IDP Conference 2004“Developmental Governance in Action”

SESSION 3:SESSION 3:

‘‘Empowering Municipalities to deal withEmpowering Municipalities to deal with Economic Development’ Economic Development’

- - Dudley AdolfDudley AdolfDirector: Economic DevelopmentDirector: Economic DevelopmentDepartment of Economic DevelopmentDepartment of Economic DevelopmentWestern Cape ProvinceWestern Cape Province

4 March 20044 March 2004

Background

Ideal Situation

Current Situation

Possible Solutions

The Way forward

CONTENT

Background

Clause 152 (1) (Constitution of RSA)

“The objects of local government are-

(c) To promote social and economic development”

Clause 153 (Constitution of RSA)

“A municipality must –

(a) promote the social and economic development

of the community

(b) participate in national and provincial

development programmes

Ideally…Economic development should be

Sustainable outcome based on local initiative

and driven by local stakeholders

Involves local ideas, innovations, resources

and skills to stimulate growth

Aim is to create employment opportunities,

alleviate poverty and improve the living

standard and quality of life of all residents

Ideally… it should be based on

Shared vision based on a comprehensive strategic plan

Critical mass of resources to promote/ manage the LED-process

Effective organisational structure

Close co-operation with the National & Provincial Government and District Municipalities

Currently there is ...

Weak institutional support for economic

development

Lack of baseline information leading to

poor plans

Insufficient focus and institutional

readiness

Unclear mandates creating overlaps and

duplication

IDP and Economic Development ?

“The IDP process to date indicated the lack of understanding and capacity within local authorities, to deal with LED issues and responsibilities”

- DPLG (2002)

Currently ...

How do we move forward to create growing towns and regions?

A few facts we need to consider …

Key fact 1Economic Development requires resources and assets

Human– capacity for basic labour, skills and good health

Physical– access to infrastructure

Natural- landFinancial– savings and access to credit (grants)Social– networks of contacts

Key fact 2

Efforts to address past and current social inequalities should focus on people not places.

In localities where there are both high levels of poverty and development potential, this could include fixed capital investment beyond basic services to exploit the potential

In localities with low development potential,government spending, beyond basic services, should focus on providing transfer, human resource development and labour market intelligence.

Mobility to choose places that are likely to provide sustainable employment or other economic opportunities

Key fact 3

Spending by government is likely to be more effective if aligned with social, environmental and economic trends in your area

Economic growth is most likely to continue where it has previously occurred, and therefore economic potential is the highest in these localities

Even in localities with unexploited potential (natural resource endowment, human resources and forward-backward linkages to other economic processes),such potential can only be unlocked if linked to primary centres of economic growth.

Research indicates that primary growth centres provide the human, financial and institutional resources necessary to develop the under exploited potential of other localities(see National Spatial Development Perspective)

What now …

It is important to have an accurate description of you area as it currently exist.

A baseline profile of the cities economy that allows you to isolate the drivers of you economy and the resistors

Simplicity is the key …..

Human Assets– labour, skills and good health

Physical Assets– access to infrastructure

Natural assets- such as land

Financial assets– tax base, savings and access to credit (grant’s)

Social Assets- networks of contacts, common or shared vision, social integration

Drivers leading to improvement

Resisting forces leading to

deterioration

Fact 1

Fact 3

Fact 2

ASSET BASE

GROWTH SECTORS

EQ

UIT

Y

CLOTHING&

TEXTILES

AGROPROCESS

BEE

AGRICULTURE

SMME CMT

MONATIC JV’S

IDP/LEDATLANTISMICHELLS

PLAIN

LINKPROCURE

MENT

OIL ANDGAS

TARGETAREAS

WESTCOAST

DOWNSTREAMENGIN-EERING

?

BIOTECH

METALSELSENBURG

DESIGNHRD

potential

?

?

?

Sector potential...

Or …NO

Potential

SECTOR

Businesssophistication

Formal InformalBusiness

Marketopportun-ities

Technicalskills(product & service)

Empower-ment

Marketingsales,delivery,service

Humanresourcemngt &dev.

Demand andSupply D R D R D R D R D R D R D R

GloballyCompetitiveFirms

+ + + + + +/- + +/- + + + + + +

Growth-orientated + + + + + +/- + +/- + - + - + -

Emerging/stable firms

+ - + - + - + - - - - - - +

Survivalist/necessityentrepreneurs

+ - - - + - - - - - - - - -

FINANCE SUPPLY:TRADITIONAL OR DEVELOPMENTAL

PROCESSING RELATED EMPOWERMENT ON FARMS

BUSINESS ANALYSIS...

D = DriverR = Resistor

ASSETBASE

Growth, employment

Desired outcomes, targets, methodologies

Transforming Leadership

Diminishing Barriers

Becoming a better place

Believing we are worth it

Macro Context

Micro-economic Strategy

Provincial Growth & Development Strategy

Metro & Districts

URBAN RENEWAL GROWTH & DEV SUMMIT RURAL DEVELOPMENT

IDP Basic ServicesSocial Infrastructure

LED

Economic Base

NATIONAL

PROVINCIAL

CONCLUSION

Way forward is a Structure or Function to address the following in a region:

Maintain economic baseline information

Maintain awareness of any economic opportunities or threats

Awareness of existing state law, policy, legislation & investments

Access point for information and a distribution point to service municipalities, provincial and national departments, agencies and the private sector