Month: July 2016

THE CONCEPT OF Local Economic Development

THE CONCEPT OF Local Economic Development

There are quite a number of definitions that have been adopted globally when it comes to defining what Local Economic Development (LED) is, but in South Africa the World Bank adaptation has been adopted and is as follows:
“Local Economic Development (LED) is the process by which public, business, and nongovernmental sector partners work collectively to create better conditions for economic growth and employment generation with the objective of building up an economic capacity of a local area to improve its economic future and the quality of life for all”
Local Economic Development is an ongoing process, rather than a single project or a series of steps to follow. It involves identifying and using local resources, ideas and skills to stimulate economic growth and development. The aim of LED is to create enterprise development and employment opportunities for local residents, alleviate poverty and, redistribute resources and opportunities to the benefit of all local residents.
In order for Local Economic Development (LED) to be effective, a community (local, ordinary people, entrepreneurs and local government) with the support of knowledgeable individuals and experts needs to identify and consider its own economic strengths, weaknesses, opportunities and threats and agree on a shared strategy.
LED is characterised by the following objectives:
1.  Creating an enabling environment for enterprise development;
 2. Establishing a job-creating economic growth path;
 3. Embarking upon sustainable rural development and urban renewal; and
 4. Bringing the poor and disadvantaged to the centre of development



TRANSFORMATION is integral to virtually all spheres of society including the political, economic, social and sports spheres. What started off in 2002 with the drafting of the Black Economic Empowerment (BEE) Commission report as an inclusive economic growth model has become a smokescreen for driving individuals interests.

The mining industry is a prime example: The state has obtained all SA’s mineral rights, all existing mining rights holders and new mining right seekers must apply for a licence to the minister of mineral resources in terms of the Mineral and Petroleum Resources Development Act. The act provides for certain criteria to be met to be granted exploration or mining licences. One of these is 26% black shareholding. The 26% is supposed to benefit communities.  Employees and the poor – to serve real broad-based upliftment and real transformation – but too many greedy people are focused on securing their financial interests. Billions of rand in equity have flowed to politically connected individuals. This has been deemed by corporates as “insurance” to maintain good relations with those in high places and to secure the renewal of licences and permits to operate. The majority of BEE transactions resulted in the acquisition of shares by beneficiaries who don’t pay for shares. They are financed by existing shareholders through the issuing of rights and paid for by way of dividends. This is the ideal instrument for the poor, working class, or unemployed to obtain a stake in business. Instead of redistributing wealth and positions to the black majority, they have resulted mainly in “a few individuals benefiting a lot”, while leaving the leadership of most big companies in white hands. The black masses, the intended beneficiaries have hardly gained.

Under apartheid, blacks were given an inferior education and on the whole restricted to much worse jobs. The Employment Equity Act in 1998 tried to make the workforce “more broadly representative of our people” across the board. But more than two decades later, whites still hold three – quarters of senior jobs in private business whereas blacks hold a very low percentage of their share in the working population. Among the 295 companies listed on the JSE, blacks account for just 4% of CEOs, 2% of CFOs and 15% of other senior posts. In non-executives ones, blacks account for just over a quarter of board chairmen and 36% of directors, but still nowhere near their share of the work force. BEE codes only enriched few high profile politically connected blacks and today they have wealth but can not help alleviate poverty amongst the black community.