PLANNING AND ORGANISING local economic development ArR720S: applied regional and RURAL economic development

outline Local economic development: why, what, who, where and how P3 processes and tools LED approaches/strategies: categories, planning, implementation and delivery Discussions and review

objectives To examine the meaning, actors and elements involved in local economic development (theme I) To discuss the approaches and strategies associated with local economic development (theme II) To engage students and assess their understanding through interactive discussions

Theme I LED meaning, actors and elements

introduction Globalisation, removal of trade barriers and increased competition Opportunities and threats Colonial history and reliance on commodities Citizen participation in economic decision-making Creativity, innovation and democratic decentralisation

Why is local economic development (led) important? Strengthening local economic capacity Improving investment climate Enhancing productivity Ensuring competitiveness of businesses, workers and entrepreneurs

What is led? An ongoing process A process driven by local actors from different sectors Joint planning: people, business and government Citizens and their needs Private enterprises and the need for an enabling business environment Government obligations Implementation by public, private and non-governmental sectors

Definitions of led “LED is an ongoing process by which key stakeholders and institutions from all spheres of society, the public and private sector as well as civil society, work jointly to create a unique advantage for the locality and its firms, tackle market failures, remove bureaucratic obstacles for local businesses and strengthen the competitiveness of local firms.” (GIZ)

Definitions of LED (cont’d) “LED is a participatory process which encourages social dialogue and public-private partnerships in a defined geographical area. LED enables local stakeholders to jointly design and implement a development strategy which fully exploits local resources and capacities, and makes use of the area’s comparative advantages.” (ILO)

South African government’s vision for local economies “Robust and inclusive local economies exploiting local opportunities, real potential and competitive advantages, addressing local needs and contributing to national development objectives” (National Framework for LED, 2006-2011).

South African government’s vision for local economies (cont’d) Notion of developmental local government: characteristics (White Paper on Local Government, 1998) Maximising economic growth and social development Integrating and coordinating Social development Leading and learning

Who is responsible for driving led? Partnerships are important Alignment of development strategies at national, regional and local levels Essential roles of national and local governments

Role of national government Coordinating and supporting activities of municipalities Providing legislative and regulatory framework Maintaining inter-governmental relationships Providing resources and disseminating information Increasing administrative efficiency Monitoring outcomes and impact

Role of local government Prioritising social and economic development Conducting studies on local economic regeneration Establishing capacity for inter-departmental collaboration Creating a forum for mobilisation of resources and efforts Establishing and maintaining an economic database Identifying and marketing new economic opportunities Creating an enabling environment for local businesses Communicating and networking with key role players Mobilising civil society and encouraging public participation

Where to unlock led Factors that influence the choice of a LED approach: Local economic structure Existing businesses and leading sectors Local communities The business environment Human resources and a skilled workforce Networks and partnerships

How to develop and implement led Get the basics right Understand the local economy Plan for LED and develop the strategy Prepare for implementation Measure results and impact

Elements of the led strategy Vision Goals Objectives Programmes Projects and action plans

How to prepare for and affect led Recognition of unique local conditions and relative advantages Investment: government and private sector, skills and continuous learning

Prevailing situation Much of existing LED materials focus on theoretical issues Relatively low emphasis on implementation Practitioners not well-equipped to tackle problems

P3: Partnership, participation, progress Membership: Sweden, South Africa, Namibia and Botswana 2010/2011: supporting 25 municipalities – transparency, relations between local government and citizens LED component: municipality impact on business enabling environment

P3 Processes Supply-side LED interventions to promote capacity building Selection criteria: stability, staff, satisfactory performance, core competencies

P3 tools LED roundtable concept: new in Namibia and Botswana Red-tape reduction: process/regulatory review, improvement and efficiency Business retention and expansion: feedback, partnership formation, responsible business Plugging the leaks in the economy Business enabling environment surveys

Theme i: discussion questions Discuss the historical origins of local economic development (LED). What is LED? Why is LED important? Discuss the South African government’s vision for local economies. Who is responsible for driving LED and what are their roles? Where can LED be unlocked? How does one develop and implement a LED strategy? Examine the elements entailed in a LED strategy. What is P3? Discuss the processes and tools associated with this initiative.

Theme II LED approaches and strategies

Introduction: local economic Development (led) Traditional LED approaches: competing municipalities Offering of incentives e.g. tax rebates, utility subsidies

Categorising approaches to led Entrepreneurial competitive strategies Local comparative advantages and small business job creation Urban efficiency Local authorities and urban productivity

Categorising approaches to led (cont’d) Progressive competitive strategies Human resource development Community based strategies Sustainability, working with low-income communities and organisations

Led Developmental approaches Community-based development Municipal grassroots assistance Linkage between profitable growth and redistribution Construction linkage, balanced investments by financial institutions Human capital development Living wages and productivity

Led Developmental approaches (cont’d) Infrastructure and municipal services Reliable, cost effective service delivery Leak-plugging in the local economy Use available resources, buy local, utilise local expertise Retaining and expanding local economic activity Enhanced productivity, increased market share, value addition

Lessons from south Africa First ten years of democracy: limited sustainability and partnership building in LED Direct funding and lack of local markets Poverty alleviation: strong state intervention Local Economic Development Fund: Department of Provincial and Local Government Economic growth: creation of enabling environment

Lessons from south Africa (cont’d) Small local authorities: project focus, service delivery, public works, SME development, compliance with statutory requirements Large local authorities: institutional market enabling frameworks, conducive business environment, business clusters and retention, red tape reduction

Led strategy development tools Strengthening local economy and building local capacity Time frame: 3-8 years Annual implementation plans

led: a five stage strategic planning model Organising the effort Competitive assessment Strategy making Strategy implementation Strategy review

Organising the effort Create an internal group Manage and engage stakeholders Establish an ad-hoc/steering committee

Competitive assessment Conduct a SWOT analysis: initial rough draft, formal final presentation

Strategy making Create a vision Develop goals Create specific objectives Develop programmes and projects to achieve the objectives

Strategy implementation Project responsibility Targets: output, time and funding Reporting structures Performance measures, monitoring and evaluation

Strategy review Validity of SWOT analysis Required changes Project achievements Performance indicators

Led delivery mechanisms Public sector Public and private sectors Private sector

Funding a led strategy Competition for scarce resources LED strategies must have budget attached to them Sources of LED funding: Local government revenue Sale or renting of local government property Intergovernmental transfers International donor grants and loans Private sector funding Foundations

Assessing quality of led strategies Two schools of thought Develop credible LED strategies Implement pragmatic, bottom-up initiatives to improve local economy Ideal situation: good strategy and good implementation

Assessing quality of led strategies: important questions Timeline Implementation plan Method Implementation budget Data quality and depth Uniqueness and focus of strategy Internal LED capacity Key economic sectors

Assessing quality of led strategies: important questions (cont’d) Problem analysis and solution identification SWOT Public participation Private sector involvement Alignment with regional/national development policies Scenario planning Existing LED activity Concise strategy and clear layout

Theme II: discussion questions Discuss the various categories of approaches to LED. Examine the main LED developmental approaches. What are some lessons from South Africa with respect to LED? Assess some major LED strategy development tools. Examine the five-stage strategic planning model associated with LED. Discuss the various delivery mechanisms entailed in LED. What are the main elements and sources associated with funding a LED strategy? Examine the major schools of thought and questions entailed in assessing the quality of LED strategies.

Review: theme I Sub-theme Details Local economic development (LED): historical origins Globalisation, colonial history and citizen participation Why is LED important? Strengthening local economic capacity; improving investment climate; enhancing productivity; ensuring competitiveness of businesses, workers and entrepreneurs What is LED? An ongoing process; a process driven by local actors from different sectors South African government’s vision for local economies Robust and inclusive local economies; maximising economic growth and social development; integrating and coordinating; social development; leading and learning Who is responsible for driving LED? Partnerships are important; alignment of development strategies at national, regional and local levels; essential roles of national and local governments Role of national government Coordinating and supporting activities of municipalities; providing legislative and regulatory framework; maintaining inter-governmental relationships; providing resources and disseminating information; increasing administrative efficiency; monitoring outcomes and impact Role of local government Prioritising social and economic development; conducting studies on local economic regeneration; establishing capacity for inter-departmental collaboration; creating a forum for mobilisation of resources and efforts; establishing and maintaining an economic database; identifying and marketing new economic opportunities; creating an enabling environment for local businesses; communicating and networking with key role players; mobilising civil society and encouraging public participation Where to unlock LED Local economic structure; existing businesses and leading sectors; local communities; the business environment; human resources and a skilled workforce; networks and partnerships How to develop and implement LED Get the basics right; understand the local economy; plan for LED and develop the strategy; prepare for implementation; measure results and impact Elements of the LED strategy Vision; goals; objectives; programmes; projects and action plans P3: Partnership, participation, progress Membership (Sweden, South Africa, Namibia and Botswana); 2010/2011 - supporting 25 municipalities (transparency, relations between local government and citizens); LED component - municipality impact on business enabling environment P3 processes Supply-side LED interventions to promote capacity building; selection criteria (stability, staff, satisfactory performance, core competencies) P3 tools LED roundtable concept; red-tape reduction:; business retention and expansion:; plugging the leaks in the economy; business enabling environment surveys

Review: theme II Sub-theme Details Categorising approaches to LED Entrepreneurial competitive strategies; urban efficiency; progressive competitive strategies; community based strategies LED developmental approaches Community-based development; linkage between profitable growth and redistribution; human capital development; infrastructure and municipal services; leak-plugging in the local economy; retaining and expanding local economic activity Lessons from South Africa First ten years of democracy: limited sustainability and partnership building Poverty alleviation: strong state intervention Economic growth: creation of enabling environment Small local authorities: project focus, service delivery, public works, SME development, compliance with statutory requirements Large local authorities: institutional market enabling frameworks, conducive business environment, business clusters and retention, red tape reduction LED: a five stage strategic planning model Organising the effort; competitive assessment; strategy making; strategy implementation; strategy review LED delivery mechanisms Public sector; public and private sectors; private sector Funding a LED strategy Competition for scarce resources and budgeting; sources - local government revenue, sale or renting of local government property, intergovernmental transfers, international donor grants and loans, private sector funding, foundations Assessing quality of LED strategies Two schools of thought: develop credible LED strategies; implement pragmatic, bottom-up initiatives to improve local economy Ideal situation: good strategy and good implementation Assessing quality of led strategies: important questions Timeline; implementation plan; method ; implementation budget; data quality and depth; uniqueness and focus of strategy; internal LED capacity; key economic sectors; problem analysis and solution identification; SWOT; public participation; private sector involvement; alignment with regional/national development policies; scenario planning; existing LED activity; concise strategy and clear layout

Plan for next TWO weeks Lecture: Practical Examples and Case Studies of LED Activities and Initiatives in Namibia Group Presentations Review for Test 2

references Martindale, L. and P3 Team (2012). Develop your own LED strategy: creating a credible LED approach for your municipality. A local economic development toolkit for South Africa, Namibia and Botswana. Martindale, L. and P3 Team (2012). From words to action: making it work on the ground with LED tools. A local economic development toolkit for South Africa, Namibia and Botswana. South Africa LED Network and South Africa Local Government Association (2011). A councillor's guide to local economic development in South Africa. The why? what? who? and how? of LED.