The Lesotho Highlands Water Project Phase II is a next phase of an existing joint project between the Government of the Republic of South Africa and the Government of the Kingdom of Lesotho with the objective to augment water supply in the Vaal River Basin by transferring water from Lesotho to South Africa. The NDB Sovereign Guaranteed Project Loan will be used by Trans-Caledon Tunnel Authority (TCTA), a government agency of the Republic of South Africa, for financing the construction of the dam and water transfer tunnel on the territory of Lesotho. The Project will promote South Africa’s resilience to climate change, support economic growth and foster sustainable livelihoods of people by increasing available water by 437 million m3 in the long run and by reducing the amount of restrictions imposed due to drought. The Project will also contribute directly to South Africa’s commitments to the Sustainable Development Goals (SDGs), specifically objective 6.4, to reduce water scarcity. It also seeks to enable inclusive and sustainable economic growth in South Africa, a goal embodied in SDG 8.

By increasing the water availability of the Vaal River System the Project will contribute to the improvement of water supply security in South Africa.

By increasing the water availability of the Vaal River System the Project will contribute to the improvement of water supply security in South Africa.

The Project has been classified as Category “A” in accordance with NDB’s Environment and Social Framework (ESF). Main environmental and social impacts include land acquisition and involuntary resettlement of households; inundation of large areas by the water reservoir and associated loss of arable and grazing land and habitats of important flora and fauna species; impacts on downstream environments and communities due to decreased river flow; increased pressure on rangelands and wetlands by displaced livestock and people; impact on cultural heritage sites; community safety risks during construction; potential anti-social behavior and negative gender impacts due to influx of construction workforce. These impacts will be mitigated by adherence to country systems and provisions of E&S management plans, and implementation of additional E&S action plan developed for the project in line with NDB’s ESF.