Challenges and solutions for Local Economic Development (LED) municipal institutional arrangements. The case of the Northern Free State

Abstract

Appropriate municipal institutional structures and arrangements are important for successful local economic development (LED), policy development and implementation. The purpose of this article is to analyse the status quo of the municipal institutional arrangements in the local government sphere. While community involvement is critical, changes are required at the institutional level to ensure effective LED. Successful implementation of development strategies and interventions requires appropriate institutional arrangements in the local sphere. Since 1994, local government in South Africa has been tasked to fulfil a developmental role, which places significant pressure on institutional capacities. Due to a lack of capacity, skills, funding and appropriate policies, local government has achieved limited success with its developmental mandate. The Northern Free State region (also known as Fezile Dabi District Municipality) has been selected as the case study region to test the institutional arrangements for LED at the five municipalities (one district municipality and four local municipalities) within the region. The analysis highlights the effect of the lack of institutional arrangements for LED at the municipal level, and that LED is as yet not well embedded in municipal practice. Furthermore, this article seeks to identify possible solutions for LED with specific reference to municipal institutional arrangements. Although this article does not claim to give definitive solutions to the problem which could cause municipalities to fail in delivering on their developmental mandate, it nevertheless serves as a starting point for seeking sustainable solutions for LED institutional arrangements. It should be noted that the physical and socio-economic conditions of a specific locality have an impact on the preferred LED institutional arrangements. This article also provides solutions to foster local development optimally, such as dynamic local leadership, effective partnership formation, skills training and an integrated approach to LED