Empowering Municipalities for Economic Development

1. SESSION 3: ‘Empowering Municipalities to deal with Economic Development’ - Dudley AdolfDirector: Economic DevelopmentDepartment of Economic Development Western Cape Province4 March 2004 IDP Conference 2004“Developmental Governance in Action”

2. CONTENT • Background • Ideal Situation • Current Situation • Possible Solutions • The Way forward

3. Background • Clause 152 (1) (Constitution of RSA)“The objects of local government are-(c) To promote social and economic development” • Clause 153 (Constitution of RSA)“A municipality must –(a) promote the social and economic development of the community(b) participate in national and provincial development programmes

4. Ideally…Economic development should be • Sustainable outcome based on local initiative and driven by local stakeholders • Involves local ideas, innovations, resources and skills to stimulate growth • Aim is to create employment opportunities, alleviate poverty and improve the living standard and quality of life of all residents

5. Ideally… it should be based on • Shared vision based on a comprehensive strategicplan • Critical mass of resources to promote/ manage theLED-process • Effective organisational structure • Close co-operation with the National & ProvincialGovernment and District Municipalities

6. Currently there is ... • Weak institutional support for economic development • Lack of baseline information leading to poor plans • Insufficient focus and institutional readiness • Unclear mandates creating overlaps and duplication

7. Currently ... IDP and Economic Development ? “The IDP process to date indicated the lack of understanding and capacity within local authorities, to deal with LED issues and responsibilities” - DPLG (2002)

8. How do we move forward to create growing towns and regions? A few facts we need to consider …

9. Key fact 1Economic Development requires resources and assets • Human– capacity for basic labour, skills and good health • Physical– access to infrastructure • Natural- land • Financial– savings and access to credit (grants) • Social– networks of contacts

10. Key fact 2 • Efforts to address past and current social inequalities should focus onpeople not places. • In localities where there are both high levels of poverty and development potential, this could include fixed capital investment beyond basic services to exploit the potential • In localities with low development potential,government spending, beyond basic services, should focus on providing transfer, human resource development and labour market intelligence. • Mobility to choose places that are likely to provide sustainable employment or other economic opportunities

11. Key fact 3 • Spending by government is likely to be more effective if aligned with social, environmental and economic trends in your area • Economic growth is most likely to continue where it has previously occurred, and therefore economic potential is the highest in these localities • Even in localities with unexploited potential (natural resource endowment, human resources and forward-backward linkages to other economic processes),such potential can only be unlocked if linked to primary centres of economic growth. • Research indicates that primary growth centres provide the human, financial and institutional resources necessary to develop the under exploited potential of other localities(see National Spatial Development Perspective)

12. What now … • It is important to have an accurate description of you area as it currently exist. • A baseline profile of the cities economy that allows you to isolate the drivers of you economy and the resistors Simplicity is the key …..

13. Resisting forces leading to deterioration ASSET BASE Drivers leading to improvement Human Assets– labour, skills and good health Physical Assets– access to infrastructure Natural assets- such as land Financial assets– tax base, savings and access to credit (grant’s) Social Assets- networks of contacts, common or shared vision, social integration Fact 1 Fact 2 Fact 3

14. Sector potential... GROWTH SECTORS CLOTHING&TEXTILES AGRI CULTURE OIL AND GAS BIO TECH ? SMME CMT AGRO PROCESS LINK PROCURE MENT BEE MONATIC JV’S DOWN STREAM ENGIN-EERING ? EQUITY IDP/LED ATLANTIS MICHELLS PLAIN TARGET AREAS potential WEST COAST ? HRD DESIGN ELSEN BURG METALS ? Or … NOPotential

15. Marketingsales,delivery,service Humanresourcemngt &dev. Technicalskills(product & service) Marketopportun-ities Empower-ment Formal InformalBusiness SECTOR Businesssophistication Demand andSupply D R D R D R D R D R D R D R GloballyCompetitiveFirms + + + + + +/- + + + + + + + +/- Growth-orientated + + + + + +/- + + - + - + - +/- Emerging/stable firms + - + - + - + - - - - - - + Survivalist/necessityentrepreneurs + - - - + - - - - - - - - - BUSINESS ANALYSIS... PROCESSING RELATED EMPOWERMENT ON FARMS FINANCE SUPPLY: TRADITIONAL OR DEVELOPMENTAL D = Driver R = Resistor

16. Growth, employment ASSET BASE Transforming Leadership Diminishing Barriers Becoming a better place Believing we are worth it Desired outcomes, targets, methodologies

17. Macro Context NATIONAL PROVINCIAL Micro-economic Strategy Provincial Growth & Development Strategy URBAN RENEWAL GROWTH & DEV SUMMIT RURAL DEVELOPMENT Metro & Districts Social Infrastructure IDP Basic Services LED Economic Base

18. CONCLUSION Way forward is a Structure or Function to address the following in a region: • Maintain economic baseline information • Maintain awareness of any economic opportunities or threats • Awareness of existing state law, policy, legislation & investments • Access point for information and a distribution point to service municipalities, provincial and national departments, agencies and the private sector