The Komati Basin Development Project

The Swaziland Komati Project Enterprise (SKPE)

Rates of Return

Two major studies (Gibb and Conningarth) were conducted to evaluate the economic viability of the overall Komati River Basin Development Project (Swaziland). The Economic Internal Rates of Return thus determined were 10,0% and 11,5% respectively.

A study undertaken in 1997 by the Commonwealth Development Corporation (CDC) and Tibiyo Taka Ngwane showed an even more positive economic return for the Downstream Development Project under consideration in this paper.

In particular the financial rate of return for the smallholder scheme now in planning is estimated to be greater than 20%. Although this figure may appear high it has been confirmed by the Nyakatfo pilot scheme involving smallholders farming 200 hectares within the project area. This pilot scheme is on track to repay all on-farm loans within 3 crop years of operation.

The estimated annual average operating income for smallholders over 20 years is E5,400 per hectare.

Project Costs

The total cost of the Komati Downstream Development Project is estimated to be E415 million made up of the following components:

The Government of Swaziland is committed to finance the establishment and operating costs of SKPE throughout the Project period.

Funding Agency support is sought for all other elements of the works.

A description of the various cost components is given below:

Capital Costs

Off farm irrigation works - the cost of diversion weirs, river pumping stations, pumps and pumping mains to bring water to the fields
In-field irrigation works - the cost of clearing, ripping and preparing fields, roads, culverts, fencing, field pipe work, drainage and dragline sprinklers
Roads and Power for Farms - the cost of upgrading district road and the bulk electricity supply to pumping stations
Relocation of participants - the cost of rebuilding homesteads within the PDA for persons who will participate as smallholders
Relocation of non-participants - the cost of rebuilding homesteads within the PDA for those who do not wish to participate in the scheme
PDA Infrastructure Development - the cost of potable water supply, pit latrines, livestock watering for all residents of the PDA. Clinics and schools.

Management Costs

Design - the cost of the various consultancies awarded to date
Supervision of Construction - the cost of supervising the construction of the works
Monitoring of Mitigation Measures - the cost of monitoring the mitigation measures
SKPE Establishment in PDA - the cost of SKPE's camp within the PDA
SKPE Ops Cost - Komati only the cost of operating SKPE during the project life.