DEVELOPMENT: Challenge to World Bank’s Plans for South Africa

By IPS Correspondents Reprint | | Print |

Abid Aslam

WASHINGTON, May 19 1998 (IPS) - The World Bank’s independent Inspection panel has registered compolaints from South Africa that the Bank violated its policies in pushing apartheid-era plans to supply water to the country’s industrial heartland.

Allegations filed by three anonymous residents of Alexandra township in Johannesburg, urged postponement of ‘Phase 1B’ of the Lesotho Highlands Water Project (LHWP), which would divert water from the mountains of Lesotho to South Africa’s Gauteng province.

Bank executive directors were to vote Wednesday on a 45-million- dollar loan for the project’s next stage, construction of the Mohale dam in Lesotho. Hopes of blocking that vote were misplaced because “the filing of a claim does not stop the processing of a loan,” said Inspection Panel Chairman Alvaro Umana Quesada, who registered the complaint Friday.

The move followed the withdrawal of an earlier inspection request by civic organisations in Alexandra and Soweto townships amid reports that South African Minister for Water and Forestry, Kader Asmal, had “intimidated” the claimants.

Ministry officials denied the reports and leaders of the two groups, in an April 20 letter to the inspection panel, said they withdrew following a March 6 “positive meeting” with Asmal and “the (water and forestry) department’s commitment to us that the rest of the LHWP’s phases won’t go ahead as planned.”

An April 20 letter from civic leaders to Asmal suggested a different version of events. The leaders, referring to their meeting with Asmal and a subsequent letter from the minister, declared “there was no double agenda at all, as you suggest in your letter, and our loyalty to the current government is unqualified.

“We participated in the struggle against apartheid and some of us paid heavily for that and we shall ensure that our new democracy is not reversed, but this does not mean that we should be quiet and trust that our comrades in government will do everything for us, for that would be a terrible mistake…”

Analysts here believed the complaint now before the Bank was submitted by individuals who disagreed with the civic groups’ reversal.

“All they’ve done is registered the complaint,” John Roome, project team leader at the Bank, said of the Inspection Panel’s latest action. Roome and his colleagues had until June 16 to answer to the charges. The Panel then would have 21 days to give executive directors their recommendation on whether to proceed with a full-scale probe.

The Bank overlooked demand management alternatives to the project, claimants charged. These included repairing pipes supplying Gauteng’s townships, originally built by South Africa’s apartheid regime to house migrant black workers. As much as half the water destined for these communities is lost to leaks, according to official estimates.

The complaint further alleged violations of Bank rules on the environmental and social impact of building dams and reservoirs, and shoddy assessment of the economic value of the project and its alternatives. It urged the lending agency to put off further work until detailed demand management studies due late next year have been completed, according to Panel and Bank officials.

“I believe that we’ve done the analysis,” Roome told IPS. “The South Africans are committed to this and so is Lesotho.” The costs of delay could be significant, he warned.

“If you delay the project even by one year…it’ll knock six percent off Lesotho’s GDP (gross domestic product) this year,” Roome explained. “They’re going to need to be compensated for this somehow.”

Moreover, he argued, if South Africa delayed the project, that would be tantamount to breaking a treaty with a neighbour at a time when the post-apartheid government is emphasising regional cooperation.

The project was set up under a 1986 sanctions-busting treaty between South Africa’s apartheid regime and the then military government of Lesotho, through which project loans were channeled. These were made at interest rates consistent with South Africa’s economic status, not that of low-income Lesotho.

South Africa no longer needed to play such financial shell games after white-minority rule ended in 1993, but by then the two countries had committed to the project, which calls for a network of five dams on the Orange River (known as the Senqu River in Lesotho). These would be connected to South Africa’s water grid and the Muela power station, which supplies electricity to Lesotho.

The project is scheduled for completion in 2017 at a cost of eight billion dollars. Mohale, which would be the second dam, is expected to cost 1.5 billion dollars. The Bank loan would be made to the Lesotho Highlands Development Authority, a para-statal corporation, and would be backed by government guarantees, mainly from South Africa.