Accelerating Economic Diplomacy towards a better South Africa, Africa and world: DIRCO Budget Vote Speech 2019
Address by Minister Naledi Pandor, Department of International Relations and Cooperation Budget Vote Speech, 11 July 2019 at the National Assembly, Parliament
I am pleased to have the opportunity to report to this House on our progress and activities in the 2018/19 financial year and to indicate our plans for 2019/20.
Last year DIRCO was allocated R6 552.7 billion to be utilised to advance our agenda for global co-operation. The development of our region and our continent. This year we are allocated R6 508.5 billion and as with all departments we are confronted by the limitations of budget reductions, currency fluctuations and the inadequacy of our compensation budget. Given these challenges we have to use our resources wisely and strategically. The reduced budget severely impacts on our ability to support government in reaching our national priorities. Fortunately, we have an excellent team in DIRCO and we shall do our best.
Debates on the international relations budget and programme are incomplete if they are not associated with the tremendous role the international community played in supporting us to achieve freedom. We have in many ways sought to honour these solidarity based contributions through reciprocating in creating a just world order that has a humane face – a face of empowered women and girls, of men and boys, free from war, living with human security. I have been pleased that our statements and voting pattern in Geneva and New York reflect our support for a more just world.
Our work must always reflect this commitment to return the privilege of international solidarity with attention to the plight of those who seek refuge, democracy, freedom and peace.
The world has improved vastly from the world in which racial domination could thrive, yet Palestine is still occupied and not free, South Sudan has internal conflict, Western Sahara is still occupied and not free, Cuba remains blockaded and extremism and terrorism destabilise the world. Powerful forces of economic bullying seek to alter the established multi-lateral world order. Africa too continues to have many development challenges. We have to promote our relations in this challenging context. We have to use our extensive network and limited resources to support the emergence of a world where all enjoy freedom and democracy, increased human security and peace. Our relationships with the world must be centred on achieving these outcomes.
This year we celebrate 25 years of freedom. Even though we are young adults in democracy, we can as President Ramaphosa said in SONA “move forward together towards achieving a stronger, greater, more compassionate, more united and harmonious South Africa” and we add Africa.
We recall too that Rwanda is commemorating 25 years since the genocide of 1994. We reaffirm our friendship and solidarity with the people and government of Rwanda and salute them for their determined efforts to achieve reconciliation and a nation at peace with itself. The search for social cohesion and reconciliation have been put to good effect in both our countries and we should use this common experience to forge greater links.
The work we do will advance such links and also actively contribute to the seven priorities announced by the President:
Economic transformation and job creation;
Education, skills and health;
Consolidating the social wage through reliable and quality basic services;
Spatial Integration, human settlements and local government;
Social cohesion and safe communities;
A capable, ethical and developmental state; and
A better Africa and World.
These priorities are global, they are in the NDP, the SDGs (Agenda 2030), and in our Africa Agenda 2063. We will promote action to realise them for our country and our continent.
We pursue the priorities in a period in which Africa has entered a phase that holds much promise for genuine sustainable development. We plan to use our diplomacy to build stronger links with Nigeria, Egypt and Kenya as anchor countries that should advance these goals.
Many African countries are achieving positive economic growth and developing social and economic infrastructure that expands the likelihood of national development, higher growth levels and social development for all. It is noteworthy that democracy has also taken root in much of the continent with free, fair and regular elections on the rise.
We are very encouraged by the launch of the African Continental Free Trade Area Agreement. Now that the ACFTA has come into force, immense opportunity for trade within Africa has come into being. South Africa must ensure it is ready to take advantage of the potential offered by this expanded market access. Once the agreement is fully operationalised Africa will be one of the world’s largest single markets encompassing 55 countries, a population of 1,2 billion people and a combined GDP of 3,2 trillion U.S. dollars. The development of the necessary infrastructure is going to gather speed and we must be ready to play a key role.
In addition honourable members, our capacity for research and innovation could play a critical role in enhancing our industrial development ambitions.
Minerals beneficiation, advanced manufacturing and wider use of digital technologies could place us at the leading edge of economic innovation support in Africa.
South Africa has excellent research universities, trains a large number of African post-graduate students and absorbs only a small number of them. We also have very competent research councils, imagine the contributions we could make to Africa if we multiply this capacity. The development in potential of a vibrant Africa based knowledge economy would become a genuine reality. Our capacity for innovation must become part of our diplomatic interactions and be utilised to advance our continent’s interests.
We should promote the creation of hundreds of research institutes all over Africa and support them to be innovative, productive and responsive. We have the capacity, let us use it strategically.
One of our major co-operation successes is our regional economic community that has established a strong platform for greater integration and growth. We must consolidate and expand trade and investment in SADC and give effect to the President’s assertion that:
“Within the SADC region, we should prioritise development of cross-border value chains in key sectors such as energy, mining and mineral beneficiation, industrialisation and enhancing manufacturing capacity, infrastructure development as well as agro-processing”.
We will, therefore, intensify several related SADC initiatives.
I am pleased with the progress that was achieved during South Africa’s tenure as SADC chair.
Progress on regional trade has been increased by the operationalisation of the Integrated Real Time Gross Settlement System (SADC-RTGS), which is hosted by the South African Reserve Bank. A total of 81 banks (central banks and commercial banks) are participating in the system. The system aims at establishing a firm platform for increased intra-SADC trade and investment to further strengthen regional financial integration. The SADC-RTGS has performed impressively since July 2013 when the system went live, with a total of 1,275,591 transactions settled as at end 2018, representing ZAR5.21 Trillion. The benefits of the cross-border payment system are its efficiency and the reduction in transaction costs. This experience is going to be a valuable contribution to the development of the payment system announced at the AU Summit in Niger three days ago.
A second example is the completion and adoption of the SADC Energy Foresight and Assessment Study for Renewable Energy Value Chains.
Member States are going to use the recommendations to develop SADC renewable energy capacities. The Council for Scientific and Industrial Research (CSIR) was tasked to conduct a mapping exercise of potential renewable energy value chains for use by Member States. A progress report will be presented to Ministers in June 2020.
Third, the SADC Engineering Needs and Numbers Study has been concluded. It will assist Member States to implement programmes for developing enhanced engineering training at national or regional platforms to enable career development through sharing of experience and expertise. Furthermore, Member States were also urged to introduce Science, Technology, Engineering and Mathematics subjects at early stages in the education systems to increase the number of students able to take up studies in engineering fields.
Tripartite Free Trade Area
The Common Market for East Africa (COMESA) – East African Community (EAC) – Southern African Development Community (SADC) Tripartite Summit agreed in October 2008 to accelerate the programme to harmonise trade arrangements among the three Regional Economic Communities (RECs), with a view to establishing a single free trade area (TFTA) encompassing all Member States of the three RECs.
Our country appended her signature on the Agreement establishing the TFTA on 7 July 2017 in Kampala, Uganda. To date, the Agreement has been signed by 23 member countries and requires 14 ratifications to enter into force. To date, only Kenya, Egypt, Uganda, and South Africa have signed and ratified the agreement.
South Africa will intensify its diplomatic efforts aimed at urging other TFTA members to sign and ratify this important trade facilitation instrument in order for it to become operational. To this end, a TFTA Summit is scheduled to take place in January 2020 in Rwanda, we hope that the ratification threshold would have been achieved by that date.
The recent report of Africa’s regional bodies at the AU’s extra-ordinary summit confirmed the critical role regional bodies are playing in our development programmes.
Our commitment to Agenda 2063 remains steadfast. We are honoured to have been selected as the 2020 AU Africa Chair. We are cognisant of the huge responsibility, this places on South Africa, particularly, the pursuit of the ambitious goal of silencing the guns by the end of 2020 in the continent.
We have a rare opportunity to place this goal on top of the Agenda of the United Nations Security Council (UNSC) when we assume the Presidency of the Council in October 2019. The theme for our Council Presidency is “Continuing the Legacy: Working for a Just and Peaceful World”. It is important to use our tenures at the UNSC and as chair of AU to implement the Enhanced Co-operation Agreement on Peace and Security as it foregrounds commitment to conflict prevention and to addressing the root causes of conflict.
This is the embodiment of the legacy of Nelson Mandela who, during his tenure as President of our country, worked tirelessly to advance peace and stability on the continent and globally, through mediation, and preventative diplomacy.
The continued existence of conflicts in Africa diverts us away from our goal of peace and development. In this regard, we repeat our call for a total ceasefire in Libya and the pursuit of an inclusive national dialogue led by the AU. On Sudan, we deplore the recent violence and deaths in that country and welcome the agreement reached by the Transitional Military Council and the Forces For Freedom and Change. This is an opportunity for the people of Sudan to begin entrenching peace and stability. We applaud the mediation efforts of the AU and IGAD. As South Africa we stand ready to assist where we can. Our experience in conflict resolution and in drafting a progressive constitution, make us a partner genuinely able to resolve complex national problems.
Our President has done much to assist the Kingdom of Lesotho to achieve political stability. While appreciating progress reported recently, we implore all the people of the Kingdom of Lesotho to work diligently on the finalisation of the necessary constitutional and security sector reforms. We thank former Deputy Chief Justice Moseneke for his work as the presidential envoy.
A peaceful and stable as well as economically integrated Africa will contribute towards transforming the world to ensure that people of the global South are not marginalised. We have partnered with like-minded countries to improve our condition and that of our partners. Work in Africa’s partnership with China in the Forum for China Africa Co-operation and with Japan in The International Conference for Africa’s Development can make a significant contribution to our development.
The BRICS is also a formation which has the potential to change the global political and economic outlook. The work of the New Development Bank (NDB), its Africa Regional Centre (ARC) and the Contingency Reserve Arrangement (CRA), are concrete examples of the effectiveness of BRICS.
The ARC is focussed on providing financial and project preparation support and funding for infrastructure and sustainable development in South Africa, Africa and in future to developing countries at the global level.
In April this year, the NDB approved around $790 million of loans for three projects in South Africa. Over half the funding is for Eskom to stabilise our national electricity grid. The NDB and Eskom signed a separate agreement for a $180 million loan to implement an integrated renewable energy project. This is evidence of the use of diplomacy to address national imperatives.
The NDB will also provide infrastructure and sustainable development project funding to countries that are not members of the BRICS. It has confirmed that part of the $790 million will fund the Lesotho Highlands water project. The implementation of the Second Phase of this project is important for both South Africa and Lesotho as it provides water to the Gauteng Province and hydro-energy for Lesotho’s electricity needs.
We continue to enhance our cooperation with institutions and countries of the North. Our partners continue to play a constructive role in bridging the global development divide.
President Ramaphosa has been consistent in using platforms like the G20 and the G7 to argue for support for Africa and for a fair, inclusive and balanced world trade environment. We believe in multilateralism and reject attempts at unipolarity and neglect of the poor and marginalised. We believe much more must be done for shared growth, for the empowerment of women and the eradication of poverty and reduction of inequality.
Success in pursuing these objectives means leadership, hard work, consistency and commitment. We as Africans must rise and act in our interest, must execute our own agenda.
The United States of America is our strategic partner in the fight against HIV and Aids. They have been instrumental in supporting our national and HIV interventions and American businesses continue to invest in South Africa to create employment and reverse the frontiers of poverty. We have excellent trade relationships and are determined to expand them for increased growth and job creation.
We will affirm these links while also working to support measures for peace in South Sudan, freedom and justice for the people of Saharawi and freedom, security and democracy for the people of Palestine. We will also continue to strive for the end of the unilateral economic blockade against Cuba and continue to strengthen our collaboration.
We have been closely monitoring developments regarding the UK’s planned exit from the EU. South Africa remains strongly committed to our Strategic Partnership with the European Union, which has created a platform for engagement at various levels, not only on bilateral matters, but also on matters pertaining to regional, continental and global challenges. The European Union (as a bloc) is South Africa’s largest trading partner with total trade having increased from R497 billion in 2014 to R620 billion in 2018. While there remains a significant trade deficit, South African exports to the EU have increased from R197 billion in 2014 to R268 billion in 2018. The R1.4 trillion in foreign investment from Europe (representing approximately 77% of total FDI in the country) has made a significant contribution towards job creation and industrialisation in South Africa.
We will work with greater energy to increase our cooperation with India, Russia and Brazil. Our partnership with the People’s Republic of China continues to grow. The recent conclusion of 90 trade and export contracts will enhance our partnership even further.
In the recent SONA the President referred to the need for us to increase tourist arrivals to support our economy. Europe and Africa are among leading continents in terms of tourist arrivals in South Africa.
I have tasked all our Missions abroad with the responsibility to help manage and brand South Africa to attract more tourists. Similarly they have the huge task of assisting us in securing more Foreign Direct Investment (FDI), whilst identifying and leveraging trade and cultural diplomacy opportunities in their host countries.
Our foreign policy principles remains centred on promoting peace, human rights and dignity for all people in all countries of the world. We continue to be guided our apex mandate, our Constitution. I am studying the report of the Ministerial Review Panel on our Foreign policy and hope to report on our response to the portfolio committee soon.
We also hope that Parliament will conclude its processing of the Foreign Service Bill.
I wish to thank the two Deputy Ministers for their guidance and support in preparing for the Budget Vote. Deputy Minister Botes will outline further details of our work in his contribution.
The Director-General and the management of the Department, my special advisors, ministry staff and family contributed immensely to this budget vote and their efforts are most appreciated. Let me thank the DIRCO Team for their role in ensuring that a detailed overview of our work is presented in this debate.
I thank you.