Cover image courtesy of Aurecon.
–by Lauren Douglas and Simon Dempsey–
A 1986 treaty between Lesotho and South Africa initiated a large-scale water development project called the Lesotho Highlands Water Project (LHWP). Financed heavily by foreign investment, the LHWP was designed to increase water supply for the Guateng Province of South Africa while simultaneously increasing jobs and electricity in the Lesotho. However, macro-scale and institutional corruption within the LHWP have obfuscated most of the intended positive outcomes of the project. Additionally, failed compensation schemes have done little to address ways in which the LHWP exacerbated income inequality, destroyed valuable resources, and undermined social structures in rural project-affected areas. This article examines the origins and goals of the LHWP and further explores the multiple negative consequences it imposed on rural communities.
In 1986, a treaty between the Kingdom of Lesotho and the Republic of South Africa initiated a large-scale water development project known the Lesotho Highlands Water Project (LHWP). About the size of Belgium, Lesotho is landlocked by its powerful neighbor, South Africa. While the country is among the world’s poorest and is relatively devoid of natural resources—particularly arable land—its mountain highlands contain an abundance of water. As such, the LHWP aimed to utilize the vast abundance of water in Lesotho to deliver water to the highly populated Guateng Province of South Africa. Advocates for the project presented it as a natural solution to combat the water shortage experienced by South Africa while simultaneously providing an influx of electric power, jobs, money, and infrastructure to Lesotho—a country where over 50% of the population lives underneath the poverty line.
However, since its inception the LHWP has been mired in controversy as it either failed to achieve its cited benefits or sacrificed too much to do so. This article will explore some of the most glaring failings of the project, particularly how these flaws harmed rural communities located within the project areas. The LHWP exacerbated poor conditions for project-affected populations in Lesotho due to pervasive institutional corruption, elimination of various tangible resources, destruction of local social paradigms, and an ineffective compensation scheme.
The idea behind the LHWP began with the British High Commissioner to Lesotho, Sir Evelyn Baring, in the 1950s. He realized the potential within Lesotho’s abundant water supply for future economic partnership with South Africa. In 1978, both South Africa and Lesotho conducted an initial feasibility study. The Lahmeyer MacDonald Consortium followed this up with a more in-depth three-year study in 1983. The study concluded that the proposed water project would be mutually beneficial for both countries, providing water to the dry areas of South Africa in the Guateng Province while generating hydroelectric power for Lesotho.
With these findings, both countries moved forward to sign a treaty in 1986 that officially began the project by outlining it goals, the roles of South Africa and Lesotho, and a long-term plan for its implementation. The treaty also established parastatal authorities whose responsibilities included general supervision of the project as well as implementation of compensation and resettlement programs; for Lesotho this was the Lesotho Highlands Development Authority (LHDA), for South Africa, the Trans-Calderon Tunnel Authority. Further details of the treaty include five planned project phases to be carried out over a thirty-year period, with an immediate focus on Phase I.
Currently, only Phase I of the project has been completed. This represents a significant lag past the initial 30-year timeframe detailed by the treaty. The delay can be attributed to the project’s sheer scale, as well as pervasive project corruption and political strife in Lesotho. The project will now not likely be completed for another decade. Yet, this does not mean that the LHWP and its impact cannot yet be observed and analyzed. Thus, the remainder of this article will focus on the details and impact of Phase I of the Lesotho Highlands Water Project, specifically within the Kingdom of Lesotho.
Construction of the Katse Dam as part of Phase 1A began in 1989. The dam itself is 180 meters high and 710 meters long. A 45 kilometer transfer tunnel was also excavated between the Katse Dam and the planned Muela Hydropower Station. Phase 1B contained the construction of the Mohale Dam, the Muela Hydropower Station, and a diversion tunnel to the Katse Dam.
The Mohale Dam spans 564 meters with a height of 140 meters. However, the combined outputs of both dams only totals about 29 cubic meters per second of water delivered, short of its desired output of 70 cubic meters of water per second. The Muela Hydropower Station was commissioned in 1998 and now generates 72 megawatts of power for Lesotho. This has served to reduce Lesotho’s near complete dependence on South Africa for electricity. Finally, Phase 1B—and by extension the entirety of Phase I—saw its completion with the inauguration of the Mohale Dam in 2004.
The successful completion of Phase 1 created some undeniable positive outcomes for Lesotho. The official Phase I website cites a rise in GDP per annum from 3% to 5.5% during Phase 1A construction. As of 1998, the project accounted for 13.6% of Lesotho’s GDP; one third of all construction in Lesotho is project related. In the same vein, 16,000 jobs were created for Lesotho, and the country decreased its energy dependence on South Africa after the completion of the Muela Hydropower Plant. Furthermore, Lesotho has received over M5.2 billion in royalty revenue from water transfer and electricity sales.
Despite not yet achieving the project’s water transfer goal, South Africa’s water needs have been more than met. In fact, the project is currently outputting 38.3 cubic meters per second, which is six times the daily usage of Capetown. Lesotho has also benefitted from infrastructure improvements; the official Phase I website cites the construction of 400 km of gravel roads and 300 km of tarred roads, the rehabilitation of 133 km of gravel roads, and the construction of 11 bridges. Certainly, the project has achieved many of its original, tangible goals, at least on paper.
Unfortunately, actual implementation of the project was rife with issues, one of which takes the form of institutional corruption. The political climate of the countries involved in the LHWP certainly did not encourage accountability. In 1986, the same year the treaty was signed, a military coup overthrew the government of Lesotho; meanwhile, South Africa was ruled by an apartheid government. Previous negotiations with Lesotho on a water treaty had been unsuccessful in part due to the Lesotho’s civilian government being unwilling to associate itself with South Africa’s apartheid government. Thus, South Africa backed the military coup in part to negotiate its way to the treaty that would become the LHWP.
In this way, the LHWP was founded upon an agreement between two undemocratic states; while not directly causing widespread corruption within the project, these circumstances prevented legitimate checks against growth of corruption. Much of this corruption remained hidden until 1993, when a new Lesothan civilian government conducted an audit on the LHDA. The audit revealed that the LHDA’s CEO, Masupha Ephraim Sole, was misappropriating funds for his own use. Further investigation into large sums of money received by Sole found that he had been accepting bribes from outside contractors in order to be awarded bids for the project. This practice had been occurring since the project’s inception. Sole and many of the contractors were subsequently brought to court and found guilty on charges of fraud and bribery.
Similarly, project wealth stayed in the hands of the privileged. Proponents of the LHWP stated how project royalties would be redistributed among the nation’s poorest, recognizing adversely affected people first. As such, the Lesotho Fund for Community Development was created to conduct redistribution of Lesotho’s $25 million of annual royalties. However, a World Bank audit found the organization guilty of corruption, with local politicians instead lining their own pockets and using the money to reward supporters of their party; Lesotho is still ranked within the top ten highest global income disparities.
Many effects of this corruption still taint the LHWP. Corruption and bribery quickly gave way to project mismanagement and negligence concerning the project’s wide-ranging effects on the environment and local populations. The reputation of the LHWP became so controversial that the LHDA has attempted to reform many of its policies, even going so far as to release a new anti-corruption policy in 2011. Though this policy is a step in the right direction, it still leaves much to be desired for the LHWP—whether it actually demonstrates it has learned from its past mistakes remains to be seen. Subsequent analysis of the LHWP’s many adverse effects on local populations will demonstrate how much difficulty the project faces in winning back public trust.
The reputation of large-scale water project development is not a particularly flattering one. According to a World Commission on Dams report, this type of infrastructure development has physically displaced an estimated 40-80 million people throughout the past century. Furthermore, with 60% of the world’s rivers damned by 2000 and two-thirds of large dams constructed in poor, remote areas, many studies have noted a severe disparity in the distribution of resulting benefits. Those affected by projects, while typically not benefitting from the wealth created by damns, also suffer consequences such as loss of livelihood, forced migration, and cultural alienation. Given this unflattering history, large funders of these types of development projects (such as the World Bank, the world’s primary financier of large dam development) fell under pressure to adopt a set of guidelines concerning the resettlement and compensation of those that damns displaced.
The World Bank did, in fact, act as a major financier of the LHWP, contributing $110 million to Phase 1A alone. As a result, the project treaty was legally obligated to follow the WB’s own guidelines regarding displaced and resettled populations. Article 44 of the 1986 treaty thus states that “The [project] shall, ensure that is far as is reasonably possible, the standard of living and the income of persons displaced by the construction of an approved scheme shall not be reduced from the standard of living and the income existing prior to the displacement of such persons.” As previously mentioned, the Lesotho Highlands Development Authority represented the main entity responsible for ensuring implementation of compensation and resettlement programs. Reassured by the World Bank’s vote of confidence and appraisals of minimal socio-environmental impacts, multiple other foreign financiers contributed to project funding.
On paper, the compensation policies drawn up by the World Bank and LHDA are among the best to accompany a large-scale water development program. Comparatively, the LHWP hired more consultants, allocated more money, and made more efforts to restore affected livelihoods than almost any of dam development project in history. For example, the compensation program for Phase 1A budgeted 1.3% (approximately $13 million) of the overall project cost for this purpose. The Phase 1B program was similarly well-funded, budgeting approximately $10 million for those affected by Mohale Dam. On paper, the LHWP was off to a good start—clearly, the investors involved wanted to avoid the bad press typically associated with dam development.
The policy is largely defined by lump sum compensation for loss of resources. For example, those who had lost above 1000 m2 of arable had to choose between an annual cash payment of $300 per hectare for 50 years or a one-time lump sum payment of $6,000 per hectare, also designed to provide 50 years’ worth of compensation. To receive the lump sum compensation, the policy required applicants to draw up a viable “business plan” before granting them payment. Again, a main motivation of these measures was to encourage the investment of foreign entities. This way, at the very least, the investors would have a reasonable escape clause in the event of creating severe socio-economic burdens for locals. While other dimensions of the compensation scheme included resettlement and rural development projects, this investigation will narrow its focus onto the failings of the direct compensation scheme as well as the host of tangential consequences created by the project itself.
Harm to Local Populations
The Lesotho Highlands Water Project, despite is promises and well-funded compensation plan, brought with it a host of detrimental effects to local populations. The most overwhelming blow is the significant loss of land. The Kingdom of Lesotho is landlocked; less of 10% of its land area is considered arable. By the end of Phase I, the LHWP had taken away 1,500 hectares of arable land, 1,900 ha 0f cropland, and 5,000 ha of grazing land. Around 2,345 households’ fields became submerged, not even counting households who sharecropped them. Unfortunately, Lesotho’s most fertile land, the Mohale valley, was among the submerged regions.
This loss of land has resulted in several adverse effects to locals. Most obviously, food security in the affected areas became highly strained as two-thirds of the population had depended on locally-produced crops. The loss of grazing land restricted herds of cattle, sheep, and goats to far smaller areas, overstressing the remaining grazing land. Additionally, the flooding of ravines and valleys took away “winter pastures” that helped shield the animals from icy winter winds; as a result, cattle-rearing became far more difficult.
Another large blow was the loss of access to free, renewable resources. Fuel resources such as trees and shrubs became scarcer, taking away a common supplement to local incomes—the sale of firewood. Affected people became forced to walk significant distances to collect fuel for fire. Furthermore, the half of affected households who used to gather wild vegetables in the river valley were faced with traveling much-increased distances to gather them or forgo eating them at all. Of the 175 species of medicinal plants growing in the flooded area—whose sale presented another source of supplementary income—many were wiped out completely. All told—excluding the economic value of lost crop and grazing land, the proportion of annual income lost due to lack of renewable resources totals around 45%. As the resources that were previously gathered at little-to-no cost then required increased cost and effort to procure, many households stopped using the resource entirely rather than shouldering the extra cost. In tangible terms, the variables of loss of land and access to resources provided the two largest blows to local livelihoods and sustainability.
Beyond purely tangible losses, the LHWP generated a host of social traumas. The main source of these traumas can be traced to the huge influx of construction workers to rural areas; hearing of employment opportunity, thousands of men converged upon project areas. Unfortunately, this mass-migration meant that many locals failed to procure employment, a large promise of the project. Shanties built on the village outskirts by these men quickly outnumbered original households in the villages closest to construction sites. Riding this influx of outsiders, shop owners raised prices of their wares, making purchases more difficult for locals. Additionally, many workers initiated affairs with local women, whose own husbands could not secure employment. Such disturbances to community relationships were addressed and condemned by local chiefs, whose authority was then undermined as non-local workers were not subject to these chiefs’ authority. As a result, local crimes among youth increased as the chieftainship lost respect. 
In a similar vein, HIV rates in project-affected areas increased significantly. A 1995 report by the Archives of Internal Medicine finds: “In the early years of the worldwide pandemic, there were no reported cases of AIDS in Lesotho. That all changed when HIV-infected construction workers arrived in the previously isolated LHWP areas. By 1992, HIV infection rates in villages around the dam were 0.5 percent, and infection rates in the dams’ work camps were over 20 times higher (5.3%).” The rate of infection in the project-affected town of Leribe among 15-24 year olds jumped from 3% in 1991 to 12.6% in 1993. By 1999, 22% of pregnant women living around Katse Dam tested HIV positive. Meanwhile, in the nearby gated community of Katse Village, foreign workers from South Africa, the UK, France, Germany, and Italy lived in relative luxury. These wage-earning foreigners attracted the attention of many young local girls, who “[slept] where their parents don’t know,” in the words of a local 12-year-old. This type of interpersonal involvement, among many of the other factors discussed, contributed to severe social collapse. In fact, the LHDA itself noted the disbenefits and how they “[left] the social fabric of these communities visibly disintegrating.” Unfortunately, these great blows to local people present a whole other dimension of disruption—the intangible—which was not easily quantified and, in kind, not compensated in the least. This utter lack of pre-project consideration for social impact belies a lack of either effort or understanding on the part of foreign investors to anticipate full-picture consequences; a common attitude when directing resources to “developing” countries.
Even worse, the LHDA failed to effectively implement the compensation schemes that did exist. From the start, the management of the LHWP belied troubling signs. All management structures were dominated by engineers and politicians, translating to a lack of both expertise and concern for socio-economic issues and compensation objectives. The previously-discussed topic of corruption also played a role; concerning the LHDA, a 2007 World Bank report found that appointments to high-level positions had been driven by political interests instead of qualifications and experience. This lack of effective infrastructure within the LDHA led to poor implementation of programs—programs that were not even comprehensive enough in the first place. In fact, a 1995 report found that project planners had underestimated the number of locals displaced by 600%.
Beyond poor and negligent management, many inherent flaws of the program became apparent. A very unpopular policy was the 50-year time frame applied to all compensation of land. Many of the project-affected criticized the policy, pointing out that land is an asset passed down for countless generations, and thus a short-term compensation scheme did not account for potential impoverishment of offspring. Another large flaw in compensation was the requirement of a business plan to receive the lump sum land compensation. Taking into account both lack of local experience in drawing up business plans and lack of LHDA criteria to evaluate them, very few households had received their compensation after four years of waiting. Additionally, the compensation program entirely failed to consider the plight of sharecroppers who had previously subsisted on food and income gained from working on other people’s land. A population of 3,200 at Katse dam alone, these people were considered landless in the eyes of the LHDA and thus received no compensation whatsoever, as loss of access to land was not covered in the compensation policy. Clearly, the compensation program of the LHWP fell short in both design and implementation.
Another facet of failure is the way that many of the cited benefits of the project ushered in detriments themselves. For example, one of the most heavily cited boons of the LHWP was the construction of infrastructure, specifically roads. Ideally, the roads would provide increased access to employment by reducing isolation. While the roads did reduce community isolation, this very development ironically harmed local economies. With the advent of easy outside access, the local market became flooded with cheap South African products and shops set up by outsiders with vehicles, cornering the market while locals found themselves unable to compete. This phenomenon mirrors the way in which the majority of construction jobs were taken up by outsiders rather than affected locals; project-related jobs were incidentally another selling point for the LHWP. All in all, the image of a booming local economy and job market concocted by project designers was not represented by reality. In a greater sense, many results of the projected that were lauded as purely beneficial by the LHDA in reality harmed the livelihoods of local populations further. Yet again, the lack of foresight of project managers and investors is apparent.
The LHWP represents a highly complex and controversial issue with many convincing opinions arguing both for and against its merit. In fact, this paper only explores the tip of the iceberg, as many other facets of the project and its effects were not discussed. However, the intent of this article is not to argue whether the project is justified and/or necessary, but rather to bring to light many of its negative consequences on local populations who were already struggling immensely. As we have seen, many of the benefits cited by the Phase I website (i.e. road and job creation, etc….) have either benefitted rural populations less than expected or actively crippled them. Additionally, systemic corruption plaugued the LHWP from its inception, further undermining many of the positive goals and outcomes of the project. Given the many economic blessings of the LHWP, the complete lack of successful poverty reduction cuts especially deep; revenue from the project has completely failed to reach the people and areas that need it most.
All in all, the LHWP presents a perfect example of how large-scale infrastructure development—whether one finds it justified and/or necessary or not—can severely debilitate local populations who were already in a place of weakness. Additionally, while foreign investors may aim to feel exempt from any culpability by pointing to compensation measures, the measures are rarely comprehensive or effective enough to provide true relief. The Lesotho Highlands Water Project—through its pervasive corruption, elimination of various tangible resources, destruction of social paradigms, and ineffective compensation, actively exacerbated poor conditions for project-affected populations in Lesotho, ultimately leaving many impoverished people in a worse state than before.
This post may have been edited by admin for clarity and length.
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