ADDRESS BY THE MINISTER OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, MR DES VAN ROOYEN, at the NATIONAL LED CONFERENCE,
09 November 2017,
Programme Director, Deputy Minister Andries Nel,
Honourable Minister of Small Business Development, Ms Lindiwe Zulu,
Honourable Deputy Ministers from DSBD, EDD and COGTA,
Honourable Chairpersons of DSBD & COGTA Portfolio Committees
President of SALGA, Councillor Parks Tau,
Esteemed Traditional leaders,
Executive Mayors and Mayors,
Ladies and Gentlemen,
Good Morning, Dumelang, Sanibonani, Goeie More,
It is a privilege for me to address you this morning.
Not many of you may be aware of this, but the first conference on small business in the democratic South Africa was convened by our former President, Tata Madiba.
Speaking at the opening of the conference he stated,
“There are moments, poised between the dissolution of the old order and the establishment of the new, at which the change coursing through our society becomes sharply visible.”
Today is such a moment.
We thank the Ministry and Department of Small Business Development, under the leadership of Minister Zulu, for joining hands with us to make this conference a reality.
Let me also quote our Minister of Small Business Development, who just yesterday, said,
“Those against Radical Economic Transformation must stop…there’s a difference between fighting corruption (we have a responsibility to fight it) and delaying RET and claiming it’s a root to looting!”
Our starting point must be that apartheid systematically and deliberately restricted opportunities available to the majority of the population.
Today we are faced with the challenges of unemployment, especially for the youth, stagnating national output, and spatial and economic inequalities.
Earlier this year we hosted the Third Presidential Local Government Summit, under the theme of “Transforming Municipal Space for Radical Social and Economic Development.”
We also hosted the Traditional and Indigenous Leadership Indaba as well as the Local Government Youth Summit.
These summits covered the following three focus areas:
- Accelerating economic and spatial transformation – integrate plans, improve mobility and connectivity, create quality living and working environments.
- Building on the Back to Basics programme by continuing to provide quality services.
- Collaboration and Leadership: ethical and committed leadership, responsive to needs of local communities, working closely with other spheres of government.
These resolutions and focus areas continue to give our efforts direction as we seek to make the vision they espouse a reality for all South Africans.
Ladies and Gentlemen,
The National Development Plan is clear about the role of small business in a future South African economy:
“A large percentage of the jobs will be created in domestic-oriented activities and in the services sector. Some 90 percent of jobs will be created in small and expanding firms. The economy will be more enabling of business entry and expansion, with an eye to credit and market access. By 2030, the share of small and medium-sized firms in output will grow substantially. Regulatory reform and support will boost mass entrepreneurship. Export growth, with appropriate linkages to the domestic economy, will play a major role in boosting growth and employment, with small- and medium-sized firms being the main employment creators.” (NDP: Chapter 3: Key Drivers of Change, page119)
As we mark the fifth anniversary of the National Development Plan, it is towards realising this objective that we meet here today.
Local government is the space where citizens first interact with government.
For many citizens it is also the space where their most frequent interaction with government occurs.
The Presidential Local Government Summit reiterated the need for radical economic transformation to be felt within the municipal space.
Among the other objectives of this conference are to reflect on the state of LED at local government level. What are the successes and what are the constraints? Why do some municipalities still treat the informal sector as a second cousin? What steps do we need to take at local government level to heighten the trajectory of Local Economic Development? In addition, where do youth feature in our LED efforts?
We also need to consider how we take advantage of rapid urbanisation and achieving our spatial transformation goals to stimulate LED.
Again, we should deliberate on what we mean by Radical Economic Transformation in our context and what are the concrete steps we can take to achieve this, using LED as a vehicle.
As local government practitioners what are the various policies, legislation and strategies that impact on building inclusive local economies, both positively and negatively?
The Back to Basics (B2B) programme is the premier programme for the transformation of local government.
It is based on five pillars:
- Putting people and their concerns first
- Creating conditions for decent living by consistently delivering municipal services to the right quality and standard
- Be well governed and demonstrate good governance and administration
- Ensure sound financial management and accounting
- Build and maintain sound institutional and administrative capabilities
We believe that these pillars are self-explanatory.
The successful implementation of the B2B programme lays a foundation for economic development.
When businesses are assured of the regular supply of water, electricity and waste removal services, to name a few, the conditions for a stable business environment exist.
This is even more important for small business development, which can be devastated by fluctuating service delivery.
Just imagine a newly-opened restaurant or takeaway outlet that suddenly has to contend without electricity for a number of days.
How do we capitalise on the B2B programme to stimulate Local Economic Development?
We have experiences of what works and does not in LED. The LED concept or approach to development has undergone many phases in South Africa. Prior to the release of the first National LED Framework in 2006, focus was mainly on poverty alleviation-oriented ‘projects’ that were primarily dependant on grant-funding. Over time there was wider acknowledgement that alone, this approach to local development cannot be sustained as it does not impact on the economic capacity of localities.
Initiatives focusing on the competitiveness of local economies, that were intended to attract private-sector and /or state-led, sector-specific investment/development soon followed. With time however, there was greater acknowledgement that local economic development cannot be limited to the ‘economy’ or ‘sector’ only; that local people/stakeholders, the space and the environment are all fundamental factors central in driving integrated and sustainable localities.
In recent times, LED initiatives have shifted focus to the creation of an enabling environment for development, through the promotion of functional institutional arrangements particularly with the local private sector, and various ease of doing business interventions. Other initiatives focus on integrated spatial development, ranging from nodes, precincts, small towns to regional development.
Meanwhile, at the global level, Sustainable Development Goals (SDGs) place local government at the centre of development, and call on countries to localise the SDGs. In addition, the global development community now recognises LED as a framework for localising the SDGs. As an example, the 4th World Forum of LED, held in October 2017 in Cape Verde, reaffirmed the distinct role of LED in turning global dialogue into concrete development opportunities at the local level, driving an alternative – more equitable, inclusive and sustainable economic development model from and through territories as means to achieving universal goals. Arguably, LED has not received this much global attention since the release of the World Bank LED Primer in 1996.
Back in South Africa, there are views that there is need to reconceptualise the understanding of LED, to remain relevant to changing times and changing national development priorities, such as the Integrated Urban Development Framework. This conference should assist us to reflect on LED developments in SA, in the form of evidence based examples of LED successes in planning, coordination and implementation by partners and LED stakeholders. The main objective is to contribute to the LED knowledge base in the country and provide recommendations for replication of these successes in other localities. It would be amiss of me not to mention another flagship programme of the department, the Integrated Urban Development Framework or IUDF.
Last week we witnessed the very first national observance of World Cities Day in the eThekwini Metro.
It also highlights one of the main reasons that we as stakeholders in the local government sector, have partnered with the Department of Small Business Development in tackling the issue of Local Economic Development.
Increasingly cities are being recognised as key drivers of economic growth.
What happens at the municipal level has a direct impact on a city’s contribution to the GDP.
Cities provide efficient infrastructure and services through density and concentration in transportation, communications, power, human interactions, and water and sanitation services.
They attract talents and skilled labour that allow for specialisation in knowledge, skills, and management capabilities possible.
Cities are the agents of social, cultural, economic, technological and political changes and advancement.
South African cities have made notable achievements in a number of areas, from an economic development perspective.
Cities and large towns in South Africa produce 80% of the country’s GVA (Gross Value Add) and they are home to over two-thirds of the country’s population.
This presents opportunities in terms of the natural concentration of economic activity, economic growth, poverty reduction and job creation.
Government has also invested considerable expenditure in infrastructure development in all the major cities of the country, mainly in the road and logistics infrastructure.
Major metropolitan municipalities in the country have adopted long-term growth and development strategies that integrate economic planning, spatial planning, infrastructure planning and social planning.
This facilitates predictability of the cities’ development trajectories, whilst it also ensures that adequate resources are allocated for the implementation of those plans.
It is against this backdrop that we meet to consider how we ensure the implementation of the IUDF, within a LED context.
One of the key policy levers of the IUDF is that of Policy Lever 6, which deals with Inclusive Economic Development.
This Lever recognises the importance of inclusive economic development and calls for:
“Cities and towns that are dynamic and efficient, foster entrepreneurialism and innovation, sustain livelihoods, enable inclusive economic growth, and generate the tax base needed to sustain and expand public services and amenities.”
It acknowledges the need for municipalities to create an enabling environment for economic growth and innovation, through their actions.
Policy Lever 6 identifies actions that can be taken in the short, medium and long term to advance the goals of inclusive economic development.
We do hope that you will consider these in your workshops.
Currently South Africa ranks 74 out of 190 countries in the 2017 World Bank Doing Business Report.
One of the initiatives that we have been involved with in conjunction with the National Treasury, World Bank and other stakeholders is participating in the Sub-National Doing Business report.
The Sub-national Doing Business study is a global indicator benchmarking exercise which has examined business processes impacting on businesses such as building permits, electricity connections and property transfers.
The project has aimed at supporting the eight metros to improve their local business climates by improving their regulatory and administrative performance.
The project also liaises with selected implicated national departments to encourage parallel reform initiatives.
Ladies and Gentlemen,
One of the failures of the LED landscape has been the inability to incorporate other important economic avenues or drivers that have played a critical role in economic development in the past few years.
These, as noted in the National Development Plan, include the green economy and science, technology and innovation.
Any LED framework would be inadequate without considering the following:
- The importance of acknowledging the transformative impact embedded in interactions of various policies within the LED space economy and the critical importance of LED to the national economy;
- That innovation is central to the development of adaptive capabilities of cities and District Municipalities to respond to national challenges and global changes including their ability to promote the emergence of new growth opportunities based on innovation – when one considers the decline of the clothing manufacturing industry and its impact on selected municipalities and communities and the inability to find new avenues of economic sustenance, then the value of driving innovation will be realised;
- LED should remain embedded to its socio-economic and spatial context such as village, town, and cities – essentially LED should be driven from a bottom-up approach that allows for the identification of opportunities that are unique and viable to specific municipalities.
As I mentioned earlier, today is indeed a momentous occasion.
Our deliberations here have the potential to change the face of local government.
From today on local government will no longer be just about delivering basic services.
Today we can ensure that Local Economic Development, is actually driven from the local level, and does not ensue from a top-down approach, as occurred previously.
Today we take steps to bring to fruition the concept of Radical Economic Transformation.
Today our actions will improve the lives of our citizens by ensuring economic development that is truly inclusive.
I thank you.