A case of Local Economic Development in South Africa

In order to address the identified priority issue of unemployment, Free Town municipality intends to plan a local economic development programme. The objective reads: "10 000 new jobs created and income opportunities for another 10 000 self-employed households increased before end of 2005". The municipality gets involved in two types of strategy debates. The first is on focal economic sectors of promotion, the second on tools of promotion to be applied by the municipality.

Strategic options and focal sectors

1. Focus on agriculture.
2. Focus on agro-based industries.
3. Focus on production for local markets.
4. Focus on competitiveness on export market.
5. Focus on tourism.
6. Focus on chemical industries.

Taking into consideration the underutilised agricultural potential in the rural areas, limited tourist attractions and the absence of locational advantages or national spatial development initiative for the area, the municipality decides on an agriculture based strategy with targeted promotion of agro industries and on small-scale industries orientated towards local markets (especially related to public infrastructure), i.e. a combination of strategies A, B and C.

Strategic proposals related to tools of promotion

1. Providing and developing appropriate land for investors.
2. Providing attractive investment conditions by offering efficient and client-orientated administrative services.
3. Public procurement focused on local small-scale entrepreneurs.
4. Training.
5. Subsidised services.

The in-depth analysis had shown that there are different constraints and support requirements for different sectors and target groups:

• Emergent small-scale farmers need access to more land and training in organising marketing and procurement of farm inputs.
• Processing industries need serviced land close to the railway line and to the highway.
• Local contractors need more qualified staff to be able to comply with larger public orders.
• Informal sector traders and producers complain about cumbersome administrative procedures which prevent them from expanding and becoming formalised. 

Taking these findings into consideration, the municipality decides on a targeted LED strategy package with the following components

1. Providing available land to 5 000 small-scale farmers.
2. Engaging an organisational development agency (NGO) to train and assist these small-scale farmers in building up their own procurement and marketing organisation.
3. Establishing an industrial estate with a fully-fledged system of industrial services for agro-based industries.
4. A targeted training programme for local builders and for managers of building companies linked to placement of contracts to such local entrepreneurs.
5. Elimination of administrative hurdles for investment by establishment of a "One-Stop Business Service Centre" which caters for all administrative requirements.

It is decided to refrain from all direct subsidies (except for training and rates for public land).

Source: "Planning and Implementation Management Support System" PIMSS

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