LOCAL ECONOMIC DEVELOPMENT A REVIEW OF THE

LOCAL ECONOMIC DEVELOPMENT : A REVIEW OF THE COMMONWEALTH EXPERIENCES BY PROF PS REDDY (UKZN) and PROF M WALLIS (DUT) 1

1. INTRODUCTION - Not a new concept : originated 30 40 years ago in response to socio – economic challenges of localities. Several disciplines contributed : 1970 s : interest and ideas kept it alive : implementation a challenge : varying levels of success 2

2. TOWARDS AN UNDERSTANDING OF LED - World Bank : “Build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which the public, business and ngo sector partners work collectively to create better conditions for employment generation”. - No blueprint for LED : complementary to provincial/national driven programmes : decentralisation strategy 3

3. KEY STAKEHOLDERS 3. 1. LOCAL AUTHORITIES - Key actors : facilitate business development : retention, marketing, incentives, education and training, small business development , infrastructure, reviewing regulatory procedures. Local governance : creative and adopt collective approach 4

3. 2. CIVIL SOCIETY - Residents fully involved for successful LED : legitimise process/depoliticise projects; increase effectiveness/ efficiency; widen consensus/support; foresee problems by engaging key partners/ stakeholders; secure volunteer efforts and incorporate low income/informal economy groups 5

3. 3. PRIVATE SECTOR - Good understanding of local economy; importance of co – operating with government; support small business development and feasible expansion strategies 6

4. ROLE OF NATIONAL, PROVINCIAL /STATE AND LOCAL GOVERNMENT - Leadership in LED is not confined to single sector 4. 1. NATIONAL GOVERNMENT - Robust inclusive local economies : high level of IGR : micro/macroeconomic policies : diffuse thinking. 7

Single vision for LED : access to finance/ national tools/instruments : facilitate growth. Universities important. - Key to unlocking potential of locality. UNCDF : develop capacity of local governments to manage development. /support of private sector. - 8

4. 2. PROVINCIAL/STATE GOVERNMENT - Co – ordinate resources transferred to departments : priorities/initiatives at local level. LED : major delivery area. Departments dealing with LED/local government adequately capacitated/ empowered : develop capacity of municipalities 9

4. 3. LOCAL GOVERNMENT - Dynamic implementation of national, provincial/state policies/instruments : key to promoting LED : develop capacity/skills base. Not sole perogative to promote LED, but leadership important : direct/indirect/critical roles. 10

5. COMMONWEALTH EXPERIENCES - Caribbean : Economic liberalism and globalisation : socio – economic challenges. “Third Economic Way” : transformed local government. New concept : challenges 11

- Africa : LED assimilated with community/ local development to achieve socio - economic goals : short term survival as opposed to sustainability/economic growth. Africa Report : private/ngo sector growing. Challenges : lack of capacity, transparency/accountability/difficult development environment. 12

- Asia : Financial crisis : decentralised governance : promote LED. : economic growth with private sector/civil society. Asian Development Bank : six strategic principles : partnership, decentralisation, participation, capacity building, networks and communication technology 13

6. LED PROSPECTS& CHALLENGES Differences : developed/developing states : general situation of local government rather than problems specific to LED 6. 1. Unfunded Mandate : gap : what national government/society expects and resources allocated 14

6. 2. Uneven Development& Consequences: Impact of colonial rule/economic history/. environmental considerations/ locational features 6. 3. LED Policy Transfer : inappropriate transfer : policy failure. Economic/ social/ political and ideological contexts important. Local realities : skills/investment climate/ limited funding : conditions 15

6. 4. Rural Local Government Challenges : Traditional leadership : integral part of local governance : key participants : land tenure : politically fuelled tensions. Deconcentration rather than devolution model more suitable for rural areas 16

6. 5. Integration and Difficulties: integrated action/planning and working interepartmentally : appropriate structural arrangements/model for business development 6. 6. Competing Priorities : Various functions : competiting priorities : demands on budget : challenges. Energising LED : prejudiced by other forms of LED. 17

6. 7. Need for Business Skills, Capacity &Attitudes : capacity/ entrepreneural leadership /business skills. Links with educational/training institutions. 18

6. 8. IGR : Role of National/ Intermediate Governments and Constitutions : Centralised approach critiqued. Constitutions : powers and functions to local government : stronger role in implementing socio – economic policies : need support for LED 19

6. 9. Planning &Related Obstacles: Difficult local/regional development environment : limited capacity/ resources/ poor accessibility and weak civil society : viability of LED 20

6. 10. Global Financial Crisis 2007 Crisis : challenges : Less dramatic than Europe and Asia. Crisis for LED : Greater scarcity of revenue for public sector spending/. private sector funding difficult to obtain; donors cautious; debts relief/cancellations more difficult. Crisis : local action : LED 21

7. INTERNATIONAL/LOCAL NETWORKS AND DONOR SUPPORT - Networks/donors involved in LED : share experiences. Strengthen business communities through public private partnerships, decentralisation and LED. 22

– Moyo : aid dependancy. Many localities : basic conditions in place for LED : some external top down support : main supporters are GTZ; UN &World Bank. UNCDF three objectives : subnational focus; local level institutional development; performance linked and national policy relevance. 23

- Donors : supporters of LED : over a decade : from structural adjustment of 1990 s : strenghten business communities/national policy relevance. - CLGF and other international ngos/ donor agencies : support LED by sharing knowledge, insights and best practices. Dangers of policy transfer : inadequate grounding in local realities 24

8. CONCLUSION - Practised internationally for three decades : not sole perogative of local authority but collaborative partnership. Several roleplayers : firm commitment, supporting and enabling political environment. Local partnerships/ linkages/networks can facilitate the process. 25

Way forward &Recommendations : - The legislative framework including national constitution reviewed to ensure that LED is local government function; - LED must not be allowed to fall foul of the unfunded mandate syndrome; - National government : determine what role it can play/action taken to support LED; 26

- Need for entrepreneural style of leadership; - Multiplicity of actors : networking/coordination - Most countries are trying to cope with the long term effects of the global crisis : LED : part of way forward and not casualty; 27

- Enabling environment at local level for companies to succeed and business to flourish; - Active and consistent participation of private/ngo sector for recognition and exploitation of local development opportunities 28