‘Spend 10% of royalties in host communities’


 . . . TRC tells government on behalf of voiceless villagers


MASERU – Transformation Resource Centre (TRC) wants 10 percent of royalties from the mining and water sectors running into billions of Maloti to be spend on improving the quality of life of communities hosting the dams and mines.

A cursory calculation of the known annual amounts earned from Letseng, Storm Diamond mines and water royalties show an average annual amount of more than M1.5 billion.

This means on average communities would have an annual cash injection of at least M150 million. This does not factor in potential revenue from the rest of the mines and other lucrative foreign investments such as cannabis farms.

The civil rights watchdog on Wednesday this week presented its proposal for the review of the policies to empower host communities and generate inclusive and sustainable economic opportunities to the ministry of mining.

“We are yet to engage more stakeholders; we only engaged a few yesterday (Wednesday). We are going to engage other government ministries,” TRC’s government accountability and public participation officer, Thuso Mosabala, told Public Eye yesterday.

“Then after them, we are going to engage parliament’s natural resources portfolio,” Mosabala added. International mining companies operating in Lesotho are obligated to pay millions of maloti in royalty payments to the government which also earns royalties from the Lesotho Highlands Water Project (LHWP).

Gem Diamonds, a British-based global diamond mining business listed on the London Stock Exchange which operates Letšeng Diamond Mine in Mokhotlong, paid about M249 million in royalties to the government for the 2018 financial year.

In its 2016–2018 report, Storm Mountain Diamonds which operates a kimberlite diamond mine at Kao in Botha-Bothe, said it had paid government royalties amounting to M358 million. Storm Mountain Diamonds is a subsidiary of Namakwa Diamonds.

In 2018, Lesotho transferred some 779.92 million cubic metres of water to South Africa and earned about M936 million from the transfer of water and sale of electricity generated at the ’Muela Hydropower Station in Botha-Bothe.

The dams and mines, some commentators have argued, have brought much-needed revenue and contributed to economic growth that should lift some people out of poverty.

But have local communities that are negatively affected by mining and construction of dams – and mostly insufficiently compensated, directly benefitted from foreign investments that includes cannabis farms, dams and diamond mines?

TRC says they have not. “Developmental projects often adversely affect communities by changing their way of life without providing much needed alternative means of livelihood,” Mosabala said yesterday.

“The remote areas, of which some are host to development projects/corporate entities such as mines, cannabis producing firms, Lesotho Highlands Development Authority (LHDA), are faced with significant challenges, which are exacerbated more by land expropriations as well as the disturbance of their natural ways of livelihood,” he added.

He said in its visits to the communities in Botha-Bothe and Mokhotlong last month, TRC was told by members of the communities that they lacked access to basic services such as electricity, health care and water. The residents, according to TRC, also complained that their infrastructure, roads and bridges, was worn-out.

“It is the Centre’s position that the aforementioned community needs are characteristic of the public goods, thus implying the need for stronger government intervention for their availability through, among others, stronger policy frameworks,” Mosabala said.

He added: “To arrest these challenges, the Centre proposed that there be a legal framework that enforces government to reserve 10 percent of royalties to benefit host communities, to enhance social protection of the said communities.

“As it stands, the communities hosting developmental projects do not have a direct benefit from the royalties as that is directed to the consolidation fund. This is despite the hazards, impacts that these communities face as a result of the operations of the developmental projects.”

The Ministry of Finance decides on an annual basis how best to spend the total revenue collected in the national consolidated fund – based on government’s objectives and priorities. In February 2016, the then finance minister Dr ’Mamphono Khaketla told parliament that government would use the royalties to generate revenue.

“Another proposed method of generating revenue without resorting to borrowing, will be to ring-fence a portion of the royalties that government receives from the mining and/or water sectors, and use these to raise funding that can be used exclusively for capital projects,” Khaketla said.

She said this again would reduce the burden of debt while creating jobs for the private sector. She was presenting budget speech for the 2016/2017 fiscal year to parliament. The current Minister of Finance, Thabo Sofonea, was in a meeting when Public Eye contacted him for comment yesterday.

Mosabala told this publication yesterday that there also seemed to be a tendency by the government to overlook the need to provide access to services “such as health, water, electricity to these communities”.

He said it seemed as though the government had left the responsibility of the wellbeing of these communities to the developmental projects in such areas.

“On the other hand, the corporate social responsibility plans of the developmental projects have not been successful at addressing the public goods needs of the communities. Hence, government needs to step up efforts and it is through, among others, the 10 percent reserve in question that the government can,” he said.

TRC further suggested that there was a need for the corporate social responsibility plans of corporate entities to be informed by the felt needs of the host communities.

“…government entities should monitor and enforce this as well as to provide legal framework mandating CSR,” Mosabala said.

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