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Local Economic DevelopmentLocal Economic Development“Sustainable Success Stories”“Sustainable Success Stories”

IMFO Western Cape Symposium

7th June 2011

Douglas Cohen

dcohen@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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5 million jobs by 2020

http://www.businessday.co.za/articles/Content.aspx?id=145000

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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

4Source: Sunday Times (March 27 2011)

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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 SMME’s 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

New Growth Path: The Highlights

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• 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

New Growth Path: Implications for Municipalities

www.salga.org.zaNGP 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 SMME’s,

Rural development and regional integration

Small scale agriculture, community gardens, co-operatives, irrigation schemes

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• 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

New Growth Path: Priorities for 2011/12

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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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• 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?

Taking LED More Seriously

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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:1. Municipalities should provide some relief for the poor.

2. 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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CONDUCIVEENVIRONMENT

FORINVESTMENTINCREASED

EFFICIENCYOF

INVESTMENT

Source: Joburg 2030 Strategy

Safety & Security

Urban regulation

Council Account Mgmt

Land use Application Mgmt

Skills

NEWINVESTMENT

Urban Form

Transport

EfficientServices

Infrastructure

Sector support

Area support

SMMEsupport

Investmentfacilitation

Acceleratingactivities

Taking LED More Seriously: The Theory

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• Create 2m jobs through labour intensive construction though EPWP

• Direct government support to SME’s – Strategic Sourcing & Procurement

• Promote key national/provincial priorities in LED strategies

• Greening: re-orientate municipal services in sustainable activities (eg labour intensive recycling)

Taking LED More Seriously: More Direct Job Creation…

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• 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

Taking LED More Seriously: Shifting Behaviour

Source: Adapated from RED-X LED Maturity Tool

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1. LED Strategy Development Simplified, sustainable and locally-owned It should not be a planning type / needs based strategy

2. Positioning of LED “section” and reporting Ideally the LED section should be placed directly under the

Municipal Managers Office

3. Capacity Constraints

4. LED Strategy Appropriateness LED strategies need to speak to local conditions and challenges

Source: SALGA LED Position Paper (2009)

Taking LED More Seriously: Principle Lead Approach

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5. Economic Intelligence Requirements

6. Stakeholder relationships LED Roundtables to connect with business stakeholders

especially, around concrete business enabling tools such as red tape reduction, business retention & expansion etc.

7. Acknowledging the Informal Economy as part of the local economy

8. Monitoring and Evaluation

Taking LED More Seriously: Principle Lead Approach

Source: SALGA LED Position Paper (2009)

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17Source: http://led.co.za/sites/led.co.za/files/clgf_rt_presentation_mbombela.pdf

• Creating the right environment for LED

• Reposition LED’s role

• Four Objectives:

• 1 Stakeholder Engagement

• 2 - Support the unemployed residents / smme dev.

• 3 – Long term strategy development

• 4 - Economic & investment incentive policy

Mbombela: A CLGF Good Practice Scheme Case Study

See the SA LED Network for full details of this and other LED case

studies, knowledge and networks.www.led.co.za

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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 you’ve got.”

– Michael Spicer, CEO of Business Leadership SA

18Source: Sunday Times (March 27 2011)

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• In South Africa, it is a municipality’s 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

Unlocking the value from partnerships

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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.

InfrastructureImprovement 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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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