The United Nations Development Programme’s (UNDP)’s compliance watchdog has recommended that it immediately cancel the memorandum of understanding it entered into with the controversial Musina-Makhado Special Economic Zone. (Photo: James Puttick)
The United Nations Development Programme’s (UNDP)’s compliance watchdog has recommended that it immediately cancel the memorandum of understanding it entered into with the controversial Musina-Makhado Special Economic Zone (MMSEZ) because it is a “high risk” project with “reputational risks”.
The planned economic zone, a multibillion-rand industrial mega-project in Limpopo, was designated in 2017 by the department of trade and industry. It comprises a northern light industrial site near Musina, which is focused on manufacturing, agro-processing and logistics sectors, and a southern heavy industrial site largely for steel manufacturing.
In March 2022, Earthlife Africa filed a complaint with the UNDP’s Social and Environmental Compliance Unit (Secu) about the memorandum that the programme’s country office in South Africa had entered into with the MMSEZ state-owned company.
While the memorandum identified areas of collaboration between the parties to “support the development and promotion of MMSEZ initiatives”, Secu’s report found that the country office deviated from prescribed protocols, thereby bypassing essential policies.
These are related to due diligence, publicity, use of the UNDP emblem and mitigation of reputational risks. This oversight failed to comply with the programme’s policy on due diligence and partnership with the private sector, as well as the associated risk assessment tool, particularly in assessing high-risk projects involving coal and other minerals.
Earthlife Africa’s Thabo Sibeko welcomed the decision, saying they, together with other civil society organisations, the Vhembe district residents and some local grassroots organisations in the area “are truly opposed to the MMSEZ”.
Complaint
In the complaint, Earthlife Africa, which was later joined by Living Limpopo, represented local residents who work and live in the Musina-Makhado area and who had said they would be directly and negatively affected by the proposed economic zone.
They said the zone would have significant adverse effects on “water use, air pollution, climate change, biodiversity loss, sacred and heritage sites, and many other aspects of life for people living in the area”.
They also expressed concerns that the jobs that may be created by the economic zone would be high-skilled ones and that people living in the area would not be eligible for them because they did not have the requisite skills.
The adverse effect of the zone on tourism and agriculture in the area could lead to people losing jobs, according to the complaint.
They also quoted residents as saying the UNDP country office, by signing the memorandum with the state-owned company, “has effectively expressed support for the project thereby increasing both the likelihood that the MMSEZ project would proceed”.
Damning findings
Secu’s report said the country office’s decision to use the template for partnerships with government entities rather than that for partnerships with the private sector had important consequences.
“It meant that the [country office] did not require any representations from the SOC [state-owned company] and, as a result, was not fully informed about the potential risks to UNDP’s reputation from an association with the SOC and the MMSEZ,” it said.
While the language of the memorandum of understanding explicitly states that it does not create legally binding obligations for either party, “it is clear from the information received from the country office, the response of the complainants to the MOU, and the media reports following its signing that the MOU did have implications for the operations of the country office and the reputation of UNDP”.
“In addition, the fact that the signing of the MOU resulted in UNDP being publicly identified as a partner, means that the mere existence of the signed MOU had significance for the SOC. This in turn exposed UNDP to whatever reputational risks may arise from being associated with a company, whose project, pursuant to the applicable UNDP policies, the UNDP considers to be high risk,” the report added.
Reputational risk
According to Secu’s report, the SOC sought an MOU with UNDP “precisely because it believed that working with the [country office] would help it deal with the challenges that it faced in its relations with outside stakeholders who were concerned about the potential adverse social and environmental impacts of the project”.
“Merely by signing the MOU the [country office] put itself in the position of appearing to support the SOC’s objective of using the UNDP to help it resolve its problems with outside stakeholders in the MMSEZ”.
The report detailed the opposition of the Mulambwane community, which was forcibly evicted from their land during apartheid, to the economic zone.
While there are supporters of the project in these communities, who see the potential for economic benefit, given Secu’s mandate, its team focused on the concerns of the complainants, who “expressed deep misgivings and even fear about the social and environmental impacts of the MMSEZ project”.
“Most significantly, they said that the project, if it is constructed, will inevitably result in the permanent destruction of the many graves and sacred sites located in the project area. They explained that, pursuant to their customary law, these graves and sacred sites cannot be moved. They feared that this development would irreparably damage the wellbeing and integrity of their communities.”
These communities were also concerned about the environmental effect of the project, for example on land, air and natural water sources, their health and ability to continue supporting themselves in the way they found most culturally comfortable.
They were sceptical that the jobs the economic zone would generate would be available to local residents and they worried that the jobs would not be consistent with their traditional way of life.
“The complainants have provided evidence indicating that the project will have substantial and adverse social and environmental impacts. Thus, the [country office’s] noncompliance has also increased the risk of harm to the complainants and affected communities,” the report said.
The Musina-Makhado Special Economic Zone had not responded to questions from the Mail & Guardian by the time of publication.