REFLECTIONS ON THE EVOLVING NATURE AND PROSPECTS OF LOCAL ECONOMIC DEVELOPMENT IN SOUTH AFRICA: 1990

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REFLECTIONS ON THE EVOLVING NATURE AND PROSPECTS
OF LOCAL ECONOMIC DEVELOPMENT IN SOUTH AFRICA
1990-2007

• Etienne Nel

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Introduction

• Pre-1991, LED almost non-existent in SA
• The apartheid state racial and centralised
  preclude local development
• Flawed pre-1991 Regional Strategy
• 1990s LED emerge in a democratic era
• Forum movement / community based planning
• Recognition of external trends / experience by
  planners
• Democratic policy shifts policy law
• Widespread NGO etc activity at the local level

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Introduction continued

• LED evolve since the early 1990s
• Successes vs. failures
• Frequent incompatibility with market forces
• This paper reflect on LED experience, 1990-2007
• Policy, practise
• Evolution, challenges, recent findings
• Global and contextual issues
• Focus is broad, not on particular areas or
  programmes

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Periodization and Critique

• Pre-1950s
• Era of autonomy some city actions
• 1990-1998
• 1990 Stutterheim partnerships, community
  planning, 1995 mandate concerns ? PPPs?
• Elsewhere mainly cities / policy
• No policy local uncertainty
• 1998- 2002
• White Paper, 2000 Acts, IDP process
• LED Fund mixed success, poverty relief focus
• Narrow policy vision of LED
• Cities follow a more advanced route

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Periodization cont.

• 2002-2007
• End of the LED Fund
• Larger vs. smaller cities gap widen
• Civil society protests
• Municipal Finance Act
• Development Agencies
• EU Support
• 2006 LED Strategy document and Toolkit,
• need for follow-up support now

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LED and the Broader Context

• Cant see SA in isolation from global trends
• Development theory has evolved is relevant to
  consider relevance for SA
• 1) General Thinking
• Global City debates opps / constraints also
  the place of the ordinary city
• Social Capital n.b. of trust, goodwill,
  partnerships
• Decentralization debates limitations recognised
• New Economic Geography n.b. of broader
  structural forces / mustnt see economies in
  isolation
• Clusters niches and comparative advantages
• Value chains work with pre-existing strengths
• Climate change and sustainability

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LED / Context cont.

• ii) LED Thinking
• 1980s/90s question political interference,
  short term planning
• LED is not static / has it evolved / SA ?
• Swinburn and Yatta (2007) identify Emerging
  Trends in LED (PTO)
• SA advanced legal context/does seek local and
  external investment but is practise becoming
  dated in general ?

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Traditional Emerging

• Focus on External Firms
• No legal framework
• Manufacturing
• Hard Infra.
• Limited info.
• Public Sector domin.
• Supply driven
• Ltd. Institutional focus
• Sectoral interventions
• LED in Political Space

• Local and External
• Legislative framework
• Multi-sector focus
• Soft Infrastructure
• Evidence based planning
• Partnership driven
• Demand driven
• Institutional mechanisms
• Territorial interventions
• LED in Economic Space

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LED Context cont.

• Third Wave Strategies dominate
• (1st Wave 1960s-80s / 2nd 1980s-90s)
• 3rd Wave focus on
• Whole business environment / multi-sectoral
• Functional eco. spaces
• Soft infra and HR / partnerships / QOL
• Targeted strategies / coordination / networking
• Clarke and Gaile IT, innovation, strategic
  investment
• SA has some parallels and some gaps

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LED Context cont.

• iii) New Regional Development Thinking
• DTI focus, but recent revival globally has
  links with LED (? Role of SA DMs)
• Canada targeted rural support / Eco. Unit focus
• Australia regional agencies, clusters, RD,
  global competitiveness
• UK Regional Dev Agencies, Knowledge based
  economy and innovation
• Korea and Japan secondary cities / sectoral
  specialization

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LED Context cont.

• New Zealand Innovation based policy and
  partnership determined base
• Cluster development
• Regional Polytechnic Fund
• Regional Partnerships partnerships, local
  vision, competitive bidding for state funds e.g.
  Southland and broad-band
• Lessons partnerships, knowledge based ecos,
  Development Agencies, manageable Region, local
  buy-in
• Brazil development axes devolution, local
  planning, regional and global links

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LED Policy in SA

• Policy evolve 2006 National Framework Document,
  advantages
• Defines the role of Local Govt
• Strategic Planning
• Partnerships
• Bridge pro-poor / pro-growth debate
• Interventions
• Role of institutions clarified
• LED Tool kit innovative features / building
  blocks

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LED Policy cont.

• Concerns
• Need more guidance on partnerships processes
• ? Role of other stake holders
• DMs must ensure they dont ignore local issues
• Development State debate
• Community vs. Local Development debate (Meyer
  Stammer, 2003)
• Can all issues be aligned / issue of one size
  fits all ? (Isandla, 2007) objectives vs.
  strategies

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LED Practise in SA

• 17 years, but mixed balance sheet, need to
  interrogate
• 2006 World Bank study Municipalities have LED
  staff, but limited policy
• Cases - n.b. of partnerships, marketing,
  leadership, skills
• Challenges differing success, limited data and M
  and E, funding limits, differing staff complements

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LED Practise cont.

• Key Trends
• Projects may have a life-cycle
• World Bank report concerns about
• Rapid staff turnover
• Funding shortages
• Limited staff
• Limited results
• Limited M E
• Differences across the urban hierarchy / wealth
  gap
• Process is often politically driven
• Limited M and E results unclear / Cape Town
  wealth gap is widening

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LED Practise cont.

• Minor themes
• Politicization of development
• Stand-alone nature of projects
• Bureacratization
• Need dedicated funds
• Ambitious nature of IDPs
• Micro-project focus
• SMMEs struggle to access finance
• Underplay partnerships
• Delays / role confusion
• Differing views on LED

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LED Practise cont.

• Positive New Themes
• Impact of differing government depts
• Increasing interest in the topic
• External support
• Innovative interventions (cities especially)
• New Themes
• Development Agencies
• Municipal Finance Act

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Broader Context

• Different theories different value of
  historical and economic contexts
• Places are vulnerable to forces beyond their
  control / also impacted on by their historical
  legacy
• Rural skills loss and output declines over time
  vs. places where skills and resources have
  concentrated impact on LED prospects
• Case study Karoo economy and its towns
• Decline in sheep numbers / loss of jobs and the
  farms dependence on small towns for their eco
  needs (Figure 1)

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• Small town population all are experiencing
  growth Natural Increase and migration. (Figure
  2)
• Highest growth focus on the larger centres with
  their diverse economies and services
• Larger towns are less dependent on the rural
  economy

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• Business changes have differed large places
  grow, smaller decline despite population growth
  (Figure 3)
• Unemployment and loss of skills becomes
  reinforcing
• Impacts on future growth prospects

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• State of Karoo towns economy
• Graaff Reinet vibrant, growing economy
• Somerset East dynamic Dev. Agency
• Smaller towns minimal activity / internal
  constraints
• Study indicates that all places are not on the
  same growth trajectory
• There are very real differences between places
  related to their history, economy, size need
  appropriate, unique action
• In SA need to acknowledge inherited legacies,
  role of broader eco forces, plan differing types
  of LED support

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Cameos of Success

• Illustrate elements of success do all have
  their limits
• Alicedale partnership,major project
• Wuppertal tea, global market
• Cape Town range
• Japan financial support
• Tanzania micro-finance
• Somerset East Development Agency
• Durban range
• Napier partnerships
• Invercargill leadership, competitive bidding

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The Way Forward

• Need to acknowledge past strengths / weaknesses
• Institutional capacity / agencies / PPPs
• Leadership / Vision
• LED Strategies musnt copy, context is n.b
• Beneficiaries musnt loose focus on the
  community and poverty relief needs
• LED Processes market forces, awareness of
  constraints

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Conclusion

• SA LED story of engagement / action
• Commitment to LED is no guarantee of success
• Applied, funding and policy challenges
• Experience vary across the hierarchy
• Future need to learn from past failings, local
  successes, international experience / address
  funding, capacity, partnership constraints
• FIN