Under pressure to deliver

The role of the municipality in securing economic development outcomes


Government’s Broad-based Black Economic Empowerment (B-BBEE) regulations stipulate that a percentage of business turnover be spent on socio-economic development. Many of these programmes are designed and implemented without engaging with the relevant municipality. This is a mistake. Municipalities are involved across communities and their inputs can add tremendous value, helping to optimise outcomes.

As an economic development specialist with many years’ experience working across a number of South African communities, Economic Development Solutions (EDS) has gained insight into effective engagement strategies that can be applied to drive productive interactions with municipalities.

In an ideal world…

In an ideal world, impact studies would identify how the establishment and operation of the business might impact the environment, municipal infrastructure and services (e.g., roads and water use), and the community. The business’ socio-economic development plan would then be designed with inputs from the municipality and other authorities — specifically with insight into the municipality’s Integrated Development Plan (IDP), which spells out the needs and ambitions of the community. Finally, a well-managed rollout of the programme would add value to the community, with careful monitoring providing evidence that the effort was successful. This is often not the reality.

Barriers to interaction

Many municipalities in South Africa are under-resourced and under enormous pressure to deliver. They don’t have sufficient staff and lack the fundamental skills, budgets and tools to deliver on their mandates, namely managing the infrastructure and services required by the community. For many of these municipalities, collaborating with large organisations to deliver on socio-economic development programmes is often a challenge.

There are also a number of other barriers to interaction. Organisations remain wary of engaging too closely with municipalities. While they recognise that it is important for them to access the IDP to understand the municipality’s development priorities and invest in programmes that can augment and complement the municipality’s efforts, a lack of clear processes and governance within local government structures makes private companies cautious. Their own governance is at risk if they entrust these local government structure with investments or the management thereof. While a change of leadership has brought a new, tougher stance against corruption in the public service sectors, it will take some time to rebuild trust.

It would nevertheless be a mistake not to seek out the inputs of municipalities. There is a way this can be done without placing an additional burden on the municipal authorities or subjecting the company to undue risk.

Specialised tactics

An independent economic development specialist is aware of these challenges and often has the insight, tools, relationships and capability to resolve many of these challenges.

With a focussed mandate, an independent economic development specialist can drive collaboration and ensure proper monitoring, management and reporting.

To ensure transparency, an independent specialist can be given a limited mandate by the business - i.e., only the authority to conduct business related to the economic development programme. This makes it difficult for public sector or other stakeholders to engage on topics that are out of scope.

Far reaching benefits

There are also other potentially far-reaching benefits that are specific to using a specialist in this sector. With multi-dimensional insight into the dynamics at play, they are also able to delve deeper to help identify and address the psycho-social impact on the community.

Although the responsibility of the municipality does not reach across education, social and health services, these challenges are inter-related. For example, job losses at a mine can plunge workers and their families into poverty, which could result in the need for feeding schemes and counselling to deal with stress. Armed with this knowledge, the municipality and independent specialist can play a central role in facilitating decision-making about the placement of investments—for example, potentially funnelling funds and the jobless to building new infrastructure or other projects initiated in the community.

Being able to make these observations and decisions takes involvement on the ground and in boardrooms and municipal councils. For companies that are committed to making a real difference and making their investments count, it’s important to put the right team and guidance in place. Find the right partners with the right skills, capabilities and motivation to drive economic development success — it is good for business, for the community and for the country.

Janine Espin, Managing Director at Economic Development Solutions

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Issue 93


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