Local economic development, an emerging reality in sub saharan africa

3.6: The Johannesburg LED Urban Case Study

This case study portrays a pro growth focus LED although there is some latitude either directly or indirectly for economic growth in the poorer areas of the municipality. The case study uses the Johannesburg fashion district initiative to exemplify a market focused project which has a direct bearing on the pro-poor development of the municipality (Nel et al, 2006: p. 54).

3.6.1: The Economic Background of Johannesburg

Johannesburg is one of the biggest cities in Sub-Saharan Africa which is experiencing rapid growth in the financial and business services, high technology manufacturing, wholesale and retail sectors in recent years. This has led to growth in employment to be limited within the capital intensive sectors of the municipality. Other sectors such as mining and manufacturing are experiencing long term decline thus leading to persistent unemployment levels in the city (Ibid, p. 55).
Johannesburg has the most sophisticated policy development framework for LED in SA titled “Johannesburg 2030”. The policy document supports a pro-growth policy which aims at developing a knowledge based economy and enhancing the city’s status as a world class city. Their LED strategy places emphasis on skills improvement, the promotion of the tertiary sector and infrastructure development. The policy framework sees poverty as an issue to be tackled through the overall development of the city’s economy – trickle down which is not consistent LED common sense (Ibid).
The city’s economic development is managed by the economic development unit and is helpful in creating partnership arrangements with both the private sector and state institutions e.g. the “Blue IQ” programme which seeks to develop high tech, logistics, tourism and transport facilities within the municipalities (Nel et al, 2006: p. 55 and DPLG, Section B, 1998).

3.6.2: LED Strategies for Johannesburg

The city has embarked on an extensive development initiative, which includes:

-Development of the city deep freight and logistics deport – for continued economic development and linkages of the city to other towns and the rest of the world.

-Support for urban agriculture to provide food for the urban population.

-Support for small businesses to generate emplyment.

-Support for financial service development.

- Support for marketing the city as an avenue for conferences and events (Nel et al, 2006: p. 55).

The LED for the clothing fashion district did not initially incorporate poverty alleviation as central in the venture; rather it laid emphasis as a catalyst pro-growth focused project. There are positive moves to incorporate poverty as part of the programme (Ibid).
The fashion district covers 20 city blocks and the programme is designed to form a partnership between the city authority, provincial and national government, the private sector and the city tertiary training institution. Activities to enhance the programme include training, the development of training centres, the formation of a production net work and an operators’ association. The project has incorporated about 1000 micro clothing manufacturers and has focused on niche markets, outsourcing and the integration of migrant workers (Ibid). This has further compromised national job prospects as these industries will do very little to train nationals who lack the skills since it will be cheaper and easier engaging foreign labour.

3.6.3: The Outcome of the Project

The output of the supported firms within the Fashion District programme has increased tremendously as well as the employment and net working between firms. The project has facilitated small businesses to break through new markets possibilities both local and international which have led to job creation and income improvement through the involvement of some 1000 micro clothing manufacturers (Ibid, p. 55-56).
The Johannesburg clothing initiative is facing serious competition from cheap imported textile products into SA and the recruitment of foreign workers undermine domestic work force who could trained to enable them gain the skills (Ibid).

3.6.4: Lessons Learned in the Programme

-Poverty reduction intervention is multi dimensional which requires explicit policy and strategy support.

-Training is decisive for poverty relief interventions to be effective.

-A competitive market environment requires the positioning of small operators in a niche market along other bigger competitors or as a group of small operators in order to overcome the challenges.

- Collective efficiency improves market potentials and quality.

-The project shows that pro-poor growth initiative can be embedded into a city’s search for global competitiveness and at the same time alleviate poverty (Ibid, p. 56).

It is worth noting that there are many other LED case studies in both Urban and rural municipalities in SA. Some municipalities, especially the urban municipalities, have laid emphasis on pro-growth and global competitiveness while within other municipalities; LED is still at the policy development and potential strategies rather than applied practice (Nel et al, 2006: p. 54-55).

3.6.5: Critique to LED in South Africa

From the foregoing discussions, it is clear that LED is an essential tool for the development of robust local economies in a bid to alleviate poverty and create jobs in SA. However there are substantial hold backs for the achievement of these LED goals:

The reality within municipalities is far from these ideal expectations of developmental LG policy paper. Many communities are still separated; millions of people live in poverty and isolated from services and opportunities. The apartheid government system did very little to help those with the greatest needs. The current democratic and nonracial government is unable to do much to reverse these long standing patterns of inequities and unsatisfied human needs. Therefore LED could not be a magic solution to reverse decades of failed policies within such a short period (DPLG Section B, 1998).
Furthermore, there is a major constraint in that the concept is still relatively new in SA as compared to countries of the West who have had inbuilt experiences due to decades of tested knowledge and experience on the field with substantial results in the application of LED (Nel, 2001:p. 1008).
There is no unified LED policy frame work in SA and as such, LED is unevenly developed and operationalized. A major divide exists between the larger well resourced municipalities and the smaller municipalities in terms of policy development and practical reality (Nel et al, 2006: p. 96).
LG’s in SA have been given enormous constitutional mandate to create viable sustain humane societies. It is very doubtful whether local governments in SA are adequately equipped to fulfil these developmental mandates. Municipalities are facing greater challenges in promoting human rights, meeting human needs, addressing past socio-economic and political distortions caused by apartheid. Though the LG have been democratized and considerable powers handed to local authorities, there are insufficient funds to meet these demands (DPLG, Section B, 1998).
One of the serious truths about the current situation of LED in SA is that not withstanding the attention paid to LED by policy-designers, after more than 10 years of application, results are rather limited. In the case of Stutterheim where a programme for community reconciliation and LED was launched in 1990’s, less than 100 permanent jobs were created after 6 years of involvement. In other cases, promising ventures have been downgraded in terms of their scale and focus; for instance, the small coastal town of Stilbazzi where tourism and promotional endevours have achieved close to full employment yet the programme has been downgraded due to lack of resources and loss of skilled labour to promote tourism (Nel, 2001: p. 1017).
Furthermore, the out migration of skilled people and the absence of economically minded local leaders have added to the problem of high levels of disempowerment of communities devastated by decades of apartheid induced discrimination, deprivation and denied opportunities (Ibid)
A major weakness of LED in SA is that there is no conceptual framework on which the programme is based. Although the policy document talks of a robust and inclusive LED capable of exploiting local opportunities, addressing local needs and contributing to national development objectives such as economic growth and poverty eradication, it nevertheless does not mention the conceptual guidelines on which municipalities should harness these potentials (Hindson et al, July 2005: p. 18)
The limited allocated funds, the absence of poverty reduction targets in most municipalities and the lack of details on the impact of LED on poverty alleviation suggest that LED is not yet as embedded in municipal practice as envisaged by related legislation on LED. This is further compounded by the lack of monitoring and evaluation methods especially within the rural municipalities which has led to the complications in evaluating the success of individual projects and their impact on poverty alleviation (Nel et al, 2006: p. 96).
With the exception of some bigger municipalities e.g. Cape Town, interactions with the private sector and other stakeholders are limited thus leading to the inability of municipalities to fully tap the potentials of LED in alleviating poverty (Ibid).
Government failure may account for the overall lack of success of the LED programme to alleviate poverty. Here the government is seen as too bureaucratic, hierarchical and opaque in its functioning with regards to LED. Furthermore, bureaucratic governments may attract or retain personnel who lack commitment, ability to bargain and compete. Human capacity shortages have compounded the problems of service delivery failure in areas of LED and poverty alleviation (Hindson et al, July 2005: p. 9).
The impediments faced by LED practitioners in SA include securing consistent political support for the programmes with long yield, as well as recognition of the need to align other policies with LED interventions. There are very limited resources to support LED, both in number and capacity. Thus failure to rally the necessary political support and the inability to align other policies to LED undermines the ability to enable municipalities to come out of poverty (Nel et al, 2006: p. 98).
Emphasis by some municipalities on pro-growth instead of concentrating on the pro-poor direction undermined its ability to legitimately tackle poverty. Although positive moves are now being made in that direction this may be considered as an afterthought, which will require a lot of time for it to be embedded as a central within the municipality policy designers and implementers.