Rural Economic and Enterprise Development: A framework for analysis and joint action Bloemfontein, South Africa 25 January, 2004

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Rural Economic and Enterprise Development A
framework for analysis and joint
actionBloemfontein, South Africa 25 January,
2004

• Junior Davis and Felicity Proctor
• Natural Resources Institute (UK)
• j.davis_at_gre.ac.uk
• f.j.proctor_at_gre.ac.uk

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Workshop Objectives

• Present the Rural Economic and Enterprise
  Development (REED) Framework
• Exchange relevant current and planned project and
  programme experience between practitioners and
  review in the light of the REED framework
• Review the potential utility of the REED
  framework in the South African context
• Consider options for follow up action research
  and learning in partnership with the NRI led
  programme

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Hoped for Outputs

• Better understanding of REED as a framework to
  support multi-stakeholder processes for rural
  economic development and poverty reduction
• Shared learning between South African programme
  practitioners set within rural and local economic
  development
• Emergence of a learning platform/network on
  REED/LED to support ongoing and future programme
  interventions
• Agreement on whether and how to take forward work
  on the validation of REED in the South African
  context and possible future uptake

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What is Local Economic Development

• Local economic development is about local people
  working together to achieve sustainable economic
  growth that brings economic benefits and quality
  of life improvements for all in the community.
  Community is here defined as a city, town,
  metropolitan area, or sub national region (World
  Bank, 2004).

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Three Waves of Local Economic Development
Focus Tools
1960s to early 1980s mobile manufacturing investment, attracting outside investment, especially the attraction of foreign direct investment hard infrastructure investments To achieve this regions/ government/ NGOs used massive grants subsidized loans usually aimed at inward investing manufacturers tax breaks subsidized hard infrastructure investment
1980s to mid 1990s the retention and growing of existing local businesses still with an emphasis on inward investment attraction, but usually this was becoming more targeted to specific sectors or from certain geographic areas To achieve this regions/government/NGOs provided direct payments to individual businesses business incubators/workspace advice and training for small- and medium-sized firms technical support business start-up support some hard and soft infrastructure investment
During this third (and current) wave of LED, more focus is placed on soft infrastructure investments public/private partnerships networking and the leveraging of private sector investments for the public good highly targeted inward investment attraction to add to the competitive advantages of local areas To achieve this regions/government/NGOs are developing a holistic strategy aimed at growing local firms providing a competitive local investment climate supporting and encouraging networking and collaboration encouraging the development of business clusters encouraging workforce development and education closely targeting inward investment to support cluster growth supporting quality of life improvements
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Research on Local Economic Development highlights

• Significant role played by extensive and
  established local economy clusters
• Municipal/ local government plays a key role in
  impacting these economies
• Constraints are often inadequate political
  decentralization and regressive urban planning
  regulatory frameworks
• A purely "industrial" or agricultural focus
  excludes
• extensive livelihood linkages in the rural and
  urban economy,
• governance aspects.
• importance of extensive trade networks
  inter-connecting distinctive local economies both
  rural and urban

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What is REED?

• The Rural Economic and Enterprise Development is
  a framework based on the analysis of successes
  and experiences of programmes and projects by an
  international group of practitioners from
  different professional backgrounds and countries.
  
• REED framework offers a flexible tool for joint
  analysis, planning, evaluation and learning among
  stakeholders concerned with rural economic and
  enterprise development.
• It is an example of an holistic and spatial
  approach to local, rural and urban development.

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The Evolution of REED

• Joint donor initiative (GTZ, DFID, SDC, IFAD,
  CTA, FAO, WB) to overcome fragmentation
• Framework developed based on success factors of
  operational experience from a diverse range of
  programmes (Berlin workshop November 2002)
• This was developed using the Learning Wheel
  methodology.

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1. An enabling environment that provides for an
attractive investment climate and dynamic
entrepreneurship
10. Ongoing learning from success and failures by
all stakeholders
2. Effective mechanisms and structures that
address local needs
9.Active participation and ownership of
development processes by well linked stakeholders
3. Active private sector institutions and links
Fostering Rural Economic and Enterprise
Development
8. Local organisation, groups and associations
(representing the poor) as building blocks
4. Functioning and effective infrastructure (hard
and soft)
5. Access to integrated and open markets
7. Adaptive management capacity and
entrepreneurial competence within business and
enterprises
6. Access to effective and efficient support
services and resources
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Using REED in the planning process

• Use of the framework in the planning process for
  poverty oriented LED in rural and urban areas
• As a checklist in the planning process
• As a tool to define priorities with stakeholders
  and decision makers
• As a guideline in participatory planning with
  stakeholders
• As a tool for joint planning with different
  projects and donors
• As resource material for the REED/LED planning
  process

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Using REED in prioritising interventions

• Using the framework as a tool for selecting
  amongst intervention priorities (gateway
  function)
• For example
• local and regional economic development
• promotion of value chains
• training and human resource development
• rural and urban business development services
• microfinance
• ....

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Using REED in monitoring evaluation

• Use the framework for monitoring and evaluation
• As a guideline to establish a M E System
• As a tool for discussions with decision makers on
  changes observed
• As a tool for joint evaluation of different
  projects in the same region
• To help define indicators for results and impacts
  on different levels
• As a tool to establish benchmarks for regions and
  countries

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The Cornerstones of Rural Economic and Enterprise
Development framework

• Each cornerstone contains
• The aim of a cornerstone in the overall context
  of REED/LED
• Core elements of the cornerstone
• Key strategies to achieve best results
• Instruments and means of implementation
• Links to websites with information, experiences
  and best practices

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The key elements of the ten REED Cornerstones

• Cornerstone 1. An enabling environment for an
  attractive investment climate and
  entrepreneurship.
• Good governance, improved reformed regulation,
  taxation, licensing, remove tariff and non-tariff
  barriers
• Cornerstone 2. Effective mechanisms and
  structures that address local needs.
• Effective decentralisation, empowerment of
  communities
• Cornerstone 3. Effective private sector
  institutions links
• Build capacity of private BDS, enhance
  organisational capacity, create local business
  networks

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The key elements of the ten REED Cornerstones

• Cornerstone 4. Functioning and effective
  infrastructure (hard and soft).
• Identify infrastructure needs of rural SMEs,
  Providing maintaining required infrastructure,
  integrating into wider systems, quality
  dimensions
• Cornerstone 5. Access to integrated and
  effectively functioning markets.
• Access to markets, transparency stability of
  markets, market chain integration management,
  market development
• Cornerstone 6. Access to effective and efficient
  support services and resources.
• Provide information specialised services,
  Develop market for service provision, provide
  contracted business services, supply inputs,
  access to finance RD facilities

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The key elements of the ten REED Cornerstones

• Cornerstone 7. Adaptive management capacity and
  entrepreneurial competence within business and
  enterprises.
• Management organisation, production service
  generation, financing, marketing, networking
• Cornerstone 8. Local organisations, groups and
  associations (representing the poor) as building
  blocks.
• Understand organisational arrangements, motivate
  self-mobilisation, facilitate organisational
  development, ensure organisational graduation to
  higher and appropriate levels of formalisation

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The key elements of the ten REED Cornerstones

• Cornerstone 9. Active participation in and
  ownership of joint learning processes by
  well-linked stakeholders.
• Identifying stakeholders, building stakeholder
  convergence, creating structured platforms for
  a for negotiations, creating networks for
  learning
• Cornerstone 10. Ongoing learning from success and
  failure by all stakeholders
• Create platforms to share and review information,
  agree vision and ME framework, creating an
  effective knowledge management system

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Cornerstone 4. Functioning and effective
infrastructure (hard and soft).
CONTENT KEY STRATEGIES PROCESSES POSSIBLE WAYS TO IMPLEMENT
Identifying the infrastructure required by rural enterprises 1.Assess the existing infrastructure and identify gaps and the necessary improvements 2.Improve access to the infrastructure 3.Identify ways and means to reduce costs of accessing the infrastructure. Survey of existing infrastructure and business needs Identification of priorities and contributions in multi-stakeholder forums Increase in the volume of goods or services using the infrastructure Provision of low-cost solutions to enterprise needs.
Providing the required infrastructure 1.Encourage public and private investment in infrastructure Development of sound proposals for new or improved facilities with benefits to rural enterprise and the public.
Providing the required infrastructure 2.Privatise state utility service providers An independent regulatory body Invitations to tender for management of service delivery contracts.
Providing the required infrastructure 3.Promote local, self-funded facilities, e.g, collective or cooperative services Development of innovative schemes for self-funding.
Providing the required infrastructure 4.Establish facilities on a correct and legal basis, e.g, access. Investigation into the local regulatory or legal position.
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Scenario for using the REED framework in an LED
setting (l)
The following steps are proposed l. Define
geographical area (e.g., district, province),
II. The framework could be applied to analyse
the existing situation in that area and identify
potential areas of improvement. III.
Cornerstones, their interdependencies, strengths
and gaps could be identified by detailed analysis
and self-assessment.
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Scenario for using the REED framework in an LED
setting (ll)

• IV. The gaps or shortcomings blocking the
  exploitation of the economic potential of the
  region should be analysed in detail and
  prioritised by their negative effects on the
  system.
• Factors with the greatest negative impact should
  be addressed through intervention.
• VI. Once the possible interventions are
  identified, implementation strategies can be
  planned and the roles of the different actors and
  their mutual expectations can be clarified.

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How REED can add value

• Thinking about economic and livelihood strategies
  to compliment other spatial planning and
  management efforts is new. Critical linkages
  which combine to direct resources and
  interventions strategically and spatially need to
  be considered.
• Public administrations should conceptualize
  REED/LED strategies in a trans-locational
  (village, small towns, cities) perspective,
  including its institutional setting and
  prioritise according to cost effectiveness and
  socio-economic impact.
• REED provides a common platform and mechanism to
  link policy, procedures and interventions from a
  multidisciplinary perspective.

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NRI Action research and shared learning on REED

• The research aims to develop further the
  conceptual framework and project tool for the
  fostering of rural economic and enterprise
  development in South Africa and Bangladesh
• In pursuit of this, the project aims to
• Apply the REED framework and share emerging
  practice on pro-poor public policy and
  institutional support at local and national
  government levels
• Refine and develop the conceptual framework so
  that it can address gaps in the framework

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Approach

• Collaboration with In-country partners
• Collaboration with UK and EU partners
• Consultation with key stakeholders
• Policy and Institutional focus
• Policy dialogue

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Methodological issues

• Study site selection criteria
• Unit of analysis
• Quantitative and Qualitative Research

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Methodologies and tools
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Policy uptake and dissemination

• Stakeholder involvement and shared learning
  platform at in South Africa and Bangladesh
• Input into DFID, World Bank and EU programme and
  investment processes
• Published Outputs and Website
• Networking
• Seminars and Workshops

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Thanks for your attention!

• For related reports see
• The Natural Resources Institute website
• http//www.nri.org/projects/reed