Announcement of 5.5 Million Dollars IDA Highways Credit Includes Assistance for Labor-Intensive Program on March 4, 1976

J ·world Bank 1818 H Street, N.W., Washington, O.C. 20433, U.S.A. • Telephone: (202) 393-6360 IDA ~EWS RELEASE NO. 76/11 March q, 1976 LESOTHO SEEKS JOBS SECURITY $5.5 HI Ilion IDA Highways Credit Includes Assistance for Labor-Intensive Program The Kingdom of Lesotho, landlocked within South Africa, is particularly vulnerable to labor conditions In the Republic. Sixty percent of Lesotho's male labor force is employed in South Africa,. mainly in the gold mines and on farms. In 197q the migrant workers' net earnings were about $75 million -- almost equal to Lesotho's total domestic income. The extent of this vulnerability has been demonstrated by two recent events: -- In 197q, between 10,000 and 15,000 Basotho workers suddently returned h~ after disturbances in SOllle South African mines (eventually going ba,ck to their jobs there).· • -- In the same year, South Africa announced its intention to increase 111echanization of its mines and reduce dependence on migrant labor. As a result, the Lesotho Government asked the World Bank to lead a U.N. inter- agency economic mission to the country to help find solutions for its migrant labor problems. The mission, financed by the United Nations Development Progranwne (UNDP), recom- mended the establishment of a special unit to gain experience with labor-intensive methods for coping with future employment amergeneies and providing a basis for a long-tenn employment strategy. Labor Unit Formed The mission's reconnend•tlons were adopted as part of Lesotho's Second Develop- ment Plan (1976-So). They have also resulted in the establishment of a labor-intensive construction unit (LCU) that will be·flnanced by part of a $5.S million highways credit approved on March 2, 1976 by the World Bank affiliate, the International Development Association (IDA). The new unit's work progr• wl II be relatively 1imited at first, employing about 200 laborers in public works construction and soil conservation. But it will be ~pable of quickly expanding its scope in the event of an employment emergency, and well be able to embrace agriculture and other sectors. Note: Honey _figures are expressed In US dollar equivalents. I • •••• LESOTHO ' • - 2 - The unit will train supervisory staff In labor managenaent; fon1Ulate adminis- trative procedures for large-scale adoption of labor-intensive techniques; and develop an inventory of suitable projects. Technical assistance will be provided under the program to strengthen the Labor Connissioner•s Office. Need for Domestic Employment The project has been appraised by IDA against the background of Lesotho's dual need to identify projects for its national development as well as reduce its dependency on the South African labor market. Lesotho is a mainly mountainous country where less than ISl of the land is suitable for crop production, yet 85% of the population depends on agriculture for its livelihood. Mining, manufacturing, construction and public utilities together contribute less than 5% of gross domestic product. The shortage of skilled manpower is a major constraint to development. This is aggravated by the continuing migration of workers. Of Lesotho's population of about 1.2 million, approximately 175,000 men and 25,000 women work in South Africa, compared with 16,000 employed by Lesotho's "modern sector". During the past six years, the number of Basotho employed in South African mines has increased by some 40,000, while domestic employment has grown by only about 2,000. Apart from the economic vulnerability of this situation, the large-scale migration of workers has • caused much disruption of family life. For the forseeable future, tso~ of the national increase ftn Lesotho's labor force is expected to look for work in South Africa because of the higher wages there and the limited opportunities offered by Lesotho's economy. The Lesotho Government is now seeking to create job opportunities at home that wi11 attract would-be emigrant workers. The Kingdom's Second Development Plan stresses the continuation and expansion of rural development programs started in recent years. And employment opportunities are expected to increase as a result of the strengthening of the role of the National Development Corpor~tion, and pre-investment studies for specific projects. • I • •.•• • LESOTHO - 3 - IDA Support for Highways Improvement The main component of the $5.S mill Ion IDA project!/ under which the new labor~ intensive unit will be established wlll be for the Improvement and reconstruction of two road sections connecting Thaba Tseka,"Matsonyane and St. Michaels. These Improvements will substantially Improve the link between Thaba Tseka, the cOlllllerclal focus of the central mountain region, and the capital of Maseru. The new labor unit will not be capable at this stage of being utlllzed for the project's road works. The project wfli be assisted by a $1.S million gra,t from the Overseas Develop- ment Ministry of the United Kingdom, while the Arab Bank for Economic Development in Africa is considering a loan of about $2.S mi JI ion. If the latter is approved, IDA's credit would be reduced by an equal amount. The Lesotho Government is also negotiating with Sweden and UNOP for grants totaling $700,000 to substitute for part of its own contribution to the labor unit and to technical assistance for the Labor COftllllssioner•s Office • • !/ The IDA credit is for SO years, including 10 years' grace, and is interest-free with a charge of 3/4 of 1% a year for administrative charges. - 0 - • Form No. 1121 (9-75) ' PROJECT: fECHNICAL Second Highway DATA • COUNTRY: Kingdom of Lesotho TOTAL COST: $ij.61 million IDA FINANCING: $5.5 mi 11 ion, standard IDA terms. OTHER FINANCING: Government,$1.59 mill!on; United Kingdom Overseas Development Ministry (ODH), $1.52 million. IMPLEMENTING ORGANIZATION: Ministry of Works, P.O. Box 20, Maseru, Lesotho. PROJECT DESCRIPTION: li) ·Improvement of the gravel road between St. Michael. and Mantsonyane (95 km.) and reconstruction of the eart track between Hantsonyane and Thaba Tseka (52 km.). Funds are also included for consultant services to finalize the construction documents and supervise the work; road maintenance equipment and facilities along the project road; and technical assistance to strengthen Ministry of Works (HW); (ii) establishment and operation of a labor-intensive construction unit (LCU) for a three-year period and the provisior, of technical assistance to strengthen the Labor Commissioner's Office. PROCUREMENT: Road construction and improvement by international competitive bidding. CONSULTANTS: ODM will finance consultants to supervise road (i) improvement/reconstruction contract and provide ten man-years of technical assistance for MW; (ii) Lesotho Government will finance two man-years of technical assistance to strengthen Labor Comnissioner's Office; and {iii) IDA will finance a team of three experts for three years to administer LCU . ECONOMIC RATE OF RETURN: For road component, 12%. •