(Regional and) local economic development themes in contemporary South African Cities

Introduction

Increasingly cities are coming to be understood as ‘significant new territorialisations of the global economy’ (Robinson, 2006: 125). They are treated by governments and the private sector as engines for economic growth, both enacting and reflecting the thrust towards enhanced entrepreneurialism and the leveraging of increased wealth through the urban economic system (Sheppard, 2014). Thus, the rhetoric and practice of growth-oriented, competition-focussed development has been adopted in cities across the world and increasingly in the global South, where these market-driven needs must compete with the need for urgent direct intervention in the lives of the poor and marginalized (Oldfield and Parnell, 2014). The pressure to undertake urban development, largely through economic mechanisms has, arguably, arisen through shifts toward neoliberalism within international and state-led policy (Robinson, 2008b). These shifts have intensified reliance on the assumption that the benefits of growth-focussed development will be dispersed through ‘trickle down’ and they have engendered actions to improve economic growth within cities.

These wider shifts are evident in cities in South Africa, where the post-apartheid transition has seen the urban, and national, development agenda infused with a mix of growth-oriented and socio-spatial redress-oriented goals and practices (Houghton, 2013). Thus, urban development policy and practices in South Africa increasingly reflect the assumption that municipalities can grow economically through developments which increase the municipal asset base and its rates-derived income. Inherent within the policies of most cities is the argument that once this wealth is generated within the urban economy, it can, and will, be used to benefit the poor majority through socially focused development and increased employment opportunities (Houghton, 2013).

The tools through which cities, globally and in South Africa, have become more economically proactive include a suite of mechanisms for the stimulation of economic growth, infrastructural development and urban re-imaging (Boraine et al., 2006). These ‘tools’ are seen to be capable of enabling a city to improve urban innovation, enhance competitiveness and attract globally circulating capital with its concomitant benefits (Boraine et al., 2006; Parnell and Robinson, 2006; Robinson, 2008a). Although perhaps not always positioned at the forefront of the abovementioned suite of economic development tools being adopted by South African cities, local economic development (LED) is considered a prominent approach through which these kinds of economic development objectives have been pursued within both large and small urban centres across the country (Rogerson, 2010; Rogerson and Rogerson, 2010; Xuza and Swilling, 2008).

In this paper, the discussion highlights the ways in which long-standing national policy trends and selected core strategies continue to dominate the LED agenda in South African large cities. However, as will be discussed, closer examination of LED activities in Durban facilitates insight into the shifts taking place in the discourse and practice of LED in South Africa. The discussion concentrates on themes which are emerging as new emphases within LED praxis in the South African urban context. The themes that are highlighted are a shift in emphasis from the ‘local’ to ‘regional’ scales within policy and practice, an emphasis on social entrepreneurialism and a focus on strengthening the positionality of local economic activity within global value chains. In addition, the emergence of partnerships between cities is raised as a further issue related to LED in South African cities. These partnerships are considered in the light of the principles of collaboration, partnerships and the development of social capital that typically characterize LED. The discussion concludes with a reflection on the significance of these emergent themes for LED practice in South African cities.

LED as an economic development strategy and practice in South Africa

In order to provide a backdrop to the discussion of emerging themes in LED praxis in South African cities, this section briefly describes the emergence of LED as an approach to transformation in South Africa and its implementation within the urban arena over the last 20 years. As argued by Rogerson et al. (2014), there are a number of weighty issues which must be tackled by researchers (and practitioners) if the challenges of sustainability in Africa are to be addressed. These include ‘questions around building resilient cities, LED, service delivery, food security, informal livelihoods and environmental change’ (Rogerson et al., 2014: S2). These elements are each critical in their own right but they exist in complex, dynamic and interconnected ways that require integrated thinking and practice (Bodhanya, 2014). Within this context LED has emerged as a widely adopted approach to economic development and transformation in South African cities and their hinterlands. As such, the analysis of LED in South African cities presented here is grounded within a conceptualization of LED as encompassing the commonly accepted (and utilized) characteristics of ‘maximising the comparative advantages of localities and (which) include improving the local business environment, building local skills, cluster development (often involving small medium and micro-enterprises) and encouraging trust and partnerships between the private sector, public institutions and civil society’ (Rogerson, 2014a: 204).

LED emerged as an economic development approach in South Africa during the mid-1990s when the advent of democracy resulted in multiple shifts in policy and practice in order to enact economic change that would contribute to the national agenda of post-apartheid transformation (Nel, 1999; Nel and Binns, 2001). It is important to note that in South Africa, the emergence of LED is linked to the adoption of the concept of ‘developmental local government’. The notion of developmental local government is now a deeply entrenched ambition of the democratic state which was initially defined in the 1998 White Paper on Local Government as a commitment to ‘working with citizens and groups within the community to find sustainable ways to meet their social, economic, and material needs and improve the quality of their lives’ (DPLG, 1998: 38). This policy foundation has resulted in LED in South Africa being more strongly adhered to as an accepted practice of socio-economic change than is typical of the adoption of LED in many other countries (Xusa and Swilling, 2008). Furthermore, the early adoption of a number of influential policy and developmental frameworks shaped the nature of LED in South Africa as an approach that strongly advances the active role of local government in economic development, while continuing to support the importance of partnership-facilitated economic development in localities (Xusa and Swilling, 2008). With these foundations, LED is often viewed as having the potential to integrate the social and economic transformational agendas in the country through mechanisms underpinned by principles of localization, collaboration and partnership – all of which are concepts much embraced in the post-democracy governance transformation in South Africa (Xuza and Swilling, 2008).

Although much has been discussed in relation to the widespread adoption of LED in South Africa and its cities (Rogerson and Rogerson, 2010), it is useful to note the predominant ways in which LED has been practiced in South Africa. LED practice has, over approximately 20 years, encompassed a wide variety of projects and programmes supported predominantly through institutional mechanisms in the local government sphere (Rogerson, 2010; Xusa and Swilling, 2008). While these many initiatives have sought to address the need for strengthening a range of economic sectors, there has been much attention paid to small-scale manufacturing, small business support, enhanced productivity of small-scale agricultural practices, skills development and the institutionalization of mechanisms through which economic development can be facilitated by the local state over the longer term (Rogerson, 2006). In rural municipalities there has been much attention paid to LED in the form of support for agricultural co-operatives, arts and crafts programmes and the advancement of the tourism sector (Nyawo and Mubangizi, 2015). Cities and small towns have, however, typically been the spaces in which LED activity has taken place most effectively. According to Rogerson et al. (2014: S2), ‘place-based initiatives for promoting economic development in large urban areas as well as secondary cities and small towns have been one of the most distinctive aspects of the South African development over the past 15 years’.

Internationally and locally, LED has not been spared from critique as a development approach and for good reason. As Sheppard (2014: 145) argues, ‘under neoliberalism, the economic dynamism of localities came to be seen as the sine qua non for national economic development, with economic clusters presented as the key to local success’. That the same overarching policy prescription is being adopted and promoted uncritically in localities, despite the great variance in local economies, differential situatedness in the global–political economy and capacity concerns is viewed as highly problematic (Sheppard, 2014). In addition to this paradigmatic critique, there have been extensive critiques of the practice of LED in South Africa itself. In terms of institutional concerns, weak governance is raised as a significant problem for economic development and sustainable urbanization trajectories (Buckley and Kallergis, 2014). Furthermore, a mismatch between the policy and requirements of the different sectors constrains LED. However, much of the research and practice-based critique of LED in South Africa concentrates on the widespread lack of sustainability of LED projects and programmes, which frequently collapse once direct support has been withdrawn (Rogerson, 2010). Despite these important concerns, LED remains a significant intervention approach which continues to be practiced within rural and urban municipalities across South Africa.

The following section highlights the ways in which LED is being enacted within current urban economic development strategy and projects. Moreover, emergent themes will be highlighted through a more detailed consideration of Durban, the dominant urban node in the east coast province of KwaZulu-Natal.

Trends in the development of South African city urban economies

This section overviews some of the general trends currently evident in LED policy and practice in South African cities. The key issues that are being tackled by economic development practitioners in cities are diverse and only some of these will be overtly identified as LED in related urban planning and policy documents or in project plans.

Analyses of LED in various South African cities over the recent past highlight the various forms and processes through which LED has been manifested. Predominant LED interventions in South African cities encompass the following key areas:

Strategic infrastructure development to support economic growth in the city;

These emphases can be the focus of unique, targeted projects but they are also frequently integrated within urban LED projects and programmes which have multifaceted goals.

In addition to the abovementioned array of interventions, concern for the refinement and improvement of policy and institutional arrangements as well as the development of implementation mechanisms for LED must be noted as critical areas of LED practice, with cities often being seen to be the spaces where LED ‘experimentation’ has been enacted (Matlala and Motsepe, 2015; Xuza and Swilling, 2008). This focus extends to urban place marketing and entrepreneurialism which is evident in the establishment of development agencies in cities that are focussed on investment promotion and facilitation. For example, Trade and Investment KwaZulu-Natal in Durban, the Gauteng Economic Development Agency in Johannesburg and Wesgro, Western Cape investment and trade promotion agency, in Cape Town are active in promoting and facilitating foreign direct investment, exports from local markets, and they offer the tourism industry support to foster economic growth. Additional institutional mechanisms which are designed to incorporate LED interventions are area-based management units, such as those within eThekwini Municipality which have a particularly strong emphasis on integrating local government functions to address unemployment, a low skills base within communities, and the supply of basic services needed to encourage economic advancement within defined sub-urban localities (eThekwini Municipality, 2015). Furthermore, on a national scale, the South African Cities Network acts as an important institution for the collection, aggregation, analysis and dissemination of city-scale information as a support for policy-makers and practitioners involved in economic and other urban development arenas in the nine largest cities in South Africa.

In addition to these focal areas of LED activity in South African cities, it is worthwhile considering the broader contextual situatedness of urban LED in this discussion. The contexts in which LED is implemented and its associated institutional mechanisms are central to LED activities within the major cities of South Africa. In this regard all the city economic strategies reviewed, including those from Cape Town, Johannesburg, Durban and Tshwane (Pretoria), show that LED policy and practice in these cities is strongly embedded in an understanding of the wider demands of the South African economy operating within a globalized political economic that is characterized by turbulence, recent slumps and fierce competitiveness. These concerns are evident in the LED strategic documents in Cape Town and in Tshwane; for instance, they take cognizance of the impacts of the current and long-term changes in the global economy on the prosperity of local urban economies. Similar concerns are raised in strategic planning for economic development in Johannesburg such that the local state prioritizes the facilitation of ‘resilience’ as central to LED interventions. Thus, it is locally envisaged that the collective implications of economic growth at the city-scale should enable the urban economy to weather the pressures and unpredictability of a troubled global economy (Matlala and Motsepe, 2015).

A further trend in thinking related to LED is the continued relationship between social transformation in post-apartheid South Africa and LED. There remains extensive recognition by local governments of the need to integrate economic goals with other aspects of urban and social transformation – even as economic development is often promoted as central to support for urban change. For example, the Growth and Development Strategy for Johannesburg (2014) positions economic growth as one of the four main drivers of transformation in the metropole. In combination with economic development, the drivers of governance, environment and services, as well as human and social development are integrated to ensure that Johannesburg achieves its long-term vision of greater resilience and livability.

Overall, these trends differentiate city LED practice from that within more rural areas and tend to extend the domain of LED beyond the micro-scale focus on localized skills development and job creation or business support programmes and often towards ‘mega projects’. In the recent experience of South African cities, there has been a focus on investment promotion and urban entrepreneurialism facilitated through the development of large-scale flagship projects that are often planned and implemented through public–private partnerships. These mega-projects can take the form of convention centres (such as those within Durban, Cape Town and Johannesburg), comprehensively planned industrial estates and waterfront developments (Nel et al., 2003). Although urban interventions on this scale may not be typically characterized as encompassing LED as it is practiced in other parts of the world, in the South African context they are routinely conceptualized (and argued for) on the basis of their ability to maximize the comparative advantages of urban centres, improve the business environment and employment status of urban communities, and generate overall improved robustness within the urban economy. These are outcomes that are considered characteristic of LED in South Africa (Rogerson, 2014). Furthermore, their implementation, through collaborative mechanisms, means that they are often categorized as LED activities by local and provincial municipalities. This trend towards large flagship programmes being categorized as LED activity is further evident in the role being played by the National Growth Plan and recent associated legislation which facilitates the development of special economic zones (SEZs) as mechanisms for LED. SEZs are typically located within key transport and trade nodes found in the cities and the incentives offered within SEZs encourage cities to concentrate their efforts on boosterist, industrial and commercial investments, which offer the prospects of long-term job creation and additional spin-off effects in terms of the anticipated growth of associated small businesses (Luthuli and Houghton, 2015).

In line with well-accepted conceptualizations of LED as a collaborative approach, the major cities in South Africa continue to prioritize participatory and inclusive mechanisms through which to strengthen local economies. To this end, partnerships are used extensively to facilitate LED within marginalized communities in cities. Furthermore, partnerships between city governments and supporting civil society and private sector organizations, as well as education institutions, often provide collaborative efforts through which the SMME sector and the informal economy is supported and skills development can be fostered. Strategic partnerships between public and private sector stakeholders can also facilitate property and infrastructure development that are seen to be important strategic economic growth interventions in urban economies (Houghton, 2013).

In terms of the many problems being addressed through LED initiatives in cities, the reduction of unemployment is possibly the most significant priority in South African cities. In Cape Town, it is strongly recognized that marginalization of individuals and communities in the city is largely produced by unemployment. As such, economic growth which does not encompass job creation is generally avoided. This prioritization is further evident in Johannesburg since, ‘with the City's goal of inclusive and sustainable economic growth, productive employment of a greater proportion of the city's people is without doubt the primary route for focus’ (Central Strategy Unit, 2011: 51). Job creation is increasingly focused on addressing youth unemployment as a particular concern in urban areas (City of Tshwane, no date). To this end, entrepreneurship and the facilitation of entry into the formal economy is increasingly prioritized as job creation mechanisms which can boost the local economy in cities and address unemployment (City of Tshwane, no date; eThekwini Municipality, 2015).

Within the cities of South Africa, LED practice typically includes the prioritization of small business support. As argued by Rogerson (2014a: 210), ‘the centrality of small business development for achieving the objectives of competitive local economies and of inclusive growth is emphasised’. One typical mechanism for the nurturing of businesses is business incubators. Business incubators are usually supported by a combination of stakeholders, including government departments, private and community-related groups, such as business chambers or non-profits, and universities. In order to be effective, they must provide an array of relevant facilities and services to start-ups that move beyond the provision of shared working space to skills development, networking opportunities and even equipment. To be successful, an incubator must meet the needs of the stakeholders involved which could be skills development, prototyping and commercialization of products, job creation and the provision of viable investment opportunities for potential venture capitalists or financiers (Barrow, 2001). In addition, access to finance for small business has become a critical element of LED in the realm of fostering SMMEs within cities.

As part of the business focus of LED there has been the emergence of support for particular economic sectors that are seen as priorities in LED due to their perceived ability to create new jobs, contribute to improved living conditions and limit the impact on the environment. An obvious case is that of the prioritization of the ‘green economy’ as an expanding sector with potential for economic growth. The trend towards ‘green capitalism’ (Sheppard, 2014: 146) is evident in South African cities and has become a growing aspect of LED discourses, policy and projects. In response, there has been an emerging discourse of resilience, life cycle accounting, systems-based thinking and sound energy use and resource minimization in the LED and economic growth policies in South African metros (Cape Town Partnership, 2014; Central Strategy Unit, 2011; McGaffin et al., 2015; Matlala and Matsepo, 2015). Although much remains to be done to turn policy discourse into practiced reality in cities, such arguments highlight the ways in which increased environmental sustainability can be synergistic with increased competitiveness, entrepreneurialism and the support of infrastructure development or ‘retrofitting’ to encompass and foster ‘the green economy’ (see Rogerson, 2014b).

Collectively, these focal areas of LED strategy, policy and activity are to be found in the main urban centres of South Africa. They fall in line with the broad requirements of the ‘developmental state’ as it is framed within the National Development Plan and the objectives of the National Planning Commission. Given these trends and the influence of an overarching national policy framework, much of the ‘local’ economic development planning and practice taking place in South African cities can thus be seen to follow similar, and even predictable, paths of addressing the preeminent economic problems within cities and the country more broadly (Rogerson, 2014a). They are also representative of emerging trends in economic development within cities across the world and in particular in the global south (Rogerson and Rogerson, 2010; Sheppard, 2014).

While much of the policy and practice of LED in South Africa reflects continuity with past thinking, nuances are emerging in the ways South African cities tackle economic development within their local economies. These nuances can be found through closer examination of shifts in the planning and implementation of LED within the cities. To highlight these shifts, the following section concentrates on emerging LED practice in Durban that point to three new foci of LED in the South African urban context.

Looking towards emergent LED practice in South African cities: Evidence from Durban

The city of Durban is the key economic hub on the east coast of South Africa and the second largest city by population in the country. From its origins as a British colonial port, the city has emerged as one of the most significant cities in South Africa, housing a third of the population of the province of KwaZulu-Natal, generating 65.5% of the province's economy and contributing 10.9% of the national gross domestic product (GDP) through economic activity that is largely derived from the port and a large manufacturing sector (eThekwini Municipality, 2015). Although it functions as an important urban hub within South Africa, the city currently faces many of the challenges inherent in post-apartheid South Africa. In particular, high levels of unemployment; a largely low- or un-skilled urban population; a contracting manufacturing sector; the need for housing and basic service provision; and the persistence of apartheid-produced spatial, racial and socio-economic fragmentation within the urban landscape, all of which are key challenges faced by the local government, the eThekwini Municipality (eThekwini Municipality, 2015).

Economic development activities in Durban have generally followed the trends in LED described earlier. However, closer perusal of the LED discourses within the city and the nature of interventions taking place provide a more nuanced understanding of the emergent nature of LED within South African cities as practitioners are required to respond to the dynamic nature of economies within complex and unique cities (see Robbins’ (2010) consideration of job creation through LED in Durban, for example). The following section will elaborate on the growing shift towards a discourse of the ‘regional economy’, prioritization of the integration of small businesses into the global value chain and the emphasis on social entrepreneurship as an approach to addressing unemployment. These moves within the LED activities in Durban offer insight into the directions that LED practice in South African cities are likely to be heading in.

Networks between cities

The fact that LED is a multi-disciplinary arena of practice acts as both a strength and a weakness for good practice. One can draw positively from the various and wide-ranging backgrounds of practitioners; however, this multi-disciplinarity creates the challenge of productivity in RLED being partly reliant on the ability to synthesize these backgrounds with local contexts and the dynamic demands of the economy. Furthermore, the context for RLED is dynamic and much of it is out of the control of the practitioners and business people who are trying to establish themselves and forge ahead with their projects and businesses. Coping with this dynamism and leveraging economic development benefits are critical skills that need to be built.

One means of addressing these challenges is for RLED practitioners from across a range of sectors in South African cities to actively learn from each other. Since 2012, the Economies of Regions Learning Network (ERLN) has been developed and has grown as a community of practice that facilitates joint learning and the cross-fertilization of ideas and best practice in the largest metropolitan areas in the country. The network is also now beginning to incorporate stakeholders from some of the secondary cities within South Africa. The ERLN facilitates workshops, critical discussion and information sharing through thematically focused network events which bring practitioners from the metros together on a voluntary basis. Furthermore, since access to information is critical to good decision-making, the ERLN has developed a working group focused solely on data generation which relates to RLED directly in response to the data-related concerns raised by members of the network. In addition, this network is regularly engaging with conceptualization of RLED-related matters and is particularly focused on addressing shifts in thinking linked to ‘regions’ as being crucial within the ambit of urban economies.

These linkages between cities further the emergence of regional economic development thinking, promote collaboration and build social capital. In turn, this has the potential to build overall capacity, facilitate shared learning across city regions and, thereby, the broad, systemic issues related to lack of economic development can be more collaboratively addressed. In addition, much needed data collection and dissemination (highlighted as an LED challenge by Rogerson (2010)) can be collectively addressed and embedded practices and institutional arrangements can be challenged through more collaborative thinking and the cross-fertilization of ideas. Overall, these potential outcomes offer much opportunity for rigorous and innovative practice of RLED in South African cities.

Conclusions

This paper has taken a broad approach to examining LED within South African cities and highlights the trends found within strategic LED planning and projects being implemented within the largest metropolitan areas within the country. While there clearly is continuity with the past in terms of the policies and the practices adopted, there is clear evidence of gradual adaptation. By focusing on emerging (R)LED and other trends within Durban, the current evolution of new variants of LED in an urban context has been presented. The contemporary experiences with Durban-based practices of LED raise a number of issues which should be taken into consideration in other South African cities and beyond. The shift in the scalar conceptualization from LED to encompass the wider scale of an economic region problematizes the use of localities as the basis for economic development and therefore the incorporation of greater complexity of spatial constructs must be more comprehensively considered in cities. Furthermore, these emergent scalar shifts offer opportunities to promote linkages between urban nodes in the wider economic landscape and also to leverage the potential benefits of linking urban-based LED programmes with small town regeneration schemes in neighbouring localities.

In addition to scalar considerations, the evidence from Durban highlights an emphasis on entrepreneurship and a link to global value chains as newly prioritized mechanisms for LED. This points to the transfer of some LED goals for employment away from traditional LED projects towards the fostering of new businesses by supporting entrepreneurs themselves rather than direct engagement with state-led job creating projects in communities that are often unsustainable in the long term. The emphasis on global value chains as a ‘space’ in which entrepreneurship should be directed and into which economic development projects should be targeted emphasizes the importance of integration in the global economic context for city economies, even when addressing locality-based economic development needs. Furthermore, the emphasis on social entrepreneurship should be noted as a possible means of mitigating the potential loss of the community focus which is an important feature of LED policy and practice in the country. Overall, these trends and their consequences for the nature of LED highlight that the balancing of economic development needs across integrated and complex scales of economic activity is increasingly becoming a critical challenge for South African cities and beyond. This challenge requires collaborative and innovative solutions that surpass the established spatial and intervention practices which have traditionally been characteristic of urban LED.