Transcript LGSP - M&E - Project Team Training Session

Local Economic Development (LED)
DISTRICT CLUSTER WORKING SESSION
February 2006
PROJECT LOGO
GOES HERE IN
MASTER SLIDE
LGSP is financed by USAID and is being implemented under the technical guidance of Research Triangle Institute, http://www.rti.org.
What is Local Economic Development (LED)
LED is a locally driven process designed to
identify, harness and utilise local resources,
where possible, to stimulate the economy and
create new job opportunities.
LED entails the mobilisation of local role players,
resources and interests to realize the
economic development opportunities of a local
area
Background to Local Economic
Development (LED)
LED was development as an approach in
response to the pressures brought about by
globalisation. Its popularity coincided with the
global trend of decentralising power from
national to local government
LED was first implemented in developed
economies during the 1960s and was only
implemented in developing economies in the
late 1980s
LED in South Africa – Goal and Objectives
LED Goal in SA
• To maximise economic potential of all localities in the country through increased
economic growth and employment creation
• To enhance the resilience of macro-economic growth through LED actions within
the context of sustainable development.
LED Main Objectives:
• To create employment.
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Co-ordination and integration.
• To stimulate economic development.
• To stimulate local resources and to utilise connections between the social,
cultural, environmental and economic linkages.
• Partnership establishment.
• Capacity building.
• Broad Based Black Economic Empowerment
• Fighting HIV/AIDS.
The Role of the Municipality and Councillors in LED
The White Paper on Local Government reinforces the mandate to municipalities to
become involved in LED through the concept of “Developmental Local Government
“defined as”
“Local government committed to working with citizens and
groups within the community to find sustainable ways to meet
their social, economic and material needs, and improve the
quality of their lives”
Councillors in their personal and collective capacities can also contribute
significantly to LED through:-
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Leadership
Policy maker.
Entrepreneur
Promoter
Catalyst
Lobbyist
LED and Organizational Fit
• This will differ from municipality to municipality.
• It will depend on the IDP of the municipality and the
resources, skills, and capacity it has at its disposal.
• In established municipalities, LED may be driven by a
separate directorate (e.g. metros)
• In smaller less resourced municipalities LED may be the
responsibility of the municipal manager or the IDP manager.
LED definitely requires political support and should
become the responsibility of every councillor as he/she
goes about his/her daily work.
Why has LED not been as successful as one
might expect?
LED initiatives in developing countries suffer from four typical inherent
problems:
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Strategy and a planning-driven approach
Confusion between community development and LED.
An unclear theoretical and conceptual background for LED
Good governance of LED:
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A bottom-up, action-driven participatory approach is more promising
than approaches which presuppose lots of institution and capacity
Action-oriented approaches are more promising than approaches
which put huge re-sources in terms of time and money into analysis
before any implementation happens.
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Building Block for LED
• Attract
• Lead
• Build
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Production
Consumption
Government & Finance
National Surplus
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Good Governance
Efficiency
Economic Strategy
Spatial Plan
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Skills & Institutions
Entrepreneurship
Trust & Participation
Information Flows
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Buy Local
Cross-subsidise
Linkage
Local Partnerships
• Circulate
Factors Impacting on LED Initiatives
1. Institutional set up of Government Structures and the
alignment of Policies and Programs.
2. Balanced LED plans
3. Support Systems for Entrepreneurial Institutions
4. Information on Economic Development Opportunities
5. People and Socio Economic Focus.
6. Marketing of the municipality as a haven for investment
7. Human Resource Development
8. Building Partnerships
9. Ensure Sustainable Economic Outcomes
10.Innovative and Creative Response
11.Financial Position of the Municipality
12.Implementation of Monitoring and Evaluation Systems
Strategic Challenges facing LED Initiatives
1. Lack of National Policy and Strategy Coherence
2. Functional Specialisation and Uncoordinated Actions
3. Lack of Dedicated LED Institutions
4. Shortage of LED Capacity and Skills
5. Lack of Clear Roles and Responsibilities
6. Competitiveness of Local Areas and IDP’s
7. Poor Financial Position of Municipalities
8. Poor Access to Accurate Information
9. Ineffective Monitoring and Evaluation
10.Project Based Initiatives
11.Poor LED Integration with Municipal Priorities
BUSINESS RETENTION, EXPANSION AND ATTRACTION
The retention, expansion and attraction of business
and industries is one of the most productive ways of
creating employment and stimulating the economy
• Retention and Expansion - most productive
approach to increase economic base. Local
authorities can help create an environment for growth
• Attraction - new businesses help create jobs. Local
authorities could provide incentives
INFRASTRUCTURAL DEVELOPMENT
• Business retention and attraction requires a well
developed infrastructure.
• Infrastructure development through Expanded Public
Work Programmes (EPWP) will further reduce
unemployment thus reducing over reliance on
governments’ grants.
• Infrastructural development is possible when the role
players e.g. Municipal Infrastructure Grants (MIG),
Provincial Infrastructure Grants (PIG) are playing a
visible role.
MIG AND PIG INVOLVEMENT SHOULD SEEK TO SUPPORT
AMONG OTHERS A:
• Consolidated Municipal Programme, in support of
internal bulk, connector infrastructure and community
facilities to poor households;
• Water Services Capital Fund, in support of bulk,
connector and internal infrastructure for water
services at a basic level;
• Community based Expanded Public Works
Programme, in support of the creation of community
assets
in
rural,
historically
disadvantage
communities.
INFRASTRUCTURAL DEVELOPMENT
• LED Fund, in support of planning, and
implementation of job creation and poverty
alleviation;
• Building support for Sport and Recreation
Programme to sustain sport and recreation facilities
within disadvantage communities; and
• Electrification funding in support of addressing the
electrification backlog of permanently occupied
residential dwellings that are situated in historically
under supplied areas.
Promotion and Marketing
Legal Considerations and Funding
• Promotion & Marketing - Develop a local marketing
strategy whether the function is outsourced or not
• Legal Considerations – Land, planning legislation,
zoning, investments, loans / start up / venture capital &
health and safety bylaws
• Funding - Funding for development programs initiated
by the municipality can be obtained from public and
private sources.
Proposals should answer 10 vital
questions
LED Planning – issues to consider
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Political leaderships
Involvement of stakeholders.
Over dependence or reliance on government programs
Ensure that you have the human resources and
expertise to support the investors wishing to establish
in your area.
Be careful in the selection of your economic activity.
Do not underestimate the potential of women and the
youth in LED initiatives.
Do not confuse LED with community development
Be aware that the concept of LED is relatively new
Do not embark on costly surveys to establish market
needs or local business frustrations
Where possible use existing structures to consult
around LED issues.
LED in Small Towns
Small town development, and its long-term viability is essentially
about two key issues.
• The economy
• Process – identifying and harnessing local resources
It is extremely important that councillors involve communities in:
• Identifying the community's competitive advantage and determining
their aspirations.
• Bring money into the community and keep money circulating
• Explore and identify new market possibilities
• Understand the complexities of existing markets better.
• Find new resources and use resources more effectively.
• Create strategic alliances between key groups.
• Increase the net number, quality and variety of local jobs
Leadership and LED
The most critical factor in determining the growth
or decline of rural communities is leadership
Successful economic development initiatives are
driven by high energy visionaries
"movers and shakers“ with:• A positive attitude towards change & experimentation
• A commitment to the mobilisation and involvement of
local people
• A commitment to process
• The ability to generate new ideas, thinking and
community Involvement
LED Strategies and Investment Tools
Strategies
• Enhancing the Attractiveness of the Community to Visitors
• Business Community Involvement
• Fostering Local Entrepreneurs and New Business Formation
• Strengthening the Existing Business Base
• Plugging the Leaks in the Local Economy
• Improving Infrastructure
Investment tools (instruments) used by municipalities to
influence the local economy, and enhance the development
potential of the area
• Cost Reduction Tools
• Capacity Improvement Tools; and
• Market Expansion Tools
LED and Poverty Alleviation
Poverty is characterised by not only a lack of assets and the
poors’ inability to accumulate an asset portfolio, but also by
an inability to devise an appropriate coping or management
strategy.
Steps towards expanding the asset base of the urban poor include:-
• Enhancing access to: water supply, sanitation, refuse removal,
drainage, flood protection, local roads, and public transport,
• Employment creation
• Security and protection from crime and natural disasters
• Co-ordination and integration of both NG0s and private sector
organisations.
• Intergovernmental support
Institutional Options for LED
Institutional options offering potential benefits
for the management, implementation and
monitoring of LED programmes and /or
projects.
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Municipal LED units;
Community development trusts;
Section 21 companies; and
Partnerships with other stakeholders
Direct and Indirect Roles of Municipality in LED
Direct roles of
municipalities in LED
Indirect roles of
municipalities in LED
• Policy formulation and
leadership
• Collation and interpretation
• Coordination of local
initiatives
• Provision of business
infrastructure,
• Support to SMMEs,
• Development of incentives.
• Creation of an enabling
environment
• Improvement of operational
efficiency
• Facilitation
• Attraction of development
funding
• Dissemination of
information.
Promoting Entrepreneurs and SMME’s
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Start-up and Venture Capital
One-Stop Centres
Local Business Service Centres
Tender Reform
Utilising Municipal Land, Buildings and Other
Public Assets
• Incubators