International Relations and Cooperation, Budget Vote Speech, Deputy Minister Candith Mashego-Dlamini, 12 May 2022
Chairperson of the Portfolio Committee, Honorable Mr Supra Mahumapelo,
Members of the executive,
Guests joining us today,
As the world continues to grapple with the scourge of the COVID-19 pandemic, governments around the world have had to confront dwindling budgets and do more with less. South Africa is no exception, as we have had to divert significant financial resources to combatting the pandemic which has translated into slashed budgets across the board. This has made it particularly difficult to deliver on our mandate.
The work expected of the Department of International Relations and Cooperation has increased substantially over the past year as economic diplomacy has become a critical priority if we are to achieve our domestic objectives and stimulate economic growth in our country. Our missions abroad have been expected to undertake a substantial increase in trade and economic activities at the same time as their budget allocations have been decreasing.
There are limited budgets for hosting trade or tourism seminars or events at our missions abroad, and our diplomats are having to come up with innovative ways of selling South Africa and our brand. What we need to do given the current constraints is to further develop digital diplomacy to implement budgetary savings and raise the effectiveness of South Africa in the international arena at a reduced cost. We commend our diplomats for their fortitude and commitment despite these challenging circumstances, and we hope that over time our budget allocation will improve so that we can more effectively carry out our mandate.
One of the most serious consequences of our severe budgetary constraints has been the inability to fill senior management positions at head office, and there are unfilled positions at the Chief Director and DDG level, which places inordinate pressure on the remaining senior managers to double up on their work responsibilities, with DDGs having to take responsibility for two branches instead of one. Chief Directors are critical posts in the department, as they not only manage our missions within a particular region, but they interface with Ambassadors posted to South Africa in strengthening our bilateral relations. We urgently need to fill a number of these posts, but we currently do not have the budget available to do so. These are challenges that need to be urgently addressed so that DIRCO is given the means to perform optimally and with the requisite skilled and experienced personnel.
The filling of vacancies in missions has also been delayed and done in a staggered manner, with only critical vacancies being filled. Unfortunately, the Department has also not been able to implement cost of living adjustments for Locally Recruited Personnel in our Missions abroad for the past three years and in some Missions for more than five years, due to the shortfall in the Compensation of Employees budget. This has a negative impact on the morale and service delivery of Locally Recruited Personnel, many of whom have been working in our Missions for many years and are exceptionally loyal to South Africa and what we want to achieve in their countries.
What is perhaps the most concerning development is that while the Compensation of Employees ceiling increased from R2.852 billion in 2021/22 to R 2.859 in 2022/23, representing a 0,27% increase, it is not sufficient to cover the existing salary bill of filled positions in the Department, as well as vacant critical posts. DIRCO has never faced such a dire financial situation and we will need to address this with the Treasury and DPSA in order to chart the way forward. The projected shortfall on Compensation of Employees for the 2022/23 financial year is R124 million. The shortfall obviously impacts negatively on human resource processes. In an attempt to manage the shortfall, all posts become unfunded once they become vacant. This has serious implications in terms of the capacity in the Department, and the ability to maintain a professional foreign service. Currently only critical and specialised posts are being identified and advertised in a staggered manner.
Approximately 58 percent of DIRCO’s budget is allocated towards bilateral and multilateral engagements and 12 percent has been allocated towards membership fees to international organisations.
The Department’s allocation of R166 million on the payment of capital assets increased from R156 million which is an average of 6.1 percent. This will allow the Department to make more effort in ensuring that all state-owned properties are utilised optimally. To this extent, a plan has been developed to initiate the processes for feasibility studies and design for the construction of prioritised state-owned properties. We have also prioritised the implementation of major refurbishment projects, for which we will conduct condition assessments to obtain recommendations for renovations in order to improve the state of the Department’s property portfolio.
Over the medium-term period, the Department has been allocated R796 million for the Foreign Property Management Portfolio, which consists of 127 state-owned properties abroad. The focus in 2022/23 will be on accelerated property renovations, repairs and maintenance. The works will be informed by the outcomes of the condition assessments on state-owned properties performed by those in Africa, followed by those in Europe, and then those in the Americas and Asia. Furthermore, the Department plans to build three properties on state-owned land over the MTEF period – in Luanda, Angola, New Delhi, India, and in Gaborone, Botswana to reduce the rental portfolio. In addition, 18 superfluous properties have been identified for disposal. In re-organising the Property and Facility Management Unit, the Department has employed a Chief Director, and a Director with relevant qualifications and skills.
In terms of the Department’s audit action plan, despite the noticeable progress made in 2021/22 with the implementation of the plan, the Department is continuing to promote the culture of compliance with relevant financial legislation. In the 2022/23 financial year, the Department has developed a roadmap to a clean audit which we intend to implement. The audit action plan will focus on addressing the root causes of the findings as per the recommendations of the Auditor General. The monitoring of the adequacy and the effectiveness of the controls implemented in addressing the root causes will be done by the Audit Steering Committee, the Audit Committee, and the National Treasury.
In terms of the other areas of our work, which is primarily focused on our relations with Asia, the Middle East, and Africa, our engagement with these regions is focused on capitalising on the immense opportunities that exist for growing trade and investment given their significant consumer markets. We are looking to exploit these opportunities through Structured Bilateral Mechanisms and Joint Trade Committees. South Africa’s total trade with the region amounted to approximately R1.2 trillion last year. With some notable exceptions, our concern is the widening trade deficits with the region.
Our relations with the Peoples’ Republic of China have reached new heights, and in a significant development earlier this year, our two countries signed a new 10-Year Strategic Programme on Cooperation (2020-2029), covering a wide range of bilateral fields with the intention of benefitting both countries. China remains South Africa’s largest global trading partner in terms of total volumes of bilateral trade. Increasing from less than R1 billion of trade in 1998, when diplomatic relations commenced, to R544 billion in two-way trade last year, total bilateral trade has grown exponentially. While the trade balance was heavily skewed in China’s favour for years, the trend over the last few years has been that South Africa’s negative trade balance is shrinking. Last year it shrank to R49,5 billion, implying that South Africa’s trade deficit with China decreased by R4 billion from R53,5 billion.
It is encouraging that trade between South Africa and India has continued to grow despite the COVID-19 pandemic, and that total trade has overtaken pre-pandemic levels. The growth, amidst a worldwide pandemic, is evidence of the strategic value of the bilateral relationship. India is also an important partner especially in terms of Foreign Direct Investment, skills development and technical cooperation. South Africa and India have also agreed to join forces to combat “vaccine nationalism” to ensure that vaccines are readily available in every country around the world. In this regard, South Africa and India’s initiative to call for the temporary suspension of intellectual property rights so that COVID-19 vaccines and other new technologies are accessible for developing countries is an important and noteworthy step.
South Africa has a positive trade balance with Japan and the Republic of Korea, with surplus gains for our exporters of R100 billion, as well as increased high-profile investments in the automotive and other sectors resulting in more jobs and business growth. This includes the launching of Toyota’s hybrid model vehicle, the Corolla Cross, produced on the production line at its Prospecton Plant south of Durban in October last year. The Corolla Cross is fuel and battery operated and will be exported to 40 countries across Africa. The introduction of the Corolla Cross has created 575 new jobs at the plant while more than 1200 direct jobs were created in the component supply base.
South Africa also has robust relations with countries of the Middle East. President Cyril Ramaphosa visited the United Arab Emirates in March this year, and the visit contributed significantly to realising the key targets of South Africa’s Economic Reconstruction and Recovery Plan. South Africa’s participation at the World Expo in Dubai was highly successful in showcasing the South African value proposition through displays on sector specific trade and investment opportunities, as well as highlighting new emerging sectors.
Qatar will be hosting the FIFA2022 World Cup, and we look forward to strengthening our respective people-to-people ties further during this major event.
The long-standing occupation of Palestine by the government of Israel and the conflicts that arise from that permeate the Middle East. South Africa has been working actively for a peaceful ending of the occupation and for peace based on human rights and justice for all people in the region. We have also called for ceasefires and negotiations towards lasting peace in Syria and Yemen. Dr Riad Malki, Minister of Foreign Affairs of Palestine, undertook an Official Visit to South Africa last year in which discussions included efforts to support the struggles of the Palestinian people who have been facing a violent and oppressive occupation that is now more than 40 years old. We will continue to focus our advocacy and diplomatic efforts towards intensifying peace efforts in the region and advancing the Middle East Peace Process.
The former President of the Republic of South Africa, President Nelson Mandela once said, and I quote “Our struggle for freedom and justice was a collective effort. It is in your hands now to create a better world for all who live in it” close quote.
I thank you.
ISSUED BY THE DEPARTMENT OF INTERNATIONAL RELATIONS AND COOPERATION
OR Tambo Building
460 Soutpansberg Road