transfers – The overspending is as a

results of foreign exchange rates losses in relations to the payment of membership fees and assessed contributions to United Nations, African Union and South African development Community.

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2014 Budget allocation per programme

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Programmes2014/15 2015/16 2016/17 2014/15 2015/16 2016/17

2014/15 to 2016/17

MTEF Year on year growth Average annual growth

R'000 R'000 R'000

Administration 1 396 255 1 393 282 1 441 108 5.7% -0.2% 3.4% 3.0%

International Relations 2 810 160 3 002 291 3 225 417 1.5% 6.8% 7.4% 5.2%

International Cooperation 486 371 541 258 560 210 6.0% 11.3% 3.5% 6.9%

Public Diplomacy 317 249 250 279 265 888 24.7% -21.1% 6.2% 1.5%

International Transfers 744 289 846 805 918 046 -21.8% 13.8% 8.4% -1.2%

Total 5 754 324 6 033 915 6 410 669 0.0% 4.9% 6.2% 3.70%

2014 Budget allocation per Economic Classification

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Econ. Classification

2014/15 2015/16 2016/17 2014/15 2015/16 2016/172014/15 to

2016/17

MTEF Year on year growth Average annual growth

R'000 R'000 R'000Compensation of Employees 2 461 835 2 483 995 2 670 906 4.6% 0.9% 7.5% 4.3%Goods and Services 2 120 789 2 241 342 2 337 156 3.5% 5.7% 4.3% 4.5%Transfers and Subsidies 745 723 847 985 919 226 -22.8% 13.7% 8.4% -1.6%Payments for Capital 425 977 460 593 483 381 10.5% 8.1% 4.9% 7.8%Total 5 754 324 6 033 915 6 410 669 0.0% 4.9% 6.2% 3.7%

Overview of the MTEF allocation • Over the medium term, spending is expected to increase to R6.4

billion owing to inflation related adjustments made across all Programmes, including provision for rental increases, unitary fees incurred for the head office building, and COLA for Transferred Officials and Locally Recruited Personnel

• The department’s growth trend has been decreasing over the seven year period.

• Annual average growth rate has decreased from 7.9 per cent during the period 2011/12 until 2013/14 to 3.7 per cent over the medium term.

• However, taking into consideration the projected foreign exchange loss, the budget growth further decreases to an annual average rate of 2.3 per cent

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2014/15 Baseline Assessment

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Allocations2014/15 R'million

Approved baseline 5 754 324Recapitalisation of African Renaissance Fund (ARF) 277 560

Available budget for operations 5 476 764Compensation of employees 2 579 835Compulsory Goods and services (obligatory) 1 478 304

Available budget before earmarked 1 418 625Earmarked funds 760 723

Available budget to fund discretionary expenditure (APP) 657 902

Allocation as a Percentage of Total Budget

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Implementation of cost containment measures

Foreign exchange mechanism

Review of the appointment of Locally Recruited Personnel – explore a legislative framework.

Utilisation of Technology in the conduct of foreign policy

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Conclusion Acquisition strategy for properties abroad – funding model

Draft Foreign Service Bill

Review of the ARF Act – Partnership Fund for Development

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Thank You

African Renaissance and

International Cooperation

Fund

STRUCTURE OF THE PRESENTATION1. Introduction

2. Objective of the fund

3. The utilisation

4. Programme performance plan

5. MTEF Allocation

6. Conclusion

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1. INTRODUCTION

• The African Renaissance and International Co-operation Fund (hereafter referred to as the “Fund” and or “ARF”) 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).

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2. OBJECTIVES OF THE FUND

2.1. Co-operation between the Republic of South Africa and other countries, in particular African countries;

2.2. Promotion of democracy and good governance;

2.3. Prevention and resolution of conflict;

2.4. Socio-economic development and integration;

2.5. Humanitarian assistance; and

2.6. Human resource development.

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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.

3. THE UTILISATION OF FUND

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• 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.

3. THE UTILISATION OF FUND

4. PROGRAMME PERFORMANCE INDICATORS

Indicators Target

Percentage of requestsresponded to for the qualityassurance and reviewof project proposals inpreparation for the AfricanRenaissance and InternationalCooperation Fund (ARF)Board meetings

100% of request received responded to timeously as per objectives of theproject plan

Number of ARF structuresand processes convenedto identify and recommendprojects

Four Advisory Committee meetings toconsider project proposals forrecommendation

Percentage of approveddisbursement processed

100% of approved disbursementProcessed timeously as perobjectives of the project plan

5. MTEF ALLOCATION

2014/15 2015/16 2016/17

Transfer received

277 560 358 350 403 678

6. CONCLUSION

1. During 2013/14 the funding was directed:

• Humanitarian assistance projects,

• Electoral support and election observer missions

• Capacity building projects

• Socio economic development projects.

Thank you