Department of International Relations and Cooperation 3rd Quarterly Report and Strategic Plan 2012

Meeting report

The Committee requested that the responses to the questions raised in the previous Committee meeting on the Annual Performance Plan 2012/2013 and the Strategic Plan 2012/2017 be provided as written responses as there were more than 23 of them.

Budget Presentation
Mr Caiphus Ramashau, Chief Director of Finance, gave the budget presentation which covered the allocation of finances as given to the Department by National Treasury. Various points were covered including the indicative baseline allocation as per the strategic objective of the Department. It tackled the budget in terms of its programmes such as administration, public diplomacy and protocol, international transfers and international relations (refer to document).

Discussion
Exchange fluctuations
Mr E Sulliman (ANC) said he noticed there was a slight decrease in budget and brought up the issue of exchange fluctuations and the inflation rate. He asked if these had been taken into consideration. He asked if there would then be problems of overspending.

Mr Ramashau replied the Department working with Treasury to try to find a better model to minimise risk due to fluctuations. In terms of the inflation adjustments, the Department was interacting with Treasury on how to deal with the CPI.

Clarification on estimates
Mr Davidson said he was a little overwhelmed by the figures and sought to address the accuracy of the Department’s estimates. If one looked at audited outcomes of 2010/11 and looked at adjusted appropriations one found a massive difference in numbers. There was sometimes an increase and sometimes a decrease. He argued that with budgeting one either looked backwards or did zero based budgeting.

Mr Ramashau replied that the Department monitored their budget very closely and had reached a stage where some areas did not have sufficient operational budgets, which was proving a challenge. The Department was working with Treasury trying to find a better model to minimise financial risks.

Head Office building
Mr Davidson asked about the Head office building. He needed more clarity on why the building would over time cost billions of Rand. He asked the Department to break down the fee. Who was the contractual partner of DIRCO for this?

Ms Bernice Africa, Chief Director: Property and Facilities Management, replied that the Department had operated originally in seven different buildings but decided, in the name of cohesion, to come together in one building. The Department had embarked on a Public Private Partnership (PPP) building project that involved the private sector building, maintaining and operating the building on a day to day basis. Thus where the Department stood there were no assets that they had bought within the building as the contract had supplied them all. The Department wanted to move away from the model in which they designed the buildings and worked with the Department of Public Works to build the building. This method had often been costly and time consuming. There was a PPP unit within Treasury and there was a Treasury regulation (Regulation 16) that had to be complied with to the letter. It stated that there had to be a feasibility study to compare what the cost would be of renting and what would it cost to build in a PPP manner. This study involved the Department, the Treasury PPP unit, the Department of Public Works and a number of contractors. This very detailed feasibility study showed the Department that the PPP method would achieve all objectives and minimise risk. The whole process involved consultation and approval from Treasury. The overall contract had involved approximately 89 individual contracts which were then taken to Treasury who sought independent counsel on it and approved it. It was then, after further consultation, approved by the Minister of Finance. The Department still met with the private party on a monthly basis to make sure that the contract was being followed and the party was penalised for any performance not carried out. National Treasury was a part of the monthly meetings.

The Chairperson said in 2009 the Committee had done oversight on the Head Office building and there had been a similar meeting at the time. He asked if the Department could make material available with regard to the Head Office building as the membership of the Committee had changed.

Pan African Parliament and Membership
Ms Jacobus referred to page 12 of presentation and asked if South Africa made a contribution to the Pan African Parliament? She asked if South Africa was up to date with all its membership fees.

Mr Moodley replied that South Africa had paid up all its membership fees. Regrettably the membership fees were only reflected in the last quarter evaluation and would not be reflected in this quarter’s report. He confirmed that South Africa did contribute membership fees to the Pan African Parliament.

Public policy and protocol
Ms Jacobus referred to Programme 3: Public Policy and Protocol, and why had there been a drop in the allocation for the year 2012/13?

Mr Moodley replied the reduction related to the COP17 conference. The fact is it was not factored in at the beginning of the year meant there was a huge spike in the mid term and then a reduction. This was because the Department had been notified by the Presidency in April of their involvement in COP17 after they had done their yearly budget submission. So at the time COP17 was not factored as a main factor.

Mr Ramashau replied that the Department had submitted their request in terms of the additional mandate. The response from Treasury had been that there would be no additional funding. Thus the Department was beginning with a deficit. The Department thus had to go and find funding for these additional mandates such as the African Diaspora Conference. The Department wanted to emphasise that their budget had experienced a reduction.

Strategic Plan
Ms Jacobus asked if the budget spoke to the strategic plan as sometimes Departments spent the money allocated to them but did not follow the strategic plan.

Mr Moodley replied there had been pressure on all departments to implement efficiency measures. The strategic plan had focused on directing resources to the main area of the budget, mainly the international relations programme which was the core function of the Department. Resources had been allocated in accordance with the strategic focus of the Department. However one needed to note that 90% of the budget was spent on compulsory non-discretionary charges such as rentals and salaries. The remaining 10% was what was allocated to the strategic areas.

South African Council
Mr B Skosana (IFP) asked if there was a possibility of having a South African Council on International Relations. He liked that idea as it could be tied in with public diplomacy. However if the council was going to be feasible there may have to be an increase in budget. He argued that it would be good for country to have that imbizo on international relations as it would close the gap between domestic and foreign policy for the man on street

Economic Leverage
Mr Skosana said that in terms of transfers there was the issue of value for money. There was a need for South Africa to have economic leverage to persuade some international organisations to push human rights. He argued that as South Africa had been one of the countries to accept gay rights, it thus needed to help other countries accept these rights. However South Africa needed economic leverage to do this.

BRICS
Mr Skosana asked what sphere the BRICS relationship fell into in geo-political terms. Was it a South South relationship or something different?

Mr Ian Basson, Chief Director of the Department, replied that in geo-political terms, BRICS was classified as a South South relationship due to the nature of the agenda. This was the same with the Commonwealth.

New Missions
The Chairperson asked if the Department intended to open new missions and if so had they been factored into the budget.

Mr Moodley replied that there were no plans to open missions this year thus it was not factored into the budget. However there had been recommendations and an in-house analysis to manage how best to go forward in terms of the resources the department had.

Leasing property
The Chairperson said that the Committee had raised before the issue of leasing of property and had recommended the Department move away from leasing. He asked if this had been factored in and what were the projections in terms of new acquisitions.

Mr Moodley replied that sometimes in the property portfolio there was a difference between the original budget and adopted budget. One example was the OR Tambo House which came onto the market place after about 20 years and after the Department had submitted its budget to Treasury. The Department then submitted a proposal that they buy it. In terms of leases some landlords demanded that rent be paid a year in advance, but as far as possible the Department tried to pay their leases monthly. They were however subject to the demands of landlords and owners of property. Often the Department had very little choice in terms of properties who often asked to pay leases years in advance.

Mr Moodley said the Department had come up with alternative methods of acquiring properties. A proposal had been drafted with different options and it had been approved by the Office of the Director General and would be signed off by the Minister and sent to Treasury soon. The first option was based on acquiring land. In various parts of the world this had been affected by the financial downturn. The Department wanted to receive a lump sum figure in order to acquire properties and turn lease payments into bond payments. The lease payments had witnessed phenomenal fluctuations and the advantage of the bonds fluctuations would be managed within a certain band. The second advantage was the lease payment would service the bond and leave a certain amount of money left over. The property would then become the Department’s after sometime and they would be able to make improvements to it.

Ms Africa replied that the Department was trying to move to a place of acquisitions instead of rentals. The Department sought, by the end of this year, to have their strategy and alternative funding mechanism approved by Treasury. They sought to identify pilot projects. They had already submitted a first draft and sought to enter negotiations with Treasury to find the best model. The public-private partnership (PPP) model had proven effective in various countries as well as various areas of development within South Africa. It was a good opportunity to bring in private sector entities who may not have wanted to enter such a venture alone whilst minimising the risk for the Department. It was thus something that the Department sought to move towards.

Properties
Mr B Elof (DA) asked if the Department had a list of properties that were not rented or were not being utilised. He asked for a list of what was being utilised and what was not as well as the status of these buildings.

Ms Africa replied that of the 115 properties owned at the moment 13 were redundant properties. The Department knew all of the properties they owned and they had title deeds for them. They had valued the properties in 2008 and would have then valued again in 2013. The entire property portfolio had been transferred to the Department in 1999 from the then Department of Public Works, which allowed them to acquire and manage property. Unfortunately there was legislation (State Land Disposal Act) in place that only allowed the Minister of Public Works and the then Minister of Land Affairs to dispose of property. Thus DIRCO’s role in disposal was it identified a piece of land as being redundant and then wrote a letter to the Minister of Public Works and asked for it to be disposed of on their behalf. The Department of Public Works had been notified about all 13 properties that were currently redundant. This had been a weakness within the Department as it required a number of high level interactions and would continue to do so.

Mr Elof noted that four properties had been disposed of. He asked why and what had happened to the money from these properties.

Head office Organogram
Mr Elof asked if there was an organogram of the positions at head office that had been filled.

Mr Kgabo Elias Mahoai, Deputy Director General: Human Resources, replied there had been organisational reviews to identify the number of posts that remained unfunded. They sought to have these abolished if they were to remain unfunded.

Assets Register
Ms Jabobus asked how far had the Department gone with the asset register? Did they know what they had?

Ms Africa replied that the department knew each and every asset they had. An asset register could be prepared. The Department knew all of the properties they owned and they had a title deed for each.

Lease and property Payments
Mr Davidson commented that when one went through the property payments and lease payments of the various programmes there were anomalies that could not be understood.

Public Diplomacy
The Chairperson said the Committee in the past had raised the issue of public diplomacy and recommended that it be prioritised. This was due to the fact that over the years South Africa had often supported or taken controversial decisions and it would be best for the general public to understand why. Foreign Policy decisions needed to resonate with people on the ground or it would remain elitist. He asked the Department why R53 million had been budgeted when there was much more work that needed to be done.

Mr Moodley replied he would take the comments on public diplomacy back to the department. He stated that prior to 2009, the issue of public diplomacy was at the level of Chief Director but it had been moved up to the level of the Director General. The Department had given more budget for it but they took the Committee’s comments into consideration.

Vacancies
The Chairperson asked why there was a large number of vacancies in the Department’s Level 1-10 posts?

Mr Mahoai replied that the Department still had some vacant unfunded posts and the exercise they would embark upon would identify these posts, find out if there was going to be funding for them and, if not, scrap them. There was a discrepancy between head office posts and mission posts as usually the entry level positions were local. In the review, there would have to be an exploration of the relationship between lower level and high level posts. Action was being taken on the issue. The review should be finalised within the first three months of the new financial year.

The Chairperson asked the Department to share the outcome of the review with the Committee.

Third Quarter Expenditure presentation
Mr Moodley said the report had been increased to include January in order to give a more accurate picture of the financial position of the Department.

Mr Moodley said that the Department owned the building in Cavendish Close. There was a 25 year lease on the property and every 25 years there was a review of the rent which was market related. There were still negotiations happening in terms of the purchasing of the lease and there were many entities which the Department had to interact with such as municipalities and the Department of Public Works. (Slide 4).

Discussion
The Chairperson asked what of the total budget had actually been spent currently.

Mr Moodley replied that the first slide explained that spending against drawings was at 88%.

Cavendish Close
The Chairperson asked what the building in Cavendish Close was used for.

Mr Moodley replied that it had been used for residential purposes for staff. The deputy Head of Mission had been the one to use it historically but when renovations had occurred at Highveld the building was used to house the Head of Mission temporarily. It was thus a residential building, DIRCO owned the actual building but had a lease on the land.

South Africa House
The Chairperson asked if the Department owned South Africa House in London.

Mr Moodley replied the Department did not own it but had a 99 year lease which would end in 2029. It was owned by the municipality of London. The challenge was that once the lease had come to an end, there would be a reassessment of the market value of the property. The Department had thus proposed to do the estimates for DIRCO’s future rental rate now and give up the 20 years that remained on the lease. He confirmed that this property would not be sold to the South African government.

The Chairperson said that as this was a third quarterly report, there were still areas for expenses to be incurred. However things were looking good in terms of spending.

Update on African Diaspora Summit
Ambassador Mbulelo Rakwena spoke about the preparations for the African Diaspora summit, covering the road to the summit as well as the formulation and nature of the summit. Mr Moodley briefed them on the logistical aspect of the summit. The summit was to take place from the 23 - 25 of May at the Sandton International Convention Centre (see document).

Discussion
Mr Skosana said he could not see the fundamental objectives, namely the social, political and economic writing, behind the adoption of the African Diaspora.

Ambassador Rakwena said that documentation would be provided which would articulate some of these concerns as well as provide further understanding. He asked members to recall in 2007 after the ministerial conference was held, a number of documents were prepared and these were referred to as the Ministerial Outcome documents. It listed the plethora of ideas that would need to be present to live in an Africa that was developed and had a proper relationship with the Diaspora. That document married the objectives with expected outcomes.

Structured Program
Mr Skosana asked if there was a structured program for civil society which came earlier than the summit itself. Were there structures MPs could use to motivate or inform civil society on the African Diaspora Summit?

Ambassador Rakwena replied that the challenge with working with other institutions was that it slowed down activities due to the pace at which entities could focus and finalise certain documents. There was a Civil Society forum that would take place in May in Addis Abba where about 50 members of civil society would be present. There were structures on the ground to facilitate the growth of participation. In South Africa, work had already been done to create awareness amongst civil society. On the 23 March 2012 various entities such as trade unions and academic institutions would meet at DIRCO headquarters for a briefing and to solicit participation. The Department would launch a public media campaign to explain to South Africans what the intentions of the summit were and what it could achieve.

Conceptual basis of conference and the issue of Diasporas
Mr Davidson asked what the conceptual basis was of the conference. How did one determine what an ‘African Diaspora’ was with all the array of countries? What could be achieved by having an African Diaspora.

Ambassador Rakwena replied that in other contexts it would be easy to place one’s finger on what could be achieved in terms of a Diaspora. In the African context one would have wanted to look at the justification of the scarcity of resources and bankable projects (in which the accountability that was sought could be looked into). On the notion of remittances he gave examples of the work being done.  He gave the example of 40 billion being brought into the continent in an unregulated manner. This means of handling this money meant that all other entities that handled those remittances may have kept a share (that otherwise could have created an advantage in some other area). This would have meant that the scores of money that swept through the continent were not being efficiently utilised. This money would have made it possible to create collective infrastructure programs (that could then be positioned within the development agenda). If one compared that 40 billion in remittances with Overseas Development Aid (ODA), one found in many respects ODA flows were less but because they were not controlled by Africans, they had an amorphous behaviour that mirrored those who provided them. What Africans sought to do now was place effective control within the realm of remittances. There was a process being developed to do that. There was the African Remittances Institute that had gathered together treasuries from around the continent and Diaspora and Caribbean states. There was work being done to find a way to create some sort of kitty and this was one of the ways being looked at to tap into the notion of a Diaspora. He argued that there was a skills based incentive as well.

Ambassador Rakwena said when international institutions such as the World Bank functioned within the continent they tended to behave as if there were no professional skills within the continent. Professional skills were sourced from elsewhere. So this was an opportunity to utilise the skills within the continent. He said there was now work being done with the World Bank and the International Organisation of Migration to ensure that when ODA is released, the organisations were cognisant of the fact that there were skills within the continent and there was a need to rely on the body of that skills base. This allowed for a pooling of resources.

Ambassador Rakwena argued one could not talk of a Diaspora without exploiting the sentimental value that tied a person to their place of origin. The continent could learn from the sentimental attachment that was witnessed in other Diasporas such as the Israel Diaspora. There were economic benefits in the business of culture. However Africans had not looked at culture from an economic point of view and were simply consumers of this commodity. But if one looked at the talent available on the continent, one could be able to reverse that particular trend.

Ms Sikose Mji, DIRCO Chief Director of Central Africa, gave the example that there had been a sizeable number of African Americans who had returned to Ghana (which they saw as their homeland) and they were involved in a number of projects there. The entire idea had sprung from the concept of the Diaspora and they want to be involved back home.

Mr Davidson asked if the Department had known the conference was a specific item on their calendar then why had they not budgeted for it as a specific item.

Mr Moodley said it had been a specific item but had not been given specific funding for it. Thus the Department had had to re-prioritise within the department.

Committee attending the conference
Mr Skosana said he had realised that those organising the summit had not made provision for the Committee to attend.

The Chairperson said there was an interest for the Committee to attend the summit and they would appreciate an invitation. He emphasised that it was important that concrete solutions came from the conference as what often happened with conferences was that no specific results emerged.

Meeting was adjourned.