Stimulating

1
Stimulating Developing Sustainable Local
Economies

• Draft National Framework for Local Economic
  Development in South Africa
• South African Cities Network
• April 2006

2
Outline of the Presentation

• Introduction
• Challenges
• A Bit about ASGISA
• Basis of the LED Framework
• Objectives
• Outcome
• Focus of the framework
• Policy Thrust
• Strategy
• Concluding remarks

3
Introduction

• The National Framework for LED has a long history
  of discussion and consultation with a number of
  role players
• The predecessor of this document was also
  presented at a workshop to the Economic and
  Employment Directors General cluster
• Result of previous document - "Guideline for
  implementing LED in South Africa
• This framework does not dictate what should
  happen in different municipalities but focuses on
  what the state can do to support local leaders,
  communities, businesses, NGOs, organised labour,
  and other stakeholders to realise their own and
  their collective objectives.
• It emphasises the need for local people to work
  together with each other and with external role
  players to improve their lives. The state should
  play the role of facilitator, net worker and
  monitor.
• It is no longer just about what government
  departments do, but it is about how they do, what
  they do!!

4
Challenges

• Capacity constraints in human resources and
  skills
• Existing LED strategies and plans not linked to
  the local reality
• Lack of participation of important stakeholders
  in the design of LED strategies and plans
• Lack of clear strategies to deal with the
  informal economy
• Reliance on consultants to design LED Programmes
• Lack of information on the local economy
• Over politicising economic development
• National and Provincial Government Spheres
  parachuting into localities

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ASGISA Binding Constraints

• Relative volatility of the currency, and current
  strength
• Cost and efficiency of national logistics system
  and some infrastructure
• Shortage of suitably skilled labour and
  disjointed spatial settlement patterns
• Barriers to entry and competition in sectors of
  the economy
• Regulatory environment and burden on SMMEs
• Deficiencies in state organisation, capacity and
  strategic leadership impacting on delivery

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ASGISA Interventions

• Macro-economic issues
• Challenge of improving budgeting in
  governmentneed to predict income and expenditure
  better
• Need to monitor better implementation of
  decisions to spend, especially on capex
• Infrastructure programmes
• Overall government plans for infrastructure
  spending totals over R370bn over the current
  MTEF
• 50 To be spent by the three spheres of govt
• 40 To be spent by State Owned Enterprises.
• 5 To be spent through Public Private
  Partnerships
• 3 - 5 To be spent by development finance
  institutions

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ASGISA Interventions

• Sector investment strategies
• Focus on sectors with potential for high growth,
  employment creation and enterprise development
• Immediate focus on BPO and Tourism (strategies
  are essentially complete)
• Focus on agriculture/agro-processing for next set
  of initiatives
• Other sectors include chemicals metals
  beneficiation (including capital goods) creative
  industries clothing and textiles
• Education and skills
• 2nd economy SMME interventions
• Expansion of EPWP bigger rural road projects
  focus on maintenance roll out of Early Childhood
  Development component
• Strengthening of microfinance initiatives
  especially loans between R10 000 and R250000
• Targeted initiatives for women and youths
  particularly in construction and management of
  infrastructure projects
• All sector strategies must have developmental
  elements
• Public administration issues / delivery

8
Basis of the Document

• The White Paper on Local Government provides the
  context and the direction for the role of
  municipalities in economic development. The White
  Paper says
• Local Government is not directly responsible for
  creating jobs.
• Rather, it is responsible for taking active steps
  to ensure that the overall economic and social
  conditions of the locality are conducive to the
  creation of employment opportunities

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Objectives of the Framework

• To build a shared understanding of LED in South
  Africa
• To elevate the importance and centrality of
  effectively functioning local economies in
  growing the national economy
• To wage the national fight against poverty more
  effectively through local level debates,
  strategies and actions
• To improve community access to economic
  initiatives, support programmes and information
• To improve the coordination of economic
  development planning and implementation across
  government and between government and
  non-governmental actors
• To build greater awareness about the importance
  and role of localities which, globally, are
  playing an increasingly significant role as
  points of investment, decision-making and
  development in a world where the global-local
  dynamic is emerging as a key hallmark

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Outcome of the Framework (5yrs)

• All District and Metro municipalities have
  credible LED strategies, effectively implemented
  by a dedicated local economic development unit or
  similar entity
• All Local Municipalities have at least one staff
  member (at least qualified through the LGSETA LED
  Learnership) implementing its LED activities
• Analysis of the 52 district and metro municipal
  economies undertaken.
• The competitive advantage of all District and
  Metro municipalities are identified, incorporated
  into its LED strategy and exploited
• Appropriate structures exist to encourage and
  facilitate discussion and joint economic planning
  among municipalities and with Provincial
  Government
• All municipalities have innovative spatial
  strategies that links special demarcated areas in
  place
• All municipalities have at least one public
  private partnership through which an economic
  activity is being implemented
• A national centre for monitoring, learning and
  research in LED is established and is supported
  by provincial centres

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Focus of the Framework

• What the state with all its organs and agencies
  can do to support and reward citizens who
  organise locally and operate in local level
  partnerships to engage in greater economic
  activity, spreading economic development in a
  more inclusive and shared manner
• How the state can be a platform to facilitate the
  inclusion of the attempts of all to participate
  in the economy. This would include rewarding and
  enabling citizens who form organised communities
  in response to social and economic rights
  programming
• Improving the competitiveness of the 52 District
  and Metropolitan municipal regions by providing
  an approach to developing local economies with
  the participation of all relevant stakeholders

12
Policy Thrust

• Introduction - The private sector,
  consisting of private enterprises, cooperatives,
  and community businesses, that operates in
  municipal regions are the engines of economic
  growth. Their existence and ability to produce
  competitively and generate greater levels of
  income and employment, is dependent on an active
  State role in generating the appropriate and
  necessary conditions, stimulus and governance
  efficiencies.
• Public Sector Leadership Governance -This
  includes a focus on local governance, effective
  intergovernmental coordination, infrastructure
  investment capability, enterprise support, and
  identification and promotion of competitive
  advantage of the 52 regions around customized
  sectors and clusters.
• Investing in Communities - The State should
  partner with communities in order to boost
  circulation of local income and community
  organization in 52 economic impact regions (46
  Districts 6 Metros)

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Strategy

• Improve market and public confidence in
  municipalities - is a critical first step in
  attracting investment and building loyalty to
  local areas.
• Identify and exploit competitive advantage of the
  52 municipal regions - A better understanding of
  the opportunities and constraints in local
  economies should inform a more balanced
  development path of these regions
• Intensify enterprise support The Small
  Enterprise Development Agency (SEDA) should be
  the key vehicle for localised enterprise support.
  
• Sustainable Developmental Community Investment
  Programming - suggests building community, and
  thus using a powerful cultural dynamic, as the
  main vehicle and partner for LED together with
  the resourcing of organised communities to carry
  out key local functions, provide services and
  become important productive units

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Strategy 1 Improve Markets

• This strategy will require the LED Unit to focus
  on a range of existing dplg initiatives
  (responsibility of municipal finance unit with
  National Treasury) around the priority of
  improving local economies.
• Activities
• Intensify support to municipalities under Project
  Consolidate
• Monitor and Report on Implementation of the
  Municipal Finance Management Act (MFMA) and
  Property Rates Act.
• Assist municipalities to finalise appropriate
  spatial policies in their IDPs that are linked to
  a municipal-wide land-use management system.
• Improve infrastructure investment and
  intergovernmental coordination
• Support Municipal- Economic Forums

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Strategy 2 Exploit Competitive Advantage

• This strategy will be driven through the
  IDP/PGDS/NSDP alignment task team that is led by
  the Presidency and of which the dplg and the dti
  are a part.
• Activities
• Undertake analysis of the 52 municipal economies
• Target priority growth sectors
• Build capability for a knowledge economy
• Market the 52 Regions and their Products
• Establish Innovative Funding Instruments
• Regulatory impact assessment

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Strategy 3 - Intensify enterprise support

• This strategy is largely a part of the on-going
  responsibilities of the dti. There are also a
  number of additional sector-based enterprise
  support initiatives.
• Activities
• Implement the new small business development
  strategy
• Improve Access to Finance

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Strategy 4 - Sustainable Developmental Community
Investment Programming

• This strategy will require a special programme to
  be established. The LED unit will mobilise
  resources for an appropriate institutional
  structure to develop concepts and proposals to
  pilot and replicate sustainable developmental
  community investment programming
• Activities
• Crafts
• Fresh Produce
• Waste Collection
• Street trading / Development of Markets
• Community Enterprises
• Housing
• Organise Communities

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Concluding remarks

• This framework for LED seeks to mobilise local
  people and local resources, within the framework
  of the PGDSs and NSDP, to become competitive in
  both the domestic and international markets.
• It augments the range of current sectoral
  initiatives to deal with the challenge of
  employment creation
• It is intended to build a shared understanding of
  LED in South Africa and put into context the role
  of local economies in the national economy.
• It also lays the basis for the co-ordination of
  economic development planning and implementation
  across government and between key role players.
• It lays the basis for deepening community access
  to economic initiatives, support programmes and
  information