The Multinational Monitor

MAY 1996 · VOLUME 17 · NUMBER 5

T R Y I N G    T I M E S    I N    S O U T H E R N    A F R I C A

Making the Earth Rumble
The Lesotho-South African
Water Connection

by Korinna Horta

MAPELENG, LESOTHO -- Small earthquakes have been rumbling in recent months through the Maluti Mountains in the small landlocked nation of Lesotho, which is entirely surrounded by South Africa. Mountain villages now live in fear of the ongoing earth tremors, such as the one that left a crack through the middle of the village of Mapeleng, and damaged many traditional stone-built rondavels (round houses).

"For 60 years we lived comfortably here, until October 1995. My family is sitting on a crevice," says a Mapeleng villager. "When I ask, I am told the foundations to my huts are weak. Yet for 60 years those huts stood strong. I fear that one day when the tremors attack, I shall run outside only to get swallowed by the crevice running between my huts."

According to expert seismologists, the reason for the earthquakes is the filling of the Katse dam, which at a height of 182 meters is the highest dam ever built in Africa. About 2.4 million cubic meters of concrete were used to build the dam, and the reservoir will extend over an area of about 15 square miles.

Funded by the World Bank, European export credit agencies, international and South African banks and various bilateral donors, including the French, British and German donor agencies, the Katse dam is the centerpiece of Phase 1A of the Lesotho Highlands Water Development Project. Phase 1A also includes the building of more than 50 miles of tunnels to be blasted through the mountain landscape, a hydropower station and the building or upgrading of 250 miles of roads. The entire project consists of what are effectively five separate phases (IA, IB, II, III and IV), including the building of five large dams, two smaller dams and 140 miles of tunnels. The last phase is due to be completed in the year 2017. The entire scheme's cost is estimated to be $8 billion.

The purpose of the project is to export water from the Senqu River, known as the Orange River in South Africa, to the Johannesburg region, the industrial heartland of South Africa. The project will first store the southwesterly flowing headwaters of the Senqu River and then redirect the water northward via a system of tunnels and pumping stations to South Africa's power and population center in Gauteng Province, where Johannesburg and Pretoria are located. Phases 1A and 1B, both of which are covered by a 1986 treaty negotiated by the South African apartheid government and a Lesotho military government which reportedly took power through a coup engineered by South Africa months before the treaty's signing, are to deliver 2 billion cubic meters of water to South Africa per year.

A small hydropower component, the Muela power plant, was added to the project in response to Lesotho sensitivities about further deepening its already overwhelming economic dependence on South Africa. The Muela hydropower station, construction of which has been suspended for many months because of unspecified "procurement problems" -- a likely euphemism for corruption charges -- is supposed to help make Lesotho more self-sufficient in energy production.

Phase 1A is itself mammoth, especially in the context of Lesotho, an impoverished mountain kingdom the size of the state of Maryland with about 2 million inhabitants and an approximately $750 million gross domestic product. The project is overwhelming the country and is likely to determine the political economy of Lesotho for generations to come.

John Roome, the World Bank's task manager for the project, says, "The main impact of the project on Lesotho's economy will be the royalties from the sale of water, estimated at about $55 million per year once the first two large dams are operational. This will be a net contribution to the Lesotho government, which will put this money into a development fund to be used for community-identified and poverty-focused investments."

In contrast, a World Bank supervision report of October 1995 is less clear about what the benefits and possible trade-offs of the project might be. It states that an economic analysis for the Phase 1B area is essential to "address the question whether the project results in a squeezing out of other poverty projects and uncompensated environmental impacts." Lesotho will have to pay for a Rural Development Plan to be undertaken in conjunction with the water project, and the sheer size of the water project diverts attention from any other possible development program.

Astonishingly, the Bank supervision report's proposal to address the "squeezing out" concern is for the Lesotho Highlands Development Authority (LHDA), the Lesotho parastatal agency responsible for the project, "to submit a quick and dirty study."

Big plans, tiny country

The Kingdom of Lesotho is an unlikely site for one of the most ambitious engineering projects in the world. Its economy is largely dependent on the remittances of Basotho (native people of Lesotho) workers employed in South African mines and industries. The country has a small manufacturing base and subsistence agriculture continues to be the most important activity of a large part of the population.

Lesotho is often referred to as the "Kingdom in the Sky." It is said to be the only country in the world whose entire territory lies 1,000 meters above sea-level, and three quarters of the country consists of high mountain land. The mountainous topography is responsible for the abundance of water, said to be among the highest quality in the world. The boundaries of present-day Lesotho were determined by the wars of conquest waged by the Boers, the encroaching Dutch settlers, between 1840 and 1869. During this time, the Basotho lost most of their agricultural land and were forced to withdraw into the remote and highly inaccessible mountain regions.

South African engineers conceived the Lesotho Highlands Water Project in the 1950s, but many Basotho greeted the idea with marked skepticism. Reflecting continuing Basotho resentment of having lost their land to the white settlers in what is now South Africa's Orange Free State, one Lesotho official explained the initial lack of enthusiasm for the project: "First the Boers took our land away from us, and now they want to take our water."

Ironically, despite its abundance of water, Lesotho, like much of southern Africa, has suffered from severe droughts since 1992. Although Lesotho may have more than enough water to cover the country's needs, the water is not evenly distributed, and growing water scarcities have led to decreased food production and a growing dependence of the country on cereal imports and food aid. In addition, the vast majority of Lesotho's population has no access to clean drinking water.

The Lesotho Highlands Water Project is not designed to improve the water supply for the Basotho or their fields, however. To the contrary, construction activities and the recent tremors have already destroyed many springs, which provide mountain villages with their only accessible water.

The Lesotho Highlands Water scheme will also aggravate an already difficult land situation. Today, only 9 percent of Lesotho's land area is arable. Growing erosion problems have diminished the availability of land, and soil is generally of poor quality. Yields of the main staple crops -- maize, sorghum and wheat -- are declining. The water reservoirs envisaged under the project, especially the dam and reservoir to be built under Phase 1B of the project, which is scheduled to receive co-financing from a World Bank loan, will flood some of the most fertile and productive land in the entire country.

Changing the face of Lesotho

An international insurance company advertisement on a Lesotho radio station proclaims that the company is helping to insure "the project that is changing the face of the earth." This is not commercial hyperbole; the ongoing earth tremors indicate that the Lesotho Highlands Project is affecting change on more than the earth's surface.

Despite the gigantic dimensions of the project, project designers, constructors and funders all failed to conduct an environmental impact assessment (EIA) for Phase 1A. The initial feasibility studies for the project, carried out by the British-German engineering consortium Lahmeyer-McDonald, concluded that there were no major "environmental obstacles" to the project. This seems to have been sufficient to satisfy funders. Officials of the environment department of the Lesotho Highlands Development Authority have frequently complained to outsiders that they were unsuccessful in drawing attention to the ecological implications of the project: "We've got little in terms of proper baseline data," says a biologist on contract at LHDA who requested anonymity. "Instead of doing an EIA, they went straight to doing an Environmental Action Plan without the benefit of baseline data."

The Environmental Action Plan prepared for the project is based on a series of mostly European Union-funded short-term studies that environmental experts familiar with the project describe as "transient and sketchy."

The World Bank's John Roome admits that no EIA was carried out, but points out that the Bank was not obliged to carry out an EIA, since the Bank approved the project loan shortly before the Bank's policy on environmental impact assessments became effective in 1991.

The slipshod environmental reviews conducted in conjunction with the project have largely overlooked two of the most critical ecological aspects: the increase of erosion resulting from the project and the project's downstream impacts.

Soil erosion, which is already severe in the Highlands, is being further aggravated by project construction activities and will be exacerbated even more by changes in land-use patterns when villagers are forced to farm and graze their cattle on steeper hillsides as their fields and grazing lands in the valley bottoms are flooded by the reservoir. This serious shortcoming of Phase 1A has not yet been studied, even though it is likely to contribute to the silting up of the dams and to impede adequate water flows in the river. Phase 1B contemplates a study of this issue, but that study, even if it were to prompt action, may be too little, too late for the Phase 1A area.

The diversion of large amounts of water from the Senqu (Orange) River is likely to exacerbate water scarcity problems downstream, in western South Africa and Namibia. The extent of the potential problem is not yet publicly known, but present indications are worrisome.

According to South African officials, the South African Ministry of Water Affairs has undertaken some studies on downstream impacts, but these have been kept secret. Shortly after the closing of the gates of the Katse dam, South African television news -- SABC -- reported that stretches of the Orange River had run dry and that the South African Ministry for Water Affairs was launching an investigation into the water shortages in the Orange River. According to other South African news reports, a study by the South African Water Research Commission has concluded that the amount of water in the Orange River was vastly overestimated in the project planning stages.

Downstream riverine habitats will be affected as well as the agricultural productivity in the adjacent areas.

A monster project

Clusters of small, stone-built round houses with thatched roofs seem carved into the sides of the ruggedly beautiful mountain landscape of the Lesotho Highlands. The villagers, wrapped in their traditional blankets to protect against the freezing mountain temperatures, rely on horses as their main form of transportation in a terrain marked by steep valleys and rocky mountain sides.

The Highlands people are the poorest people in Lesotho. Access to agricultural fields and communal grazing lands for cattle, villagers' traditional source of wealth, is crucial to local livelihoods. An internal World Bank memorandum of April 6, 1994 recognizes the thin margin of survival in the Highlands: "The slight, but highly important losses inflicted on these households, even if just a small garden, become very important in keeping a family above the line of malnutrition and this fact is not always appreciated by people who are not native to the Highlands."

About 20,000 Highlands people have been affected by Phase 1A of the project, according to demographic surveys by LHDA. They have lost all or part of their grazing lands and fields. Some lost their homes to the rising waters of the reservoir and the construction of other project-related infrastructure.

The Highlands people deeply resent that they never were consulted about the project. "It is as though we do not matter. If and when they choose to tell us things, they simply inform us as though we were children," explains a Highlands villager. Although the Lesotho king visited the Highlands before signing the 1986 project treaty with South Africa, villagers felt powerless to affect his decision. "When the king came through, what could we do but smile and clap hands? We did not understand anything," says one member of the Highlands Church Action Group, a local non-governmental organization.

Those Highland people who lost land are receiving compensation in the form of an annual delivery of corn and beans and fodder for their livestock, depending on how much they have lost. This compensation scheme is to last for a period of 15 years, half of which has already passed. "We are compensated for only 15 years, whereas our land would feed us throughout our family lives," explains a local villager.

By the end of the 15-year period, the Rural Development Plan, which is part of the project's Environmental Action Plan, was supposed to have generated a sufficient number of jobs to replace compensation. But so far the Rural Development Plan has largely remained a well-intentioned paper exercise. Even the internal World Bank supervision report of October 1995 recognizes the Rural Development Plan as "the sick man of the entire operation."

The World Bank's poverty assessment on Lesotho of August 1995 admits that, given the fact that the project is capital intensive and that jobs may have largely gone to non-Basotho people, "the project may not have benefitted the poor as much as the model simulation estimates."

For most local people, the project has been an utter disaster. "People look at the project as a monster," is how a villager describes the generalized feeling of local people toward the project.

In a 1993 survey by LHDA, the vast majority of villagers expressed strong dissatisfaction with the compensation package. The corn and beans do not reflect the many varieties of food that the Highlands people traditionally grow, and they make for a nutritionally poor diet. An environmental panel set up by the World Bank to monitor the project has repeatedly called for the distribution of iodized oil capsules to all children in the Phase 1A area and a comprehensive nutritional evaluation of the compensation package. These recommendations have not been implemented.

Villagers are not compensated at all for other essential goods that the land used to provide -- such as wild plants, building materials and fuelwood, which is critical for cooking and heat in the harsh high-altitude temperature.

Perhaps most disturbing for villagers is the loss of identity that accompanies the loss of land. "How can we plan for the future if we have no land? We are almost dead, without hope. We should not be disturbed like this. Our land and homes and graves should not be disturbed," says a local church minister.

"What will we leave for our children?" asks Moea Ramokoatsi, a member of the Highlands Church Action Group, echoing the sentiments of the affected Highlands people. "What will happen to us after the 15-year period ends?"

In addition to harming local people by depriving them of land, the project has brought with it a host of problems: deafening noise pollution from blasting, dust, the destruction of clean water sources and a great influx of outsiders in search of work. Many of the newcomers to the region have put up shacks of cardboard and plastic in the traditional villages. Social and public health problems, including alcoholism, crime, prostitution and AIDS, are rapidly worsening. Reports from the World Bank environmental panel of experts have warned that there is a risk of a worsening health situation for a majority of the affected people. Its August 1994 report says, "While the necessary monitoring activities have yet to begin to provide the necessary data, the panel believes the health conditions continue to deteriorate."

Outlook for Phase 1B

A World Bank loan for $110 million for the continuation of the project into Phase 1B, which is estimated to cost $1.1 billion, is currently in the pipeline and may get approved as early as 1997. Preparations for Phase 1B, including massive investments in advanced infrastructure, such as the building of a major new road, are already underway.

With the news arriving from the Katse area in Phase 1A so consistently bad, much of the population in the Phase 1B area is against the project, according to a November 1995 report by the Hunting Consult 4 Joint Venture consulting firm, which was contracted by LHDA to study resettlement for the Phase 1B area. The report warns that "the possibility of a reduction in subsistence agricultural activities could have important consequences for household members, particularly women, children and the elderly."

But, living in remote and difficult-to-reach villages, many people in the approximately 63 villages that will be affected by Phase 1B have little information about the project. "Many people do not know about the project and those who have heard about it cannot picture in their minds that their houses and land will be flooded," says a member of Development for Peace Education, a Lesotho non-governmental organizational that works in the area.

In some 1B areas, the destruction of water springs, houses and fields to make space for the advanced infrastructure and its construction camps has already created a sense of impending disaster. "The contractors themselves decide what they give people in compensation, they decide what the land is worth," complains a local villager.

Environmental and social problems in the Phase 1B area will be far more complicated than those in Phase 1A. The area is home to a number of endemic species listed as endangered, such as the Maluti Minnow, a fish only found in the rivers of the 1B area, and the Spiral Aloe, a plant widely used in Lesotho for medicinal purposes.

The area to be flooded for the Mohale dam will require the resettlement of a larger group of villages than was the case with Phase 1A, and the flooding will submerge some of the most fertile land in the entire country. The November 1995 report by Hunting Consult 4 Joint Venture states that the low-lying fertile lands of the valley have consistently produced surpluses that have helped feed surrounding mountain villages with less productive land and warns that "not only the project area, but the country as a whole will lose an asset of rare quality." The lack of arable land in Lesotho and the growing problem of food security for its people makes it all the more important that compensation include a land-for-land agreement that local people are demanding -- even though this may involve land in neighboring South Africa.

South African alternatives

When it became known in Lesotho that South African President Nelson Mandela himself had endorsed the water project, a member of the Highlands Church Action Group explained that the local reaction was, "Nobody told Mr. Mandela that the Highlands people are suffering because of the project. He has only heard the propaganda."

This may well be true, especially as many project-related decisions are being made by the apartheid-era bureaucracy which remains entrenched in South Africa. The apartheid-era planners of the Lesotho Highlands Project were concerned about a reliable supply of water for industrial growth. An adequate supply of safe water for the disenfranchised black majority of the country was not a high priority.

The new South African government has set the goal of providing access to clean water to all its residents and has emphasized the social purpose of the Lesotho Highlands Project. But a range of less environmentally or socially harmful alternatives to the Lesotho Highland Water Project are readily available.

Systematic water conservation efforts could yield major savings, given that at present most water is used by urban middle- and upper-income areas to maintain lush gardens and swimming pools. A recent report by the London-based organization Christian Aid and the Christian Council of Lesotho points out that the South African goal of supplying 25 liters per person per day to the approximately 1.4 million urban inhabitants of Gauteng Province without access to water represents an amount of water equivalent to approximately 5 percent of the water currently consumed by middle-class and wealthy South Africans.

The real problem of providing access to clean water appears to be building the infrastructure for water delivery, rather than lack of water per se. The Group for Environmental Monitoring, a Johannesburg-based environmental organization, points out that much water could be saved through upgrading old and faulty pipes in Gauteng Province, which are estimated to leak about 50 percent of the water passing through them.

Environmentalists in South Africa also propose that there be a review of the efficiency of water use by South African industry and that serious consideration be given to shifting industries and jobs to water-rich catchment areas so that they would not increase water demands in more arid areas.

All these considerations deserve attention because of the high stakes involved. An internal World Bank memorandum of April 1994 calls for "reduc[ing] the penalties to the Highlands people who live in severe poverty and whose very survival is at stake." Unfortunately, such voices within the World Bank are often overridden by other concerns.

With the filling of the Katse Dam, it takes about a 40-mile ride on horseback to get around the reservoir. At a "pitso," a traditional village meeting, a villager from Mapeleng voices the feelings of many Highlands people. "Before this dam came into being, walking across to Ha Constabole and Spinare was half an hour's business," he says. "We've been deprived of all communication with other villages; now we are having to shout messages regarding illnesses and death. Is that right in our Sesotho tradition? If nothing is done to ease our life in this respect, they should pump this water out of here. Otherwise, this water will become a grave for us and our children."

The debate about water in the region should be public and should consider who the losers and winners will be under various scenarios. The obvious winners in the Lesotho Highlands Water Project so far are the engineering consortia, the European companies who have benefitted from the support of their export credit agencies in order to get a piece of the project and many banking and business operations. Surely the government of South Africa and the international public and private financiers of development assistance can be challenged to ensure water for South Africa's disenfranchised without sacrificing the Highlands people, creating irreversible ecological damage and inflicting harm on the downstream populations.

Financial Wizardry

THE COSTS FOR THE NOW ALMOST COMPLETED Phase 1A alone are estimated to run to approximately $2.4 billion, a stunning allocation for a single project for a small country with a yearly per capita income of less than $500. Arranging financing for the project in the 1980s was a complicated affair. While Lesotho, a country too poor to qualify for such large loans, was the nominal recipient of the funds, loan documents state that South Africa, subject to international sanctions at the time, is responsible for servicing and repaying the debt.

Starting in 1986, the World Bank provided a concessional loan of $8 million to Lesotho to help finance project design and arrange for the complicated financial package. According to the Bank's project report, preparations for project financing were so complex that it required "the amount of staff work that would normally go into about 10 projects." That was because Lesotho did not have the creditworthiness needed to obtain the major international funding required for Phase 1A, and giving the money directly to apartheid South Africa was politically unacceptable.

World Bank documents show that the Bank was concerned about "the project being perceived as being in the Republic of South Africa's interest" and about other possible co-financiers' "political sensitivities" about aiding the apartheid regime. To assuage the other lenders' "sensitivities," the World Bank helped set up a trust fund in Britain through which South Africa could service its debt. The Bank also agreed to assume the same level of risk as other lenders, an arrangement that lent the project international credibility. A range of European export credit agencies, the European Investment Bank, the African Development Bank, commercial banks such as the French Credit Lyonais and the German Dresdner Bank as well as British and other European bilateral aid providers then agreed to co-finance the project.

Only the Muela hydropower plant which, if completed, will generate some of Lesotho's electricity, will be paid for by Lesotho, with British aid, and loans from the African Development Bank and others.

-- K.H.

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