IDP Conference 2004 “Developmental Governance in Action” SESSION 3: ‘Empowering Municipalities to deal with Economic Development’ ‘Empowering Municipalities to deal with Economic Development’ - Dudley Adolf Director: Economic Development Department of Economic Development Western Cape Province 4 March Dudley Adolf Director: Economic Development Department of Economic Development Western Cape Province 4 March 2004

Background Ideal Situation Current Situation Possible Solutions The Way forward CONTENT

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

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

Ideally… it should be based on Shared vision based on a comprehensive strategic plan Critical mass of resources to promote/ manage the LED-process Effective organisational structure Close co-operation with the National & Provincial Government and District Municipalities

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

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

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

Key fact 1 Economic 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

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

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

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

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

GROWTH SECTORS EQUITY CLOTHING & TEXTILES AGRO PROCESS BEE AGRI CULTURE SMME CMT MONATICJV’S IDP/LED ATLANTIS MICHELLS PLAIN LINK PROCURE MENT OIL AND GAS TARGET AREAS WEST COAST DOWN STREAM ENGIN- EERING ? BIO TECH METALS ELSEN BURG DESIGN HRD potential ? ? ? Sector potential... Or … NO Potential

SECTOR Business sophistication Formal Informal Business Market opportun -ities Technical skills (product & service) Empower -ment Marketing sales, delivery, service Human resource mngt & dev. Demand and Supply DRDRDRDRDRDRDR Globally Competitive Firms / Growth- orientated / Emerging/ stable firms Survivalist/ necessity entrepreneurs FINANCE SUPPLY: TRADITIONAL OR DEVELOPMENTAL PROCESSING RELATEDEMPOWERMENT ON FARMS BUSINESS ANALYSIS... D = Driver R = Resistor

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

Macro Context Micro-economic Strategy Provincial Growth & Development Strategy Metro & Districts URBAN RENEWALGROWTH & DEV SUMMITRURAL DEVELOPMENT IDP Basic ServicesSocial Infrastructure LED Economic Base NATIONAL PROVINCIAL

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