Local economic development in the Emfuleni municipal area : a critical analysis
Van Vuren, Lennard Clifford
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Increasing emphasis is being placed on local economic development (LED) by the South African government, given the paradigm shift away from local government being viewed as simply delivery agents to the concept of developmental local government. LED is essentially an ongoing process, based on local initiatives and driven by local stakeholders (especially the local government) to stimulate economic activity and to create jobs in a specific locality. The structural weaknesses and problems of the Emfuleni Municipal Area (EMA) economy highlight the importance and urgency of LED in the EMA. The purpose of the study is therefore to investigate, analyse and evaluate LED in a South African context, with specific reference to the EMA. The research method is literature-based, with some research aspects of an empirical nature. Firstly, LED is investigated in the South African context. It was determined that LED has a legal mandate in South Africa and that South African experience shows, that role-players in the local economy and specifically local governments, have developed a wide range of LED strategies to promote the development of the local economy. Institutional options for the implementation of LED in South Africa include LED units, Community Development Trusts (CDTs), section 21 companies, and partnerships with other stakeholders. Secondly, the financing of LED is also investigated in the South African context. It was determined, that there is no single national fund to promote LED. LED is the responsibility of all government departments and agencies, and all role-players throughout society. The most important resources available to meet LED objectives are existing transfers from the national government (especially the National Treasury and the Department of Provincial and Local Government - DPLG) to local governments. Unconditional equitable share transfers and conditional infrastructure transfers can be highlighted in this regard. A local government's budget can also be an important tool to stimulate LED in a specific locality. Thirdly, a socio-economic overview of the EMA is given. The EMA is currently experiencing abnormal high unemployment and poverty rates. The EMA's contribution to the Gauteng economy is 6% and its share in terms of Gauteng's manufacturing sector, is 12.7%. The manufacturing sector's share to the EMA economy is declining, but still more than 40% in respect of economic activities of the region. The socioeconomic problems and challenges of the EMA highlight the importance of LED in the EMA. Fourthly, LED in the EMA, and specifically the role of the Emfuleni Local Municipality (ELM) in this regard, is investigated. The importance of LED is reflected in the ELM's Integrated Development Plan (IDP), vision, mission, core strategies and operational plans. LED is also part of the ELM's organisational structure and arrangements. Several potential LED strategies were already formulated by the ELM, but there are some questions about the practical implementation thereof. There also are other LED role-players and initiatives in the EMA, such as the Vaal Economic Regeneration Board (VERB) and Vaalgro. Government funding to the ELM for LED purposes include unconditional, conditional and recurrent transfers from the national government, for especially poverty alleviation and infrastructure purposes. Some of the recommendations in the study include the need for prioritisation and implementation of LED strategies in the EMA. The ELM, in partnership with other stakeholders, should develop a common vision for the EMA and must formulate and implement LED strategies to realize the region's development objectives. The LED strategies should be aimed at the creation of jobs, promotion of investment and economic growth and also the alleviation of poverty. The ELM should also explore and utilize all possible government and other resources and avenues of funding for LED purposes. A restructuring grant from the National Treasury and the ELM's budget could constitute powerful tools towards promoting LED in the EMA.