Presentation to the Portfolio Committee DIRCO 30 July 2014

1. Presentation to the Portfolio Committee DIRCO 30 July 2014

2. Structure of the Presentation • Situational analysis • What informs DIRCO work? • Strategic Objectives • Programme Structure • Annual Performance Plan • Expenditure Outcome 2013/14 • Budget 2014 /15

3. 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

4. The Changing Global Environment • 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 technologies.

5. Global Trends that Impact on SA’s Influence • A new transnational resource agenda (scarce resources fuelling tensions, protectionism). • 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)

6. 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.

7. South Africa’s Current Global Standing • 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 110 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

8. 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

9. SA’s EXPANDING GLOBAL FOOTPRINT: 1994-2013

10. South Africa’s Shifting Global Trade Patterns: 1994-2013

11. TOURISM:1994-2013

12. 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) • .

13. What informs DIRCO’S work? • The Constitution and national priorities provide an overall mandate and scope for all work done by national government departments, provincial and local government and informs SA’s foreign policy • The draft White Paper of South Africa’s Foreign Policy was approved by Cabinet and submitted to Parliament • Under Outcome 11 of the Delivery Agreement, 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

14. DIRCO Strategic plan aligned to NDP and MTSF

15. DIRCO Strategic plan aligned to NDP and MTSF

16. DIRCO Strategic plan aligned to NDP and MTSF

17. DIRCO Strategic plan aligned to NDP and MTSF

18. DIRCO Strategic plan aligned to NDP and MTSF

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

20. DIRCO APP Five Budget Programmes • Programme 1 – Administration • Programme 2 – International Relations • Programme 3 – International Cooperation • Programme 4 – Public Diplomacy & State Protocol • Programme 5 – International Transfers

21. Programme 1: Administration

22. Programme 1

23. Programme 2: International Relations

24. 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

25. Programme 3: International Cooperation

26. Programme 3: International Cooperation • 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

27. Programme 3: International Cooperation • 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

28. Sub-programme 3.2: Continental & Regional Cooperation

29. 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

30. Sub-programmes 3.3 & 3.4

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

32. Programme 4Sub-programme 4.1: Public Diplomacy

33. Programme 4Sub-programme 4.2: State Protocol

34. Budget 2014 Medium term expenditure framework

35. EXPENDITURE OUTCOME 2013/14

36. Vote Expenditure as at 31 March 2014

37. 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.

38. 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.

39. 2014 Budget allocation per programme

40. 2014 Budget allocation per Economic Classification

41. 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

42. 2014/15 Baseline Assessment

43. TRANSFER PAYMENTS

44. TRANSFER PAYMENTS

45. TRANSFER PAYMENTS

46. TRANSFER PAYMENTS

47. TRANSFER PAYMENTS

48. Allocation as a Percentage of Total Budget

49. Implementation of cost containment measures • Review of Locally Recruited Personnel – explore a legislative framework. • Review of policy in relations to benefit for transferring officials abroad. • Availability of Technology and its use – Broadband

50. Conclusion • Acquisition strategy for properties abroad – funding model • Draft Foreign Service Bill • Review of the ARF Act – Partnership Fund for Development