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Lu Heideman LED Expert P3 Project: Partnership – Participation – Progress SALGA, BALA, ALAN, SALAR March 2011

Municipal Local Economic Development and the power of the local multiplier effect: piloting a community enterprise identification method in South Africa and Namibia . Lu Heideman LED Expert P3 Project: Partnership – Participation – Progress SALGA, BALA, ALAN, SALAR March 2011 .

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Lu Heideman LED Expert P3 Project: Partnership – Participation – Progress SALGA, BALA, ALAN, SALAR March 2011

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  1. Municipal Local Economic Development and the power of the local multiplier effect: piloting a community enterprise identification method in South Africa and Namibia Lu Heideman LED Expert P3 Project: Partnership – Participation – Progress SALGA, BALA, ALAN, SALAR March 2011

  2. What is ‘Plugging the Leaks’? • NEF-developed LED tool based on Keynesian local multiplier effect • Piloted in South Africa and Namibia as an instrument of policy implementation for broader uptake by municipalities • Utilises the analogy of a local economy as a leaky bucket • Bottom-up approach to LED that does not rely on external experts • Community-based strategy that works directly with low-income communities

  3. LED as a contested concept in South Africa • Ten years of community development projects of dubious economic sustainability and limited stakeholder partnership • Polarised policy positions of social welfare versus competitive approach • Plugging the leaks returns enterprise support into the municipal sphere without crossing the line of job creation through projects • Battle for LED as a series of systematic processes to improve the BEE, rather than ‘projects’

  4. Adapting Plugging the Leaks • Intention: build economic literacy and empower communities to better utilise existing resources toward local enterprise • NEF approach includes a full-time enterprise coach and finance through micro-finance players offering small loans • The need to mobilise other entrepreneurial support meant municipalities facilitating and coordinating multiple agencies with a common goal

  5. Municipalities • Namibia: Walvis Bay and Arandis dependent on natural resources • lack of economic diversification • High GINI coefficient, poverty, low population density • Dessert challenges • Namport opportunities

  6. Municipalities • Theewaterskloof and Cape Agulhas: Caledon, Grabouw, Bredasdorp, Napier • Agricultural and trade (tourism) • Southern-most point in Africa • Small population, unemployment, inequality, race-class correlations

  7. Responses to Plugging the Leaks • Initial workshops in Grabouw, Caledon, Napier, Bredasdorp, Arandis and Walvis Bay • Similar contexts: unemployment and poverty • Inequality endures in race-class correlation • Largely white-owned private sector and predominantly black public sector • Neither SA nor Namibia offer an effective social welfare net • Limited UIF, no BIG

  8. Responses to Plugging the Leaks cont... • Most workshop participants involved in the ‘second’ economy in survivalist or copy-cat ventures due to absence of wage employment • Limited regular cash income leads to limited individual spending choices and exclusion from the cash economy. LM3 has limited traction • Analysing markets and networking highly successful • Funding for enterprise development through grants undermines sustainability and distorts markets

  9. Responses to Plugging the Leaks cont... • Can municipalities change the way LED officials work to incorporate coaching activities ? Can municipalities facilitate enterprise development without becoming project implementers? • It is viable to build groups of passionate, aspiring entrepreneurs to support each other and pool resources? • Identify markets before starting a business • New understanding of competitiveness • Look inward and maximise value – balance to FDI • Local experts empowered instead of passive grant dependent recipients

  10. Uniqueness of local • Xenophobia • Degrees of localness • Co-operation for competitiveness • Small business challenges different to established business (BR&E versus PtL) • Mistrust between business and government (welfare versus profit)

  11. Prospects for PtL as a municipal approach to LED • Emphasis on local knowledge gives meaning to participatory LED methods • Locals have been relegated to the role of workers in projects, rather than owners • PtL an effective tool to harness ‘indigenous’ knowledge accessibly • Delivered through NGO’s and CBO’s to date, but can be an institutionalised policy instrument for the local state to work directly with low-income communities in future.

  12. Contact details: Lu Heideman luheid@mweb.co.za www.projectp3.org +27 (0)82 7052145 Cape Town, South Africa Skype lu_heideman NEF info: www.pluggingtheleaks.org

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