Lesotho faces employment crisis due to return of citizens and strain on the economy

A critical water crisis has emerged in the eThekwini municipality as the number of incomplete repairs continues to rise daily, with open water supply defects exceeding 12,000 by mid-June.

Funding and Current Situation

eThekwini councillors plan to use a district-based municipal budget program to address water pipe leaks. Each of the 111 municipal districts is allocated an annual budget of 2 million rand for basic district projects. Andre Betge, an eThekwini Executive Committee (EXCO) member, reported that by the second week of June, the number of open faults reached over 12,000, and the internal municipal structure cannot even handle major bursts.

Maintenance Issues

Only 199 major bursts were recorded on Wednesday, June 10, while reports indicated only two plumbers were present in the central Durban region. The situation is exacerbated by the march of the eThekwini Plumbers Panel, who headed to the Durban City Hall on Monday to submit a memorandum to officials demanding clarification on two tenders announced in December 2025.

Conflict and Tenders

The plumbers expressed outrage that they were informed about the awarding of five new general contractors, while the water resource department required them to work only through the council's existing plumber registry. This led to job losses for many specialists. Betge noted that the municipality is starting a new fiscal year with a deficit equivalent to approximately 60% of next year's budget.

He explained that on December 12, 2025, the municipality launched a comprehensive tender, inviting its army of contract plumbers and any other interested parties to submit documentation to legalize long-standing irregular appointments and establish appropriate contractual terms. Applications were closed just seven days later, on December 19, allowing the municipality to report to the council and satisfy the requirements of the Auditor-General related to grant funding.

Tender Results and Delays

According to Betge, out of the 509 applications received, only three participants met the necessary criteria for Groups 1, 2, and 6, providing a repair capacity of only 23.5 million rand. Implementation was further slowed by legal proceedings from unsuccessful applicants, whose appeals were ultimately dismissed with costs awarded. Successful participants were only appointed on May 25, 2026.

It is reported that the successful contractors lacked sufficient resources for plumbing work to cope with the existing backlog, increasing dependence on municipal staff. Betge mentioned that discussions about increasing contract sums were underway before significant work began, and these plumbers were supposed to be hired on Friday, but there were no reports of this.

Operational Problems and Quality

Betge was also aware of two entries into municipal depots that were allegedly blocked by contractors, hindering municipal plumbers from addressing leaks. Officials cite incorrect invoicing and contractors' unwillingness to comply with the recently introduced electronic submission and verification system, while contractors claim the system is cumbersome, poorly communicated, and never properly trained. Prospective contractors were required to provide valid professional qualifications and then undergo municipal theoretical and practical certification to obtain permission to work on municipal infrastructure.

Furthermore, there are ongoing concerns regarding the quality of materials purchased and stored by the municipality. It is suspected that the use of low-quality products, insufficient stock of spare parts, and unstable supply chains contributed to premature failures and compromised repairs. The eThekwini municipality received a memorandum, but it did not respond to media inquiries at the time of publication.

According to the Absa Purchasing Managers' Index (PMI) for June 2026, manufacturing activity in South Africa declined to contraction levels, falling from 50.8 to 47.3 index points on Wednesday.

Impact of geopolitical situation

Experts attribute this PMI decline to tensions in the Middle East. Absa reported that the survey was conducted after the United States and Iran signed a memorandum of understanding aimed at ending hostilities in the Middle East and resuming operations in the Strait of Hormuz, which led to a significant drop in Brent crude oil prices.

Price and order dynamics

Furthermore, the PMI procurement price index sharply decreased by 13.5 points, reaching 71.3 in June. This suggests that the peak of price pressure may have occurred in April and May, especially considering the fuel price reduction that took effect on Wednesday. Although preliminary orders contributed to improved demand in March and April, respondents noted that this growth weakened in May.

In June, there was a trend toward reversal as some buyers postponed purchases awaiting lower prices. This contributed to a further decrease in the new orders index, despite a slight improvement in business activity.

Overall production picture

Despite the weakening indicators in June, the average business activity index for the second quarter remained similar to the first quarter, when official manufacturing output contracted. This indicates that the manufacturing sector is likely under pressure for the second quarter in a row. Additionally, manufacturers' inventory levels decreased, which may suggest that purchasing managers also anticipated price declines.

Absa concluded that the easing of tensions in the Middle East positively affected the expected business conditions index, which tracks six-month forecasts. This index rose from 52.9 to 56.6, exceeding the March level by more than 10 points, although it still lags behind the start of the year by 10 points. Some respondents cited the upcoming protests on June 30th as a key concern that likely influenced sentiment.

Economists' views

Waldo Krugell, an economist at the University of the Western Cape Business School, noted that the index reflects global political fluctuations and oil prices. He emphasized that the sub-indices show a decline in procurement prices due to falling oil and fuel prices in June, while new orders and inventory levels indicate that purchasing managers are expecting price decreases. Krugell added that despite some improvement in business activity, production remains under pressure in the second quarter, but the expected improvement in business conditions is good news for the economy in the second half of the year.

Lara Hodges, an economist at Investec, stated that the seasonally adjusted overall PMI entered contraction territory in June. Although business activity slightly increased in June (by 2.1 points), it remained below the 50 mark, indicating continued pressure on manufacturing capacity in the second quarter. However, new orders continued to fall in June, reaching a modest 40.6 compared to the previous 44.6, with some respondents suggesting that customers are postponing purchases in anticipation of lower prices following the signing of the Memorandum of Understanding (MOU).

According to Hodges, the supplier delivery sub-index slightly decreased compared to April and May but remained high at 60.0. Since this index is inverted (a higher figure means slower deliveries), maintaining a high figure amid a fragile global environment likely indicates that supply chains have not yet stabilized. Hodges also noted a sharp drop in the employment index to 41.4, attributing it to high global uncertainty caused by the ongoing war, which is causing companies to postpone hiring new staff.

Professor Simphiwe Madikisela from UNISA expressed concern that the PMI declined even though the agreement had just been signed and its impact had not yet materialized in the economy. He also noted volatility but considered the drop in crude oil prices and the strengthening rand as positive signs that led to lower gasoline and diesel prices on Wednesday.

Undocumented Zimbabwean citizens residing in the Abakuluci Municipality are awaiting their return home on Wednesday. Local residents do not wish this group to be present in the community due to their immigration status, so they have organized their own transport back to Zimbabwe.

Local Authorities' Reaction

The Mayor of the Abakuluci Municipality, Sifiso Mkhwanagzi, noted that the municipality faces the same national issue related to foreign nationals. He stated that they are assisting those who wish to return home, acting in conjunction with the police.

Mkhwanagzi explained that on Monday, people were in a hall seeking asylum. They are now being moved to a location where they can wait for buses that have been arranged for their departure, as the community is dissatisfied with their illegal entry and does not allow them to stay in public halls.

Security Measures

Tents have been prepared for them to set up camp. Mkhwanagzi emphasized that the situation is complicated by the presence of young children, but they are obliged to ensure their safe return home. He added that they hope the buses will arrive on Wednesday and assured that the police will patrol the area to ensure their safety until their return.

Road Incident

Meanwhile, the Border Management Authority (BMA) reported a road traffic accident near Beitbridge on Tuesday. A bus transporting foreign nationals for repatriation was traveling from Durban to Musina. It carried 65 passengers who were heading for processing by relevant authorities before crossing the Beitbridge Entry Port as part of the repatriation process.

According to preliminary information received by the BMA, the bus driver died in the accident. Seven passengers were injured and received first aid from medical personnel, after which they were transported for further treatment. The current BMA Commissioner, Major General (Retd) David Chilembe, expressed deep regret over the tragic incident and extended his sincere condolences to the family, friends, and colleagues of the deceased driver, while wishing a speedy recovery to the injured.