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Towards appropriate social and economic integration
- and the development of suitable linkages between Free State and Lesotho
Scoping study: five issue areas
Prepared by: Daniel Pienaar and Jeff Zingel, Democracy and Governance Unit, Human Sciences Research Council, Bloemfontein
and Rural Urban Integration Consultants, Maseru
December 2004
Comments on this paper can be sent to Jeff Zingel at: jeff@telkomsa.net
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Executive Summary
This scoping study addresses five 'issue areas' considered vital in addressing serious faultlines in the structural interdependency that characterises relationships between the Free State Province and Lesotho. It is aimed at creating the conditions, structure and approach for a series of mutually agreed actions and investments, to be agreed to by the Free State Provincial government and the Government of Lesotho, and to be endorsed by the Departments of Foreign Affairs and Trade and Industry (DTI) nationally, and formally supported by the South African Development Community (SADC) and by the NEPAD Secretariat.
The study begins by setting the context for some of these faultlines, and provides recent perspectives from the Free State's Provincial Economic Advisory Council (PEAC) as to how and where a more appropriate, stimulatory and bottom up growth may be achieved in the province and especially across 'a corridor' between Mangaug and Maseru.
It also sets out the role of SADC and its key Regional Indicative Strategic Development Programme (RISDP), whose four directorates and key objectives are clearly geared at facilitating regional growth and integration, in the context of attaining a competitiveness and output warranted by economic trends in globalisation. The progress and some limits in South Africa's 11 Spatial Development Initiatives/Corridors/IDZ's are also considered, setting the scene for the choice of a suitable institutional vehicle in which to house the study' recommendations.
It has identified a priority development zone across the Mohokare (Caledon) River which separates the two 'regions', and has concentrated on four major issue areas considered vital for a more stimulatory integration and to the development of the region. These have strong potentials for specific areas of co-operation, change, and investment which can simultaneously address social problems and also create economic and institutional progression.
The middle "Mohokare 'development zone covers a distance of approximately 210km from Lithlhoteng just north of Hlotse, to the confluence of the Meptsana and the Mohokare rivers in the Maseru district some 25km south of the capital. It is formed by the districts of Leribe, Berea and Maseru. On the Free State side of the Mohokare river this middle zone is matched by the two municipalities of Mantsopa and Setsoto (in the two districts of Motheo and Thabo Mofutsanyane) and contain the important 'corridor' towns of Mangaung, Bothshabelo, Thaba Nchu, Ladybrand and Ficksburg.
The identified zone has comparative advantages which will support the promotion of mutually beneficial actions and investments. These are its relative population size and density, a concentration of existing industrial development, important economic border gates, higher agricultural development potential, a concentration of the government sector, and it is the focal point for current patterns of urbanisation and the associated rapid development of urban settlements.
The first of the 'issue areas' conflates the performance of trade, industry and manufacturing. It notes how the contrasting growth paths of Lesotho and the Free State have seen the former gain 32,000 jobs in manufacturing - largely in textiles - and due to a low cost, flexible labour relations regime, beneficial tax regulations, and the preferences gained from the AGOA agreement with the United States, while the Free State has lost 11,000 jobs in manufacturing over the same period, with a reduced contribution to GGP. There are significant developments in the international trade regime, and both 'regions' need to avoid ad hoc reactions to these changes. The scope for mutually beneficial and complementary strategies which strengthen their respective industrial, trade and manufacturing bases are detailed below. These are made taking into account the policies and prescriptions of SADC's RISDP for the sector as whole, which promote regional integration.
In agriculture, there has been slow progress in liberalisation and in introducing land reform in Lesotho, and the many potentials for high value crops and value adding production have yet to be addressed in the Mohokare zone. In the Free State, while land reform and donor support programmes are proceeding apace, new trends - overriding established patterns in stocktheft and in cross border movement, are witnessing the purchase of border farms by Lesotho citizens keen to escape the restrictions to larger commercial scale production from communal land tenure. While both the public sector and private sector in Free State agriculture have developmental support programmes towards the small scale or emerging sector, little is yet in place which is directly stimulatory. Very large potentials, again following the potentials in the RISDP and in provincial strategies, are identified in the study for extensive and productive co-operation between the regions.
In tourism, Lesotho citizens are by for the largest group of visitors to South Africa from its neighbouring countries, and have the highest aggregate spend, visiting predominantly friends and relatives.
Yet Basotho express by far the highest levels of dissatisfaction on important matters such as customs and immigration, service levels, accommodation and especially in perceptions of safety and security. Some serious limits are presented on the organisation and operation of local tourism development in the zone, especially between the private sector and local authorities, yet despite these, the study highlights the growth of the important Maluti route, and the exciting growth in a 'two nations' collaboration in tourism and recreation. Recommendations are made at three 'levels', to deepen and enhance this progression, and the potential in Basotho visits.
In targeting cross border infrastructure provision as a significant area for regional integration and cooperation, the study compares the state of urban services provision and consumption overall on both sides of the border and notes the lack of any real progress in Lesotho (and some real successes and recent constraints in the Free State). There is strong potential and demand for integration in providing bulk services such as water and electricity and road and rail infrastructure, which are teased out in the recommendations, again accommodating SADC policies, which highlight the scope and need for public- private partnerships and cross boundary river basin organisations to maximise the potential for the intensification of growth in the respective sub- sectors.
The final major and pervading faultline in relations between the two regions is in the complex reality of the largely ineffective system border controls presently in place, and to which Basotho do not wish to comply at all, for a variety of historical and practical reasons. Coupled with these problems, which are clearly insurmountable and are held to promote criminality and extensive corruption, is the pattern whereby Basotho access, and sometimes compete for, a range of services in the two identified Free State districts. This is facilitated by ties of identity going back to clan lineages, given that much of the area comprises what were the 'Conquered Territories', and which also enable many Basotho to access South African identity documents. Given large cross border movement in relation to business, the professions and in trade, the scope for reductions or the blanket elimination in most border controls are held to be highly stimulatory, especially in promoting tourism trade and agriculture. SADC Common Market objectives also eventually view a Southern African market where controls on 'the movement of all factors of production are removed'.
The real challenge in this study has been the major problem that at this stage, the two region' are economically and socially directly dependent on one another, yet have no framework for Lesotho and the Free State to interact directly. Diplomatic protocol demands laborious liaison via Foreign Affairs in Pretoria and directly with SADC in the case of Lesotho.
Ways and means have to be found to enable practical working groups comprising the state and non-state sectors on both sides of the Mohokare to design and adopt the instruments and arrangements that can enhance both regions' progress from poverty to prosperity. It requires innovative forms of public and private sector interaction in the design and delivery of appropriate actions and investments.
This study has opted for an approach contained within the overall approaches embodied in the Spatial Development Initiatives (SDI's), and made in recognition of some of their limitations, (particularly the overly rigid adoption of central government conditions and prescriptions), as well as the neglect of local specificities. Without sufficient recognition or understanding of these - which this report has covered quite substantially-albeit in a preliminary fashion- any centrally directed investment can be undermined.
The recommendations below for each issue area therefore aim to 'capture' the SADC principles of additionality (where programmes need to add value to, or generate solutions to problems in regional integration), and associated principles of subsidiarity (whereby all programmes and activities are handled at levels at which they can be best handled).
They are also directed at RISDP principles which encourage the maximum engagement of regional expertise and institutions for programme management and implementation, which should further enhance capacity building and local ownership, ie; decentralised management. As noted above, there is an associated need to draw in expertise and growing experience in SADC, and in the NEPAD Secretariat, to engage in the early formulation, and provide subsequent support for, the organisation and operation of a specific and dedicated cross- border SDI programme.
Recommendations
Industry, Manufacturing and Trade
These should encompass investigations, undertaken within an agreed and formalised organisational and institutional structure of an SDI, to determine how best both the Free State and Lesotho can utilise their existing strengths (textiles in Lesotho and chemicals -with pharmaceutical potential in Sasolburg) to explore opportunities in the North American and African markets that could lead to the expansion of the Free State -Lesotho industrial base. This should also focus on achieving complimentarity in industrialisation efforts, since the industrial estates of Maseru-Thaba Nchu-Bothshabelo -Bloemfontein are close enough to one another to pursue linkages in many areas, including component processing or the further enhancement of products of use to the two neighbours.
Further investigations of the implications of full free trade between the two countries should be considered. Lesotho still regulates the importation of agricultural produce under the rationale of protecting local producers. This should apply to other major selected commodity groups as well.
Close co-operation between Free State and Lesotho agencies should be initiated to investigate the selected expansion of agro- processing in the Mohokare Valley Zone. On the Free State side there exist several agro-industrial endeavours where further product niche's can be investigated for diversification and downstream processing. The development of high value crop production under irrigation in both sides of the Mohokare (see agricultural recommendations below), would imply opportunities for substantial expansion in this sector.
A joint Free State -Lesotho study be initiated to investigate the patterns in micro - level /household consumer imports into Lesotho. (Eg: what type of consumer shopping from Lesotho is taking place in Ladybrand, Ficksburg and Mangaung), and what are the associated development opportunities that may emerge on the basis of such information.
Agriculture
In agriculture there are clearly significant faultlines- and opportunities- for a more co-ordinated investment in agriculture and land reform, and a large degree of 'policy convergence' or synergy exists in the recommendations and strategies of the Free State PEAC, Lesotho, SADC, the Free State Department of Agriculture and the private sector.
For Lesotho, the first, high order recommendation is that the Land Reform process is accelerated by legalising the main recommendations of the Land Review Commission.
Secondly a joint Lesotho-Free State Working Group for Agriculture and Land Reform needs to be established (drawing down SADC officials), to set an agenda for the establishment of complementary policies and programmes of collaboration and investment in the following areas;
- collaboration around problem issues in the border zone, cross country visits by Lesotho officials and farmers to investigate the methods and practices in Free State's land reform processes,
- land purchase and the promotion of investment in productive agriculture in the border zone,
- intensification of productive irrigated agriculture on both sides of the Mohokare,
- mutually beneficial and complementary investments in downstream processing plants,
- the reduction of any trade barriers to the free movement of food products,
- integrating donor support programmes across boundaries, and
- commercial farmer support programmes for good neighbourliness across borders.
At a programme or project level, the established Free State agricultural companies in the Ladybrand area need to begin discussions with both Lesotho and Free State Departments of Agriculture with a view to developing formal outgrower partnerships with small scale and emerging farmers in specific crops and commodities to be identified. There has not been a consolidated effort by role players in the Free State to formalise large scale and enduring partnerships. Many such initiatives are piecemeal and exploratory and need to be consolidated within an economic and financial and institutional model which works to best effect of all parties. The beneficial tax regime in Lesotho for manufacturing could also entice processing facilities into the country.
The final recommendation for agriculture promotes the need for a scan of the Lesotho lowlands to identify valleys that are in terms of soil and climate ideal for irrigation, and then to pilot land reform processes and the introduction of high value crops, in a number of these identified valleys. This needs to be accompanied by training and extension -in the extensions services initially - or knowledge transfer, on higher value crops.
Tourism
As for agriculture, there exists a fairly large degree of 'policy coherence' in the perspectives and positions of SADC, the Free State and of Lesotho. Recommendations are cast at four 'levels' or orders of potential, and need to be realised within the agreed framework of an SDI type of organisational and institutional structure.
In the public sphere, Free State Tourism (in DTEEA) and Lesotho Tourism should agree to initiate a series of planned bi-laterals (drawing SADC officials down locally and the private sector), to consider the joint allocation of public funds into a facility geared to undertaking investigations, providing support for and promoting appropriate investments and strategies which build on, deepen and expand the existing nature of integrated tourism development strategies and practices between the two 'regions', in a complementary and integrated way. This facility should aim to develop appropriate public-private-partnerships in further investments and in an appropriate 'niche' development, to be defined by the facility through investigations.
The large Basotho market should be targeted, and the facility should engage with the relevant institutions and actors to investigate, assess and subsequently address their defined requirements - going forward - and the causes and consequences of their relative dissatisfaction with their South African experiences, particularly in the Free State itself.
Given ongoing tensions between local municipalities' officials and the local tourism interests in the private sector, it is recommended that the intended facility - or Free State Tourism, in conjunction with SADC officials drawn down locally, investigate the most appropriate location of the powers and functions for local/small town tourism development in terms of constitutional provisions for this (should this be district /local /or provincial? and how should the three spheres interact and who provides what?). Having done this and agreed on an optimal spread of role and powers and services, there needs to be a planned and phased programme of capacity building and training of municipal and district officials - and incorporating private sector interests- regarding the requirements and responsibilities and relative contributions of each sets of actor- for a more stimulatory and developmental pro-growth and pro- poor tourism -in many niches.
Enhancing tourist facilities in the Katse Dam area to keep tourists to the Eastern Free State and Lesotho an extra night or two in the area, should have substantial benefits for both Lesotho and the Free State province.An investigation determining the needs of tourists and outlining tourism potential and linkages between the Ladybrand to Clarens/Golden Gate and the Lesotho Highlands Water Scheme and Oxbow Lodge and its ski-facilities should be jointly undertaken. Such a study should determine the private sector needs and scope for development as well, since they are major investor in facilities, and where relevant authorities take on a benchmarking oversight and promotion role.
Infrastructure
Again there is large degree of policy coherence between the three major institutions with interests in an effective and stimulatory regional integration. The higher order recommendation is for the phased establishment of a dedicated Cross Border Infrastructure sub-unit or function- within the proposed SDI structure - comprising the relevant Free State Departments and Lesotho ministries and incorporating private sector organisations (with SADC officials drawn down), to begin to assess and prioritise and address the cross border infrastructure needs and opportunities identified in this study.
A public- private- partnership facility needs to be established, capacitated with the support of the S.A Treasury PPP facility, the Municipal Infrastructure Investment Unit (MIIU- housed in the Development Bank) and the Infrastructure Cluster/Directorate SADC. It's initial task should be to draw in stakeholders and to mutually develop the strategies, options and models and modalities for establishing various -and the most suitable forms of -PPP's in the following major service sectors;
For the water services sector;
- bulk water supplies across the Mohokare borders,
- the establishment and management of river basin organisations to manage the trans-boundary development of the Mohakare river and harmonise relevant legislation,
- develop regional water infrastructure projects -including transfer schemes, storage and especially irrigation for the recommendations in agriculture contained in this study.
In the transport sector it can consider;
- the establishment of representative corridor planning committees tasked with assessing the linked and related transport needs of a future and changing industrial and manufacturing regime across borders, of a more stimulatory tourism development across borders, and of a more developmental agriculture and land reform tourism, and around the needs of previously underserved or neglected communities, villages and farms across borders,
- the relative priorities for either road or rail infrastructure,
- the subsequent upgrading of railway infrastructure for improved cross border goods movement (see recommendation four below),
- the subsequent upgrading of major and secondary roads across borders and between the key corridor towns /centres of Mangaung, Bothsabelo/ Thaba' Nchu, Tweespruit, Ladybrand, Cloclolan, Maputsoe, Maseru activity axis,
- the introduction of labour based road development programmes in the tertiary roads on both sides of the border in support of local villagers and agriculture and a stimulatory local and regional tourism.
In manufacturing and trade it can negotiate and consider the most optimal sets of relationships between the public and private sector in the provision and use of industrial land and associated facilities.
An investigation of the urban infrastructure needs of towns on both sides of the border could also consider future bulk and end-user arrangements with financial advantages for communities on both sides. Joint urban services should have benefits especially in the case of Ficksburg and Maputsoe.
A study to determine the feasibility of a new station between Thetsane and Ha Tikoe and the potential for compact urban development on the land then freed by the existing station and fuel depot, should be pursued. The possibility of a public-private partnership for such a station should also be investigated.
Cross border controls and 'social infrastructure'.
The recommendation is that a Working Forum is established within the proposed Spatial Development Initiative/Corridor development facility comprising the Free State Provincial Government and Lesotho (and drawing down SADC officials), where negotiations and discussions are formalised, and the mandate and funds developed to prepare detailed position papers and perspectives regarding the phased introduction of the two alternatives below. This must be endorsed by the Department of Home Affairs as a regional initiative intended to unblock economic and social blockages, and will need to be framed by the current status of legislation and policies emanating from Home Affairs, in SADC and in Lesotho.
The first alternative is for a partial easing and streamlining of border controls, short of the complete free movement of persons across the border. Separate lines for S.A citizens and permanent residents, for Lesotho citizens and third state citizens, pedestrians and light and heavy goods and services vehicles would not only make sense but seem necessary if controls are to be retained. (See the related recommendations on issue area one for trade and manufacturing)
The radical alternative is removing the DHA's operations completely from the Free State border posts. The benefits seem to far outweigh the risks and disadvantages and is an admission that the busy border posts cannot be efficiently controlled except by the allocation of resources that bring no benefit in revenue, crime control, labour market protection (and regulation) or local and national security. It would save budgetary resources and is the only means of removing corruption among DHA officials. It would enhance regional public revenue, social order and political stability by promoting tourism, economic development and job creation. It would not create any economic or security risks that could not be better addressed by other agencies, specifically SAPS and the South African Revenue Services. The Government of Lesotho would have no objection, and it would improve the life of all inhabitants in the Mohokare valley.
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