Aid to the Southern African periphery: the case of Lesotho

267

Aid to the Southern African periphery: the case of Lesotho P. A. Wegings

Lesotho receives a disproportionate volume of aid, most of it disbursed on exceedingly generous terms. In recent years, allocations have escalated and sources diversified. Increasingly, projects are being funded multilaterally with the Lesotho Government contributing a proportion and retaining a large measure of control. Hence, many of the now traditianal arguments against aid-the creation of debt, tying of expenditure, manipulation of the economy in the interests of foreign cap&al---cannot be sustained in the case of Lesotho. Theoretically, the objective of the transfer of capital is the development of the indigenous economy and therefore the reduction of dependence on South Africa. fiowever, an analysis of aid disbursements reveals disturbing trends which seriously question this prospectus. First, aid is ahowing the ~vernment to divert domestic revenue to projects of dubious deveI~m~n~a1 value and to the expansion and entrenchment of the state apparatus. Second, altocations to the agricultural sector. the underdevelopment of which constitutes the most serious obstacle to the manufacture of an independent economic future, are being cut back in favour of ventures where the returns are more visible and immediate. Third, a vast percentage of externally derived capital is rerouted to the South African space-economy via Lesotho through a variety of conduits catalogued in this paper. Thus, in this form, aid serves to tighten dependency but, ironically, it helps to guarantee political independence of the Republic by providing within Lesotho an attractive reservoir of foreign exchange which can be readily tapped by South African companies.

Amdyses of the motives arrd hen&s of ~~~e~a~~~~a~ aid to de~e~o~~~~ ~o~~~~~s have hecome the suhjecr of txmmus pubhcations. The case against aid has been ably documented by both moderates (Batter 1971: 96-132: Healey 1971; Amuzegar 1979) and the Left (Griffin and Ems 1970; Hayter 1971; Hensman 1971; White 1975; Zeylstra 1975; Arnold 1979; Helleher 1979; Okuda 1979). The main purpose of this paper is to draw attention to the experience of Lesotho where the objectives and effects of aid do not slot easily into the categories identified in the literature, The aid story

The basic textbook on aid to Lesotho before 1975 has been written by &mes (1977), albeit from a ~re~o~~~~~t~~ B&ish and pro-aid perspective. He begins by a~tern~~~g to explain Britain’s des~~atj~~ of Lesotho (along with Swaziland and Eotswana) as a special case deserving preferential treatment in the allocation of aid. He notes that in 1972-73, Lesotho,

Botswana and Swaziland possessed 0,2 per cent af the total population of the Commonwealth developing countries, but received 4 per cent of British aid to such countries (3 per cent of all British aid).* One of the reasons for this interest, he suggests, is Britain’s former neglect of this economically insignificant possession. Lesotho’s colonial status, as a Wigh Comission Territory, was rather low and it was only as the country approached independence, eventually achieved in October 1966, that it received any real attention and substantial assistance. It was about this time that Britain first noted the extreme poverty of the Basotho people living in a small and largely barren country, dependent almost entirely on primitive agriculture and herding supplemented by migrant remittances~ and possessing virtuahy no infrastructure or industry (W~lman 1972; World Bank f975). The more likely and plausible explanation of Lesotho’s promotion at Whitehall is potitical. If aid was seen by the donors primarily as a mechanism of dependence and hence supportive of neo-colonialist objectives throughout sub-Saharan Africa, then an exception must be drawn in the case of Lesotho. In the early 1960s there seemed to be no resources worth exploiting (though small quantities of diamonds are now mined and there is potential for exporting highland water to South Africa), and the country was far too small and poar to provide much of a market for manufactured goods, In consequence, Lesotho was, and still is, heavily dependent on South Africa for its imparts, as a market for its exports, and as a source of revenue through migrant remittances and Customs Union receipts. The scale of migrancy, for example, has been increasing at about 6 per cent per annum since the early 1960s and by 1971, 40 per cent of the adutt male population was employed abroad; by 1975 this had risen to 45-55 per cent (Jones 1977: 166). Indeed, the idea that Lesotho would eventually be absorbed into the Republic persisted until at least I96 I ~ The vast inflow of aid must therefore be seen fundament~~y as an attempt to reduce the dependence by providing the Government of Lesotho with some form of budget. As Jones (1977: 50) claims: In the case of Botswana, Lesotho and Swaziland, one of the main aims of UK aid-as seen by the UK and the recipient countries-is to reduce economic dependence on the Republic. The development of Lesotho seems, then, to have been regarded as a subsidiary effect of the preservation of the country’s integrity. Although this form of opposition to South Africa and solidarity with the independent black states on its periphery was essentially little more than a gesture, it did succeed in boosting Britain’s sagging political prestige, particularly in Africa. Jones sees this as reward enough, but it was more likely to have been a strategy to preserve favourable relations between Britain and its former colonies. Up to 1965-66, Britain was atmost the sole donor to Lesotho. Budgetary aid (recurrent e~pendi~~re~ increased from R O-8 million in 1960-6 1 to R 5-5 million in 1965-66 and &2-3 million was made available for development expenditure over this period (Jones 1977: 17 1). Total UK aid rose to a peak of R 8.6 million in 1966-67, dropped to its lowest ebb in 1970-71 (when aid was suspended for a brief period in response to a political coup in the country), revived somewhat afterwards, but reached only R 398 million in 1972-73 (Jones 1977: 192). Most British assistance was in the form of budgetary aid but the proportion devoted to this sector decreased gradually, especially after the redistribution terms of the Customs Union were made more favourable to Botswana, Lesotho and Swaziland in 1969, and was eventually phased out in 1970-7 1. Between 1965-66 and 1971-72, Britain remained the principal donor but was joined by several others, notably SIDA (Swedish International Development Agency), Oxfam and * For this period net ODA per head worked out as 5241 for Lesotho compared with> for example, Kenya @33-E), Ghana @0.21), Nigera (EO-13), Zambia (;El@?) and India (&@10) (Jones 1977: 62).

P. A. Wellings

269

the Freedom from Hunger Campaign (FFHC). During this period, 73 per cent of capital and recurrent expenditure was financed by grants (96 per cent from UK), 12 per cent from external loans (IDA), 2.5 per cent from domestic commercial loans and 12-5 per cent by the Government of Lesotho (Jones 1977: 179-180). After 1970-71, the picture changed somewhat in terms of the number of donors and their relative importance, although Lesotho remained highly dependent on externally derived funds. In particular, UNDP became involved, between 1972 and 1976, in the Thaba Bosiu Rural Development Project, allocating R 1.3 million in each year. Food aid, which began in 1966 in response to a serious drought in Lesotho, assumed great importance in 1972 when R 4.0 million were allocated by WFP and CRS for institutional feeding, special need programmes and ‘Food for Work’ projects. In addition, administrative assistance and supplies of equipment and plant were given by CARE and the UK.

Since 1974 the list of donors, of both grants and loans, has extended considerably and the value of aid has risen spectacularly. Table 1 shows capital expenditure commitments by source from 1974-75 and these figures are reproduced in Fig. 1. The dramatic increase in grant aid together with external, usually preferential, loans is clearly demonstrated. The governmental share of capital expenditure commitments, although apparently increasing, presently stands at only 23 per cent. Table 2 gives figures for actual capital expenditure from 1975-76 and similar trends are noted. However, audits of these accounts have not yet been made and so these statistics are estimates which are quite probably biased in favour of the governmental contribution, a quite common feature of Lesotho development plans.

140 -

120.

,_,_.-

- GOL

77-78

78-79

7980

Figure 1. Expenditure available by source for Lesotho.

60-61

1X)0 6.88 5.84 5.54 14.70 27.11 22.68

Amount 9.04 IS-38 28.79 39.27 46.01 77.58 56.37

%

5.1 20-o 10.4 I.9 13.9 17.0 17.6

Grants

Amount I.74 2.55 5.01 8.62 21.4 18.35 20.36

45.7 44.7 51.1 56.0 43.4 48.6 43.9

External loans

8.8 7.4 8.9 12.3 20.2 11.5 15.8

%

by source for Lesotho,

%

commitmentsa

% 0.1 8.4 4.3 5.3 11.7 7.1

Amount 0.02 4.73 3.0 5.58 18.74 9.11

Domestic loans

8.0 9.59 12.02 13.65 18.29 17.92 20.0

Amount

TAC

1974-75 to 1980-81 (millions of Rand)

56.39 70.08 105.98 159.76 128.52

17.3 11.2 15.6

19.8 34.4 21.3 19.5

40.4 27.9

o/o

’ Funds committed but not necessarily spent-actualities accounts will not be available until late 1982 or 1983 b Government of Lesotho c Technical Assistance: no accurate figures for this exist in Lesotho-statistics from donor countries are not compiled and made available. These estimates derive from the Capital Account yearbooks d Amounts rounded to two decimal places Note. Includes direct aid (i.e. aid which is not monitored through the budget, but excludes recurrent expenditure, which is now fully the responsibility of the government) Source: Government of Lesotho, Estimates of the Revenue and Expenditure of the Kingdom of Lesotho, Part 2 Capital Account (1974-75 to 198&8 1)

1974-75 1975-76 1976-77 1971778 1978-79 1979-80 1980-81

Amountd

GOLb

Table 1. Total expenditure

a

z 9 B z $

3.

3

e

1975-76

Amaunt

%

1976-17

Amount

% 23.3 15.5 2z; 9.7 16.6 3‘5

f*il 13‘70 4-62 7*9X 1.67

2-G

3; 17.0

24-l 54.1

4*1 9”2 f ::

9.1 12.6

25-1

36.3 50-2 4.8 8-3

34.0

7.4 18~5 3.5 4~6

21.8 54.4 IO*3 13.5

9.8 17-5 6.2

5.54 Y& 3.47

11.8 18.1 7.2 1.9 39-O

30.3 46-4 18.5 4-9

1978-79

56.32

2-2 33-6

19.8 10.9

%

1.23 18*94

11.16 6.12

Amount

197&79

54.5

19.8 25-7 5~3 3.7

%

3;.: 11.6 23.2 58

-

8?4 Il.5

g;:

36”3 47.2

1979-80

43.90

G-49 16-83 5.08 10.19 2.56

3.69 5J.Ib

Amount

1979-80

a Bx&des the ramt budget in terms ~~x~~~tu~c and source, bSource for 1969-70 and 1974-75: Oovermnent of Lesotho (1975: Yet 1, 36); source foE 197S76 to 1979-80: Government of Lesotho (1980: 28 and 37); (there are some addition errors which axe corrected here) c Knctudes‘lural Development’ for 1Y69-70 and 1974-75

T0td

GOL &ants Domestic bans External loans

%

11-20 7.37

Amount

1977-78

1911-78

%

1916-11

Bources

Amount

1975-76

47.58

%

1974-75

Totals

Agriculture’ Industry, commerce and torrrism N&i?& !XsouXes Jzcotzomk ~~~~ctu~ Education and training Social infrastructure Government services

Amount

1969-10

Although Lesotho has become increasingly dependent on aid. particularly if measured in absolute terms, it has at least managed to diversify donor sources. The 1981-82 Capital Account lists 21 donors of grants, three direct contributors and nine external sources of loans. This represents a marked change from the situation prior to 1974. Table 3 shows some trends in aid sources. British aid, for example, has declined in significance quite considerably, from 52 per cent of all committed grants in 1974-75 to 33 per cent in 1978-79 and 7 per cent in 1981-82. German, American and Swedish contributions have all increased dramatically. The EEC is now a major donor and a huge quantity of food aid (R 16-3 million) has been committed by WFP and CRS. The UN has also increased its allocations to Lesotho. mainfy in the form of technical assistance (TA), as a result of the 1976 ‘emergency (when the Tr~skei~~sotho border was closed). In terms of loans, the IDA has retained its leading position but the ADB and various Arab donors now figure more prominently than previously.

Table 3. Committed external loans and grants to Lesotho (millions of Rand): major donors, X974-75: 1978-79: 1981-82 1974-75

1978-79

UK FR Germany USAKD SIDA CXDA Netherlands Eire EEG DANlDA WFP FFHC OXFAM CRS UN

4-72 0.25 0.43 0.75 0.46 0.42 0.05 0.07 0.05 f-2

lZ.25 3.96 2436 3.0 Oa61 6.77 I4.6 -

Overall total (all. sources)

9,04

46”Ol

Loans IDA

1.36

6846 5.96 5*91 2.07 -

1981-82

Grants

ADB FR Germany DANIDA BADEA

-

Overall total (al1 sources)

I.74

Source:Gapital

Account

5=66

19.91 10.12 3.29 0.48 0.55 0.78 8.41 8.3 8-O O-88

2.3 3%18

83.3

12.81 10.40 2.5

21.4

(1974-75; 1978-79; 1981-823

4. Average terms of selected African countries

Table

!5m

commitments --comparisuns

Interest rate (%) “..““W ,,

Maturity (yews)

1977

1977

1978

t978

between Les&x3 and

Grant element (%) I9T-F

1978

Comparative figures far capital assistance disbursements per head clearly demaasbatc: that some form of special ste\tus is enjoyed by Lesotho in terms of aid allocation. This is also evident in the conditions of loan commitments. The two mdn donors, IDA and ADB, give bans on extremely soft terms to Lesotho; 3-4 per cent p-a_ interest i-ate, 90 per cent grant ekmen& a XI-year grace period with 40 years tct repay (usuaEy 14 years paying off 1 per cent pa, and 20 years pay@ oE 3 per cent pa.). fn T&k 4? ~rn~~~ns have been made betweer~ L~3tho and some other A&an ~u~t~i~s for 1977 and 1978 in zcrms of the average interest rates, m~tu~ty and grani element of external toans. fn a21 of A#kica~ Lesotho receives toslns on the easiest terms and some of the debts which have accrued have been written off, For example, in 1978, the IJK wrot.e off debts of US%1.7 million ow& by the 17 poorest LDCs, nne of these being Lesotho, Hdno~, debt service (Table 5) and outstanding debt (Table 6) are considerations oti, as yet, little importance to the Government of Lesotho in contrast to many other African states where indebtedness leads to a shortage of capital for the development budget and is inevitably followed by economic and poiiticai leverage OIZthe part of donors (Islam 1976: Hughes 1977; Abbott 1979). fn terms of grants &so, certain standard conditions may be waived in the case! of tisotbo,. The ODM, firr exampk, used to apply its own annual budgetary rules io the-ixx strictest form for aid ~sbur~ments to Lesotho wbkh meant that ammaE ceilings fur expenditure ~~~ each ~~~~n~urn were Exed and rmspent funds Iost @ones $977: 35). This reg&&n has now been rehxxed so that unused ~ommjtm~ts may be expended ovt?r the two years ~rnrned~at~~~ forgoing a triennium. In addition, donors wil2 overcommh quite

274

Aid to the Sotdzern African periphery

Tabie 5. Total debt service0 to all lenders-comparisons African countries (millions of US dollars)

Lesotho Botswana Swaziland Kenya Tanzania Zambia Uganda Ghana Malawi Nigeria

between Lesotho and selected

1972

1973

1974

1975

1976

1977

1978

0.3 I.6 8.6 25.5 41.7 106.9 9.8 14.3 8.4 64.5 51.3

0.4 2.5 IO.1 29.6 31.9 362.4 22.3 23.7 11.0 150.5 57.4

0.3 3.3 4.4 33.3 23.4 105.6 11.6 27.7 14.3 168.9 63.6

o-3 6.9 3.3 34.0 28.8 88.4 7.3 50.4 16.6 246.5 111.7

o-5

4.3 2.0 47.2 27.7 112.7 6.4 52.6 14.5 3744 100.2

0.5 5.8 2.2 54-l 36-l 180.7 12.8 37.2 12.7 106.6 62.3

I.0 34.4 4.0 121.0 38.2 249.5 4.4 46.6 20.7 128.3 76-2

a Service payments-repayments of principal (amortization) currencies, goods or services Source: World Bank ( 1979) World Debt Tables, p. 158

and interest

Table 6. Debt outstanding including undisbursed-comparisons selected African countries (millions of US dollars)

Lesotho Botswana Swaziland Kenya Tanzania Zambia Uganda Ghana Malawi Nigeria Sudan

payments

made in foreign

between

Lesotho

and

1972

1973

1974

1975

1976

1977

1978

1.0 0.0 9.9 22.2 24.1 135.6 11.7 0.0 1.1 34.9 51.9

1.0 0.0 3.7 22,9 21.0 275.9 8.2 0.0 6.3 31.8 90.0

0.9 0.0 1.2 21.4 16.9 284.0 6.1 o-0 8.7 27.8 217.2

0.7 0.0 0.1 109.2 12.7 489.3 4.4 0.0 7-o 22.5 296.0

0.7 0.0

0.6 0.0 0.1 275.2 20.3 455.2 3.8 0.0 38.0 4.8 444.5

0.6 45.0 28.1 305.4 21.3 452.2 4.0 21.5 64.4 1780.2 640.9

0.1 163.1 20.9 508.6 3.6 o-0 4.8 10.4 418-l

Note I. External public debt is a debt owed to non-residents repayable in foreign currency, goods or services which has an original or extended maturity of over one year and which is an obligation of a public debtor Note 2. Disbursements are drawings on loan commitments (the total of loans for which contracts are signed in the year specified) Source: World Bank (1979) World Debt Tables, p. 52

generously to allow for slack implementation so that more projects are approved than can be financed within the ceiling for any particular year. Ove~rogramming on this scale (currently about 30 per cent) is much less common elsewhere. Furthermore, as we will see in the final section of this paper, although about two-thirds of grant aid is tied, dispensations are frequently made in the case of Lesotho to allow ‘local’ and third-country purchases.

As the vafue d grantsand loans and the number of donors increases, the analysis of aid becomes more di~cuIt. Fir&y, capital assistance, even if it is channelfed through the budget, can so far only be examined in terms of commitments. Figures for actual expenditure must await Ministry of Finance audits which are, unfortunately, required for as far back as 1975-76. The Treasury therefore advises that disbursement figures in the Development Plans be treated with extreme caution. Opinions of their validity vary wildly: some see them as rough estimates, others as fantasy. In addition, some commitments, in particular those of USAID, are duplicated in the Capital Accounts, appearing in both ‘direct’ and ‘through the budget’ enumerations. Secondly, virtually all technical assistance and food aid monies are directly funded. EIeuce, the Government of Lesotho has no immediate access to disbursement figures and therefore reIies on the submission of reports from the local project directors or, more generally, the donor countries, Recent data have not yet been acquired by the Ministry of Finance p~marily because of i~e~ciencies in their info~a~o~ collection and requisition machinery. Thirdly. it is becoming increasingly common for individual projects to be funded by several, rather than one or two, donors. Furthermore, programmes now quite often make use of funds derived from different source categories: government loans (external and domestic) and grants. In consequence, more concrete and substantive analysis must await the compilation of accurate and disaggregated financial account disbursement Agures. Nevertheless, it is possible to extract some information of value from the data, but research conclusions are necessarily speculative at present

The high-priority status of Lesotho irs intemationaI capital and technicaI assistance allocations has been shown to be even more evident today than in the period covered by Jones (1977). The reasons for this need to be re-examined and, in particular, the thesis that external financial assistance lessens dependence on South Africa merits further analysis. Lesotho’s poverty is of course a major item in its curriculum WE, especially when that poverty is often expressed in starvation and malnutrition, given that the country is subject to periodic droughts, and imports about 50 per cent of its food (Government of Lesotho 1980: 10). In 1975 the UN placed Lesotho, along with 17 other African countries, in its list of LLDCs, therefore qualifying for special attention. Indeed, so high are the benefits attached to mem~rship of this dub that, in Maseru f&an&l circles, it is being seriously suggested that the Lesotho ~o~er~me~t has falsEed development indicator statistics in an attempt to stay in. WhiIe it is di%mlt, in the light of recent IeRist literature, to accept international concern as a serious factor in aid disbursement, the allegation that aid acts as a lubricant for neocolonialism (Arnold 1979: 14) is difficult to make in the case of Lesotho. In the first place, the monetary value of aid is not very significant although it is disproportionately high per capita. Therefore, it is most often the case that individual projects are of too small a scale to attract much private foreign investment and contracting. Secondly, while a substantial proportion of aid is tied, purchases, at least so far, are made primarily with foreign capital since government revenue is severely constraiaed and is largely directed to recurrent expenditure. The domestic contribution to the devebpment budge&is therefore far too iow to generate external trade to any degree which would justify the initial aid allocations_ Thirdly, there is cousiderabIe evidence to suggest that aImost ah non-tied aid

216

Aid to the Southern African periphery

and a substantial proportion of tied capital assistance is used, through the waiver system, to purchase goods and services from South Africa. Hence, Lesotho’s main selling point in relation to international aid is its chronic dependence on South Africa, by which it is geographically surrounded. In terms of its limited resource base and its characterization as a labour reserve within the South African space-economy (Strom 1978), Lesotho’s dependence is apparent. To begin with, Lesotho has been quite unable to develop its industries sufficiently to generate many exports mainly because of the difficulties encountered in mobilizing local capital and competition with South African and Bantustan producers (only 28 per cent of Lesotho’s exports find their way outside the Republic; Government of Lesotho 1980:26). Imports, too, are controlled by South Africa. Over 90 per cent derive from the Republic itself and the rest are subject to South African customs and freight charges. Hence, the trade deficit has widened to alarming proportions. In addition, over this period 86 per cent of foreign exchange earnings to meet this deficit were drawn from the Republic (71 per cent from the remittances of Basotho migrant workers and 15 per cent from Customs Union Revenue). Labour migration is a subject of intense concern to Lesotho at present (Van der Wiel 1977; Leys 1979; Cobbe 198ia, 1982), not only because of the negative manpower effects on domestic agriculture but also because it is likely that this source of income will diminish in the near future in response to the strategy of the South African State in internalizing its labour force. At present it is estimated that no less than 60 per cent of the male, and some 10 per cent of the female, adult labour force of Lesotho are employed at any one time in the Republic. This migration is characterized by regular wage remittances and periodic returns to a home residence maintained, most generally, in a village in which at least the immediate family is resident. Such migration influences the agricultural structure, the basis of the Lesotho economy for the forseeable future, in several ways. An important aspect is the absence of sufficient labour on the farm, a shortage keenly felt during harvests. In addition, since about 70 per cent of the income of rural Basotho households is derived from labour migration, any changes in the characteristics of the labour market will strongly affect capital investment in agriculture. Two significant tendencies within this market have become apparent. In the first place, the demand for Basotho labourers has slackened, primarily as a result of a reduction in the mining labour quota allocation to Lesotho (there was, for example, a drop of 3 per cent between 1977-78 and 1978-79; Government of Lesotho 1980: 18). This stems from a policy of economic ‘integration’ between the ‘white’ South African sector and the Bantustans. Thus, labour from the homelands is being employed in preference to that of the peripheral states. Secondly, migrant incomes are falling further behind inflation. In consequence, with employment levels stagnant or falling, it is unlikely that remittances will grow in real terms over the next 10 years or so. More probably they will fall (see Table 7). Customs Union Revenue, which derives from excise and sales* duties on purchases of South African goods and services made by Lesotho, Botswana and Swaziland, is collected on behalf of member countries, paid into a common pool administered by South Africa and redistributed to members, with a two-year time-lag, according to a complicated and structurally unstable formula. Lesotho has virtually no say in the calculation of its allocation which fluctuates wildly from year to year, averaging about 18 per cent of the total. Membership of the Union seems to be an article of faith in government circles but, in the light of recent predictions that Lesotho receipts will actually fall 10 per cent in real

* This item is no longer strictly applicable since the Republic introduced General Sales Tax (GST) but this tax raises the value of goods and services and, hence, Custom Union Revenue.

277

P. A. Wellings

Table 7. Estimates of migrant employment, remittances and rate of growth, 1973-74 to 1978-79 Total employment

1973-74 1974-75 197%76 1976-77 1977-78 1978-79

Mine employment

155 000 147 000 154 400 160 400 159 500 154 600

Total remittances (millions of Rand)

Real rate of growth (%I

Mine remittances ~milljon~ of Rand)

Real rate of growth WI

40 60 90 to3 118 I24

i-21 +34 t33 +2 i-2 -7

24 43 71 84 100 105

+38 +58 +47 +5 +5 -6

111 119 102 236 i 16 375 125 329 128 518 124 578

Source: Government of Lesotho f1980: I8- 19)

terms between 1980 and 1985 (Government of Lesotho 1980: Zl), one of the key research topics identified during a recent ISAS Conference (Cobbe 1981b; Daniel 1981; see also Cobbe 1980) was a cost-benefit: analysis of continuing membership.

In consequence, then, Lesotho’s stated development strategy is to find ways to minimize dependence and promote self-reliance (IL0 1979) and it is this prospectus which has primarily attracted the donors. Although it may be that, since such a project has the blessing of ADB and OAU, the political leverage to be gained by donors from participation may be the factor underpinning the patronage of Lesotho, it is necessary to evaluate aid in terms of its success in reducing dependence and in bringing Lesotho closer to the point of being able to dispense with this form of assistance. The following sections should be viewed as a preliminary assessment of the value of aid in these terms, Aid and a~ieultura~ development in Lesotho In a particularly cogent survey of the motives and consequences of aid allocation to Africa, Guy Arnold (1979 : 19) observes that,

There is a growing tendency for recipients to see project aid as relieving them of both interest in, and responsibiIity for, particular developments.

The extent to which this analysis is applicable to agricultural deveiopme~t in Lesotho is the subject of this section. Given a situation in which 85 per cent of the population of Lesotho is rural-based and heavily dependent on arable farming and herding it was logical that the main objective of both the First (~97~7~/1974-75) and Second (3975-76/1979-80) Plans should be the development

of the agriculturai

sector.

The highest priority, during the plan period, is given to increasing agricultural productivity substantially in both crop and livestock sectors (First Plan: 24). The largest contribution, in absolute figures, to the projected increase in GDP comes from agriculture, where a special effort will be made to raise the yields of traditional crops through the nation~de implementation of a development programme . . . at the same time efforts to establish new systems of land use and cultivation, including the introduction of cash crops and mixed farming together with proper conservation measures, will be continued and intensified, as witi the development of irrigation (Second Plan: 24).

It 74-75 Figure 2,

75-78

76-77

77.78

78-79

79-80

80-81

Percentage of committed funds devoted to agricukure.

However, Fig. 2 shows a steady decfke in capital commitments, as a percentage of the total, to agriculture and, to a lesser extent, to ‘rural development’ between 1974-75 and 1980-81. This has been primarily the result of changing donor priorities since almost ali development capital in these sectors has come from external sources-the domestic contribution has in fact consistently fallen below the average for all recipient categories. Table 2, which showed capital expenditure by sector for 1969-70 and 1974-75 to 1979-80, confirms this trend. Sectors other than agriculture, notably economic and social infrastructure and industry, commerce and tourism. have captured greater shares of the development funds. The figures relating to agriculture are reproduced in Fig. 3. The redistribution of capital is then evident in the contribution of individual sectors to GDP. The percentage attributable to agricutture. for example, fell from 5 I.4 per cent in f.973-74 to 4f=4 per cent in 1977-78 (Ntsane and Eckert 1978: 16). No change in this pattern of investment is expected during the current plan period, from 1980 to 1985 (see Table 8). Ahhough ‘the challenge of the Third Plan is to transform Lesotho from being essentially a distribution system for migrant remittances, customs

P. A. Wellings

69-70

70-71

71-72

72.73

73-74

74-75

75-76

76-77

77-70

76-79

219

7980

Figure 3. Percentage of capital expenditure devoted to agriculture.

revenue, and aid into a viable domestically-based production system’, it is made clear that the Government is ‘anxious to move away from the simplistic concept of self-sufficiency’ (Government of Lesotho 1980: 49), because the subsidization of crop production channels resources away from more productive investments and complete self-reliance in basic foodstuffs is in any case an ‘unrealistic objective’. The rundown in the externally funded agricultural development effort, in relative if not absolute terms, which relieved the Lesotho Government of an initial responsibility, is therefore not being counteracted by any real increase in the domestic contribution and its replacement in the form of Food Aid is of dubious merit. Thus, an analysis of priorities as gauged from the Capital Accounts gives no indication of local concern in the relegation of the agricultural and rural development sectors. In 1974-75, for example, while agricultural projects topped the lists in the grants and loans budgets, the Government devoted the largest share of its revenue to the building of the Palace, the police headquarters and the development of telecommunications and the postal system (Capital Account 1974-75). Indeed, Jones (1977) notes that in discussion between the Government of Lesotho and ODM, the former repeatedly complained about the percentage of funds directed towards the agricultural sector which they considered too high. In 1978-79, the greatest single commitment of domestic capital (R 1.3 million) went to the Hilton Hotel project (completed in 1979 at a cost of R 7 million) while the two most substantial external allocations were to the Thaba Bosiu Rural Development Project (R 1 a4 million; R 1.0 million from IDA and R O-4 million from USAID) and the Pre-School Feeding Programme (R 1.7 million; CRS and WFP; Capital Account 1978-79). By 1981-82, however, the highest percentage of committed funds from all sources was taken by Works, Transport and Communications (Capital Account 1981-82). The reasons for this are twofold. In the first place, the closure in 1976 of the Transkei border with Lesotho led to tremendous hardship for those Basotho living on the Lesotho side who

78.8

38.5 7.5 36 8.2 5.8

lOO*O

38.5 I.5 3.6 8.2 5.8

10.8 3. I

10.8 3.1

94 2.9

I.4 2.3

3Od6 6.0 2.9 7.8 4.1

6.0 16.5

6.0 16.5

6.3 16.1

o/o

s.0 12.7

Amount

o/o

1981432

Amount

1980-8 1

106.8

42.3 7.1 4‘1 8.8 6.3

9.6 4.9

6.8 16.9

Amount

1982-83

39.6 6.6 3.8 8.2 5.9

9.0 4.6

6.4 15.8

o/r,

99.3

34.4 6.9 5.7 8.6 1.7

9.3 4.8

7.0 14.9

Amount

o/6

34.6 6.9 5.7 X,7 I.8

9.4 4.8

7.0 15.0

1983~-84

106-2

31.6 8.1 8.5 10.7 9.2

4.2

8.5

7.4 18.0

Amount

1984-85

8.0 4.0

7.0 16.9

4/o

29.8 7.6 8.0 10. I 8.7

by sector for Lesotho (millions of Rand), 1980-S 1 to 1984-85

Source: Government of Lesotho (1980: $5) (there are some addition errors which are corrected here)

Totals

Rural development Agriculture Industry/commerce and tourism Natural resources Transport and communications Education Health Urban development Government services

Sector

Table 8. Planned capital investment

491.1

177.4 35.6 24.X 44.1 33.1

45.6 19.3

32.2 19.0

Amount

Totals

36.1 I.2 5.0 9.0 6.7

9.3 3.9

6.6 16.1

o/

P. A. Wellings

281

were poorly connected with other districts and found themselves suddenly unable to obtain food, medical assistance and other essential items. The short-term alleviation of their problems and the longer-term need to develop better internal infrastructure led to a rapid reorganization in international and local capital disbursements. Hence, agriculture and economic infrastructure claimed 32.6 per cent and 18.1 per cent respectively of the original planned public investment of the Second Plan period but the revised figures were calculated as 20.7 per cent and 29.1 per cent (Government of Lesotho 1980: 28). Secondly, donors became disillusioned by the conspicuous failure of the agricultural projects which commenced towards the end of the First Plan period. Thus, the most recent Capital Account (1981-82) demonstrates quite clearly that there are now a lot more funds available for capital-intensive, urban-based and non-agricultural projects. For example, R 4.65 million have been committed to the construction of the international airport (R 0.75 million from the government and the rest from Arab banks); R 5 million to government administration blocks (government revenue); R 11 a8 million to urban water supply (R 5.8 million FRG, R 3.1 million ADB, R 2.9 million IDA). Since these failures have sparked off what amounts to a reversal in national development strategy they deserve closer attention. The constraints on agricultural development in Lesotho have been well documented elsewhere (Ntsane and Eckert 1978; Sterkenberg 1979). The limited resource base, ecological deterioration, the land tenure system, migration and an unreliable climate present the major difficulties but, despite these, there is some considerable potential for increasing productivity and it was this which attracted heavy donor involvement in all four of the strategies identified in the Second Plan (Government of Lesotho 1975: 81-82). These strategies comprise: 1. The implementation of large-scale, area-based projects. 2. The supply of basic agricultural services in 36 ‘concentration areas’, which included the major project areas. 3. Small-scale crop and soil conservation schemes of 400 ha or less. 4. General extension and marketing services to all projects. Most of the money was channelled into strategies 1 and 2. Although there are exhaustive histories of these types of projects in Moody (1976) and Garaba (1980) a short summary is useful here. The story began with the establishment of the Leribe Pilot Project (LPP), funded by UNDP, in 1970. Its objectives were to: 1. Demonstrate the impact upon production which could be accomplished by integrated planning and by the introduction of improved technology and practice. 2. Test the suitability of a semi-cooperative farm organization system, designed to permit the rapid increase of production without conflicting with the prevalent land tenure system. Thus, LPP became the pioneer of what was to become a general strategy of agricultural development consisting of the extension of a package of inputs followed by the use of more sophisticated agricultural methods where conditions favoured their application. By the middle of the Second Plan period, over 200 rural development schemes were listed by the FAO (1977) but just nine of these programmes, the large-scale, area-based projects, swallowed almost all the capital. All of them failed to achieve their objectives. The most spectacular failure was that of Thaba Bosiu Rural Development Project which was scheduled to run from 1973 to 1979 but terminated abruptly in 1977. This used approximately US% 9.8 million (57 per cent IDA, 29 per cent USAID, and 14 per cent

Aid to the Southern African periphery

282

local sources). In the same way, the Senqu River Extension Project. which began in 1974, was abandoned before the second phase could commence in 1976. These failures have been ascribed to various causes. The piiot project was, for example, unfortunately sited in an atypical location which favoured the success of the planning strategy employed (FAO 1975). Its proximity to a South African border post allowed easy access to inputs and the market. soil fertility was above average, the incidence of erosion below average. and communications were relatively good. The individual projects remained isolated from the wider economy and, in consequence, inputs and technology were inevitably externally derived (Garaba 1980). In addition, the provision of local staff proceeded at too slow a pace, administration became chronically inefficient, and the cost of implementing activities proved tremendously high relative to the output achieved. In summary. Nobe and Seckler (1979: 169) state, Area-based projects were designed with over ambitious goals of achieving large increases in crop production in the short-run and/or rapid development of the rural sector in an integrated manner. While some projects are still underway those that have ended recently again fell far short of achieving the objectives stated in the original project proposals. Farm labour and institutional constraints were primary causative factors. But inadequate project management was also a factor leading to less than optimum achievement levels.

Hence the prospectus of the area-based projects to allocate all cropland to food crop production and raise yield levels through intensification was quite inapplicable given the land tenure system. the size of holdings. the preference for livestock and the high risk introduced by hail, drought and frost. Basotho farmers with small landholdings simply could not afford the risks introduced by the high input costs necessary for maximum production. However. as donor capital is reallocated elsewhere in response to the problems encountered in the implementation of the area-based projects. it leaves Lesotho with an unusual and contradictory agricultural development strategy for the current Plan period. This situation derives from two quite distinct recommendations made by LASAP (Lesotho Agricultural Sector Analysis Project). On the one hand, BASP (Basotho Agricultural Services Project), which is mainly funded by external sources (the UK, EEC. FRG, UNDP and IDA), will continue to run for some time. LASAP acknowledged that the project concept, to make agricultural inputs and technical knowledge more accessible at the village level. was basically sound but greater success would be possible if some machinery were developed for the provision of risk insurance and the amalgamation of cropland into economic units (Nobe and Seckler 1979: 169). At the same time, however, LASAP observed

that.

. . . an approach using agricultural contractors who can provide physical inputs such as plowing. planting and fertilisers and also serve as a link between farmers and Extension efforts is worth consideration (Nobe and Seckler 1979: 170). On the evidence of the 1981-82 Capital Account, it is the latter strategy which enjoys greater governmental support. For this year. R 4.23 miliion has been committed to BASP (R 3.5 million externally funded) but R 7.5 million to the summer and winter wheat programmes (all government revenue), plus R 1.8 million for feedlots (ADB) and R 1.5 million for land conservation and range management (USAID). The particulars of these programmes have yet to be publicized in detail but it is already clear that they will be commercially oriented and administered and implemented by South African companies while Basotho farmers are subsidized in order to vacate their land. It therefore seems unfortunate that, now the lessons of past experience have been learned. donors are looking to other sectors for projects to finance. At the same time, the Government of Lesotho. which had previously loaded the task of agricultural development onto these donors. will soon be implementing programmes directly opposed to, and in

P. A. Wellings

283

rejection of, this externally designed, incorrectly formulated, but nevertheless valid strategy of building agricultural development from the grass roots upwards. In this context, it is disturbing that so much more aid is being pumped into the rural areas of Lesotho by WFP and CRS. In the 1981-82 Capital Account alone, an astonishing R 16.7 million has been committed by these organizations to a wide range of projects (Capital Account 1981-82). Although a strong case is made for the potential benefits of food aid by Stevens (1979) the negative effects have been the subject of closer scrutiny (George 1976: Isenman and Singer 1977: Maxwell 1978). The greatest potential danger is that food aid may indirectly sustain inefficient agricultural policies. acting as a disincentive to the individual farmer and as an excuse for government neglect of agricultural reform. No real evidence for this was discovered by Stevens (1979: 200) in his case study of Lesotho but the recent policy changes outlined above, and the massive escalation of food aid disbursements since he collected his data, invalidate the applicability of his conclusion to the present situation. There is now a real threat that food aid, while performing some useful services in the fields of education and health and allowing the implementation of useful for genuine agricultural infrastructural projects, will be employed as ‘replacement’ development programmes and as a hand-out to rural residents in return for political support. Aid Rows to South Africa

Despite the rhetoric, the lack of any real governmental commitment in, and the disillusionment of donors with, agricultural development programmes is clearly apparent in the redistribution of funds to other sectors. At the highest level of generalization, for all categories of funds, the major priorities seem now to be works, transport and communications; projects in which the effects of investment are more visible and the benefits more apparent, if not immediate. The government, however, in the allocation of domestic revenue, attaches almost as much importance to the establishment of state infrastructure and has also been heavily committed to projects of questionable developmental value such as the winter and summer crop programmes, the Hilton Hotel, the Maseru Centre Shopping Complex and the international airport. Although one can argue that the diversification of funds will avoid overdevelopment of one particular sector and hence lead to a balanced economy and that economic infrastructure is a vital prerequisite of development, it is worrying that agricultural development is suffering in the process. Even if previous agricultural programmes have failed then the response should be a reformulation of the planning structure with the same objectives in mind. Given the competition provided by South Africa, industrial development is not a viable alternative. The only strategy which can lead to a substantial reduction of dependence on migrant remittances and imports from the Republic through the provision of reproductive domestic employment opportunities is a massive alteration in the conditions of rural agricultural life. Recent development policy, therefore, has had the effect of entrenching and extending the severe spatial and structural polarization of the the recommendations for the immediate implementation of country-hence decentralization programmes (Moody 1975; Wagner 1978; Huisman and Schmitz 1981; Huisman and Sterkenberg 1981; Wallis and Van de Geer 1980, 198 1). To be cynical, but quite probably accurate, one can suggest that the present Lesotho government is not genuinely interested in basic agricultural development for the following reasons. 1. Given power

the political structure through a consistent

of Lesotho, in which a non-elected government retains refusal to hold elections and through suppression of

284

Aid to the Southern African periphery

opposition (Khaketla 1971). it is not surprising that the prime objective of the ruling party is to strengthen its hold on the country by developing establishments to preserve and legitimize its position and disbursing funds to projects and areas to secure political support. 2. It follows that, since the zone of greatest agricultural potential is also the most powerful support base of the opposition, agricultural development will be pushed lower on the list of priorities. 3. A considerable amount of external capital may be construed as falling within the category ‘rural development’ if one counts food aid, infrastructural and educational programmes. This may satisfy some critics of current development policy but these projects do not genuinely get at the problems of ecological deterioration, the limited resource base, land tenure restrictions, technological impoverishment, credit. marketing and insu~cient rural capital, in an integrated fashion. One might also argue that the government is, for its own reasons, more concerned with the preservation of the fabour reserve function of Lesotho, since this generates income without governmental expenditure: in the short-term view, it is. therefore, possible to see the incorporation of migrant labour in the domestic agricultural economy as a cost rather than a benefit. Even if overstated, it is quite true that relations between Lesotho and South Africa are more cordial than may appear from cursory observation. Lesotho may refuse to recognize the Bantustans (the border with Transkei remains shut) and verbal assaults on the Republic may be made from time to time. but this represents no more than a facade of opposition concealing the close cooperation between. and integration of. the two economies. Lesotho is. in essence, no more than a peripheral organ within the South African space-economy and the government makes no real attempt to escape or Iimit this ~corporation. There is, for example, no hesitation at all in using government funds to purchase South African goods or services. nor restrictions on the activities of, and the tendering of contracts to, South African companies whether they be based in Lesotho or the Republic. This attitude of the government to South Africa is one of the major criticisms levelled at the ruling party by its opposition. The recent political disturbances in Lesotho attributed to the LLA (Lesotho Liberation Army-the military wing of the BCP) led to accusations by the Government that the ‘terrorists’ were being harboured and supported by South Africa. This was not taken at all seriously in Lesotho and it is likely to have been dismissed in Pretoria since the opposite is probably the truth. So what is the place of aid in this scenario? Jones’ view was that Lesotho has a non-elected government-whose main political objective appears to be to retain offic~supported. apparently. by a minority of the population. Yet the experience of Lesotho seems to indicate that British aid is not a necessary prop. and there is a considerable likelihood that without it the Republic of South Africa would have been able to extend its influence (Jones 1977: 60). According to Jones, then, aid was required to guarantee Lesotho’s political independence of the Republic. However, it has proved quite unnecessary to incorporate Lesotho politically within South Africa to preserve its labour reserve function and if. as suggested below. a massive proportion of aid eventually flows to the South African economy. then Lesotho is of more economic value to the Republic as an independent hostage state. Hence, Jones’ analysis of the role of aid seems to be correct. but for reasons quite different from those he suggests. Lesotho is an extremely open economy and it is. therefore. quite simple for aid capital to find its way over the border. The question ‘how much?’ must await the completion of the

P. A. Weldings I-

-

-.-

-‘-‘-

Customs union revenue _ _ __- _.-.-.- -.- .--.-._

_.-._

- _ - _ - - -

-.-

285

-.-

Purchases

-.

t f

Sub contracts l

Purchases

*

* Purchases

r

+

Aid +

Donors

L

z :

’ Lesotho

Direct purchases and contracts

Recipients

-__--_

Salaries Employment

Return

L

f 2

income

Flow

+

Q.

5 a v)

(Some Tied Aid,TA)

Figure

8 Lu

4.

Aid-derived

capital flows to the South African economy.

aid disbursement audits, but access to this highly sensitive information is likely to be severely restricted. However, with some knowledge of the proportion of inputs to completed projects which were derived from South Africa it is possible to estimate, from the recent Capital Accounts, a rough percentage of aid flow to the South African economy. The most conservative figure is an improbable 60 per cent but there are indications that it may be considerably higher and 80 per cent may be nearer the mark. Indeed, now that so much more development is occurring in infrastructure and construction where an extremely high percentage of equipment, materials, services and contracting is South African, this figure may creep higher still. How, though, is this possible if a large proportion of aid is tied? The following is a categorization of the ways in which aid money benefits South Africa (shown diagrammatically in Fig. 4).

Direct purchases (a) Unrestricted aid capital is treated in the same way as government revenue and is quite openly used to purchase South African goods and services. (b) Tied aid comes in a package containing various regulations and restrictions on its use. Some donors stipulate that no purchases may be made in South Africa (e.g. ADB), others allow a certain amount (e.g. UK) and some specify virtually no limit (e.g. FRG. IDA). Hence, a lot depends on the donor: on their attitude towards waivers and accountancy procedures. The normal practice with tied aid is that purchases may be made only in the donor country but under certain circumstances this regulation may be waived. It is up to the recipient to make a case for the granting of a waiver and this seems to be a relatively simple task in the case of Lesotho, since it is true that to make purchases outside South Africa and then import them through the Republic seriously

diminishes the value of aid. South African products are quite often less expensive. certainly cheaper and quicker to import. and spares and repairs easier to obtain. An example may be drawn from the Farming Systems Research (FSR) Project which is being funded chiefly by USAID and is directed towards the goal of increasing the rural incomes of Basotho farmers through the creation of ‘rural enterprise mixes’ and by research into appropriate means of transfering knowledge and gaining farmers’ acceptance of recommended technology (Farming Systems Research 1978: iv). Between 1978 and 1983, the contribution of USAID is expected to be US$ 8.3 million (92 per cent of the total), over half of which wiil be in the form of TA. However. US$ l-5 milfion will be accounted for by ‘commodities ’ . ~construction~ and ‘local costs’. and it is for these input categories that waiver requests were made in the Project proposal. In terms of the procurement of construction materials, the normal policy is to restrict this to sources within the United States. However, a waiver was requested for the full amount because: 1. The cost of shipment would diminish the value of project funds. 2. The time-lag of shipment would result in slack implementation. 3. Replacement parts and service facilities for fixtures and materials made to South African specifications are readily available in Lesotho and over the border in Bloemfontein (Farming Systems Research 1978: Annex vi). Similarly, a waiver was requested against the exclusive use of the services of US-owned and based companies, and an alternative restriction to ‘local’ businesses because: I. The scale of construction would be too smalf to interest US companies. 2. There are no US companies in Lesotho to provide the required services. 3. Lesotho-based firms may qualify as ‘local’ on the grounds that they are ‘integral parts of the domestic economy’, but the number of companies covered by this de~nition would be ~nsu~cient to ‘assume adequate competition and availability of services’. Hence, it would be necessary to include some of the firms operating locally but which have their primary place of business in the Republic. 4. Some maintenance and repair would have to be provided by local firms, many of which may also be owned by South African interests (Farming Systems Research 1978: Annex vi). For vehicles and tractors, an application for a waiver against their purchase in the United States was made on the grounds that: 1. Left-hand drive would be dangerous in Lesotho conditions. 2. Local mechanics have limited experience with US machines. 3. There is a lack of suitable spare parts in Lesotho and South Africa-their importation would lead to unacceptable vehicle lay-off times and contribute to implementation delays in project objectives. The recommendation of the Project paper was therefore as follows: In this situation of left-hand drive US vehicles net being rapidly and reliably repairable when they break down and constituting a safety risk when on the road, it is suggested that vehicles manufactured in the Republic of South Africa are an appropriate substitute (Farming Systems Research 1978: Annex vi). Britain also allows local and ‘third country’ procurement. In general, there is a standing waiver in the case of building materials; individual applications are required for other items but waivers will normally be granted if there are no suitable UK or local products, if the maintenance of UK goods would be difficuIt and/or expensive and in situations where the price in the Republic is substantialIy fess than the equivalent in UK. In addition, for works contracts, Britain adopts a very wide de~nition of ‘Iocaf’ contractors since genuine Basotho enterprises are so few.

P. A.

Weilings

287

Some donors tend to discourage waivers by imposing a barrier of red tape. Britain, for example, passes requests from the local High Commission to ODM and then on to the Board of Trade-a lengthy procedure but which seems to have failed significantly to reduce the applications and is partly responsible for the slack implementation of projects. (c) It is possible to buy from South African-based agencies which are representatives for, or subsidiaries of, foreign companies. This still represents a benefit to the South African economy even though the certificate of origin documents may give the impression that the imports came directly from overseas. In the same way. it is well known that ‘foreign’ companies currently operating in Lesotho are fronts for South African firms. (d) Certificates of Origin are, apparently. quite easily forged. Some donors may even be satisfied by a signed statement of purchase origins unsupported by any documentary evidence.

Indirect purchases As we have seen, it is possible to have restrictions waived on local purchasing. therefore, may flow into the local economy, creating some employment, establishing and infrastructure, and out again through:

Aid, plant

1. Purchases from South African companies based in Lesotho. 2. Purchases from Basotho-owned companies which import their stock from South Africa. 3. Contracts to projects and Ministry departments which place subcontract tenders, inevitably won by South African companies. 4. Contracts to Basotho-owned companies which subcontract to South African firms. Theoretically, donors retain the right to check on the origin, purpose and invoice of any purchase, analyse accounts and evaluate the progress of projects. This is a simpier procedure in the case of directly funded aid, but capital assistance through the budget is very difficult to keep track of because of the unsatisfactory state of administration. Hence, if donors are to minimize the benefits of aid to the South African economy, they must administer the disbursements themselves, abide by much stricter regulations and abandon the waiver system.

Salaries Only a very small percentage of expatriate and Basotho salaries, funded by TA. accrues to the domestic economy. Most of it is used to import South African goods and services, either directly or indirectly. A minor effect is the stimulation of internal tourism and the provision of local entertainment facilities. However, one of the most starthng consequences of this is the demand for housing, which has benefited the Lesotho Housing Corporation, local Basotho entrepreneurs, as well as South African companies and their Lesotho subsidiaries.

Employment income Aid generates employment and therefore a rise in income per capita. This inevitably leads to an increase in the propensity to import from South Africa. again either directly or indirectly.

288

Aid to the Southern African periphery

If aid stimulates importation from South Africa, then it will result in an increase Customs Union receipts. This accounts for a minor feedback to the Lesotho economy the context of the much greater external flow.

in

in

Conclusion It is not a contention of this paper that all aid to Lesotho is, and has been, without value-far from it. In some sectors at least, development is proceeding at a remarkable pace although the old question ‘development for whom?’ needs to be the subject of closer examination. There are, however, two disturbing trends. 1. A reshu~ing of aid priorities upon the failure of the area-based agricultural projects has meant that Lesotho is now left with a contradictory agricultural development policy. The externally designed grass-roots development strategy is being phased out as donor funds dry up, to be superseded by government schemes which essentially ignore the farmer and hand the responsibility for development over to South African contractors. Food Aid programmes, as ‘replacements’ for the large-scale projects, act indirectly in support of this reversal in policy. 2. An astonishingly high percentage of aid directly and indirectly benefits the South African economy, thereby entrenching Lesotho’s dependence on the Republic-an effect directly the opposite of that intended. The conclusions are tentative at this stage; a lot more work needs to be done. By the end of 1982, it is anticipated that accurate audits of budget accounts from 1975-76 will be available. An analysis of these is necessary to con~rm (or otherwise) and develop the points made in this paper. Provided that the audits can be disaggregated to reveal details of individual transactions (invoices, certificates of origin, evidence of payment) and that these data are publishable, it will be possible to derive figures for the aid-derived capital flows, identified in Fig. 4, to South Africa, and actual disbursements to agricultural and rural development programmes. In addition, an independent analysis of the government summer and winter wheat programmes is awaited with interest. Acknowledgements Many thanks to Dave Telford of the Ministry of Finance. assistance in procuring information. However. the conclusions own. Thanks aiso to Ross Ealey and Jonathan Crush of the National University of Lesotho for their useful comments. tables.

Lesotho for his advice and of the paper are entirely my Department of Geography, Pam Ownsworth typed the

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289

Cobbe, J. H. (198la) Migrant Iabour and Lesotho: problems and policies, and difficulties and constraints with respect to them. Paper to Lesotho Catholic Bishops Conference on Migrant Labour, Roma, November 198 1. Cobbe, J. H. (1981b) Priority areas for economic research for development in Lesotho. Paper presented at the Institute of Southern African Studies Conference on Research Priorities in Southern Africa, Roma, Lesotho, 23-27 November 198 1, Cobbe, J. H. (1982) Emigration and development in Southern Africa with special reference to Lesotho. International Migration Review (forthcoming). Daniel, J. (1981) The state of research in Swaziland: problems, opportunities and directions. Paper presented at the Institute of Southern African Studies Conference on Research Priorities in Southern Africa, Roma, Lesotho, 23-27 November 198 1. FAO (1975) The development of a pilot agricuiturai scheme it! the Leribe area, Lesotho: project ~~d~~gs and recomme~dat~a~s. Roma: FAG

Farming Systems Research (1978) ~~~~e~~~~~e~. Maseru: FSR Project. Garaba, I. M. ( 1980) The main area-based rural deve~apment projects and pragrammes of Lesotho and tke critieria under&&g their spatial organ&cation. Unpublished BA Dissertation. Department of Geography, NUL. George, S. (1976) How the other halfdies: the real reasons for world hunger. London: Penguin. Government of Lesotho (1970) Kingdom of Lesotho first jive year development plan. Maseru: Government Printer. Government of Lesotho (1975) Kingdom of Lesotho secondfive year development plan. Maseru: Government Printer. Government of Lesotho (1980) Kingdom qf Lesotho third jive year development plan. Maseru: Government Printer. Griffin, K. B. and Enos, 3. L. (1970) Foreign assistance: objectives and consequences. Economic

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Economic ~eve~o~rne~t and Cultural Change 25 (2), X5-238. Islam. N. (1976) The external debt problem of the developing countries with speciat reference to the least developed. In A world dittided: the less developed economies in the international econoqr (G. K. Helleiner, ed.). London: Cambridge University Press. Jones, D. (1977) Aid and development in Southern Africa. London: Croom Helm/ODI. Khaketla. B. M. (1971) Lesotho 1970: an African coup under the microscope. London: Hurst. Leys, R. (1979) Lesotho: non-development or underdevelopment. Towards an analysis of the political economy of the labour reserve. In The politics qfA.frioa: dependence and dellelopment (T. M. Shaw and K. A. Heard, eds), pp. 95- 130. London: Longman and Dalhousie University Press. Maxwell, S. (1978) Food aid, foodfor work at?d public works. Discussion Paper No. 127. Brighton. Sussex: Institute for Development Studies.

290

Aid to the Southern African ~erjpher~

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