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A Councillor’s Guide to
Local Economic Development (LED)
in South Africa
WHY?
WHO?
WHAT?
Join the SA LED Network now on www.led.co.za
Menlyn Corporate Park
175 Corobay Avenue, (Corner Garsfontein Road and Corobay Ave)
Waterkloof Glen
Pretoria
South Africa
Tel: +27 (0)12 369 8000
Fax: +27 (0)12 369 8001
HOW?
A Councillor’s Guide to
Local Economic Development (LED)
in South Africa
The Why ? What ? Who ? and How ?
of LED
© SA LED Network, SALGA 2011
01
Acknowledgements
02
Foreword by the CEO of SALGA
04
Purpose of this Councillor’s Guide to LED and how to use it
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CHAPTER ONE: The National Economic Context in South Africa
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This undertaking would not have been possible without the financial commitment and content
contributions to this shared project by many of the partner organisations we have been working with for
a long time. We thank the following national and international partners for their support:
Findings of the National Planning Commission
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The New Growth Path (NGP)
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The Expanded Public Works Programme (EPWP)
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The Community Works Programme (CWP)
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A Sector driven economy
12
The Informal Economy
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Department: Cooperative Governance (DCoG), Department: Trade and Industry (the dti), Industrial
Development Corporation (IDC), Development Bank of Southern Africa (DBSA), Deutsche Gesellschaft
für Internationale Zusammenarbeit (GIZ) GmbH, NETSAFRICA, Commonwealth Local Government Forum
(CLGF), European Union (EU), Local Economic Development Network of Africa (LEDNA), Centre for
Municipal Research and Advice (CMRA) and the University of Johannesburg (UJ).
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CHAPTER TWO: Local Government and LED: The Why? What? Who? and Where?
- Questions to ask BEFORE asking How?
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WHY is LED important?
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WHAT is LED?
19
WHO is responsible to drive LED?
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WHERE to unlock LED?
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HOW to develop and implement LED?
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CHAPTER THREE: Tools for LED
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CHAPTER FOUR: Partners
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RESOURCES
67
Stakeholder Directory
68
Glossary
73
References
77
Useful Websites & Links
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Councillor LED Checklist
80
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to Local Economic Development (LED) in South Africa
This Councillor’s Guide to Local Economic Development (LED) in South Africa was compiled and edited by
the South African Local Economic Development Network (SA LED Network), which is hosted as a project
by the South African Local Government Association (SALGA). It generates and gathers information and
knowledge from a wide range of sources and organisations in order to give an overview of the current
LED landscape in South Africa to inform the newly elected local governments and their administrations.
A Councillor’s Guide
Contents
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
Acknowledgements
In response to the current challenge of mass joblessness,
poverty and inequality, Government released the Framework of
the New Economic Growth Path aimed at enhancing growth,
employment creation and equity. The policy’s principal target is
to create five million jobs over the next 10 years. This framework
reflects government’s commitment to prioritising employment
creation in all economic policies. This is a clear signal that
there are expectations from all spheres of government to drive
employment creation programmes both directly and indirectly
as well as to report on such employment creation activities.
In terms of local economic development (LED), not only is it
going to become much more visible from a municipal leadership
perspective this year and next, as government pushes much
harder to address joblessness, poverty and inequality, but
there needs to be a substantial re-think of the current LED
approaches. This includes taking a much more inclusive and proactive stance in support of the formal
and informal economy, (not only within local government but across government as a whole.
This philosophy is not new to SALGA as the organisation has already demonstrated its support through
numerous strategic LED initiatives and programmes. A few include; the hosting of the South African LED
Network; the roll out of the LED Maturity Assessment Tool as well as our many partnerships projects like
the P3 Project (a joint initiative between local government associations of Sweden, South Africa, Namibia
and Botswana) and the Good Practice Scheme together with the Commonwealth Local Government
Forum (CLGF) .
Our ultimate aim is to further a meaningful and impacting LED agenda within more responsive and
accountable local institutions managed by a new era of visionary Municipal Leadership (Mayors and
Municipal Managers) focused on growing their municipalities for future generations. We hope this LED
guide takes us all one big step closer to this aim.
Xolile George
CEO of SALGA
At SALGA, our strength lies in the intellectual capital we have acquired through our people over the years
and our values to be Responsive, Innovative, Dynamic and Excellent underpin all that we do. Our mission
to be consultative, informed, mandated, credible and accountable ensures that we remain relevant to our
members and provide value as we continuously strive to be an association that is at the cutting edge of
quality and sustainable services. In line with its mandate, SALGA has set out its role to “Transform local
government to enable it to fulfil its developmental role” and to “Develop capacity within municipalities”.
Since the release of the SALGA LED Position Paper in 2009/10, SALGA has had to move beyond its
limited lobbying, advocacy and profiling role in seeing that LED actually “works” within Local Government.
The direction SALGA is currently focusing on is one that would be more of a direct “hands-on” service
to municipalities. Rather than look outside of government and incur costs, SALGA aims to be available
and as the intermediary, info-mediary and trusted development partner that guides, shapes and assists
in municipal LED good practice, ensures alignment as well as reports on performance in an aggregated
manner. Focusing on the municipal LED mandate and employment creation expectations, the SALGA
approach will talk to both direct and indirect development opportunities for local government, is strongly
grounded in national, provincial, district, local and community priorities and realities.
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to Local Economic Development (LED) in South Africa
Foreword by the CEO of SALGA
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Economic development is the process of creating and sustaining wealth.
We know that it is occurring when: New jobs are being created, existing jobs are
being maintained and the standard of living is improving.”
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Rather than trying to compile all information on LED, this guide gives an overview of relevant documents,
policies, case studies and tools and further indicates where to find more information on particular topics.
Website addresses and contact information for key stakeholders are provided.
The guide is accompanied by a USB stick with a selection of key documents on LED. Additional and
updated information is available on www.led.co.za. Registration is free and easy and open to all
LED practitioners.
With this combination of key issues, core content and a resource guide to further sources on LED, we
hope to provide LED stakeholders with a lasting reference to making LED work better locally.
The South African LED Network
Since its inception in 2001, the South African Local Economic Development Network (SA LED
Network) has grown from an idea to a functioning network to become the leading source of knowledge
and information and a unique online portal for the exchange of ideas in economic development
(www.led.co.za). The membership base of over 2,000 LED practitioners and other stakeholders
includes representatives from national, provincial and local government as well as the private sector,
or non-profit organisations and academia.
CHAPTER ONE
The SA LED Network is hosted as a dedicated project by the South African Local Government
Association (SALGA) and is directly supported by the Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ) GmbH.
Everyone can become a member and it´s absolutely free! So get connected on www.led.co.za!
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The National Economic
Context in South Africa
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to Local Economic Development (LED) in South Africa
This guidebook was developed as an overview and reference guide for LED, particularly for those
working at municipal level and in various areas of local government. Its aim is to make LED information
accessible in one publication as a single source for newly elected councillors, municipal leadership as
well as LED practitioners in general at local level.
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
A Councillor’s Guide
Purpose of this Councillor’s Guide to LED
South Africa’s economic context is plagued by challenges of mass joblessness, poverty and inequality. In
short, the economy has not created sufficient employment opportunities for many of our people over the
past three decades. Creating more and better jobs must lie at the heart of any strategy to fight poverty,
reduce inequalities and address rural underdevelopment.
In 2010, South Africa’s national unemployment rate was 25% compared to Egypt’s 9% and
Malaysia’s 3%.
This context is further reinforced by the first priority raised in the Medium Term Strategic Framework
(MTSF, 2009 – 2014) :
• Strategic Priority 1: Speeding up growth and transforming the economy to create decent work and
sustainable livelihoods.
To achieve this objective, the creation of decent work opportunities should be regarded as the primary
focus of economic policies. While recognising the need to move up the value chain in the medium to long
term, industrial policy in particular must recognise that:
• In the foreseeable future minerals and related sectors are critical for development across
the economy;
• Over the next five years, the State must do more to improve the support structures and systems for
economic activities that create decent work opportunities on a large scale;
• In the medium term, growth should come more from industries which could competitively meet the
needs of South Africa and the region; and
• The push for expanding decent work must include an integrated rural development and agrarian
reform strategy which addresses the mass joblessness and poverty of the former Homeland regions,
while seeking to improve conditions for farm workers.
Findings of the National Planning Commission
The South African National Planning Commission was formed in April 2010, under the chairmanship
of Trevor Manuel. The mandate of the commission is to take a broad, cross-cutting, independent and
critical view of South Africa (SA), to help define the SA we seek to achieve in 20 years’ time, and to map
out a path to achieve those objectives. The Commission has identified nine key challenges facing the
country in their first report, which legitimises many of the concerns already voiced across government,
the private sector and amongst political and economic analysts.
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According to the Commission there are nine key social, political and economic challenges facing South Africa:
1. Too few South Africans are employed - SA’s extremely high unemployment and low economic
participation contribute to widespread poverty. Only 41% of South Africans between the age of 18
and 60 work. This ratio is very low by international standards, where the norm is closer to
two- thirds.
2. The quality of education for poor black South Africans is substandard. While SA has made gains in
school enrolment, numeracy and literacy scores are extremely low compared with most other
countries, not only among pupils but, shockingly, also amongst teachers.
3. South Africa’s growth path is highly resource-intensive and hence unsustainable.
4. Poorly located and inadequate infrastructure limits social inclusion and faster economic growth.
5. Spatial challenges (rural vs. urban development) continue to marginalise the poor - the spatial
legacy of apartheid continues to weigh on the entire country.
6. The ailing public health system confronts a massive disease burden, including HIV infections,
tuberculosis, trauma cases as well as high infant and maternal mortality rates.
7. The performance of the public service is uneven. While some institutions have been turned
around, others, and especially those related directly to service delivery, are failing.
8. Corruption undermines state legitimacy and service delivery. The volume of cases of corruption
provides worrying evidence that levels of corruption are high and growing.
9. South Africa remains a divided society in which race, gender, education, skills and income
levels define opportunity and world views.
According to the report, the first two challenges listed above are “the most pressing challenges facing
the country” in fighting poverty and inequality. There is significant detail provided on each of these
challenges in the diagnosis report and presentation. Local Government, in playing its role to support a
long-term and sustainable development plan, needs to also specifically take responsibility of addressing
some of the key challenges of investment in and management of infrastructure, inclusive planning (both
urban and rural) addressing corruption and focusing on service delivery that matters.
The New Growth Path (NGP)
South Africa’s economic policy, defined by the New Growth Path (NGP) starts by identifying where job
creation is possible, both within and across economic sectors. In summary the NGP focuses on the
creation of five million jobs over the next 10 years, especially in the green economy, agriculture, mining,
manufacturing and tourism. Infrastructure investment will focus on energy, transport, communication
and housing. The aim is to target limited capital and capacity so as to maximise the creation of decent
work opportunities using both macro and micro economic policies to create a favourable environment.
The NGP specifically highlights how and where the state can accelerate job creation:
• Short-term: Direct employment schemes, targeted subsidies and/or a more expansionary
macroeconomic package.
• Short-to medium-term: Support labour absorbing activities, especially in the agricultural value
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to Local Economic Development (LED) in South Africa
CHAPTER ONE:
The National Economic Context in
South Africa
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“The question is what can the municipality
do to help business do better?”
chain, light manufacturing and services. (Provide inducements and subsidies to private investment
in targeted sectors.)
Long-term, as full employment is achieved: increasingly support knowledge- and capitalintensive sectors in order to remain competitive.
Reporting on Employment Creation forms part of Outcome 4 of government’s strategic agenda and
relates to the creation of decent work. The January 2011 Cabinet Lekgotla called for departments and
spheres of government to report regularly on the employment impact of their programmes and policies,
as part of the implementation of the New Growth Path.
Reporting methodologies will be tailored to different areas of government activity, each of which affect
employment in different ways.
1. Through normal direct employment in the public service, local governments and other
state-funded agencies.
2. Through special employment schemes and subsidies designed primarily to create employment,
often while delivering government services, as with the EPWP and CPW (see info boxes).
3. Through the procurement of goods and services from local producers, which in turn create
more employment in order to supply the State.
4. Through the production of goods and services, for instance electricity, education and healthcare,
that will increase the productivity of businesses and/or households or reduce their costs.
5. By financing employers outside the state in order to encourage increased or diversified production,
in turn leading to higher employment.
6. Through regulatory frameworks that encourage production and minimise the costs of red tape
and delays.
7. Most broadly, by creating a stable, equitable, law-abiding and mobilised society, which is the
crucial framework for sustained economic development.
All spheres of government are expected to present information on the impact of direct and indirect
job creation programmes in the area. 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
sphere of Government will, to varying degrees, respond to specific drivers identified in the NGP.
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)
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NGP Drivers
Municipal Implications
Take advantage of knowledge and green
economies
Green energies, waste management, recycling
Leverage social capital
Community engagement, support to SMME’s
& co-operatives
Rural development and regional integration
Small scale agriculture, community upliftment
programmes gardens, co-operatives, irrigation schemes
The Expanded Public Works Programme (EPWP)
The Expanded Public Works Programme (EPWP) is one of South African Government’s short-to-medium
term programmes aimed at the provision of additional work opportunities coupled with training. It is a
national programme covering all spheres of government and state-owned enterprises and is aimed at
creating temporary work for the unemployed and guaranteeing that access gain skills. Its fundamental
strategy is to increase economic growth so that the number of new jobs being created starts to exceed
the number of new entrants into the labour market.
The goal and purpose of EPWP Phase 2 includes defined targets for the next five years: “To create
employment equal to 2 million Full Time Equivalents (FTE’s) (4, 5 million short and ongoing work
opportunities with an average duration of 100 days) for poor and unemployed people in South Africa so as
to contribute to halving unemployment by 2014, through the delivery of public and community services.
In this regard, a full Time Equivalent (FTE) Job refers to one person year of employment. One person
year is equivalent to 230 person days of work.
For local government, the EPWP infrastructure projects are funded through the Municipal Infrastructure
Grant (MIG) allocated to municipalities by the National Treasury through DCoG. Municipalities will identify
infrastructure projects through the IDP process and from these identify projects which are amenable to
labour-intensive methods.
Another key change from EPWP Phase 1 to Phase 2 was the introduction of an EPWP wage incentive
through a grant. The incentive is structured to reward provinces and municipalities that create EPWP
work by reimbursing them a portion of their wage costs. The more employment created, the higher the
incentive that will be paid out.
Find current trends and information on ongoing improvement in terms of municipal performance on
www.epwp.gov.za.
The Community Works Programme (CWP)
The CWP is a key additional component of government’s strategy to scale up public employment as
part of the Expanded Public Works Programme (EPWP), Phase 2. The programme has been based in
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•
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Small business as a whole are the strongest part of the national economy,
creating most of the new jobs and accounting for more than
half of the nation’s output.”
For more information please contact Mr Reckson Luvhengo – Programme Manager: Community
Work Programme (CWP);Tel: 012 336 5772; Cell: 082 735 6826; Email: [email protected]
A Sector Driven Economy
As highlighted in the New Growth Path, the economy needs to be placed on a production-led trajectory
with growth targeted in ten ‘jobs drivers’.
As a first step, government will focus on unlocking the
employment potential in six key sectors and activities. These are:
• Infrastructure, through the massive expansion of transport, energy, water, communications
capacity and housing, underpinned by a strong focus on domestic industry to supply the
components for the build-programmes;
• The agricultural value chain, with a focus on expanding farm-output and employment and increasing
the agro-processing sector;
• The mining value chain, with a particular emphasis on mineral beneficiation as well as on increasing
the rate of minerals extraction;
• The green economy, with programmes in green energy, component manufacture and services;
• Manufacturing sectors in IPAP2; and
• Tourism and certain high-level services.
The 2010/2011 Industrial Policy Action Plan or IPAP2, as it has become known, builds on the National
Industrial Policy Framework (NIPF) and the 2007/8 IPAP.
It is estimated that the IPAP2 will result in the creation of 2 477 000 direct and indirect decent jobs over
the next ten years. It will diversify and grow exports, improve the trade balance, build long term industrial
capability, grow our domestic technology and catalyse skills development.
In terms of local government, areas such as changes to public procurement policy and legislation
will have implications and operations responsibilities. These include identifying the opportunities to
improve domestic procurement leveraging across the three spheres and to focus on labour intensive
sectors / industries.
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Info Box: The Green Economy
In the green economy for example, the new growth path projects a jobs potential of 300 000
additional direct jobs by 2020 to green the economy, with 80 000 in manufacturing and the rest
in construction, operations and maintenance of new environmentally friendly infrastructure. The
potential rises to well over 400 000 by 2030. The Industrial Development Corporation has been
assigned responsibility to raise the necessary capital to drive growth of the green industrial economy.
The green economy is not a new concept and that the role of local government is to scan the
environment and open up opportunities for employment. Possible areas for green job creation which
include; Energy efficiency, Renewable Energy, Waste Management and Recycling, Carbon Friendly
Transport, Bio-fuels, Agriculture and Agro-Processing, as well as Greening the Built Environment
The Informal Economy
In 2007 some 3.6 million people were in non-agricultural informal employment, 2.2 million were
in non-agricultural informal wage-employment and 1. 4 million were in non-agricultural informal
self-employment.
In 2008, 19% of people South Africa were working in the informal sector. Limpopo had the highest
proportion of people working in the sector with 33% and the Western Cape had the lowest with 11%.
South Africa has to date not acknowledged that the informal economy forms a key component of the
economy, as a job creation opportunity and as a means of limiting dependence on social grants. This
sector therefore needs to be supported and encouraged is done elsewhere by governments globally.
• A 2006 study (Ligthelm) noted that the total expenditure in the informal sector in 2004 amounted
to R51.7 billion and as such, the contention that informal trading contributes little to economic
growth is very inaccurate. Consequently, NEDLAC argues that informal economy activities should
not be seen as a separate sector, but as part of the inter-economy which has a formal and
informal end.
• According to StreetNet (2006), there were 2.3 million informal economy workers (in absolute terms)
in 2000, a figure which had increased to 3.8 million in 2005. Statistics show that the number
keeps on residing every year, especially with the increased influx of informal traders from other
African countries.
• The challenge for South Africa is, therefore, finding strategies which would gradually turn around
this anomaly, so that its economy could also reflect a 60% to 70% contribution from the informal
sector. This would bring the high number of those who have given up into the informal economy fold.
The issue of Informal Trading Management was first raised at the SALGA National Congress in 2006.
Dealing with informal/street traders is an on-going challenging experience, which requires constant
review of policy elements and, thereby of structures and these were captured in a report made to
the NEC. Municipalities should be conversant with these challenges. Municipalities should therefore
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DCoG since April 2010. CWP provides access to a minimum level of regular work on an ongoing and
predictable basis for those unable to access other opportunities. CWP is an employment “safety net” in
the sense that the Programme provides participants with a minimum number of days of regular work,
typically two days a week or the monthly equivalent, and 100 days spread throughout the year. The wage
rate is currently R60 per day. CWP has a target minimum of 1,000 people per site. The work performed
in CWP must be ‘useful work’ – work that contributes to the public good, and/or to the quality of life in
communities – and that does not displace jobs in the public sector.
A Councillor’s Guide
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to Local Economic Development (LED) in South Africa
“You can’t have success without work.”
Case Study: A Different Chamber of Commerce
The Umhlosinga Economic Development Agency (UMDA) has been driving the initiative to establish the
Umkhanyakude Business Chamber of Commerce. Currently, over 800 businesses and entrepreneurs,
700 of which are informal, have been registered and will be invited to become members of the
chamber. The main difference to other chambers is that this approach aims strongly at including small
businesses as well as informal ones and linking them. Membership fees will be raised according to
income/turnover.
The chamber’s purpose will be primarily to represent local businesses and increase their economic
bargaining power by clustering them according to sectors. Potential business benefits through this
approach exist particularly in the local craft and agriculture sectors. Here, traders from outside the
District are buying local produce at dumping prices only to sell them on in Durban and elsewhere for
bigger profits.
“The establishment of the Umkhanyakude Business Chamber of Commerce by UMDA was a
milestone” IDP Manager, District Municipality
The chamber will also help in order to provide business training and guide informal businesses
towards formalisation.
Local Government and LED:
The Why? What? Where?
and Who? questions to ask
BEFORE asking “How?”
For more information on UMDA’s approach, download LED Case Study on www.led.co.za
CHAPTER TWO
For more information and documents on the informal economy,
go to: http://led.co.za/content/informal-economy
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Local Government should step in by encouraging and boosting the informal economy. Municipalities
must, therefore, start ‘thinking outside the Box’ in order to identify creative economic solutions to the
unemployment challenges.
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
A Councillor’s Guide
define appropriate policy and operational mechanisms to get optimum results from both formal and
informal sectors as part of their Local Economic Development (LED) strategies. It is imperative for local
government to move towards combining law enforcement, infrastructural and spatial policies with a
business approach as a means of creating an enabling environment for informal traders.
This section will address each of these questions systematically and finally provide a step by step
approach on how to drive the LED process in your municipality forward.
WHY is LED Important?
“The success of a community today depends upon its ability to adapt to the dynamic local,
national and international market economy. Strategically planned LED is increasingly
used by communities to strengthen the local economic capacity of an area, improve the
investment climate and facilitate an increase in the productivity and competitiveness of
local businesses, entrepreneurs and workers. An understanding of the principles and
practices of strategic LED planning will position communities to be able to improve their
quality of life, create new economic opportunities and fight poverty.”
In adopting LED as a strategy, the South African government is encouraging people at all levels of society
to participate in economic decision making which explores creativity and builds entrepreneurship at all
levels of society. Given the challenges that we face in job creation and poverty eradication, LED builds a
platform for bringing ‘all hands on deck’ in working towards solutions.
In South Africa, the Constitution gives Municipalities a mandate to promote local economic
development. Section 153 of the Constitution states that:
A municipality must structure and manage its administration, and budgeting and planning processes
to give priority to the basic needs of the community, and to promote the social and economic
development of the community.
Source: “Making Local Economic Development Strategies: A Trainer’s Manual”, World Bank, Cities of
Change, Bertelsmann Foundation
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Source: Florian Kopp
South Africa’s economy faces many challenges: first and foremost high unemployment, poverty and
inequality, which Government is responding to through the New Growth Path described in the previous
chapter. This is a clear signal that there are expectations from all spheres of government including
municipalities, to drive employment creation programmes both directly and indirectly as well as to report on
such job creation activities. LED needs to become much more visible from a municipal leadership perspective
in order to contribute to the implementation of national government policies to tackle joblessness, poverty
and inequality. Further, there needs to be a substantial re-think of current LED approaches including taking
a much more inclusive and proactive stance in support of both the formal and informal economy.
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to Local Economic Development (LED) in South Africa
Local economic development (LED) is concerned with the creation of an environment which will engage
stakeholders in implementing strategies and programmes. This perspective had to be aligned with the
country’s macro-economic strategy which focused on re-entering the global market, providing a climate
which is amenable to international investments, enhancing the role of the private sector, and reducing
the role of the state (DBSA, 2000). The increasing status of locality in the global economy and the rising
emphasis of local and community decision-making in democratic states have paved the way for the
development of local economic development (LED)
Your term in office provides opportunity enough to work on the “how to best implement LED?”. But
before working how, you should have first dealt with the (strategic) issues the other four questions will
raise for you: Why? What? Where? and Who? We believe that time spent in dealing with these questions
will not be wasted — especially if you want to become a municipality that makes LED work!
Globalisation is the process through which trade barriers have been reduced allowing goods and
services to be traded more freely around the world. Globalisation brings both opportunities and
threats. The opportunities lie in expanding trade beyond the boundaries of local and regional and
national boundaries through competitive production techniques, value addition to local produce and
innovation in local economies. The threats lie in our ability to adapt to global economic forces and in
having to produce goods and services at costs which can compete on international markets.
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to Local Economic Development (LED) in South Africa
CHAPTER TWO:
Local Government and LED:
The Why? What? Where? and Who?
questions to ask BEFORE asking “How?”
A Councillor’s Guide
“Easy to phone the LED department, the doors are open.”
Extracts from legislation and related documents relevant to LED
• The Constitution (1996): “A municipality must structure and manage its administration,
and budgeting and planning processes to give priority to the basic needs of the community, and
to promote the social and economic development of the community.”
• The White Paper on Local Government (1998) introduced the concept of “developmental
local government”, defined as: Local government committed to working with citizens and groups
within the community to find sustainable ways to meet their social, economic and material needs,
and improve the quality of their lives.”
• The Municipal Systems Act (2000) made integrated development planning compulsory, and
legislated a number of key LED functions, roles and responsibilities. The aim of the Act is “To
provide for the core principles, mechanisms and processes that are necessary to enable
municipalities to move progressively towards the social and economic upliftment of local communities.”
• The LED Guidelines (issued in 2000): “The National Framework for LED in South Africa aims to support the development of sustainable local economies through integrated government
action. This government action is developmental and stimulates the heart of the economy which
comprises those enterprises that operate in local municipal spaces. The framework is underpinned
by an appreciation of the evolving practice of LED internationally and is based on the unique
South African context and challenges.”
• The National Spatial Development Perspective: It has made a key contribution to the LED
policy debate through its assertion that some areas are better suited to business development
and growth, while others should be allocated for government services and transfers.
• The National Framework for LED in South Africa (2006) aims to build a shared
understanding of good LED practice and motivate more effective implementation.
• Refocusing Development on the Poor: LED Policy Paper (2001) In order to promote
economic development it is increasingly being recognized that microeconomic measures at the
local level are needed as well as macroeconomic measures at the national level. The former are
often collectively referred to as Local Economic Development (LED) and in the South prioritizing
the needs of the poor must feature prominently in the design of LED interventions. South Africa is one country in Africa where there has been explicit attention paid to LED policy and practice
and, given the government’s prioritization of the needs of the poor, it has the potential to serve
as a learning laboratory with respect to the principles, policy and application of pro-poor LED. Hence
the World Bank commissioned this particular study into Pro-poor LED in South Africa, with a specific
focus on seeking to ascertain lessons which can be derived from the application of LED, primarily by
local governments.
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Summary – LED and Local Government
• Poverty and unemployment are the main challenges facing South Africa. LED strategies and
programmes are the main instruments at local level to tackle job creation and poverty alleviation.
• LED can be described as a decentralisation mechanism which allows local and regional
governments and their communities (business, labour and society) to shape their environments, improve competitiveness in their local economies and ensure that infrastructure and services
work well for industry and society.
• LED further aims to support previously disadvantaged people, marginalised communities and
geographical regions, black empowerment enterprises and SMMEs to allow them to participate
fully in the economic life of the country. This will contribute to reduce inequality across the nation.
• LED promotes local ownership, community involvement, local leadership and joint decision
making to develop strong and inclusive societies.
• The linkages between the formal and informal sectors of the economy need to be understood and
considered in devising a local economic development strategy.
• LED strengthens local, national and international partnerships between communities, businesses
and government to solve problems, create joint business ventures and build up local areas.
• LED uses local resources and skills and maximises opportunities for development at the
local level.
• By adopting LED strategies people in a local economy can work out ways of attracting investment
to grow the local economy and also start businesses which will retain income in their area.
WHAT is LED?
The World Bank defines the purpose of local economic development (LED) is to build up the economic
capacity of a local area to improve its economic future and the quality of life for all. It is a process by
which public, business and nongovernmental sector partners work collectively to create better conditions
for economic growth and employment generation.
This question is probably one of the most frequently asked ones in the sector. This is certainly justified
because there are numerous definitions for LED. However, most of them have in common that they
underline two important aspects:
1. LED is an ongoing process.
2. LED is driven by local actors from different societal sectors.
Both these points imply collaboration, and even co-responsibility between the public and private sector
for the economic development of a region or location.
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to Local Economic Development (LED) in South Africa
The importance of LED for South Africa’s future development is outlined in a number of key legislative
documents, some of which are highlighted below:
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“You must keep your business intact before you
create new business.”
“Local economic development (LED) is a participatory process which encourages social dialogue and
public-private partnerships in a defined geographical area. LED enables local stakeholders to jointly
design and implement a development strategy which fully exploits local resources and capacities, and
makes best use of the area’s comparative advantages.” The International Labour Organisation (ILO)
The SALGA Legal Opinion on LED to Cape Winelands DM:
Given that the purpose of local economic development (LED) can be expanded to include:
1. Creating an enabling environment in which local people and institutions can make realistic and
practical decisions that strengthen the local economy, create more jobs, promote new enterprises,
including self employment, and to improve the quality and prospects of life for all.
2. In building developmental local government engages more directly where possible in creating
jobs and building the local economy.
There can, as a result, be little doubt that local economic development is a local government function
in keeping with the purposive interpretation of the Schedules and the developmental character of
local government under the new constitutional dispensation.
WHO is responsible to drive LED?
Partnerships are essential for Development
Effective LED is not possible when there “misaligned” planning exists between national, provincial and
local. Vanity (Flagship) Projects, driven by Provincial or National spheres and “land” in a local economy
need to be incorporated into municipal IDP and attention should be given on the long term sustainability
or operations of such projects. Therefore, one of the most important methods for achieving greater
co-ordination and integration is integrated development planning. Partnerships hold the promise
of inclusiveness, complementarily, dialogue and shared responsibility for development. Provincial
governments, municipalities, State-owned entities, business sector and civil society have to join forces
to work on behalf of continued growth and prosperity of the local, provincial and national economies.
Source: Florian Kopp
The SA Government’s vision for local economies is:
“Robust and inclusive local economies exploiting local opportunities, real potential and competitive
advantages, addressing local needs and contributing to national development objectives” (National
Framework for LED (2006-2011).
In the White Paper on Local Government (1998), the notion of developmental local government is
comprised of four basic characteristics :
1. Maximising economic growth and social development: local government is instructed to exercise its
powers and functions in a way that has a maximum impact on economic growth and social
development of communities.
2. Integrating and coordinating: local government integrates and coordinates developmental activities
of other state and non-state agents in the municipal area.
3. Democratic development: public participation: local government becomes the vehicle through which
citizens work to achieve their vision of the kind of place in which they wish to live.
4. Leading and learning: municipalities must build social capital, stimulate the finding of local solutions
for increased sustainability and stimulate local political leadership.
20
Local government structures have a particularly important role to play in harnessing national and regional
resources to promote their areas and in facilitating strategic local partnerships to enhance and sustain
economic growth. Local stakeholders, such as government, business, labour and civil society organisations,
should work together in order to enhance local economic development (LED). Local communities and
authorities can play an active role in determining their own economic paths. LED involves identifying and
using local resources to create opportunities for economic growth and employment. Successful LED depends
on local partnerships as well as on national and regional structures to promote and support local initiatives.
Government has a particular role to play in LED, by ensuring that LED leads to job creation, sustainable
rural development and urban renewal. LED interventions must benefit disadvantaged and marginalised
people and communities within municipal boundaries through an inclusive and redistributive approach
to economic development.
To ensure the success of LED, national government must:
• Co-ordinate and align support to municipalities for LED through the IDP process
• Provide support to municipalities to implement their developmental mandate
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to Local Economic Development (LED) in South Africa
Definitions of LED
“LED is an ongoing process by which key stakeholders and institutions from all spheres of society,
the public and private sector as well as civil society, work jointly to create a unique advantage for the
locality and its firms, tackle market failures, remove bureaucratic obstacles for local businesses and
strengthen the competitiveness of local firms.” (GIZ)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“LED is NOT about supporting individuals
for a year or two.”
Provide the overall legislative and regulatory framework for LED
Maintain strong inter-governmental relationships and institutions
Provide the necessary resources to municipalities for the implementation of LED
Disseminate information to provincial and local government about LED
Increase administrative efficiency (such as access to land and finances), and
Monitor the outcomes and impact of municipal-led LED activities.
District municipalities can play an important role by taking advantages of economies of scale within
a broader geographical region. The Districts can also provide significant co-ordination and support role
to local municipalities. The Districts have the following responsibilities:
•
•
•
•
•
•
•
•
•
Plan and co-ordinate LED strategies within the framework of IDPs
Establish an LED structure, representing the districts and local municipalities, to foster co-operation
and co-ordinate LED policies, strategies and projects within the district
Identify lead LED sectors that can kick-start development within Districts by undertaking economic
research and analysis
Promote joint marketing, purchasing and production activities
Promote networking of firms within the District (for example, tourism routes)
Collect and disseminate information to assist local municipalities with LED policies
Identify resource availability (grants at provincial level, land, infrastructure, etc.)
Maintain a strong relationship with the province, and
Provide the necessary training to municipalities.
As the key LED implementation agents of government, local municipalities have the following responsibilities:
• Ensure that social and economic development is prioritised within the municipal Integrated
Development Plans
• Conduct local economic regeneration studies as part of the IDPs
• Establish capacity within the municipality to promote interdepartmental collaboration
• Establish an LED Forum within the community to mobilise the efforts and resources of local
stakeholders around a common vision
• Build and maintain an economic database to inform decisions and act as an ‘early warning system’
for the municipality
• Identify and market new economic opportunities
• Create an enabling environment for local businesses through efficient and effective service and
infrastructure delivery
• Improve the quality of life of and facilitate economic opportunities for people living within the
municipality by addressing infrastructure and service delivery backlogs
• Develop an understanding and communicate the complex local economic relations, limitations and
advantages to key role players
22
•
•
•
•
Network with key sectors and role players to create partnerships and projects
Motivate and support individuals, community groups and local authorities to initiate and sustain
economic initiatives
Mobilise civil society to participate in LED and encourage public participation, and
Establish sector linkages and clustering of economic activity.
The Role of Business in LED
Business needs to recognise the importance of co-operating with government and civil society in LED
For example, larger businesses could help to grow the economy by sub-contracting to and tendering
from local small businesses. Developers of trading areas should ensure that microenterprises are
incorporated into their spatial planning frameworks.
Source: LEDNA
The Role of Civil Society in LED
Local residents must be fully involved in the local development process. For successful LED processes
to become community driven, a community must have a core of local, capable and respected leaders
who are prepared to commit time and energy to LED. The active engagement of women and young
people in the leadership group is essential. Leaders must be willing to report, listen and ensure the
support of the community.
There is a need for a joint vision of what key community stakeholders want for the future, and
a commitment to the concepts of partnership and co-operation. Stakeholders need to organise
themselves in a professional manner to make things happen. This requires organisation, structure,
processes and a locally based organisation to facilitate and manage developmental efforts. It must
gain the communities’ confidence and have the support of all role-players.
23
to Local Economic Development (LED) in South Africa
•
•
•
•
•
•
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“There are many consultants who know what the problems are
but don’t know what to offer as solutions.”
Within this framework and in relation to LED, the roles of councillors include the following aspects:
• Reviewing and evaluating policies and programmes existing the municipality, such as
- IDP, LED Strategy, SDF, sector plans
• Driving the process of developing a shared vision and understanding of LED within the Council,
municipality and amongst stakeholders
- Review the positioning of the LED unit within the municipality and ensure that it is placed in a way
that ensures sufficient cross-cutting influence of LED in other relevant areas of local government
• Explore, understand and take into consideration the needs of the economic actors in the
municipality, including
- Formal businesses, informal businesses, community, representative groups and forums related
to LED
- Active and regular participation in local business forums to demonstrate to the local business
community that their needs are taken seriously at political level and create mutual trust
• Work and engage with local stakeholders and administration to develop recommendations to
improve LED policies and programmes in line with the objectives of local government and for a more
prosperous local area.
WHERE to unlock LED?
Factors that influence the choice of LED approach
There are various approaches to Local Economic Development (LED) in South Africa. Each approach
is based on certain assumptions about the conditions and challenges of a local economy and the
impact and role of local authorities. Factors that influence LED and therefore the choice of an LED
approach, can include the local context (geographic and physical characteristics), the local economy
and employment structure (e.g. market trends, employment base, dominant sectors, levels of flexibility
and diversification, support mechanisms and entrepreneurial climate), the local population and labour
market (e.g. demographic trends, incomes, quality of life, cultural characteristics, relationship between
different policies), and opportunities for partnerships (e.g. key role-players from public and private sector
and civil society, but also vertical relationships between national, provincial and local government).
Conditions of the particular area that determine the appropriate LED approach include:
• The local economic structure: Through an identification of natural geographic features and the
type and quality of infrastructure that exists, a locality can identify which areas may yield opportunities
for economic development through tourism and business potential.
24
•
•
•
•
•
Existing businesses & leading sectors: International research shows that most new jobs
(60-80%) are created by the growth of existing businesses. Usually, saving an existing job is easier
and cheaper than creating a new job.
Local communities: Uneven growth can exacerbate the gap between rich and poor. Benefits should
rather be equitably distributed. Therefore, it is important to involve the community in conceptualising,
implementing and monitoring projects.
The business environment. A favourable business environment is key to boost local markets
and businesses since private investment creates jobs and generates income. Increasing productivity
by lowering costs of living and doing business as well as bureaucratic barriers; strengthening of
locational factors by investing in infrastructure and municipal services (e.g. basic services, business
support services) are important requisites for LED.
Human resources and a skilled workforce are crucial catalysts for economic growth and
poverty alleviation. Without appropriate skills and technical expertise, members of poor communities
are unable to benefit from the creation of new jobs.
Networks and partnerships promote exchange of knowledge and ideas and also create
an environment for peer-to-peer learning and multi-party collaboration. Support to local business
associations and chambers; regular LED or other business forums to be established in order to
facilitate an ongoing dialogue between local government and businesses; improved communication
and networking can also promote cross-sectoral learning (mentoring, learning events) and create
new business linkages; PPPs.
Case Study Amajuba DM Forum for LED (AFLED)
Grown from the need to coordinate and create partnerships between the activities of the public and
the private sectors in the district to strengthen the economy as a whole, the Amajuba Forum for Local
Economic Development (AFLED) was established before 2004. Its purpose is to serve as an advisory
forum to all local municipalities on LED matters and to establish partnerships in the tourism, agriculture
and commerce & industry sectors that can drive projects forward into implementation as well as feed
back into policy processes. The Forum meets every second month and comprises of 38 members.
While similar approaches of LED forums are taken in other municipalities as well, AFLED has proven
to be a well functioning structure that indeed integrates both public and private sector stakeholders in
a constructive way to foster LED in the area. The strong representation of the business community is
critical for the Forum as they can ensure business needs are clearly identified and addressed. Municipal
officials from both the local and district levels highlighted that political commitment and participation are
key. Further, the joint structure supports the two other local municipalities in the district, which have less
LED capacity, thus strengthening the district as a whole and establishes a better working relationship.
For more information on AFLED approach, download LED Case Study for Newcastle Local Municipality
on www.led.co.za
HOW to develop and implement LED?
The process of strategy development and planning
This section aims to give a step-by step guide to initiate and implement LED processes at municipal
level. It certainly does not give a ‘one size fits all’ approach because the exact dimensions of how LED
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to Local Economic Development (LED) in South Africa
Councillor’s Role in LED
Local government in South Africa is guided by the concept of developmental local government as
described in the White Paper on Local Government, 1998. Its vision is that local government should
‘work with local communities to find sustainable ways to meet their social, economic and material
needs and improve the quality of their lives.’
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“We are NOT the implementers
- Government is pretty bad in that”
In each of the 5 steps, a variety of LED tools have been developed over time to assist LED practitioners.
They are listed in the boxes at the bottom of each step and described in more detail in the following
chapter on approaches, strategies and tools to LED.
Step 1: ‘Getting the Basics right’
Before initiating own approaches, the context of LED activity and action within the regional, national and
global context should be explored in detail. This will provide local government with the background and
framework for LED processes and the purpose of strategic planning for this effort.
This also includes getting a clear internal understanding of internal structures in the municipality,
linkages, vision and positioning of LED. Where is it located, what is its mandate and what are the internal
resources and capacities in this are?
Tools that can be useful in this stage:
• LED Maturity Assessment Tool
• Compass of Local Competitiveness
• Hexagon
Tools that can be useful in this stage:
• BCS / BICA
• CEDPI
• Economic Mapping
• Five Forces
• GENESIS
•
•
•
•
•
Hexagon
KEI
PACA
Plugging the leaks
SWOT
Step 3 ‘Planning for LED and Developing the Strategy’
Preparing a strategic plan based on the local economy assessment (stage 2) involves several steps:
• Defining an LED vision,
• Establishing a LED unit, funded, and positioned at the most senior level of the municipality,
• Setting aims and objectives,
• Developing programmes and projects to be implemented.
- Identify options, analyse impact and feasibility, prioritise according to resources and potential
impact towards achieving objectives
• Identifying sources for finance
From the World Bank Primer on LED:
Step 2 ‘Understanding the Local Economy’
Having explored the LED set-up and capacity within the municipality, the next step is to get a clear
picture of the local economic fabric of your area. Deeper understanding and knowledge of competitive
advantages and weaknesses of the local economy is crucial prior to any LED intervention. Two aspects
are key in this respect:
Creating the LED Strategy (Local Economic Development Primer. World Bank, 2003)
As in comprehensive city strategic plans, the intent is to achieve an integrated approach to LED.
Professionals in local government and principal stakeholders need to balance economic development
with environmental and social needs. The LED Strategy has a number of components.
Elements of the LED Strategy
Vision: Describes stakeholders’ consensus on the preferred economic future of the community
• Economic data and intelligence
• Stakeholder involvement
to Local Economic Development (LED) in South Africa
processes unfold will be different in each locality. However, it can be considered as a starting structure
to develop your own individual approach.
Goals: Based on the overall vision and specify desired outcomes of the economic planning process
A broad range of tools are available to assess the internal and external circumstances of the local
area and economy as well as on how to interpret data to make it meaningful for the local economy
assessment. It is essential to develop a clear picture of the local economy, its assets, competitive
advantages and weaknesses. Bringing all relevant local stakeholders into this process is important in
order to lay the foundation for planning and implementation.
26
Objectives: Establish the performance standards and target activities for development of each goal.
They are time bound and measurable
Programs: Set out approaches to achieving realistic economic development goals. They are time
bound and measurable
Projects and Action Plans: Implement specific program components. They must be prioritised and
costs established. They are time bound and measurable
27
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“ED does not stop at municipal boundaries.”
•
•
•
•
•
Market Assessment Toolset for BDS
PACA
Plugging the leaks
Strategic Planning
SWOT
Step 4 ‘Preparing for Implementation’
In order to bring projects from paper into practice, action plans need to be developed for each
project prioritised above. Action plans bring projects to the operational level and include the
following components:
• Tasks
• Owner for each task (name of a person to take ownership of this task)
• Realistic timetable for completion
• Resource needs (financial, time, human resources)
• Expected outcomes, results, impact (monitoring and evaluation framework)
• Stakeholders to be involved in the task
Even though this stage is very much centred at operational level within the administration, the
involvement of LED Portfolio Councillors is important in an oversight role throughout the process and
certainly as essential stakeholder.
Source: Florian Kopp
Tools that can be useful in this stage:
• LOCATI
Implementing tools, if relevant to the projects identified in the LED strategy:
• Value chain promotion
• Leak Plugging
28
Projects and Programmes
Financial Instrument / Institution
Basic Infrastructure
Internal municipal sources, MIG, DBSA
Bulk Infrastructure
Bulk contributions, DBSA
Industrial Sector Development
Customised Sector Incentives (DTI), IDC
Building Competitive Advantage
Customised Sector Incentives (DTI), IDC
Transport and commercial infrastructure
Public-Private
Social and Cultural Infrastructure
Municipal Internal Finance, MIG
Financial Services for Large and Medium
Enterprises
Investment and Retail Banks, Private Equity, Stock
Exchange
Industrial Innovation
Venture Capital
Import and Export Promotion
DTI (TISA), PDCs
Financial Services for the Unbanked
Housing Finance
Micro and small enterprise finance
Wholesalers
MFIs
Savings and Credit Coops
Village Banks
MIG = Municipal Infrastructure Grant
DBSA = Development Bank of South Africa
DTI = Department of Trade and Industry
IDC = Industrial Development Corporation
TISA = Trade and Investment South Africa
PDCs = Provincial Development Corporations
MFIs = Microfinance Institutions
Step 5 ‘Measuring Results and Impact’
Sound monitoring and evaluation frameworks are required to track and assess the progress in LED
strategy and in project implementation. Indicators to be linked to each project need to be determined as
part of the planning process in order to measure impact of the projects and the strategy in the future.
With a general lack of economic data availability at local level in South Africa this is often problematic.
Therefore, sound and relevant indicators need to be identified carefully to measure project outputs
initially and impact on the local economy in the future.
Tools that can be useful in this stage:
• Business Climate Survey (BCS) / Business and Investment Climate Assessment (BICA)
29
to Local Economic Development (LED) in South Africa
Funding for LED – from the Toolkit for Local Economic Development – DPLG, Alistair Fray
Tools that can be useful in this stage:
• CEDPI
• Compass
• CEFE
• GENESIS
• Hexagon
• LED Maturity Assessment
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Sprinkling funding everywhere does not work.”
A Councillors Guide
to Local Economic Development (LED) in South Africa
Tools for LED
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A Councillor’s Guide
to Local Economic Development (LED) in South Africa
CHAPTER THREE
This section gives an overview of the tools that were developed for LED, most of which have been
applied in a number of municipalities across South Africa. Many more tools have been developed in
the past but the aim is not to give readers the full list but brief information on those that have been
tried and tested in the South African context. Depending on the local context, LED focus and needs,
municipalities need to decide individually, which tool or combination of tools is most relevant for them to
apply. Although some of the tools require external facilitation, a range of them can be applied, managed
and facilitated internally by in-house LED practitioners.
We already referred to the tools in the previous sections of this book and in the table above in order to
provide a practical overview of the relevant context that each tool can be used in.
The table below illustrates five generic approaches in promoting LED as well as respective tools and
instruments that have been developed in the past. However, it is generally a combination of different
approaches that should be used when implementing LED strategies.
Theme
Improving the
Environment
Tool
Business •
•
•
Strengthening Existing
Businesses & Leading
Sectors
•
•
•
•
•
• RALIS
BCS / BICA
Market Assessment Toolset • RIA
• RTR
for BDS
Plugging the leaks
BCS / BICA
BR&E
CEFE
Five Forces
Hexagon
•
•
•
•
Market Assessment Toolset
for BDS
Plugging the leaks
RALIS
Value Chain Promotion
• PACA
• Plugging the leaks
Following Community-based • CEDPI
LED
• KEI
• LOCATI
Promoting Training &
Capacity Building
• CEFE
• Hexagon
• LOCATI
• Plugging the leaks
Fostering Communication &
Networking
• Economic Mapping
• PACA
• Strategic Planning
• Value Chain Promotion
32
Summaries of LED Tools in alphabetical order
Business Climate Survey (BCS) / Business and Investment Climate Assessment (BICA)
BCS’s and BICA’s measure the business climate as perceived by entrepreneurs in a specific market
sector and within a given period. Both aim at gathering qualitative & quantitative information on the
business environment and can be useful in order understand the local economy.
References:
• Doing Business 2011 – Making a difference for entrepreneurs. The World Bank. 2010.
• South Africa: Second Investment Climate Assessment. Business Environment Issues in Shared
Growth. Department: Trade & Industry (the dti). 2010.
• Second Investment Climate Assessment - Improving the Business Environment for Job Creation and
Growth. Department: Trade & Industry (the dti), The World Bank. 2010.
Or visit: www.doingbusiness.org/
Business Retention and Expansion (BR&E)
The BR&E approach comes out of recognition that jobs are more likely to be created by expanding
existing businesses, than by registering new businesses which have a higher failure rate. It is a
systematic method for the municipality to take a structured approach to identifying and supporting
the needs of local business. It centrally involves a programme of visits with local volunteers, which
attempt to unpack specific concerns, ideas and opportunities and respond to these in a way which builds
confidence among stakeholders. Action plans are developed to implement quick wins.
Reference:
• The South African Business Retention and Expansion. Gerry Delany, Claire Patterson. 2010.
• Formal Business Retention & Expansion (BR&E) Survey. David Civittolo and Gregory A. Davis.
• iLembe Business Expansion & Retention Programme. Results of the Ballito Business Survey. 2010.
See: www.municipaltoolkit.org/UserFiles/Civittolo&Davis_EN.pdf
Community Economic Development Preparedness Index (CEDPI)
CEDPI was jointly produced in the early 1980’s by the Wisconsin Department of Development and the
University of Wisconsin. The purpose of CEDPI is to help communities analyse strengths and weaknesses
before developing a plan to improve economic development opportunities in the community. The index
is based on individual perceptions of activities and conditions in the community, over which you may or
may not have some level of control. The compiled responses will provide a reflection of your community’s
readiness to a) retain existing businesses and income, b) attract new businesses, residents, and income,
and c) expand small businesses and income within your community.
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to Local Economic Development (LED) in South Africa
CHAPTER THREE:
Tools for LED
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Funding possibilities are out there,
precise figures open doors.”
a role in a given cluster - companies and economic sectors, support institutions, associations, government
and others. Second, it is a way to visualise the links between the various stakeholders. Third, it also is
a way to highlight the nature of the relationship and the power structure between the economic actors.
Or visit: www.uwex.edu/ces/cced/economies/cedpi.cfm
The mapping tool can be used with a heterogeneous group of stakeholders not depending on the level
of education, both on a very sophisticated level (e. g. adding quantitative data) and in a rural setting with
participants with low level of education (e. g. in local language, using symbols instead).
Competency Based Economies Formation of Enterprise (CEFE)
CEFE’s main objective is to improve the entrepreneurial performance of economic actors through guided
self-analysis, stimulating entrepreneurial behaviour and the building up of business competencies. The
target group embraces existing or potential entrepreneurs, as well as personnel from enterprise support
or regulatory agencies, including universities. CEFE is adaptable to academics as well as to people with
low educational background and has proven to be as successful with managers, entrepreneurs and
university graduates. CEFE is a comprehensive set of training instruments using an action-oriented
approach and experiential learning methods to develop and enhance the business management and
personal competencies of a wide range of target groups.
Reference:
www.cefe.net/
Compass of Local Competitiveness (Compass)
Compass is a tool that assists local stakeholders in strategising, monitoring and continuously
assessing and adjusting their LED process. It is a flexible tool that can be applied in different contexts
and institutional settings. It can be used on a micro level for a public-private LED initiative, for local
government processes or up to a state or national level.
The Compass approach is based on the balanced scorecard method. The key idea is to introduce a
wider, more balanced set of performance indicators that is not one-sidedly looking at financial and
other economic indicators but also at other, more qualitative indicators that address the long term
growth perspective of the local economy. The elaboration of a Compass is primarily based on structured
workshops with local decision-makers and stakeholders. The outcome of these workshops is the
definition of a set of critical success factors that can be used by the key persons of the respective
initiatives or activities to monitor the ongoing effort.
Reference:
• The Compass of Local Competitiveness Manual. Sonja Ende, Anja Ruecker. 2006.
• The Compass of Local Competitiveness. Manual. 2008
Reference:
• Local and Regional Economic Development: Towards a common framework for GTZ’s LRED
interventions in South Africa. Anja Rücker, Gabriele Trah. 2007.
Five Forces
The Five Forces Analysis is an analytical concept developed by Michael E. Porter. It is a useful concept in
analysing the competitive position and strategic challenges of a company or a cluster. This tool aims at
understanding competitive position and threats to individual branches of industry and offers an analytical
framework to assess competitive dynamics within an economic sector. It suggests looking at five aspects
that influence a sector or a company: 1) Rivalry among existing firms / competition; 2) Bargaining
power of suppliers; 3) Bargaining power of buyers / customers; 4) Threat of new entrants; 5) Threat of
substitute products or services.
Reference:
Local and Regional Economic Development: Towards a common framework for GTZ’s LRED interventions
in South Africa. Anja Rücker, Gabriele Trah. 2007.
Generating Strategy - Innovation - Solutions for Local and Regional Development (GENESIS)
GENESIS is a methodology to identify strategic interventions (catalytic projects with a strong leverage
factor) in the context of a territorial economic development initiative. GENESIS gives you a) a strategic
perspective of the development opportunities of your local or regional economy, based on the scenario
of future development and b) specific proposals for catalytic activities to stimulate the development of
the local or regional economy.
Reference:
• Generating Strategy – Innovation – Solutions for Local and Regional Development.
Jörg Meyer-Stamer & Colin Mitchell. 2005.
• Local and Regional Economic Development: Towards a common framework for GTZ’s LRED
interventions in South Africa. Anja Rücker, Gabriele Trah. 2007.
Economic Mapping
Economic Mapping is a general instrument for qualitative research that can be used in a participatory LED
process. The purpose of an economic mapping is threefold. First, it serves to identify the actors who play
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to Local Economic Development (LED) in South Africa
Reference:
Community Economic Development Preparedness Index (CEDPI). Andrew Lewis.
See: www.municipaltoolkit.org/UserFiles/File/Lewis2_EN.pdf.
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“We have good plans and bad implementation:
it´s the management of projects rather than management of the problem.”
This tool was developed and piloted by REDX and GIZ, then adapted by SALGA and is now being rolled
out with support from DMRA to the SALGA Provincial Offices, which will offer the assessment as a
service to municipalities in the future.
The tool is organised and visualised along six triangles: 1) Target group of LED (e.g. local population,
external investors, local companies and start-up companies); 2) Locational factors (featuring the local
economy); 3) Synergies (between economic promotion, employment promotion and urban/regional
development); 4) Translation of the concept of sustainable development to the local level
(combining the economic with the social and ecological dimensions of sustainability); 5) Actors in
local governance (involving the legislation, local government executives as well as private business
associations); 6) Planning, Monitoring and Evaluation.
Local Economic Development Training Initiative (LOCATI)
LOCATI aims at developing the capacity of local stakeholders to plan and implement effective and
sustainable LRED initiatives. LOCATI, a training initiative by InWEnt, has developed basic concepts and
materials for a training programme in Local Economic Development (LED) in South Africa. The curricula
provides Local Government, Business and Community Economic Development actors with a problemsolving and practical approach to implementing LED.
Reference:
The Hexagon of Local Economic Development (LED) in SA. Jörg Meyer-Stamer. 2006.
See: www.mesopartner.com/uploads/media/mp-wp5_Hexagon-SA.pdf
Knowledge Economy Index (KEI)
The Knowledge Economy Index is a “do-it-yourself” manual that makes it possible for communities
to conduct an economic analysis and prioritize issues for local action. For example, if the indicators
demonstrate ample access to broadband communications but lack of widespread skill or interest in
using the Internet by many residents, targeted responses might include technology skills training or
initiatives that support community-generated content.
Reference:
Capacity in the Global Knowledge Economy: Assessment and Steps to Take. Rex LaMore & Faron
Supanich-Goldner.
See: www.municipaltoolkit.org/UserFiles/LaMore&Supanich-Goldner_EN.pdf
LED Maturity Assessment Tool
The LED Maturity Assessment tool provides a rapid assessment of the readiness of a municipality to
successfully undertake LED. It does this by using a thirty-three question survey to gather information
into what is working, what has worked and what is not working within a municipality. It identifies risks
for future LED planning and points to what improvements need to be made to enhance successful and
sustainable LED. Each municipality gets a detailed report of the outcomes of their assessment and also
has the opportunity to attend a cross-learning event that uses the results of the assessment.
36
Reference:
for more information, contact your SALGA Provincial Office.
LOCATI offers participatory, action-oriented training to enable local actors to become more effective in
LED. It helps to clarify the meaning of LED and the roles that LED actors can most effectively play. It
provides practical tools to help increase the competitiveness of localities and stimulate enterprise and
community economic development.
Reference:
www.locati.org/
Market Assessment Toolset for Business Development Services (BDS)
This tool provides a detailed understanding of the BDS markets as a necessary basis for preparing
an overall strategy of demand oriented business development services for small and medium private
businesses. This tool consists of a number of steps that identify the consumption of business services
in a specific area, by business sub-sector, size or other desired catagory. First, data are recorded on
the reach and retention of services so that even if consumption levels are low, one can see if potential
consumers are at least aware of the business services. The data is then used to identify potential gaps in
the market by looking at sub-sectors that consider the services to be important to their business. LOCATI
assists in giving rapid feedback on the acceptability of products and prices.
Reference:
BDS Market Development - A Guide for Agencies on the Emerging Market Development Approach to
Business Development Services. Alan Gibson, Rob Hitchins, Marshall Bear. 2001.
Participatory Appraisal of Competitive Advantage (PACA)
The purposes of this methodology are to assess the economic potential of a local area, to provide
strategies on how to mobilize and unlock this potential, and to get local stakeholders to work together,
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to Local Economic Development (LED) in South Africa
Hexagon
The Hexagon of LED is a didactical tool that helps to organise the main concepts and instruments of
LED along a number of triangles. The purpose of the Hexagon is to organise the key issues in LED in a
way that makes it easier for stakeholders to understand the complexity of issues involved in LED. The
Hexagon is useful in introducing practitioners and stakeholders to the main concepts and instruments of
LED. It helps to widen the perspective and understanding the complexity of LED.
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Many studies are being done but there is no institutional memory, no central
system, meaning that the knowledge gets lost and replicated over again.”
PACA is in the narrow sense a set of tools used to come up with a diagnostic of the competitive
advantages and disadvantages of a locality (e. g. a district, town or township) or a sector (such as
tourism, agriculture or the formal business community) combined with concrete, practical proposals to
stimulate the local or regional economy. One of its key features is the mobilisation of local stakeholders
from the public and private sector as well as civil society to take on ownership of the assessment of
their local economy as well as of the resulting initiatives to improve the locality. In the wider sense it is a
participatory, bottom-up and pragmatic approach to LED that aims at building momentum by identifying
and implementing quick wins, which in the medium term build up to effective and sustainable LED
dynamics in the communities.
Reference:
www.paca-online.de/
Plugging the Leaks in the local economy
Plugging the Leaks is about working directly with low-income communities analysing the local economy
as if it were a bucket with holes in it. Resources flows in and out of the bucket in the form of cash,
and communities are able to identify where this happens, and find local solutions for these problems.
At its heart is the local multiplier effect from Keynesian economics: the observation that the more
cash circulates within a community before leaving, the more value it creates locally. The method was
pioneered by the New Economics Foundation some eight years ago. The method builds economic literacy
and aims to empower groups of people to indentify gaps in local markets and organise themselves to
respond to opportunities proactively. It is based on prioritising local enterprise, and emphasises local
value-addition and innovation. It looks for activities with strong multiplier effects, and increases the
interconnectedness of elements within a local economy. More robust and enterprising local economies
are the long-term goal.
Reference:
Rapid Appraisal of Local Innovation System - Findings and Recommendations. Larry Dolley,
Jessy Van Wyk. 2008.
Red Tape Reduction (RTR)
RTR is a tool that aims to assist local stakeholders understand the importance of improving the local
business environment by looking at the regulations and process that govern it. These instruments
specifically considers the interface between local government and the local business community and
often results in the initiation of a change process within local government ultimately aimed at improving
service delivery.
Red tape refers to all the regulations, rules, administrative procedures and processes that stand in
the way of doing business efficiently. They often form barriers to entry and exit, and have unintended
negative consequences on the competitiveness of localities. The origin of the term red-tape goes back
to 17th Century England, when legal and official documents were always bound with red tape. Today, it
refers to unnecessary bureaucracy.
In South Africa local government accounts for 6% of recurrent compliance costs to doing business
(Small Business Compliance Project: 2004). In times of recession, the few percentage points can mean
the difference between business viability and bankruptcy.
Red Tape and the Informal Sector
In most developing economies, at least one third of entrepreneurs are informal, and thus are trapped in
activities characterized by low productivity, limited access to finance and services, and a limited capacity
to expand. Thus, informality many times represents a missed opportunity for faster economic growth
and better income distribution, let alone functioning markets and rule of law. It is therefore important to
ask the question of how informality and the regulatory environment are linked, and what improvements
to the regulatory environment could produce incentives for formalization.
Reference:
for more information, see detailed P3 description in the partner section of this book, p.xx
Reference:
Cutting Red Tape - Improve the Business Environment in South Africa. 2007.
Rapid Appraisal of Local Innovation Systems (RALIS)
Rapid Appraisal of Local Innovation Systems (RALIS) is a methodology to get, within a short period of
time, an overview of the main features of a local innovation system and the innovation processes along
a value chain. In the wider sense, it is a rapid, practical, bottom-up, participatory and network stimulating
approach to value chain development and local/regional economic development. RALIS is different from
other diagnostic efforts in various aspects. A RALIS is supposed to lead to practical activities which
enhance the interaction along a value chain and improve the performance in elements of the value chain.
Regulatory Impact Assessments (RIA)
Regulatory Impact Assessments (RIA) are a rather sophisticated tool in order to improve the quality
of regulations and to mainstream Regulatory Best Practice (RBP). Several attempts have been made
recently to popularize the concept in developing countries, including South Africa. Given the complexity
of the tool, it is mainly used for national and provincial level regulatory issues only. However, the
principles behind it and some of the methodology might also be transferable to local level interventions.
The assessments help policy and law makers to know whether particular groups are likely to be
disproportionately or unfairly affected by a proposed new policy or law.
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to Local Economic Development (LED) in South Africa
creating practical opportunities for cooperation and trust building. PACA (Participatory Appraisal of
Competitive Advantage) has been developed by Mesopartner, a German consultancy.
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“We need to get businesses to take ownership, form clusters and then acquire
funding for projects where needed.”
Reference:
Free online software available: www.inghenia.com/gadgets/swot/swot_en.php.
Strategic Planning
Strategic Planning is a systematic decision-making process that focuses attention on important issues
and on how to resolve them. Strategic Planning provides a general framework for action: a way to
determine priorities, make wise choices and allocate scarce sources (e.g. time, money, skills) to achieve
agreed-upon objectives.
Reference:
Promoting Local Economic Development through Strategic Planning. Volume 2: Manual.
UN-Habitat. 2005.
Value Chain Promotion
The promotion of value chains provides an opportunity to identify bottlenecks in chains, to link up all
important economic actors within a chain, to reach economies of scale and to enable local producers to
meet certain standards. This contributes to the realisation of higher incomes and higher employment of
local producers. Promoting a value chain means supporting its development by externally facilitating a
value chain upgrading strategy. Promotion is done by government agencies and development agencies
together with partners within the value chain.
Reference:
Making Value Chains Work Better for the Poor - A Toolbook for Practitioners of Value Chain
Analysis. 2006.
Partners
CHAPTER FOUR
These references are part of the resource chapter.
40
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to Local Economic Development (LED) in South Africa
SWOT (“Strengths, Weaknesses, Opportunities & Threats”) Analysis
SWOT analysis is a general method for strategic planning used to evaluate the strength, weaknesses,
opportunities and threats of a project or business. It involves specifying the objective of the business or
project and identifying the internal and external factors that are favourable and unfavourable to achieve
that objective. A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model.
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
A Councillor’s Guide
Reference:
Guideline for Implementation of a Regulatory Impact Assessment (RIA) Process. Raymond Mallon. 2005.
Contact details: Ms Phumla Ndaba
– Executive Manager: Economic Development
Tel: 012 334 4903; Email: [email protected]; Website: www.cogta.gov.za
Description
As a national Department, the function of the Department of Cooperative Governance (DCoG) is to
develop and monitor national policies and legislation with regard to Local Government. DCoG’s mandate
is essentially to make Government work better by getting the three spheres of government to work far
more effectively together with communities and key stakeholders at the local level. DCoG is tasked with
the responsibility to improve coordination across the three spheres of Government and to make sure
that provinces and municipalities carry out their service delivery and development functions effectively.
Focus of LED Activities
The Department’s goal on LED is to coordinate government programmes and activities geared towards
the development of local economies and the overall goal of job creation. LED-Programmes in the
Department are, in the main, informed by the Local Government Turn-Around Strategy (LGTAS) and
Outcome 9: A Responsive, accountable, effective and efficient local government system. The strategic
focus of LED work in the Department is in the following areas: Strategy & Policy Development;
Stakeholder Coordination and Strategic Partnerships; Public Participation; Capacity Building; Knowledge
Management; and Job Creation Support Programmes (which are project specific).
Specific projects
Project Name: Business Adopt a Municipality: This flagship project is aimed at mobilising and encouraging
private sector companies and State Owned Entities (SOEs) to provide support to municipalities – according
to the companies’ area of expertise. DCoG plays a central role in linking up private sector companies and
vulnerable municipalities in order for the companies and SOEs to provide support measures and interventions
that will assist in unlocking and turning-around the economic potential of the municipalities. To date, six
Memoranda of Understanding (MoU’s) have been signed between the private sector and municipalities
focusing in the area of capacity building within the infrastructure development component.
Project Name: District Business Development Forums (BDFs): BDFs is a new project and was
conceptualised on the basic principle that large scale employment creation will be achieved primarily
through private sector driven catalytic business ventures (CBVs). The project entails the establishment of
BDFs which will be representative of each of the 44 Districts. Where similar structures already exist, the
focus will be on building on existing initiatives. The forums will be made up of big private sector companies
and the municipality. The main purpose of the BDFs is to identify CBVs specific to their districts based
42
on the area’s competitive and comparative advantages. The BDFs will further facilitate the preparation of
Business Plans for each of the CBVs and project-manage the implementation. The actual implementation
and capitalisation of the CBVs will be funded by the private sector, while DCoG will fund the work of the
BDFs (i.e. Economic Profiles; Business Plans; Feasibility Studies; Project Management fees, etc).
Project Name: Cooperatives Development Programme: This Programme supports municipalities in
their pursuit to create an environment which is supportive and enabling towards the job creation drive.
Cooperative forms of enterprise have been identified as a delivery model by DCoG based on the recognition
of their large scale contribution to communities and their members in terms of social, cultural and
economic development. DCoG facilitates the support provided by the dti and other institutions to reach the
level of municipalities. This support includes financial and non-financial support, training of officials and
cooperatives, among others. So far, a service level agreement has been entered into with an implementing
agent to focus on social mobilisation aspects of the cooperatives movement. DCoG is also in engagements
with various institutions of government that are currently providing development support to cooperatives.
The intention is to develop a plan of action with these institutions, to bring their support programmes to local
municipalities, and capacitate the municipalities to promote the development of cooperatives.
Time frame of LED programmes & projects: All projects are set for the Medium Term Expenditure
Framework (MTEF) period up to the 2013/14 financial year. Most of the projects will go beyond the MTEF period.
Location of LED activities: LED programmes are targeted at the whole country. Some projects
target specific areas based on a set of different criterias.
Partnerships: The Department is currently working with the GIZ and the AHI on a number of projects.
Most notable of these is the Small Towns Development Initiative (STDI) project.
Source of funding: Funding remains a major challenge for the LED sector in general. The main
source of funding presently is the government fiscus. DCoG has however been fortunate in the past
to form strategic partnerships with donor organisations such as the GIZ and the EU. There are also
opportunities presented by the Jobs Fund and the Employment Creation Fund, among others.
Services & offers for municipalities
- Technical support with planning activities such as the analysis of IDPs and LED Strategies, and other
local and provincial strategies;
- Technical support with economic profiling;
- Coordination of national government programmes to reach the level of municipalities and communities;
- Community Work Programme (CWP).
How can interested parties get involved & apply
Municipalities can contact the Department directly through Provincial Support Units set up throughout
the nine provinces, or directly to the head-office in Pretoria. Currently there are no application processes
administered by the Department in all our programmes.
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to Local Economic Development (LED) in South Africa
Department of Cooperative
Governance (DCoG)
A Councillor’s Guide
AA CC oo uu nn cc ii ll ll oo rr ’ss GG uu ii dd ee
tt oo LL oo cc aa l l EE cc oo nn oo mm i i cc DD ee vv ee l l oo pp mm ee nn tt ( ( LL EE DD ) ) i i nn SS oo uu tt hh AA ff rr i i cc aa
“Individual staff capacity is important.
You need someone who is hands on, pushy and sees processes through.”
Contact details: Ms Evelyn Masotja
– Director: Local Economic Development
Tel: 012 394 9500; Email: [email protected]; Website: www.dti.gov.za
Description
The dti has clustered its work on the basis of core themes, which collectively seek to promote a more
effective and co-ordinated approach to implementation of the dti´s strategic objectives, for an enhanced
and long-term impact on the South African economy and its citizenry. These themes are:
• Industrial Development;
• Trade, Export and Investment;
• Broadening Participation;
• Regulation;
• Administration and Co−ordination.
Specific projects: Co-operative Incentive Scheme (CIS)
The dti identified the promotion of co-operatives as one of its flagship projects for the year 2004/05. The
brief for the flagship projects also identified the development of co-operative enterprises as an initiative
to address the needs of the second economy. The Co-operative Development Act and Strategy are key
documents for the success of this scheme.
The objective of Co-operative Incentive Scheme (CIS) is to improve the viability and competitiveness
of co-operative enterprises by lowering the cost of doing business through an incentive that supports
Broad- Based Black Economic Empowerment.
The CIS is designed to address the following market failures encountered by co-operative enterprises:
• Lack of working capital to allow effective market entry;
• Lack of access to finance;
• Lack of participation in formal economy by co-operatives, in particular those owned by black
persons (especially those in rural area), women, persons with disabilities and youth;
• Low or non-participation by co-operative enterprises on current incentive programmes.
How can interested parties get involved & apply
The Co-operative Incentive Scheme (CIS) is a 90:10 matching cash grant for registered primary cooperatives (a primary co-operative consists of five or more members). The CIS is an incentive for
cooperative enterprises in the emerging economy to acquire competitive business development services
and the maximum grant that can be offered to one co-operative entity under the scheme is R350 000.
To be eligible for CIS, a co-operative must satisfy all the mandatory requirements as set out below:
• Be incorporated and registered in South Africa in terms of the Co-operatives Act of 1991;
• Emerging co-operatives with a majority black ownership;
• Have projects in any of the different economic sectors
• Adhere to co-operative principles;
• Be owned by historically disadvantaged individuals (HDI’s);
• Be biased towards women, youth and people with disabilities.
Eligible activities:
The intended project activities must aim to enhance the viability of a co-operative through:
• Business development services (e.g. feasibility studies; manufacturing production systems;
production efficiency and improvement, etc.)
ALL MUST be linked to the activities applied for and not exceed more than 20% of the value applied for
(i.e. total cost of all activities applied for ).
• Technological improvement projects
• Machinery, equipments and tools;
• Commercial vehicles
• Infrastructure linked to the project (e.g. 3 phase electricity, boreholes, etc)
• Working capital requirements:
- Existing co-operatives: not more than R140 000;
- Start-ups: Up to 40% of the actual activities applied for.
Time frame of LED programmes & projects: ongoing.
Location of LED activities: national.
Source of funding: the dti.
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to Local Economic Development (LED) in South Africa
Department of
Trade and Industry (the dti)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“You should always be open-minded and flexible and ready to
change initial assumptions and framework.”
45
-
Contact details: Stuart Bartlett:
Head Agency Development and Support Department
Tel: 011 269 3629 / 3466; Email: [email protected]; Website: www.idc.co.za
Description
The IDC is a state-owned development finance institution and in terms of its developmental mandate,
is committed to determining ways and means to accelerate development and equitably distribute
sustainable economic opportunities in a proactive and systematic way through the ADS Programme.
Focus of LED Activities
Old, tired methods, strategies and programmes unfortunately have not sufficiently addressed these matters
adequately. The IDC determined that there was a need for a different approach and an openness to change. It is in light
of this reality, that the IDC initiated its programme of establishing and supporting Development Agencies as a creative
alternative in promoting and accelerating sustainable economic development. The establishment of development
agencies at a local level is premised on the assumptions that: Development always happens at a local level; there
is often a limited capacity at a local level to harness and exploit opportunities effectively (especially in impoverished
areas); for effective implementation, it is essential that there is a focused and dedicated entity or champion.
Why agencies?
In attempting to understand (in order to develop an appropriate strategy), within the South African
context, the conditions and circumstances prevailing at a local level impeding development and the
exploitation of opportunities, a number of broad generalisations were determined:
- Communities often do not recognise their assets and they often try and copy strategies and recipes
and processes from elsewhere;
- Local Government is often too busy to focus on economic potential due to extended mandates,
addressing basic need priorities etc;
- Local Government often lack specific capacity to identify real business opportunities, finance,
entrepreneurial ability, project management capacity, and strategies of implementation;
- There is often too much focus on poverty alleviation and not on sustainable and viable business
opportunities, and also innovation is generally seen as risky;
- Specific competitive and comparative advantages are cited as reasons why investments are made
by the private sector; this very often results in skewed development with some regions benefiting
more than others and also a bias is created between urban as against rural areas;
- The private sector is often wayward and timid (risk adverse) in lending itself to new undertakings; the state
itself, or its agents such as IDC and others, in pursuing a developmental mandate, is therefore sometimes
required to excite the confidence of the private sector investment/participation by private sector;
46
There is a general lack of co-ordination or co-operation which is generally a turn-off to potential
investors (especially when occurring within public sector).
The role of IDC (ADS Department) has been:
- The identification and proactive targeting of particular areas for special or strategic intervention,
based on inherent potential or identified developmental need;
- Providing assistance with gaining political support and approval for development agencies within
regions, where required;
- Assisting the public authorities with setting up of development agencies by providing access to
development finance and technical support to ensure the rapid establishment of the Special Purpose
Vehicles (SPV) and operationalisation thereof;
- Assisting the SPV to attract investors into anchor projects through: utilising its network of investment
partners; assisting with project feasibility studies; ensuring that viable anchor projects are
appropriately funded; facilitating the attainment of social and economic targets.
Time frame of LED programmes & projects: Year to year.
Location of LED activities: Except for the Northern Cape, development agencies exist in all provinces.
Partnerships: The ADS department of the IDC works closely with SALGA & the SA LED Network, DCoG,
Local and District Municipalities, Provincial Government, the Department of Economic Development,
the dti, National Treasury, the Department of Rural Development, the DBSA, the Technology Innovation
Association, Local chambers, Local NGO’s and CBO’s, the University of Johannesburg and LG SETA.
Source of funding: Funding for the development agencies come from the IDC’s balance sheet. IDC
administers the Regional Industrial Development fund on behalf of the dti.
Services & offers for municipalities
With regard to the rolling out of the agencies, five key applications of the concept are emerging, namely:
- Managing of LED funds on behalf of third parties;
- Rural development;
- Township upgrading;
- Small town revitalization;
- Urban regeneration;
- Mining town interventions.
Other initiatives undertaken and supported by ADS include:
- Managing of LED funds on behalf of third parties;
- Project-specific support to municipalities;
- Supporting social inclusion and cohesion;
- Supporting knowledge management, through establishing a community of practice;
- Strategic partnerships, including universities, donor funders, civil society, etc;
- Business retention and expansion;
- Training and capacity-building support.
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to Local Economic Development (LED) in South Africa
Industrial Development
Corporation (IDC)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Spending resources on proper research for project development is key!
Without the xy study we would be going with wrong assumptions.
Now we have scientific proof that we’re going the right way.”
Direct LED-municipal support projects include:
Support to the Cacadu District Municipality LED Unit has centred on strengthening LED strategy
and implementation since 2009. Key support areas through the advisory work of one seconded expert
includes the development of an Agriculture Mentoring Strategy and LED strategy implementation support.
Contact details: Faith Lawrence - Advisor LED and Partnerships; Email: [email protected];
Carsten Hildebrand - Advisor LED & Administration;
Email: [email protected]; Website: www.giz.de/en/home.html
Support to Chris Hani District Municipality through the advisory work of one seconded advisor, three
junior experts and one local expert. The intended impact of the cooperation is to ensure the institutional
strengthening of the district municipality in the field of LED. Additional specialisation includes advisory
services regarding the establishment of a District Development Agency, the fostering partnerships and
communication with the private sector, and chamber development and support.
Description
In 2004 the Strengthening Local Governance Programme (SLGP) was initiated as a partnership
programme between the Department of Cooperative Governance and Traditional Affairs, the South
African Local Government Association (SALGA), National Treasury and the Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic
Co¬operation and Development (BMZ). The programme is strongly aligned with the South African
government’s policies and strategies, and the Local Government Turnaround Strategy is the guiding
framework for GIZ’s support.
SLGP’s technical support includes advisory services on policy refinement, implementation strategies,
the development and promotion of methods and tools as well as providing hands-on support and
technical advisory to selected municipalities. Our LED support emphasis include: institutional
strengthening, improving the operationalisation of LED in municipalities, strengthening partnerships
between government, civil society and the private sector as well as knowledge management and
learning network support.
Specific projects
National Projects include:
The SA LED Network initiative, which is a knowledge-based project hosted by SALGA. It is not
only aimed at providing stakeholders involved with relevant information concerning LED, but also, it
connects role-players with each other. Through an improved exchange and utilisation of knowledge
and information, which is freely available to all South African Local Municipalities, the impact of LED
is strengthened.
The Small Town Development Initiative – Is a cooperation initiative between the AHI and the
Department of Cooperative Governance (DCoG) –and has been supported by Idasa and GIZ since August
2010. The project is aimed at strengthening the cooperation between the public and private stakeholders
in small towns by supporting the implementation and packaging of catalytic LED projects, promoting
local leadership and sharing knowledge and best practice across five small towns. The promotion of
a dialogue between local communities, the public sector and local business entrepreneurs in order to
create a joint vision for the development of small towns, is key.
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Strengthening LED capacity in Emalahleni Local Municipality through the placement of a seconded
advisor since April 2008. Specific focus areas are agriculture related LED. Besides strengthening capacity
within the municipality, the Advisor assists agricultural associations in the context of the diversification of
local products and value chains.
Support to the Development Agency, ASPIRE, in Amathole District Municipality, Eastern Cape
Province, is facilitated through the placement of three seconded advisors. ASPIRE has been supported by
SLGP since 2007. The intended impact of the cooperation is to ensure the sustainability and management
of the regeneration of small towns. SLGP involvement includes support with the implementation of the
LED strategy, direct project support in tourism, forestry and agriculture. All interventions have been
jointly developed by local communities, the private and the public sector.
Time frame of LED programmes & projects: Ongoing.
Location of LED activities: National, Eastern Cape.
Partnerships: DCoG, SALGA, the dti, selected District & Local Municipalities, Chambers of Commerce
such as AHI.
Source of funding: Federal Ministry for Economic Cooperation and Development (BMZ) – Germany.
Services & offers for municipalities
Institutional Development, Capacity Building, Studies and Analyses, Networking and Community of
Practice, Inter-Municipal exchange, Secondment of Advisors, facilitation and technical advisory support
How can interested parties get involved & apply
Selection of municipalities are jointly determined at the steering committee level which comprises of
DCoG, NT, SALGA and GIZ.
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to Local Economic Development (LED) in South Africa
Strengthening Local Governance
Programme (SLGP) / Deutsche Gesellschaft
für Internationale Zusammenarbeit (GIZ) GmbH
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“It will be important to bring the right people with a vision on board and with the
power to make decisions that affect change.
Emotional intelligence and integrity are key features (...).”
Strategy; and many others including a Cacadu Investors Conference schedule for early 2012.
Contact details: Mlulami Manjezi
– Divisional Executive - Rural Development Division
Tel: 011 313 3524; Email: [email protected]; Website: www.dbsa.org
The Ugu REDI focuses on the development of studies and plans. Therefore, no tangible success “on the ground”
can be claimed so far. However, the long term importance should not be underestimated. Some of the studies and
plans worth mentioning includes: a district-wide Growth and Development Strategy (GDS), which also includes
the review and alignment of existing local LED Strategies; a Spatial Development Framework (SDF) (linked to the
GDS) with the goal to develop an overarching more comprehensive SDF with holistic recommendations informed
by infrastructure, spatial, land and environmental audits and is aligned to local municipality plans and frameworks.
Description
The DBSA is one of several development finance institutions in South and Southern Africa. Its purpose is to
accelerate sustainable socio-economic development by funding physical, social and economic infrastructure.
DBSA’s goal is to improve the quality of life of the people of the region. The DBSA plays a multiple role of Financier,
Advisor, Partner, Implementer and Integrator to mobilise finance and expertise for development projects.
Focus of LED Activities
The DBSA LED mandate is to finance catalytic economic infrastructure projects as well as the development and
implementation of economic and institutional turn-around strategies within identified localities with the aim of
stimulating national and local space economies in order to foster shared growth and financial sustainability. The
focus of the DBSA’s LED support is on economic development solutions; economic and institutional turnaround
strategies; and project finance. In general, all the DBSA’s programmes, in one way or another, support economic
growth and development, whether it is through technical assistance, capacity building or financial assistance.
Specific projects
The DBSA is currently involved in LED related initiatives country wide. The LED technical assistance
and capacity building support is housed in the DBSA’s Development Fund. The most prominent capacity
building and technical assistance initiatives are the Cacadu Rural Economic Development Initiative
(REDI); Theewaterskloof (TWK) REDI; and Ugu REDI.
Some of the TWK success stories include the 2030 development strategy which focus on a long term vision
and strategy to turn around the rural economy, the financial viability of the Municipality and broadening
participation in the economy; a tourism strategy and various related activities such as a centralised brand
and marketing platform that could provide an umbrella across all of the eight towns in the region, the launch
of the Cape Country Meander, tourism routes including the development of a mountain biking network for
the total area, etc; a SMME programme that aims to stimulate businesses through a combination of value
chain analysis, a buy local campaign and leveraging resources for business support.
The Cacadu REDI is growing into a massive development initiative. Currently 30 initiatives of varying
magnitudes and thematic focus are underway in Cacadu District municipal area, from studies on agro
processing, fibres and renewable energies, to chamber development. The initiative comprises activities
such as a natural fibre cluster; an agri-tourism route; the support for hydro-electricity on micro/mini
sites; a Land Use and Locational Policy for Renewable Energy; an Economic Growth & Development
50
Lessons learned
Some of the most important lessons learned are:
• A long term view needs to be taken because to turnaround a local economy takes time and it is
important to focus on strategic foundations such as sectors, skills, infrastructure and networks;
• A big picture visionary thinking needs to be combined with bold projects - catalytic interventions are
important to show early results;
• It is important to work with a large diversified portfolio because best turnaround strategies are
diversified - it spread the risk and maximises influence and connections;
• Partnerships is an important key for projects, it establishes a culture of collaboration and openness
and it creates linkages between big projects and SMME’s;
• It is important to shift the stakeholder focus from “consumption economy to productive economy” –
what better and new products can we sell to current and new market;
• The development approach should be holistic because it will help to link catalytic macro projects
with local beneficiation activities including SMME’s and link the clustering approach to the total
value chain – growth sectors;
Time frame of LED programmes & projects: No specific time frame.
Location of LED activities: The location of the DBSA LED activities is country wide, but the focus of
the technical and capacity support is in “rural” Municipal areas.
Partnerships: The DBSA’s approach is to partner with as many partners as possible if it can
contribute towards the delivery of its LED mandate. Partners such as national and provincial
government structures; all the development finance institutions; international development agencies;
CSIR; IDC, provincial and local development agencies; universities; private sector; civil society; etc.
Source of funding: DBSA uses own funding; but also funding from partners
Services & offers for municipalities
The DBSA can offer technical assistance; capacity building; advice and finance to municipalities.
How can interested parties get involved & apply
The DBSA requires an application and or request from clients for support.
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to Local Economic Development (LED) in South Africa
Development Bank of Southern Africa (DBSA)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“The Municipality has to have more competent staff who can think out of the box
and be visionary. More business people should run municipalities.”
Description
NETSAFRICA is a network of Italian and South African local governments established within a threeyear decentralised co-operation Programme funded by the Italian Ministry of Foreign Affairs and the
Regional Government of Tuscany and implemented in the framework of a MoU with the Department of
Cooperative Governance and Traditional Affairs. The Programme aims at contributing to build up the role
of South African local governments on the path towards democratisation and peace by strengthening
their capacity in the fight against poverty and improved access to basic services.
Focus of LED Activities
As part of the foreseen activities in the context of the National Framework for LED, a number of initiatives put
forward by the four South African partner municipalities aim at empowering poor communities favouring their
active participation in local development and the consolidation of job opportunities while, at the same time,
strengthening the capacity of the local governments in areas of LED strategic planning and service delivery.
Specific projects
Project Name: In Ekurhuleni Metropolitan Municipality, a pilot project is being implemented with
the aim to mobilise the communities of Actonville and Wattville to become development partners in the
management of waste services, particularly in waste collection and recycling. The underlying idea is to
valorise community-based organiztions and informal pickers, which, although informally, are already
contributing to waste management practices. The model will be tested in the areas of Actonville and
Wattville before being possibly replicated to other areas of Ekurhuleni.
Project Name: In Buffalo City Metropolitan Municipality (BCM). Two initiatives are being
implemented, first a pilot project aiming at empowering BCM to establish a Ward-Based Planning
system and to capacitate constituent wards within the Municipality. It involves the local community to pro52
Project Name: In the OR Tambo District a project is contributing to the development of local informal
trade in Lusikisiki. The aim is to mainly provide technical and financial assistance to the Municipality and
to enhance the capacity of the local hawkers. There is going to be access to improved services and an
upgraded infrastructure, including the construction of hawkers stalls to be located in town. The hawkers
purchase items from wholesalers and sell it to the everyday passing community from their roadside stalls.
Items that are generally for sale include fruit and vegetables, herbs, clothing and bags, sunglasses, combs
etc. The hawkers also provide other services eg. shoe repairs, hairdressing, public phones, playing a
crucial role for the community and for local economy. The project aims therefore to enhance their capacity
as small enterprises and offer them a more suitable environment and infrastructure to sell their products.
Time frame of LED programmes & projects: From October 2008 to October 2011, with a possible
extension to April 2012.
Location of LED activities: In Gauteng province in Ekurhuleni (Actonville and Wattville) and
Metsweding District (Ekandustria). In the Eastern Cape in Buffalo City (East London, King William’s
Town, ward 15 and ward 40) and OR Tambo District (Ingquza Hill Local Municipality, City of Lusikisiki).
Partnerships: The LED projects are implemented in partnership with Ekurhuleni “Waste Coops”, Arts
and Crafts Incubator, Urban Agricultural Coops in Mdantsane, Ward-based Planning pilot project and
Supporting Informal trade in Lusikisiki.
Source of funding: Project funding is sourced from the Italian Ministry of Foreign Affairs /
Directorate-General for Development Cooperation, Regional Government of Tuscany and in-kind
contributions from each partner municipality in South Africa.
Services & offers for municipalities
• Technical assistance;
• Financial support (in-kind);
• Training and capacity building;
• Set-up of network relations with relevant stakeholders in South Africa and Italy.
How can interested parties get involved & apply
Although the Programme is not open for applications, interested municipalities can approach the
Secretariat for exploring possible collaborations and/or for more information on the outcomes produced.
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to Local Economic Development (LED) in South Africa
Project Name: Within the former Metsweding District (now part of Tshwane Municipality), in the small
industrial area of Ekandustria, an old factory is being refurbished to house an innovative Arts and Crafts
Business Incubator facility. The incubator will contribute in promoting entrepreneurship, enhancing skills
and give training and support to small enterprises from local disadvantaged communities. It will support
selected incubates in the arts and crafts sectors of jewellery, pottery and leather. By promoting this new
type of development in a professional/business-like manner, and by valorising traditional arts and crafts,
it could also contribute to improving tourism to the area.
Contact details: Ms Clara Bosco – Programme Coordinator
Tel: 012 336 5724; Email: [email protected];
Website: www.netsafrica.org
actively identify their own developmental needs and to be empowered at engaging with the Municipality
through a true participatory approach. Secondly, support to agriculture cooperatives in the township of
Mdantsane. This initiative is the continuation to an existing pilot project run by BCM which had started
in 2009 with 3 existing registered agricultural cooperatives planting tomatoes using the “hydroponics”
technique. Netsafrica Programme is now assisting in upgrading the capacity of the cooperatives, which
are largely run by woman, to be able to reach commercial sustainability. The initiative provides them with
infrastructure, equipment, operational, technical as well as administrative support. The initiative aims
also at extending the support to other cooperatives and land distribution farms in BCM area.
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
NETSAFRICA
A Councillor’s Guide
“Balance progress and democracy to allow
a small team to progress quickly.”
Contact details: Ms Nyasha Simbanegavi – Project Coordinator Southern Africa
Tel: 012 369 8040; Email: [email protected];
Website: www.clgf.org.uk
Description
CLGF works to promote and strengthen democratic local government across the Commonwealth and to
encourage the exchange of best practice – through conferences and events, programmes and projects,
and research and information. CLGF works with national and local governments to support the development
of democratic values and good local governance. As a Commonwealth organisation, CLGF draws on the
influential network of the Commonwealth that provides a solid basis for its programmes and activities. As an
associated organisation officially recognised by Commonwealth Heads of Government, CLGF is well-placed
to influence policy development and lead on democracy and good governance at local level.
CLGF’s strength lies in its membership whose representatives are the key players in local government
in the Commonwealth and can be drawn into CLGF’s work as experts and influencers. CLGF is unique in
bringing together central, provincial and local spheres of government involved in local government policy
and decision-making. CLGF has more than 160 members in 40 Commonwealth countries including
local government associations, individual local authorities and ministries dealing with local government.
Focus of LED Activities
CLGF’s Good Practice Scheme (GPS) seeks to improve the delivery of local authority services through
the spread of good practice. The Scheme matches South African municipalities with municipal partners
within South Africa and across the Commonwealth. CLGF support both parties through identifying a
project of mutual benefit and developing a project plan, and provides up to £40,000 to support selected
project activities. Achievement of the Millennium Development Goals is the overarching goal to which
the Scheme aims to contribute. Improving the capacity of local government to provide quality basic
services to local communities will contribute to reducing global poverty. Projects are therefore designed
to contribute to “Improving capability – effectiveness, responsiveness, and accountability, in sustainable
forms – of participating local authorities in target countries to serve their citizens.” The GPS brings
benefits to both municipal partners and is currently being implemented in six countries namely, Ghana,
India, Jamaica, Pakistan, Sierra Leone and South Africa. In South Africa the project is being implemented
in partnership with SALGA focusing on Local Economic Development (LED).
Specific projects
In South Africa, the GPS is running in five municipal partnership projects as follows:
Mbombela Local Municipality (SA) and Sunderland City Council (UK): The project seeks to contribute
to poverty reduction in Mbombela by promoting inward investment, creating an attractive environment for
54
business, and preparing the local workforce to take up new job opportunities. It also seeks to improve the
capability of Mbombela to design and deliver services to promote local economic development and support
its residents, particularly the poor, to access employment opportunities as they are created. The municipality
is partnered with the Sunderland City Council which is drawing on its experience of regenerating its economy
in the last 15 to 20 years following the decline of its traditional industries of ship-building and coal-mining.
Steve Tshwete Local Municipality (SA), eThekwini Municipality (SA) and Leeds City Council
(UK): The objective of the project is the facilitation of strategic economic development through business
support for SMMEs. The project also seeks to create employment by establishing partnerships with business
and increase municipal support to SMMEs through preferential procurement. The project was successfully
piloted in eThekwini Municipality (resulting in a best practice guide on procurement, standard operating
procedures and a tendering manual for procurement) and has been replicated in Steve Tshwete with
support from eThekwini and Leeds to develop procurement systems that promote SMMEs participation.
Mopani District Municipality (SA) and Trivandrum, Kerala, (India): The project aims to contribute
to poverty reduction through the provision of alternative farming methods and promotion of partnerships
between the municipality and its stakeholders for increased capacity and job creation. This is being done
through piloting ideas learnt from Trivandrum Panchayat from Kerala, India. The partnership is focusing
on four pilot projects namely, cattle farming, piggery, banana farming and water harvesting.
Vhembe District Municipality (SA) and Gondal Local Municipality Gujarat (India): The goal of this
project is to contribute to poverty reduction and job creation through the establishment of cooperatives,
development of capacity of LED municipal officials and small scale farmers, partnership working and
the facilitation of markets. The project seeks to increase the capacities of the LED Department of the
Municipality to develop and design LED initiatives that enhance the capacity of small scale farmers and
artists and facilitate markets for their products.
Amathole District Municipality (SA), Buffalo City Municipality (SA) and Glasgow City Council (UK):
The project aims to promote LED through the establishment of a Marketing Bureau, development of Community
Benefit clauses, development of a Credit Union and creation of a sustainable lighting project. The project has
progressed satisfactorily although progress has been hampered by the transition of Buffalo City Municipality
into a Metropolitan Municipality which means that the relationship between the two councils has changed.
Time frame of LED programmes & projects: 2008-2011.
Location of LED activities: Mbombela Local Municipality, Steve Tshwete Local Municipality,
eThekwini Metropolitan Municipality, Mopani District Municipality, Vhembe District Municipality,
Amathole District Municipality & Buffalo City Metropolitan Municipality.
Partnerships: CLGF & SALGA.
Source of funding: UK AID from the Department for International Development.
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to Local Economic Development (LED) in South Africa
Commonwealth Local Government Forum (CLGF)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“The ownership of community projects is crucial,
though co-operatives in iLembe need constant mentoring and advising.”
Contact details: Mr Serge Nguimatsa Zelezeck
– LEDNA Network Facilitator
Tel: 012 346 5102; Email: [email protected]/; Website: www.ledna.org
Description
LEDNA is a Pan African Local Economic Development (LED) initiative that was established following
the demand made by African Mayors during the Africities Summit held in Nairobi in 2006. Its mandate
is to provide support to local governments in LED and provide a platform for LED peer-learning and
experience sharing across African countries.
LEDNA is a programme of the United Cities and Local Government of Africa (UCLGA). As a pan-African
programme, LEDNA geographical focus is the entire African continent and its partners in each African
country are local governments and National Association of Local Governments.
Focus of LED Activities
LEDNA’s activities are centred around four strategic objectives:
(1) facilitate the institutionalization of LED through policies and national and local programs;
(2) strengthen the capacities of the actors involved by offering them LED knowledge and tools
through seminars, training sessions and the development of professional business networks;
(3) develop and intensify the sharing of knowledge between the practitioners of LED by offering
information about different practices and experiences;
(4) establish a contact platform for offers and requests for financing for LED activities.
Time frame of LED programmes & projects: The current phase is 2010-2014.
Location of LED activities: Mode A intervention in five countries of concentration (Benin, Botswana,
Mali, Togo and Zambia), Mode B intervention already implemented in Morocco, Cameroon and
Swaziland and Knowledge sharing & networking platform (online & panafrican).
Partnerships: In South Africa, LEDNA key partner is the South Africa LED Network and National
Associations of Local Governments such as SALGA remains our main partners in each African country.
Source of funding: LEDNA receives core funding from the Swiss Agency for Development and
Cooperation (SDC), the French Development Cooperation (AFD), United Cities and Local Governments
of Africa (UCLGA) and has received punctual funding from the UNDCF, ILO, GTZ and USAID.
Services & offers for municipalities
• Access to African-relevant knowledge and resources (methodologies, toolkits, cases studies, good
practices etc)
• Cross-country experience learning and sharing
• Capacity-building for LED implementation
• Pan-African LED training seminars/workshops
• Networking and visibility on the continental local government landscape.
How can interested parties get involved & apply
LEDNA Knowledge sharing platform (www.ledna.org) is for African local government official and staffs.
Membership is free. For other types of assistance, please contact the LEDNA team on the contact details
provided above.
Specific projects
Project Name: A one-stop knowledge sharing and networking platform (www.ledna.org) for local
government officials, staffs and LED practitioners. Interaction on the LEDNA platform increasingly
allows for:
• LED Practitioners and decision makers dialogue;
• Peer learning embedded on local needs and realities;
• Cross-country experience and best practice sharing;
• Relation-building towards an interconnected African LED community.
Success stories: LEDNA’s one-stop knowledge sharing and networking has over 4000 resources
relevant for Africa.
Source: Florian Kopp
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to Local Economic Development (LED) in South Africa
Local Economic Development Network
of Africa (LEDNA)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“We always have to ask ourselves:
What are the needs and challenges and how do we respond to them.”
57
Success stories: The Local Economic Development Support Programme in Limpopo led to the creation
of 800 jobs, 52% of which were women and the Gijima KZN resulted in 4, 255 jobs.
Contact details: Mr Gerhard Pienaar – Project Officer
Tel: 012 452 5200; Email: Delegation South Africa: [email protected];
Website: www.eusa.org.za
Description
The European Union’s Development Cooperation with South Africa is carried out under the Trade and
Development Cooperation Agreement (TDCA), which supports policies and reforms carried out by the
South African Government aimed at fighting poverty, promoting the integration of South Africa into the
world economy and consolidating the foundations of a democratic society.
Focus of LED Activities
The South Africa - European Community Country Strategy Paper and Multi-annual Indicative Programme
focus this partnership on three areas of development cooperation: (i) promoting pro-poor, sustainable
economic growth, including in the second economy and focusing on generating employment; (ii)
improving the capacity and provision of basic services for the poor at provincial and municipal level, and
promote equitable access to social services; and (iii) promoting good governance in both the public and
non-public domains. The EU is furthermore committed to strength civil society and helping NGOs, CBOs,
social partners and indeed non-state actors generally to play their part in partnership with government.
The EU sees LED as just that: developing economies locally. It refers to the ability of a local area to
achieve economic growth and redistribution sufficient to ensure a rising standard of living for all within
that area. Successful local development depends on concerted efforts and actions from a range of
individuals and organisations. It, among other things, entails the promotion of constructive partnerships
between local authorities, the private sector and civil society organisations.
Time frame of LED programmes & projects: The EU’s programme involvement in LED-related
fields started in 2001 and is ongoing.
Location of LED activities: The programmes are implemented across the country and the
geographic areas covered depend on the nature of the programme.
Partnerships: The LED projects are implemented mainly in partnership with various national
departments and provincial authorities as well as local authorities, NGOs, marginalised community
groups, financial intermediaries and local business.
Source of funding: Projects in Africa, the Caribbean and Pacific are funded by the European
Development Fund. While the Development Co-operation Instrument and European Neighbourhood &
Partnership fund projects in other regions.
Services & offers to municipalities
Depending on the nature of the programme, the following services can be provided:
• Grant funding allocated through Calls for Proposals;
• Technical Assistance;
• Capacity building activities.
How can interested parties get involved & apply
Grant funding in the field of LED can be made available through the global thematic programme “Nonstate actors and local authorities in development”, which is aimed at encouraging non-state actors and
local authorities, both from the EU and in developing countries, to get more involved in development
issues. We recommend you regularly visit the publication site to identify calls that would meet your
context: New calls for proposals - http://ec.europa.eu/europeaid/work/funding/index_en.htm.
Specific projects
Project Name: Local Economic Development Support Programme in the Limpopo Province (2001-2010).
About R230 million has been invested in projects through this programme.
In order to know better its partners and to improve the services offered to the potential applicants of a
grant, the EU now implements a new on-line services approach. PADOR (Potential Applicants Data Online Registration) can be accessed by following the link:
http://ec.europa.eu/europeaid/work/onlineservices/pador/index_en.htm.
Project Name: Gijima KZN, or the Local Economic Development Support Programme in KwaZulu-Natal
(2002-2011). Grants to the value of R126 million was provided which attracted additional investment
of about R159 million.
Registration in PADOR is mandatory for all applicants and their partners for the calls for proposals.
Project Name: Thina Sinako, or the Local Economic Development Support Programme in the Eastern
Cape Province (2004-2012). Grants to the value of R116 million were provided that resulted in significant
job creation, capacity building and SMME support.
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to Local Economic Development (LED) in South Africa
European Union (EU)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“You can only ensure sustainability if you’ve got a good ownership model,
for example increasing the community’s shareholding of a project step by step.
The community must own the concepts, not us.”
Contact details: Ms Letticia Naid – Project Manager
Tel: 012 347 3848 - Email: [email protected]; Website: www.cmra.org.za
Email: [email protected].; Email: [email protected]
Description
The Centre for Municipal Research and Advice (CMRA) is a technical service provider in the field of
local government. We aim to support and strengthen municipalities and Local Government Associations.
CMRA works countrywide as well as in Southern Africa. Its head office is based in Pretoria. Our mission is
strengthening local government in Southern Africa and as such we provide support to local government
in areas of municipal good governance, housing, public participation, HIV/AIDS and LED. In these sectors
one of the tools we use frequently is learning Benchmarking. This is a comparative instrument used to
improve municipal performance.
Time frame of LED programmes & projects: The Benchmarking LED maturity project
implementation period is April 2011 – December 2011.
Location of LED activities: Emalahleni Municipality (EC), Buffalo City Municipality (EC), Langeberg
Municipality (WC), City of Tshwane Municipality (GP), Ekurhuleni Municipality (GP), Naledi Municipality
(NW), Dr. Ruth S Mompati Municipality (NW), Rustenburg Municipality (NW), Oudtshoorn Municipality
(WC), Camdeboo Municipality (EC), Govan Mbeki Municipality (MP).
Partnerships: The LED projects are implemented in partnership with SALGA and different other
partners, such as VNG – International, GIZ South Africa and the LED Network.
Source of funding: Benchmarking LED Maturity is funded by the Netherlands Ministry of Foreign
Affairs with co-funding from participating municipalities.
Focus of LED Activities
Currently, the main project is the “Benchmarking Local Economic Development maturity project”, which
is supported by VNG-International and is implemented in close cooperation with SALGA. The aim of
this project is to establish the status quo of LED maturity in South Africa through implementation of a
peer assessment, facilitate peer learning and provide participating municipalities with recommendations
for improvement. Furthermore, CMRA works with individual municipalities to assist with LED strategy
development and providing hands on mentoring support. CMRA is an LGSETA accredited trainer,
providing a level 4 accredited training in LED.
Specific projects
Project Name: Benchmarking LED maturity in South African municipalities. 12 municipalities
participate in this Benchmark. The LED officials from the municipalities and the SALGA provincial LED
officials have been trained to execute LED assessments and reporting. Municipalities together with
SALGA provincial LED advisors will conduct maturity assessment interviews and develop comprehensive
reports with input for improvement.
Success stories: In 2010 CMRA implemented a project “Benchmarking LED Initiatives of Local Authorities
in Namibia”, the project enabled Local Authorities to identify gaps in performance and good practices in
SME parks, open markets, LED strategy development and Public Private Partnerships (PPPs).
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Source: SA LED Network
Source: SA LED Network
Services & offers for municipalities
CMRA offers the following services on a fee basis:
• Benchmarking
• Strategy Development
• Process facilitation
• Hands on mentoring support in executing LED initiatives
• Training
How can interested parties get involved & apply
To register for the benchmark on LED, any municipality can express its interest by contacting CMRA.
Some of the requirements for participation is the allocation of time and the willingness to allocate cofunding for the implementation of project activities. In addition to the benchmark, municipalities can hire
us directly as a service provider doing work on municipal LED.
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Centre for Municipal Research and Advice (CMRA)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“We have a lot of young people in the district, so to make agriculture
successful in iLembe also means, we have to train our youth.”
Contact details: Ms Maggie Makanza – P3 Country project manager
Email: [email protected]; Website: www.projectp3.org/index.php?id=92
Description
P3 is a cooperation between national local government associations in four countries, namely South
Africa, Namibia, Botswana and Sweden. Funded by the EU and the Swedish International Development
Agency (SIDA), the cooperation focuses on transparency in the relationships between municipalities
and their communities. P3 is implemented through two projects during 2009-2011, the Transparency
Project and the Local Leadership for Economic Growth Project.
Focus of LED Activities
The partnering local government associations, SALAR, SALGA, ALAN and BALA have in turn partnered
with 25 municipalities – 13 in South Africa, 6 in Namibia and 6 in Botswana – to test a number of tools
to enhance municipal transparency and performance and business-enabling environments. Other aims
are to facilitate inter-municipal learning, and to build the capacity of the associations to support their
member municipalities. In the last phase of the project, P3 materials and lessons learned from partner
municipalities will be made available to all municipalities in participating countries, via their municipal
associations.
•
•
•
•
•
LED roundtables;
Business Enabling Environment surveys;
Leak plugging;
Business Retention and Expansion;
LED strategy development (Botswana).
Time frame of LED programmes & projects: 2009-2011.
Location of LED activities: P3 partners with SALGA provincial offices in Western Cape, Eastern
Cape and Free State and pilot municipalities in South Africa include: Hessequa, Mossel Bay, Cape
Agulhas, Theewaterskloof, Lukanji, Elundini, Emalahleni, Intsika Yethu, Senqu, Mohokare, Kopanong
& Setsoto.
Partnerships: SALAR, SALGA, ALAN and BALA & 25 municipalities – 13 in South Africa, 6 in
Namibia and 6 in Botswana.
Source of funding: EU and SIDA.
Specific projects
The P3 LED project brings together stakeholders in local economies to share information and discuss
local business issues, and to cooperate in creating an environment conducive to growth, including by
improving municipal service delivery and capital investment planning.
Objectives of the Local Leadership for Economic Growth project are:
• Transparency developed in the relations between the municipal administration and the
business community;
• Improved understanding of the local conditions for businesses;
• Improved internal and external understanding of the strategic directions for the
individual municipality;
• Partner associations’ capacity to support their members in LED related issues strengthened.
P3 facilitates networking and cooperation between municipal and local business leaders via LED
Roundtable meetings. It also facilitates LED learning and sharing of good practices among municipalities,
and offers the following tools:
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Source: SA LED Network
Services & offers for municipalities
Piloting of LED tools:
• LED roundtables
• BEE surveys
• Leak plugging
• BR&E
• LED strategy development (Botswana)
How can interested parties get involved & apply
The project targets pilot municipalities. Partner associations intend to draft plans to roll-out tools on a
greater scale.
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to Local Economic Development (LED) in South Africa
Partnership, Participation, Progress (P3)
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“In terms of LED, a big challenge is that people don’t understand what it is.
And also, there is limited funding. Funding is often only provided for things you
see, not for things you don’t see.”
Contact details: Dr Marius Venter
– Director: Centre for Local Economic Development (CENLED)
Tel: 0824649636; Email: [email protected]; Website: www.uj.ac.za
Description
Professionalising the careers of LED practitioners and enhancing their status will assist to meet the
challenges faced by local government. The dti has realised that there is a need to support local government
with practical tools for economic development in order to empower this sphere of government to facilitate
sustainable economic development. In addition, the dti has seen this opportunity as crucial to inform and
influence the professionalisation of LED from a curriculum development perspective and to be taken into
account by universities as part of their on-going programmes. It is in this context that the dti entered into
a partnership with the University of Johannesburg (UJ) in April 2010 for a period of 5 years to promote
capacity building for universities to be able to assist at a local government level. UJ is seen as a strategic
partner given the work that it champions through the Centre for Local Economic Development (CENLED).
Focus of LED Activities
A certified LED Practitioner Programme is being developed which is affiliated to the International
Economic Development Council (IEDC). The programme will kick-start the recognition of a career
path for practitioners in the field of LED. The certification will signify a mastery of principle skills in
LED, professional attainment, and a life-long commitment to professional and personal growth. The
programme seeks to unite the field of LED and establish a baseline of what is considered the core body
of knowledge for LED practitioners. The qualification will ensure that the practitioners are accountable,
re-certified periodically and take pride and protect the stature of the profession.
Specific projects
The capacity building programme consists of two pillars which are professional development and
organisational capacity building: The professional development is in the form of training modules
developed for the programme and organisational capacity building consists of the establishment of
a consortium of universities especially inclusive of the previously disadvantaged universities and a
mentorship programme to support municipalities.
For more detailed information on the course modules and structure, see UJ / dti partner folder on the
USB resource stick.
Time frame of LED programmes & projects: Cooperation agreement between dti and UJ since
April 2010 for a period of 5 years.
Location of LED activities: National.
Partnerships: Stakeholders such as the LGSETA, DCoG, DBSA, IDC and other academic institutions,
etc. support the programme.
Source of funding: the dti.
Services & offers for municipalities
Organisational capacity building will include a mentorship programme that aims to support a few
municipalities in specific areas where they require support. The programme will target rural areas,
municipalities that need this support and demonstrate commitment and will be informed by the status
quo analysis that will be conducted on the municipality. The programme will target 5 municipalities and
the identified municipalities will be supported on specific technical areas by specific universities. The
aim of the mentorship programme is not only to build economic development capacity at the municipal
level but to strengthen partnerships between municipalities and academia.
How can interested parties get involved & apply
The programme is still new and the actual implementation will commence from early 2012. Interested
municipalities can express interest by contacting CENLED.
Source: SA LED Network
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The UJ/dti Capacity Building Programme
for Economic Development
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Modern cities worldwide are the hub of
economic growth and development.”
A Councillors Guide
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A Councillor’s Guide
Resources
to Local Economic Development (LED) in South Africa
to Local Economic Development (LED) in South Africa
Stakeholder Directory
Local Economic Development requires the involvement of various stakeholders. But who are these
actors of LED? The constitutional and legislative framework mandates local governments (local and
district municipalities) to be responsible for LED. But because there is no clear distinction between
strategic and implementing roles, it is often interpreted that local government is solely responsible for
LED and that other important actors, like private businesses and civil society organisations are sidelined.
This hampers LED efforts, especially since local government is neither best-equipped nor does it always
have the capacity to successfully drive LED. On the following pages we provide you with a brief overview
of relevant stakeholders active within LED in South Africa:
Public Sector – National
Department:
Cooperative Governance (DCoG)
DCoG is a National government Ministry in
charge of intergovernmental relations, good
service delivery and build and strengthen the
capability and the accountability of Provinces
and Municipalities.
Tel: (012) 334 5767
Fax: (012) 334 4854
Website: www.cogta.gov.za
Department:
Trade & Industry (the dti)
The dti has the objective to increase the
contribution of SMMEs to the South African
economy, via financial, administrative and other
support;ensure the implementation of B-BBEE;
increase the levels of foreign direct investment;
Tel: (0861) 843 384
Fax: (0861) 843 888
Website: www.dti.gov.za
Department:
Economic Development
Department:
Public Works (DPW)
DPW aims to promote the government’s
objectives of economic development, good
governance and rising living standards and
prosperity ... by leading the national EPWP and
transformation of the construction and
property industry.
Tel: (012) 337 3000
Website: www.publicworks.gov.za/index.html
Tel: (021) 466 9800
Fax: (021)461 0428
Website: www.info.gov.za/aboutgovt/contacts/
min/econdev.htm
Department:
Agriculture, Forestry & Fisheries (NDA)
NDA strives towards a united and prosperous
agricultural sector, with the aim of supporting
sustainable agricultural development.
Tel: (012) 319 6000
Website: www.nda.agric.za/
South African Local Government
Association (SALGA)
SALGA is an association of municipalities.
SALGA is the voice and sole representative
of local govern-ment and interfaces with
parliament, the National Council of Provinces,
cabinet, etc..
Tel: (012) 369 8000
Fax: (012) 461 8001
Website: www.salga.org.za
Department:
Rural Development and Land Reform (DLA)
DLA is a National government Ministry in
charge of the planning and implementation of
an integrated rural development programme
through agrarian transformation.
Tel: (012) 312 8911
Fax: (012) 323 3693
Website: www.dla.gov.za
National Development Agency (NDA)
NDA’s primary mandate is to eradicate poverty
by granting funds to civil society organisations
(CSO) that implement developmental projects
of poor communities. It is a public entity and
reports to the Parliament through the Minister
for Social Development.
Tel: (011) 018 5500
Website: www.nda.org.za
Source: SA LED Network
Source: Theewaterskloof
Provincial
Provincial Departments for Economic Development
There are Departments for Economic Development in all nine provinces. They are mandated to
fast-track economic growth essential for the creation of jobs and the scaling down of poverty in the
respective provinces. The link below provides an overview of existing provincial departments and
contact details.
Website: www.info.gov.za/links/govt_provgovt.htm
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Resources
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Need to consider the long term spatial implications and promote the relationship
between places (locally, regionally and nationally).”
District and Local Municipalities & local economic development agencies
LED is one of the core mandates of local government. More information on the different LED
strategies and projects can be found directly on most of the municipality’s websites. SALGA provides
an overview of contact details for all municipalities, please follow the link:
www.salga.org.za/pages/Municipalities/Contact-Details
One of the IDC’s initiatives, the Agency Development and Support Department (ADS) is tasked with
advancing and leveraging the development potential inherent in various geographic areas via the
establishment of development agencies. More than 30 development agencies have been established
with IDC support so far. They can be defined as independent organisations, shaped by public and
private institutions in order to implement LED strategies and to drive economic growth and job
creation in the particular municipal area. An overview of existing development agencies can be
requested from the IDC:
Tel: (086) 069 3888; Website: [email protected]
Private sector: Business and Financial support
Afrikaanse Handelsinstituut (AHI)
The AHI is a multi-sectoral business chamber,
actively involved in different sectors of the
economy, with members representing trade,
industry, mining, financial institutions, etc.
Tel: (012) 348-5440
Fax: (012) 348-8771
Website: www.ahi.co.za
Independent Development Corporation
(IDC)
The IDC is a national development finance
institution set up to promote economic growth
and industrial development. It is owned by
the South African government under the
supervision of the Economic Development
ministry.
Tel: (011) 269 3000
Fax: (011) 269 3116
Website: www.idc.co.za
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Development Bank of Southern Africa
(DBSA)
The DBSA is a development finance institution.
Its purpose is to accelerate sustainable socioeconomic development by funding physical,
social and economical infrastructure.
Tel: (011) 313 3911
Fax: (011) 313 3086
Website: www.dbsa.org
Business Unity South Africa (BUSA)
Business Unity South Africa (BUSA) represents
South African business on macro-economic
and high-level issues that affect it at the
national and international levels.
Centre for Municipal Research and
Advice (CMRA)
CMRA is a research and consultancy
company. It is an initiative of SALGA and
the International Cooperation Agency of the
Association of the Netherlands Municipalities
(VNG-I).
Tel: (012) 347 3848
Fax: (012) 347 9565
Website: www.cmra.org.za
University of Johannesburg - Centre for
Local Economic Development (CENLED)
CENLED was established in 2009 and is
based at the University of Johannesburg (UJ).
CENLED aims to professionalise the careers of
LED practitioners working in local government.
Tel: (011) 559 2057
Fax: (011) 461 8001
Website: www.uj.ac.za
International organisations
European Union (EU)
The EU’s supports policies and reforms
carried out by the South African Government
aimed at figh-ting poverty, promoting the
integration of South Africa into the world
economy and consolidating the foundations of
a democratic society.
Tel: (012) 452 5200
Fax: (012) 460 9923
Website: www.eusa.org.za
Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ)
GIZ is operates in many fields, such as
economic development and employment
promotion; governance and democracy; food
security and basic education; etc.
Commonwealth of Local Government
Forum (CLGF)
CLGF works to promote and strengthen
democratic local government across the
Commonwealth and to encourage the exchange
of best practice through numerous methods.
Tel: (012) 369 8040
Fax: (012) 369 8001
Website:
www.clgf.org.uk or www.clgc2011.org
Partnership, Participation, Progress (P3)
P3 is a partnership focusing on the importance
of transparency in the relationship between
local governments and their communities. It’s
a partnership between different national local
government associations.
Tel: (012) 423 6332
Fax: (012) 342 5521
Website: www.giz.de/en/home.html
Tel: (012) 369 8000
Fax: (012) 369 8001
Website: www.projectp3.org
Tel: (011) 784 8000
Fax: (011) 784 8004 or 086 609 8248
Website: www.busa.org.za
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Research
Local
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“The local economic development process fits within the
broader city planning context.”
Tel: (012) 369 8000
Fax: (012) 461 8001
Website: www.led.co.za
Source: SA LED Network
Brownfields: This is a general term used for sites that have been developed in the past that may
or may not be contaminated. Sustainable economic development strategies encourage the beneficial
reuse of these sites, even though this may be more expensive than building or developing (new, to date
undeveloped) Greenfield sites.
Business Incubators: A business incubator is an economic development tool primarily designed to
help create and grow new business in a community, within a specific building or location. Business
incubators help emerging businesses by providing various support services such as assistance with:
developing business and marketing plans, building management skills, obtaining capital and access to
more specialized services. They also provide flexible space to rent, shared equipment and administrative
services in managed workspace.
Business Retention Strategies (BRS): BRS are systematic efforts designed to keep local companies
content at their present locations within the city area. Strategies include helping companies cope with
changing economic conditions, addressing new markets and even assisting with internal company
problems. Business Start-up Support: Business support includes the full range of services available
to people starting in business for the first time. Initiatives include: training, business advisory support,
business networking and mentoring and financial assistance (grants, loans, interest rate subsidies are
traditional methods; a more innovative approach to financial support is to try and attract as much private
sector investment as possible, rather than public sector).
Clusters: An industry cluster is a grouping of related industries and institutions in an area or region. The
industries are inter-linked and connected in many different ways. Some industries in the cluster will be
suppliers to others; some will be buyers from others; some will share labour or resources. The important
thing about a cluster is that the industries within the cluster are economically linked, they both collaborate and
compete and are, to some degree, dependent on each other; and ideally, they take advantage of synergies.
Entrepreneurial Training: Programs that provide guidance and instruction on business basics (such
as accounting and marketing) so that businesses improve their chances of success.
Expanded Public Works Programme (EPWP): It is one of government’s arrays of programmes aimed
at providing poverty and income relief through temporary work for the unemployed to carry out socially
useful activities. It is aimed at promoting economic growth and create sustainable development.
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Local Economic Development Network of
Africa (LEDNA)
LEDNA is a friendly social network; which
allows Local Economic Development policy
makers and practitioners to work together
and learn from each other. This hub gives you
access to free and impartial LED knowledge,
resources and contacts.
Tel: (012) 346 5102
Fax: (012) 346 5106
Website: www.ledna.org
South African LED Network
The SA LED Network is a project hosted
by SALGA. It’s a platform and portal for
the exchange of ideas and the creation of
synergies in economic development on the
local level in South Africa and in cooperation
with its partners.
Glossary
Agricultural value chains: full range of activities that are required to bring a product (or a service)
from conception through the different phases of production to delivery to final consumers and disposal
after use. Further, a value chain exists when all of the actors in the chain operate in a way that maximises
the generation of value along the chain. Agriculture is primarily the first stage in the chain.
A Councillor’s Guide
Networks
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Managing local economic development appropriately can assist in achieving
sustainable development outcomes.”
Foreign Direct Investment (FDI): FDI is investment that is attracted from abroad. It can mean either
Greenfield investment (i.e. investment in building new facilities on hitherto undeveloped sites) or portfolio
investment (i.e. buying into an established business). Inward investment can take similar forms (either
Greenfield or portfolio). However it could include investment from within your country as well as from abroad.
Gross domestic product (GDP): It refers to the market value of all final goods and services produced in
a country in a given period. GDP per capita is often considered an indicator of a country’s standard of living.
Greenfields: Refers to factories and offices being built on land that has hitherto not been developed.
Greenfield investments also imply that facilities are designed and built for investors, rather than the
investor buying a facility already built.
Gross Value Added (GVA): It measures the value added or contribution made by each individual producer,
industry or sector to the economy. It thus measures the difference between output and intermediate
consumption for any given sector or industry. That is the difference between the value of goods and
services produced and the cost of raw materials and other inputs that are used up in production.
Forward Strategy: Is an arrangement to continue the life of projects after initial project funding stops.
Sometimes described as an exit or succession strategy. This should be established at the outset of all
projects that are likely to need ongoing capital or revenue resources after the initial period of establishing
the project.
Hard Infrastructure: Hard infrastructure includes all the tangible physical assets that contribute to
the economy of a city. For example, transport infrastructure (roads, railways, ports, airports), industrial
and commercial buildings, water, waste disposal, energy, telecommunications etc. See also soft
infrastructure below.
High Road Techniques: High road techniques stress the need to make more efficient use of resources
and invest in processes, technological innovation and employee skills. It views labor as an important
commodity and skill enhancement as a crucial, targeted investment. It entails the mobilization and
upgrading of local resources and the maximization of local strengths and advantages to balance
relatively higher wage rates.
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Indicators: Proxy measures to provide operational definitions to the multidimensional components of
LED. Indicators are expected to serve the function of defining policy problems and informing policy
formulation. They should provide a basis for policy discussion and planning.
Indigenous Businesses: Local businesses, usually those that have developed in the community.
Increasingly, the term refers to all businesses in an area whether they are ‘locally grown’ or not.
Informal Sector: Not within formal or legal sector and therefore not raised and not provided with
services. Not able to use assets as collateral for new productive investment.
Integrated Development Plan (IDP): It is a holistic development plan that, in terms of the Municipal
Systems Act, 2000, must be prepared by every municipality in the country on a five-year basis and is
reviewed annually. Spanning and integrating all sectors through a focus on cross-cutting issues, IDPs
are meant to ensure the sustainable development of the municipality.
Labour Market Information: The body of data available on a particular labour market, including
employment and unemployment statistics, occupational statistics, and average hours and earnings data.
Local Economic Development Forum: A coordinating mechanism set up to achieve the streamlining
and improvement of local economic service delivery.
Mobile Manufacturing (or service sector) Investment: Where manufacturing (or service)
companies have a wide choice of location choices. Consequently they are in very strong negotiating
positions when it comes to choosing where to locate their businesses.
One-stop Business Service Centres: Facilities where business persons can go to obtain advice and
support to help them establish and expand their business. Sometimes these centers also issue licenses
and permits needed by businesses to start-up, operate or expand. These centers improve the local
business environment by reducing the number of separate agencies and offices a business may need to
approach for advice or to apply for various licenses and permits. They save public and private time and
improve efficiency as a result.
Soft Infrastructure: Soft infrastructure relates to the less tangible aspects of LED such as education
and training provision, quality of life infrastructure such as park, leisure and library services, housing,
business support, business networking and financing services etc.
Small, Medium and Micro Enterprises (SMMEs): There is no definitive delineation between a small
and medium sized business. As a general reference, small is often from 5 to 20 employees, medium
from 20 up to 200. Businesses with fewer than 5 employees are usually called micro-enterprises. This
is a guide only.
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Export Development Services: Export assistance programs can help businesses to diversify their
customer base, expand operations and become more profitable. Export services include: assessing company
capacity for exporting; market research; information services (on exporting, trade regulations, transportation,
etc.); international lead generation and trade shows/exhibitions or promotional marketing trips.
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Quality of life is increasingly important for recruiting & retaining
technicians & professionals.”
Sectors (Primary, Secondary and Tertiary): The primary sector is the closest to natural resources.
Both mining and agriculture work directly on the products of nature found on, or under, our soil. The
secondary sector is a step away from this; it consists of activities that process raw materials into
manufactured products or material goods that are used by consumers. While growing mielie is part
of the primary sector, the production of mielie meal is a manufacturing process. The tertiary sector
is even further removed from natural resources. This is where the mielie meal is sold to the consumer
and marketed under a particular brand identity. Most of its activities can be said to belong to the
service sector.
Supply Chains: The products and processes that are essential to the production of a good or service.
For example, to produce frozen fish, the supply chain inputs will extend from fish catching, handling,
processing, and freezing to packaging, storing and distribution. These are all elements of a supply chain.
Integrated LED strategies will try and capture as much as possible of the higher value end of the value
chain in their area. In this case fish processing, packaging, storing and distribution will be adding value
and therefore be seen at the higher end of the value chain. An industry cluster is a grouping of related
industries and institutions in an area or region. The industries are inter-linked and connected in many
different ways. Some industries in the cluster will be suppliers to others; some will be buyers from
others; some will share labor or resources. The important thing about a cluster is that the industries
within the cluster are economically linked, they both collaborate and compete and are, to some degree,
dependant upon each other; and ideally, they take advantage of synergies.
Unemployed (narrow or official): Those people within the economically active population who: did
not work during the seven days prior to the Statistics South Africa interview; want to work and are
available to start work within two weeks of the interview; and have taken active steps to look for work or
to start some form of self-employment in the four weeks prior to the interview.
Unemployed (expended): Those people within the economically active population who: did not work
during the seven days prior to the Statistics South Africa interview; want to work and are available to
start work within two weeks of the interview.
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References
Legislation
• Constitution of the Republic of South Africa. 1996.
• The White Paper on Local Government. 1998.
• Municipal Structures Act (No. 117 of 1998).
• Municipal Systems Act (No. 32 of 2000).
• Municipal Structures Amendment Act (No. 33 of 2000).
• Co-operatives Act (No. 14 of2005).
• Companies Act (No. 71 of 2008).
Policies, strategies & government documents
DCoG: State of Local Government in South Africa. Overview Report. 2009.
DCoG: Local Government Turnaround Strategy 2009 – 2014. 2009.
DCoG: Local Government Turn-Around Strategy: Municipal Guidelines. January 2010.
DCoG: Community Work Programme. Implementation Manual. 2011.
DPLG: Local Economic Development: A Resource Book for Municipal Councillors and Officials. 2003.
DPLG: Stimulating and Developing Sustainable Local Economies. The National Framework for Local
Economic Development (LED) in South Africa 2006-2011. 2006.
DEAT: The South African Tourism Planning Toolkit for Local Government. 2009.
DEAT: National Tourism Sector Strategy. 2011.
DLA: Comprehensive Rural Development Programme (CRDP). 2009.
DPW: Expanded Public Works Programme (EPWP): Five-Year Report 2004/05 – 2008/09.
DTI:
Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises. 2005.
DTI:
South Africa: Second Investment Climate Assessment. Business Environment Issues in Shared
Growth. Department: Trade & Industry (the dti). 2010.
DTI:
Second Investment Climate Assessment - Improving the Business Environment for Job Creation
and Growth. Department: Trade & Industry (the dti), The World Bank. 2010.
DTI: National Directory of Small Business Support Programmes. 2010.
DTI: Co-operatives Handbook 2010. 2010.
DTI: The dti Co-operative Incentive Scheme: Guidelines. 2010.
DTI: Industrial Policy Action Plan (IPAP) 2011/2012 – 2013/2014: Economic Sectors and
Employment Clusters. 2011.
DTI:
A Guide Incentive Schemes. 2011.
IDC: Local Economic Development Agencies as Municipal Entities: Guidelines. Draft. 2008.
National Planning Commission. Diagnostic Overview. 2010.
National Spatial Development Perspective. 2006.
New Growth Path (NGP). 2010.
Province of the Eastern Cape: Local Economic Development: Information Booklet.
SALGA: LED Position Paper. 2010.
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Stakeholders: Individuals and groups who have an interest in the issues in hand. They normally
represent their own interests as stakeholders.
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“Small business as a whole are the strongest part of the national economy,
creating most of the new jobs and accounting for
more than half of the nation’s output.”
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Case Studies
• Cape Town: Red Tape Reduction Case Study and LED. 2008.
• SA LED Network: LED Network Case Study: Amathole District Municipality –
GENESIS Process. 2008.
• SA LED Network: 1st LED Case Study: Newcastle Local Municipality – Working Hand-In-Hand with
the Business Community. September 2010.
• SA LED Network: 2nd LED Case Study: Lukhanji – Successful Partnership in Local Tourism:
The LTO in Lukhanji. September 2010.
• SA LED Network: 3rd LED Case Study: Maruleng Local Municipality – Private Partnerships Driving
Rural Economic Development. March 2011.
• SA LED Network: 4th LED Case Study: Chris Hani District Municipality – Women in LED: Utilising the
Economic Potential of Female Businesses. June 2010.
• SALGA Free State: LED Case Study: A brief study of the Maluti Wildlife Kingdom Project in Maluti‐a‐
Phofung. 2010.
• SALGA Free State: LED Case Study: A brief study of the ZR Mahabane Brick Manufacturing
Cooperative in Masilonyana. 2010.
• Wessels, Johannes: Case Study Gariep Dam. 2011.
Useful Websites & Links
- DPLG - LED Toolkit: www.dplg.gov.za/subwebsites/led/docs/toolkit.pdf
- DTI: http://apps.thedti.gov.za/econdb/default.asp
- General information around LED: www.etu.org.za/toolbox/docs/government/led.html
- International Finance Corporation (IFA) toolkit for South Africa:
www.smetoolkit.org and http://southafrica.smetoolkit.org/sa/en/index
- ILO: www.ilo.org/empent/areas/local-economic-development-led/lang--en/index.htm
- International Economic Development Council: www.iedconline.org/
- LED Network of Africa (LEDNA): www.ledna.org/
- Municipal Economic Toolkit: www.municipaltoolkit.org/en/content/
- SA LED Network: www.led.co.za
- South African Government Information (Constitution,White Paper, Acts, etc.):
www.info.gov.za/documents/constitution/
- Statistics South Africa: www.statssa.gov.za/default.asp
- The World Bank: LED:
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTURBANDEVELOPMENT/EXTLED/0,,
contentMDK:20185186~menuPK:399161~pagePK:148956~piPK:216618~theSite
PK:341139,00.html
- The World Bank LED database: http://data.worldbank.org/country/south-africa
- The World Bank – Guidelines for policy makers and reformers: http://rru.worldbank.org/Toolkits/
- UN-HABITAT – Strategic Planning in LED:
www.unhabitat.org/pmss/listItemDetails.aspx?publicationID=1922
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General documents
Blakely, Edward J.; Green Leigh, Nancy: Planning Local Economic Development. Theory and Practice. 2010.
Civittolo, David; Davis, Gregory A.: Formal Business Retention & Expansion (BR&E) Survey.
Davies, Rob; Thurlow, James: Formal – Informal Economy Linkages and Unemployment in South Africa.
South African Journal of Economics Vol. 78:4. 2010.
Delany, Gerry; Patterson, Claire: The South African Business Retention and Expansion. 2010.
Dolley, Larry; Van Wyk, Jessy: Rapid Appraisal of Local Innovation System - Findings and
Recommendations. 2008.
EU: Investigation of Pro-Poor Local Economic Development in South Africa. 2006
Hindson, Doug; Vicente-Hindson, Valerie: The Policy Guidelines for Implementing LED in South
Africa. 2005.
Hindson, Valerie; Hindson, Doug; Rücker, Anja; Wegmann, Mattia: Ressource Handbook for Cutting Red
Tape to Improve the Local Business Environment. GTZ/InWent South Africa. 2006.
IEDC: The Role of Local Elected Officials in Economic Development: 10 Things You Should Know.
IFC: Doing Business 2001. Making a Difference for Entrepreneurs. 2011.
ILO: Gender Mainstreaming in Local Economic Development Strategies - A guide. 2010.
Mallon, Raymond: Guideline for Implementation of a Regulatory Impact Assessment (RIA) Process. 2005.
Meyer-Stamer, Jörg (Ed.): Participatory Appraisal of Competitive Advantage. A Methodology to Launch or
Adjust Local Economic Development Initiatives.
Meyer-Stamer, Jörg; Mitchell, Collin: Generating Strategy – Innovation – Solutions for Local and Regional
Development. Colin Mitchell. 2005.
Meyer-Stamer, Jörg: The Hexagon of Local Economic Development and LED in South Africa. Mesopartner
Working Paper No. 5. 2006.
Patterson, Claire: Country Report: Local Economic Development in South Africa. GTZ. 2008.
Philip, Kate: The Community Work Programme (CWP) in South Africa.
Rogerson, Christian M.: Strategic Review of Local Economic Development in South Africa. GTZ. 2009.
Rowe, James E.: Theories of Local Economic Development. Linking Theory to Practice. 2009.
Rücker, Anja: The Compass of Local Competitiveness: A result-based management and monitoring tool
for Local Economic Development Processes. GTZ. 2005.
Rücker, Anja; Ende, Sonja: The Compass of Local Competitiveness Manual. 2006.
Rücker, Anja; Trah, Gabriele: Local and Regional Economic Development. Towards a common framework
for GTZ’s LRED interventions in South Africa. 2007.
Trah, Gabriele: Local Economic Development in South Africa. Addressing the Challenges. 2005.
The World Bank: Local Economic Development A Primer Developing and Implementing Local Economic
Development Strategies and Action Plans. 2003.
The World Bank: Doing Business 2011 – Making a difference for entrepreneurs. 2010.
UNDP: An Employment-Targeted Economic Program for South Africa. 2006.
UN-Habitat: Promoting Local Economic Development through Strategic Planning. Volume 2: Manual. 2005.
USAID: Making Cities Work. Assessment and Implementation Toolkit. Local Economic Development. 2006.
WIEGO: South Africa’s Informal Economy: A Statistical Profile. Urban Policies Research Report, No.7. 2009.
A Councillor’s Guide
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“What attracts entrepreneurs? A local leadership that is committed to
building a positive business environment.”
How far are you?
How far are you?
Too
early
1: Getting the Basics right
Developing a shared understanding and vision
for LED in your municipality
Understanding the Policy context – national,
provincial, local
Half 100% Comments /
Way
evidence
Too
early
Half
Way
100%
Comments /
evidence
Too
early
Half
Way
100%
Comments /
evidence
2: Laying the foundations for LED Strategies
Understanding the local economy – its sectors and
resources
Strategic choices which promote or hinder poverty
and job creation
Identifying competitive advantage in the country,
region, district and local municipality
Understanding constitutional and statutory
mandates for LED
Understanding concepts such as value addition,
multipliers, leverage, backward and forward linkages,
complementarities (of labour) and clustering.
Knowing what processes are involved in
constructing an LED Strategy
Knowing how to mobilise, research and
assemble an LED Strategy
Understanding what municipalities can do to
stimulate the Local Economy by examining the
extent and nature of what can be done to create
jobs from the local level.
Fleshing out opportunities for job creation and
increased community involvement in infrastructure
and private sector development e.g. subcontracting
and tendering
Identifying the major blockages to investment and
poverty reduction
How far are you?
3: Planning for LED
Strategic planning sessions – critical outcomes and
decisions
A Councillor’s Guide
Mobilising for participation and partnerships
Assigning territorial and sectoral roles across
partners in LED processes
Using LED plans to improving public confidence in
municipalities
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Councillor LED Checklist
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“In order to be competitive,
sector specific knowledge is key for us.”
81
Too
Half
early Way
100% Comments /
evidence
1) LED is important to me as a Councillor because ...
Too
early
100% Comments /
evidence
2) The key actions I will undertake to make LED work in my municipality are ...
4: Preparing for Implementation
Drawing up Action Plans
Laying foundations for Implementation:
People, partnerships, stakeholders and roles
Resources required: internal, external, funding
Management
Integration of LED strategies into IDPs
How far are you?
Half
Way
5: Measuring results and impact
Understanding the need for consistent and regular
monitoring and evaluation
Selecting sound M and E techniques:
deciding how to measure i.e. the complexities of
measuring development,
assigning responsibilities
Source: adapted from the DPLG LED Toolkit, 2004.
A Councillor’s Guide
3) I will know we have achieved our LED goals when ...
to Local Economic Development (LED) in South Africa
How far are you?
A Councillor’s Guide
to Local Economic Development (LED) in South Africa
“So far, study after study is being done but there has been
no implementation, yet. Only this will show the real successes.”
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A Councillor’s Guide
to Local Economic Development (LED) in South Africa