Overview of LED in South Africa and the Findings of

the World Bank/DBSA Study

World Bank

Etienne Nel and Ian GoldmanRhodes University. & Khanya-aicdd

Rhodes University

Introduction

• LED & ‘developmentally local government’ has become well established in SA

• Applied practice is maturing however results are mixed and many limitations exist

• Appropriate to reflect on what has been achieved to improve applied practice

• Primary focus: findings of the World Bank / DBSA study of pro-poor LED in SA

Overview of the Presentation

• The LED Context• The World Bank / DBSA study

– Overview of the project– Background to LED / LED Research Findings– Application of LED– Case Studies– Lessons / Implications / Possible Interventions– Conclusions for pro-poor growth

The LED Context

• LED is one of the key post-apartheid development interventions

• Has a long history: significant evidence of LED in cities and towns 1870-1950

• Suppressed after 1950 / Keynesian era• Re-established 1990 – Stutterheim• Gradual re-emergence from mid-1990s –

mainly in cities

• From 1990s - Significant policy development and debate at national and local levels: SANCO / CDE / RDP / DCD / DPLG

• By 2000 accepted facet of local government• Widespread acceptance / links to IDP

process• Results on the ground mixed but policy, esp.

pro-poor policy well established – prompt the research investigation – seek to establish what has been achieved / assess

Previous research identified:

• Limited resource allocation to LED• LED often marginalised in municipal budgets

and actions• Limited success on the ground• Limited private sector involvement• Devolution of power not resources• Policy ‘pro-poor’, practice isn’t always

The World Bank / DBSA Pro-Poor LED Study

• 2003 – World Bank interest in SA and Brazil policy development / seek to assess policy & practice for possible lessons. City focus

• Research partners: Rhodes, Khanya-aicdd, Wits, UKZN, UCT

• Reference Group: SACN, LGSETA, NT, DBSA, Mangaung LM, World Bank, SALGA

• 2005 – DBSA extend study to cover rural areas

• Key findings: provide a status quo overview of LED

Methodology

1) Overview of policy and research2) Survey of the 30 largest urban centres &

random sample of 20% (50) of the remaining LMs (rural) and DMs (urban / rural cutoff – municipal pop. of 200 000)

3) Case studies of key interventions: – 7 urban and 7 rural

4) Stakeholder workshops

Background

• Local govt. recognised as a key development role-player – Constitution, LG White Paper etc.

• Policy: strongly pro-poor• On the ground: significant action by the cities – tends

to be pro-growth • Smaller centres – less significant results / resource

and capacity constraints • Limited success of the LED Fund

Results of surveys indicate

• Wide diversity of perceptions of what LED is, range from ‘global competition’ to ‘poverty alleviation’

• Most see LED as multi-faceted (poverty and growth responses) 92% rural / 66% urban

• Strong growth focus but links to poverty relief often not explicit

• 56% of municipalities have LED Units, 82% of rural LMs have at least an LED officer

• Most cities have an LED policy but only 48% of rural LMs

Urban results

• Wide range of strategies e.g. – global city, job creation, skills dev., area based

dev., infrastructure, investment attraction, poverty relief, research, marketing, SMME support

• Cities: common themes in the definition of LED (20 max): – Economic growth and facilitation – 7 cases– Economic growth and poverty relief – 4– Job creation – 4– SMME support – 2– Global links / export – 2

• business support (18/20 responses)• infrastructural investment (18)• sector support (16)• area marketing (16)• research and information (14)• special development zones (13)• inward investment attraction (12)• business expansion and retention (11)• privatisation (7)• SMME support (13) overlap with poverty response?

Growth orientated interventions in urban centres (max. 20)

Specific poverty responses: 17 cities

• provision of free/subsidized services (8 cases)

• social development (6)

• procurement policies (4)

• infrastructure provision (2)

• business development (2)

• job creation / training/public works (5)

• food packages/nutrition (2)

• housing policies (1)

• rural planning (1)

Rural survey findings

• Less has been attained / often more ‘project’ based in focus

• most LMs (92%) appreciate the role LED can play in economic growth and poverty relief

• LED features prominently in most IDPs• Small budget allocations • LED is more embedded in DMs than LMs• 52% no LED policy • weak political and institutional links• Support mechanism are modest/low levels of

collaboration with the private and other sectors  

Rural survey results indicate

• Growth is taken place / reporting is patchy• M&E poorly established• Few cities able to supply tangible results• Rural LMs encouraging - 50% report est.

+100 jobs each• Few have poverty reduction targets• LED impacts generally poorly understood

Case Studies

• Metros, Secondary cities, Small centres• 7 urban• 7 rural• Selective to focus on particular issues (especially in

metros which are complex) and a snapshot in time

Focus of case studiesMetros:• Johannesburg – growth strategies / Fashion District• Ekurhuleni – pro-poor focus • eThekwini – multi-faceted approach / area-based development• Cape Town – global city and public works – example of

community-based approach

Secondary Cities:• Mangaung: informal sector, also interesting to note CBP• Umhlatuze: CSR / poverty and growth interventions /

collaboration

Rural / Small Town municipalities• Ndlambe – was good example of LED Fund - but now

failed• Motheo/Senqu – importance of linkages/ challenges

of rural economies• Ingwe – pro-poor tourism, building on rail tourism• Wuppertal – NGO / focus on rooibos• Alicedale – PPP/private sector dev.• Sodwana/Magaliesburg – niche tourism

Lessons1) Key differences between largest and smallest in

terms of policy / staff / interventions2) Differ viz. pro-poor vs. pro-growth def. / wide variants

on local understanding of LED3) Development responsibilities and need to address

poverty is acknowledged4) Results are patchy, primary reasons – resource /

staff / poor market research / limited partnerships / limited M&E

5) Support for the informal / community economy has a key role to play.

Lessons cont.

6) LED often is not seen as cross-cutting.7) Partnerships – often just consultative –

generally poorly dev. / seldom fully involve the private, community and NGO sectors.

8) Budgets are limited relative to needs.9) M&E is poorly entrenched.10) It cannot be assumed that growth-based

interventions will benefit to poor

Successful LED requires

• identifying / responding to market niches• effective collaboration between local partners – LED

is not just about municipal action• a focus on economic sustainability• strong leadership to give direction• significant resources and capacity to succeed (need

to access partnerships)• defined pro-poor outcomes/community buy-in• growth paths to achieve both competitiveness and

poverty reduction – pro-poor growth

Pro-poor growth interventions

• Key aspects:– Strategy– Local business climate– Financial / non-financial support / infrastructure– Skills dev., procurement, SMME & IS support– Livelihood support– Sectoral support / employment schemes / development

zones / research and information

• See circulated Policy Brief (example attached)

Improving the local business climate

Creation of zones where combined residential and small business use are permitted

Review of procurement procedures to permit informal businesses to access municipal contracts

Grants/rebates to attract inward investment

Subsidised training and skills development of disadvantaged employees of investors

Non-financial support for inward investment

Provision of land, planning rights for investors if employ certain numbers of disadvantaged employees

Support to investors to use their corporate social investment fund in ways relevant to disadvantaged people/informal economy.

Investment in infrastructure and infrastructure-related services

Provision of incubators Provision of market stands for informal traders Creation of produce markets Creation of input supply depots for farmers Contracts for community-based or SMME construction and maintenance Support for specific infrastructure to support projects, eg the railway

station in Creighton Planning suitable infrastructure for service delivery in rural areas, eg

cellphone payment of electricity bills Indigent policy to support access of poor people to services

Conclusions• LED has clearly come a long way over the last 16

years in SA• Policy has matured but results remain mixed• Opportunity now exists to ensure more effective pro-

poor LED which – integrates local role players– makes for more effective ‘developmental local govt.’ – supports attainment of competitiveness – But also supports explicit pro-poor growth interventions

which promote poverty reduction – not depending on simple welfare transfers to promote livelihoods of the poor