Urban Studies, Vol. 38, No.

7, 1003 – 1024, 2001

Local Economic Development: A Review and

Assessment of its Current Status in South Africa

Etienne Nel
[Paper Ž rst received, January 2000; in Ž nal form, September 2000]

Summary. In recent years, local economic development (LED) has become a widely practised
development strategy in the countries of the North at both the local government and community
levels. LED is less widely implemented in the South where, in most instances, it appears to be still
in an incipient phase. This paper investigates the current status of LED in South Africa, where,
over the past decade, local governments, community groups and non-governmental organisations
(NGOs) have become signiŽ cantly more active in locality-based economic development. Several
local governments have established comprehensive LED programmes including the establishment
of LED units and the pursuit of a range of developmental strategies, whilst in parallel, an array
of community and NGO initiatives are in place. In almost all cases, however, results are still of
a rather limited nature and this paper assesses some of the reasons for this situation.

1. Introduction: The Emergence of Local

Economic Development

By mobilising the resources of urban com-
munities, government and the private sec-
tor we can make our cities centres of
opportunity for all South Africans, and
competitive within the world economy.
The success of this will depend on the
initiative taken by urban residents to build
their local authorities and promote local
economic development (Mandela; in RSA,
1995, p. 5).
South Africa’s remarkable political rebirth in
the 1990s rightly captured world attention
and admiration for the phenomenal process
of reconciliation and nation-building which
took place. Less well known internationally
is the severity of the economic and employ-
ment crisis which South Africa has inherited.
OfŽ cially, unemployment stands at nearly 40
Etienne Nel is in the Department of Geography, Rhodes University, PO Box 94, Grahamstown 6140, South Africa. Fax: 46 636 1199.
E-mail: E.Nel@ru.ac.za.
per cent, although Ž gures of up to 80 per cent
have been recorded in certain rural districts.
Inherited racially based inequalities still
largely persist, whilst the country has not
attracted the amount of foreign investment
hoped for. Instead, it is estimated that nearly
1 million jobs were lost in the 1990s, as a
result of poor economic performance, global
competition and deindustrialisation, which
affected the gold mining industry particularly
severely (Lester et al., 2000; Wakeford,
2000). Within this context, a variety of em-
ployment-generating strategies are being in-
vestigated and experimented with by the
state and private organisations. One which
has enjoyed considerable attention, though it
has yet to really prove itself in practice is that
of local economic development (LED). This

0042-0980 Print/1360-063X On-line/01/071003-22 Ó 2001 The Editors of Urban Studies

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DOI: 10.1080/ 00420980120051611
1004
paper details and assesses the emerging re-
ality of LED in South Africa.
The development strategy of local econ-
omic development or LED has been widely
practised in the countries of the North for
several decades now. In the South, by con-
trast, in a formal sense, it appears to be a
relatively recent phenomenon and one which,
in an era of economic crisis, needs to be
evaluated in terms of its potential to help to
address the challenges of poverty and unem-
ployment and simultaneously to encourage
growth. Reasons for the emergence of LED
in the North and the South differ as detailed
below.
In the countries of the North, although
there have been elements of place marketing
and boosterism evident in local government
policy for many decades (Ward, 1990; Erie,
1992), it would seem that in the past 20– 30
years the incidence of LED has become more
proliŽ c. This is not only in terms of local
government action, but also in terms of the
activities of central governments seeking to
catalyse growth at the local level and the
endeavours of various community develop-
ment organisations striving to improve econ-
omic and social conditions within speciŽ c
neighbourhoods (Rich, 1992; Wilson,
1996a). The importance of the so-called
‘rolling-back of the frontiers of the state’
(Roberts, 1993, p. 759) after the 1970s econ-
omic crises, the pursuit of ‘Reaganomics’
and ‘Thatcherism’, the dubious results
achieved by traditional, regional develop-
ment interventions and the widespread inci-
dence of locality-speciŽ c crises of
deindustrialisation have all played their part
(Nel, 1999). LED is one response to the
so-called development impasse referred to by
Schuurman (1993) and has parallels with the
anti-development argument about the need to
focus on innovative grassroots movements
(Escobar, 1995). The actions of various com-
munity economic development initiatives ex-
ist in parallel with the more formalised local
government and private-sector initiatives
(Lenzi, 1996; Haughton, 1998; Reed, 1999).
The rise of LED partially accords with post-
modern concepts of unique local action, as
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ETIENNE NEL
has been outlined in the writings of the Lo-
calities School (Carter et al., 1993; Page,
1996; Wilson, 1996b). According to De-
maziere (1996, p. xv), “LED literature illus-
trates the decline of grand theory, and the use
of more partial, post-modern, methodolo-
gies”. The net result is that
cities are adapting to restructuring and
globalisation trends with a range of policy
choices unanticipated by scholars and un-
heard just a few years ago (Clarke and
Gaile, 1998, p. 1).
In the South, LED is gradually emerging as a
result of reasons not dissimilar to those in the
North. To the list of causes must, however,
be added the considerations of the debt crisis,
the effective inability of many states to inter-
vene at the local level, imposed structural
adjustment, massive currency devaluation
and the series of natural and political shocks
which continually shake the region (Taylor
and Mackenzie, 1992). Despite these reali-
ties, LED in the formal ‘Northern’ sense,
does not appear to be as widespread as one
would imagine. Reviews of the status of
LED within local government areas in the
South indicate that formal LED, as opposed
to community-based variations, is still in its
infancy and few local governments or other
agencies can be said to be actively engaged
in LED at present (Rogerson, 1995a, 1997,
1999a; Manuel, 1997). The process of demo-
craticisation in the South, moves to decentra-
lise control and the state’s attempts to bring
about development—not so much through
direct intervention, but rather through facili-
tation of the private sector—are all gaining in
prominence and will assist the LED process.
One should not, however, ignore the wide-
spread reliance within societies in the South
on indigenous technical knowledge (Binns,
1994), the importance of local coping or
self-reliance strategies within villages and
communities and the dependence on the in-
formal sector by many millions. Though not
LED in the strict Northern interpretation of
the concept, in countries where the govern-
ment lacks the resources and staff to inter-
vene effectively within local areas,
 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
communities—often with the support of non-
governmental organisations—have had to be-
come more self-reliant in order to survive
economically (Burkey, 1993; Binns and Nel,
1999). Hence, in many ways, the emergence
or re-emergence of the informal sector,
communal farming and various forms of
community survival can be seen as a rough
Southern equivalent of LED. These issues,
though not a speciŽ c focus of this paper,
have been examined elsewhere (Binns and
Nel, 1999) and need to be borne in mind in
any analysis of current development trends in
the South, particularly in the light of the
constraints on government to intervene
within local areas.
As South Africa shares similarities with
both the North and the South economically,
it is inevitable that LED is experienced in
forms ranging from urban entrepreneurialism
to rural survival strategies. However, as evi-
dence detailed below reveals, in many cases,
LED is in its early stages; government and
local governments are often still in the Ž rst
phases of policy development and appli-
cation and it would be difŽ cult to claim that
signiŽ cant, concrete results have been
achieved to date. Community initiatives, al-
though often well established, do not receive
signiŽ cant policy support at present. After a
brief overview of the concept of LED below,
the discussion will proceed to an investiga-
tion and evaluation of what is happening in
South African cities and towns.
2. Local Economic Development
LED is not a new phenomenon; it has been a
deŽ ned aspect of local government adminis-
tration in the North for over a century (Ward,
1990). What are new are the increasing inci-
dence of such activity, its growing accept-
ability and the parallel increase in the
importance of various NGO and community-
based development initiatives. The enhanced
status of the locality in the global economy
and the importance of local decision-making
and democracy have accelerated this trend.
Variously referred to as self-reliance, local
coping, endogenous or bottom-up develop-
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1005
ment and LED (Taylor and Mackenzie, 1992;
Binns, 1995), the phenomenon deŽ es both
rigid deŽ nition or stereotyping as to what
precisely it involves. An attempt to deŽ ne
LED has, however, been made by Blakely
(1994, p. xvi) who deŽ nes it as
the process in which local governments or
community-based organizations engage to
stimulate or maintain business activity
and/or employment. The principal goal of
LED is to stimulate local employment op-
portunities in sectors that improve the
community, using existing human, natural,
and institutional resources.
According to Zaaijer and Sara (1993, p. 129),
LED
is essentially a process in which local gov-
ernments and/or community based groups
manage their existing resources and enter
into partnership arrangements with the pri-
vate sector, or with each-other, to create
new jobs and stimulate economic activity
in an economic area.
Although these deŽ nitions cannot be taken as
the Ž nal statement of what LED is, they do
provide a broad insight into the overall orien-
tation of the concept. Despite this, the topics
of local economic development (LED) and
related concepts such as community econ-
omic development, self-help and self-re-
liance strategies appear to have received
considerable attention from scholars in recent
years (Turok, 1989; Bennett, 1990; Stöhr,
1990; Clarke and Gaile, 1998) and according
to Reese (1993a, p. 492), “research on local
economic development (has grown) expo-
nentially”.
The reality of LED has been examined by
a wide range of authors over the past 20
years, as is witnessed by a signiŽ cant variety
of books and articles on the topic (Judd and
Parkinson, 1990; Zaaijer and Sara, 1993;
Clarke and Gaile, 1998; Nel, 1999). Accord-
ing to Glasson (1992), by the end of the
1980s, regional planning in the North had
emerged from the ‘doldrums’ in a revamped,
dynamic new form. ‘Top-down’ approaches
have now, partially, been superseded by lo-
1006
cally driven strategies. These are based in the
host community, are motivated by a desire to
improve local conditions and encourage that
area’s entrepreneurs. This is in preference to
the more traditional ‘smoke-stack chasing’
approach of seeking investment by large-
scale, external Ž rms (Daniels, 1989; Stöhr,
1990). The notion that regional policy was at
a ‘crossroads’, both Ž nancially and theoreti-
cally, has given impetus to local initiatives
and, more speciŽ cally, to LED (Albrechts et
al., 1989). In the North, there has been a
deŽ nite switch to ‘bottom-up’/‘development
from below’/endogenous/supply-side strate-
gies characterised by a frequent reliance on
decentralised,  exible production in which
local authorities and actors play a key role
(Stöhr, 1990; Glasson, 1992). The swing in
favour of so-called bottom-up strategies,
which emphasise local action as opposed to
that of the central state, has clearly marked a
signiŽ cant shift in development thinking.
LED can materialise when local agencies
and/or people seize the initiative and engage
in actions which unify communities, business
and other relevant authorities in their local
area in a joint endeavour to improve their
economic and social conditions (Stöhr,
1990). It appears that LED is generally a
cost-effective and community-empowering
process which has a deŽ ned role to play and
which can yield tangible beneŽ ts for partici-
pating communities. There is a clear, deŽ ned
role for government within this overall con-
text—namely, that of facilitating, supporting,
part-Ž nancing and devolving control. Al-
though LED projects in the South and the
North are directly comparable, in terms of
issues such as reliance on local control and
initiative and the addressing of local needs,
the well-publicised Northern examples tend
to focus far more on issues of investment,
big-business support and large project devel-
opment undertaken by relatively well-re-
sourced local agencies with or without
external support (Judd and Parkinson, 1990).
In parallel, in the North, community econ-
omic development and the activities of com-
munity business form an important adjunct to
the more formalised policies, particularly in
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ETIENNE NEL
underdeveloped areas (Wilson, 1996a,
1996b, 1996c; Filion, 1998; Haughton, 1998;
O’Doherty and Durrschmidt, 1999).
In the South, even though there is some
evidence of urban entrepreneurialism in
places like Brazil, Peru and Korea (Ferguson,
1992; Zaaijer and Sara, 1993; Rogerson,
1999a) as the literature on ‘self-reliance’
suggests, LED often relies far more on small-
scale and community-based initiatives, utilis-
ing indigenous skills and seeking primarily
to ensure survival, rather than participation in
the global economy (Taylor and Mackenzie,
1992). These categories are naturally not mu-
tually exclusive. LED in the North and the
South can be conceptualised as operating at
two broad levels, namely:
(1) the formal: usually characterised by the
involvement of local and higher auth-
ority structures and the formal business
sectors (Nel, 1999); and
(2) the informal: usually characterised by
action at the level of community-based
organisations and NGOs; links with
spontaneous self-reliance initiatives and
the informal sector have been discerned
(Wilson, 1996c; Nel, 1999).
Within this overlap context, the role of part-
nerships between key agencies is clearly im-
portant.
The reliance of LED initiatives, particu-
larly at the community level, on high degrees
of social cohesion and the joint identiŽ cation
and implementation of projects ensures that
there is complementarity between LED and
the currently vogue notion of social capital.
The popularisation of the ‘third sector’ or
civil society (Wilson, 1996a)—as identiŽ ed
by Putman in his work on social capital in
northern Italy (Buckland, 1998)—draws at-
tention to
features of social organisation, such as
trust, norms (customary behaviour), and
networks, that can improve the efŽ ciency
of society by facilitating co-ordinated ac-
tions (quoted in Buckland, 1998, p. 241).
Trust and co-operation are essential for
achieving indigenous efforts at community
 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
development. In many parts of the world,
social capital is enhanced through the proac-
tive endeavours of NGOs which, according
to Mercer (1999, p. 247), are “the develop-
ment panacea for the 1990s and beyond”.
Much has been written about the actual and
potential role of NGOs in development, but it
would be fair to argue that their role has
probably been exaggerated and they have
been credited with abilities above and be-
yond their actual capacity.
Although a great variety of strategies are
applied around the world, some general ap-
proaches can be outlined. Individual selec-
tion will depend on whether local authority
LED or community-based LED is being fol-
lowed. The latter will normally opt for com-
munity-focused activities, with an economic
and job-creation focus tending to dominate
strategies; support for small enterprises is a
common trait. Company establishment is fre-
quently encouraged by local-authority-based
endeavours through either ‘supply-side’ in-
centives such as tax-related incentives which
are common in the US or ‘demand-side’
incentives. The latter, which are common in
Canada, involve the development of new
businesses by employing strategies which
build demand for locally produced goods and
provide support for emerging enterprises.
Assistance with marketing and training all
feature prominently in this case (Reese,
1993b). Some of the most common formal
LED strategies pursued by authorities in-
volve (in no set order of precedence):
(1) Financial support
revenue bonds;
revolving loan funds and below mar-
ket rate loans;
tax incentives;
loan guarantees and/or equity partici-
pation;
investment packages;
Ž nancial assistance to small Ž rms; and
community banking/group loan
schemes.
(2) Land and building development
provision of infrastructure and land;
land acquisition;
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1007
the provision of workshops and small
industrial premises;
enterprise zones with tax and planning
concessions;
urban regeneration; and
agricultural support.
(3) Information and marketing assistance
supply of information and advice;
general marketing and promotion and
image reconstruction;
targeted marketing of products or ar-
eas; and
export promotion.
(4) New planning and organisational
structures
adoption of comprehensive planning
techniques;
streamlining administration; and
community development corporations,
community business and co-opera-
tives.
(5) Training and employment
employment and training strategies
and grants;
direct employment;
vocational education; and
social support structures/community
organisations.
(See Bovaird, 1992; Clarke and Gaile, 1992;
Lever, 1992, 1993; Koeble and Bailey, 1993;
Reese, 1993a, 1993b; SANCO, 1995).
It needs to be pointed out that no single
locality will apply more than a limited num-
ber of these strategies. Some examples serve
to illustrate this point. Italian towns have
been noted for a focus on small business
promotion, through the use of grants, equity
participation, tax incentives and the oc-
casional provision of factory space (Brusco
and Righi, 1989). By contrast, in Spanish
centres, the focus is often on place-marketing
and infrastructural development which acts
as a drawcard to potential entrepreneurs and
investors (Garcia, 1993). In North America, a
shift in LED activities away from traditional
locational incentives to more entrepreneurial
approaches has been noted. Less use is being
made of tax incentives, which are seen as
1008
unwieldy, in favour of new marketing strate-
gies—for example, special promotions and
cultural events, business incubators, lease-
back arrangements, improvement of the local
environment and building rehabilitation
(Reese and Fasenfest, 1996). In documented
Brazilian localities, there has been an alterna-
tive focus on community organisations, com-
munity business, community support
programmes and appropriate training (Fergu-
son, 1992). Applied LED can vary from a
strategy applied within an entire city to one
applied in a particular neighbourhood or
community.
It would be wrong to see the above strate-
gies as resounding successes or as the prel-
ude to a new phase of economic regeneration
and growth. LED does, however, represent a
serious attempt by local actors, as representa-
tives of their communities, to promote and
sustain economic development in spite of
recessionary and other global forces. Whilst
there appears to be universal agreement that
change has occurred, the degree to which it
has taken place is open to debate as is the
whole question of whether LED can really
serve as a new growth option. Opinions on
the latter point vary, according to Razin
(1990, p. 685) who asserts that
LED policies have gained widespread
recognition during the last decade, and
may soon overshadow national spatial
economic policies.
Practically, however, not all initiatives suc-
ceed; many projects do experience a life
cycle commencing with enthusiasm and suc-
cess followed by what can often be mediocre
results and despondency. As Stock (1995,
p. 359) points out, “there are limits to what
they [communities] can accomplish”. The
sense of critical re ection which such reali-
ties has engendered has led to the recent
investigation and publication of articles
which address topics such as the “Rise and
fall of local economic development?” (Hall,
1995) and “Why state and local economic
development programs cause so little econ-
omic development” (Dewar, 1998). Research
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ETIENNE NEL
by Green et al. (1996, p. 609) in the US
shows that LED policies had
a limited in uence on changes in the num-
ber of jobs in cities during the economic
recovery of the 1980s. Local investment in
infrastructure and education, however,
may enhance employment growth in both
the manufacturing and the service sectors.
These are sobering thoughts which other re-
gions of the world need to be aware of when
seeking what seem to be alternative growth
options to pursue. The determination of the
various factors which cause a project to suc-
ceed or fail are critical in the analysis of any
case study of LED. Over and above obvious
factors such as available resources—both
Ž nancial and physical and questions of trans-
port and accessibility—critical within the de-
bate has to be the role of both human and
social capital. Leadership within any LED
initiative is not conŽ ned to any single group
and can fall under local governments, NGOs,
government, community groups or a combi-
nation of such organisations (Zaaijer and
Sara, 1993). Further, as a project evolves it
might either peter out and die, or mutate and
alter course according to prevailing circum-
stances, obstacles and opportunities. Atten-
tion now shifts to an examination of the
situation in South Africa.
3. Local Economic Development in South
Africa
3.1 Introduction
The concept of Local Economic Develop-
ment (LED) is currently attracting con-
siderable attention in government and
policy circles in South Africa (Nel and
Humphrys, 1999, p. 277).
Even though the concept is still relatively
new in the country, it enjoys much wide
acceptance and credibility. It is currently be-
ing initiated in variations which range from
typical, Northern-style ‘urban entrepreneu-
rial’ approaches pursued by the major cities
through to a host of community and NGO
initiatives which share much in common
 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
with strategies pursued throughout the devel-
oping world. From a policy perspective, LED
Ž nds accord with the post-apartheid govern-
ment’s pursuit of a neo-liberal economic
strategy and a commitment to devolve pow-
ers of government to the local level and to
support community-based endeavours (ANC,
1994; RSA, 1996a, 1996b). In this section,
the evolving history of LED in South Africa
is detailed before proceeding to an examin-
ation of current national policy on the topic,
an investigation of the current reality of LED
and an assessment of what is taking place.
From the outset, it needs to be pointed out
that—even though its application is quite
widespread—few tangible results have yet
been achieved.
3.2 Evolving LED in South Africa
In common with those of other countries in
the world, it is apparent that some South
African urban areas were actively engaged in
LED at the turn of the century (Nel and
Rogerson, 1995). This, however, petered out
in the era of strong central state control
which characterised a large portion of the
20th century. Under apartheid, Keynesian-
style policies were rigidly applied to ensure
that the central state gained control over all
aspects of the society, which led to the sup-
pression of local initiative and the erosion of
local autonomy (Nel, 1999). In the recent
past, LED can only really be regarded as a
post-1990 phenomenon. Although delayed in
comparison with the North, numerous en-
deavours are emerging in South Africa.
These have generally sprung from local
economic crises and the initiatives of local
leaders and the communities which they rep-
resent. Places or localities where this
phenomenon was Ž rst noted in the early
1990s include the town of Stutterheim, the
city of Johannesburg and the industrial de-
velopment point of Atlantis (see Figure 1)
(Nel, 1994; Rogerson, 1995b; Nel and Me-
ston, 1996). The efforts of the noteworthy
Stutterheim Development Forum in the early
1990s to try and achieve racial reconciliation
and to promote development clearly served
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1009
as a model for similar public – private com-
munity ventures elsewhere and provided a
limited model of what could be accom-
plished (Nel, 1994). In terms of local-
government-led LED, with the exception of
Cape Town which actively started to investi-
gate the issue in 1986 (City of Cape Town,
1986; D. Gretton, Cape Town City Council,
personal communication, 1997), the process
can only really be treated as having started in
the mid 1990s. Emerging local government
LED units are still only in their incipient
phase and, where they actually exist, most
are still drafting policy and are seldom in-
volved in signiŽ cant development.
The emerging role of public – private
growth coalitions is starting to be discerned
and is an approach which is encouraged by
government policy (RSA, 1998; Mosiane,
2000). Community-based organisations
(CBOs) and NGOs have a long history in this
Ž eld and have a key role to play in resource-
and capacity-weak areas. Their contribution
in smaller centres such as Kei Road and
Seymour are noteworthy in this regard (Nel,
1997). In addition, the support and training
rendered by private organisations such as the
National Business Initiative (NBI) and the
Friedrich Ebert Stiftung (FES) have been of
particular value to CBOs and NGOs. There
clearly is scope to enhance this role in paral-
lel with support of local government LED
initiatives.
3.3 National Policy with Respect to LED
Although guidelines for NGOs and CBOs
engaged in LED are not provided for, South
African law and policy do now provide a
clear sanction for local authorities to engage
in LED. The more important elements of this
include the Constitution (RSA, 1996a) and a
range of laws and policy papers. According
to Sections 152(c) and 153(a) of the former,
local government must
promote social and economic development
(RSA, 1996a, sec. 152(c)).
and it must
1010 ETIENNE NEL

Figure 1. The provinces and cities of South Africa.

structure and manage its administration, economic development (Centurion Town

and budgeting and planning processes to
give priority to the basic needs of the
community, and to promote the social and
economic development of the community
(RSA, 1996a, sec. 153(a)).
The Local Government Transition Act of
1993 and its 1996 Amendment (RSA, 1993,
1996c) are the major post-apartheid local
government enactments which require mu-
nicipalities to promote economic and social
development. The Act obliges local govern-
ments to draw up Integrated Development
Plans that address spatial and transport plan-
ning, infrastructure and the promotion of
Planning Department [Pretoria], 1999). Un-
der this legislation, metropolitan areas are
empowered to promote integrated economic
development and reference is made to
tourism and street trading amongst other is-
sues. A serious omission of the Act, how-
ever, is that it does not go on to deal with the
powers of non-metropolitan local govern-
ments in terms of many of these issues. This
has burdened the smaller cities, towns and
rural areas with a legal dilemma and they
technically require special sanction to pursue
such actions. In addition, despite a consti-
tutional mandate to engage in economic and

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 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
social development, a plethora of provincial
controls and ordinances surviving from the
previous administration are still in force and
these are not always conducive to LED.
These issues will, however, potentially be
addressed by the Municipal Systems Bill
which should be debated by parliament in
2000 (RSA, 1999). This Bill has been de-
signed to
enable municipalities to move progres-
sively towards the social and economic
upliftment of communities, and ensure
universal access to quality services (RSA,
1999, p. 1).
Local authorities are being encouraged to
promote growth and investment, and simul-
taneously to focus on poverty alleviation.
According to policy documentation (RSA,
1997a, p. 35)
the overriding economic challenge for
South African local authorities is in-
equality and poverty—which can and
should be addressed through all the func-
tions of a municipality.
LED also features prominently in other
government development strategies. The Ur-
ban Development Strategy (RSA, 1995) and
the Rural Development Framework (Draft)
(RSA, 1997b) both have an LED focus. The
former focuses on the provision of housing
and infrastructure, public works, efŽ cient
regulation, mobilisation of investment and
the promotion of small businesses. The latter
identiŽ es LED as a way forward for rural
local governments. SpeciŽ c actions identiŽ ed
are: economic diversiŽ cation, training, ser-
vice provision, housing and the development
of periodic markets. The formation of part-
nerships, agricultural support, land reform,
tourism, forestry and small business pro-
motion also feature in the document.
The White Paper on Local Government
(RSA, 1998) released in 1998 and the 1997
Green Paper on the same topic (RSA,
1997a), which both laid a basis for the afore-
mentioned Municipal Systems Bill, clearly
stress the new role that local governments are
now expected to play:
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1011
Local Government should be developmen-
tal. It should exercise its powers and func-
tions in a way which maximises the social
development and economic growth of
communities (RSA, 1997a, p. 1).
The papers call on local governments to pro-
vide vision and leadership in development
and to adopt new approaches such as buying
local, encouraging social responsibility,
speeding up planning and forming partner-
ships. Strategies recommended include: mar-
keting the local area, investment support,
assistance to small Ž rms, setting up ‘one-stop
shop facilities’, land release, public works,
local procurement, promotion of labour-
based programmes, linkage development and
research and training. Many of these princi-
ples have been encapsulated in the aforemen-
tioned draft legislation (RSA, 1999). Even
though the mandate clearly exists for local
government to pursue LED, the legal enact-
ments are not yet fully in place, nor are
precise guidelines on how to implement and
fund the above-mentioned policies. It was
only in 2000 that the government started to
release initial guidelines about possible LED
institutional arrangements and suggested
strategies for local governments to begin in-
vestigating, despite the existence of laws and
policies for seven years prior to this date
(Department of Provincial and Local
Government, 2000).
There are a further range of general
government development initiatives which
have LED implications. The small business
and Local Business Service Centre (LBSC)
programmes of the Department of Trade and
Industry can result in changes in local econ-
omies. Under this programme, various na-
tional advice and funding agencies have been
established and support is available for local
organisations deemed able to set up and run
LBSCs within their communities (Depart-
ment of Trade and Industry, 1997). Whilst
South Africa cannot be said to have a re-
gional development programme in the formal
sense of the word, broader national pro-
grammes such as Spatial Development Initia-
tives and Industrial Development Zones will
1012
impact on localities and hence LED in areas
fortuitous enough to be located in or near
them. The former are growth corridors along
which private-sector investment is being en-
couraged to focus, whilst the latter will see
the establishment of dedicated industrial
zones in which industrial Ž rms will receive
certain incentives to establish (Nel, 2000).
Limited parallels with the Enterprise Zone
and Export Processing Zone concepts are
obvious (Healey and Ilbery, 1990).
3.4 Applied LED
The radical policy shifts detailed above par-
allel the democratisation of all aspects of
society and the allowance of greater levels of
personal freedom which have taken place in
South Africa. This has directly aided in the
emergence of local-level self-expression, as
is evidenced by the rise of a range of local-
ity-based initiatives as are detailed below.
The parallel force of globalism has also
played a role, with the large metropolitan
areas all seeking to market themselves on the
global stage as places for international in-
vestment and leisure-related activities. Jo-
hannesburg and Pretoria’s place-marketing
initiatives, Cape Town’s Olympic bid and the
building of the International Conference
Centre in Durban all illustrate how, in an era
of greater local freedom, local centres are
conŽ dently seeking investment and a role for
themselves in the global community (Cape
Town Olympic Bid Committee, 1995;
Rogerson, 1995b; Maharaj and Ramballi,
1998; Greater Pretoria Metropolitan Council,
1999). At a lower level, there has been
a noticeable  ourishing of locality-based
development activities as evidenced in the
activities of NGOs (non-governmental
organisations), CBOs (community-based
organisations), local governments, tourism
promotion agencies and supporters of
locality-based small business.
It needs to be borne in mind that LED, as
elsewhere, is often catalysed by local-level
economic crises—for example, deindustriali-
sation—or, more speciŽ cally in the South
African scenario, the rationalisation of indus-
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ETIENNE NEL
tries such as textiles and gold mining which
has provoked area-speciŽ c responses to em-
ployment crises. The establishment of the
Free State Gold Fields Development Centre
in Welkom to seek alternative sources of
employment for retrenched miners is proba-
bly the best example of this type of reaction
in the country (K. van der Walt, Free State
GoldŽ elds Development Centre, Welkom,
personal communication, 1998). The loss of
100 000 mining jobs in and around that town
in the past 10 years has prompted various
local government endeavours, in collabora-
tion with the private sector, to Ž nd alterna-
tive sources of employment. These have
included place marketing, the offering of in-
centives, support for small business and ur-
ban agriculture and the investigation of new
growth sectors (Friedrich Ebert Stiftung,
1999). In small towns and rural areas, the
general shortage of jobs has provoked re-
sponses ranging from small-business support
to small-scale farming initiatives (Nel, 1999).
If one examines LED in South Africa, it is
apparent that it is occurring at a variety of
levels and is assuming widely differing char-
acteristics. In this regard, it is important to
note that LED in South Africa is clearly
broader than just the business and predomi-
nantly large-city conceptions which have tra-
ditionally characterised thinking on this topic
in the country in certain quarters, such as the
business-orientated Urban Foundation
(1994). One clearly also needs to acknowl-
edge the plethora of CBO, NGO, etc. initia-
tives occurring in local areas which are also
leading to the improvement in local social
and economic conditions.
It can be argued that there are four variants
of LED which are currently in existence in
the country (Nel, 1998), namely:
(1) Formal local government initiatives:
these parallel traditional Northern think-
ing and, to a large degree, overlap with
government policies on the topic as de-
tailed in its policies.
(2) Community-based/small town initiatives:
these often develop as a result of NGO
facilitation and support.
 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
(3) Section 21 Development Corporations: a
company ‘not for gain’ operates to pro-
mote local development within a se-
lected spatial area.
(4) ‘Top-down’ LED: government, usually
at the provincial level and/or in the form
of various national organisations, is at-
tempting to catalyse and support local
initiatives.
As the tone of the above description sug-
gests, many of these initiatives are in their
incipient phases and, in many cases, there is
little in the way of tangible results. In the
following section, key features of the above
four categories are outlined and assessed.
3.5 The Various Experiences of LED
Local government initiatives. Even though
the larger cities pursued a limited degree of
LED throughout the apartheid era, largely in
the form of place-marketing (Rogerson,
1999b) and limited endeavours to attract in-
vestment, it is only in the past few years that
the range of activities pursued has increased.
It is, however, important to note that it is
only the four largest metropolitan areas—Jo-
hannesburg, Durban, Pretoria and Cape
Town which are following broad-based,
comprehensive LED strategies and which
have established well-staffed and funded
LED/economic units. With the exception of
these four major centres and a handful of
smaller places, established examples of LED
are few and far between and those which do
exist are often in their early stages of im-
plementation. Results, even in the big cen-
tres, are still limited. In the small cities and
towns, even though there is now policy sup-
port for LED and considerable interest is
being expressed in the topic by hundreds of
local authorities, with the exception of a
limited number of places such as Welkom,
very few have established functioning LED
units or are engaged in project implemen-
tation (Nel, 1998).
Development endeavours in the larger cit-
ies have become quite comprehensive in
their scale and focus. In almost all cases, the
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1013
dual pursuit of global competitiveness and
poverty alleviation are core themes in the
policies adopted. Rogerson (1995b) has ex-
amined how Johannesburg has purposefully
sought to ‘re-image’ and promote itself as a
‘global city’ through various marketing
strategies, extensive lead projects, infrastruc-
tural investment, property development and
the promotion of the city through the use of
its sporting facilities. The hosting of the All
Africa Games in 1999 was a key achieve-
ment in this regard. Property-related projects,
mostly in collaboration with the private sec-
tor, include extensive inner-city renewal
projects which focus of the upgrading of
buildings and facilities, the provision of
transport infrastructure and housing improve-
ment. Seven major projects are currently be-
ing pursued in the Johannesburg inner city
(Johannesburg Metropolitan Council, 1999).
Metropolitan-level plans include the devel-
opment of Casino Complex at Gold Reef
City, the development of the ‘Baralink’ corri-
dor from Soweto to central Johannesburg, the
Sandton City Convention Centre, the Florida
Lake Development Project, the establishment
of a Business Information Centre and the
regulation of informal trading activities (Jo-
hannesburg Metropolitan Council, 1999).
In Durban, property-led redevelopment of
the Point area, the development of industrial
estates through partnership arrangements and
the promotion of business tourism through
the construction of the International Conven-
tion Centre are key examples of local-
government-facilitated LED in that city
(Durban Metropolitan Council, 1996; Ma-
haraj and Ramballi, 1998; G. Robbins, Econ-
omic Development Department, Durban
Metropolitan Council, personal communi-
cation, 1999). The Durban Metropolitan
Council has established an Economic Devel-
opment Department. The key activities
which it has identiŽ ed are:
—creating economic development capacity
in local government;
—building a world-class metropolitan econ-
omic environment;
1014
—involving disadvantaged communities in
economic activities; and
—ensuring that economic development is
sustainable (Urban Strategy Department,
1999).
Over the years, difŽ culties have been en-
countered in terms of trying to encourage
economic activity in the low-income areas—
the townships—and an overlap with pre-ex-
isting municipal activities has occurred.
Through the passage of time, the focus of the
Economic Development Department has
been narrowed down to four core areas, lead-
ing to the establishment of
—a small business and community economic
development unit;
—a tourism unit;
—a private-sector and investment promotion
unit; and
—an information unit (Economic Develop-
ment Department, 1999).
In Pretoria, business promotion has clearly
become the core LED focus. In that city, the
Metropolitan Economic Development Chief
Directorate has been actively engaged in the
promotion of business activity since 1996,
through policies of information provision,
networking and advice. According to the di-
rectorate, it
acts as a catalyst for … initiating bi-lateral
trade agreements between the other re-
gions of the world and the private sector in
the Pretoria region; attracting investments
to the Pretoria region and opening up new
markets for products manufactured in the
Pretoria region (Greater Pretoria Metro-
politan Council, 1999, p. 2).
In parallel, there are policies in place to
support emerging enterprises, to involve dis-
advantaged communities, to promote the
overall competitiveness of the city, to foster
the development of a series of industrial
clusters and to develop human resources and
tourism (Pretoria Metropolitan Economic
Development, 1997). In practical terms, in
addition to place marketing and the provision
of various service-related incentives for es-
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ETIENNE NEL
tablishing Ž rms, small business support cen-
tres have been established, business
incubators are planned and the viability of
urban agriculture is being investigated (Cen-
turion Town Planning Department [Pretoria],
1999).
The response of the city of Cape Town is
particularly instructive as to how that local
government has responded to the consti-
tutional mandate that it should engage in
social and economic development. In 1997,
an Economic and Social Development Direc-
torate was established at the metropolitan
level to oversee, co-ordinate and assist the
six metropolitan local councils in the Cape
Town area. The overall goal of the Director-
ate is to achieve both ‘global competitive-
ness’ and ‘poverty reduction’ (Siswana,
1999). Key foci in terms of achieving global
competitiveness are: investing in people; en-
suring that there are world-class infrastruc-
ture and attractive investment areas;
providing world-class local government ser-
vices; facilitating cluster/sector development;
and facilitating world-class marketing. Cur-
rent and planned actions in this regard are:
promoting investment and trade; key sector
support; tourism development; major events;
infrastructure development; improving local
government services; and the supply of stra-
tegic information. Key foci in terms of pov-
erty reduction are: ensuring a minimum
‘social safety net’; providing efŽ cient basic
services and infrastructure; improving spatial
integration and environmental quality; pro-
moting job creation and economic empower-
ment; and supporting community and social
development. Current and planned actions in
this regard are: community-based job-cre-
ation projects; small business support;
tourism development; local government pro-
curement; basic services; a poverty grant;
and strategic information (Siswana, 1999). In
contrast with the aforementioned metropoles
where LED is highly centralised within the
metropolitan authority, in Cape Town, actual
implementation is devolved to the six local
councils which make up the metropolitan
area. These constituent councils focus on the
following activities: informal sector pro-
 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
motion, promotion of small and big busi-
nesses, tourism, business and community fo-
rums, job centres, local industrial parks,
property development and development fa-
cilitation (Cape Town Metropolitan Council,
1997).
Although considerable interest exists in
LED at the local government level, it would
be fair to say that it is only the larger better-
resourced centres which have gone beyond
the planning phase and which have commit-
ted funds to the establishment of dedicated
LED units and the pursuit of deŽ ned LED
policies (LED News, 1996 – 98). Beyond the
four major metropoles, most cities and large
towns are investigating LED options but lit-
tle concrete progress has been made to date.
Quite clearly the lack of resources, the tenu-
ous Ž scal position of many smaller centres
and the shortage of skilled staff are all seri-
ous impediments to the successful pursuit of
LED—issues which may well require a de-
gree of central or provincial government fa-
cilitation and support along the lines of the
UK’s former partnership or Enterprise Zones
policy (Healey and Ilbery, 1990).
Community-based/small town initiatives.
Whilst local governments are obliged to op-
erate within the constraints of various leg-
islative acts which prescribe the activity in
which they can engage and how they can
utilise their funds, community-based organi-
sations and non-governmental organisations
can, understandably, operate on a far broader
plain. It would appear that, in many cases,
either church or other socially responsible
organisations active in destitute communities
are key change agents in local areas and
small towns and are the main proponents of
LED-type activities. In all cases, a measure
of local-level partnership formation has
helped to ensure the success of initiatives and
the representation and participation of key
stakeholders.
Some of the more well-known cases of
LED at this level include civil society and
NGO activity in Khayelitsha (in Cape Town)
and the Mineworkers-Union-supported
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1015
small-business programme in Mhlala (De-
partment of Constitutional Development,
1999). Other less-well-known cases include
the towns of Kei Road, Seymour and Hert-
zog (Nel, 1999). In the case of Kei Road,
church intervention in a community, scarred
by apartheid-based removals in the early
1990s, catalysed a variety of community-
based initiatives, including: brick-making,
bulk-buying and housing construction. One
of the most innovative features was the way
in which the church acted as a broker be-
tween a women’s co-operative and large
parastatals to secure lucrative sewing con-
tracts (Nel, 1999). In Hertzog, a rural village
in the former Ciskei Homeland, the local
CBO led a programme to revive of the area’s
economy through a community agricultural
co-operative, independent of external sup-
port. These examples clearly indicate that
LED can occur in the most marginalised
situations and that community groupings
have the potential to embark on self-reliance
initiatives. In instances where local capacity
is not on a par with that in Hertzog, such as
is the case in the town of Seymour (Nel,
1997), a well-intentioned NGO has stood in
the gap and provided the necessary expertise
and contacts with donor organisations to as-
sist with localised LED.
A recent endeavour in the coastal town of
Stilbaai has led to the effective elimination of
unemployment in the town and an impressive
tourism-based development strategy. In this
instance, the formation of a strategic partner-
ship between local business, tourism authori-
ties and the local authority was the key
development catalyst (Friedrich Ebert
Stiftung, 1999). Whilst LED at this level has
yielded impressive results and is clearly op-
erating at this microlevel in dozens of areas
(NBI, 1996; LED News, 1996– 98), there are
practical limits to its widespread application.
Shortage of skills in many localities, the
limited number of NGOs and resource con-
straints are all impediments. Once again, it
needs to be stressed that—in a country with
nearly 800 local authority areas (pre 2001)—
the number of initiatives which exists is still
very limited (RSA, 1998).
1016
Section 21 development companies. In sev-
eral parts of the country, LED-type activities
are overseen by local Section 21 companies.
These are companies set up ‘not for gain’
and the most well known are described in
this sub-section. Such organisations usually
have a strong business leaning and are active
in the promotion of small entrepreneurs in
particular. In cases where the local authority
is either too weak and underresourced to
initiate LED or where the nature of a particu-
lar development project justiŽ es the estab-
lishment of a corporation to oversee its
operation, this is a logical route to pursue. In
the aforementioned cases of Stutterheim and
Welkom, the limited capacity of the local
government led to the formalisation of a
partnership with such organisations in those
towns which have focused on business sup-
port and skills training (Friedrich Ebert
Stiftung, 1999; Nel, 1999). In Port Shep-
stone, the local authority established a Sec-
tion 21 company to oversee a major property
development in that town (Harrison and
Naidoo, 1999), whilst in the medium-sized
towns of Midrand and Harrismith, this devel-
opment route has been regarded as more
ideal to pursue than the establishment of
unique LED units within local government
(Department of Constitutional Development,
1999).
The institution of Local Business Service
Centres as locality-based centres to promote
small, medium and micro-enterprise develop-
ment are related cases in point. The activities
of the ‘Beehive’ in Lydenburg, the Stutter-
heim Development Foundation and the
COMSEC (the Community Self-employment
Centre) in Port Elizabeth are good examples
of well-resourced local-level organisations,
usually based on a local-level partnership
between key local stakeholders, which have
positively assisted literally hundreds of
prospective entrepreneurs through the offer-
ing of advice, assisting with loan applica-
tions, training and the occasional provision
of workspace (LED News, 1996 – 98).
At a broader level, in parallel with the
activities of regional development authorities
which are proactive in local areas—such as
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ETIENNE NEL
the Irish and Welsh Development Authorities
in the British Isles—there is at least one
partial parallel in South Africa—namely,
WESGRO in Cape Town. This organisation
has become the de facto marketing, research
and development arm for a range of local
centres across the province. WESGRO has
the potential to assist actively with the facili-
tation of LED and, in so doing, could mean-
ingfully serve as a model for other parts of
the country (R. Hein, WESGRO, Cape
Town, personal communication, 1998).
‘Top-down’ LED. The last major category is
the rather anomalous one of ‘top-down’ de-
velopment. Although LED should, in prin-
ciple, be locally driven and led, there are
numerous examples around the world where
limited ‘top-down’ support, direction and ad-
vice can unlock local-level potential and ini-
tiative (Stöhr, 1990).
In South Africa, the most obvious role-
players in this regard are the national Minis-
try of Provincial and Local Government
Affairs and the various provincial Ministeries
of Local Government and Economic Affairs.
The former is the key link between local and
national government and, in addition to
undertaking LED-related research and policy
advice, has recently instituted two Ž nancial
support measures—namely, the LED Fund to
support local government development
projects and the Social Plan Fund to under-
take regeneration studies in towns affected
by severe job loss (LED News, 1999). In both
cases, the amount of funding made available
is extremely limited with only R46 million in
total (approximately £4.4 million in 2000)
being made available in 1999. Relative to the
development needs in a country with an un-
employment rate of nearly 40 per cent,
signiŽ cantly greater levels of funding are
clearly needed (LED News, 1999). As these
programmes were only implemented in late
1999, it is too early to see concrete results
yet.
At the provincial level, strategies variously
ranging from the provision of very limited
seed funds (often for economic research), to
 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
training and consciousness-raising regarding
the potential of LED have been embarked on
by a range of provincial governments. The
most prominent areas in this regard are the
Western and Eastern Cape, Northern and
Mpumulanga provinces. The activities of the
National Business Initiative, a business-
funded development agency, in assisting
these provincial programmes has been partic-
ularly noteworthy (Nel, 1998). The South
African Local Government Association is
also positioning itself to provide support in
this area (LED News, 1999).
Such action is clearly desirable and could
make a signiŽ cant difference to local com-
munities. Unfortunately, there appears to be
no commitment at this stage to long-term
funding of projects and the employment of
LED facilitators. The apparent success of the
European Union’s (EU) Structural Fund and
the positive role played by EU-funded devel-
opment facilitators under the LEADER pro-
gramme are noteworthy in this regard and
could be used as a role model (Stöhr, 1990;
Nel, 1999).
3.6 Assessment
In the light of the above discussion, it is
apparent that LED is becoming an important
element of development policies applied by a
range of government, community and NGO
agencies. The poverty alleviation and job-
creation focus is understandable and needs to
be encouraged. However, as the discussion
below suggests, there are very real barriers
which exist at present to the further expan-
sion and application of LED programmes.
One of the sobering realities about the cur-
rent status quo of LED in South Africa is
that—despite the attention paid to the con-
cept by policy-makers—after a decade of
experience, results are rather limited. In the
celebrated case study of Stutterheim, where
an innovative programme of community rec-
onciliation and LED was launched in 1990,
less than 100 permanent jobs had been cre-
ated after the Ž rst 6 years of intervention. In
the mining towns which have suffered from
the loss of tens of thousands of mining jobs,
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1017
the situation is as modest, with often only a
few dozen jobs being generated in new,
small businesses (Friedrich Ebert Stiftung,
1999). In many cases, promising initiatives
have petered out or have simply been down-
graded in terms of their scale and focus. One
of the few clear success stories is that of the
aforementioned small coastal town of Stil-
baai, where various tourism and promotional
endeavours have achieved near full employ-
ment (Friedrich Ebert Stiftung, 1999). Rea-
sons for the generally negative situation can
be found in a variety of explanations. At one
level, they relate to the limitations which
LED often has in achieving its objectives
through internal constraints, lack of re-
sources and the loss of skills, as noted in the
North (Green et al., 1996; Dewar, 1998). In
addition, the frequent loss of a town’s econ-
omic base, its lack of appeal to external
investors and the near-absence of any mean-
ingful state development assistance for LED
initiatives in South Africa are obvious
causes. To this must be added the out-mi-
gration of skilled people, the frequent ab-
sence of economically minded local leaders
and very high levels of disempowerment in
communities devastated by decades of apart-
heid-induced discrimination, deprivation and
denied opportunities (Nel, 1999). This rather
bleak prognosis should not be treated as a
dead-end street; instead, it should rather
serve as a prompting to the state and other
agencies to embark on meaningful efforts to
introduce realistic policy, support, training
and funding programmes. One does not, nat-
urally, anticipate absolute success. However,
if the government wishes to address the
chronic unemployment and job-loss scenario
in the country, radical and signiŽ cant action
will be needed and it cannot rely on its
current rather narrow reliance on neo-liberal-
ism (Lester et al., 2000).
An examination of current policy towards
LED does, however, reveal that it appears to
be rather lacking. Whilst NGOs and CBOs
are often making valiant, albeit rather lim-
ited, efforts to address local-level crises, the
general lack of support from government and
limited access to resources, seriously con-
1018
strain their capacity. Policy does not, as yet,
adequately acknowledge or support the role
of such agencies and, until it does, such
actions will remain limited and sporadic. Pol-
icy tends to assume that local government,
rightly or wrongly, should be the key
change-agent in localities and policy is de-
veloping along these lines, regardless of the
very real difŽ culties which many local gov-
ernments face in addressing their current re-
sponsibilities, let alone taking on additional
responsibilities. The traditional focus of local
governments solely on service provision and
the development of infrastructure and land
has been seriously challenged. Such a change
is in line with international trends, most par-
ticularly those which relate to democraticisa-
tion, increasing local-level control and local
economic initiative in the face of what is
often a hostile and competitive global econ-
omic system. The concept is, however, new
and little experience exists in South Africa in
this Ž eld; guidance is clearly needed. Ac-
cording to one local government,
while the power and functions of local
government have been outlined, there is an
urgent need for their clariŽ cation to pro-
mote more efŽ cient and effective im-
plementation (Anon., 1997, p. 12).
In addition, it needs to be established if
existing laws and ordinances actually allow
local authorities to embark on all that is
proposed in policy documents—an issue
which has merited the publication of two
legal research papers (Emdon, 1997, 1999).
Government policy, although encouraging
LED, falls short in the area of providing clear
guidelines of how to undertake and opera-
tionalise strategies. As Rogerson (1997,
p. 190) notes
although the critical importance of devel-
oping LED strategies to assist post-apart-
heid reconstruction is stressed in several
government documents … a coherent set
of guidelines and a framework for LED
has yet to emerge.
Until such happens, it would be unrealistic to
expect the widespread incidence of the
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ETIENNE NEL
phenomenon. Equally serious is the failure of
policy to indicate how the aforementioned
poverty focus must be addressed and how to
integrate this approach within LED pro-
grammes. Research by Rogerson (1999c) in-
dicates that this reality is impeding practical
endeavours on the ground and is a serious
obstacle to the attainment of government ob-
jectives.
One of the key shortcomings in current
policy is its failure to recognise the inability
of the vast majority of local governments in
the country to operate in a manner consistent
with the urban efŽ ciency model suggested,
because of serious resource shortages and
effective bankruptcy in many instances. In
addition, the ‘big-city’ bias of policy fails to
acknowledge certain key needs, particular
within smaller centres. These include the
training and retraining of staff, arresting bud-
get deŽ cits, addressing the need for
signiŽ cant levels of development Ž nance and
the establishment of facilitation support at
provincial and national levels. All of these
need to be put in place before local govern-
ments can realistically be expected to embark
on development policies. The aforemen-
tioned traditional focus of local government
means that there is effectively no cadre of
trained LED experts in the country. Although
the larger centres can draw on the skills of
their planners, accountants, etc., smaller cen-
tres have no such staff pools. There is an
urgent need to train LED ofŽ cials and to
expose councillors to the concept. For most
smaller centres, the need exists to initiate a
national or provincial facilitation support ser-
vice, along the lines of the US Extension
Service, which can help to address capacity
constraints at the local level (North Central
Regional Center for Rural Development,
n.d.). Locally appropriate models of how
LED should operate and also of LED units,
their structure and functions, should be prop-
agated (Delany, 1997).
In many areas, low levels of citizen in-
volvement in civic matters and for that mat-
ter, payment for municipal services have
impeded progress. Government has at-
tempted to promote citizen involvement at
 LOCAL ECONOMIC DEVELOPMENT: IN SOUTH AFRICA
the ground level through various initiatives.
One particularly noteworthy campaign,
known as Masekhane and launched in 1995,
sought to promote active civil participation
and more particularly to encourage urban
residents to pay their rates and services
charges—a legacy of apartheid civil dis-
obedience. This programme has unfortu-
nately not succeeded, with low levels of civil
participation and payment seriously im-
peding the development potential and ca-
pacity of local government. These low levels
of mobilisation are in contrast to what were
very high levels of civic involvement in the
late apartheid period, when opposition and
later reform politics involved signiŽ cant pro-
portions of the population (Lester et al.,
2000). Until the development process in-
volves more people and local revenue bases
can be enhanced, development endeavours
will be impeded.
SigniŽ cant Ž nancial transfers targeted at
LED will be required if local government is
to pursue these strategies, over and above the
limited support that is currently available.
LED is a ‘new’ local government responsi-
bility and it will, as such, be regarded as
secondary to traditional activities in most
areas. With the possible exception of the
metropolitan areas, most local governments
do not appear to have any money to invest in
the process. The fact that an estimated 50 per
cent of local authorities are alleged to be
near-bankrupt exacerbates the process. The
poorest councils tend to be those facing the
greatest development challenges. Non-pay-
ment for services by many impoverished ur-
ban residents seriously impedes the actions
and capacity of local states, with the national
Masekhane campaign, mentioned above,
having done little to rectify the situation.
There is an urgent need to make available
signiŽ cantly larger amounts of dedicated
state funds for LED, as discussed above, and
also to allow local governments to raise
loans. Financial strictures—for example, on
the use of levies and funds accrued from the
sale of municipal assets—need to be criti-
cally reviewed (Nel, 1998). Clarity on who
pays for what and what procedures need to
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1019
be followed, needs to achieved. Policy docu-
ments do not, at this stage, give any sugges-
tion that signiŽ cant national support will be
provided. According to one of the major
local governments in the country
the devolution of responsibilities without
accompanying Ž nances and resources un-
dermines local government’s ability to
properly execute them (Anon., 1997, p. 2).
In other countries and in the EU, local-level
development is often predicated on Ž nancial
transfers to assist bottom-up development/
LED and, in North America, access can often
be made to tax credits or draw-down funds
(M. Murray, LED Researcher, Belfast, per-
sonal communication, 1996).
In her recent assessment of LED in South
Africa, the economist Swapna Mukhopad-
hyay (2000) noted that South Africa has in
place the key ingredients for LED—namely,
democratically elected local structures and
local autonomy. However, key problems in-
clude the limited available resources locally
to implement LED and the fact that there is
effectively no devolution of resources. She
has stated that it is
ridiculous to tell cash-strapped TLCs to
manage their own affairs and then expect
them to solve the country’s prob-
lems … LED is not the responsibility only
of local government … the (central)
government can’t abrogate its responsibili-
ties (Mukhopadhyay, 2000).
Quite clearly, the stage has been set for local
governments to play a key role in LED. Care,
however, needs to be taken not to assume
that LED is the sole prerogative of local
government. Although this might often be
the reality in some areas, as national and
international experience suggest, public – pri-
vate – community partnerships can diversify
the initiative, draw in more stakeholders and
maximise the potential success and beneŽ ts
of the process (Bennett and Krebs, 1993).
Although the concept of partnerships does
feature in policy documents, there is a sense
that their role and place have not been fully
recognised. The roles of the private sector,
1020
CBOs and NGOs need far greater recogni-
tion, whether at the regional, local authority,
suburban, village or neighbourhood level.
Hence, it is argued that the current policy
vision of LED is too narrow and, as is sug-
gested above, it does not adequately en-
compass all stakeholders or allow for the
resources to actualise the endeavour. CBOs
and NGOs are making a difference within
many localities, as outlined above, but in a
country the size of South Africa they are not
really altering the broader picture.
4. Conclusion
LED is a new development strategy which is
currently being experimented with in South
Africa. Even though signiŽ cant progress has
been made in the larger cities, in most parts
of the country local governments are dealing
with an ‘unfunded mandate’ which they lack
the power, resources and capacity to im-
plement. Relative to the size of the country,
it is disappointing that so few of the non-
metropolitan areas are actively engaged in
LED yet. Out of the 791 local authorities
only a handful have deŽ ned LED strategies
in place and are actually implementing them
(RSA, 1998). If government wishes to see
more local authorities actively engaged in
LED, it will need to provide greater levels of
support and funding. Change is clearly oc-
curring in the South African space economy
and, as former President Mandela announced
at the 1998 Presidential Job Summit,
the government has had no illusions about
the massive social problems that our new
democracy has to deal with. We know too
keenly that government alone cannot ad-
dress these problems (Mandela, 1998,
p. 1).
LED also clearly requires the joint action of
a range of stakeholders if it is to succeed.
NGOs and community-based organisations
have key roles to play in Ž lling the develop-
ment gap which exists and they need to be
assisted in this endeavour.
Even though efforts to promote LED are
often limited and many years behind similar
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ETIENNE NEL
initiatives in the North, the fact that they are
now occurring indicates not only the nature
of the economic crises which exist, but also
the softening in approach by a previously
highly centralised state to issues of bottom-
up development and decentralisation. LED
clearly is being viewed and adopted as a
perceived new growth and development cata-
lyst. Although it is too early to ascertain
whether it will live up to expectations, initial
results from South Africa suggest that, even
though development can occur, it tends to be
a slow and rather limited process. Key ques-
tions to ask at this stage are whether results
achieved will actually live up to expectations
and what the necessary factors are which
should be in place in order to ensure success.
Given the blossoming of LED-type activi-
ties which has taken place in recent decades
in the North and in parts of the South,
whether at the level of large cities or the
self-reliance initiatives of community groups,
it is inevitable that LED in South Africa will
gradually become more widespread in its
application. LED both re ects and manifests
the contemporary forces of globalism and
localism. As local areas look inward at their
own resources and skills to promote local-
level development, they often seek a unique
place for themselves in an increasingly
globalised economy and society. We live in
an era of rapid change which is encouraging
important, major shifts in society and econ-
omic activity and in the way in which we
understand them. In this context, the words
of SANCO (the South African National
Civic Organisation) are clearly appropriate:
As a new era of administration dawns,
new forms of development, appropriate to
meeting the needs of the majority of the
people and their economic and employ-
ment requirements need to be embarked
on (SANCO, 1995, p. 1).
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