MAKING LED WORK FOR RURAL COMMUNITIES: THE ILEMBE CASE STUDY

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REGIONAL AND LOCAL ECONOMIC DEVELOPMENT SUMMIT – 2012

BASIL S IKHAKHANE: MD- ENHANCE STRATEGIES INTERNATIONAL AND CHAIRPERSON, KZN

COMMISSION ON TRADIT IONAL LEADERSHIP D ISPUTES AND CLAIMS (CTLDC )

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LOCAL ECONOMIC DEVELOPMENT IN RURAL AREAS

Key Focus Is On Land Productive use

Ease of Access to land

Commercially viable tenure system(s)

Improved value through infrastructure

Empowerment of women and children

Access to Agri-logistics

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NATURE OF RURAL COMMUNITIES IN KZN Rural (small) town areas

Large-scale commercial farms

Small-scale farms

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Rural traditional community areas

Excludes small towns

Excludes large and small scale commercial farms

Carries the bulk of the development and service delivery backlog

Vicious cycle of deprivation

Looks up to LED for relief

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RURAL COMMUNITIES IN KWAZULU-NATAL

LAND AS KEY A FACTOR OF PRODUCTION:

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LED CHALLENGES IN RURAL AREAS (AGRICULTURAL CONTEXT)

THE AGRI-LOGISTICAL DIVIDE

Rural Areas Rural Areas (Traditional Communities)

- Farming communities

(commercial & small

scale)

- Access to agri-logistics

- Processing & packaging

- Access to markets

- Generally unsuitable land

- Lack of skills

- Limited to no access to agri-logistics

- No access to markets

- Increased market- gardening as

opposed to commercial farming

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STRUCTURAL CHALLENGES (DISTRICTS)

o The “duality” challenge Different economies Different communities Differentiated legacies Marginalisation/ expansion

o The pressure to address “marginalisation” issues

o The need facilitate growth and expansion outside traditional community areas

o The need to maximise effort in current opportunities

o The creation of ladders between the two economies

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DISTORTIONS Global trend:

60% small-scale farmers contribution- agricultural production

40% large-scale farmers contribution Bulk support and funding to small scale

RSA trends:

95% large-scale contribution 5% small-scale contribution 5% small-scale not necessarily “rural” Bulk support and funding for large-scale Funding/ tenure mismatch

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ILEMBE DISTRICT CASE STUDY

Challenging realities

Spatial inequality Dual economy Cycle of deprivation in free-fall mode in rural areas

• General development backlog• Service delivery backlog • Poor productivity

Shortage of skills Unemployment Poverty Vulnerability

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ILEMBE APPROACH & PRINCIPLES Acknowledgement of the spatial context of the district

Collective/ regional response

Family of municipalities as opposed to competing enclaves

Acknowledgement of different strengths

Capitalizing on the diversified strengths

One district one economy

Elimination of duality

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ALIGNMENT Regional alignment

Provincial alignment

Sector alignment

Alignment of regional (district) processes within provincial strategic objectives

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OPTIONS Local municipality driven LED

Local focus Local view Competition Missing out on complimenting advantages Compliance challenges

District municipality driven LED

Diluted local focus Competency challenges Legislative/ compliance challenges

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THE DEVELOPMENT AGENCY OPTION Legislative framework

Municipal entity Opportunities in addition to PFMA and MFMA Access to different sources of funds Ability to pilot District wide coordination Alignment with IGR framework Shared destiny (regional vision) Coordination of public and private sector efforts Inline with Provincial Growth and Development Plan as a

regional planning forum Enhanced accountability measures

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ILEMBE DISTRICT CASE STUDY

The LED Governance & Implementation Model

The DM supported by COGTA established a regional Development Agency (Enterprise ILembe)

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OBJECTIVES OF ENTERPRISE ILEMBE To optimise on the regional competitive advantages of

Tourism, Agriculture & Low Impact Manufacturing;

To develop creative mechanisms to rapidly achieve BEE targets;

To design an organisational vehicle to leverage catalytic economic opportunities;

To involve Business In functional regional economic decision-making;

To leverage all possible resources to the benefit of the ILembe region.

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FUNCTIONS OF ENTERPRISE ILEMBE

Developing and strengthening the local economic development strategy on behalf of the district and local municipalities;

Championing a wide range of activities which emerge as important from the LED strategy; Fundraising for specific projects, and potentially project managing some of these; Funding certain services to be applied across the area, eg specialist business advice; Coordinating activities to ensure that an integrated service is provided across providers, eg for business

advice; Monitoring and quality control of services available in the area; Directly undertaking certain functions, eg regional marketing; Promoting regional activities, eg collective marketing, regional food brands etc. Facilitating the identification, packaging and implementation of catalytic projects. Provide a professional and multi-skilled support and networking service to major investors who wish to

invest in the region by:- Working with local government to improve the business enabling environment ; Establishing a research unit to develop and maintain a regional socio – economic and investor database Facilitating the establishment of a Destination Management Office (DMO) in Ilembe. Provide a “turn-key” service to investors who wish to relocate to Ilembe Implement an aggressive business retention and expansion (BR&E) programme coupled with a business

development and support (BDS).Priority will be given to those businesses committed to black economic empowerment (BEE) partnerships.

Build twinning relationships with developed regions internationally.

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OPERATIONAL PRINCIPLESThe Council and Board of Directors of Enterprise ILembe have set out the following operational principles for the organisation : Bring the poor and previously disadvantaged to the centre of development Build a synergistic relationship between Local Economic Development and

Social Upliftment. Build Linkages between the established coastal economies and historically

marginalised rural areas. Build a culture of Social, Economic & Environmental interdependency as the

first test when evaluating opportunities. (i.e. triple bottom line) Focus LED around realistic catalytic initiatives natural to the region and

wherever possible building on the uniqueness of local competitive advantage and market differentiation.

Building a capacity to nurture effective and mutually beneficial partnerships based on fair and equitable business principles.

Ability to leverage Black Economic Empowerment (BEE) as measured by direct or potential equity and not only new jobs created.

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GOVERNANCE STRUCTURE

Board of Directors

Audit and Risk Committee

Internal Audit Committee

External Audit Committee

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OPERATIONAL STRUCTURE

CEO

Manager: Trade & Investment Promotions

LED Officer: Agric.

Head: Project Management Unit

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DISTRICT FOOTPRINT

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FUNDINGTo date the agency has had two core funders of its

operational costs, these being the District Municipality (which provides a grant of about R2m) and the Industrial Development Corporation (IDC), (which provides a grant of R3.5m for operational costs). Both these funders have required that the agency progressively develop financial self-sustainability strategies.

As regards project funding, the agency presently manages about R15m of project funds from the Provincial Corridor Development Fund (managed by the KZN Dept of Cooperative Governance and Traditional Affairs), and the IDC.

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ALIGNMENT OF PROJECTS WITH STRATEGIC OBJECTIVES

Strategic Objectives:

Job Creation Human Resource

Development Human & Community

Development Strategic Infrastructure Environmental

Sustainability Governance And Policy Spatial Equity

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EXTENT OF LINK WITH STRATEGIC OBJECTIVES

JOB CREATION Unleashing the agricultural sector Enhance industrial development through trade, investment & exports Expansion of government- LED creation programmes Promoting SMME, Entrepreneurial and youth development Enhance the knowledge economy HUMAN RESOURCE DEVELOPMENT Early Childhood Development, Primary and Secondary Education Skills alignment to Economic Growth Youth Skills Development & Life-Long LearningHUMAN & COMMUNITY DEVELOPMENT Poverty Alleviation & Social Welfare Enhancing Health of Communities and Citizens Enhance Sustainable Household Food Security Promote Sustainable Human Settlements Advance Social Capital Enhance Safety & Security STRATEGIC INFRASTRUCTURE Develop-ment of Harbours Development of Ports Development of Road & Rail Networks Development of ICT Infrastructure Improve Water Resource Management & Supply Develop Energy Production and SupplyENVIRONMENTAL SUSTAINABILITY Increase Productive Use of Land Advance Alternative Energy Generation Manage pressures on Biodiversity Adaptation to Climate Change GOVERNANCE AND POLICY Strengthen Policy and Strategy Co-ordination & IGR Building Government Capacity Eradicating Fraud & Corruption Promote Participative, Facilitative & Accountable Governance SPATIAL EQUITY: Actively Promoting Spatial Concentration Facilitate Integrated Land Management & Spatial Planning

Job Creation (100%)

Human Resource Development (100%)

Human & Community Development (100%)

Strategic Infrastructure (100%)

Environmental Sustainability (100%)

Governance And Policy (100%)

Spatial Equity (100%)

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LEAD SECTORS

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KEY TRANSFORMATION OUTCOMES (IN PROJECTS)

Ownership Operations

Joint ownership of factors of production by local co-ops and technical partners

Programme joint ownership of agri-logistics

Access to agri-logistics

Compliance

Access to commercial markets

Improved land value

Empowerment of women and the youth.

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PROJECTS (FUNDED)PROJECT STATUS/PROGRESS1. Agri-Hubs This project involves the establishment of four hydroponic (tunnel) farms in the four local municipalities,

as well as two nurseries to supply the tunnel farms. Total Budget is R11m.

 2. Ilembe Vineyards This project involved the growing of about 12 hectares of vines in 3 local areas of the District – with a

view to building a new wine industry on the north coast. Total Budget of R8m has been approved by KZN Corridor Devpt Fund, (R30m was requested).

3. Ilembe Industrial Development Strategy

This project involves the development of a District wide plan for the release and development of priority sites for industrial expansion and development. The plan will guide future infrastructure, industrial and related developments. About 6 priority areas have been identified and high-level feasibility for developing these has been done. The project budget of R1.3m was funded by the Provincial Corridor Fund.

4. Ilembe Broadband Project This project involves developing a detailed business plan for the roll-out of affordable (if not free) broadband to both urban nodes and rural areas in the District. A pilot project delivering such cable-based and wireless broadband capacity is also planned. A budget of R3m has been approved for the project. A total of about R30m is required for full broadband roll-out in the District.

5. Ilembe Biodiesel Refinery This project aims to establish a biodiesel processing plant, delivering vehicle-grade diesel from used oil (initially) and ultimately from moringa seed. A budget of R6m has been approved from the KZN Corridor Fund for this project.

6. Mambulu Titanium This project is a feasibility study into the potential for the commercial mining of titanium deposits in the Mambulu area of Maphumulo Local Municipality. A budget of R400 000 is committed to the project.

7. Macambini Project Secretariat

Through this project, Enterprise Ilembe is able to provide the technical support to the process of exploring a viable stakeholder approved solution to the development proposal/s for Macambini. This involves providing research, legal, planning, design, engineering, social facilitation services to the Provincial Team tasked with developing solutions and managing the process.

8. Darnall Airport This project proposes the development of a general aviation airport near Darnall. No further progress has been made since the finalisation of the high-level feasibility study which suggested that the closure of Virgina airport was key to the success of a new airport at Darnall.

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PROJECTS (UNFUNDED)

In addition to the funded projects above, the Project Management Unit pursues other opportunities for projects which have some level of feasibility, but do not yet have funds for implementation or for piloting. Some of these include :

9. Sports Legacy Parks

10. Ilembe Blueberries Project

11. Choice Water Bottling

12. Thussong Centre at Shakashead

13. KZN Artspaces

14. Ilembe Mountain Bike Race Hosting

proposal

15. Ilembe ICT Programme Management

16. Ilembe BEE Strategy Formulation

17. Aquaculture Project

18. Wind Farming Project

19. Nonoti Master-planning process

20. Cooperatives Strategy implementation

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CURRENT/ FUTURE MILESTONES

Contractual finalisation(s) of ownership model

Pilot results assessment on operational practices

Setting up of regional structure to monitor progress

Documentation of lessons learnt

Sharing

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SUCCESS FACTORS FOR LED (RURAL COMMUNITIES): WHAT HAVE WE LEARNT

District approach

Complimenting against competing

Diverse strengths against diverse weaknesses

Integration (Ownership & Operations)

Land-value through productivity

Bridging of the agri-logistical divide

Skills development

Access to commercial markets

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CRITICAL IMMEDIATE/ FUTURE REQUIREMENTS FOR ILEMBE

More pilot projects (in all sectors)

Additional funding

Training (for co-operatives & other structures)

Establishment of Regional Support structure

Monitoring

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ELIMINATION OF DUALITY (CONCLUSION) Addressing the marginalization factors of rural

communities

Implementing the “one district” approach

Traditional rural communities accessing the developed rural area infrastructure

Ownership partnerships across the Agri-logistical divide

Robust and competent regional structure to support the partnerships

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THANK YOU