Transcript Local Economic Development and Municipalities

SESSION 2:
‘Economic Development and Municipalities’
-Rashnee Parhanse
Project Manager: Socio-Economic Development
SALGA
4 March 2004
IDP Conference 2004
“Developmental Governance in Action”
‘Local Economic Development and Municipalities’
Presented by Rashnee Parhanse
4 March 2004
Content
• Rationale for municipal participation in
economic development
• LED Good Practice
• Learning from the past……
• Towards a strategy for LED …….
• Conclusion
Why should municipalities
engage in Local Economic
Development?
Impact
Globalization
Global and national economies
Decentralization
Regional and Local
economies
Mobilise
Role Players
Resources
Interests
Economic
Development
Opportunities
in municipal
areas
Macro Economic Challenges
• The rate at which new jobs are created is
insufficient to absorb the increasing levels of
unemployment
• In adequate skills of South Africans to meet the
demands of the new economy that is service and
knowledge driven.
• Poverty levels and unemployment remain high
• The income and skills gap between white and
black South Africans remains extremely high South Africa is still characterized by two parallel
economies.
Legislative Mandates
• Local government sphere closest to the people
• Municipalities have a constitutional mandate to
undertake a developmental approach in
implementing policies and programmes
• Local Government White Paper, Municipal
Structures and Systems Act
– Municipalities are to exercise powers and functions to
maximize the impact of social development, meeting
needs of poor and ensuring growth of local economy
Primary Responsibilities of
Municipalities
• To meet the basic needs of people
– Establish an environment (whether directly or
indirectly) that will create jobs and alleviate poverty in
a sustainable manner
– Engage actively engage with spheres of government
and partners
– Co-operate and align policies and programmes
– Cannot perform in a vacuum and assume that external
processes (e.g. the changes in the global economy,
NEPAD, Growth and Development Summit) are
irrelevant to the municipality
Local Economic Development
- a local response to global and
national economic and social
dynamics and challenges
The type of response by municipalities is
critical!
LED Case Studies in
Municipalities:
Ekurhuleni
Randfontien
Oudtshoorn
Ekurhuleni Municipality
• LED Policy
– Economic Status of Ekurhuleni
– LED Vision – An inclusive wealth generating local
economy
– LED Mission
– Objectives of the Policy
– Key Policy thrusts
– Key Principles
• LED Strategy
– Strategic Interventions
– Key Performance Areas
– Implementation Mechanisms
Ekurhuleni Municipality
Key Policy Thrusts
– Local production for local need
– A cooperative sector to represent
community-based interventions
in the local economy
– A skills development network
– Develop and sustain urban and
commercial agriculture to build
food security
– Promote Waste Recycling and
Reusable Energy
– Build Local Development Capital
– Ensure Participatory and
Integrated Planning
– Maintain Linkages with the
Industrial base
– Facilitate and Grow SMME’s
– Affirm Local Procurement
Strategic Interventions
– Ring fencing revenue surplus
– Developing and sustaining
economic sectors – Agriculture,
Mining, manufacturing, services,
finance, electricity and water
– Development zones
– Harness Conditional Grants
– Mainstream the marginalised
into the Formal Economy
– Procurement – target start up
20%
– Service levels and retention
plans
– Business register
Ekurhuleni Municipality
• LED Drivers
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Cooperative Governance
Partnership
Rapid Response to innovation and investment
Sound Intergovernmental Relations
• Problems
– planning – IDP not aligned to economic realities
– Capacity (Understanding of LED and Political
Representatives and officials require training)
– Linkages on Trade and Investment (DTI and Province
and local not fully aligned, International relations and
investment on aligned)
– Cooperatives (funding for capacitation limited, Procurement
processes needs to be adjusted to include cooperatives)
Ekurhuleni Municipality
• Comments
• Policy
– Challenges of dual economy
– Securing markets for entrepreneurial development
– Harnessing local resources and skills in a sustainable
manner
– Qualitative skills development
– Impact of industries e.g. pollution
– Co-operative governance and integration
• Strategy
– Monitoring and evaluation
– Linkages to IDP
Randfontein Municipality
• LED plan linked to IDP
• LED drivers
– Prioritizes economic sectors for LED intervention –
agriculture, mining, trade and tourism
– Encourage community participation and ownership
– Establish Public-Private-Donor Partnerships –
partnership with rugby association, DBSA and Mines
– Support SMME development – bylaws
– Enhance Co-operative governance
• Implementation of Credit Controls to increase
flow of income to communities e.g. waste
management
Randfontein Municipality
• Comments
– Challenge - Gradual decline in mining sector
- retrenchment of mine workers
– Tourism – primary or secondary sector
– SMME Development linkage to market
opportunities and business management skills
– Strong partnerships with business sector and
donars
– Clear linkage of sector plans to LED strategy
Oudtshoorn Municipality
• Article in Business Times (22 Feb 2004)
• Renowned as tourist destination (arts
festival, ostrich farms, Cango Caves,
climate etc) –increased earnings for the
farms, festival, hotels and B&B’s
Oudtshoorn Municipality
• Comments
– Role of municipality
– Impact on municipality?
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Direct benefits for the municipality
Number of jobs created
Service delivery costs (electricity, water, sanitation)
Municipal assests – land, facilities etc
Partnerships
– Currently municipality formulating LED strategy,
business plans and establishing partnerships
Learning from the Past
Challenges
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Lack of national policy and strategy coherence
Functional specialization and uncoordinated actions
Lack of dedicated LED institutions
Shortage of LED capacity and skills
Lack of clear roles and responsibilities
Competitiveness of local areas and IDP’s
Poor financial position of municipalities
Poor access to accurate information
Ineffective monitoring and evaluation
Project based - survivalist such as brickmaking,
poultry farming, hydroponics
• Consultant Driven to address capacity problems
Towards a strategy for LED
- LED Principles
Key LED Principles
• Linked to current economic realities
• People focused and mobilises social capital
• Socio-economic focus- increases income flow to
people to creates jobs and alleviate poverty
• Co-operative governance
• Alignment and coherence of policies and
programmes
• Market functioning and promote competitiveness
• Support systems for entrepreneurial institutions
e.g. SMME’s, targeted procurement
Continued……
Key LED Principles
• Creates opportunities for human resource
development e.g. skills development
• Building partnerships with business community,
community, NGO’s,
• Ensures sustainable economic outcomes
• Innovative and creative response
• Network, listen to and know what's happening!
Designing a LED Strategy:
Key Elements to consider
Key Design Elements
• Purpose: To co-ordinate and integrate economic
development efforts, resources, role players
investments and institutions (internally and
externally)
• Strategy driven by municipality
– Design and implementation championed by the
municipality
– Housed within the municipality
– Emanates from the IDP
• Policy thrusts of strategy to be aligned to national
and provincial economic polices
Key Design Elements
• Strategy informed by competitive assessment of
local economy (demographics etc)– accurate and
updated information
• Thereby prioritizing primary, secondary and
tertiary economic sectors
• Defines the municipal economic vision and
objectives
• Identifies role players and establishes clear roles
and responsibilities
• Utilizes internal departmental relations to
integrate and align to other components of
municipality (BEE, land reform, housing etc)
Key Design Elements
• Specifies the type of intervention
– Establishing Partnerships
– Cluster and sub-sector cluster development (firms,
groups working together)
– Co-ordinated business support programme
– Set of special purpose vehicles
• Strategy identifies and addresses the skills gap in
communities to participate in economic
development e.g. business management skills
• Identity's the LED spatial boundary or target area
• Clear performance areas and comprehensive
monitoring and evaluation indicators
Conclusion:
Good Practice Municipal LED
Holistic and Integrated approach
Process orientated
Partnerships
Municipal Driven (not control)
Proactive and Dynamic!!!!!!