The concept of local economic development (LED) was new to the 1994 ANC-led South African government. However, following international trends, the National Government realized the importance of the devolution of economic functions to local government. Thus the Constitution of South Africa (Act 108 of 1996) stipulates that the promotion of social and economic development are specific objectives of local government (article 152.1 c). These 'developmental duties' of Municipalities 'structure and manage its administration, 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'. Municipalities now have a mandate to practice local economic development.
The tools put in place thereafter to further this goal are the following:
Three statutory requirements for strategic planning by each municipality. These statutory requirements are: 1) The Local Government Transition Act Second Amendment Act requires Municipalities to prepare Integrated Development Plans through which their priorities are defined. 2) The Development Facilitation Act requires Municipalities to prepare land development objectives, which would determine their spatial planing. 3) The Development Facilitation Act highlights linkages between economic development and town planning by arguing for 'pro-active' rather than 'reactive' planning and zoning. However, there is no specific requirement for the preparation of a LED Strategy.
Financial and budgeting stipulations for Municipalities (contained in the Local Government Transition Second Amendment Act) strive to ensure that each municipality has good accounting and financial practices. Whilst this is a fundamental for economic development, there is currently no stipulation about the percentage of the budget that MUST be spent on economic development. Furthermore, as part of the taxation system, the country's municipalities do have access to a tax on businesses, (which is collected separately to the local property taxes). In theory these funds are supposed to be invested in economic development projects, but are often not.
Until 2000 there were no national government funds for Local Economic Development. However, in January 2000, the Local Economic Development Fund was launched. It is part of the Governments Poverty Alleviation Project. Municipalities can tap into two funds as part of a 'Regenerating Local Economics Program'. The first, the Social Plan Fund is aimed specifically at job creation in local areas. The second, the Local Economic Development Fund also has job creation as a goals, but is also available for SMME support, and strategic planning.
The South African National Government does not have a national spatial plan for its urban areas. However the Spatial Development Initiatives have dictated government infrastructure investment. More recently the Industrial Development Zone Program and Cluster Initiatives give direction to municipalities on further national government spatial investment in infrastructure, and on where they will support which clusters.
For More Information: South Africa Department of Provincial and Local Government |
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