Compensation Practices in Lesotho’s Expropriation Processes: A dire need for a comprehensive consolidated policy and legal framework

Part 1

Photo by Tatenda Mapigoti on Unsplash

1. Introduction

The Kingdom of Lesotho is a homologous country landlocked by the Republic of South Africa with a total population of about 2.2 million people. This mountainous enclave is low on natural resources if compared to neighbouring countries. Yet, because of its altitude it is placed to harbour large projects like the Polihali Dam under Lesotho Highlands Water Project Phase II.

The prevailing climatic conditions and the need to produce in bulks may force government to venture into large agricultural development projects. Additionally there are and there may be additions in mining, extraction of quarry, road construction and building of textile factories. Medical cannabis manufacturing and production facilities are new additions to the settings which may contribute to development-induced displacement and vulnerability of the citizens.

Many of these developments have come at the cost of compulsory land acquisition (expropriation), resettlement of communities and individuals as well as other effects on the rights of communities in such areas. The land utilised for these projects is already cultivated by small-scale and subsistence farmers. In most cases these individuals have lived of the same fields for generations and are dependent on the land for survival. The authorities expropriate their land, and the individuals are forced to move into newly established zones.

Those affected are to be compensated by the authorities for their loss of land and income, either financially or with replacement land. Expropriation has implications and impact beyond mere monetary loss. Given the rural settings where development projects are undertaken, the substantial loss is more of a deprivation of livelihood, culture and tradition. These fundamental human aspects have no monetary value but are often compensated in monetary terms. Those who have lost property have a limited understanding of monetary value and it is challenging to relate the loss of property to the monetary compensation and for them to utilise the money to benefit them in a long run.

2. Economic Background

Despite its size, Lesotho has experienced very slow economic progress despite its aspiration to speed up economic development and catch up with the developing world. Over the years, Lesotho has had to grapple with the daunting task of development (Pule and Matlosa, 1999). Various human development indexes rank Lesotho among the poorest countries of the world in terms of socio-economic development. Lesotho is the 131 most competitive in the world out of 137 countries ranked in the 2017-2018 edition of the Global Competitiveness Report. In 2012, Lesotho was ranked 158 out of 187 countries on the Human Development Index positioning the country in the Low Human Development range.

According to African Economic Outlook (AEO) poverty, inequality, and unemployment remain major development challenges facing Lesotho in spite of high literacy rates and high investment in social sectors over the years. The national poverty head count ratio, at purchasing power parity, USD 1.25 a day, has increased and currently stands at close to 56.2% while nearly 84% of the population is vulnerable to poverty (Government of Lesotho, National Social Protection Strategy 2014/15–2018/19, 2014). Rural areas harbour the majority of the poor. Over 50% of the population remains unemployed and inequality as measured by a GINI co-efficient of 0.5 is considered unacceptably high (AEO, 2016).

In an attempt to increase economic development of the country and to face the demographical reality with a rapidly increasing population, in collaboration with other states and agencies, Lesotho has embarked on several development projects. This has inter alia been done through granting of licences to third parties to pursue large projects. These projects include diamond mining, extraction of quarry, road construction and building of textile factories. The latest of the additions to these projects is the cannabis industry which is seen as a potential engine for growth and development.

3. The Purpose and Goal

The purpose of this article is to analyse and explain how expropriation of land and property are undertaken in an effort to clarify the dire need for formulation of a comprehensive compensation policy to influence stable, efficient and fair compensation practices. The objective of such an endeavour is to highlight the financial, social and judicial aspects of the expropriation process.

The financial aspect entails, inter alia, calculation of the compensation with a clear valuation method, fairness of the amount paid to those affected and the impact of expropriation on the income and expenditure of those affected. The judicial aspect simply deals with the sufficiency of the legal framework as regards expropriation and the practical aspect of the legal framework. The social aspect deals with the cultural, traditional and the conventional consequences of land appropriation to the people affected and the efforts which have been undertaken by the authorities to provide support.

4. Framework of compensation practices in Lesotho

Procedures for land acquisition, compensation and resettlement shall be in compliance with the existing legal frameworks such as Constitution of Lesotho 1993, Land Act 2010, Lesotho Highlands Water Project Treaty 1986, the LHDA Order of 1986 and other relevant legislation. The right for the state to expropriate property has also gained recognition under international law.

United Nations Conference on Trade and Development (2012) (UNCTAD) lists the following principles:

  • Property has to be taken for a public purpose;
  • On a non-discriminatory basis;
  • In accordance with due process of law; and
  • Accompanied by compensation.

3.1. Constitution

Section 17 of the Constitution of Lesotho protects the right to property. Section 17(1) provides that no property, movable or immovable, shall be taken possession of compulsorily, and no interest in or right over any such property shall be compulsorily acquired, except where the following conditions are satisfied, that is to say:

(a) the taking of possession or acquisition is necessary in the interests of defence, public safety, public order, public morality, public health, town and country planning or the development or utilisation of any property in such manner as to promote the public benefit; and

(b) the necessity therefor is such as to afford reasonable justification for the causing of any hardship that may result to any person having an interest in or right over the property; and

(c) provision is made by a law applicable to that taking of possession or acquisition for the prompt payment of full compensation.

3.2. Land Act

The statute that governs and regulates the use of land in Lesotho is the Land Act No.42 of 2010 (“the Act”).

Section 4 of the Act provides that land in Lesotho is vested in the Basotho Nation held in trust by the King. PART IX of the Act deals with acquisition and expropriation of land for public purpose.

Section 49 (1) provides that whenever it appears to the Minister that any land which is not held under a lease is required for public purposes or the creation of servitudes for public purposes, the Minister shall, after consultation with the local authority having jurisdiction, by notice in the Gazette, declare the land to be so required.

Section 49(2) whenever it is necessary in the public interest to set aside for public purposes land held under a lease or to create a public servitude, the Minister shall, after consultation with the local authority having jurisdiction and the lessee, by notice published in the Gazette declare the land to be so required.

Section 51 (1) provides for expropriation of land in public interest for development.

Section 51(2) sets out what constitute circumstances under which land may be expropriated in the public interest. The circumstances are as follows; (a) setting aside land for the development of agriculture by modern farming techniques; (b) construction or development of a new residential, commercial or industrial area; or (c) development or reconstruction of existing built-up area.

Section 52 lays the principles which Expropriation under the Act has to follow.

PART X deals with Compensation.

According to section 56, in all cases in which the implementation of the Land Act results in compulsory acquisition of property, the person deprived of such property shall be entitled to compensation at market value.

3.3. LHDA Act

In terms of section 20 of the Lesotho Highlands Development Authority Act, 1986 the LHDA is entrusted with responsibility for the implementation, operation and maintenance of the Lesotho Highlands Water Project as defined in the Treaty on the Lesotho Highlands Water Project between the kingdom of Lesotho and the Republic of South Africa.

Section 39(1) of the LHDA Act gives the LHDA power to enter and take possession of any land or exercise any right or power conferred upon it by the LHDA Act before any conveyance or ascertainment of the price or compensation for the land or right or interest in the land is done.

Section 44 of the LHDA Act provides for the payment of compensation to occupiers of land and to owners of other rights in land as therein mentioned. Subsection (1) sets out that –
“Compensation in respect of rights or interests in land, servitudes, wayleaves, fisheries, fishing rights and other rights whatsoever shall be paid by the Authority in accordance with the laws of Lesotho.”

4. Limitations

There is no consolidated legal and policy framework on compensation relating to acquisition and expropriation of property. There is a need for clear and consistent regulations on how to calculate the compensation, not only to protect those who get their land expropriated, but also those who are expropriators. In the absence of a consolidated and comprehensive framework, expropriators have been able to manoeuvre around compensation to the vulnerable hence the accusations that the authorities have been paying pittance for land appropriation.

The Court of Appeal at para. 8 in Khoahle Moneuoa and Kopane Moneuoa C. of A (CIV) 42/ 2014 notes that Section 39(1) of the LHDA Act gives the LHDA power to enter and take possession of any land or exercise any right or power conferred upon it by the LHDA Act before any conveyance or ascertainment of the price or compensation for the land or right or interest in the land is done (my underlining). The powers the expropriating authority is endowed with are so onerous and they come to bear on the vulnerable. This places the whole expropriations and compensation substratum to the expropriating authorities which is very unfair to those who stand to be deprived off their rights for economic expediency.

The case further had an intriguing turn, it was held that compensation is for deprivation of the right of occupation and use of the field not necessarily compensation to the rightful heir who may not be occupying or using the land at the time of expropriation. The High Court had decided the matter on a different issue, which was that the respondent was allocated a piece of land by his mother which the appellant disputed on the basis that the mother had no right to do so during the lifetime of the appellant’s father who, as the eldest son, was the rightful heir to his father’s estate.

There is lack of ability to uphold central control of expropriation of property. Problems associated with this include scattered policy frameworks as each project has its own policy. Secondly, the policies are project-specific and therefore each not applicable to a situation for which it was not adopted. Thirdly, each expropriation process and consequent compensation has its own control.

There is imitation in the access to legislative text. Adaptation and translation of the legal text to Sesotho is also necessary. The laws and policies have to be readily accessible in both Sesotho and English.
In the Land Act only a single method of property valuation is prescribed. This is compensation at market value. Market value is not defined and how the actual market value of a specific object is to be determined is not stated. The assumption is that guidance on determination of the market value will be through collection of data on similar objects with similar features in the market. In the circumstances, how much will enough data be? The method relies on significant amount of comparable transactions in the same proximity to work.

Income capitalisation method is not considered. This method is defined as the present value of future net profits that the property generates. This method is primarily used for property that is generating cash flow, such as commercial property. Another method could be cost replacement which is rather simple valuation method. Essentially, the method deals with cost of constructing new property of the same technical standard as the one that is being valued.

5. Practical Challenges

Communities affected by development projects have lamented and expressed so much grief about the suffering and privation they have endured. The distress is born out of the destruction to their livelihood. Among a host of challenges are non-responsive compensation schemes. For example, Leeto Polihali, a member of the Polihali liason committee, is reported to have said the money they receive as compensation is so little it cannot help them in any way. Also, Amnesty International reported that some of those who have been affected by development projects have been given compensation equal to as little as over $1.

On the 6th February 2020, Amnesty International released a statement on Phase II of the Lesotho Highlands Water Project (LHWP) calling on the authorities to halt implementation of Phase II with a strong conviction that the project is not compliant “with international human rights standards on evictions.” On the 7th February 2020, LHDA denied the allegations and issued a response that there had been sufficient consultations and that there was consultation with those affected on compensation preferences.

Despite the presence of laws on compensation schemes, there remain rows and accusations of authorities paying pittance. In an article by Manthabiso Ralengau and Squazzin, Hlaha, a resident of Ha Ramonakalali, displayed a check for equivalent of $1.60 (about M28 then) for a yard that LHDA took from her. The article further reports that Mapuso Lengoasa was paid M2114 for a field from which she earned M15 000 a year by growing sorghum at the base of Thaba Sephara Mountain. In the same article, Maponts’o Keqe says she was paid M50 for her plot.

The stories have a common denominator, non-existence of a consolidated and comprehensive compensation scheme. For the same reason of lack of clear and consistent regulation on how to calculate compensation, compensation has been extremely high in Latin America. In their case, the expropriators are the ones who suffer the brunt of relaxed regulation. In their instance, rapid urbanisation has been the determinant. In cities such as Sao Paolo, Brazil, the expropriating authorities, usually the municipalities, have come under so much debt due to the high cost of attaining land for urban development.

6. Conclusion

Compensation is a right to those whose livelihoods and ways of life are disrupted. Often, the victims of either development-induced displacement and/or forced expropriation are the most vulnerable and impoverished. Compensation as a right is a means to appropriately support those adversely affected, not only for the day, the month or year of the disruption of their livelihood but as a going concern. Adequate and fair compensation is a way of offering practical support and an acknowledgement of the adverse social, cultural, financial, emotional and psychological effects the people are forced to endure from the impact of actions which they never brought unto themselves.

Given the prevailing circumstances, there is a dire need for a well thought out consolidated compensation scheme which will set out the boundaries for expropriation and also provide clear guidelines on how compensation should be calculated as well as to set out the appropriate methods of valuations. Without a doubt, “development” has been a curse to those adversely affected by development projects hence a need for government (executive and parliament) to design a comprehensive compensation schemes to at least safeguard the right to financial compensation of those affected. With a number of development projects in infrastructure, roads, mining, reservoirs and many others which have the potential to expose people’s livelihoods to a range of risks, an all-encompassing compensation scheme is necessary.

Under the Department of Social Justice, the Transformation Resource Centre (TRC) identified a problem with the compensation after expropriation scheme and it is advocating for structural reforms in that regard. That is to say, TRC is promoting and advocating for designing and adoption of policies and regulatory framework to ensure that the compensation schemes for expropriation are fit and able to realise the need to balance the economic need to improve the infrastructure or to engage in development projects without leaving the most vulnerable worse off. To this extent, the TRC has a draft National Compensation Policy ready to assist the government. The current essay is one of the 5 essays to be published as a series for 5 consecutive weeks. The purpose of these essays is to analyse and explain how expropriation of land and property are undertaken in an effort to clarify the dire need for formulation of a uniform comprehensive framework to influence stable, efficient and fair compensation practices.