Presented By: Damon Mathfield

1. The Space Economy – An important Consideration in spatial development planningFUNCTIONAL REGIONS A Spatial Development Response to Economic Development 27 March 2013 Presented By: Damon Mathfield

2. Contents • National Spatial Development Framework (NSDF) • Spatial Development Initiatives (SDIs) • National Spatial Development Perspective (NSDP) • The New Growth Path • Rural Development • National Infrastructure Plan • Need for a Spatial Vision • Spatial Development Principles • Spatial Targeting and the NDP • The Space Economy Concept • Functional Economic Regions • Proposed Regional Economic Development Approach

3. National Spatial Development Framework (NSDF) • SA, post-1994, has seen attempts at national spatial development planning aimed at transforming the apartheid space economy towards reduced inequality and poverty and in support of greater economic growth, development and inclusion. • Post 1994, the first major spatial planning initiative was the National Spatial Development Framework (NSDF). Commissioned by the then Reconstruction and Development (RDP) Office in 1995, the NSDF was aimed at coordinating public sector expenditure and infrastructure investment to ensure greater impact in reducing social and economic backlogs given the vast inequities and significant levels of poverty that the new government faced, given resource and delivery capacity constraints • The NSDF led the first attempt at mapping of all public sector investment in SA, after which efforts were made to lobby, negotiate and convince all relevant stakeholders to align future investment proposals with an agreed spatial investment trajectory. • In practice, the politics of persuasion was not successful as the majority of stakeholders were not keen on central instruction directing their investment choices.

4. Spatial Development Initiatives (SDIs) • The second approach in the mid-1990s, the Spatial Development Initiative (SDI) which consider regional development lessons learnt in the European Union (EU) experience • This recommended that resources and investment on social and economic infrastructure should be prioritized in growth corridors that link areas of economic potential given their importance in catalyzing economic growth for the entire space economy • A main element of the strategy was the ‘crowding- in’ and coordination of public and private investment in the growth corridors • Following successful growth and employment performance in the growth corridors, attention (and resources) would shift to more marginal areas. • By early 1999, 11 industrial, agricultural or tourism-led SDI’s had been initiated in South Africa, the most successful of which ultimately has been the Maputo Development Corridor, extending from Maputo on the African east coast through Pretoria and Gaborone to Walvis Bay

5. Spatial Development Initiatives (SDIs) cont… • An overall review of the SDI programme presents mixed results. While some SDIs were viewed as successful, particularly from a financial transaction point-of-view, from the onset it was quite evident that there had not been sufficient efforts in developing the linkages between planning and operation of the large-scale infrastructure investments and spatial development. • Often, and for a variety of reasons including capacity constraints and misaligned interests, the anchor investments occurred without attempts being made to develop the necessary local linkages. • As a consequence, South Africa’s SDI’s have not been able to translate infrastructure development into broad-based economic growth that contributes significantly to employment reduction and employment creation.

6. National Spatial Development Perspective (NSDP) • A few years later, work started on the NSDP given the limited success of prior initiatives to successfully coordinate public sector investment across South Africa’s spatial economy • The NSDP’s aim was to describe SA’s main social, economic and environmental trends through a spatial lens and to provide a common set of principles and guidelines to direct public infrastructure investment and development spending and contribute towards reducing spatial exclusion and inequality throughout the country • The NSDP’s principles were based on the notion that fixed infrastructure investment beyond the minimum package of basic services should be targeted towards areas of economic development potential and that social development spending should be targeted in places of high poverty and/or need. • Building on the SDI approach, the NSDP also emphasized the importance of channeling future settlement and economic development opportunities into economic activity corridors or nodes that link the main growth centres in the SA spatial economy

7. National Spatial Development Perspective (NSDP) cont… • The NSDP main argument was that efforts and resources to redress social inequalities should focus on ‘people and not places’ so that physical (economic) infrastructure investment should be directed towards areas of economic potential • It proposed that in areas of low economic potential, public efforts should focus on the provision of basic services and human capital development that would open up employment opportunities in areas of greater economic activity, should people choose to migrate • Resistance to the NSDP arose given that the approach challenged the notion that that poverty is concentrated in rural areas given the spatial legacy of apartheid, and suggested rather that areas of economic potential and highest poverty concentrations were co-located • The revised NSDP (2006) still did not manage to transition the debate or address the unease that it supported a ‘top-down’ national spatial development approach that would continue to grow the economically advantaged urban core regions at the expense of the rural poor, further entrenching the apartheid spatial legacy

8. A New Growth Path • In 2009, government policy has prioritized transforming the South African economy, placing the country on a new growth path that prioritized job creation and economic inclusion. • This agenda has taken cognisance of the deep development deficits in rural areas in particular, and has placed revitalising rural development and challenging the legacy of the apartheid spatial economy among government’s top priorities for the medium-term. • There is a focus on the historically disadvantaged areas- homelands/Bantustans- which were largely labour reserves. • The challenge is to identify viable economic opportunities in these areas which have varied economic potential (eg. land, water and proximity to markets). There is a strong emphasis for the need for increased public investment in these rural areas. • The challenge in the spatial planning discourse has been to shape the debate, analysis and resulting instruments in a way that highlights the importance of spatial planning and regional development interventions that target both rural and urban areas, rather than those that posit an ‘either or’ trade-off that positions the debate into a zero sum game

9. The New Growth Path • Cabinet adopted the New Growth Path (NGP), a strategy promoting decent work and inclusive growth. • A target was set nationally to grow employment by 5 million jobs by 2020 (around 3 million more than the anticipated growth if we extrapolated from 2002 to 2009) • In order to achieve this target 5 key job drivers were determined • The NGP recognises the urgent need to address the extraordinary divergences in terms of the spatial concentration of economic growth in South Africa • The NGP outlines the fact that creating an enabling environment for rural employment will require the finalisation of a spatial perspective • that sets out the opportunities available and the choices to consider in order to lay the basis for aligning government spending, infrastructure, housing investment and economic development initiatives.

10. Jobs drivers Main economic sectors: Agriculture & agroprocessing Mining and beneficiation Manufacturing (IPAP2) Tourism/other services Infrastructure Energy, transport, communications, water, housing. Look for employment opportunities in “jobs drivers” and implement policies to take advantage of them Spatial opportunities: Rural development African regional development New economies: Green economy Knowledge economy Social capital: The social economy The public sector 10

11. Rural Development • Rural development has emerged as a national priority • Action Plan 6 was adopted by the 2011 July Cabinet Lekgotla -“Scaling up Rural-Development Programmes Including Investment in Rural Areas and the Revitalisation of Smaller Towns.” • In order to implement this action plan and address the dire situation within the former Bantustan areas, the DRDLR was tasked to develop and implement an initiative that will address backlogs and public sector investment needs within 23 Districts that contain former homeland areas • Development of a framework for economic transformation • Identify priority investment areas where infrastructure can be utilised as catalyst for economic development

13. Rural Assets

14. National Infrastructure Plan • Through the Presidential Infrastructure Coordinating Council (PICC) Government recently adopted an Infrastructure Plan that is intens to transform the economic landscape of South Africa; • create a significant number of new jobs; • strengthen the delivery of basic services to the people of South Africa and support the integration of African economies. • Based on this work, 18 Strategic Integrated Projects (SIPs) have been developed and approved to support economic development and address service delivery in the poorest provinces.

15. National Infrastructure Plan cont... • 18 Geographic Strategic Infrastructure Projects (SIPS) identified: • SIP 1: Unlocking the Northern Mineral Belt with Waterberg as the Catalyst • SIP 2: Durban- Free State– Gauteng Logistics and Industrial Corridor • SIP 3: South Eastern node & corridor development • SIP 4: Unlocking the economic opportunities in North West Province • SIP 5: Saldanha-Northern Cape Development Corridor • SIP 6: Integrated Municipal Infrastructure Project • SIP 7: Integrated Urban Space and Public Transport Programme • SIP 8: Green Energy in support of the South African economy • SIP 9: Electricity Generation to support socio-economic development • SIP 10: Electricity Transmission and Distribution for all • SIP 11: Agri-logistics and rural infrastructure • SIP 12: Revitalisation of public hospitals and other health facilities • SIP 13: National school build programme • SIP 14: Higher Education Infrastructure • SIP 15: Expanding access to communication technology • SIP 16: SKA & Meerkat • SIP 17: Regional Integration for African cooperation and development • SIP 18: Water and Sanitation

16. National Infrastructure Plan cont... • PICC established structure to address the challenges through coordination, integration and accelerated implementation: the Presidential Infrastructure Coordinating Commission (PICC) • Develop a single common Infrastructure Plan that will be monitored and centrally driven • Identify who is responsible and hold them to account • Develop a twenty-year planning framework beyond one administration to avoid stop-start patterns • An Infrastructure Book has been compiled, which contains more than 645 infrastructure projects across the country • •An Infrastructure Plan with identified Strategic Integrated Projects (SIPs) has been developed and adopted by Cabinet and the PICC

17. Need for a Spatial Vision • NSDP developed in 2003 and reviewed in 2006 (need & potential) • National Development Plan 2011 indicates that there is a need to tackle inherited spatial divisions as SA’s spatial structure perpetuates exclusion • Distorted growth patterns cannot be ignored as they worsen economic and logistical inefficiencies • Many places are not growing economically because of a lack of infrastructure, inadequate skills, poor innovation capacity and weak governance • Locked-in potential of these areas could be released through targeted investment in economic and social infrastructure investment strategy • Infrastructure plays a key role in linking lagging to leading regions reducing the economic distance and enhancing goods, labour and capital market opportunities

18. Spatial Development Principles • It is proposed in chapter 8 of the NDP that all spatial development should conform to the following normative principles and should explicitly indicate how they would meet the requirements of these principles: Spatial justice, Spatial sustainability, Spatial resilience, Spatial quality and Spatial efficiency

19. Spatial Development Principles cont... • Principles of particular significant to economic development: • Spatial Efficiency- Productive activity and job opportunities are optimised and burdens on business minimised. Efficient commuting patterns and circulation of goods and services will be supported with regulatory procedures that go impose unnecessary costs to development • Spatial Justice- The historic policy of confining particular groups to limited space and the reverse of the unfair allocation of public resources.

20. Spatial Targeting and the NDP • With these principles and the need for an improved ‘urban/ rural’ balance in mind, the recently drafted NDP has proposed a spatial targeting structure that relates to: • a national competitiveness corridor that connects Gauteng and eThekwini; nodes of national competiveness, notably the Cape Town and eThekwini city-regions as well as the Nelson Mandela and Buffalo City regions; • rural restructuring zones; resource-critical regions; transnational development corridors; and special intervention zones including job intervention zones for regions that have lost over 20 per cent of their jobs over the past decade, growth management zones, and green economy zones.

21. The Space Economy Concept • Broad terms, the space economy can be defined according to economic development status of each space i.e. - leading regions (with urban growth associated with globalisation and increased urbanisation), • new regions (increased connectivity between places means that some ‘new regions’ are created by improved connectivity that then shapes the flows and markets for economic activities such as labour and land markets, infrastructure platforms)

22. The Space Economy Concept Cont… • lagging regions (regions that are losing population and experiencing industrial restructuring, or rural regions that are experiencing emigration) • political regions (e.g. provinces which do not represent ‘natural’ or ‘functional’ geographies and are mainly for administrative purposes).

23. Functional Regions • Approach to development should consider the functional relationships across a contigeous space (e.g. With respect to regional value chain analysis; market trends; sector territories; clusters and transportation flow etc.) • Concept of a functional region can be approached from various perspectives • Perspective considered here is that described by Feldman et al (2005) - “areas defined by business and economic activities rather than by administrative or historic boundaries” • The intention is that by identifying functional regions in this manner we can improvecross-boundary infrastructure planning, ensure better integration of a wider network of human settlements and support the sharing of economic assets to secure economies of scale

24. Functional Regions Growth Potential of Towns in the Western Cape FlowMap modelling of journey-to-work data, 2011

26. EDD/ CSIR Functional Economic Regions • The implementation will be as follows: • PHASE 1 • Project Start Up (Process Plan Development and the Setting up of Consultative Structures); • Conceptualisation of Functional Regions; • Data Collection and Functional Region Analysis; • Development of a First Series of Spatial Perspectives on Functional Economic Regions and Intervention Implications; • Development of a Dissemination and Decision Support Tool • PHASE 2 • More detailed analysis of functional spaces/ spatial perspectives e.g. Through climate, surveys, pilots

27. Rationale for this Initiative • This initiative is critical to EDDs mandate for the following key reasons: • It is evidence based and thus provides an opportunity for more effective planning across sectors as opposed to the more linear silo approach • Development of spatial economic perspective that will essentially support Government’s new Infrastructure build programme and SIPs • Potentially provide the economic layer to the National Spatial Framework (NSF) proposed in the National Development Plan (NDP) • To create space for cross boundary planning. Allowing municipalities that configure into functional economic regions to collective plan catalytic interventions • To be provide a basis for structures like the MINMEC, Infrastructure Cluster and the PICC to prioritise of high Impact infrastructure investment across the country • To provide a basis for EDD to proactively determine intervention areas to ensure the impact of strategic economic interventions of the Department are maximised

28. Rationale for this Initiative (2) • To enable the potential basis for Provincial Economic Development Departments to support economic planning on a regional basis with Provinces strengthening the economic component of the PGDS (Planning Scale: Sub-Province but bigger than District) • Planning on an understanding the potential of economic value chains over space • Providing a spatial platform for scaling up jobs by maximizing opportunities resulting from high impact initiatives • Ensuring greater leverage off major structuring elements such as transport and development corridors • To provide an economic context/ platform for key spatial initiatives of government such as the SIP, IDZ and new SEZ programme

29. Proposed Regional Economic Development Approach • A case can be for a move towards a more multi-faceted regional economic approach to development that emphasizes the capitalising on strategic partnerships and a focus on systemic competitiveness and inclusive growth in the development of local and regional economies • This is based on the notion that an integrated system of growth nodes, with well-articulated strategic functional economic linkages to less-developed areas (rural areas) can help unlock latent economic opportunities in an area and facilitate a more inclusive and more wide-spread regional development. • EDD is thus proposing to initiate and implement regional economic development intervention along the Ilembe to Umhlatuze (Richards Bay) development N2 corridor

30. Expanding the Spatial Lens and Rural Urban Linkage • Expanding the spatial lens from a local to a regional level, the corridor serves as the spine along which the secondary cities and regional services centres or smaller towns anchor key value chains within a broader economic region. • This facilitates identification and implementation of RLED interventions that serve to unlock latent economic development opportunities, and which have the potential to link lagging (particularly poorer rural areas) nodes to leading (urbanized) nodes across the region.

31. Providing a Broader Planning Context to LED • Based on functional regions intention is that EDD will consider regional approach to LED • Coordinate actors and create a platform for partnerships i.e. Districts that relate to functional region to identify, engage on and prioritise high impact cross cutting interventions that effect the broader region identified • Implications of the main çross-boundary economic value chains as they relate to the functional economic regions will be examined in order to consider opportunities to spread economic opportunities e.g. With respect to corridors • Economic Development Departments can potentially drive this coordination that will fit into the IDP cycle so that reviewed IDPs factor in these priorities • The result will be: • improved cross boundary planning and projects/ initiatives supported across municipal boundaries • more sustainable catalytic projects that take broader market issues into account • more holistic approach to rural areas as they relate to their urban centres/ nodes

32. Thank You