An Initial Approach to Economic Development Impact Assessment

1
SOUTH AFRICAN CITIES NETWORK THINK-TANK ON CITY
ECONOMIC DEVELOPMENT STRATEGIES

• An Initial Approach to Economic Development
  Impact Assessment
• City of Cape Town
• Economic Development Tourism
• Thursday, 21 November 2002
• Carol Wright

2

• OVERVIEW OF PRESENTATION
• 1. Introduction
• 2. What is impact assessment?
• 3. Why do we need to measure impact?
• 4. What do we need to measure evaluate?
• 5. Type of tools we need
• 6. Range of Economic Development Tourism impact
  assessments undertaken
• 7. Financial Economic Impact of a Joint
  Marketing Strategy
• 8. Job opportunities framework methodology
  01/02 - initial approach
• 9. Overview

3

• 1. INTRODUCTION - CONTEXT
• Think-tank discussions have covered
• - Economic Development strategy frameworks -
  setting direction...What?
• - Strategy implementation - plans How?
• Now brief focus on evaluating the impact of the
  strategy and implementation How well are we
  doing?
• Legislative requirements
• a) White paper on Local Government (1998) -
  steps to producing an IDP
• The use of monitoring tools to measure impact
  and performance
• b) Municipal Systems Act (32/2000 Chapters 5/6)
• Develop a performance management
  system
• (Note Cape Town part of National Pilot
  Project, Balanced Scorecard)
• c) Government Gazette (No. 22605, 2001)
• General key performance indicators prescribed
  in terms of

4

• 2. WHAT IS IMPACT ASSESSMENT?
• Indicators
• Show/reflect conditions, but not linked to
  causes
• Performance Management
• Assesses more than outcomes
• - Council
• - Services/Directorates
• - Individuals
• Impact Assessment
• Direct link between actions and outcomes

5

• 3. WHY DO WE NEED TO MEASURE IMPACT?
• Key objectives of impact assessment work
• - evaluate/assess outcomes in terms of
  resources (expenditure, time,
• skills) in relation to achieving strategy
  goals/aims
• - assess impact on income and budgets (MTIEF)
• - monitor sustainability
• - understand interrelationships and
  dependencies, plus contributions
• of delivery partners

6

• Why do we need to measure impact? (continued)
• Plus
• - part of strategy process - informs/drives
  strategy (and business plan)
• - allows more flexible response to changing
  conditions
• - allows for tracking of the impact of work
  done
• Informs
• - service delivery improvements
• - decision-making
• - programme and project management

7

• 4. WHAT DO WE NEED TO MEASURE/EVALUATE?
• Strategy and implementation
• Strategy
• - Council
• - Directorate Building competitiveness/reduci
  ng poverty
• framework
• Programmes
• - Mega projects e.g. Convention Centre
• - Specialised service focussed e.g. community
  based job creation
• programme or major events
• Projects
• - large, small
• - theme based e.g. job opportunities

8

• 5. TYPE OF IMPACT ASSESSMENT TOOLS WE NEED
• The process by which one determines what to
  measure, how to
• measure and to use the measures is more
  important than the
• product itself
• Product
• - set of tools (info tables, databases,
  models, systems and
• reports)
• - set of guidelines/principles
• Tools to be
• - easy to use, input/monitor and report on
• - repeatable and reliable
• - transparent unambiguous
• - cost efficient (cost of measuring should match
  business
• benefits)
• - integrated with other processes

9

• 6. RANGE OF ECONOMIC DEVELOPMENT TOURISM
• IMPACT ASSESSMENTS UNDERTAKEN
• Initial research (1998)
• Economic and Social Impact Assessment -
  methods application
• Strategy
• - Inputs to Corporate Balanced Scorecard
  process
• - Financial and Economic Impact of a Joint
  Marketing Strategy
• - Business Review Assessment Framework
• assessment of relative impact and
  sustainability of business
• programmes (in progress)
• Programmes
• - Convention Centre Impact analysis
• - Foreign direct investment (Wesgro)

10
Range of Economic Development Tourism Impact
Assessments undertaken (continued) - Major
Events Early pilots Navy week, Golden
Oldies Rugby Framework currently being
developed to measure economic environmental
social cultural impact Pilots Volvo Ocean
Yacht Race (in partnership) Cape Argus Pick n
Pay Cycle Tour - Evaluation of 26
community-based job creation and small business
projects (metropolitan and local impact)
- Community-based Tourism Development Fund
initial framework - Job Opportunities
framework
11

• TWO EXAMPLES OF IMPACT ASSESSMENTS/FRAMEWORKS
• Financial and Economic Impact of a
• Joint Marketing Strategy
• Job opportunities framework

12

• 7. FINANCIAL ECONOMIC IMPACT OF A JOINT
• MARKETING STRATEGY
• Aim
• To provide framework model to assess
  quantify a Joint Marketing
• Strategy
• Key objectives
• To assess
• - extent of increased marketing efforts
• - increase in direct marketing impact
• - macro-economic impact of joint marketing
  strategy
• - broader economic impact of joint marketing
  strategy
• Methodology
• - scenario building approach - single possible
  hypothetical joint
• marketing structure

13

• Financial Economic Impact of a Joint Marketing
  Strategy
• (continued)
• Challenges
• - Methodology model, especially evaluation
  of brand
• - Evaluation of broader economic benefits -
  complex, qualitative
• - Data availability and collection
• - Data comparisons across sectors
• Lessons
• - Key strategic input business case driver of
  strategy
• implementation
• - Produced unexpected key leverage area
  stimulation between sectors

14
Financial Economic Impact of a Joint Marketing
Strategy (continued)
15

• 8. JOB OPPORTUNITIES FRAMEWORK METHODOLOGY
• - INITIAL APPROACH
• Approach to Job Creation
• Based on the White Paper on Local Government
  (1998), which states the
• following
• local government should take active steps
  to ensure that the overall economic and social
• conditions of the locality are conducive to
  the creation of employment opportunities, rather
• than directly creating jobs.
• Cognisance is also taken of the National
  requirement for job creation indicators as
• one key performance measure
• General Performance Indicators 10(d)
• Number of jobs created through a
  municipalitys LED initiatives, including capital
  projects
• Government Gazette No. 22605 (24 August 2001)
  (Vol. 434)
• Short Review
• - No ready made tools which matched EDTs
  needs
• - Complex casual and outcome effects make it
  challenging to accurately
• assess the impact (direct or indirect) of the
  specialised services and

16

• Job Opportunity Framework Methodology - Initial
  Approach (cont.)
• Evaluation approach
• Short term
• to develop an initial EDT approach and
  methodology, to define job
• opportunities and to capture the EDT
  information for the period
• - accepted result would be high level
• - use to inform refinement
• Medium term
• to develop a refined, robust approach,
  methodology and process to collect
• and monitor EDT direct jobs and job
  opportunities
• Methodology
• a) Job opportunity defined
• Working definition
• - direct jobs created through the
  Councils funding of a specialised
• economic development and/or
• - indirect job opportunities created
  through access to training, advice
• and mentoring programmes

17
Job Opportunity Framework Methodology - Initial
Approach (continued) b) EDT customer/stakeholde
r job opportunities performance targets
were set for 2001/2002 These were based on
an initial estimate - less than 7000 job
opportunities average contribution - more
than 7000-8000 job opportunities above average
contribution - more than 8000 job
opportunities outstanding contribution c) A
simple framework for recording the EDT 2001/2002
job opportunities performance targets was
set up All EDT business plan programmes
(and projects) which delivered either
direct jobs and/or job opportunities in 2001/2
were recorded under the following services
- Foreign Direct Investment - Wesgro -
Small Business Support - Tourism - Conventions,
Incentives Leisure - Tourism Development
- Cape of Great Events - City Improvement
Districts - Sector Support Initiatives -
Informal trading services markets - Mun
Tender Advice Services Corp Procurement

18
Job Opportunity Framework Methodology - Initial
Approach (continued) d) Simple EDT guidelines
or assumptions were developed to estimate
the number of direct jobs and job opportunities
of each EDT programme In the absence
of precedents or clear research-based guidelines,
the EDT staff directly involved in the
programmes and projects made inputs to the
assumptions and every attempt was made to
- consult programme/project/practitioners on the
ground for guidance in setting the
assumptions - develop and use conservative
assumptions and numbers - use existing
norms and job multipliers and - access
the most detailed current information
19

• Job Opportunity Framework Methodology - Initial
  Approach (continued)
• Examples of EDT job opportunities assumptions
• SMALL BUSINESS SUPPORT
• Direct Jobs
• x number of placements/employed equals x number
  of direct jobs
• 1 start up business supported equals 2 direct
  jobs
• x hive occupied equals 2 direct jobs
• Job Opportunities
• 1 in 25 people provided with info equals x job
  opportunities
• x number of trainees/course attendees/business
  advice equals
• x number of job opportunities

20
Job Opportunity Framework Methodology - Initial
Approach (continued) e) The EDT job
opportunities, assumptions and numbers were
cross-checked and refined - over 50 000 direct
jobs and - over 180 000 job opportunities were
delivered Based on the programme/project
objectives, 90 of job opportunities were
created for historical-disadvantaged individuals
or affirmable small business enterprises
21

• Job Opportunity Framework Methodology - Initial
  Approach (continued)
• f) Challenges
• Overall Approach
• Any methodology to assess numbers of direct
  jobs/job opportunities
• should be part of a broader methodology to
  evaluate and monitor the
• impact of EDT services on overall the
  Directorate business performance
• Ideally, an accessible model and tools should be
  developed to evaluate
• the Directorates overall impact, service
  impact as well as programme
• and project impacts
• Appropriate tools and systems and training
  should be put in place to
• support the development and monitoring of job
  opportunities information

22

• Job Opportunity Framework Methodology - Initial
  Approach (continued)
• Within EDT service programmes
• The range and type of programmes within EDT
  service varies
• considerably which makes the development of
  job opportunities
• assumptions complex, difficult to compare and
  there may be overlaps.
• E.g. within sector support initiatives,
  different job opportunity
• assumptions apply to the IT sector and urban
  agriculture.
• The exact impact of EDT programmes/projects in
  terms of job
• opportunities is difficult to isolate - other
  stakeholders activities may
• potentially also have an influence.
• EDT programmes and projects objectives may have
  intended impacts
• other than job opportunities. E.g. a number of
  EDT services and
• programmes are aimed at providing a business
  and visitor friendly
• environment.
• EDT programmes and projects job opportunities
  impacts may not be
• realised in a financial budget year and need to
  be monitored overtime to

23

• Job Opportunity Framework Methodology - Initial
  Approach (continued)
• Between EDT service programmes
• There may be multiple knock-on impacts of EDT
  job opportunities
• between service programmes which are difficult
  to identify and measure
• There may be double counting between certain
  of the EDT services,
• although this was carefully minimised
• No prioritisation or weighting was made of job
  opportunities assumptions
• or numbers between EDT service programmes
• Other
• Base line data is difficult to access

24

• Job Opportunity Framework Methodology - Initial
  Approach (continued)
• The initial tables and review produced are
  valuable as for the first time in
• Council, a Directorate has grappled with the
  complexities and practical
• implementation of a job opportunity framework
  and system.
• Useful learnings and possible improvements will
  also inform the
• development of a more focussed refined
  approach and methodology
• - currently underway to be used by EDT in
  2002/3.

25

• 9. OVERVIEW
• Need to develop a framework to assess impact of
  strategy, programmes,
• projects complex and challenging
• Need to assess more than economic impacts.
  Social, cultural and
• environmental impacts must be included
• Need to integrate impact assessment work into
  all business processes
• plus align measures and reports for Corporate
  Directorate use
• Specialised skills and inputs are needed, plus
  all Economic Development
• Councillors and Officials should have some
  exposure/capacity building in
• impact analyses and evaluations
• Ideally, full time dedicated resources needed
• Base data and support systems need to be in
  place (definitions, data,
• information, models, guidelines and systems
  for capturing, reporting etc.)

26

• Overview (continued)
• Impact assessment is an area of work which is
  critical to Economic
• Development as a local government function
• Impact assessment forms a critical part of the
  strategy framework and
• implementation process
• Some initial thinking and assessments have
  been undertaken but this
• needs to be actively taken forward
• An important area to share lessons, linkages
  and how evaluation works
• in practice - the SA Cities Network can assist
  with this process