Local Development Projects

Local Economic Development Projectsin the Northern Cape

Experiences and lessons from public sector

linked LED projects and enterprises

2004

PRODUCTION NOTES

Local Economic Development Projects in the Northern CapeLocal Economic Development Projects in the Northern CapeLocal Economic Development Projects in the Northern CapeLocal Economic Development Projects in the Northern CapeLocal Economic Development Projects in the Northern Cape

is produced by

The Municipal Training and Development Institute (MTI), Northern Cape, and South

African Local Government Association (SALGA), Northern Cape

in partnership with the Swedish consultancy companies

SIPU International and SALA IDA

Development and production funded by

Swedish International Development Cooperation Agency (Sida)

AUTHOR John Roux

ILLUSTRATIONS AND GRAPHIC DESIGN Viera Larsson

PROJECT MANAGEMENT Bengt Carlsson

PHOTOS John Roux and Viera Larsson

PRINTED BY Swiftprint, Kimberley

© MTI, SALGA Northern Cape, SIPU International and SALA IDA 2004

ISBN 0-620-31962-3

LOCAL ECONOMIC DEVELOPMENT PROJECTS IN THE NORTHERN CAPE 1

LocalEconomicDevelopment Projectsin the Northern Cape

Experiences and lessons from public sector

linked LED projects and enterprises

2 LOCAL ECONOMIC DEVELOPMENT PROJECTS IN THE NORTHERN CAPE

AbbreviationsOnly frequently used abbreviations are included

here, others are explained in the text where they

appear.

ADA Apollo Development Association

CDA Community Development Association

CMIP Consolidated Municipal Infrastructure

Programme

DHLG Department of Housing and Local

Government, Northern Cape

DLA Department of Land Affairs

DPLG Department of Provincial and Local

Government, National

EDF Eskom Development Foundation

IDC Industrial Development Corporation

IDP Integrated Development Planning

LED Local Economic Development

NGO Non-Government Organisation

NPO Non-profit Organisation

NSDA Namaqualand South Development

Association

Sida Swedish International Development

Cooperation Agency

SIPU Swedish Institute for Public

Administration

CONTENTS

Introduction 3The Galeshewe Compost Project 4

LED GUIDELINES

National and provincial support for LED 7LED Grants 7LED project business plan 9

Oasis in die Wildernis Guesthouse 10LED GUIDELINES

Municipal roles in LED 13LED strategies 13Create an enabling environment for LED 13

The Kopano Women’s Bakery 14LED GUIDELINES

Getting organised for LED 17Types of LED projects 17Community Development Associations 18LED project success factors 19

Siyaya Coffin & Cabinet Manufacturing 20LED GUIDELINES

The power of partnerships 23Steps for building partnerships 24Guidelines for LED project management 25Phases of LED project development 25

Granite and Mineral Water Projects 26LED GUIDELINES

Phases of LED project development 31Watch out! Why LED projects fail 31

The Hull Street Housing Project 32An Emerging Contractor’s Story 36Jessey’s Tips for Entrepreneurs 37LED GUIDELINES

An integrated approach to LED 38Sustainable livelihoods support 38

Strydenburg Organic Meat Producers 40LED GUIDELINES

Tourism 44Building social capital 44Supporting skills development 45Innovative ideas for LED 45

The Apollo Theatre, Film Festivaland Development Association 46

LED GUIDELINES

Government funding for LED 51LED support organisations (Northern Cape) 52

Acknowledgements

The Municipal Training Develop-

ment Programme and SALGA

Northern Cape thank the

organisations and municipalities

whose projects are included, and

the people involved for sharing

their time and information on their

projects.


Introduction

This booklet presents cases studies ofeight local economic development (LED) projectsthat are either successful, or have significantpotential for success. The intention is to shareexperiences, enable learning, and to encourageothers by showing what is possible. For this reason,different types of projects were selected, and there isno claim that all the most successful LED projectsin the Northern Cape are included.

The case studies are followed by a widerdiscussion of LED that presents an overview of thenational and provincial context for LED, drawslessons from the case studies, and offers practicalguidelines. This last section also looks beyond singleprojects at options for integrated and innovativeLED strategies and programmes at local level,which are only beginning to be developed by SAmunicipalities.

This study has not focused on or includedunsuccessful projects, which are equally interestingand valuable sites of learning regarding possiblepitfalls, reasons for failure, and what not to do.However, even successful projects have often facedthese pitfalls, but been able to overcome them, andsome of the projects included currently face significantchallenges in spite of, and sometimes because of theirsuccess. Reasons for failure are usually the opposite ofsuccess factors, and an overview of common reasonsfor project failure is included.

Criteria for project selection

Criteria for project selection were that projects:• had reached a stage where they were functioning

reasonably well• had created sustainable jobs• were financially sustainable• demonstrated a viable and replicable idea or

form of partnership• involved a municipality

This last criterion excludes independent privateenterprises, which account for the major part of theeconomy, but this exclusion is implied by the term‘projects’ in any case. The intention is to look athow municipalities can contribute to LED in asituation where the private sector is not creatingsufficient employment and poverty is widespread.

The first projects are relatively simple, butare followed by examples that are larger and morecomplex. Selected projects vary in terms of thenature of their business - two provide municipalservices, three produce products, one is involved inhousing delivery and two focus on tourism andculture. They differ also in terms of types ofpartnerships and organisational and legal forms.This variety of project and partnership types gives asense of the wide range of possibilities for LEDprojects.

Consolidated Municipal InfrastructureProgramme (CMIP) projects were not included asthey are of limited duration, and because casestudies are available from CMIP. They are howeverrecognized as an important LED strategy due to thecreation of large numbers of temporary jobs for theunemployed, and the delivery of tangible results interms of infrastructure.

The case study projects

The case studies include the following1. Compost Project, Sol Plaatje Municipality,

Kimberley2. ‘Oasis in die Wildernis’ Guesthouse near Pella3. The Kopano Women’s Bakery at Warrenton4. Siyaya Coffin and Cabinet Makers in

Kimberley5. Granite and Mineral Water Projects of the

Namaqualand South Development Associa-tion at Garies

6. The Hull Street Housing Project inKimberley

7. Gariep Organic Meat Producers atStrydenburg

8. The Apollo Theatre, Film Festival andDevelopment Association at Victoria West


The GalesheweCompostProject

At the Galeshewe Compost Project you can dump

your garden refuse for free, and buy the fine or-

ganic compost produced from it. The project was

started in 1999 by the Sol Plaatje Municipality in

Kimberley, initially as a small operation processing

organic waste at the municipal market. In mid 2001

the project moved to the old Municipal Nursery

near Galeshewe, and expanded to process all

garden refuse. The site was cleared and the build-

ing upgraded to accommodate an office, meeting

room and store for tools and equipment.

drawn compost turning machine.After six weeks the compost is ready to be sieved

and put into 10 and 40 kg bags, or to be sold bythe cubic metre. This final product is fine, richorganic compost. Prices are R 6 for 10 kg, R 15for 40 kg, and R 150 for a cubic metre (2003).Income from sales goes into a municipal accountspecifically for the project.

At any one time there are six or seven rows ofcompost at different stages of decomposition, eachbetween 100 and 150 metres long. The productionprocess, given the right equipment and technique,is simple and effective in turning what is otherwisespace-consuming refuse into a valuable and market-

The project was re-launched with 30 newworkers. R 900 000 in LED funding was obtainedfrom DHLG to purchase a compost turner, tractorand trailer, chain saw and small tools.

From the start the aim was to establish aneconomically viable project that would become anindependent, worker-owned business.

The project processes garden refuse andbranches collected by the municipality, or droppedat the site by residents and garden maintenancecontractors. This is broken down into fine bits bythe chipper, and then piled in long heaps todecompose. These heaps need to be regularlywatered and turned, which is done by the tractor-

A CASE STUDY PROJECT


able commodity.The compost is sold on site to residents, garden

contractors, the municipality and Department ofAgriculture. The project has capacity for additionalinputs and to supply additional customers, andflyers have been sent to residents asking them todeliver refuse to the site.

Project workers are currently temporarymunicipal employees on one year contracts (2003),but their earnings depend on the income of theproject. At first, R 200 000 of the LED fundingwas used to subsidise wages at a level of R 1 200 per

month for about a year, but this was clearly unsus-tainable.

In October 2002 initial contracts ended, thejobs were advertised, and 16 out of the original 30workers were selected. At present the projectemploys 13 people, the majority of whom arewomen. One of the group acts as project manager,and another as a supervisor. At first wages wentdown to R 500 per month, but have now risen toR 1 000 per month. Wage levels depend on projectincome, and are thus both performance based andsustainable.

A second aspect of the project was the recyclingof waste tins and boxes, which were covered with

1 2

3

4 5

6

7

The compost making process

1 feeding branches into the chipper

2 the chipper loads the truck

3 compost heaps

4 tractor drawn compost turner

5 compost turner at work

6 the compost is ready!

7 bags of compost for sale


material and turned into attractive containers ofvarious kinds. This was however not successful dueto difficulty in marketing the products, and hasbeen discontinued. The project now focuses onlyon its core business of compost making.

Though the project has a manager, it is run on aco-operative basis, with joint decision making atweekly meetings. The municipality providestechnical advice and assistance, and financial andmanagement support. The project manager isaccountable to the workers and to the LED unitand a project committee, consisting of the managerand three municipal representatives. The intentionis for the project to become an independent co-operative business.

Challenges

so far have been• the seasonal nature of the business, with winter

being rather quiet• marketing of compost• lack of transport to sell door to door• management and motivation of workers• separation of owner and worker roles, and

tensions between joint decision making andmanagement authority

• lack of security and a number of burglaries

Success Factors

• municipal incubation and support• a viable business concept• adequate funding and equipment• technical advice and know-how• free inputs, delivered to site• reducing number of workers• wages based on project income

This project has good prospects for continuedsuccess, as the technical process has been mastered,equipment is adequate, inputs are free and expensesare limited apart from wages. The challenge is toincrease output and income without increasingoperating costs significantly, which will enablewages to be increased. This requires improvedmarketing of the service and product. Otherwise,

development into a sustainable independent co-operative enterprise will need good managementthat can take over the functions and support nowprovided by the municipality.

Key Facts and Figures

PROJECT TYPE

A municipal project, planned to become an

independent co-operative

FUNDING

LED funding R 900,000

Number of jobs 13

Monthly average wage R1 000

Annual income 2002 R 160 000

Average monthly income 2003 R 18 000

Average monthly sales 375 kg

Investment per job R 69 000

Contact

Man Siganda,

LED Unit, Sol Plaatje Municipality

Tel: 053 830 6274

Email: [email protected]


Developmental

local government

entails working

with citizens and

groups in the

community to find

sustainable ways to

meet their social,

economic and

material needs,

and improve their

quality of life.

White Paper on Local

Government

Local Economic Development Guidelines

“

Every municipality needs copies of this book!

Local Economic Development

This very useful and comprehensive LED guidebook from DPLGelaborates on much that is only summarised in this booklet. It includesthe following:• municipal roles in LED• ways of organising for LED• LED strategies – including attracting investment and promoting

exports• LED case studies – how other municipalities have successfully

promoted local economic development in SA and internationally• monitoring LED – practical methods for tracking LED results• directory of government grants for LED.

Copies are available from the LED Unit, Department of Housing and LocalGovernment, Northern Cape (DHLG)

LED Grants

DPLG provides grants of up to R1.5 million to municipalities for LEDprojects. Criteria are that a project must be supported or run by a municipality,have ten or more beneficiaries from a disadvantaged community who willbecome owners, and submit a business plan for a viable, sustainable business.DHLG administers LED grants, assists with applications and monitors projects.Municipalities need to report monthly on funded LED projects.

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DHLG is not the only provincial department involved in local economicdevelopment. Other departments supporting activities related to LED include:• Land Affairs (DLA) – land reform funding and support• Agriculture – support for emerging farmers• Economic Affairs and Tourism• Sport, Arts and Culture• Labour – skills training• Water Affairs and Forestry – Working for Water Programme• Public Works – programmes

The Consolidated Municipal Infrastructure Programme (CMIP), administeredby DHLG, also contributes directly to LED by providing infrastructure andcreating temporary work for unemployed people. See the last section of thisbook for a list of all government funding related to LED.

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LED plans must be included

in IDPs’“

A thoroughly filled in

LED application form is an

important condition for funding

to be granded


LED project business plan

Municipalities applying for LED grants should base their business plan on thefollowing format provided by DPLG:1. executive summary2. a statement of purpose3. a statement of needs4. specifications of project5. a plan for marketing6. targets and evaluation indicators7. an action plan8. human and other resources required9. a budget

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Municipalities have a

mandate to address

poverty, joblessness and

redistribution.

Department of Provincial and

Local Government (DPLG)

“

A business plan describing the

LED project must be based on

the format provided by DPLG


The aim is for the guesthouse to becomean independent, sustainable enterprise by 2005, runby the workers who are the project beneficiaries,though the property will still be owned by themunicipality. There are six project workers, a cook,four cleaners, and a gardener, the only man amongfive women.

Tariffs are very reasonable at R 90 perperson per night in the main house, R 138 forrondavels accommodating one or two people,R 150 for chalets for two to four people and R 186for chalets for three to six people. Breakfast, lunch

For anyone driving through the semi-

desert along the Orange River anywhere

near Pofadder, a place legendary for its

remoteness, Oasis in die Wildernis is

truly an oasis. This guesthouse near

Pella, an LED project of the Kai Ma Mu-

nicipality, offers a comfortable main

house, chalets and rondavels with

accommodation for up to 27 people.

This, together with a training room and

large recreation hall, makes it suitable as

a venue for workshops and tour groups.

The buildings are set among established

trees and gardens, in the midst of other-

wise dry and barren surroundings. A

notable feature of the guesthouse is the

excellent quality of the meals.

Oasis in die WildernisGuesthouseA CASE STUDY PROJECT


and supper are offered at R 25, R 45 and R 55respectively, seven days a week.

The house and buildings previously belonged tothe owner of a nearby mine, though the land wasmunicipal land on a 99 year lease. When the mineowner died, the mayor of Kai Ma had the idea topurchase the infrastructure and develop it into aguesthouse. This was done using a part of R 1.3million LED funding, paid to and managed by thedistrict municipality. Improvements includedconstruction of two double chalet buildings,restoration of the swimming pool, a new powerline, and general upgrading and furnishing of theguesthouse and other buildings.

Oasis in die Wildernis became finan-

cially sustainable in October 2002 on thebasis of income from guests. Workshop groups haveincluded a number of government departments andschool groups. These larger groups are the mostprofitable because they stay for longer periods.

Initially there were 30 people in the beneficiarygroup who worked for free for two months, andwere then paid R 40 per day during the first year ofbuilding and renovation. These costs were coveredby the LED funding. Then posts were advertisedand six from the group were chosen to becomestaff, four of them being young women withdependents.

The workers earn R 60 per day or R 1 200 permonth, so that wages amount to about R 7 500each month (2003). Other major costs are electric-ity and water (which the project pays for) and food.The municipality contributes 20% of one official’stime to act as project manager, as well as his vehiclecosts to travel to the project and do the shopping.By October 2003 the guesthouse had a surplus ofR 87 000 in the bank, something which few LEDprojects manage to achieve at this early stage, if atall. And there is potential for increasing income andprofits, as the occupancy rate increases. On theother hand, the investment cost per job created isrelatively high.

The project is overseen by a managementcommittee consisting of the mayor and municipalmanager, the official who acts as project manager, aproject worker, and representatives of thecommunity and district municipality.

Challenges

for the project include improving the water supply,better co-operation in the team of workers, devel-oping or finding a full time co-ordinator / managerand handing over financial and managementresponsibilities.

A site for tourist to visit – the cathedral at Pella

...or cool off in the Oasis swimming pool.


Success Factors

• skills needed are household skills found in everycommunity

• good quality catering• a suitable venue and not much competition in

the area.• input and labour costs are relatively low• profit margins are high, especially for workshop

groups• sufficient marketing to attract visitor and groups• municipal support in terms of management and

use of land and buildings• LED funding

This project has a good prospect of continuingsuccess and significant profit, with the key chal-lenges being team co-operation, and a smoothtransition to an independent well-managed andmarketed enterprise.


PROJECT TYPE

A municipal project, planned to become an

independent co-operative enterprise

FUNDING

LED grant R 1.3m

Number of jobs 6

Monthly wage R 1 200

Average monthly income R 43 000


Current surplus R 87 000

Contact

Jan Rooi,

Kai Ma Municipality

Tel: 054 933 0066


Oasis in die Wildernis Guesthouse

Tel: 054 971 0193


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Municipal roles in LED

Leader/promoter – developing and communicating the visionCo-ordinator – involving other sectors and stakeholdersFacilitator – of partnerships and processes that support LEDEntrepreneur – initiating and incubating LED projectsDeveloper/Project manager – implementing projectsResource – accessing and providing funding and otherresources and supportPartner – participating in joint LED strategies, programmesand projects

LED strategies

Municipalities involved in local economic development can dofar more than just support small projects. The followingstrategies can form part of an integrated approach to LED:1. promote ‘plugging of leaks’ in the local economy by encouraging people to

buy locally and thereby increase the local circulation of money2. promote your area to attract investment and tourism3. develop the abilities of local people, or ‘human capital’4. support small, micro and medium enterprises (SMMEs)5. undertake infrastructure (CMIP) and public works programmes6. support sustainable livelihoods based on a variety of income sources for poor

households

Municipalities need to undertake or commission local economic research,information gathering and sharing. This forms a sound basis for integrated andstrategic LED planning involving stakeholders in other sectors. Municipalitiesshould then access all available government grants that can support their localeconomic development strategies.

Create an enabling environment for LED

It is important that municipalities create general conditions that encourage andsupport local economic development. Municipalities can:• provide efficient and cost effective services• minimise bureaucratic obstacles to economic activity• plan for spatial integration and transport efficiency• offer incentives to business investment• create a safe, clean and attractive environment• use local labour, goods and services• use labour intensive methods• mobilise community support for local businesses• establish a local business service centre• initiate a Community Development Association (CDA)• approach housing development as an LED opportunity• support land redistribution and emerging farmers

Leader/promoter

Co-ordinator

FacilitatorEntrepreneur

Developer/

Project manager

Resource

Partner

Municipal

roles in LED


The Kopano Women’s Bakery in

Ikhutseng township at Warrenton pro-

duces and sells over 600 loaves of bread

a day, and employs 18 full time workers.

Kopano is a registered co-operative

enterprise, owned and run by 15 women

and one man, the two other men having

died tragically in an accident involving

their delivery vehicle. The bakery, includ-

ing a shop, is in a new building with new

equipment funded by a R852,000 LED

grant from DPLG. A further LED grant of

R300,000 was used to purchase a delivery

vehicle and to subsidise operating costs

in the first year.

In 2001 a group of 100 women affiliated toSANCO (South African National CivicOrganisation) in Warrenton became involved in aDepartment of Social Development povertyalleviation project, but assistance was limited andlittle came of this. The municipality then took itover as an LED project, helped develop a businessplan for the bakery, and got the LED funding fromDHLG.

Kopano has an average income of R 60 000 permonth from sales. The co-operative has no debtand salaries are R 800 per month for everyone,including for Ouma Majola, the group leader andco-ordinator.

TheKopano

Women’s Women’s Women’s Women’s Women’s BakeryBakeryBakeryBakeryBakeryA CASE STUDY PROJECT


Kopano’s oven can bake 120 loaves intwo hours, and staff work in teams of four, withtwo 8 hour shifts each day, seven days a week. Onthis basis they can produce up to 960 loaves a day.Everyone works a seven day week followed by a fiveday week, so they have only every second weekend off.

The biggest challenge is marketing the bread incompetition with big bakeries from outsideWarrenton, but Kopano have managed to keeptheir prices competitive. Apart from direct localsales, Kopano delivers to two shops in Warrenton,and the local hospital and old age home, thoughthese public sector clients take up to two to threemonths to pay.

Once business picks up, the plan is to buy asecond oven for R 200 000, which will doubleproduction capacity and create another eight to tenjobs. Interestingly, the cost of the initial 18 jobs wasabout R 50 000 each, whereas the additional jobscan be created at an investment cost of only R 20 000each, given the existing infrastructure.

The Magareng Municipality has supported theventure by providing a free site, free water andelectricity, assistance in accessing and managing theLED grant, general mentoring and linking totraining opportunities. The Northern Cape Manu-facturing Advice Centre (NCMAC) has providedtraining, advice and support.

The bakery has the latest mixing equipment and

oven.

Work at the bakery is run in shifts. One team in front of bakery

(below).


Kopano is managed by the co-ordinator, andvia monthly meetings of workers, who are theproject owners. The co-ordinator chairs meetings,which are attended by the municipal LED officer,who reports to DPLG and DHLG. This includesquarterly financial reports prepared by the munici-pal treasurer for Kopano.

Challenges

encountered have been inevitable disagreements inthe group, and the motivation and discipline of afew members of the group, but these have beenresolved, and generally teamwork and co-operationare good.

Success Factors

for this project are:• co-operation and teamwork of members, and

their ability to separate their roles as owner /shareholder and as workers

• commitment of members, willing to work longhours for limited wages

• support from the Municipality• LED funding• training and support from NCMAC• a sound business approach• an essential, locally needed product• support of the local community as consumers

This project has good prospects for continuedsuccess and increased income for members, withmarketing as the major challenge.


PROJECT TYPE

A co-operative enterprise with municipal

support

FUNDING

LED grants R 1 152 000

Number of jobs 18

Monthly wage R 800

Annual income R 720 000

Monthly income R 60 000

Output 600 loaves per day

Capacity 960 loaves per day


Contact

Andrew Moremi,

Magareng Municipality

Tel: 053 497 3111/2


The start-up vegetable garden behind the bakery

has the potential to become another community

based enterprise.


Getting organised for LED

Municipalities have a range of options for focusing LED responsibility anddeveloping LED capacity, including:• an LED officer• an official with LED as one responsibility in his/her job description• an LED unit• an LED task team or steering committee• a council sub-committee for LED• a councillor responsible for LED• an LED forum with other stakeholders• a formalised LED partnership structure• a non-profit development organisation with an LED focus• an LED consultant or consultancy supporting the above

These options are not mutually exclusive, and a number of the above can workwell together. Start by establishing LED responsibilities and functions atcouncil, senior management and operational levels. Other structures and rolescan develop out of this over time.

Types of LED projects

The case studies give examples of various types of LED projects, including mostof the following:• Municipal projects that become independent co-operative businesses

(Sol Plaatje Compost Project and Oasis in die Wildernis Guesthouse)• Municipal projects as revenue generating units• Co-operatives supported by a municipality (Kopano Women’s Bakery)• Non-profit organisations controlled by a municipality (Hull Street Housing

Company and Namaqualand South Development Association)• Independent non-profit organisations (Apollo Development Association)

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Municipalities can expand

their capacity to undertake

LED by developing partner-

ships, or initiating LED

focused institutions such

as Community Development

Associations.

“

The value of public sector and non-profit

LED projects is that they initiate new

businesses for disadvantaged people who

cannot afford loan finance, and need

grant finance and other forms of start-up

support. Or they may address needs and

create jobs in areas that are not serviced

by conventional for-profit businesses,

such as low cost housing.

“


Community Development Associations

Organisations such as the Apollo Development Association (ADA) oftensupport a variety of LED and community development projects. CommunityDevelopment Associations (CDAs) usually adopt a cluster model, with a coreorganisation supporting projects with management, administration,bookkeeping, fundraising, governance and legal status. CDAs can also incubateprojects that grow into independent self-sustaining organisations, though someservices may still be contracted from the CDA.

CDAs ideally involve a partnership of municipal, civil society and businesssectors, in order to achieve a shared LED vision and strategy, agreeddevelopment goals and practical co-operation. The board of a CDA should thusinclude representatives from all three sectors, and the CDA serve as a vehicle forcollaboration in implementing programmes and projects.

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CDAs usually involve stakeholders

from all sectors, and support a

cluster of projects.

business

sector

CDA

core

organisation

municipality

civil society

project 1

project 2

project 3


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LED project success factors

a viable project idea, with the potential to become self-sustaining

a key person or small number of people with the commitment andabilities to drive the project

adequate public sector grant finance, wisely spent

municipal support (access to land, equipment and facilities, free services,mentorship and governance, management and financial managementsupport, accessing to LED grants)

partnerships providing supportive capacity and opportunities

support for capacity and skills development

co-operation within project groups and between partners

sound governance, management, financial management andaccountability for the use of funding, usually via a municipality

the necessary technical skills to provide a quality product or service

ability to market the product or service

a business-like approach, with wages based on income

financial sustainability and a successful transition to independence


braais and stokvels. They held weekly meetings, andstarted making wooden toys, trays and small itemsin Romulus’ garage.

They decided to structure their business as a co-operative, with all ten on the board, and an execu-tive of five to act as the management team. They allattended different modules of training run by theCommunity Based Development Programme(CBDP) on project management and businessdevelopment, and shared learning with the wholegroup when they returned. They also attendedDepartment of Labour approved training on howto start a business, bookkeeping, marketing andconflict management.

In 2001 Romulus approached Eskom Develop-ment Foundation (EDF) for support to get hisbusiness started, as he lacked collateral needed toget a bank loan. They told him that they fundedprojects, and that he would need a group with 10members to qualify as a project. So he went to hisfriend Christopher van Wyk, and together theyfound another eight people who were interested.The group now consisted of five women and fivemen, of whom four were youth. One of the groupwas chosen as manager, based on his experience andskills.

Next they drew up a business plan for EDF, butdecided to start raising their own funds as well, via

Siyaya coffin

Like so many others in Kimberley,

Romulus Nxumalo found himself unem-

ployed in 1999, but he didn’t intend to

stay that way. He had the idea of starting

his own business in order to earn a living.

His grandfather had been a coffin maker,

and as a boy Romulus had watched him

work, and had helped him. He decided

that with this experience, he would start

his own coffin making business. It also

seemed to be an area of growing need.

& Cabinet ManufacturingA CASE STUDY PROJECT


In October 2001 EDF accepted their businessplan and granted them R 247 000 for machines,materials and business skills training. At thebeginning of 2002 they found premises at HelenJoseph, a development NGO in Galeshewe, andworked there throughout 2002, making coffins andsome furniture. They donated the first coffin theymade to a woman, whose family could not affordthe cost of her burial. At Helen Joseph they pro-duced 5 to 7 coffins, and an average of three built-in cupboard units per month.

At the start of 2003 Siyaya needed more space,and moved to Hodges Timbers, a factory buildingin Kimberley’s industrial area, that the Departmentof Economic Affairs planned to buy for small andmedium enterprise (SMME) development. Herethey increased their output to 20 coffins permonth, plus cupboards and other smaller items offurniture.

In August 2002 Siyaya were invited to theWorld Summit on Sustainable DevelopmentBusiness Expo as exhibitors, promoted by EDF.Two representatives of the group attended. Siyayaalso won Provincial and National awards in theAdult Learners’ Week Competition in 2002.

However, it hasn’t all been plain sailing

for Siyaya. In September 2002, machines worthR 17 000 were stolen, but fortunately EDF came tothe rescue with a further grant of R 240 000 fornew machines, materials and further training.Again, in August 2003 machines worth R 41 000were stolen, and production is currently severelyhampered by this loss, as they were not insured, andthe machinery hasn’t yet been replaced.

In addition, marketing is not easy as they are

Siyaya produce a range of

products including coffins,

furniture and custom built

units.


competing with bigger companies in the cities whooffer undertakers credit, which Siyaya can’t afford todo. Siyaya now use a marketing and sales represen-tative on a contract and commission basis, and as aresult demand is growing so fast that they haveorders, and potential large contracts that they can’tmeet with the current production capacity.

Siyaya have received training in massproduction at their factory from the Northern CapeManufacturing Advisory Centre, and are membersof a NCMAC learning network that meets monthlyto share and learn from each other’s experiences asemerging enterprises.

The group is planning to expand theirproduction to 150 coffins per month, but for thisthey would need industrial machines and anadditional 20 people. They estimate that to take thebusiness to this level will require a further R 750 000capital investment. They have put in a proposal toABSA Foundation for a grant.

Siyaya’s mission is to provide high quality woodcrafted products to a select market. Their vision isto be the leading supplier of wood crafted productsin the province, and thereafter to enter national andglobal markets by forging strategic partnerships.

The group paid themselves on averageR 100 per month in 2002 and R 400 per month in2003. Their costs, apart from wages, are mainly formaterials, telephone and transport. They don’t payrent as yet, and the Department of EconomicAffairs covers their water and electricity costs.

Lessons the group has learned

include:

• the importance of vision and focus on produc-ing quality products

• the need for management by objectives andeffective marketing

• the value of training, support and learning fromothers to build capacity

Success Factors

• development of technical and business skills• the group’s ability to work as a team and resolve

differences amicably• ability to separate roles as joint owners and as

workers• willingness to sacrifice in terms of taking only

small affordable stipends• EDF funding and other public sector support.

This project, though currently suffering a setbackdue to theft of machinery, has a good prospect ofsuccess, having started and grown as a businessenterprise, and having good technical skills andquality products. The key challenges are marketingand good business and financial management inorder to increase output, income and wages.


PROJECT TYPE

An independent co-operative funded by Eskom

Development Foundation

FUNDING

from EDF R 487 000

Number of jobs 10

Monthly wages R 400

Annual income 2002 n/a

Monthly average income 2003 n/a

Profit / loss n/a


Contact

Victor Chonga, NCMAC

Tel: 053 839 5700



The power of partnerships

There are three sectors in society: the public sector, the business sector and thecivil society sector consisting of non-profit organisations (NPOs). There aretherefore the following possible types of partnerships at the local level:

All the case study projects involve partnerships and co-operation betweenmunicipalities, NPOs and sometimes businesses. These partnerships are in mostcases essential to the working and success of projects. More can be achieved viapartnerships and co-operation, as different stakeholders contribute differentcapacities to a project. For example:• municipalities have a public LED mandate, promote the common good of

citizens, are accountable to communities, and have or can access significantresources, including land and government funding

• non-profit organisations have development values and expertise, capacity toinnovate, flexibility and are able to raise grant funding

• businesses have business, financial and marketing expertise, entrepreneurshipand a business approach, and can access loan and share capital.

Government departments could also be involved in and contribute topartnerships in some instances. Partnerships enable the right combination ofcapacities for a particular project’s needs, and people in different sectors learnfrom each other and develop capacities they lack by working together.

Partnerships also build co-operation between different groupings in dividedcommunities. Partnership organisations such as CDAs have a particularpotential to bridge between advantaged and disadvantaged communities bymobilising resources, including volunteer work. Ideally they enhance corporate,community and individual responsibility and co-operation in addressing localneeds and poverty conditions.

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Municipalities can play a

key role in initiating CDAs

as vehicles for LED,

community development

and LED focused partner-

ships.

“

a municipality

non-profit

organisation

(NPO)business


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Municipalities can use the following steps to establishpartnerships:

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The formalities of partnerships are

important, but successful partnerships

are based on shared vision,

commitment, good will, trust and co-

operation between key individuals in

partner organisations. People who want

to work together for a common aim or

ideal are the best basis for any

partnership.

“

Partnerships may remain informal with widerepresentation (an LED forum), or be formaland task focused (an LED steering group), orbecome a legal entity such as a CDA.

Establishing a formal partnership requires thatpartners:1. establish shared vision, values and overall

goals2. agree on the roles and responsibilities of each

partner3. clarify any legal rights and obligations4. establish partnership policies, processes and

accountability5. negotiate differences and any specific

conditions6. consider possible reasons and conditions for

dissolution of the partnership7. draft a written partnership agreement for a

certain time period. Use a lawyer to clarifylegal matters and assist with drafting theagreement.

identify potential LED

stakeholders and partners

prioritise key government

agencies, and local

organisations and individuals

invite key stakeholders to

participate in discussions

establish a regular partnership

forum or meetings

agree on the nature and

function of the partnership

clarify the nature and purpose

of the partnership in writing

undertake joint planning

processes

establish monitoring and

review processes


Guidelines for LED project management

LED projects will not succeed unless they are well managed. Here are someguidelines for good project management:1. an annual planning and review process involving stakeholders2. regular internal planning, monitoring and review processes3. management by objectives4. setting output and financial targets5. managing time and processes according to schedules and deadlines6. shared understanding of the financial situation and goals7. sound record keeping, administration, bookkeeping and financial

management8. effective marketing9. feedback from workers and customers10. conscious management of performance and quality11. conscious management of team co-operation and relationships12. regular narrative and financial reporting to governance structures and

partners (achievements against planned objectives, what happened / thefacts, the figures, problems and lessons)

13. focus on continuous improvement14. ongoing capacity building15. early problem identification and solving16. leadership – sharing vision and values, encouraging and praising, giving

feedback, creative ideas and initiative

Phases of LED project development

LED projects have different origins, and different, often unique biographies, ascan be seen from the case studies. However, all projects go through:• a funded start-up or incubation phase• a phase of capacity development and establishment as viable entities• a phase of becoming independent, self-governing entities or businesses

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starting up

❋ pioneers

❋ incubation support

❋ funded

becoming viable

❋ professional management

❋ mastery of business

❋ financially viable

becoming sustainable

❋ independent

❋ established

❋ profitable


This project

started in 1998

when Wouter

Jordaan, then

Garies Town clerk,

became involved in

the Poverty Alleviation Task Team of the

Local Government Development Support

Programme, supported by SALA IDA

(Swedish Association of Local Authorities

IDA) and Sida (Sweden). Recognising that

the only sustainable approach to poverty

alleviation was job creation, he began to

look around Garies for opportunities.

Quarrying and export of granite was one

of the few local industries. Huge 20 ton

blocks were sent away to Italy, to be

turned into products there. But he noticed

that many blocks were discarded due to

flaws, and many of these could still be

used. The idea was born: use these to

create granite products, and jobs, locally.

Granite and mineral waterprojectsof the Namaqualand South Development Association

After a year of thorough research, abusiness plan was submitted to the DPLG for LEDfunding, and R 1.2 m was approved. Besides thegranite processing project, a mineral water projectwas included. Today both are functioning enter-prises under the Namaqualand South DevelopmentAssociation (registered as a non-profit organisationin 1999). Any profit made is re-invested in theprojects.

Aqua Namaqua

Mineral Water

Aqua Namaqua mineral wateris high quality undergroundwater from a farm nearGaries, bought for the

municipality by DLA, for use by emerging farmers.After thorough testing of the water to assure itsquality as mineral water, R 400 000 was invested inbottling equipment and a four ton delivery truck.The mineral water is bottled at a plant on the farmin 500 ml, 1, 1.5, 2 and 5 litre bottles. Five workersearn R 50 per day, or R 1 100 a month (2003).

The colourful, attractive Aqua Namaqua labelwas designed with community input. The labels areprinted on ordinary rather than self-adhesive paper,and are cut out and stuck on the bottles by hand bydisabled people working at home. This labourintensive method saves significant costs and createsfurther part time local work.



Though Aqua Namaqua have a good

product, they are far from major markets, and afurther problem is that the two major mineralwater brands are owned by Coca Cola, whoprovide freezers to shops, but for their productsonly. So Aqua Namaqua distribute their productdirectly to provincial government, other publicsector clients and businesses, at discounted prices.Cutting out middlemen means prices can be up to40% cheaper. At present Aqua Namaqua have adepot in Upington, and another is planned atKimberley.

At present orders are far below potential output,so the main challenges for Aqua Namaqua are

marketing and distribution. Workers are alsocurrently involved in activities on the farm whenthey have time to spare.

Garies Granite

Works

Research into the five localgranite mines showed thatover 80% of the stonequarried ended up as waste,

which then had to be dumped, creating an environ-mental problem. Wouter Jordaan approached oneof the granite mines with a proposal to use their

Aqua Namaqua delivery truck Engraving tombstones

Crushed granite for building stoneGranite polishing machine


waste granite and thus help them solve theirproblem of dumping and meeting environmentalrehabilitation standards. This led to a change ofperception - seeing the waste as a potential assetand starting point for a local value-adding industry.

The first problem was getting machinery,granite saws and polishers similar to those used inItaly, but these were very expensive to import. Thesolution was to have all but one machine made byan engineering works in Brits in the North WestProvince. This resulted in a significant saving incapital costs, and support for a South African

company. All the machines needed to process thegranite and produce a variety of products werepurchased for only R 900 000 of the LED funding.

Today the factory at Garies produces highquality engraved tombstones, tabletops and othersmaller granite products. Waste at the factory iscrushed for use as building stone in subsidy houses,enabling a reduction in costs and an increase in thesize of houses. There are also plans to produce kerband cobblestones for the municipality.

The locally made tombstones areparticularly important in that they are more

Small granite products workshop Bottling machine

Inside the granite works...


affordable to people in poor communities, forwhom the cost of funerals is a real financial burden.Getting the waste blocks of granite from a localmine helps reduce costs and keep prices reasonable.There is also a large potential market, both localand international.

The granite works employs ten full timeworkers who earn R 1 100 per month, and asupervisor. Agents in local towns sell the tomb-stones to local communities on a part time andcommission basis, which provides further incomegeneration opportunities, if not actual jobs.

The Namaqualand South Development Associa-tion is a non-profit Section 21 company run by aboard of eight directors who are voluntary represen-tatives of the municipality and local community.Wouter Jordaan serves as the managing director andmanages both projects, though he works for and ispaid by the municipality.

The aim of the NSDA is to serve as a vehiclefor local economic and enterprise development inthe expanded Kamiesberg Municipality, which nowincludes eleven towns and settlements in a radius of120 km. There is potential for NSDA to initiate or

... and outside – a saw for cutting slabs from large

granite blocks.



PROJECT TYPE

Section 21 non-profit organisation controlled

by the municipality, but including community

representatives on the board

Financial overview of NSDA, 2002

FUNDING

LED funding R 1 594 000

Number of jobs created 17

Average monthly wage R 1 100

Asset value R 1 313 000

Debt R 34 000

Monthly average income R 18 000

Income in 2001 R 42 000

Income in 2002 R 215 000

(Granite R 148 000,

Mineral Water R 67 000)

Expenses R 242 000

(Wages R 159 000,

operating costs R 83 000)

Contact

Wouter Jordaan,

Kamiesberg Municipality

Tel: 027 652 8000

adopt other non-profit business projects, all ofwhich should not only create jobs but also becomeviable as business units. NSDA thus intends toprovide management, financial and marketingsupport, and non-profit legal status to a cluster ofenterprises, that do not then need to register asindependent organisations.

Of the projects described so far, the NSDAdemonstrates an alternative model to both privatefor-profit and public sector enterprises: a non-profitbusiness enterprise. Though such enterprises maybe dependent on public funding for start-up capitaland some initial operating costs, they shouldbecome self-sustaining and even profitable, thoughprofits will be invested in expansion, or developingnew enterprises based on the same model.

This model allows for different partnershipoptions via participation of stakeholders on theboard. In the case of the NSDA the municipalityand community are the key partners. Such non-profit enterprises are essentially a specific type ofdevelopment NGO or civil society organisation.

Challenges

In the case of the NSDA not everything has beenplain sailing. Success has in some instances led tojealousy, and attempts to gain control of projectsand their resources as self-empowerment opportu-nities. The critical initiating and managing role ofthe pioneer is evident, together with the controlthat goes with this. But if the pioneer does notcontinue to the point where the enterprises aresustainable and can afford hired managementcapacity, they are likely to fail.

From the financial data below it can be seen thatthe NSDA was not yet profitable in 2002, thoughthe Granite works did make a profit. In 2001 theloss was R 147 000, but in 2002 this was reducedto only R 28 000. However, this needs to be seenagainst the fact that few conventional businessesbreak even after two years. NSDA has created realand sustainable jobs, and has significant potentialto create further jobs and profits in future.

Success Factors

Success factors for NSDA have been:• thorough research and planning• adding value to local resources• a committed and capable pioneer• municipal support and involvement• LED funding• technical expertise• a business approach


Phases of LED project development

Different partnership arrangements may characterise and support differentphases of project development. Some projects start with strong support frompartners and then develop to greater or complete independence; others developpartnerships in later phases to enhance capacity and delivery.

All projects start with an idea, vision or plan conceived, owned and drivenby at least one committed person. This pioneer role is essential, and oftenrequires great commitment, hard work, creativity and perseverance to get aproject ‘on the road’, mobilise support and resources, survive setbacks anddifficulties, and ensure ongoing development. Project pioneers are socialentrepreneurs, who need similar capacities to business entrepreneurs. Both startand develop initiatives, though in different sectors and for different reasons. Asa project or business develops beyond the pioneer phase the pioneer oftenleaves, and professional management is needed.

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Watch out! WHY LED PROJECTS FAIL

LED projects unfortunately have a high failure rate. Watch out forthe following problems, and solve them before they cause a projectto fail:• conflict among beneficiaries• self-serving or incompetent leaders or managers• lack of proper governance and accountability• lack of technical skills and poor quality products or service• lack of marketing skills and difficulty of entering markets

against established, larger competitors• lack of management, organisational and financial skills• lack of a business-like approach, entrepreneurship and

economic viability• lack of support for capacity development• lack of adequate resources


The Hull Street HousingProject

The Hull Street Project is a project of the

Sol Plaatje Municipality, implemented via

a non-profit Housing Company created by

the municipality. Sida (Swedish interna-

tional development co-operation Agency)

supports the project via a R 10 million

revolving capital fund for housing, and

other grants supporting project planning

and implementation. The project plans to

build 2 200 houses in four phases on a

site close to the central business district

in Kimberley.

This project in Kimberley is a housing ratherthan LED project, with the primary aim of providinghousing, but it is included as it has a significanteconomic impact in terms of mobilising capital,creating jobs and developing skills. A booklet onHull Street as a housing project – It’s About CreatingSustainable Communities – is available from the SolPlaatjes Housing Support Centre in Kimberley. Thiscase study however looks at the Hull Street projectspecifically from an economic point of view.

The first phase involves 331 units costingbetween R 72 000 and R 86 000 each, with a



projected total cost of R 33 million. This is partlyfinanced by housing subsidies of R 20 300 forwhich all beneficiaries must qualify, and partly byindividual loans to cover the balance. Monthlyrepayments range from R 947 to R 1 177 permonth over 20 years, with transfer of ownershipafter four years. Units vary in size from 42 to 84 m2

on plots ranging from 112 to 216 m2.

Hull Street is designed on ecological housingprinciples, which also have economic implications.

Key features in this regard are• semi-detached and row houses save costs via

shared walls• eco-blocks of 40 to 60 houses around a large

common area for urban agriculture.• a dry sanitation system saves water and sewer

connection costs• grey water is recycled for watering gardens• mixed residential and business use in some parts• cycle paths and close to city centre for lower

transport costs

This design approach was supported by the Swed-ish Institute for Public Administration (SIPUInternational) and Sida, as a continuation of theirsupport for Kimberley’s comprehensive urbanplanning process.

A social innovation at Hull Street that alsohas economic implications is the joint responsibilityfor common areas via the Hull Street Owners’Association and eco-block committees. These are abasis for building a stronger sense of community,with the potential for greater care and mutualsupport for the social and economic well-being ofresidents.

Other significant features of Hull Streetfrom an LED perspective are that a significantamount of external capital is being mobilised andused locally. This not only creates jobs, but alsomeets an essential local need by producing houses.Houses create real individual and family wealth asassets that increase in value. In the case of Hull

Hull Street is under construction with

workers still on site;

small gardens belonging to individual

houses are starting to grow, though the

large common areas are not yet

cultivated.


Street, these assets are partly ‘free’, being paid for bygovernment housing subsidies (the most significantredistributive mechanism apart from social grants),and partly at the cost of external debt in the formof housing loans to residents.

The benefit of building housing at this midaffordability level is the creation of a better qualityof housing stock, rather than building new subsidy-only ‘match box’ houses. What happens is thatthose who can afford to, move out of existing cheaphouses, making space for others to occupy them,without building new stock at this level.

The Hull Street Project used 18 local emergingcontractors, and supported them to form a consor-tium and to develop their skills and quality ofwork. However, at this stage only one of thesecontractors may be used in future, due to qualityand business management problems. The remaining114 houses of phase 1 will be built by the HousingCompany’s own teams, which include some peoplewho previously worked for some of the contractors.

The policy of the project is to use locallabour, suppliers and manufacturers. This increaseslocal incomes and circulation of money, whichstimulates and enhances the local economy. Newhousing also creates further demand for built-inand other furniture, appliances, fittings, carpeting,curtains and gardening products, which all increaselocal economic activity.

Success Factors

• municipal support – free land, payment ofproject manager, procurement, technical andfinancial assistance

• creation of independent but accountable non-profit Housing Company

• Sida and SIPU support• a selection process for beneficiaries based on

saving of the required deposit• involvement and responsibility of residents via a

residents’ association and eco-block committees

Problems Experienced by…

experienced by the project have been:• accessing loan finance• unaffordable costs of solar and wind energy

systems• poor quality of work and business practices of

many emerging contractors• political interference, with contractors going to

councillors for support• cost escalation and delays in planned schedule of

delivery• beneficiaries not saving initial deposits fast enough

to be ready to move in to completed houses

In general housing projects are important to localeconomic development as they:• use land as an asset to access capital• involve large investments in local economies• gain public sector grant finance in the form of

subsidies• are labour intensive and create many jobs• develop skills and encourage emerging contrac-

tors• provide houses as the most valuable and useful

of local assets• lead to home ownership which allows access to

loan finance• stimulate demand and economic activity up and

downstream of the project


It may be argued that jobs created by housingprojects are temporary and not sustainable, but thisis not necessarily true. While there remains a needfor additional houses, housing projects can bevirtually ongoing, and other construction andrenovation work is also available in any growingeconomy.

In terms of its form, the Hull Street Project is acomplex partnership between the Municipality, theDepartment of Housing and Local Government,the Hull Street Residents’ Association and Sida.This is institutionalised in the non-profit housingcompany which drives this project and manages allmunicipal housing development.


PROJECT TYPE

Section 21 non-profit organisation controlled

by the municipality, but including other

stakeholders and partners on the board

Total cost of phase I

(331 houses) R 33 m

Spending to date

on 140 houses R 8 m

Sida revolving loan fund R 10 m

Interest on Sida fund R 2 m

Government housing

subsidies received R 10 m

Cost of houses R 72 000

to R 86 000

Monthly bond payments R 947

to R 1 177

(over 20 years)

Rate for contractors,

excluding materials R 293/m2

Estimated building

cost per m2 R 850

Contact

Johan Schoeman,

Sol Plaatje Housing Company

Tel: 053 871 2754



An EmergingAn EmergingAn EmergingAn EmergingAn EmergingContractor’s StoryContractor’s StoryContractor’s StoryContractor’s StoryContractor’s StoryIn 1998, Jessey Chikane started out withvirtually nothing but the aim of becoming asuccessful building contractor. What got her goingwas being awarded a contract by the Department ofHousing to build ten low-cost houses. Beforebecoming a contractor on the Hull Street project in2001 she already employed 12 people, of whom 2were qualified artisans. Today her company, RJCConstruction employs 32 people full time, includ-ing six artisans, plus an average of 27 casualworkers. RJC owns a three-ton truck, bakkie andmicrobus, plus building equipment, and has nodebt.

Working on the Hull Street project has helpedRJC access training and develop their constructionquality to meet the standards of the National HomeBuilders’ Registration Council (NHBRC). Jesseyhas developed a good working relationship with themunicipality and Housing Company, and foundtheir purchasing of materials particularly helpful interms of obtaining credit and good prices for bulkorders.

Jessey is currently busy with two other contractsbesides units at Hull Street: renovation of a school,and building facilities at a cricket stadium. Her aimis to grow her company over the next five years toemploy about 100 people.

Contact

Jessey Chikane

Tel: 053 831 6696



Jessey’s tips forentrepreneurs

• believe you can do the

impossible

• take the lead, even if

conditions are harsh

• treat your staff as family

• take decisions together with

staff

• be open with staff

• don’t be selfish

• be ahead – plan today for

tomorrow

• be careful with money – don’t

spend unnecessarily

• get tough with staff when

necessary – the business

carries the staff and the

staff carry the business


An integrated approach to LED

Municipalities need to go beyond separate small projects, and develop anintegrated and strategic approach to local economic development. This willenable positive responses to all the following questions:• Do you have an overall vision for LED in the medium and long term?• Have you assessed local assets of all kinds, and their economic potential?• Have you developed LED goals, strategies, and programmes?• Are appropriate LED structures and arrangements in place?• Have you formed partnerships involving stakeholders in other sectors?• Are LED plans integrated into your IDP and spatial plans?

A good, integrated LED strategy is central to a municipal approach to povertyalleviation, and goes beyond job creation to include sustainable livelihoodsupport.

Sustainable livelihood support

The conventional approach to LED focuses on job creation by the businesssector, but many factors make this difficult, such as:

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• a job-shedding economy, with technology increas-ingly replacing labour

• lack of competitiveness in global markets• the high cost of creating jobs• labour legislation that protects workers, but

discourages their employment• difficulty of SMMEs competing with large

established enterprises• lack of entrepreneurial, management, business and

technical skills• lack of money and therefore demand in poor

communities

Given these obstacles to conventional business andmarket-driven job creation, municipalities need todevelop other strategies including:• public sector initiated and supported enterprises• public sector infrastructure and job creation

programmes• non-profit enterprises and employee owned co-

operatives• encouraging local support for local products and

enterprises• supporting sustainable livelihoods for the poor

statewelfaregrants

income frompart-timework

income frominformaleconomicactivities

contributionsfromrelatives

produce fromsubsistenceagriculture

developmentaid andcharity

POOR

HOUSEHOLDS

OFTEN

SURVIVE ON

sustainablelivelihoodsupport


A sustainable livelihoods approach recognises that poor households oftensurvive on a combination of:• state welfare grants• income from informal economic activities and part-time work• contributions from non-resident working relatives• produce from subsistence agriculture• development aid and charity

An integrated LED strategy includes ways of enhancing income from all suchsources, to ensure the economic sustainability of poor households. Many poorpeople will never have formal jobs, and thus need and depend on other sourcesof income. Municipalities, together with other government departments can:• ensure that all those eligible for government grants receive them• facilitate access to land and other resources• create and facilitate part-time work via infrastructure, housing and other

public works programmes such as ‘Working for Water’• encourage and facilitate informal trading and mixed business and residential

use, so long as this does not create noise or pollution• encourage and support urban agriculture and small scale farming

A traditional foundation for sustainable livelihoods was local food security. Poorcommunities with high unemployment can work towards this, particularly inrural areas where they own land, or can use commonage. Municipalities canfacilitate land access and redistribution, skills development and access toresources such as capital, water, equipment and technical support. Partnershipswith the Departments of Land Affairs and Agriculture are essential, and manymunicipalities support productive use of commonage, and are extending theircommonage.

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Many small businesses and non-profit

projects fail due to lack of knowledge and

skills in marketing, general and financial

management and finding capital or funding,

not because they don’t have a viable product

or service.

“

It is important to

support community

and non-profit

projects and

organisations as

part of the local

economy. They

bring funding into

an area, create

jobs and part-time

work, and

contribute to skills

development, social

co-operation and

hope.

“


Local people were involved in constructionof the abattoir, which saved money and stimulatedthe local economy. Gariep also creates seasonalcontract work for another 100 people who work inteams that cull the game. There is future potentialfor a tannery and leather goods factory, whichwould create additional local employment.

The project involves a partnership betweenGariep Organic Meat Processors, a private com-pany, SBOV (Strydenburg Boere en OntwikkelingsVereniging) and Karoo Ostrich Breeding and Co-operative, an emerging farmers’ organisation, andthe Thembelihle Municipality. SBOV is constitutedboth as a company with 75 shareholder members

Strydenburg Organic MeatProducers

At Strydenburg the new Gariep

abattoir has created 102 new jobs in

a town that previously had a total of

about 80 full time jobs. This impres-

sive modern facility cost R 11 million,

and produces organic ostrich, game

and mutton to EU standards for export

to Europe, and for South African niche

markets. There is a strong demand in

Europe for as much organic meat as

Gariep can supply.

(KOBC), and as a wider non-profit organisationwith 150 members (SBOV). Karoo Oranje Agricul-tural Co-operative (KOLK), which consists of whitecommercial farmers, is also a shareholder in Gariep,together with SUBOK, the private company of thefounding Vermeulen-Kruger family. Gariep isprofessionally managed as a company by membersof the founding family, but all three partnerorganisations are shareholders and have twodirectors each on the Gariep board. KOLK andSBOV members act as independent suppliers toGariep, and there is good co-operation between thecommercial and emerging farmers’ organisations.



The story started in 1998 when theVermeulen family butchery took an IndustrialDevelopment Corporation (IDC) loan to financeexpansion of their business. By 2000 they hadformed SUBOK, and together with SBOV formedGariep. SBOV received a R 2.2 million LEDgrant, and invested R 1.5 m of this in Gariep asshare capital.

Gariep has a turnover of R 2–3 million permonth, with R 25–30 m turnover forecast for the2003–4 financial year, depending on the exchangerate. This should enable it to break even, achieveprofits and pay dividends to its shareholders thefollowing year. It is planned that the R1.5 m

invested in Gariep by SBOV will be repaid to theMunicipality, and become a revolving LED fund.

SBOV, the emerging farmers’ organisation nowhas 150 members, of whom 75 are beneficiaries oftheir main project, a 2 866 hectare farm (Platkuil)purchased for R 1 m with a Department of LandAffairs (DLA) grant. The Thembelihle Municipalityholds the title deed, and is a partner in the project,providing right of use to the land and other sup-port, including use of a further 3 500 ha of com-monage, managed by an elected commonagecommittee.

The SBOV farm includes an ostrich feedlotsupplying Gariep, and an initial 3 ha of lucerne tofeed the ostriches. Growing of the feed is importantfor cost saving and profitability, as buying in feed isexpensive. The municipality has assisted with layingon water and other infrastructure, and lendingheavy equipment when needed. SBOV membersuse 3 500 ha of municipal commonage as grazingfor sheep and goats. SBOV is run by a committeeand co-ordinator, with an office based at theStrydenburg municipality.

It is planned that SBOV will increase capacityuntil they are able to supply Gariep with 5 000ostriches per year on a contract basis. Members alsofarm sheep and goats, and an olive plantation isplanned on Platkuil. Infrastructure on the farm hasbeen funded by R 500 000 of the LED grant,mainly for the irrigation, and R 100 000 fromLand Bank via Gariep for the feedlot. SBOV iscurrently seeking a further R 1.5 m to increaseostrich production. R 200 000 was used to getelectricity to the new Gariep abattoir.

SBOV has received support from themunicipality in terms of use of land, equipmentand infrastructure, from national and provincialgovernment in the form of grants and training, andfrom Gariep as a business partner assisting withmanagement, training and quality control. Theyhave also been supported by an NGO (FarmAfrica) with training, funding for an office, and instarting a small stock bank. The stock bank loans

A loading bay and office wing at the

abattoir, functionally designed for high-tech

yet labour intensive processing.


member families 8 sheep each, with 12 to be paidback after 12 months. This successful ‘bank’ hasgrown from an initial 250 sheep to the current 532sheep, valued at R 450 each. SBOV and theirpartners have also developed good, supportiverelationships with local commercial farmers andtheir co-operative, KOLK.

Challenges

Though an overall success story, there have natu-rally been, and are problems, including getting theSBOV ostrich feedlot going to the required stan-dards and volumes, loss of export earnings due to astrengthened Rand-Euro exchange rate, a shortageof water in Strydenburg and water restrictions

disrupting production at Gariep, the districtmunicipality not wanting to put too much LEDmoney into one municipality and project, and over-grazing on Platkuil in the past.

Success Factors

• a community organisation – public – privatepartnership

• commitment and co-operation of all partners• based on sound economic and business values,

principles and management• solid leadership and co-operation in SBOV• Gariep entrepreneurial, management, financial

and marketing expertise• municipal and government support

Gariep OrganicMeat Processors

SBOVemerging

farmers’

co-operative

SUBOKmanagers

KOLKcommercial

farmers’

co-operative

family

Vermeulen-

Kruger

Municipality Land Bank &

IDC

Farm Africa

suppliers suppliers

managem

ent &

mark

eting

support

support

support ow

n 1

0%

ow

n 7

0%

ow

n 2

0%

support



PROJECT TYPE

A partnership between a private company, an

emerging farmers’ organisation and a

municipality

Gariep organic meat processors

Capital investment R 20 million

CURRENT SHAREHOLDING

SUBOK 17 %

KOLK 68 %

SBOV 15%

LOANS

Land Bank R 8 m

KOLK R 2 m

SUBOK R 1.5 m

Loans – total R 11.5 m

Construction of abattoir R 17 m

Jobs created 102 full-time

100 seasonal (hunting teams)

Worker’s wages R 1 000

to R1 500

Cost per full-time job R 196 000

(estimate)

Monthly turnover R 2 m– R 3 m

Income forecast for 2003–4

R 25 m–R 30 m,

depending on exchange rate

SBOV – emerging farmers’ organisation

FUNDING

DPLG R 2.2 m LED grant

(R 1.5 m repayable to municipality)

Dept of Agriculture R 100 000

NDA R 497 000

Farm Africa R 600 000

Loan from Land Bank R 426 000

Members 150

Shareholders in farm project 75

(45 actively involved)

Land used

– farm 2 866 ha

– commonage 3 500 ha

Cost of farm R 1 m (DLA grant)

2003 output 1 500 ostriches

Planned output 5 000 ostriches

Contact

Nico Swartz,

SBOV Co-ordinator

Tel: 053 683 0309


Kobus Vermeulen,

Gariep Financial Director

Tel: 053 683 0190


Linda van Wyk,

Thembelihle Municipality

Tel: 053 203 0008


• the scale of the enterprise and access to loanfinancing and share capital

• guaranteed demand and market for high qualityexport products

Pens leading to abattoir

SBOV co-ordinator and municipal LED officer

with ostriches

Main street, Strydenburg

▲


Tourism

Tourism is the biggest industry in the world, and often holds the greatest LEDpotential for poor, rural areas lacking skills, capital and other economicadvantages. The tourism business does not require capital, factories or skilledworkers, just a different, interesting, or authentic experience for tourists whowant to experience nature, and local people, culture and customs. The ‘product’is often ready made and simply needs to be marketed.

For example the township is there – someone just needs to organise andadvertise township tours. Tourism supports many related businesses such ashotels, bed and breakfasts (B&Bs), local restaurants and shops, car hire, taxisand bus companies. Tourists often have money to spend, can leave it behind inpoor areas, taking away nothing but the experience! But the locals need to createworthwhile opportunities for tourists to spend their money. And the longer theystay, the more they will spend.

Tourists generally don’t go to or stay long in boring, unfriendly, unsafeplaces. Create access to natural and social-cultural attractions, and ensure theyhave a happy, exciting, different experience. A bit of imagination and creativitycan make otherwise boring places into ‘must visit’ destinations. The ApolloTheatre and annual film festival at Victoria West are a good example of this.

Building social capital

Economically poor areas are often poor in ‘human and social capital’. Manypeople struggling to survive lack education, skills, and initiative, and have givenup hope of employment or a better life. There is often a culture of pessimism,and a lack of motivation and community solidarity.

In this context, any intervention that changes attitudes, develops skills andinitiative, and fosters co-operation is vitally important, particularly for youth.Programmes that provide formal or informal education and learning inorganisational and life skills and creativity are of great value for developing the‘human and social capital’ needed for successful LED. A good example is theyouth work of the Apollo Development Association via the Love Lifeprogramme, computer and video production training, and part-time work inthe theatre.

Any long-term approach to LED needs to focus on developing useful skills,and a culture of hope, creativity and entrepreneurship. Political leaders andcouncillors committed to development can play a significant role by promotinga positive culture, and facilitating initiatives that develop capacities and co-operation.

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Municipalities can help

local projects, businesses

and organisations to access

grants and support, and

poor citizens to access

social, housing and land

grants by providing infor-

mation and assisting with

applications. All grants

bring more money into your

local economy, and

contribute to poverty

reduction.

“


Supporting skills development

Many small businesses and non-profit projects fail due to lack of knowledge andskills in marketing, general and financial management and finding capital orfunding, not because they don’t have a viable product or service. Municipalitiesand their LED partners can promote skills development via a range of strategies:

SKILLS DEVELOPMENT STRATEGIES

• training programmes (especially with a number of relevant modules, withpractice in between modules)

• work experience and learnerships in existing organisations• mentorship and coaching by a person with skills and experience• a partnership with an established organisation• good, simple guide books and training manuals on bookkeeping, marketing,

financial management and fundraising• encouraging schools to focus more on practical and business skills, creativity

and entrepreneurship• support creative people and entrepreneurs in the community• a local business support centre or organisation such as a CDA

Here are a few innovative LED ideas to consider:

• Invite NGOs to your area to meet specific needs or start programmes (eg.Love Life at ADA)

• Create an exciting lead project to get things going. Often other projectsdevelop around such a project, generating both interest and funding.

• Create a local market place and sites for informal trading. This encourageslocal small-scale trade, and local production of goods and services.

• Close part of a street for a street market and social space.• Encourage waste sorting, recycling and compost making at household and

community level to support recycling enterprises and urban agriculture.• Establish an employment seeking and skills offering office to help connect

local needs and skills, and help people find work. This could include offersof volunteer assistance.

• Establish a ‘work as payment’ scheme for people who can’t afford to paytheir municipal bills or debt. This enables them to exchange work instead ofmoney for services or money owed to the municipality.

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ADA

The story started when David discovered thelast remaining Art Deco cinema in South Africa,bricked-up, dusty and unused behind the localFoschini store. He immediately recognised itshistoric value and potential for cultural tourism.The Grahamstown festival focused on theatre,Oudtshoorn on music, Vic West would do indig-enous cinema! And so the vision was born of acultural centre and annual SA film festival in themiddle of the Karoo.

In 1998 the Apollo Development Association(ADA) was established as an independent, non-profit organisation promoting ‘economic develop-ment through culture, tourism and youth training’.

The Apollo Theatre,Film Festival andDevelopment Association

The Apollo Youth Club was formed and membersbegan to clean up the cinema. Major restorationwork was made possible by a grant from De Beers,renewing an historic link – Victoria West had in itsheyday been an important stopover for prospectorsheading for the Kimberley diamond fields.

The Apollo Theatre and Conference Centre isADA’s flagship project, hosting the annual ApolloFilm Festival, ‘a showcase of South African Inde-pendent Film’ each year since 2001. It also func-tions as the local cinema, as a venue for events,conferences and workshops, and as a local culturaland skills training centre. Included in the Apollo isthe attractively appointed Diamond Café in the

When David and Gail Robbins bought an old Victorian

house in the quiet and picturesque Karoo town of

Victoria West in 1994, they thought they had found a

perfect place to periodically escape from hectic city life

in Johannesburg. David, a writer, and Gail, an indepen-

dent publisher, foresaw that they would also be able to

write and work undisturbed at their country retreat. As

it turned out, they were destined for anything but the

quiet life in Victoria West, where they became the

pioneers of the Apollo Theatre, Film Festival and Devel-

opment Association.



Today ADA has established a cluster ofprojects around the Apollo and film festivalprojects, which include• a video production unit that offers training and

use of video production equipment to localyouth.

• a catering project which services Apollo andother events

• a building construction project which hasinvolved local teams in renovations, upgradingthe area around the Apollo, and building aretaining wall along the adjacent river bank

• a craft shop plus training and support projectworking with local crafters from disadvantaged

Crowd in front of Theatre for opening

ceremony of Apollo Film Festival 2003

front foyer, a rear foyer and exhibition area, and amuseum displaying fascinating old photographicand projection equipment.

The Apollo Film Festival has proved to be aresounding success and has placed Victoria West onthe map of cultural ‘must visit’ destinations, as amecca for the local film industry, convenientlyplaced between Johannesburg and Cape Town asmajor film industry centres. The festival showcasesindigenous productions, together with presenta-tions, workshops, discussions and social events.Awards are offered for the best feature film, docu-mentary, short film, student documentary andstudent short film.


frequent failure is most often due to the lack of thenecessary support in the start-up phase.

The economic impact of the Apollo Theeconomic impact of the Apollo however goes farbeyond its own activities in terms of the influx ofvisitors, particularly to the film festival, but also toother events, and in general due to the new profileof Victoria West as a result of the Apollo. Forexample in 1994 there were only four Bed andBreakfast guesthouses. Today there are 35, showingsignificant growth if not a boom in local tourism. Itis estimated that they made R 65 000 over the eightdays of the 2003 film festival alone.

As a measure of the success of the annual filmfestival, income increased from R 17 000 in 2001to R 31 000 in 2002 to R 85 000 in 2003. Thetheatre currently subsidises ADA with overR 50 000 per annum. This clearly demonstrates theeconomic potential of the cultural sector andcultural development, and the leading role thatindependent civil society organisations can andshould play, particularly in this sector.

Cultural development activities often havesignificant potential for building social capital interms of developing skills, creativity, confidence andinitiative, and social co-operation which are all

communities, in partnership with the provincialDepartment of Arts and Culture

• a computer training centre offering part-timeaccredited courses in partnership with De AarTechnical College, which provides the coursesand a full-time teacher

• a Love Life project involved in AIDS awarenessand youth development training

• an internet café and stationery and documenta-tion centre

• a tourist information and booking officesituated at the Apollo, in partnership with themunicipality

ADA has successfully developed a cluster of projectsaround an initial flagship or anchor project, allsupported by a common governance structure andservices in terms of management, administration andfinancial management, fundraising, marketing andpartnership facilitation. Though significant fundinghas been accessed to get these projects going, and isstill needed to maintain most, the intention is thatprojects develop into viable, self-sustaining andindependent businesses over time, which will payADA for support services and rental of space.

ADA is thus serving as an incubator for realbusinesses in the real economy, rather than end-lessly dependent funded projects. This incubationfunction is vitally important, and generally lackingin the small business development sector, where

Letebele Jones,

Chairperson of the

Adjudicating panel for

AFF 2003; Andre

Marais, De Beers; Gail

Robbins, director,

organiser and founder

of the AFF; David

Robbins, founder of

ADA

Nolufefe Sonkwala,

Theatre Manager and

Clare-Rose Julius,

Tourism Officer

AFF – Apollo Film Festival in 2003


necessary to entrepreneurship, ‘employability’ andeconomic regeneration. Such activities are vital,particularly for young people, giving them meaning,hope and direction, and often lead to employment,or creation of income generating opportunities.

ADA is governed by a board consisting ofrepresentatives of the municipality, local commu-nity and Provincial Department of Arts andCulture. Gail and David as the pioneers are nowmoving on, but with the prospect of funding for anADA director for three years from the ProvincialDepartment of Sport, Arts and Culture. ADA has afull-time staff of 8 and a part-time theatre staff of15. In all ADA has raised over R 8 million in grantfunding for its activities and projects. ADA’sprinciple donors include• National Department of Arts, Culture, Science

and Technology• Northern Cape Arts and Culture Council• National Department of Environmental Affairs

and Tourism• Northern Cape Tourism Authority• De Beers Fund• Standard Bank Foundation• Standard Bank Arts Sponsorship• National Lotteries Fund• National Film and Video Foundation• Film Resources Unit

• Business and Art South Africa• National Development Agency• DGR Writing and Research cc.

The Apollo project has demonstrated both thesignificant economic benefits that tourism projectscan have, and the value and potential of culture andthe cultural sector from an economic perspective,and as a basis for LED. It should not be forgottenthat tourism is the world’s largest industry, and isboth growing and sustainable. Even where culturalassets are limited or lacking they can, unlike naturalresources, be developed if creativity and skills aredeveloped. ADA has recognised this in focusing onyouth development, as ultimately people, theircapacities and social co-operation are the greatesteconomic asset, rather than natural resources.

The role of the municipality has, in the caseof ADA, been relatively limited. Municipalrepresentatives sit on the ADA board, and initiallyfree services were provided, plus use of someconstruction equipment, but in many respects therelationship with the municipality and councillorshas been difficult. Frequent changes in politicalcontrol of the town and tension between politicalparties has disturbed and frustrated co-operation.

The development and success of ADA has alsosurfaced social tensions in the town, where thedivide between advantaged and disadvantagedcommunities remains. The Apollo pioneers aswhite, English speaking outsiders from a big cityhave been caught between the conservative andradical factions in the different communities, whoeach see the activities of ADA as benefiting theiropponents. Nevertheless ADA has found supportfrom those who are prepared to work together fromboth communities, and has strengthened real co-operation to the benefit of the whole town.

Success Factors

• developing a unique cultural asset that attractsvisitors and tourists

• capable pioneers and their commitment andvoluntary work

Community youth group performing in the Apollo precinct


• effective shared vision and co-operation inspiredby this

• focus on youth development and training as a‘cultural imperative’, and real income for theyouth group from part time work at the Apollo

• effective fundraising of over R 8 million• effective and professional marketing of the

Apollo Theatre and Film Festival• partnerships with other agencies• community involvement and representation• the cluster model, with synergy between, and

core support for projects• a business approach to LED projects• non-political stance

Problems

Problems have been:• variable and at times problematic relationship to

the municipality• antagonism of some politicians• suspicion and lack of support from opposing

factions• pioneers not being in Victoria West full-time,

lack of full-time management capacity, and lossof skilled staff

• dependence on pioneers, and moving beyondthe pioneer phase to having a paid, professionaldirector

• a culture of entrenched pessimism and de-motivation regarding development in smallKaroo towns

The ADA cluster model demonstrates thenatural developmental process of ‘one good thingleading to another’, but also the mutual reinforce-ment, synergy and support between projects. Thecluster model applied specifically to local economicdevelopment is an exciting innovation in the SouthAfrican context, though there are examples of itsapplication in community development.

ADA demonstrates the potential effectiveness ofnon-profit community development associations(CDAs) as vehicles for LED programmes. Suchorganisations have proved effective internationallyas drivers of community and local economic

renewal programmes. As civil society organisationsthey have the following advantages:• driven by community needs and development

values such as community participation• public accountability but political independence• multi-stakeholder representation• vehicles for inter-sector partnerships• focused, flexible and able to innovate• ability to raise grant funding• ability to mobilise local social capital e.g.

volunteer work, youth involvement, localcreativity and community participation

The ADA founders strongly believe that LED is notthe business of local government, though munici-palities need to play a facilitating and supportiverole. They emphasise the role of independent civilsociety organisations and particularly CDAs asdrivers of LED programmes with a cluster ofprojects, and their role in incubating projects andsupporting them to develop into independent,viable businesses. Two key success factors of CDAsare their capacity to perform this role, and theirability to raise grant funding for projects and tomaintain themselves.


PROJECT TYPE

Section 21 non-profit development

organisation supporting a cluster of projects /

Community Development Association

Funding total R 8 m

Number of full-time jobs

ADA core 5

Computer training 1

Internet café 1

Number of part-time jobs

ADA 3

Theatre 15

Craft co-op 15

Catering co-op 6

Construction co-op 10

Love Life 4

Contact

ADA

Tel: 053 621 1185



Government funding for LED

The DPLG guidebook on LED contains details, application procedures andcontact details for all of the following:

• LED Funding – DPLG / DTI / Public Works, via Provincial Department ofHousing and Local Govt.

• Tourism Development and Infrastructure, and Waste Management – Dept.of Environmental Affairs and Tourism

• Local Government Equitable Share – DPLG• Normal Finance Facilities – Industrial Development Corporation (IDC)• Bridging Finance and Guarantee Scheme – IDC• Entrepreneurial Finance Schemes – IDC• Khula Start (micro-credit) – Department of Trade and Industry (DTI)• Competitiveness Fund – DTI• DANIDA Business to Business Fund – DTI• Thuso Mentorship Programme – DTI• Small / Medium Manufacturing Development Programme – DTI• Local Industrial Park Programme – DTI and Dept. of Public Works• CMIP (Consolidated Municipal Infrastructure Programme) – DHLG• Municipal Services Partnership – DPLG• Road Infrastructure Project – SA National Roads Agency• The RDP Fund – Dept. of Finance• The Community Based Public Works Programme – Dept. of Public Works• The Working for Water Programme – Dept. of Water Affairs and Forestry• Spatial Development Initiatives (SDIs) – DTI• Land Redistribution for Agricultural Development (LRAD) – Dept. of Land

Affairs (DLA)• Land Reform Credit Facility – DLA and DTI• National Land Care Programme – Dept. of Agriculture• Housing grants – Dept. of Housing• Sports and Recreation Facilities Project – Dept. of Sport and Recreation• Child Support, Disability, Disaster Relief and Pensions – Dept. of Social

Development• Integrated Nutrition Programme – Dept. of Health• Labour Market Skills Development Programme – Dept. of Labour• Social Plan and Work Placement Programme – Dept. of Labour• Ikhwelo Programme (training and capacity building) – Dept. of Education

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Municipalities can help

local projects, businesses

and organisations to access

grants and support, and

poor citizens to access

social, housing and land

grants by providing

information and assisting

with applications. All

grants bring more money

into your local economy,

and contribute to poverty

reduction.

“


LED support organisations(Northern Cape)

Business Service Centres– Kimberley (053) 831 6696– Upington (054) 332 2822– Kuruman (053) 712 1001– Springbok (027) 718 1850– Port Nolloth (027) 851 8430

Northern Cape Manufacturing Advice Centre(NCMAC) (053) 839 5700

Northern Cape Tourism Authority (NCTA) (053) 832 2657

NCTA district offices– Upington (054) 337 2885– De Aar (053) 631 0891– Kuruman (053) 712 1001– Springbok (027) 718 2986

Northern Cape Economic Development Agency (053) 833 1503(LED, SMME development, tourism, mining,agriculture)

Municipal Training and Development Institute (MTDI) (053) 830 6320

Government Departments, Northern Cape

Housing and Local Government– LED unit (053) 830 9484– CMIP (053) 830 9609Land Affairs (land reform funding and support) (053) 831 40 90Agriculture (support for emerging farmers) (053) 838 9117Economic Affairs and Tourism (053) 830 4805

(053) 839 4007Sport, Arts and Culture (053) 831 1761Labour (skills training) (053) 838 1500Water Affairs and Forestry (053) 831 4125Public Works (053) 839 2100

District MunicipalitiesDistrict municipalities also provide LED support

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Documents

Local Development Projects