Draft Format for Project Documents - GTR 07/08/97 UNITED NATIONS VOLUNTEERS PROGRAMME SPECIAL VOLUNTARY FUND PROJECT DOCUMENT Project No.: Project Title: Labour-intensive Urban Upgrading Programme Location: Maseru - Lesotho Executing Agency: ILO and UNV Implementing Agency: Maseru City Council Co-operating Partner(s): Labour Construction Unit Backstopping UNV Group/Section: Research and Development Section (Urban Development Group), UNV Headquarters, Bonn Commencement date: October, 1998 Duration: 24 months Funding Source(s): UNV’s SVF & ILO Project Budget: US$ 500,200.00 Brief Project Description and Strategy 2000 context: The project will address the growing problems of urban unemployment and poverty in Lesotho by building capacity within the Maseru City Council to plan and implement urban upgrading schemes using labour-based methods. Working through NGOs and poor urban groups, the project will secure the maximum possible participation of the target population and contribute to the stimulation of the local economy through employment expansion and creation of cash incomes. The project builds on UNV’s previous experience in grassroots mobilization and empowerment and emphasizes urban development and environmental management. Recommended for approval: ______________________________ _______________ PAC Chairperson Date Approved: ______________________________ _______________ Executive Co-ordinator Date 1. BACKGROUND & JUSTIFICATION 1.1 Country Context Lesotho ranks among the world’s poorest countries and falls in the category of least developed countries (LDCs). Within the 12-member Southern African Development Community (SADC), it has the 6th lowest per capita GDP and the 11th lowest export receipts. Unemployment rate in the country is equally one of the highest in the region and has been growing in recent years, even among University graduates. Recent estimates by the Ministry of Labour and Bureau of Statistics suggest that about 34% of the population may be openly unemployed, with women constituting the majority of the jobless. Evidence of high underemployment abounds and this clearly makes the already desperate situation even worse. Historically, Lesotho’s domestic unemployment problem had been relieved through labour migration to the South African mines where, up to 1993, as many as 40% of the country’s male labour force was employed. The remittances of these mineworkers has always been the single most important source of family income in Lesotho and contributes to a large extent to household subsistence and domestic investment. During the present decade, employment in the South African mines seems to have peaked in 1990 at 103,000 Basotho, but has been falling ever since. At peak level of mine employment, the remittances from RSA constituted some 30% of the GNP of the country. In 1990, miners’ total remittances came to about 474 million maloti (or US$183m), and in 1994 it is estimated that the remittances amounted to some 330 million maloti (the equivalent of US$95 million). The downward trend has continued since then. By 1997 only about 90,000 Basotho, or 19% of the male labour force, were working in the mines in South Africa. This has been the result of contraction of the South African labour market and the on-going policy of retrenchments at the mines in response to the deteriorating cost situation. In addition, the new immigration policy which grants residence permit to long-serving miners means that over time, more miners will be residing in RSA with their families. Thus, even if the on-going retrenchments at the 2 mines were to stop, there is no doubt that the current drastic reduction in the level of remittances will continue. The macroeconomic situation of the country derives mainly from the absence of important deposits of exploitable resources. In addition to this, the country’s mountainous topography renders virtually all the land inappropriate for agriculture, leaving just about 9% of the total land area suitable for arable farming. Many households therefore lack access to farmlands of the right economic sizes to support other than merely subsistence production. Agriculture’s contribution to the nation’s GDP thus remains a meagre 10% despite having as much as 50% of the population reportedly living off the farm. Dwindling agricultural incomes have thus become a permanent feature of the rural areas where up to 80% of the population may still reside. Understandably, rural-urban migration has intensified in recent years with urbanization estimated to be growing at the rate of 6% per annum, estimated to be higher than the average growth rate for the region. If current trends persist, it is estimated that more than 25% of the population will be living in the urban areas within the next two years. Urban services that are already overstretched are poised to become overwhelmed as a result. And in the present situation characterized by slow growth of job opportunities throughout the economy, newly-arriving migrants face very unpleasant prospects of the increasing frustration of being jobless for prolonged periods. The emerging scenario therefore is that of an urban poverty problem that could pose more serious embarrassment for policy makers given the greater political awareness of urban dwellers. Urban poverty differs from rural poverty in terms of the high vulnerability of the urban poor to unstable market conditions since they do not have the option to fall back on an agrarian support system unlike their rural counterparts. At the same time, there are no functional social security mechanisms to buffer the poor from the harsh realities of their condition. 3 But there has been a positive development in the past few years regarding internal revenue generation for development purposes. This has been in the form of the Lesotho Highlands Water Project which was established in 1989. The aim of the project is to harness the abundant water from the Maluti mountains and deliver them through a network of dams and tunnels to the industrial zones of the Republic of South Africa. When the project is completed in a few years it is expected that the annual revenue from the sale of water will amount to about US$55 million which is estimated to represent some 14% of government revenues. At a time when foreign development assistance to Lesotho is on the decline, particularly since the end of the apartheid regime in South Africa which ended the bridgehead status of Lesotho, the new window of opportunity offered by the LHWP revenue has been widely welcome. 1.2 The Infrastructure Situation The peculiar mountainous topography and unique climatic conditions of Lesotho predispose it to a wide variety of ecological conditions. The country has the distinction of having its lowest point more than 1,000 metres above sea level, approximately 80% of the area being above 2,000 metres, and the rest of the country generally characterized by high elevations and rugged terrain. The torrential rains, thunderstorms and high, violent winds that feature at the end of winter, generally from the end of July, combine with the very thin soil cover to cause quite extensive damage to the environment through soil erosion. The result of the above situation is that land degradation is progressing in many parts of the country at a very rapid pace. The most notorious manifestation of the environmental damage is the so-called “dongas” or gullies which dot the landscape and pose serious threat to public safety. The incidence of these features complicate the problems faced by the construction industry. As a result, the quality of various categories of infrastructure often tend to be inconsistent. There is also acute shortage of good quality housing, clean water, drainage facilities and arrangements for solid waste disposal. 4 Access constraints are quite severe and have far-reaching economic consequences due to high transport and road user costs. The soil erosion, coupled with often inappropriate construction practices, cause the roads to deteriorate rapidly and expose lose stones and potholes which make motoring very difficult and distressful. The situation in the urban areas is not different. In the case of the Maseru Council area, almost all the roads are underlaid by clay soil. Due to the high proneness of this soil type to erosion, pot-hole formation is frequent and a majority of the roads are not motorable. There is also the problem of inappropriate policies for human settlement management and failure to enforce legislation on construction practices. For instance, service lines such as water pipelines, power and telegraph cables are not laid in accordance with proper procedures and location plans are generally not available. Thus, when these lines are to be maintained, the process of trial-and-error needed to locate them results in extensive corrugation of the road network which adds to the access difficulties in the metropolis. 1.3 Capacity Constraints Lesotho suffers from acute manpower shortage and capacity constraints which exacerbates its dependency situation. For virtually all skill areas, the country relies on external sources for qualified personnel. The country has continued to recruit school teachers, medical doctors, accountants, engineers, and just about any profession, from other African countries and beyond. It is not uncommon to find entire government departments being manned by foreign professionals. Many donor-assisted programmes which are predicated on the principle of transferring know-how to trained nationals are frustrated by the difficulty in identifying local persons to serve as counterparts to the technical assistance personnel. This situation of chronic shortage of high level manpower in the country has been attributed to the phenomenon of “brain drain”. This phenomenon assures that the large investments in education and training to develop the nation’s human resources do not yield any tangible results. A recent study sponsored by the UNDP and the 5 Commonwealth Secretariat concluded that the destination of the majority of Basotho professionals is the Republic of South Africa where working conditions are generally better than in Lesotho.