Local economic development, an emerging reality in sub saharan africa

2.2: The Structure of this Project

This project will consist of empirical data including the background to LED in the Republic of South Africa, the legal basis for LED policies and two case studies of LED. One of the case studies is chosen from the metropolitan city of Johannesburg and the other from the rural community of Hertzog in the Eastern Cape. The reason for these two case studies is to illustrate the orientation of the municipalities towards their LED programmes. The urban case study is pro-growth while the rural case study is pro-poor giving us an understanding of these two scenarios. Furthermore, the neo-liberal theory, the empowerment theory and the theory on decentralization of government shall constitute the theories to be used in this research work. It will be imperative to look beyond the theoretical considerations by examining the concept of good governance in South Africa. Thus the empirical data on LED, the various theories and the concept of good governance shall be scrutinized within the problem question which will provide the basis for the analysis. Finally, there shall be a conclusion and a perspective that will address issues of the future.
It is important to examine the LED background of the Republic of South Africa in order to understand a country such as SA has decided to apply LED policies within localities. This will open up for a better understanding of certain policy formulation such as the legal basis for the application of LED within the country. The country LED background gives an outline of SA in terms of the economic and the political history very briefly. This intends projects a picture of South Africa as a country endowed with resources yet it is threatened with poverty and is bound to put in place LED structure in order to arrest the prevailing situation.
The LED program in SA which is the basis of this research will be treated by examining two key documents: “The White Paper on Local Government” (WPLG) the enabling document that sets a formal and official piece of legislation mandating municipalities to carry out LED activities and secondly, Investigation of Pro-Poor Local Economic Development (IPPLED) paper in South Africa; a policy document funded by the World Bank-Netherlands Partnership Programme (WBNPP) and the Development Bank of South Africa. The objectives and strategies of these documents are firstly to set a guide for municipalities and secondly to understand and implant firmly LED programmes with the intention to achieving economic growth and/or alleviating poverty in SA.
As already mentioned, the theories to be treated in this report shall comprise the neo-liberal theory, the empowerment theory and the theory on decentralization of government. These theories are going to act as an enabling guide in explaining theoretically the problem identified in the problem formulation thus generating critical views to the issues raised by the theories in relation to LED in SA. However, we must look beyond the theoretical background of LED in order to widen our understanding of the question raised in the problem formulation by examining the concept of good governance. The concept of good governance can be used as an enabling tool to break the poverty vicious circle within communities. It arouses the need to apply developmental policies very prudently by all the stakeholders (the government, municipalities, NGO’s, civil society organizations and the population) achievement optimal results. The raison-d'être of the concept of good governance is that it will raises other practical issues on the application of LED and poverty alleviation which are not explained on the basis of a theoretical analogy in SA. These theories and the good governance concept will be examined in line with local economic development, poverty alleviation vis-à-vis the problem question.
Juxtaposing or putting together the empirical data on local economic development and the case studies, the theories, the concept of good governance and the problem question will provide the basis of the analysis. Thereafter, a succinct conclusion which will be crowned by a perspective that addresses issues for the future with regards to LED in South Africa.

2.2.1: Theoretical Consideration

As earlier mentioned, three theories shall be used in this research project: The neo-liberal theory, the empowerment theory and the theory on decentralization of government. The epistemology of these theories combined will provide us with a holistic understanding of the relationship between LED and poverty alleviation in SA within the framework of the problem formulation.
The neo-liberal theory will enable us to understand the philosophy that underpins conventional economic model in designing economic possibilities for the global prosperity. Neo-liberalism is used here to demonstrate the ideology, which underpins the basic philosophy in the free market structure emphasizing on globalization as the basis for economic growth in an economy thus leading to poverty alleviating. Trans-nationalization in trade has been upheld by neo-liberal theory and policy advocacy and relies on the trickle down effects for the spread of wealth to the disfavoured in society – top bottom approach. It argues that liberalization of markets is the key to development of policy reform and will lead to the maximization of the gains from international trade for the good of all (Colclough and Manor, 1991: p. 51).
The empowerment theory on the other hand will enable us understand the idea which buttresses the emergence of local economic development, in providing the theoretical arguments for poverty alleviation through collective efforts especially the vulnerable poor. The manifestation of the empowerment theory to LED initiative is obvious as it blends the practical reality and theoretical framework within which this concept operates by encompassing all the facets of LED. This theory lays much attention to participation, capacity building, economic improvement, democracy and transparency, which are the grand words in LED programmes within municipalities (Stirrat, 1996: p.67).
Furthermore, an examination of the theory on decentralization of government (specifically democratic devolution of power) creates an enabling environment for the enforcement of local economic development policies within communities. LED thrives through decentralization of responsibilities to the local administration regarding the economic challenges communities face and how this can be overcome – the bottom up approach. These theoretical considerations provide various perceptions on how poverty can be overcome. However, like any social problem within the field of social sciences, the problem questions seem to beg for an answer as to whether a theoretical understanding per se of social problems is sufficient to offer a complete solution to the problem itself.
Therefore, it became necessary to look at the concept of good governance as it is very relevant for the overall development policies of SA. It enables the application of development policies (by public and private sectors or even NGO’s and CSO’s) in virtuous manner for enhancement human welfare. In this light, it creates the basic extra economic conditions for development e.g. an effective public administration, a functional legal framework and a transparent system (Wohlmuth et al, 1997/1998: p. 6).