PRESENTATION TO PORTFOLIO COMMITTEE ON INTERNATIONAL RELATIONS & COOPERATION

PRESENTATION TO PORTFOLIO COMMITTEE ON INTERNATIONAL

RELATIONS & COOPERATION

THE EXPERIENCE OF THE AFRICAN RENAISSANCE FUND

(ARF)

4 August 2010

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Introduction. Alignment with South Africa’s foreign policy. Evolution of the African Renaissance Fund. Guiding principles. Institutional and strategic approach. ARF funding model. MTEF ARF budget appropriation. Summary/way forward.

Introduction. Alignment with South Africa’s foreign policy. Evolution of the African Renaissance Fund. Guiding principles. Institutional and strategic approach. ARF funding model. MTEF ARF budget appropriation. Summary/way forward.

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The African Renaissance & International Cooperation Fund Act (Act 51 of 2000) was promulgated on 22 January 2001.

The core business of ARF is technical assistance, while also providing emergency assistance when required.

The principle advantage of ARF, in its design was its introduction of framework & basis for providing funds for South African government to identify & fund, in pro-active way, projects & programmes aimed at promotion of democracy & good governance; prevention & resolution of conflict; socio-economic development & integration; humanitarian assistance & human resource development in Africa, by granting of loans or rendering of other financial assistance within African Renaissance framework.

At time of its inception, ARF pioneered encapsulation of concept of ‘African Renaissance’ in legislation in South Africa. It also introduced practical mechanism through which donor (third party) funds could be channelled to recipients and/or joint tripartite projects.

The African Renaissance & International Cooperation Fund Act (Act 51 of 2000) was promulgated on 22 January 2001. The core business of ARF is technical assistance, while also providing emergency assistance when required. The principle advantage of ARF, in its design was its introduction of framework & basis for providing funds for South African government to identify & fund, in pro-active way, projects & programmes aimed at promotion of democracy & good governance;

prevention & resolution of conflict; socio-economic development & integration; humanitarian assistance & human resource development in Africa, by granting of loans or rendering of other financial assistance within African Renaissance framework. At time of its inception, ARF pioneered encapsulation of concept of ‘African Renaissance’ in legislation in South Africa. It also introduced practical mechanism through which donor (third party) funds could be channelled to recipients and/or joint tripartite

projects.

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ARF is closely aligned with DIRCO mandate, in particular execution of South Africa’s foreign policy objectives.

DIRCO Strategic Plan mandates Department to “advance South Africa’s national interests & values through bilateral & multilateral diplomatic relations”. It further states that South Africa’s foreign policy is guided by vision of better South Africa in better Africa & better world.

In this regard, principal focus area of South Africa’s foreign policy is Continued Prioritisation of African Agenda. South Africa’s goals for African continent are:

resolution of conflict; and building of framework in which socio-economic development

can take place. From South African point of view, socio-economic development

cannot take place without peace & stability, as these constitute necessary conditions for socio-economic development. Conversely, socio-economic development is necessary in context of addressing root causes of conflict & instability.

ARF is closely aligned with DIRCO mandate, in particular execution of South Africa’s foreign policy objectives. DIRCO Strategic Plan mandates Department to “advance South Africa’s national interests & values through bilateral & multilateral diplomatic relations”. It further states that South Africa’s foreign policy is guided by vision of better South Africa in better Africa & better world. In this regard, principal focus area of South Africa’s foreign policy is Continued Prioritisation of African Agenda. South Africa’s goals for African continent are: resolution of conflict; and building of framework in which socio-economic development can take place. From South African point of view, socio-economic development cannot take place without peace & stability, as these constitute necessary conditions for socio-economic development. Conversely, socio-economic development is necessary in context of addressing root causes of conflict &

instability.

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At time of its establishment, ARF was designed to supplement Department of DFA Technical Assistance Fund, which was much larger in scope & size, & had dedicated organisational structure within Foreign Affairs, both in terms of operational utilisation of Technical Assistance Fund as well as its administration.

Comparison: focus areas of Technical Assistance Fund & ARF

At time of its establishment, ARF was designed to supplement Department of DFA Technical Assistance Fund, which was much larger in scope & size, & had dedicated organisational structure within Foreign Affairs, both in terms of operational utilisation of Technical Assistance Fund as well as its administration.

Comparison: focus areas of Technical Assistance Fund & ARF

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Technical Assistance Fund African Renaissance Fund

Bilateral (government to government)

Multilateral (organisations) & bilateral (governments & parties)

Re-active (after receipt of formal government requests)

Pro-active involvement in projects & programmes within African Renaissance framework

No mechanism for third-party funding

Mechanism for third-party funding

Principle advantage of ARF, in its design (vis-à-vis Technical Assistance Fund) was its introduction of framework & basis for South African government to identify & fund, in pro-active way, projects & programmes aimed at promotion of democracy & good governance; prevention & resolution of conflict; socio-economic development & integration; humanitarian assistance & human resource development in Africa, by way of granting of loans or rendering of other financial assistance within African Renaissance framework.

With abolishment of Technical Assistance Fund in early 2001, ARF, instead of being supplementary to bigger fund, now became stand-alone fund, necessitating it to adopt character of Technical Assistance Fund, with concurrent move towards becoming more responsive & bilateral in nature.

Overall purpose of ARF was to give practical effect to African Renaissance vision & at core of this vision was an economic & social development agenda for Africa. ARF Act also gave specific directives as to both objectives & operating mechanisms for ARF.

Principle advantage of ARF, in its design (vis-à-vis Technical Assistance Fund) was its introduction of framework & basis for South African government to identify & fund, in pro-active way, projects & programmes aimed at promotion of democracy & good governance; prevention & resolution of conflict; socio-economic development & integration; humanitarian assistance & human resource development in Africa, by way of granting of loans or rendering of other financial assistance within African Renaissance framework.

With abolishment of Technical Assistance Fund in early 2001, ARF, instead of being supplementary to bigger fund, now became stand-alone fund, necessitating it to adopt character of Technical Assistance Fund, with concurrent move towards becoming more responsive & bilateral in nature.

Overall purpose of ARF was to give practical effect to African Renaissance vision & at core of this vision was an economic & social development agenda for Africa. ARF Act also gave specific directives as to both objectives & operating mechanisms for ARF.

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The ARF guiding principles were alluded to by former Foreign Affairs Deputy Minister Aziz Pahad in his introduction of ARF Bill to National Assembly on 6 October 2000, which include:

Promotion of democracy & good governance, e.g. providing electoral assistance;

Human resource development, e.g. support in developing educational programmes: assisting foreign government representatives & officials in terms of skills development, & security sector reform;

Socio-economic development & integration, e.g. funding feasibility studies on infrastructure projects; facilitating dialogue on developmental issues such as rural development & gender;

Humanitarian assistance & disaster relief in Africa & elsewhere in world, e.g. humanitarian funding for refugees; flood, drought & technical assistance;

Cooperation between South Africa & other countries, in particular African countries; and

Prevention & resolution of conflict.

The ARF guiding principles were alluded to by former Foreign Affairs Deputy Minister Aziz Pahad in his introduction of ARF Bill to National Assembly on 6 October 2000, which include: Promotion of democracy & good governance, e.g. providing electoral assistance; Human resource development, e.g. support in developing educational programmes: assisting foreign government representatives & officials in terms of skills development, & security sector reform; Socio-economic development & integration, e.g. funding feasibility studies on infrastructure projects; facilitating dialogue on developmental issues such as rural development & gender; Humanitarian assistance & disaster relief in Africa & elsewhere in world, e.g. humanitarian funding for refugees; flood, drought & technical assistance; Cooperation between South Africa & other countries, in particular African countries; and Prevention & resolution of conflict.

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Strategic position Currently ARF has both political mandate (based on South

African foreign policy) & developmental mandate (based on needs of continent); though there might be close crosscutting linkages between two mandates.

ARF is also broadly positioned in terms of its scope. Previously funded projects have been in five areas (1) Humanitarian, (2) Economic Development, (3) Infrastructure (4) Capacity Building, & (5) Security Sector Reform (SSR).

Since establishment of ARF, funding has paid increasing attention to supporting post conflict reconstruction & development (PCRD) efforts.

PCRD programmes require more long-term commitment in order to be sustainable, e.g. South Africa’s development assistance to Democratic Republic of Congo (DRC), which follows multiple-year approach.

Strategic position Currently ARF has both political mandate (based on South African foreign policy) & developmental mandate (based on needs of continent); though there might be close crosscutting linkages between two mandates. ARF is also broadly positioned in terms of its scope. Previously funded projects have been in five areas (1) Humanitarian, (2) Economic Development, (3) Infrastructure (4) Capacity Building, & (5) Security Sector Reform (SSR). Since establishment of ARF, funding has paid increasing attention to supporting post conflict reconstruction & development (PCRD) efforts. PCRD programmes require more long-term commitment in order to be sustainable, e.g. South Africa’s development assistance to Democratic Republic of Congo (DRC), which follows multiple-year approach.

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Operational function It has been found that there is increasing pressure on ARF to

strengthen its accounting practices (and align itself to Medium Term Expenditure Framework while also, on other hand, having certain amount of flexibility to deal with emergencies.

Initially, ARF did not have proactive planning mechanism, nor did it have monitoring & evaluation mechanism in place.

With increasing demand for assistance, what has been found is that ARF faces challenges such as setting of standard criteria from which to assess & evaluate projects, & lack of standard project proposal template.

Besides lack of capacity to monitor & evaluate projects, need was identified to strengthen ARF’s administrative capacity.

Operational function It has been found that there is increasing pressure on ARF to strengthen its accounting practices (and align itself to Medium Term Expenditure Framework while also, on other hand, having certain amount of flexibility to deal with

emergencies. Initially, ARF did not have proactive planning mechanism, nor did it have monitoring & evaluation mechanism in place. With increasing demand for assistance, what has been found is that ARF faces challenges such as setting of standard criteria from which to assess & evaluate projects, & lack of standard project proposal template. Besides lack of capacity to monitor & evaluate projects, need was identified to strengthen ARF’s administrative capacity.

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ARF represents an independent funding mechanism for South Africa’s agenda on African continent. ARF Act prescribes that Ministers of International Relations & Cooperation/Finance should concur any proposed project before funding is released. In addition, ARF is also subject to medium-term expenditure estimates of National Treasury.

Advisory Committee, which is chaired by DG: DIRCO & comprises 3 DIRCO officials & 2 National Treasury officials, makes recommendations on projects to Ministers of International Relations & Cooperation/Finance.

ARF Secretariat is located in DIRCO Branch: Africa Multilateral. It receives & prepares project documentation for Advisory Committee & assists with fund disbursement & monitoring & administration of ARF.

Assets of ARF are retained in an interest bearing account with Corporation for Public Deposits of South African Reserve Bank. ARF consists of:

Money appropriated by Parliament for ARF; Money received by way of repayment of any loan made from

ARF; Interest received on any loan made from ARF, including

interest derived from any investment of money standing to credit of ARF; &

Money accruing to ARF from any other source.

ARF represents an independent funding mechanism for South Africa’s agenda on African continent. ARF Act prescribes that Ministers of International Relations & Cooperation/Finance should concur any proposed project before funding is released. In addition, ARF is also subject to medium-term expenditure estimates of National Treasury. Advisory Committee, which is chaired by DG: DIRCO & comprises 3 DIRCO officials & 2 National Treasury officials, makes recommendations on projects to Ministers of International Relations & Cooperation/Finance. ARF Secretariat is located in DIRCO Branch: Africa Multilateral. It receives & prepares project documentation for Advisory Committee & assists with fund disbursement & monitoring & administration of ARF. Assets of ARF are retained in an interest bearing account with Corporation for Public Deposits of South African Reserve Bank. ARF consists of: Money appropriated by Parliament for ARF; Money received by way of repayment of any loan made from ARF; Interest received on any loan made from ARF, including interest derived from any investment of money standing to credit of ARF; & Money accruing to ARF from any other source.

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Financial Year Amount 2001/4 R50 million 2004/05 R50 million 2005/06 R100 million 2006/07 R150 million 2007/08 R215 million 2008/09 R276 million 2008/09 R698,925 million 2009/10 R631,371 million (+ R300 million for

Zimbabwe) 2010/11 R431,072 million

As at 31 March 2010, ARF had accumulated R652,885 million in reserves.

Financial Year Amount 2001/4 R50 million 2004/05 R50 million 2005/06 R100 million 2006/07 R150 million 2007/08 R215 million 2008/09 R276 million 2008/09 R698,925 million 2009/10 R631,371 million (+ R300 million for Zimbabwe) 2010/11 R431,072 million

As at 31 March 2010, ARF had accumulated R652,885 million in reserves.

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ARF has developed into an effective tool to support South African government’s policy to promote democracy and good governance, prevention and resolution of conflict, socio-economic development and integration, humanitarian assistance, and human resource development in continent.

ARF is indicative of South Africa’s preparedness and commitment to furtherance of African Agenda.

ARF is one of few people-centred funds of its nature. ARF funding is applied to projects, without any administrative costs, which are covered by DIRCO.

Principal success of ARF must be appreciated in terms of its setting up of valuable point of reference in South African ODA environment.

Not only has ARF interventions supported immediate critical challenges, it has also served as mechanism to draw in involvement of International Cooperating Partners (donors) in terms of tripartite projects.

ARF has developed into an effective tool to support South African government’s policy to promote democracy and good governance, prevention and resolution of conflict, socio-economic development and integration, humanitarian assistance, and human resource development in continent.

ARF is indicative of South Africa’s preparedness and commitment to furtherance of African Agenda. ARF is one of few people-centred funds of its nature. ARF funding is applied to projects, without any administrative costs, which are covered by DIRCO. Principal success of ARF must be appreciated in terms of its setting up of valuable point of reference in South African ODA environment. Not only has ARF interventions supported immediate critical challenges, it has also served as mechanism to draw in involvement of International Cooperating Partners (donors) in terms of tripartite projects.

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South African Cabinet at its meeting of 2 December 2009 approved conceptual approach to establishment of South African Development Partnership Agency (SADPA).

Cabinet approved principle that work leading to establishment of agency “should focus on integration rather than on initiating new process” and that establishment of SADPA vests with Minister of International Relations and Cooperation. In terms of interpretation, reference to integration specifically relates to integration of ARF into SADPA.

Pending formal establishment of SADPA, current initiatives aimed at revision and improvement of ARF processes, as well as ongoing technical capacity building of ARF staff, will need to feed into this process and will need to be transferred to SADPA.

These activities include integration of an IT-based project cycle management approach, new templates for project appraisal & effective monitoring and evaluation systems, determining role of South African private sector & NGOs, upon understanding that these systems will be integrated into SADPA.

South African Cabinet at its meeting of 2 December 2009 approved conceptual approach to establishment of South African Development Partnership Agency (SADPA). Cabinet approved principle that work leading to establishment of agency “should focus on integration rather than on initiating new process” and that establishment of SADPA vests with Minister of International Relations and Cooperation. In terms of

interpretation, reference to integration specifically relates to integration of ARF into SADPA. Pending formal establishment of SADPA, current initiatives aimed at revision and improvement of ARF processes, as well as ongoing technical capacity building of ARF staff, will need to feed into this process and will need to be transferred to SADPA. These activities include integration of an IT-based project cycle management approach, new templates for project appraisal & effective monitoring and evaluation systems, determining role of South African private sector & NGOs, upon understanding

that these systems will be integrated into SADPA.

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COUNTRY/ INSTITUTION

AMOUNT PROJECT NAME STATUS/COMMENTS YEAR COMMENCED

Democratic Republic of Congo (DRC)

R101 million Public Service census Project in progress 2008Capacity building in decentralisation programme

Project in progress 2008

Establishment of a public service training institute (ENA)


Assistance with the building of a dam

Project plan being finalised

2008

Seychelles R27 million Infrastructure rehabilitation of the Seychelles port

Project finalised 2008

Saharawi Arab Democratic Republic (SADR)

R52 million Humanitarian Assistance Project (R42 million)

Last tranche paid in February 2010

2007

Land mine removal (R8 million)

Project plan being finalised To commence in 2010

Sports complex (R2 million)


Rice production Project in progress 2008

Electricity Stabilisation


Emergency Cleaning of the Capital City


ARF FUNDED PROJECTS TO DATE

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COUNTRY/ INSTITUTION AMOUNT PROJECT NAME STATUS/COMMENTS YEAR COMMENCED

Construction of the Kindia Museum

Suspended due to political instability

2009

Guinea-Bissau R1 million Pledge to contribute to UN anti-drug trafficking efforts in Guinea-Bissau

Project completed 2008

Zimbabwe R300 million Economic recovery programme (R300 million)

R300 million transferred 2009

R300 million Agricultural Assistance programme


R13.5 million Election Observation Missions to Presidential and run-off elections

Project completed 2008

R100 million Building of the Metolong Dam


Construction of the Sani- Pass to Mokhotlong Road


Revitalisation Timbuktu Manuscripts Project in Mali

Project in progress 2009Training of Southern Sudan Administration in Public Administration

Project in Progress 2007

Establishment of the African Ombudsman Research Centre


Funding of PAWO conference

Project finalised (2008) 2008

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COUNTRY/ INSTITUTION

AMOUNT PROJECT NAME STATUS/COMMENTS YEAR COMMENCED

Comoros R31 million Electoral Assistance to the Comoros


Rwanda R17 million A trilateral project with Cuba


Sierra Leone R24 million A trilateral project with Cuba

Project plan still being finalised

To commence in 2010/11

Uganda R22 million Building of the OR School of Leadership in Kawaweta


R10 million Funding to support the Common Wealth Heads of Government meeting (CHOGM) (2007)


R28 million Assistance to the Office of the Facilitator in the Burundi Peace process


R2.5 million Assistance to the African Economic Research Consortium


R6.5 million Financial support to the SADC Chamber of Commerce and Industry


R13 million Assistance in the clearance and demolition of unexploded ordinance at an ammunition storage


Documents

PRESENTATION TO PORTFOLIO COMMITTEE ON INTERNATIONAL RELATIONS & COOPERATION