An Initial Approach to Economic Development Impact Assessment City of Cape Town Economic Development & Tourism Thursday, 21 November 2002 Carol Wright SOUTH AFRICAN CITIES NETWORK THINK-TANK ON CITY ECONOMIC DEVELOPMENT STRATEGIES

OVERVIEW OF PRESENTATION 1.Introduction 2.What is impact assessment? 3.Why do we need to measure impact? 4.What do we need to measure & evaluate? 5.Type of tools we need 6.Range of Economic Development & Tourism impact assessments undertaken 7.Financial & Economic Impact of a Joint Marketing Strategy 8.Job opportunities framework & methodology 01/02 - initial approach 9.Overview

1. INTRODUCTION - CONTEXT Think-tank discussions have covered: - Economic Development strategy frameworks - setting direction...What? - Strategy implementation - plans … How? Now brief focus on evaluating the impact of the strategy and implementation … How well are we doing? Legislative requirements: a)White paper on Local Government (1998) - steps to producing an IDP “The use of monitoring tools to measure impact and performance” b)Municipal Systems Act (32/2000 Chapters 5/6) “Develop a performance management system” (Note: Cape Town part of National Pilot Project, “Balanced Scorecard”) c)Government Gazette (No , 2001) General key performance indicators prescribed in terms of Section 43 of Mun Systems Act … incl.. “the number of jobs created through local economic development initiatives including capital projects”

2. WHAT IS IMPACT ASSESSMENT? Indicators Show/reflect conditions, but not linked to causes Performance Management Assesses more than outcomes - Council - Services/Directorates - Individuals Impact Assessment Direct link between actions and outcomes

3. WHY DO WE NEED TO MEASURE IMPACT? Key objectives of impact assessment work: - evaluate/assess outcomes in terms of resources (expenditure, time, skills) in relation to achieving strategy goals/aims - assess impact on income and budgets (MTIEF) - monitor sustainability - understand interrelationships and dependencies, plus contributions of delivery partners

Why do we need to measure impact? (continued) Plus - part of strategy process - informs/drives strategy (and business plan) - allows more flexible response to changing conditions - allows for tracking of the impact of work done Informs - service delivery improvements - decision-making - programme and project management

4. WHAT DO WE NEED TO MEASURE/EVALUATE? Strategy and implementation Strategy - Council - Directorate: “Building competitiveness/reducing poverty” framework Programmes - Mega projects e.g. Convention Centre - Specialised service focussed e.g. community based job creation programme or major events Projects - large, small - theme based e.g. “job opportunities”

5. TYPE OF IMPACT ASSESSMENT TOOLS WE NEED The process by which one determines what to measure, how to measure and to use the measures is more important than the product itself Product: - set of tools (info tables, databases, models, systems and reports) - set of guidelines/principles Tools to be: - easy to use, input/monitor and report on - repeatable and reliable - transparent & unambiguous - cost efficient (cost of measuring should match business benefits) - integrated with other processes

6. RANGE OF ECONOMIC DEVELOPMENT & TOURISM IMPACT ASSESSMENTS UNDERTAKEN IMPACT ASSESSMENTS UNDERTAKEN Initial research (1998) Economic and Social Impact Assessment - methods & application Strategy - Inputs to Corporate Balanced Scorecard process - Financial and Economic Impact of a Joint Marketing Strategy - Business Review & Assessment Framework: assessment of relative impact and sustainability of business programmes (in progress) Programmes - Convention Centre Impact analysis - Foreign direct investment (Wesgro)

Range of Economic Development & Tourism Impact Assessments undertaken (continued) - Major Events: Early pilots: Navy week, “Golden Oldies” Rugby Framework currently being developed to measure: economic environmental social & cultural impact Pilots: Volvo Ocean Yacht Race (in partnership) Cape Argus Pick ‘n Pay Cycle Tour - Evaluation of 26 community-based job creation and small business projects (metropolitan and local impact) - Community-based Tourism Development Fund: initial framework - Job Opportunities framework

TWO EXAMPLES OF IMPACT ASSESSMENTS/FRAMEWORKS Financial and Economic Impact of a Joint Marketing Strategy Job opportunities framework

7. FINANCIAL & ECONOMIC IMPACT OF A JOINT MARKETING STRATEGY MARKETING STRATEGY Aim: To provide framework & model to assess & quantify a Joint Marketing Strategy Key objectives To assess: - extent of increased marketing efforts - increase in direct marketing impact - macro-economic impact of joint marketing strategy - broader economic impact of joint marketing strategy Methodology - scenario building approach - single possible hypothetical joint marketing structure

Financial & Economic Impact of a Joint Marketing Strategy (continued) Challenges - Methodology & model, especially evaluation of “brand” - Evaluation of broader economic benefits - complex, qualitative - Data availability and collection - Data comparisons across sectors Lessons - Key strategic input: business case driver of strategy & implementation - Produced unexpected key leverage area stimulation between sectors

Financial & Economic Impact of a Joint Marketing Strategy (continued)

8. JOB OPPORTUNITIES FRAMEWORK & METHODOLOGY - INITIAL APPROACH - INITIAL APPROACH Approach to Job Creation Based on the White Paper on Local Government (1998), which states the following: “… local government should take active steps to ensure that the overall economic and social conditions of the locality are conducive to the creation of employment opportunities, rather than directly creating jobs…”. Cognisance is also taken of the National requirement for job creation indicators as one key performance measure: General Performance Indicators: 10(d) “… Number of jobs created through a municipality’s LED initiatives, including capital projects” Government Gazette No (24 August 2001) (Vol. 434) Short Review - No ready made tools which matched ED&T’s needs - Complex casual and outcome effects make it challenging to accurately assess the impact (direct or indirect) of the specialised services and programmes/projects provided by ED&T Directorate.

Job Opportunity Framework & Methodology - Initial Approach (cont.) Evaluation approach Short term: to develop an initial ED&T approach and methodology, to define job opportunities and to capture the ED&T information for the period - accepted result would be “ high level ” - use to inform refinement Medium term: to develop a refined, robust approach, methodology and process to collect and monitor ED&T direct jobs and job opportunities Methodology a) Job opportunity defined Working definition: - direct jobs created through the Council ’ s funding of a specialised economic development and/or - indirect job opportunities created through access to training, advice and mentoring programmes

Job Opportunity Framework & Methodology - Initial Approach (continued) b) ED&T customer/stakeholder job opportunities performance targets were set for 2001/2002 These were based on an initial estimate: - less than 7000 job opportunities = average contribution - more than job opportunities = above average contribution - more than 8000 job opportunities = outstanding contribution c) A simple framework for recording the ED&T 2001/2002 job opportunities performance targets was set up All ED&T business plan programmes (and projects) which delivered either direct jobs and/or job opportunities in 2001/2 were recorded under the following services: - Foreign Direct Investment - Wesgro - Small Business Support - Tourism - Conventions, Incentives & Leisure - Tourism Development - Cape of Great Events - City Improvement Districts - Sector Support Initiatives - Informal trading services & markets - Mun Tender Advice Services & Corp Procurement

Job Opportunity Framework & Methodology - Initial Approach (continued) d) Simple ED&T guidelines or assumptions were developed to estimate the number of direct jobs and job opportunities of each ED&T programme In the absence of precedents or clear research-based guidelines, the ED&T staff directly involved in the programmes and projects made inputs to the assumptions and every attempt was made to: - consult programme/project/practitioners on the ground for guidance in setting the assumptions - develop and use conservative assumptions and numbers - use existing norms and job multipliers; and - access the most detailed current information

Job Opportunity Framework & Methodology - Initial Approach (continued) Examples of ED&T job opportunities assumptions: SMALL BUSINESS SUPPORT Direct Jobs x number of placements/employed equals x number of direct jobs 1 start up business supported equals 2 direct jobs x hive occupied equals 2 direct jobs Job Opportunities 1 in 25 people provided with info equals x job opportunities x number of trainees/course attendees/business advice equals x number of job opportunities

Job Opportunity Framework & Methodology - Initial Approach (continued) e) The ED&T job opportunities, assumptions and numbers were cross-checked and refined - over direct jobs and - over job opportunities were delivered Based on the programme/project objectives, 90% of job opportunities were created for historical-disadvantaged individuals or affirmable small business enterprises

Job Opportunity Framework & Methodology - Initial Approach (continued) f) Challenges Overall Approach: Any methodology to assess numbers of direct jobs/job opportunities should be part of a broader methodology to evaluate and monitor the impact of ED&T services on overall the Directorate business performance Ideally, an accessible model and tools should be developed to evaluate the Directorate ’ s overall impact, service impact as well as programme and project impacts Appropriate tools and systems and training should be put in place to support the development and monitoring of job opportunities information

Job Opportunity Framework & Methodology - Initial Approach (continued) Within ED&T service programmes: The range and type of programmes within ED&T service varies considerably which makes the development of job opportunities assumptions complex, difficult to compare and there may be overlaps. E.g. within sector support initiatives, different job opportunity assumptions apply to the IT sector and urban agriculture. The exact impact of ED&T programmes/projects in terms of job opportunities is difficult to isolate - other stakeholders ’ activities may potentially also have an influence. ED&T programmes and projects objectives may have intended impacts other than job opportunities. E.g. a number of ED&T services and programmes are aimed at providing a business and visitor friendly environment. ED&T programmes and projects ’ job opportunities impacts may not be realised in a financial budget year and need to be monitored overtime to ensure that the jobs are sustainable.

Job Opportunity Framework & Methodology - Initial Approach (continued) Between ED&T service programmes: There may be multiple “ knock-on ” impacts of ED&T job opportunities between service programmes which are difficult to identify and measure There may be “ double counting ” between certain of the ED&T services, although this was carefully minimised No prioritisation or weighting was made of job opportunities assumptions or numbers between ED&T service programmes Other: Base line data is difficult to access

Job Opportunity Framework & Methodology - Initial Approach (continued) The initial tables and review produced are valuable as for the first time in Council, a Directorate has grappled with the complexities and practical implementation of a job opportunity framework and system. Useful learnings and possible improvements will also inform the development of a more focussed refined approach and methodology - currently underway to be used by ED&T in 2002/3.

9. OVERVIEW Need to develop a framework to assess impact of strategy, programmes, projects complex and challenging Need to assess more than economic impacts. Social, cultural and environmental impacts must be included Need to integrate impact assessment work into all business processes; plus align measures and reports for Corporate & Directorate use Specialised skills and inputs are needed, plus all Economic Development Councillors and Officials should have some exposure/capacity building in impact analyses and evaluations Ideally, full time dedicated resources needed Base data and support systems need to be in place (definitions, data, information, models, guidelines and systems for capturing, reporting etc.)

Overview (continued) Impact assessment is an area of work which is critical to Economic Development as a local government function Impact assessment forms a critical part of the strategy framework and implementation process Some initial thinking and assessments have been undertaken but this needs to be actively taken forward An important area to share lessons, linkages and how evaluation works in practice - the SA Cities Network can assist with this process