Local Economic Development

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Local Economic DevelopmentSustainable Success
Stories

• IMFO Western Cape Symposium
• 7th June 2011
• Douglas Cohen
• dcohen_at_salga.org.za

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Points of Departure

• Job creation Government cannot do its work alone
  
• Need to taking Local Economic Development (LED)
  more seriously
• Partnerships hold the promise of inclusiveness,
  dialogue and shared responsibility for
  development

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New Growth Path
5 million jobs by 2020
http//www.businessday.co.za/articles/Content.aspx
?id145000
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• SA must create 13600 new manufacturing
  businesses alone to meet the government target of
  creating five million jobs by 2020
• Neil Rankin, founding director of the African
  Micro-Economic Research Unit at Wits University

Source Sunday Times (March 27 2011)
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New Growth Path The Highlights
Support development of rural areas through small scale agriculture, cooperatives and irrigation schemes Focus on investment on municipal infrastructure services informal settlements upgrade, rental housing, R2.6bn on water services, renovations to health facilities
Government to maintain database of job seekers Continued support for SMMEs cooperatives and small scale agriculture
R20bn tax breaks for manufacturing sector IDC investment of R10bn for investment in economic activities, R20bn for investment in the green economy
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New Growth Path Implications for Municipalities

• There are some clear areas of the NGP that have
  relevance to municipalities making local
  government a key partner to achieve this national
  vision.
• Municipalities as part of Government, will to
  varying degrees, respond to specific drivers
  identified in the NGP

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NGP Drivers Municipal Implications
Public investment in infrastructure Energy, water, transport, ICT Housing (informal settlements)
Target labour intensive activities in services, agriculture, manufacturing and mining Support for agro processing , tourism, cultural industries, investor friendly policies (removing red-tape)
Take advantage of knowledge and green economies Green energies, waste management, recycling
Leverage social capital Community engagement, support to SMMEs,
Rural development and regional integration Small scale agriculture, community gardens, co-operatives, irrigation schemes
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New Growth Path Priorities for 2011/12

• Increase local procurement regulations gazetted
• Ensure 30-days payment for SMMEs
• Impact of Rural development strategy
• IPAP2 implemented as pillar of NGP
• Metros and secondary cities to minimise delays
  and improve co-ordination of regulations that
  affect businesses
• Regular reports on employment impact of state
  activities

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• Together we Need to Take LED More Seriously
• Yunus Carrim, Deputy Minister of Cooperative
  Governance and Traditional Affairs

Source Progressive Business Forum Cape Town (22
April 2010)
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Taking LED More Seriously

• What is LED?
• What is the municipal role in LED?
• Why are the success rates in LED so low?
  Strategies not executed? What are the root
  causes?

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• The Constitution mandates municipalities to play
  an important role in the socio-economic
  development of their local communities. This can
  be achieved in two ways
• Municipalities should provide some relief for the
  poor.
• Municipalities have indirect and direct influence
  over local economic development (LED) in their
  areas and therefore need to work in partnership
  with local business to improve job creation and
  investment.

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Safety Security
Urban Form
Skills
Transport
Urban regulation
Efficient Services
CONDUCIVE ENVIRONMENT FOR INVESTMENT
Council Account Mgmt
Infrastructure
Land use Application Mgmt
INCREASED EFFICIENCY OF INVESTMENT
NEW INVESTMENT
Sector support
Area support
SMME support
Accelerating activities
MORE TAX REVENUE
Investment facilitation
JOBS
Taking LED More Seriously The Theory
Source Joburg 2030 Strategy
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Taking LED More Seriously More Direct Job
Creation

• Create 2m jobs through labour intensive
  construction though EPWP
• Direct government support to SMEs
• Strategic Sourcing Procurement
• Promote key national/provincial priorities in LED
  strategies
• Greening re-orientate municipal services in
  sustainable activities (eg labour intensive
  recycling)

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Taking LED More Seriously Shifting Behaviour

• Getting the right type of LED to work is
  critical to the sustainability of any city or
  town
• There are a number of challenges to be overcome
  first.
• raising the profile of LED within a municipality,
  
• Identifying areas for improvement, and
• identifying good LED practice.
• Ultimately we want to shift behaviours towards
  LED that works

Source Adapated from RED-X LED Maturity Tool
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Taking LED More Seriously Principle Lead Approach

• LED Strategy Development
• Simplified, sustainable and locally-owned
• It should not be a planning type / needs based
  strategy
• Positioning of LED section and reporting
• Ideally the LED section should be placed directly
  under the Municipal Managers Office
• Capacity Constraints
• LED Strategy Appropriateness
• LED strategies need to speak to local conditions
  and challenges

Source SALGA LED Position Paper (2009)
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Taking LED More Seriously Principle Lead Approach

• Economic Intelligence Requirements
• Stakeholder relationships
• LED Roundtables to connect with business
  stakeholders especially, around concrete business
  enabling tools such as red tape reduction,
  business retention expansion etc.
• Acknowledging the Informal Economy as part of the
  local economy
• Monitoring and Evaluation

Source SALGA LED Position Paper (2009)
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Mbombela A CLGF Good Practice Scheme Case Study

• Creating the right environment for LED
• Reposition LEDs role
• Four Objectives
• 1 Stakeholder Engagement
• 2 - Support the unemployed residents / smme dev.
• 3 Long term strategy development
• 4 - Economic investment incentive policy

See the SA LED Network for full details of this
and other LED case studies, knowledge and
networks. www.led.co.za
Source http//led.co.za/sites/led.co.za/files/clg
f_rt_presentation_mbombela.pdf
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• We have to do something differently. It requires
  recognition that employment is an outcome, not an
  objective you start with. You have to depend on
  firms not the firms you wish you has, or the
  workers you wish you had, but the firms and the
  workers youve got.
• Michael Spicer, CEO of Business Leadership SA

Source Sunday Times (March 27 2011)
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Unlocking the value from partnerships

• In South Africa, it is a municipalitys
  responsibility to provide basic services and
  address the developmental needs of communities
• Partnerships of different kinds are one way in
  which municipalities can fulfill these
  responsibilities

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Entry Points Partnership Opportunities
Dialogue and State-Business Relations Communication and dialogue Openness and transparency Results from dialogue
Local Economic Development Cooperation in the formulation of LED Strategies Cooperation in implementation of IDPs.
Infrastructure Improvement in delivery of local infrastructure Alignment of infrastructure developments with IDPs
Human Resource Development Skills development initiatives Upgrading of education and literacy.
Sustainable Development Small business development and procurement management of the natural environment.
Adapted from Source The state of partnerships in
mining depended municipalities in SA. Prof. C.
Rogerson (2010)
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Concluding thoughts

• The issue of LED is going to become much more
  visible this year and next, as government pushes
  much harder to ensure job creation
• This new era requires more responsive and
  accountable local institutions and accountable
  capable leadership
• Take ownership of LED and see that it is done
  well
• Need for Partnerships - Mobilise an army of
  stakeholders to continuously improve the local
  economy

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www.led.co.za
Role / Activities of SALGA in 2011/12

• SALGA councilor induction and training
• Councillor leadership on LED and Job Creation
• NGP, municipal incentives, job creation
  priorities reporting
• Donor alignment, capacity building support
• LED Maturity Tool Assessment
• Informal Economy / Economic Intelligence
• Identifying, capturing and sharing good practice

www.lgict.org.za