Local Economic Development in Low Income Areas - The Case of Cato Manor

7/30/2019 Local Economic Development in Low Income Areas - The Case of Cato Manor

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LOCAL ECONOMIC DEVELOPMENT

IN ALOW INCOME AREA

-THE CASE OF CATO MANOR -

January 2003

Etienne Nel

Trevor Hill

Wim Eising1

1 Professor Etienne Nel is Head of Geography, Geography Department, Rhodes University,Grahamstown.Dr Trevor Hill is Senior Lecturer, Discipline of Geography, School of Applied EnvironmentalSciences, University of Natal, Pietermaritzburg.

Wim Eising is Manager LED at Cato Manor Development Association and Technical Assistant for theEuropean Union to the CMDA.


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LOCAL ECONOMIC DEVELOPMENT IN ALOW INCOME AREA -THE CASE OF CATO MANOR

TABLE OF CONTENTS:

1 INTRODUCTION 12 THEORETICAL CONTEXT 22.1 Overview of LED Internationally 3

A Broad Strategic Approaches to Local Economic Development: 4B Major Categories of LED Interventions: 4C Major LED Programmes: 5D New City Foci: 5

2.2 LED in South Africa 5A Policy Context 6B South African Examples 7C Evaluating Developmental Local Government (In South Africa) 8

2.3 Area-focussed LED 92.4 Contextualising the Cato Manor Experience 103 LOCAL ECONOMIC DEVELOPMENT IN CATO MANOR 123.1 Introduction 123.2 The LED Objectives and Operational Principles in Cato Manor 123.3 Core LED Activities 15

A Community Development And Co-Operatives 15B Training And Financial Support 16C Production And Retail Provision And Support 17D Tourism Promotion And Intuthuko Junction 19E Key Facets Of The LED Programme 19

3.4 Assessment 214 LED LESSONS FROM THE CATO MANOR EXPERIENCE 234.1 Lessons 24

A Strategic Approach To Project Design 24B Project Design And Vision 25C Operational Strategies 27D Project Management 29E

Project Implementation 30

5. REFERENCES: 31


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1 INTRODUCTION

South Africas traumatic social and racial history has had profound implications for

the nations society and economy. Worst affected by events in the last 50 years havebeen those areas and communities which, under apartheid, were dispossessed,

destroyed and relocated, because of their mixed race and low-income nature. Areas

such as District Six in Cape Town and Cato Manor in Durban and dozens of smaller

ones across the countryboth urban and ruralwere the focus of some of the most

horrific abuses of human rights in the apartheid era (Lemon, 1991). With the dawning

of post-apartheid, efforts are being made to address the wrongs of the past at the

legal, social and economic levels and it is only right that in the areas worst affected

by apartheid that the most strenuous efforts should be targeted. Restoring vitality to

an area or community must, of necessity, take on a variety of dimensions in terms of

infrastructure, housing, social facilities, community organization, transport and

economic sustainability.

This paper explores recent endeavours to stimulate and revitalise the economy of

Cato Manor in Durban. After decades of apartheid based dispossession, displacement

and discrimination, the area and its inhabitants have participated in what is probably

South Africas most ambitious urban regeneration initiative. Under the leadership of

the Presidential Programme and later, European Union intervention, Cato Manor has

received support and financial assistance.

Key however to the long-term future of the area and its residents is the need to ensure

that a sustainable economic base is created to ensure that local employment and

wealth generation is ensured, which in turn can ensure the economic well-being of

residents and generate funds to finance future social and other programmes. This line

of argument does not deny the reality that Cato Manor is one of the multiple wards /

economic units which constitute the economic entity which is Durban and that

employment for local residents already exists outside of the area or that the area

cannot be segmented out of the broader Durban economy. However, given the unique

nature of the area and the high levels of deprivation which exist, targeted endeavours

to stimulate Local Economic Development (LED) are indeed justified. Given thescale of investment in LED and in the area in general which has taken place and the

levels of support which have occurred, it can be argued that Cato Manor has the

potential to serve as a role model for development / LED / urban regeneration

initiatives in other low-income areas and/or townships in South Africa and beyond.

Aside from the scale of the intervention and the level of support which has taken

place, both in human resource and financial terms, the Cato Manor experience is of

great value for another key reason. The township or low -income area/s of cities

seldom merit unique attention in economic planning terms, despite being the poorest

urban areas and those which politically, and in terms of planning theoretic, are the


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nominal focus of attention. In practice, they tend to be encapsulated within the

broader economic planning of a city and are seen as dormitory areas in need of

attention or as points for the receipt of welfare intervention. They are seldom seen or

appreciated as economic entities in their own right and they rarely are the focus of

unique, targeted LED programmes. This reality is endorsed by the noticeable paucityof literature on LED within township areas in the country. Most surveys of LED in

the country have had a focus at the city-wide level. In applied practise, with the

exception of Presidential Lead projects such as Katorus in Gauteng and the pilot cases

of the Urban Renewal Strategy2

dotted around the country, the lack of a specific

township / low income area focus in policy and planning is standard. A related issue

is the reality that, despite a firm commitment to poverty-alleviation in government

LED literature (DPLG, 2000), on the ground evidence, such as in Cape Town (Turok,

2001) and other centres (Rogerson, 2000) clearly indicates that place marketing,

providing high profile tourism and convention centres and attracting big business is

the predominant focus. The focus on area-based LED designed to address the

unique problems of a low-income area such as Cato Manor is thus both refreshing

and of vital significance to applied LED practise in South Africa and beyond, where

targeted interventions, designed to address the needs of the poorest of the poor, are

an urgent and fundamental necessity.

The key objectives of this paper are:

- to outline the international context in which LED endeavours in Cato Manorcan be situated (Section 2),

- to detail, analyse and critique the various LED interventions which have takenplace in Cato Manor (Sections 2.4 and 3), and

- to extract the key lessons of the experience both positive and negative soas to inform decision-makers, government, planners and residents of other

similar low-income areas of the type of economic planning, management and

intervention decisions which are available to them (Section 4).

2 THEORETICAL CONTEXT

The economic endeavours of the Cato Manor Development Association broadly fit

within the theoretical context of what is understood internationally as locality-based

economic development, leadership and planning, which is usually referred to as Local

Economic Development (LED) in the literature. In terms of understanding what LED

is, Zaaijer and Sara (1993, p.129), state that LED ...is essentially a process in which

local governments and/or community based groups manage their existing resources

and enter into partnership arrangements with the private sector, or with each other, to

create new jobs and stimulate economic activity in an economic area. According to

2These projects have just been defined. Implementation has not started yet.


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the World Bank (2000, p.1): LED is the process by which public, busi ness and non-

governmental sector partners work collectively to create better conditions for

economic growth and employment generation. The aim is to improve the quality of

life for all. A subsequent World bank document asserts that LED is about local

people working together to achieve sustainable economic growth that bringseconomic benefits and quality of life to all in the community. Community here is

defined as a city, town, metropolitan area, or sub national region (World Bank, 2002,

p.1). These quotations clearly identify what the core focus of LED is, emphasising the

concepts of partnership, economic sustainability, job creation and improvement of

community well-being.

In this section four key themes will be examined:

- - An overview of LED internationally (Section 2.1)-

- LED in South Africa (Section 2.2)

- - Area-focussed LED (Section 2.3)- - Contextualising the Cato Manors Experience (Section2.4).

2.1 Overview of LED Internationally

In recent years, Local Economic Development (LED) has been recognized,

internationally, as a key response to the synergistic interplay of a variety of key forces

which characterise the contemporary era. Key among these trends are:

- increasing decentralization of power and decision-making to the local-level,which parallels the increasing reduction in the role of the central state in the

economy in a neo-liberal era.

- globalisation forces, which in an era of the diminishing importance of thenation state, compel a local-level response,

- economic change within localities, varying from de-industrialization to local-innovation which requires local leadership initiative, response and direction,

and

- the dubious results achieved by macro-level planning and regionaldevelopment interventions previously. (Nel, 1994, 2001)

These trends are not unique to any portion of the globe. Though occurring at different

rates, the effects of globalisation, global economic crisesespecially since the 1970s

and the prominence accorded to the notions of enhanced democratisation and

devolution have helped to ensure that local economic initiatives and self-reliance are

a discernable trend around the world.

The goals of LED tend to revolve around issues of job creation, empowerment, the

pursuit of economic growth, the restoration of economic vitality and diversification in


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areas subject to recession and establishing the locality as a vibrant, sustainable

economic entity.

Having examined what LED is and why it developed, attention now turns to an

overview of the major characteristics of LED. These can be sub-divided into a

number of key categories.

A BROAD STRATEGIC APPROACHES TO LOCAL ECONOMIC

DEVELOPMENT:

Whilst the phenomenon of LED might be taking place around the world, its focus

differs fundamentally from place to place. Two broad orientations can be discerned,

namely:

1. Market-led approach of business development,2. Bottom-up or market-critical approach of community development

(Rogerson, 2000; Scott and Pawson, 1999).

Whilst the former focuses on the pursuit of economic growth, investment attraction

and courting the high profile business sector, the latter tends to be associated more

with support for emerging micro and community businesses. In general terms both

foci are equally valid and it can be argued that both should be pursued in conjunction

with each other in order to meet the needs of a wide-spectrum of stake-holders, to

provide for balanced growth and to ensure that capital generating large business can

generate meaningful spin-offs for the small and emerging business sectors.

B MAJOR CATEGORIES OF LED INTERVENTIONS:

In order to pursue either market-led and/or market-critical development,

implementing agencies, such as local governments, development associations etc.

generally tend to pursue fairly standard intervention measures which address the

needs for financial, infrastructural, information, planning and training support. In all

cases support varies from measures designed to support large enterprises, such as tax

rebates to support measures for micro-enterprises, such as training, job-banks and

equity participation. The five major LED interventions are:

1. Financial support2. Land and building development3. Information and marketing assistance4. New planning and organisational structures5. Training and Employment (Bovaird, 1992; Clarke and Gaile, 1992; Lever,

1992, 1993; Reese, 1993a, 1993b; SANCO, 1995).


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C MAJOR LED PROGRAMMES:

LED interventions, be they market-led or market-critical tend to have a focus on

achieving set goals related to economic growth and empowerment. In order to

achieve such goals, and through the use of the appropriate support measures,

implementing / support agencies conventionally pursue a fairly definable range of

programmes. The most common programmes include:

1. Encouraging local business growth2. Support for new enterprises3. Improving the local investment climate4. The promotion of inward investment5. The provision of both hard and soft infrastructure6. Sector support for identified lead sectors7. Area targeting to address unique challenges8. Poverty reduction to ensure equity and9. Regeneration endeavours in areas subject to economic change. (World Bank,

2002).

D NEW CITY FOCI:

In the view of David Harvey (1989), the pursuit of economic activity by urban areas,amounts to what he has termed urban entrepreneurialism which results in cities

emerging as either one (or more) of the following broad categories:

1. Centres of production which is associated with the establishment of directproduction activities, usually in manufacturing.

2. Centres of consumption where the focus is on service sector employmentand tourism.

3. Centres of information processing and corporate decision-making. This isoften quite a limited category which concerns the larger, more attractive

investment locations.

4. Centres for the reception of central government funds i.e. centres whichbecome major recipients of state funds e.g. because of acquired administrative

foci or unique developmental needs (Rogerson, 2000 based on Harvey

1989).

2.2 LED in South Africa

The policy and practise of LED has become remarkably well established in South

Africa in recent years. Starting from limited cases of applied LED in small towns in

the early 1990s and rapidly accelerating through the activities of the forum


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movement in the early 1990s the concept of community / locality based development

was implicit in the 1994 RDP, effectively enshrined in the 1996 Constitution in

terms of the developmental role of local government and there-after has been

supported by a range of policy and legal measures. Applied LED has evolved apace,

such that by the beginning of the 21

st

century, all major urban centres had establishedor were establishing LED Units / Economic Development Departments, whilst a

range of NGOs, community and private sector led initiatives have developed apace.

In the remainder of this section, the evolving LED policy in South Africa is reviewed

before moving on to discuss current practise in the country.

A POLICY CONTEXT

As noted above, the 1994 Reconstruction and Development Programme (RDP)

document made implicit references to the notion of LED through overt support for

community-based development and locality based initiatives (ANC, 1994). In 1996the national Constitution (RSA, 1996) mandated local governments to pursue

economic and social development. This concept was taken significantly further in

1998 when the Local Government White Paper was released (RSA, 1998). This

document introduced the notion of developmental local government, which is

defined as ...local government committed 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 (RSA, 1996, p. 17). In addition, local

government is required to take a leadership role, involving and empowering citizens

and stakeholder groups in the development process, to build social capital and togenerate a sense of common purpose in finding local solutions for sustainability.

Local municipalities thus have a crucial role to play as policy-makers and as

institutions of local democracy, and are urged to become more strategic, visionary

and ultimately influential in the way they operate. In this context, the key thrust of

such development strategies in post-apartheid South Africa, according to Minister

Mufamadi is that, ...The very essence of developmental local government is being

able to confront the dual nature of our cities and towns, and to deal with the

consequences of the location of the poor in dormitory townships furthest away from

economic opportunities and urban infrastructure. The solutions to these problems are

complex and protracted (Mufamadi, 2001,p3). As Rogerson comments, ...In terms

of the mandate of developmental local government the establishment of pro-poor

local development strategies is therefore critical and central for sustainable urban

development as a whole, particularly in dealing with the apartheid legacy of

widespread poverty (Rogerson, 2000, p405).

The statutory principles for operationalising these concepts of development are

contained in the 2000 Systems Act (RSA, 2000). Key within this Act is the notion of

promoting Integrated Development Planning of which LED is regarded as a key

element. Integrated Development Planning, has been defined as, ...A participatoryapproach to integrate economic, sectoral, spatial, social, institutional, environmental


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and fiscal strategies in order to support the optimal allocation of scarce resources

between sectors and geographical areas and across the population in a manner that

provides sustainable growth, equity and the empowerment of the poor and the

marginalised (DPLG, 2000a, p15). In essence, according to the Department of

Provincial and Local Government, the IDP is, ...conceived as a tool to assistmunicipalities in achieving their developmental mandates (DPLG, 2000a, p21), and

as a planning and implementation instrument to bring together the various functions

and development objectives of municipalities. Future government funding allocations

to local governments will be determined by the nature of planning and development

priorities identified in such plans

In 2002, a draft LED Policy Document, entitled Refocusing Development on the

Poor was being drafted (DPLG, 2002). This document clearly argues that pro -poor

LED which explicitly targets low-income communities and the marginalised has to be

the focus of government policy. Another emerging policy of note is the governmentsUrban Renewal Strategy which though still to be finalised has a clear focus on

issues of urban regeneration and targeted support for township areas. In order to

support LED, the government introduced an LED Fund in 1999 which, though only

providing support for poverty relief schemes, is clearly having a widespread impact

across the country.

A key drawback with policy is that despite its sophisticated focus and nature, it tends

to implicitly suggest that LED is a local government prerogative, providing little

recognition or incentive to support the often critical role played by NGOs and CBOs

in the development process.

B SOUTH AFRICAN EXAMPLES

The literature on LED in South Africa clearly indicates that LED tends to be an

urban-focussed activity in terms of the most obvious and prominent current initiatives(Rogerson, 2000). Despite this, at the micro-level, a range of NGOs / CBOs are

clearly pursuing very valuable training and job creation strategies in rural and urban

areas throughout the country.

Applied LED ranges from market-led initiatives pursued in the large cities to drawin big business, to build sports stadiums and convention centres and to re-image

cities in a global era through to small-scale, but targeted poverty relief, training and

job-creation schemes which focus on areas such as crafts, sewing, brick-making etc.

(Rogerson, 1997, 2000; Nel, 2001). Cities such as Durban and Cape Town have set

up an Economic Department and an Economic and Social Development Directoraterespectively. Both cities are seeking to achieve global competitiveness and poverty

relief and are focussing on tourism, place promotion, business attraction, support for

small and micro-projects, community projects and support for flagship projects such

as the Cape Town Convention Centre.

Some of the most critical LED endeavours are currently being pursued in townssubjected to severe economic stress. These include mining towns, such as in the Free


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State, North West province and KwaZulu-Natal, where the original basis for the

towns economy has been lost and fishing villages, such as Lamberts Bay and Stilbaai

that have been subjected to the loss of their previous economic mainstay. In placessuch as Welkom and Klerksdorp, urban farming, tourism promotion and small

business support are some of the more obvious strategies that are being pursued.

In rural areas, farming ventures and poverty relief interventions, often led by NGOs

tend to be a common trend. Support for rural markets and training in farming in the

Stutterheim district is a case in point.

Also of note are the various Presidential Lead Projects, such as Katorus and Cato

Manor, where significant levels of state funds have been targeted at defined problem

areas. The emerging Urban Renewal Strategy will also contribute in this area.

Nel (2001) has identified four variants of LED as it is currently applied in South

Africa, namely:

1. Local Government led LED where the elected local authority becomes theactive change agent

2. NGO / Community-led LED, where often in the absence of other logicaleconomic leaders, market-critical LED is pursued by the community directly

and/or by a supportive NGO active in that area.

3. Development Corporation / Section 21 Initiativesthere are several examplesof development agencies which have been specifically established, often by

local governments, to pursue LED type activities. Examples include Welkom

and Stutterheim.

4. Top-down LED this refers to instances where significant government orexternal resources are specifically targeted at an area in an endeavour to

catalyse LED. Though somewhat contrary to the conventional notion of

spontaneous, community-based development, such support has a role to play,

particularly in disempowered communities lacking in leadership capacity and

resources.

Latest in the field of interesting LED programmes in South Africa is the combined

initiative of the European Union and the provincial KZN Department of EconomicAffairs and Tourism focussing on a province-wide LED strengthening and support.

Four regions within the province will receive financial and organisational support to

strengthening the institutional thickness and to implement catalytic LED projects.

C EVALUATING DEVELOPMENTAL LOCAL GOVERNMENT (IN

SOUTH AFRICA)

The experience of LED in South Africa clearly reveals a mixed balance sheet. Some

of the key issues worth noting at this juncture are:

- The failure rate of initiatives is high;


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- In many ventures, particularly in smaller centres, there is only limited privatesector involvement;

- What is being achieved is the provision of facilities of a global standard incertain localities versus constrained achievements in the poorer areas;

- The politicisation of development is an issue where individual interests over-ride the greater common good;

- Projects appear to move through a life-cycle which often sees the demise ofonce promising endeavours;

- There is a clear problem of grant dependence and the limited sustainability ofmany projects;

- The economic aspects of projects, especially the marketing of products areoften undersold in planning and often threaten project sustainability;

- A question needs to be raised as to whether local authorities should be drivingeconomic development and job creation or facilitating it? The case of Cato

Manor will give a direction, as described later in this paper;

- Many regard LED as an unfunded mandate i.e. local government is requiredto pursue it, but lacks the necessary funds and staff;

- There is a clear need for more training, facilitation and funds;- In Rogersons view, ...the most distinguishing feature of South African Local

Economic Development policy is the new emphasis on a strong pro-poor

focus in rhetoric, albeit if not always in practice (Rogerson, 2000, p408);

- There is currently inadequate facilitation support;- There is a possible ideological conflict between GEAR and socially

responsible programmes;

- Community focussed programmes are often difficult to sustain, because ofhigh staff turnover, limited resources and capacity.

The above considerations reflect the very real challenges which applied LED has

faced in South Africa in recent years and are clearly issues which should be addressedor at least considered in the undertaking of LED initiatives.

2.3 Area-focussed LED

The notion of comprehensive LED interventions taking place at the sub-urban area is

not a particularly well-established practise. Local authority support often targets

disadvantaged areas, but it is seldom the case that such areas can exert a fundamental

say over their own future or that LED at such a level is multi-dimensional in construct

and focus. The notion of targeted support for sub-urban areas is not however

particularly unique. The most logical examples include:


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- enterprise or empowerment zones in the USA, UK and France, and- inner-urban renewal areascommon in many countries- the establishment of Community Development Corporations designed to

address particular community / urban development challenges in low-income

areas. (Demaziere and Wilson, 1996).

The first two examples frequently depend on central state support, subsidies and

incentives which are targeted at the private sectorusually from outside the specific

area. Areas are selected on the basis of job loss and particular socio-economic crises

and tend to be the recipients of external support usually in the form of tax based

incentives and infrastructural provision. Areas are green-lined in other words

support only applies within that particular suburb/estate and decisions tend to be of a

top-down nature with little reference being made to local residents who seldom have

a legitimate channel of popular control or expression at the micro-level.

Community Development Corporations3

frequently operate in deprived areas and

tend to have quite specific focisuch as job creation, drug rehabilitation etc. Run by

NGOs and community groups they often lack resources and funds and have no legal

representative function. They tend to rely on external grants for their existence

(Demaziere and Wilson, 1996).

One of the best examples of Area-focussed / sub-urban LED in the South is to be

found in the ABC region of the Sao Paulo metropole in Brazil where a purpose-

created LED council has been operational since 1997 in an endeavour to address theproblems of the region. Whilst concrete results are not yet available and operational

constraints have been experienced, local co-operation and the areal focus of the

initiative is clearly leading to local empowerment (Rodriguez-Pose et al, 2001).

2.4 Contextualising the Cato Manor Experience

The recent experience of LED in Cato Manor has unique elements but it also shares

certain commonalities with the broader LED experience detailed above.

Certain key elements can be noted at this juncture:

- LED in Cato Manor is clearly operating at the sub-urban area, but, unlike thegeneral experience elsewhere in the world and in South Africa more

specifically, the higher degrees of local autonomy and decision-making vested

in the responsible development agency enable more wide-ranging and

comprehensive LED to be pursued than one would normally expect in a

single, low-income area falling under the jurisdiction of a local government

with a broader developmental responsibility. However, whilst the scale of

3Particularly found in the USA; also related to the changing role of the government in the USA.


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intervention is significant and often decisive, as the relevant agency is not part

of an elected local authority structure, lines of direct responsibility to the host

community are less well defined.

- Relative to international experience, LED in Cato Manor assumes twodimensionsmarket-led and market-critical (i.e. community focussed). Thisis clearly a realistic approach as it recognises both internal poverty levels, but

simultaneously there is the need to market and integrate the economy of the

area within that of the broader metropolitan area and beyond.

- LED activities currently being pursued in Cato Manor overlap with all of theinternationally identified sub-divisions of LED, namely;

1. Financial support

2. Land and building development

3. Information and marketing assistance

4. New planning and organisational structures5. Training and Employment

and also with many of the World Banks (2002) identified LED programmes

(see above).

- In terms of Harvey (1989) and Rogerson (2000) four variants of citydevelopment (see page 5, section 2.1 D), Cato Manor only manifests elements

of production and consumption (i.e. incipient moves to encourage tourism-

based development).

- Relative to Nels (2001) institutionally based categorization of LED in SouthAfrica, Cato Manor overlaps most closely with categories 1 and 3, namely

LED is undertaken on behalf of a local authority and is led by a Development

Corporation. Though funds are sourced from higher authority tiers, final

decision-making on applied matters is not vested there, hence it is not fully

top-down, but neither is it bottom-up or community-based in that

economic decisions are not directly made or undertaken by the community as

such in the idealistic scenario sketched by Escobar (1995).

- What is happening in Cato Manor does, in many ways, reflect an ideal casescenario, of strenuous endeavours to improve socio-economic and living

conditions for communities most in need. In addition, it also overlaps closely

with the pro-poor concepts contained in the current draft South African LED

policy document. The more market-based approaches of certain of the Cato

Manor projects, for example the development of the Industrial Parks, tend to

overlap more with international pro-market LED strategies and those common

in other South African cities than with the current conceptualisation of LED as

detailed in South African policy documents. This aside, a multi-faceted

conceptualisation of LED and how to achieve it is economically rational.


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3 LOCAL ECONOMIC DEVELOPMENT IN CATO MANOR

3.1 Introduction

In the light of Cato Manors desperate legacy of poverty and disempowerment,

strategic interventions designed to catalyse economic activity have been a key

component of the overall European Union funded development intervention in the

area. Efforts to catalyse economic growth and job creation have been co-ordinated

through the Local Economic Development Programme (LEDP) of the Cato Manor

Development Association (CMDA). Key funding sources have included the EU and

the RDP which identified Cato Manor as a Presidential Lead Project, and the

provincial and metropolitan governments.

From the outset it should be noted that high levels of poverty prevailing in the area,

the poor resource and skills base and the apartheid legacy of the area (thoughjustifying the scale of development support) have not created an easy base on which

to initiate development. The poorly developed nature of economic activity in the area

is borne out by the findings of a recent survey which established that 85% of the

businesses in Cato Manor are of an informal nature and 40% of them generate less

than R 1000 per month (McIntosh, Xaba and Associates, 2002a). As a result, the

primary characteristic of the businesses interviewed across Cato Manor is that they

are mainly survivalist or subsistence in character. This clearly has been a key

challenge to the CMDA namely how to support marginal activity but also the

question of how to ensure economic growth and diversification. In the following

sections, the CMDAs LED objectives and foci will be outlined before examining and

then assessing key interventions which have been undertaken.

3.2 The LED Objectives and Operational Principles in Cato Manor

The overall mission of the CMDA is to ensure that Cato Manor is rapidly developed

into a holistic, sustainable, quality urban environment, in a manner that leads to the

generation and redistribution of economic opportunities, builds local capacity and

improves the standard of living of the poor (CMDA Business Plan, 1994). Within

this broad goal, issues of economic development and sustainability are obviously ofcritical importance, as Imani-Capricorn (2000, p.i) note, the long-term sustainability

of the Cato Manor Development Project depends on the people of Cato Manor

gaining access to economic opportunities and more specifically to jobs and self-

employment opportunities. The two key challenges which need to be addressed first

are: high levels of unemployment and prevailing low skills levels.

When the work of the CMDA was initiated in 1994, LED was not, unfortunately, one

of the initial project foci, though an extensive vocational training programme was

launched in 1995. Given the later realisation of the necessity to ensure economic

sustainability in the initiative, an integrated LED Programme (incorporating the


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existing Vocational Training programme) was initiated in 1999. This programme has

since become one of the key foci of the CMDA, experiencing significant growth over

the last few years. In 1999 there were only six LED projects, but by 2002 there were

48. By 2000, R 67,3 million was directed to LED projects (Hindson, 2000), rising to

R 94,5 million in 2002 (CMDA, Progress Report, 2002).

LED forms a key component within the broad, overall objectives of the CMDA

which are:

to provide housing, infrastructure, services and access to jobs for the poor

people of the Durban Metropolitan region. In addition, the project serves a

secondary purpose, i.e. to develop solutions for the poor that have

replicability elsewhere (CMDA, 2002a, p. 3).

Within the context of this broad vision, defined LED Programme goals have been

developed. The overall objective is that of: Creating Skills, Jobs, Income and

Dignity (Hindson, 2000, p. 3), whilst a series of sub-goals to achieve this objective

have been delineated, namely to:

- maximise the locational advantages of Cato Manor- initiate Ice breaking projects.- ensure project replicability- ensure recovery and reinvestment- maximize on local partnerships and ownership- create investment opportunities (in Hindson, 2000, p.3)

These overall objectives were further refined in 2000 when a Logical Framework for

LED was designed which identified the overall objective, namely: To promote

economic development in Cato Manor, whilst the project purpose is: to promote

income earning opportunities and dignity in Cato Manor and to ensure the

sustainability of the LEDP. Three core strategic areas of intervention were identified

at this juncture, namely: human capacity development, economic opportunities, and

institutional capacity development (Hindson, 2000, p.12).

Direct LED support has four foci, namely on: production, training, community

development and the financing of initiatives. In undertaking these activities, the

CMDA recognises the need to ensure economic sustainability in its initiatives and to

switch to a reliance on private sector finance as soon as is possible.

From an administrative point of view, the LED Programme / Department is composed

of a series of key clusters, namely: Commercial/Industrial Development, the

Entrepreneurial Support Centre, Tourism, Community Development and Training

(Eising, 2002).


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In understanding the focus and operation of the LED Programme it is critical to

conceptualise that LED has not been implemented as an independent line function

(despite the administrative detail in the previous paragraph) but has rather been

pursued as part of an integrated package of interventions in which the logical links

with other CMDA programmes have been consciously advanced. Overlaps withCMDAs Community Development and Infrastructural Programmes are critical in

this regard and in the case of the former the critical importance of empowering and

actively involving people in preparation for involvement in economic programmes

has been a vital aspect of the intervention (Mulqueeny, 2002). Direct LED project

intervention in the form of training, development and support is either undertaken

directly by CMDA staff or by contracted agencies.

From an institutional perspective the CMDA is a Section 21 Development Agency

which is funded primarily by the European Union but also receives / received support

from South African sources, most prominently the Durban Metro., the ProvincialHousing Board and the South African government in terms of Cato Manors status as

a Presidential Lead Project. In addition, the CMDA operates on an agency basis on

behalf of the Durban Metro (Eising, 2002). Links with the community are maintained

through the Cato Manor Community Organization (CMCO) which (ideally) ensures

that communication and interaction is maintained between the CMDA and the

community. Other core activities of the CMCO include, working with other

committees and service providers, reporting back to their communities and

maintaining links between local service providers and the community (Silimela,

2002). In addition, the CMCO has a range of sub-committees which provide directinput into the line functions of the CMDA. In the case of LED, the CMCO Economic

Development committee is the direct link (CMDA, 2000; 2001a). Further, community

representatives also sit on each project steering committee. In practice though, this

community model is not working optimally, due to, amongst other things, lack of

skills and mandate.

In the identification and operationalisation of LED, it is important to note that, in

addition to community involvement, the promotion of human dignity is recognised

as being a fundamental facet of the intervention

(Eising, 2002). This is clearly critical if self-worth and sustainability is to be achieved A

further noteworthy operational principle is the

notion that interventions need to address the

multiple development needs and realities of

residents of the area. As a result, the concept of

a ladder (Figure 2) is employed, which seeks

to promote LED interventions at a range of

scales from the most marginal activities through

to working with big business. The concept ofthe ladder and associated training and support

Figure 2: The "Ladder" of LED opportunities

in Cato Manor


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mechanisms allows for potential entrepreneurs to advance through the system as their

skills and business acumen develop. At the bottom rungs of the ladder are the

subsistence-level and other informal sector businesses, savings clubs and basic level

community development programmes, whilst higher up is entrepreneurial

development and training for the formal sector

4

, tourism based initiatives and finally,at the top, there is scope for large industrial ventures.

Not all target groups however are supported in the same intensity in financial terms.

The CMDA LED Programme has allocated most of its budget to the middle-level

group of beneficiaries (emerging micro and small businesses and people with skills:

container parks, markets, shopping centres, manufacturing workshops, etc) rather

than the bottom end (unskilled residents, etc). A kind of bell shape target group

allocation pattern emerges (see Figure 1). This approach has been justified by both

the lower costs of training compared to building accommodation and referring to a

trickling down process, where skills and jobs are, ideally, transferred from themiddle-level downwards to the bottom end of the ladder (Eising, 2002).

3.3 Core LED Activities

In undertaking LED a range of core activities has risen to the fore during the periodof operation of the CMDA. The primary LED foci include:

A COMMUNITY DEVELOPMENT AND CO-OPERATIVES

As noted above, community development (with a focus on income augmentation) is

a core component of LED in the area as this programme seeks to involve and

empower the affected community and, in so doing, lay a basis for the gradual and

4 Though the difference between formal and informal businesses is theoretically based on legal issues,

the more practical use of these terms, especially when used with sectors, is closely linked to thesubsistence vs. more developed businesses.

Target Group

Subsistence Medium enterprises

Target Group


Programmebudget

Small enterprises

Target Group


Investmentperproject

Timeeffortperproject

Private sector Investment

Private sector Investment

Small enterprises

Timeeffort

Figure1: Input and scale: projects for the subsistence level have low costs but high

management time input. Projects in the higher end require high investments (including

private sector investments) while time input is low. As a result, a larger part of the LED

programme budget is focussed on the small emerging businesses: accommodation, trainingetc. Through job creation etc this investment will trickle down to the lower end of the job

spectrum.


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widespread application of LED. Key activities undertaken by the CMDA in this

regard include the strengthening of Savings Clubs in the community, the provision of

basic skills training to adults (see also the next section), the identification and training

of local facilitators (60) within the community who help to ensure the success of

development interventions, the strengthening of development committees, theestablishment of Environmental Committees and the establishment of a series of co-

operatives (Mulqueeny, 1999). The latter includes the development of the

Masimbambane Cleaning Co-operative, the Umkhumbane block making Co-

operative, the Two Sticks Cultural/Craft Co-operative, the Fighting Poverty

agricultural Co-operative, the Hlengisiwe Health Co-operative and an incipient Youth

Development Forum (CMDA, 2000b). In addition, a sewing business known as the

Mina Nawe Business Enterprise cc has been set up and runs from the Cato Manor

Technikon. Unfortunately, the co-operatives are experiencing a number of

impediments, these include, low-levels of skills and limited capital and facilities

(Vaughan and Payne, 2002). Another interesting project is urban agriculture, in which

several cooperatives have been established, and intensively trained in urban

agriculture techniques and in cooperative principles.

B TRAINING AND FINANCIAL SUPPORT

As international experience clearly shows, appropriate skills and business training is a

key facet of LED. CMDA has offered a variety of training programmes (largely

through external agencies).These include training in: industrial skills, construction,

multi-skill training, business management and urban agriculture. By 2002 some 7000people had been trained (CMDA, 2000b, 2002a; McIntosh, Xaba and Associates,

2002b). Skills training for the Savings Clubs noted under Community Development

above, is a key facet of the endeavour, focusing on training in life-skills and in a

series of home-based management modules. To date some 4000 people have been

trained through the use of community facilitators in Home Ownership Education and

Life Skills (Mulqueeny, 2002).

A new and innovative aspect of training is the recent upgrading of the emphasis on

business skills training. Based on the successful COMSEC model, an Entrepreneurial

Support Centre (ESC) has been established to provide technical and business skills,on-site support to entrepreneurs and eventually workspace (Winter, 2002).

A noteworthy aspect of the employment creation dimension of the CMDAs LED

activities has been the establishment of a job-linkage scheme known as JOB (Job

Opportunities Bureau) which has been able to place trained Cato Manor residents in

temporary and permanent employment with major firms in the area, thus helping to

ensure the effective utilization of skills, on-site training and job creation. By 2002

some 1429 of the 5000 people on the database had been placed in employment

Financial support to entrepreneurs is not generally provided directly by the CMDA

and instead external agencies are accessed to provide that level of support. CMDAs


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focus is on facilitation, creating an enabling environment and encouraging banks to

intensify lending to the Cato Manor community/businesses. Examples include a small

loan guarantee project, known as the Cato Manor Short -term Guarantee Scheme for

building contractors, housing loans guarantee scheme and business development

loans (CMDA, 2000; Leamy, n.d.). Financial support for emerging businesses isclearly a key concern however, Mtshali (2001) established that 50% of small business

need financial assistance and most are unable to access support from banks (Mtshali,

2001). Financial institutions, including national and regional banks and so-called

Retail Finance Institutions (through Khula) are in general not interested in supporting

businesses on the level prevailing in low-income areas like Cato Manor, despite the

availability of national small business loans guarantee schemes like Khula and

Sizanani.

C PRODUCTION AND RETAIL PROVISION AND SUPPORT

Economic intervention is clearly of critical importance in the Cato Manor area if

economic and employment opportunities are to be enhanced. A survey undertaken by

Delca Research (2002) indicates that 14% of households are engaged in some form of

economic activity primarily in the retail and service sectors, with very few

participating as manufacturers. Key growth impediments include: lack of finance

(76%), lack of suitable premises (51%) and training constraints (6%). A significant

proportion of CMDAs endeavours since 1999 have been directed to addressing these

three constraints. Given the prevailing weak skills and economic base, the promotion

of SMMEs is clearly a high priority. Key objectives in this regard include making themost of local advantages, initiating a series of ice-breaking projects which can be

replicated and creating an array of investment opportunities from small to large

(CMDA, n.d.).

As noted in previous sections, the CMDA intervention is noteworthy for the wide-

ranging levels of support which are offered to both retailers and manufacturers.

Though at different levels of completion, the following broader interventions can be

noted:

1. Retail facilities: These range from the Bellair Market (informal trading facilitiesfor 100 traders and 26 lock-up stalls) in Bellair Road, and the Container Park at

Cato Crest for emerging traders to the major retail Bellair Centre. The latter

accommodates 40 shops and offices. Additional economic hives are being

prepared in Cato Crest and Wiggins. People are also being trained to set up their

own businesses, such as in the security sector and an intensive business

support/coaching/mentoring programme is being rolled out by the local ESC. In

addition, a large commercial land sales programme is implemented to release

commercial land to the market. Such release is to be timed to maximise returns

and will be structured to avoid speculation. As part of this programme, several

petrol stations will be established (Vaughan and Payne, 2002).


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2. Manufacturing Facilities: These range from the retail/manufacturing facilities inthe Cato Crest Container Park for the small and emerging entrepreneur to the

planned ESC Hive and the planned Industrial Parks (Booth West, Edwin Swales,

Booth Central) for larger investors. The latter are of particular significance in that

they will provide the basis to return capital in the form of rentals to a CatoManor/Durban Development Fund which will be critical in ensuring project

sustainability. The ESC, through the provision of training, workspace and

industrial linkages should lead to the creation of 200 jobs at approximately one-

sixth of the cost on the formal manufacturing sector (CSIR, 2001).

Another project of particular significance are the economic hives, established for

local emerging businesses. The unique experience in this project is the local

virtual ownership model, in which a local Business Association5

performs

facility management, including tenants selection, rental collection, budgeting,

bookkeeping, maintenance, security (through local service providers), while the

CMDA as agent for the land owner monitors the performance and offers intensive

technical assistance (ESC)

3. Parallel support for these activities is provided by the CMDA in the form ofinfrastructural provision and building development.

4. In parallel with tourism promotion (see D1 below), craft industries are beingactively promoted in Cato Manor in general and more specifically in the school

premises which have been made available by private owners to the community. A

2000 survey established the existence of skills in woodwork, grasswork,

beadwork and pottery and the need to develop this sector (World Vision/NtingaMSP, 2000). Subsequent CMDA initiatives have clearly supported this sector and

provided market opportunities for producers.

5. A key small business promotion activity has been the hosting of the annualsmall business fair designed to promote and encourage local economic activities

and linkages by local producers. In 2001, 50 local producers exhibited at the fair

(CMDA, 2000b, 2001b). On the positive side, the event clearly provides a venue

at which local producers can network and exhibit their wares, it provides an

opportunity to meet with financial institutions and raises the profile of the area

and its businesses. On the downside it is unfortunate that apathy and a degree ofinter-community rivalry does prevail on the part of local residents and there is an

identified need to better market the event and prepare small businesses for it

(McIntosh, Xaba and Associates, 2001). In future more businesses from a wider

cross-section of activities need to be drawn in to maximise benefits accrued

(McIntosh, Xaba and Associates, 2002).

6. Related to the Fair idea, a Cato Manor flea market initiative by local co-operatives is being supported to encourage local production and sales.

5

For this special purpose the key leaders of the Cato Crest Small Business Association haveestablished the Cato Crest Development Cooperative


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7. A building materials manufacture project is being developed (CMDA, 2000b).This project focuses on strengthening and linking local manufacturers and

offering central support services (transport, bulk purchase, hire, management

expertise, financial support, marketing, etc).

8. Other initiatives aiming at encouraging local businesses in their development arethe Business Person of the Month competition, run by the local community

organisation CMCO, and an intensive communication campaign in the local

newspaper, focussing on informing local businesses about LED developments in

the area, as well as presenting new business ideas.

D TOURISM PROMOTION AND INTUTHUKO JUNCTION

In line with the current boom which tourism is experiencing in the country, this sector

has been recognised as a key niche market which can play a key role in the economic

development of Cato Manor (Eising, 2002). Key activities undertaken to promote

tourism include:

1. The promotion of craft activity and the identification of markets (national andinternational) for items which have been produced. Overseen by a skilled project

management team, 40 producers are now active in this project in an old school

property and several other crafts producers are scattered over the Cato Manor

area. (Vaughan and Payne, 2002).

2. Investigations into aspects such as township tours and plans to develop a CatoManor museum, heritage trail and entertainment sites. To actualise theseprogrammes a municipal subsidy of R0,25 mln. per annum has been arranged

(Wright, 2001).

3. The completion of the Intuthuko Junction offices complex (which houses theCMDA offices) which will serve as a tourism node with an information and

interpretation centre, a museum, a conference centre and a coffee bar (CMDA,

2000b).

All of the above mentioned projects fall in line with the ladder approach outlined in

Figure 2, where there is a call for a diversification of strategies recognised and

implemented to facilitate the LED process.

E KEY FACETS OF THE LED PROGRAMME

As the above evidence vividly illustrates LED, as it is currently being applied in Cato

Manor has assumed a comprehensive, multi-faceted character. Key facets of what has

been undertaken include the notion of scaling up economic activity and focussing

on a diverse range of activities, providing for both community development and

training, efforts to provide appropriate facilities and to provide business support and

job placement.


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Other noteworthy facets of the LED intervention in Cato Manor include the area-

focussed application of LED, designed to catalyse growth in a spatially confined area

and to address a wide range of economic needs present within that zone. The use of

external agencies, where appropriate, is important, as this allows for skills to be

accessed as required and this also lessens the range of conflicting demands which thecommunity can make on the CMDA. Fairly high (though not maximal) levels of

community liaison and interaction and local participation in project design and

implementation are appropriate, as is the fairly high degree of interaction which

appears to exist between project participants and CMDA staff.

The project has obviously been very well funded, which has permitted a think big

attitude to prevail. Unlike with many other LED initiatives which are generally

constrained by the absence of significant finance, in the case of Cato Manor, greater

access to resources has permitted experimentation with a range of initiatives and, in

so doing, allows for conclusions to be drawn regarding which project categories arethe most ideal, what difficulties are experienced when applying LED, what linkages

exist between projects etc.

A key challenge in the Cato Manor (LED) Programme is the sustainability of the

development. Sustainable development is more than the issue whether the

development in the area will continue after CMDA closes down (see next point).

Sustainable development has been defined asdevelopment that meets the needs of

the present without compromising that of future generations to met their own needs

(Bruntland Commission, 1987). Sustainable development seeks to open a path along

which economic development can progress, whilst simultaneously enhancing human

development and ensuring the long-term viability of those natural systems on which

that development depends. Interesting to mention here is the success in the planned

Edwin Swales Industrial Park where the CMDA has set up a successful partnership

with KZN Wildlife and local government to establish a reserve for endangered black-

headed dwarf chameleons resident on the site of the proposed industrial park. A key

consideration in terms of the future success and sustainability of the initiative is the

question of what happens when the CMDA is scaled down in 2003. Although the

consequences of this action are difficult to predict, it is inevitable that many of the

LED initiatives may well contract and be rationalised. On the positive side, theCMDA, in anticipation of this scenario, will establish:

1. A Durban low-income area development fund, which will oversee the propertycurrently managed by the CMDA and recycle/distribute rents and other revenues

collected from the commercial properties like the industrial parks, the office

centre and the shopping centre to selected community socio-economic

development projects in Cato Manor and other Areas of Greatest Need in Durban.

2. SEDCO (Socio-Economic Development Company) to continue the roll out of theSED programme (preparation and implementation of socio-economic projects) in


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Cato Manor, SEDCO will operate as a Section 21 company (Garlicke and

Bousfiled, 2001; Brian Stewart and Associates, 2002b).

In addition, further financial support from external donors and from local sources will

remain a priority if the recently initiated projects are to survive.

3.4 Assessment

In assessing the current status of the LED intervention in Cato Manor the findings of

Doug Hindson in his 2000 report still remain valid, namely: the efficiency of the

economic projects cannot be fully evaluated yet due to the recent start of most of

them (Hindson, 2000, p.6). As many of the key projects have yet to become fully

operational, general comments are difficult to make at this juncture. None the less

what is on the ground appears to be operating effectively and appears to have been

generally well received by the local community and can well provide a basis forsustainable economic development. Interviews conducted with representatives of key

institutions, including the Durban Metro, the CMCO and the University of Natal all

yielded a generally positive response. Even though it was pointed out that not all

activities have achieved all that they had aspired to, the general nature of the

intervention and achievements to date were regarded in a positive light. Three of the

key reasons noted for the success of the initiative to date revolves around the capacity

of the CMDA and its staff which are identified as being highly committed, skilled

and apolitical, secondly the level of external support received and thirdly the fact that

the CMDA operates on the basis of public entrepreneurship (Eising, 2002).

Positive aspects of the experience include:

- the pursuit of highly-focussed, well-resourced area-focussed development. Asa result, Hindson (2000, p.6) concludes that the CMDP is Durban and South

Africas pioneer in large scale, integrated, area-based development at sub-

metropolitan (and sub-council) level.

- generally positive, community based support, despite the fact that suchcommunity support/participation is extremely difficult to implement in an

unsettled low-income, politicised urban environment like Cato Manor.

- targeting a range of economic activities in different sectors and at differentlevels. The programme offers a hierarchy of opportunities that covers the full

range of beneficiaries from survivalist operators at the lowest end to middle

and large-scale businesses at the upper end (Hindson, 2000, p.20).

- the tourism sector which provides a clear niche market which must be furtherpursued (P. Wright of Secprop, 2001).

Key concerns at this juncture are:

- will all the projects be completed when the CMDA as a company is closed (in2003)?


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- sustainability and replicability actually rests on reconstituting the CMDA asan enduring area-based development management institution to oversee

infrastructural maintenance, capacity building and economic development

(Hindson, 2000, p.24). Especially in disempowered communities, establishing

sustainable, enduring projects is a long-term process. The experience ofCOMSEC (a small business development initiative) in Port Elizabeth suggests

that this can take up to eight years to achieve for emerging businesses (Winter,

2002). It is therefore imperative that the financing and support of initiatives

continues for the foreseeable future.

- there is only limited evidence of private sector investment and support.- some of the projects face operational constraints. For example, McIntosh,

Xaba and Associates (2002b) note that the co-operatives lack capital, skills

and premises from which to operate. However, several LED projects have

started to address these issues.

- the ability to promote industrial establishments is constrained, given theopportunities and constraints which exist in the macro and micro economies at

present (Marriott Property Services Ltd., n.d.).

- defining the community and who their leaders are has been a difficultprocess, given the complex history of the area and recent population

movement (Eising, 2002).

- there has only been limited financial sector support and corporate buy-in, withthe activities of Coke-a-Cola being the most positively noticeable in thisregard (Eising, 2002).

- The support from the Municipal government (City) to the project has so farnot been optimal (power issues, credits, recognition), and the current

sustainability plans and replicability plans (roll-out experience to other Area

in Greatest Need, within city, region and national) could face a slow death if

Council does not come fully on board in time.

According to Brian Stewart and Associates (2002a, p.1), the challenge is to establish

and nurture new business ventures and to identify those in the precinct which do have

growth potential (p.20). They note a serious concern over the limited access to

affordable finance and point out that the Cato Manor community is too small to

support a vibrant and growing business community (p.24). The latter point

emphasises the need to continue with efforts to integrate the local economy within

that of the city as a whole, while simultaneously ensuring a township development

focus. There is a growing concern, amongst a number of people that were

interviewed, that the process is too insular in nature. There is a call to move beyond

the boundaries of Cato Manor and integrate the development process within the

broader context of the city, for example through collaboration with development

initiatives in the Southern Basin region of the city.


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The Way Forward:

There clearly are quite fundamental concerns regarding the long-term future of the

area when the EU funds cease. According to Brian Stewart and Associates (2002, p.4)

the majority of Cato Manor residents are not able to access socio -economic

opportunities. Thus, the proposed SECDO has a vital role to play in terms of

continued business advice and training, providing workspace and incubator facilities,

micro-lending, business linkages and service provision.

In order to ensure the long-term viability of the area:

- the Asset Holding Vehicle / Durban Development Fund needs to beestablished as soon as possible;

- external financial and other forms of financial support will remain essentialfor the foreseeable future and need to be accessed and secured(P. Mtshali,

2000);

- the key base laid in terms of empowering the community must bestrengthened and enhanced;

- high levels of unemployment and low skills levels must continue to beaddressed as a matter of urgency if the area is to be transformed (Imani-

Capricorn Consortium, 2000);

- current projects need to be consolidated and extended wherever possible andthe industrial estates and ESC need to become operational as soon as is

possible; and

- the income augmentation projects such as urban agriculture need to becomefirmly established.

4 LED LESSONS FROM THE CATO MANOR

EXPERIENCE

The experience of LED in Cato Manor provides valuable insight into an ideal case

scenario of LED, i.e. area-based development, with a well-resourced, funded and

well-staffed, dedicated development corporation specifically charged to redevelop the

area. Whilst it is unlikely that other areas will have access to the same resources,

funds and skills which Cato Manor had access to, it is believed that, despite this, the

ideal case scenario of the redevelopment of Cato Manor does indeed shed valuable

light on the potential of LED in low-income areas and the range of issues which need

to be taken into consideration in such endeavours, at whatever scale they are

implemented. A range of key lessons, both positive and negative can be derived from

the experience, which can serve to guide and inform LED initiatives in other

localities or redevelopment areas in South Africa and further afield. In this section,

the lessons are examined first i.e. those which can guide other localities, before


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moving on to examine key over-riding considerations which will impact on the

development process.

The lessons learnt in Cato Manor are numerous and this paper could easily be

extended with a long list of detailed recommendations on what to do and what not to

do when developing the economy of a low-income urban area. It could even develop

into a kind of manual for LED in low-income areas. Due to its space restrictions,

the section below will only address the priority lessons learnt in Cato Manor and will

only describe these in a general, rather than in a detailed way. The projects website

and the Best Practice LED in South Africa website6

will be hosting a comprehensive

manual on LED implementation in low-income areas7.

4.1 Lessons

Numerous lessons can be derived from the Cato Manor experience, which are ofpotential relevance to planners seeking to pursue similar types of development in

other localities. The lessons derived can be broadly grouped in a series of clearly

defined categories.

A STRATEGIC APPROACH TO PROJECT DESIGN

1. Targeting high-levels of multi-faceted, integrated support at a single area which isoverseen by a dedicated, spatially focused development agency is a positive

testimony about the success and potential of:

- area-based management, focusing on reasonably small, homogenous andcontained areas and communities,

- development overseen by a dedicated Development Agency (Section 21Company) which enjoys higher levels of financial autonomy,

independence and decision-making than an equivalent local authority

agency would. Socio-economic development needs an area-based

implementing agent to be close to the target group. Such an agency has the

power to act as a facilitator or steward of development, to assist in

decision-making, to better adapt to local needs, to optimise

communication with the community, to draw in skills and resources, to

network between agencies and recipients and oversee and guide the

development process. It is however essential that such an agency enjoys

credibility and respect in the host area and that the community have

6 CMDA website:www.CMDA.org.za; LED SA website:www.LED-SA.org.za7

This would included issues like best practice key figures for SED projects, like construction costs perm2, Project Management costs per m2 delivered rental space and rental income/ROI foraccommodation projects (economic hives, shopping centres, industrial parks etc), and for training

projects: training costs/trainee, PM costs/trainee etc, Also a series of Project Management Gantt chartsfor different types of projects are envisaged to be included.
http://www.cmda.org.za/http://www.cmda.org.za/http://www.cmda.org.za/http://www.led-sa.org.za/http://www.led-sa.org.za/http://www.led-sa.org.za/http://www.led-sa.org.za/http://www.cmda.org.za/


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mechanisms for communication and support open to them and that such

agencies are physically accessible to the community.

- the value of highly skilled, professional and well resourced developmentagencies, and

-

integration in the development process, which reduces overlap andwastage and ensures that local planners have the ability to ensure balanced

development, which is unlikely to occur in cases where the agencies

within large metropolitan authorities often lack the capacity to network

with other branches of the same organization.

2. As far as is possible, in order to be successful, development must blend top-down support, finance and direction with bottom-up resources, initiatives

and capacity to ensure synergy, and mutually rewarding programmes. This

ensures a proper balance of assets (accommodation etc) with community

ownership of the programme. Such balance is necessary as an exclusivelybottom-up approach would take long to implement, but an exclusively top-down

approach could neglect community needs and concerns of ownership.

3. Public-Private Partnerships (including Corporate Social Investment) are a keycomponent of development and care needs to be taken to identify and establish

appropriate partnership arrangements. In addition partnerships with the

community sector are important to cultivate.

4. Predominantly in the lower end of the development spectrum, prevailing in low-income areas like Cato Manor, very close links clearly exist between LED and

Social Development8 and the two need to be seen as having fundamentallinkages. Therefore a more appropriate term for such development programme in

low-income areas would be SED, being Socio-Economic Development, rather

than LED.

B PROJECT DESIGN AND VISION

5. The target area and community must be properly determined and defined . Inaddition, where it exists, local leadership potential must be identified, encouraged

and supported. If area-based development is pursued, the area in question

cannot view itself as an independent island within a city and issues of spatial

and economic integration within the broader city economy cannot be ignored.

Simultaneously, the city authorities cannot treat the area as an isolated entity and

must take cognizance of the need to support and plan for the area as part of

broader macro-level planning. Antipathy on the part of city officials to what they

may perceive as a special-case or privileged area that can take care of itself

8 Amongst the most obvious examples in this context are the projects around savings clubs and co-

operatives, where the economic objectives (job creation and improving access to finance) coincidewith important social objectives (strengthening of the community).


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needs to be avoided at all costs. Although this objective is difficult to achieve,

intensive communication with officials and politicians, involving them in

programme/project planning and implementation (e.g. by membership of steering

committees and deployment of council personnel in the implementation agency),

and presenting the programme as a council owned and driven programme couldbe helpful. Related issues are:

a. Whilst a LED intervention is part of an area-based initiative, itshould not limit itself to activity within the area itself. Part of

the intervention should be assisting residents in the area to

establish businesses in other areas.

b. To expand even further, if such LED intervention is innovative andsuccessful, it should be encouraged to expand its focus to other

areas and residents in order to maximise replication of best-

practice experience.

6. In order to succeed, though taking cognizance of the political process,development itself must be undertaken in an apolitical and neutral

9

fashion to avoid antagonism and to ensure that decisions are made and projects

instituted in an economically rational manner to benefit all stakeholders.

7. If an independent development agency is to be instituted, its mandate andautonomy must be assured and ideally its long-term existence guaranteed to

prevent the destabilizing effects of restricted authority, limited budget and short-

time frame of its existence.

8. LED visions and objectives need to be determined in a manner which isappropriate to the community and its needs and which also promote sustainability

and growth. LED must also be empowering and lead to the promotion of human

dignity, self-worth and community stability. Such a vision must be holistic,

comprehensive and multi-faceted, encompassing a widerange of economic

sectors and allowing for growth and progression in each, from small- to large-

scale activities and providing training and financial and other support as is

appropriate.

9. As far as is possible, and making allowances for the need to develop communitycapacity, development endeavours must be run on business-like lines. Thisdoes not detract from the need for external grants to be in place for an extended

period or to offer degrees of welfarist support. Implementing LED on business

principles is essential if investment is attracted and local entrepreneurs are to

have a realistic chance of coping in the economy. An important element in this is

a business-like project selection/evaluation method: the Value-for-Money of each

project needs to be assessed in terms of its impact on the community and

9Though some say that development can never be neutral.


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complying Return-On-Investment and Opportunity Costs (would the money be

better spent in another project and have a higher impact?).

10.The Public Entrepreneurship model is one worthy of pursuing (see otherarticles in this book).

11.Development in a low-income area is not something that can be undertakenon a short-term basis. In areas with low-skills, capacity, resources and a legacy

of depravation and disempowermentaggravated in the South African context by

the immeasurable impact of inferior education and discriminationgenerating an

entrepreneurial culture will not take 5 to 6 years, it might take a generation or

two. Development takes dedication and long-term support and commitment. This

reality is not unique to South Africa, even in well-resourced American cities

short-term planning, often changing for political reasons, prevents the

establishment of enduring sustainable economic programmes (Dewar, 1998).

Planning must take cognizance of this reality.

12.Development in a low-income area needs to be sustainable. Sustainabledevelopment seeks to open a path along which economic development can

progress, whilst simultaneously enhancing human development and ensuring the

long-term viability of those natural systems on which that development depends.

Though often being impacted on by conflicting objectives, local economic

development needs to and can be implemented without degenerating the natural

environment.

C OPERATIONAL STRATEGIES

13.A low-income area LED programme can consider allocating most of its budget(not effort) to the middle-level group of beneficiaries rather than the bottom

end. A kind of bell-shape target group allocation pattern emerges. This approach

could be justified by both the higher costs of building accommodation and setting

up professional business support compared to the costs of training and referring to

a trickling down process, where skills and jobs are ideally transferred from the

middle-level downwards to the bottom-end of the ladder.

14.Maintaining strong and enduring links with the target community mustalways be striven for. Failure to win community confidence and to involve them

adequately in the development process can jeopardize a development endeavour.

Devolving decision-making and control to the host community, wherever it is

viable, is important to strive for. Simultaneously, recognising that a community is

seldom homogenous is important, as is the need to work with each sub-grouping.

15.Developmental interventions must both work with the community at the levelwhere they are at, empowering and encouraging them and providing appropriate

support to new and pre-existing activities (bottom-up), but it must alsoencourage market-based activity to ensure large-scale employment and skills


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development (top-down). As such development interventions need to be both

market-based and community-based in design and implementation and

encourage links and integration between the two. Development must both

capture the existing economic spirit and promote larger-scale economic forces.

16.Related to the preceding, working with pre-existing community organisations,such as Savings Clubs, is a critical development approach. Strengthening their

capacity and working through them can lay a sound basis for trust and support and

later growth activities.

17.Development depends on local champions who need to be encouraged andsupported.

18.Project packaging which synthesizes research and implementation is essential.Therefore a special project preparation budget is highly recommended to

explore/prepare projects to the stage of submission for funding.

19.Two often clashing approaches to empowerment need to be focused on:a. Internal empowerment: Empowerment within the Implementing

Agency team (e.g. staff/managers, preferably from the target area)

b. External empowerment: empowerment of the target group throughprojects.

As quality of the implementing agency staff is critical for success of a

programme, the main focus should be on external empowerment.

However, employment of people of the area on the staff is needed to ensurelocal knowledge of community power processes and of community processes

and needs (antenna), as well as to ensure the communitys acceptance of the

projects.

20.In low-income areas concerted efforts at community-development often need toprecede economic development. This in itself is a drawn out process but is

essential in order to build community capacity, confidence and skills in order to

prepare people for economic development, to enable them to identify with and

support interventions and to ensure that gains made are sustainable and

meaningful. Given South Africas legacy of deliberate disempowerment and skillsdepravation, the importance of this step cannot be over-emphasized. Development

interventions frequently fail because they do not adequately recognize or address

the need to embark on long-term community and capacity development, leading

to the common failure of short-term, focused skills development training. On the

other hand, due to the limited timeframe of many programmes and the need

for immediate success, LED is forced to start early in the project. Therefore,

the urgent need at inception of the project is to develop an effective community

representation organisation and local leadership, through which the bottom-up

approach would be facilitated.


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21.Projects must avoid grant dependency as far as is possible and seek ways inwhich to ensure economic sustainability.

22.Development projects require good base-line data and needs analyses need tobe undertaken in order to correctly identify development interventions and target

support.

23.Related to the preceding point, the implementing agency must have a clearunderstanding as to what type of development (e.g. market or community

focused development) it is pursuing, for what reason and how. In addition, the

spatial area of operation must be carefully defined.

D PROJECT MANAGEMENT

24.The concept of an asset-holding vehicle which sells or leases property within anarea with the objective of generating funds in a sustainable fashion to fund further

community development endeavours over the long-term is an economically

rational approach which can ensure financial autonomy, collaboration with the

market and long-term sustainable development10.

25.The Development Agency needs to operate in a professional, business -likefashion in order to operate effectively and deal with external agencies and

business in a profe

Documents

Local Economic Development in Low Income Areas - The Case of Cato Manor