Local economic development?—what’s missing?

2013-10-25 00:00

THE role of local government may appear straightforward. The service-delivery agenda may be clear and adequately funded for the infrastructure delivery programme; however, local economic development (LED) staff are left to their own devices. They have to balance the expectations of their political principals with the realities on the ground.

Many municipalities hold LED summits every year, but do they yield the expected results?

Is LED the most frustrating mandate in local government? The biggest frustration of local government has been the disappointment with regard to achieving tangible results within the LED agenda.

The social and economic-development space is swamped in the state-driven and civil-sector development programme. Government services are keeping the economies of many rural towns alive. We see new settlements along the transport corridors in many rural communities, which present multiple economic opportunities. However, it is not clear whether the municipal LED programme is playing its part in all of this.

Municipal officials may have a good understanding of LED and may see the boundary between welfare programmes and the support of enterprise development. However, the pressures to deliver targets that are contained in the Integrated Development Plan (IDP) tend to blur the lines and cause a divide between poverty alleviation and economic-development imperatives.

The populist tradition associated with the five-year political term tends to reinterpret LED programmes as poverty alleviation. Municipalities end up funding small-scale income-generating projects that don’t survive the harsh realities of the market.

The IDP is supposed to achieve the integration and alignment of all development plans in the municipal space. However, it would appear that some LED plans hardly talk to other municipal sector plans such as Water Services Development plans, Disaster Management plans, Waste Management plans, and other infrastructural service-delivery programmes.

The point here is that LED seems to lose many opportunities presented by the infrastructure programme and other service-delivery plans. Municipalities struggle to augment inter-departmental collaboration that would maximise the use of resources, which in the end would deliver the expectations of the LED agenda.

In this instance, the municipal procurement systems have been blamed for inflexibility and a failure to support the internal LED targets that are contained in the IDP document.

The role of the LED officer is reduced to counting small-scale projects such as chicken broilers, piggeries and fields of crops. At the end, the small, micro and medium enterprises (SMME), and particularly the co-operatives, become the biggest losers in the process, as small-scale projects normally fail after the first production.

Over the years, the business community has been very selective when taking incentives from local government. The business community is aware that development planning is the proficiency of the state. The state has produced a number of feasibility studies and development plans, with the hope that the business community would grab the baton and run with it. The point is that the business community may not have aligned itself with public-sector investments.

LED programmes are largely underfunded and municipal officials find themselves chasing deadlines for funding proposals.

The experiences of the LED units in municipalities should teach us a few things. LED strives for economic inclusion to improve the incomes of vulnerable households. These are noble intentions, however, the implementation remains a minefield. What is it that we can do differently?

It is public knowledge that LED units should play a facilitatory role to achieve harmony and collaboration between state institutions, civil society and the business community. Such collaborative efforts should yield opportunities that build the necessary bridges for local entrepreneurs to grab opportunities presented by public and established businesses. It is not the role of the state to provide jobs. It is the role of the state to facilitate an enabling environment for the private sector to grow the economy.

For example, the state would conduct a feasibility study for a chicken abattoir, a pack house, an animal-feed plant, a milling plant and other manufacturing opportunities within a municipality. The chicken abattoir feasibility study would list the number of broiler units in the municipality, analyse the value chain, identify actors and supporters. It would identify production capacity as well as skills’ gaps. At the end, it would make recommendations. This is the critical bit of information for the business community. The role of the LED unit should then switch to drawing on the skills of the private sector and prepare a solid platform to attract the participation of state institutions, civil society and business. It should align available state investment that would see the project completed on time. The facilitation role of the LED unit stands to achieve more than building broiler units. What does this mean to an LED? It means that the LED unit should take on a connector role to ensure that development targets are met by all units in the municipality. It also means reviewing the mandate and authority of the LED unit. It can be done.

• Nqe Dlamini is a rural development consultant.

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