UNDP Withdraws Support for Contentious R165bn Limpopo Industrial Zone Amid Criticism

The United Nations Development Programme (UNDP) has taken steps to back away from its earlier support for the multi-billion rand Musina-Makhado Special Economic Zone (MMSEZ) in Limpopo, a project that had promised massive industrialization and job creation but had drawn significant environmental and community opposition. The UNDP's decision represents a notable shift in the landscape of developmental aid and underscores the importance of environmental and social due diligence in such large-scale projects.

The Limpopo Economic Development Agency (LEDA) had initially secured a non-binding memorandum of understanding (MOU) with the UNDP for the R165-billion heavy industry hub – an agreement that seemingly paved the way for a fruitful partnership. The 8,000ha proposed project site, positioned between Musina and Makhado and close to the mineral-rich Soutpansberg region, was envisioned to catalyze the local economy by attracting foreign direct investment through numerous industrial undertakings.

The plan included the establishment of up to 20 industrial projects in a tax- and duty-free zone, with the prospect of creating between 21,000 to 53,000 jobs. It would introduce a new iron and steel plant, a ferrochrome plant, a chrome plating plant, an agro-chemical and petrochemical manufacturing plant, mineral beneficiation operations, a Smart City, and a logistics cluster – all in an area labeled as a potential economic hotspot.

Yet, this ambitious plan was met with staunch criticism from social and environmental advocates. The concerns cited massive water demands in a region characterized by water scarcity, the contributions to greenhouse gas emissions potentially contradicting South Africa's climate commitments, pollution, the negative impact on eco-tourism, and potential infringements on the rights of local communities.

The public backlash intensified with the involvement of NGOs such as Living Limpopo and Earthlife Africa, leading to legal action taken against the legality of the project. And when scrutiny fell upon the UNDP's role and its compliance with internal Social and Environmental Standards (SES), the narrative shifted from potential economic prosperity to one of compliance and accountability.

In a revealing 29-page draft investigation report by the UNDP's Social and Environmental Compliance Unit (SECU), the recommendation to withdraw support for the MMSEZ came to the fore. SECU pinpointed the lack of due diligence and potential reputation risk that the UNDP would face from being associated with the project.

While senior officials from the MMSEZ refrained from commenting, a spokesperson from the UNDP's Pretoria office acknowledged receipt of the report and its interim findings. They reiterated the organization's protocols that mandate adherence to SES across all projects and the importance of heeding communities' voices in these matters.

The findings of the report not only questioned the UNDP's initial backing but also revealed procedural discrepancies, such as the incorrect MOU template used – one meant for state entities over private sector projects. This procedural mishap sidestepped critical checks such as the representation of facts by LEDA before entering the MOU. In essence, the UNDP had inadvertently provided the Limpopo heavy industry plan with a cloak of legitimacy it hadn't fully vetted.

Further complicating matters was the issue of water usage and human rights, as the project site includes land belonging to the Mulambwane community, whose claim to the land had been legally recognized post-apartheid but not actualized due to the proposed SEZ.

The SECU report's conclusion aligns with the objections raised by environmentalists and community groups and provides an opportunity for all stakeholders, including communities and decision-makers, to reconsider a development path that offers broad-based prosperity without jeopardizing the landscape.

Moving forward, any potential affiliation between the MMSEZ and the UNDP would require a reset: a new MOU under the correct parameters and comprehensive due diligence. For now, UNDP's withdrawal sends a message that the responsibility of development agencies extends beyond economic indices, emphasizing environmental sustainability and social equity as indispensable components of future projects.