South Africa: Local Development

Businessday - Published: 2010/07/22 08:04:01 AM

We are not doing the right things to make Gauteng grow to its potential. Yet much of what is so urgently needed is not complicated, does not require costly five-year plans or even much more money.

Nowhere is this more apparent than in local government.

Local economic development lies at the heart of the effective functioning of the local government sphere. Without the additional resources that arise from local economic development, there is little room for local development. This undermines the sustainability of a healthy, developmental sphere of government, whose success or failure affects the lives of ordinary South Africans.

The problem we face, and which accounts for the epidemic of local government breakdowns across SA, is the bald fact that local economic development is failing disastrously. The reasons for this failure are not hard to find. They include the creation of unrealistic expectations about what local economic development can provide, a preference for quick wins that forgo sustainability in favour of one-off distributions of goods and materials to a favoured few. It results in projects that peter out after a few months. It creates the idea that ward councillors are dispensers of patronage and jobs for those who support them. And it creates a “quick- fix” mentality at odds with the long-term vision that underlies sustainability.

This is why we have multipurpose centres that stand unused and farming co-operatives are set up with no thought about who will buy the products. After a few months, the taps are stolen, as are the wheelbarrows and spades. This provides a one-off cash boost to those who appropriate it, but no sustainable development. The day the government turns off the tap, the project collapses.

Experience shows real local economic development, by contrast, occurs in SA only when it is driven by the private sector. The government cannot create “decent” jobs, as it concedes. The Expanded Public Works Programme is not a sustainable development initiative leading to decent jobs. It is a handout. It and its variants have a role to play, but they must be understood for what they are.

Local economic development has an essential part to play in local government if this sphere of delivery, directly to the citizens, is to be sustainable. And since local economic development does not happen in isolation, there must be ways of using local resources to extract maximum local benefit.

What, then, can be done? The experience of the Midvaal municipality, the only one in Gauteng run by the Democratic Alliance (DA), contains practical examples of the limits and real possibilities of local economic development. In brief, there are three commandments: get the basics right and working; slash all unnecessary spending on “nice-to- haves”; and keep your town tidy and safe.

In Midvaal, local government sees its role in local economic development as:

• Efficient service delivery, driven by capable employees;
• Recirculating the local rand locally, as far as is sensible, by requiring municipal contractors to buy from local suppliers and use local labour;
• Build into performance management targets for municipal staff requirements for the employment of low-skilled and unskilled local labour wherever feasible;
• Procure locally where possible;
• Require banks that wish to do business with the municipality to have at least a branch (not just an ATM) in that municipality, employing people who spend locally and making for business convenience;
• Outsource nonessential services to local small businesses and co-ops; and
• Keep the town a place in which people (and investors) want to live.
• Local government cannot promise to create sustainable “decent work”. For the rest, it is as simple as getting the basics right.

Things such as water and electricity supply are also important, but much of this is beyond the control of a single municipality, falling to the province instead. To maintain and extend infrastructure shifts extra, uncosted burdens onto municipalities that do their maintenance, so that, for example, sew age gets diverted from other areas less well governed, overstraining the few functioning systems.

In Gauteng, the provincial authorities are in a cash-flow crisis. Late payments destroy struggling small-business startups and undermine municipal viability when running larger capital projects. All these constraints inhibit development in the subregions because new projects require services that are either collapsing or nonexistent. And at the local government level, the small things that do make a difference — proper signage for tourists, traffic lights that work, regularly resurfaced roads, reliable electricity substations — are neglected in favour of “nice-to-haves” such as marketing and overseas travel.

As a direct result, the Gauteng government’s own statistics show that this province, still the “engine of Africa” in our promotional brochures, is steadily falling behind the growth rates of provinces such as the Western Cape. In a few years it will be Lagos, not Johannesburg, that will be the economic engine of Africa, closely followed by Cairo.

As for investment, it is the quality of local government services that can make all the difference. In 2009- 10, one of the biggest foreign investments in SA was the new R3,5b n Heineken factory. It is creating 2500 construction jobs, 220 permanent direct jobs, and more than 200 local indirect jobs.

Heineken had the choice of locating next to a metropolitan area, or Midvaal. It chose Midvaal. Why?

• The Midvaal executive made itself available to the Heineken executive around the clock to deal with any problems. The metro did not.
• The (multiparty) Midvaal council was prepared to delegate to the mayoral committee to meet at 24 hours’ notice at any place convenient to Heineken to resolve urgent concerns. The metro was not.
• Midvaal made sure all the nitty-gritty issues, such as rezoning, were speedily addressed and resolved to deadline, working the system to achieve the outcomes needed. For Midvaal, the priority was the investment, not the convenience of municipal officials or the sanctity of the rule book.
• For Heineken, all it needed from Midvaal in terms of investment support (on which Gauteng spends millions) was accurate data suited to its businesses needs.
• Heineken now has a direct line to the may or and the municipal manager.
• Midvaal was able to make decisions quickly. The metro demanded three months’ notice and could be overruled by the provincial African National Congress (ANC) leadership. Midvaal, admittedly a smaller municipality, needs 24 hours. Midvaal deals with rezoning applications within six months. The metro takes up to three years.
• In return for this no-frills, commonsense approach, Midvaal was rewarded with nearly 3000 decent, sustainable jobs. This is a local economic development success story, creating a better life for all Midvaal’s citizens.

When the Gauteng City Region Observatory recently produced a quality of life survey of Gauteng’s municipalities, it showed that Midvaal was the only one in which the majority of inhabitants, black and white, were happy with the standard of local government services. It is not rocket science.

Tim Nast is mayor of Midvaal. Gavin Lewis is a member of the Gauteng legislature and a development analyst. Both belong to the DA.