March 2015
SALGA WESTERN CAPE
MATZIKAMMA MUNICIPALITY JOINS HANDS TO
ADDRESS ECONOMIC THREATS AND
VULNERABILITY
Written by Margie Murcott
Introduction
24th November 2014, in a room on a farm in the Olifants river valley- Western Cape- South Africa, a
group of 40 people from different backgrounds, organisations and professions gathered together for
two days to discuss their plans to address the threats and vulnerabilities of the Matzikama economy.
The group ranged from teachers to adult training providers, large business owners and leaders of
business and agriculture chambers, community organizations & government and finance agencies. The
focus of this gathering was to understand how best the challenges of poor market diversity, skills
shortages, joblessness and inequality could be addressed in the Matzikama area in the next five years.
This case history looks at the events and achievements that led to the point where a gathering of this
nature could be possible and investigates the potential of collaboration and cooperation in transforming
a local economy.
Background
How best can a local authority intervene to improve participation in and growth of the local economy?
This is the challenge set to municipalities throughout South Africa. South Africa is currently operating in
an environment where growth in capital has outstripped the growth in jobs exponentially in the past 20
years. The private sector has a principle role deciding our economic fate. There is an increasing
realization that the apartheid legacy of unequal distribution of services, jobs, skills and income can only
be solved place by place and business by business. Local economic development has now been placed in
an unprecedented position in the history of South Africa’s economy, as the chief vehicle to address
poverty and unemployment sustainably.
The Constitution of South Africa in section 152(d) obliges Municipalities to promote economic
development. The White Paper on Local Government of 1998 calls for a Local Government that is
committed to work with people and groups within the community, to find sustainable ways to meet
their social, economic and material needs and to improve the quality of their lives.
Municipalities are approaching this challenge in a variety of different ways, relying on economic
development theories initiated in the more developed economies of the West, but often lagging behind
current theory and applying outdated and unproven practices of economic development. Examples of
LED practices that are considered redundant, are those that were found to have an excessively high cost
to the state for each job created. Examples vary from spending millions on business projects employing
only a few people, to expecting massive state infrastructure projects to trigger private sector investment
and the infrastructure triggering far less growth and investment than expected. For example, the Coega
industrial zone in the Eastern Cape had an average cost of R2million per job created (Bond 2002).
These actions are not failures per se, but learning opportunities, albeit expensive ones, the challenge is
to ensure that these lessons are learned and mistakes not repeated. A variety of organizations; SALGA
included, are on a mission to make sure lessons from failed projects are learned and good practices
shared. Expanding the understanding of what actions municipalities can take & what role they play in
promoting local economic development in their locations.
In the Western Cape, the Department of Economic Development, with support from SALGA, took an
active role in ensuring that municipalities are able to improve their LED practice in a systematic manner
based on previously established evidence and good practice. In 2011 the province set out on a
benchmarking exercise; The LED Maturity Assessment, which is a rapid assessment of the capability of a
local economic development system to deliver sustained employment and enterprise growth; was to be
rolled out year on year in order to track reported changes in municipalities understanding of their role in
LED.
The Maturity Assessment was developed by the German technical development support agency-GIZ, to
measure determinants of successful LED departments and agencies, namely Leadership and Governance
of LED, LED Facilitation and Participation and LED Implementation. After initially being rolled out in
Gauteng, the Maturity Assessment was further developed and used by GTZ (now GIZ) in Mpumalanga
and parts of the Eastern Cape. In 2011 the Western Cape Department of Economic Development and
Tourism (DEDAT) took the decision to use the LED Maturity Assessment as a diagnostic tool which would
inform and enable the targeting of their support and capacity building activities.
The LED assessment was followed by targeted interventions across the Province, such as the use of rapid
economic assessment techniques like the Participatory Appraisal of Competitive Advantage tool, as well
as training of municipal leadership in their role of LED and governance. Over time it has been revealed
that the success of these processes depends largely on the level of investment the municipality takes in
adopting and owning the outcomes.
Matzikama is a municipality that took full and proactive ownership of the outcomes of Provincial
supported processes to developing LED capability and thus provides lessons on the potential of
participatory and evidence based approaches to improvement in LED.
Building LED Mastery in Matzikama
Figure 2 Matzikama Municipal area 300km from Cape Town
Figure 1 Matzikama Municipal Area, 300km from Cape Town
Part of the fertile Oliphants River Valley, Matzikamma Municipality governs a 13000square kilometer
area in the northern most part of the Western Cape of South Africa. Situated in the West Coast District
municipality, the Matzikamma area contributes 16% to the Gross Geographic Product (produce) of the
district. Its population of 67 150 reside in and around 17 towns and villages, including Doring Bay,
Ebenhaezer, Klawer, Lutzville, Strandfontein, Vanrhynsdorp & the largest town Vredendal.
Located over 300km from the Greater Cape Town Metropolitan the economic contribution of
Matzikama is exceeded in size on the West Coast only by those municipalities at the cities border,
Saldanha Bay and Swartland. Despite its remoteness it’s an active rural area, with more than 10% of the
land under cultivation. Driving into Vredendal, the vast cultivation, well maintained farms & frequent
passing trucks loaded with goods, are encouraging signs of a busy local economy. Scratching the surface
however reveals an economy fraught with vulnerabilities; a lack of market diversity, problems of
inequality, poverty and unemployment common to South Africa.
Official rates of 16% unemployment exclude the evidence of underemployed and discouraged work
seekers, including this evidence places unemployment levels closer to 37%, nearly identical to the 35%
of households currently living in poverty. Though the economy has continued to grow throughout the
recession, the growth has slowed from 4.3% in 2002 to 1.6% in 2014. Inequality and accompanying
social division, though marginally less drastic than South African metropolitan levels, remain high and
hamper the development of the economy in a unified and coordinated manner.
In addition the shortage of economic diversity creates risks for the future of the area. Agriculture,
focused on viticulture, at 26% Gross Value Add is the largest economic contributor. Agriculture trends
both show a decline in value add, with growth set at -1.2% and increasingly mechanization, which
impacts employment. The sector is known for having the lowest wages and on top of that, has been
gradually shedding jobs for the past ten years, exacerbating poverty in the municipality. Agriculture is
further vulnerable to the threats of climate change and water shortages. Therefore a shift in economic
focus in order to reduce economic vulnerability is needed.
The municipal council voted into power in 2011, mirrored the social divisions in the municipality. The DA
won 7 seats, to the ANC’s 6 with 2 independent parties winning seats, a tenuous political arrangement
in even the most organized municipalities, with the potential to negatively impact service delivery. The
LED maturity assessment which took place a few months after elections revealed that Leadership and
Governance of LED were critical areas requiring improvement. In the coming months this turned out to
be the case, as critical decisions and actions that could have created jobs were left undecided while the
municipal council clashed over the determination of power lines.
During this time a leader in the administration had started the journey towards enabling a decisive and
effective leadership era in the municipality, to guide the development of the local economy. Lionel
Phillips was invested in the notion that the municipality, the fate of its people and all its needs and
services are founded on the economic activity that supports livelihoods in the area, therefore the
municipality must enable economic development. The focus of the municipality should be on facilitating
both prosperity and inclusiveness.
Realizing that strong, knowledgeable leaders were needed to carry these aims forward, Lionel lobbied
actively for funding for training in Leadership and Governance for LED, which took place in 2013
supported by the Centre for LED (CENLED) at the University of Johannesburg.
CENLED states that the purpose of short learning programmes undertaken in municipalities, is to
“…develop the competence of participants in promoting Local Economic Development in their work
environments for the benefit of the local communities… through developing the knowledge,
understanding and skills of participants in learning areas that are critical to effective LED practice…”
After the training both the ANC and DA caucuses were able to see the impact that disagreement over
decisions affecting LED could make and acknowledged that while key points of political difference may
remain, they could definitively agree on the central importance of job creation and economic inclusion
and resolved to cooperate on LED issues. With a decisive leadership framework, the administration were
able to carry forward decision and promote projects and programmes with greater certainty and fewer
delays. Councillors from both parties in Matzikama credit the intervention with stabilizing their LED
programmes and giving the municipality greater focus.
The extent of the municipalities’ commitment to LED is reflected in the theme of the Integrated
Development Plan “Economic Development: A prerequisite for successful service delivery”
It was from this newly cooperative foundation that a Participatory Assessment of Competitive
Advantage (PACA) process was implemented in the municipality in 2013.
Implementation
Way forward Wks
5 Mini-workshops
ResultsWorkshop:
Diagnosis
+
Proposals
Presentation
event
Kick-off
Wks
Hypothesis Wks
Preparation:
* Organisation
* Advance
info
Interviews with Key Stakeholders
Fieldwork (1 week)
PACA-Process
PACA is a rapid assessment of the state of LED in a municipality, it begins with a series of workshops
conducted over 5 days, with local economic leaders and stakeholders. Participants are tasked with
outlining opportunities and challenges and developing a concrete plan of action that will enhance a
regions competitive advantage. A competitive advantage is defined by mesopartner as:
“A unique advantage, an advantage that enables a community to do something that competing local
economies cannot easily do.”
PACA relies on the energy of a core group of leaders to create and build momentum in the local
community to undertake actions to improve the local economy. Like any transformative effort,
leadership, committed partnerships and strong communication skills are core factors of success.
PACA projects must address a set of criteria for good LED proposals. They should improve local markets
by removing barriers for entry, resolving information gaps and problems and amplifying supply or
demand. Removing bureaucratic obstacles to doing business and lowering the cost of doing business are
recommended as is more efficient and effective resource use.
The 5 day PACA process involved over 50 community stakeholders and resulted in a clear plan of action
to develop the Matzikama community. A series of catalytic, quick win projects were identified in core
economic sectors, namely aquaculture, agriculture and agri-processing, recycling and tourism.
Aquaculture development in Doring Bay is the development with massive potential to transform the
local economy. The municipality has been exploring the possibility and advocating for aquaculture
development for 7 years and discovered that this stretch of coastline has the most remarkable potential
for aquaculture on the South African coast. The municipality now has secured support from the Western
Cape Aquaculture Development initiative to advance the development of aquaculture. The project has
the capacity to create at least 5600 jobs in the medium term. Also of note are the opportunities for long
term spin off economic activities as the area may develop in response to this opportunity. The first
community owned Abalone farm has already been developed and 32 jobs created.
Figure 3 Local Community benefiting from Aquaculture
Agriculture and Agri-processing projects focus on retaining and expanding existing operations,
improving the inclusion of the industry for emerging farmers and developing the skills and capabilities of
farmworkers. Water remains the key cause of vulnerability in the agriculture sector, however lack of
production diversity contributes to this too. The states interventions then focus on improving
infrastructure and supporting emerging farmers in sectors with untapped potential in the region, such as
livestock farming. Construction of a higher wall at the Clanwilliam dam will have a vast impact on the
yield and potential of the entire Oliphants river valley. The upgrading and maintenance of the canal
infrastructure in Matzikama will allow local farmers to benefit.
A recycling project has been implemented through a partnership between the municipality and the
private sector, the project will eventually employ 87 people with the capacity to expand. The project will
assist the municipality in reducing land-fill and improving waste management as well as creating
economic opportunities.
Tourism focuses on enhancing the domestic visitor experience and increasing bed nights spent in the
area. The aim of the municipality is to increase off season visits as currently the majority of visitors come
in the wildflower season.
Once the catalytic projects were identified in the PACA, a focus on implementation was needed and a
number of barriers would need to be removed for the municipality to meet its vision of inclusiveness
and poverty reduction.
A core team of community members in the municipality would be needed to advance the development
of improved water provision, health services, skills development and business cooperation. Which brings
us back to the meeting of the 24th November 2014 where the community leaders, business leaders and
municipality came together to visualizing where they may be in 2020.
Frequently, workshops involving members of the community and local government start from an
adversarial position, with the municipality defending themselves and having to take the first quarter of
the meeting to soothe disappointed community members. Not this time, as the municipality had
maintained communication since the PACA process, the group was able to get to work immediately,
developing their priorities, strategies and action plans to achieve their goals going forward.
With some project feasibility studies having already been undertaken and core opportunities
understood, the discussion had a significant focus on implementation sticking points and outstanding
issues. The group’s ownership of achievements in aquaculture and recycling were encouraging. The
overwhelming impression was of a focused and powerful LED governance team that shares a vision and
is facing the same direction. An incredible starting point for a municipality with enormous challenges
ahead.
Lessons learned and remaining challenges
The way government project funding is structured is problematic for municipalities like Matzikama. The
equitable share of the National budget that municipalities receive is calculated based on the amount of
human need in a municipality, while this rationale is commendable. Evidence is increasingly showing
that the places with stable governance, development opportunities and plans are the ones that can best
spend state finance and that poor people will go to areas where development is happening to follow
these opportunities.
Provincial funding is directed in part by a Growth Potential of Towns study, which anticipates towns like
Vredendal have little growth potential. Matzikama has made the case that the development of
aquaculture particularly, but also the resolution of irrigation problems through the raising of the
Clanwilliam Dam wall could change this into a high growth potential area in the near future.
With a municipality as focused on economic development as this, it is likely that other money and
people will follow these opportunities and the Provincial and National state will be forced to adopt a
reactive rather than a proactive position in developing the area in an inclusive manner. At a national
level, resources for sector development and LED are uncoordinated, making it difficult for a municipality
like Matzikama to identify the most efficient vehicles for delivery.
Conclusion
Facilitating solutions for economic vulnerabilities, such as insecure water, poor social cohesion and poor
economic diversity, is the key role of the state in LED. In South Africa an uncoordinated framework for
LED as well as the competing needs across the country, makes this task incredibly challenging for small
municipalities with significant transformation potential like Matzikama.
Despite the remaining challenges, Matzikama municipality have placed themselves in a position to be
leaders in determining the future of their economy. They have started to empower motivated local
people to address challenges and find opportunities and are working collaboratively to improve not just
economic growth potential, but inclusivity and social cohesion. The municipality is steadily proving that
you don’t need all the resources or all the solutions to perform in LED, you do however need to build
relationships, foster understanding, plan together with citizens and most of all, start.