EKURHULENI: TOWARDS A LOCAL INDUSTRIAL POLICY FOR DRIVING PRO-POOR GROWTH AND A PEOPLE-CENTRED ECONOMY
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EKURHULENI: TOWARDS A LOCAL INDUSTRIAL POLICY FOR DRIVING
PRO-POOR GROWTH AND A PEOPLE-CENTRED ECONOMY
Christian M. Rogerson
1. Introduction
The metropolitan municipality of Ekurhuleni is based upon what historically has
been known as the East and/or Far East Rand. Unlike other metropolitan
municipalities it does not represent the extension of an existing city but instead
represents the amalgamation of several long-established towns (Machaka and
Roberts, 2004). The five East Rand towns of Alberton, Benoni, Boksburg
Germiston and Kempton Park have been merged with the three Far East Rand
towns of Brakpan, Nigel and Springs. According to SACN data (2004) the
combined Ekurhuleni currently is the fourth most populace of South Africa’s six
metropolitan municipalities. Although a separate municipality, Ekurhuleni is
functionally part of a much larger urban-economic system that spans nearly all of
Gauteng and beyond. Together with Johannesburg, Tshwane (Pretoria), Mogale
City (Krugersdorp) and Emfuleni (Vanderbijlpark-Vereeniging), Ekurhuleni is an
integral part of a “virtually continuous urban ‘extent’ of 8.6 million people” (SACN,
2004, p. 24). Ekurhuleni is distinguished by the fact that within its boundaries,
population growth has been expanding at an annual average rate of 4.12 percent
which is the highest growth rate recorded of all the six South African metropolitan
municipalities (SACN, 2004). Equally significant is that Ekurhuleni is marked by
higher unemployment rates than those recorded in other major urban centres;
based upon 2000 census data the unemployment rate in Ekurhuleni was 40
percent (ANC Gauteng Province, 2004, p. 58).
Ekurhuleni encompasses what is claimed to be “the largest concentration of
industrial activity in South Africa, and in sub-Saharan Africa” (Machaka and
Roberts, 2004, p. 2). Indeed, the former East Rand has been described variously
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
1as South Africa’s ‘national industrial workshop’, ‘the workshop of Africa’ or as
‘South Africa’s Ruhr’ (Bloch, 1993; Centre for Development and Enterprise, 1997;
Machaka and Roberts, 2004). Historically, the region existed as “a bastion of the
mining industry” prior its emergence during the 1970s as the national industrial
heartland (Nieftagodien, 2004, p. 2). The industrial base of the region benefited
enormously from the apartheid economic boom period of the 1960s, including the
growth of military production which was heavily concentrated in the East Rand.
From the mid-1970s, however, the manufacturing economy entered a phase of
protracted decline. Triggered by decline in mining, a major downtown in the local
manufacturing economy occurred from the mid-1980s with a hollowing out of the
industrial base resulting in the loss of a total almost 100 000 jobs between 1989-
99 (Rogerson and Rogerson, 1997, 1999; Rogerson, 2000, 2004).
Despite this bleeding of manufacturing employment, the SACN (2004) study
confirms that manufacturing still remains the core of Ekurhuleni’s formal sector
economic activity. Indeed, there is evidence that since 1996 there has been a
turnaround in the fortunes of the local manufacturing economy with a recorded
increase of 30 000 new manufacturing jobs between 1996-2001, an increase of
26 percent (ANC Gauteng Province, 2004, p. 7) As indexed by the total gross
value added by key economic sectors, the three leading drivers of the Ekurhuleni
economy are manufacturing (28.8 percent), financial, insurance, real estate and
business services (20.9 percent), and community, social and personal services
(13.5 percent). Three large sub-sectors account for nearly two-thirds of value-
added (2002) in the critical local manufacturing sector (Pogue and Maharajh,
2004, p. 13). These three essential sub-sectors of Ekurhuleni’s manufacturing
economic base are metal products, machinery and household appliances (34.2
percent), fuel, petroleum, chemicals and rubber products (20.2 percent), and
food, beverages and tobacco products (10.5 percent). Of significance is that
gold-mining, which Nieftagodien (2004, p. 3) observes “contributed hugely to the
initial transformation of the East Rand from a sparsely populated and
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
2undeveloped region into one of the country’s leading economic zones”, has been
reduced to the point that by 2002 it contributes only 1.8 percent to total gross
value added.
Against this brief background portrait of the historical economic development of
Ekurhuleni, the objective in this paper is to present an analysis of the current
state of local economic development practice and policy. Methodologically, this is
a desk-top study which draws necessarily upon both primary and secondary
sources relating to LED in Ekurhuleni1. In the first section of this report, an
attempt is made to provide a picture of the broad LED vision and strategy as put
forth in official LED statements approved by the Ekurhuleni municipality. It is
argued that this ‘people-centred’ approach is viewed in policy rhetoric as
embodying a strong pro-poor focus. The absence is noted, however, of a clear
and focussed economic strategy for driving the agreed LED vision of creating “an
inclusive wealth generating local economy” (Ekurhuleni Municipality, 2003a).
Accordingly, in the second section, attention shifts to review the key dimensions
of an analysis of the competitiveness of the Ekurhuleni local economy. This
strategic economic analysis offers an alternative “local economic development
model to effectively implement an industrial policy for broad-based industrial
development and employment creation” (Machaka and Roberts, 2004, p. 2). It
will be argued that within this second stream of writings on LED in Ekurhuleni
there are embodied several potentially important ‘lessons’ or ‘best practices’ for
evolving local pro-poor growth strategies in South Africa.
2. Towards a People-Centred Economy
1
As of end-2004 the Ekurhuleni municipality had not responded to and completed the survey questionnaire
for the World Bank-Netherlands Partnership Program. It was the only one of the six metropolitan
municipalities that failed to respond.
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
3The Ekurhuleni official policy, strategy and implementation framework for LED
was presented for adoption to the Council in 2003. There are three components
to the documentation. The first is the Ekurhuleni Local Economic Development
Policy (Ekurhuleni Municipality 2003b), the second is the Ekurhuleni Economic
Strategy (Ekhuruleni Municipality, 2003c) and, the third is the LED Policy and
Strategy Implementation Framework (Ekhuruleni Municipality 2003a). In this
section the key themes as represented in these official policy statements are
reviewed and analysed. The overriding theme is developing ‘a people-centred
economy’, a theme which derives from the title of the earlier documentation on
LED policy that was drafted in 2002 (COPAC, 2002)
As stated earlier, the LED vision for Ekurhuleni is viewed as that of creating an
“inclusive wealth-generating economy” with the LED mission statement given as
“To facilitate a conducive environment where all can participate in a wealth
generating local economy by focusing on economic growth, empowerment and
transformation” (Ekurhuleni Municipality 2003a). The municipal local economic
development policy reflects the strong imprint of the Reconstruction and
Development Policy with several long quotations presented from the RDP
document to justify the directions offered for LED.
The LED policy framework for economic empowerment and transformation is
explicitly pro-poor in every respect. Ten policy thrusts are identified which are
based upon eight so-termed ‘development principles’. These are listed in Tables
1 and Table 2. Together Tables 1 and 2 encapsulate the key components of
Ekurhuleni’s LED Policy.
Table 1: Key Features of Ekurhuleni’s LED Policy (Source: Ekurhuleni
Municipality, 2003b)
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
4POLICY THRUST KEY OBJECTIVES INTERVENTIONS
Local Production for Local *Create and facilitate an * Set up industrial hives
Need environment within which people *Promote SMMEs and
are able to achieve sustainable micro-enterprises
livelihoods *Facilitate the participation
*Assist individuals and of women in local
communities to increase income production and services
and wealth *Stimulate and encourage
* Facilitate production projects to beneficiation of local
eradicate poverty mineral and manufactured
* Increase local production to products
meet local needs and eradicate *Develop and sustain all
food security economic sectors
* Facilitate conditions at local
level to ensure sustainable LED
A Cooperative Movement to *Create and facilitate * Set up ongoing linkages
Represent Community- mechanisms for sustainable with community
Based Interventions in the livelihoods to be achieved organisations involved in
Local Economy * Promote Asset formation and economic activity
asset management amongst the *Facilitate the involvement
poor and marginalized of communities in all
*Realise BEE economic programmes of
*Provide the environment for the metro
skills development, skills *Encourage the initiation
acquisition and diversification of and continued
skills development of coops
*Provide a voice to organised *Investigate the potential
groups in the policy process to set up municipal worker
* Link the marginalised with the coops on key service
mainstream economy delivery channels
*Develop the socialised third *Develop linkages with
sector national and provincial
programmes to facilitate
access to financed,
information and marketing
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
5POLICY THRUST KEY OBJECTIVES INTERVENTIONS
of products
*Review local legislation to
include coops.
A Skills Development *Enhance the access of local *Facilitate the linkages
Network people (employed and between the local skills
unemployed) to acquire skills development needs and
development and increase the the national and provincial
skills base through diversification programmes
of skills *Develop a skills
*Provide training, mentoring and development network
support for the developing comprising all training
economic enterprises institutions to consolidate
*Create a system that can the capacity at local level
respond to plant closures and and to align vocational
industrial decline such that training and skills
workers are given the option of development to the needs
training to enable self- of the local economy
employment or a smooth * Facilitate the supply of
transition into new employment labour for projects and
*Organise the supply side of the service delivery
labour market to meet demand. programmes of the metro
through organizing the
unemployed into skills and
technology coops.
Develop and sustain urban *Eradicate food insecurity and *Ensure that land in the
and commercial agriculture poverty Metro is accessible to
to build food security *Ensure sustainable land use residents interested in
*Promote sustainable livelihoods carrying out agricultural
activity
*Facilitate urban
agricultural friendly
legislation
*Facilitate linkages to
finance, information and
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
6POLICY THRUST KEY OBJECTIVES INTERVENTIONS
production methods with
national and provincial
government.
*Encourage organic
farming
*Support the development
of fresh produce markets
in local communities to
ensure that agricultural
produce can be sold
cheaply
*Facilitate linkages to
export markets
*Increase the efficiency
and broaden the base of
access and ownership of
the municipal market
Promote Waste Recycling *Create Sustainable communities *Stimulate approaches to
and Reusable Energy *Assist poor households bring value added waste
down energy consumption costs processing
*Provide alternative sources of *Encourage the use of
energy renewable energy through
*Create sustainable livelihoods establishing coops
*Contribute to local production for *Encourage the
local need establishment of
renewable energy coops
Build Local Development *Increase the savings base of *Encourage local savings
Capital local communities in communities
*Provide safe and secure *Facilitate access to
institutions in which people can finance
save and borrow money to meet *Set up a co-operative
their development needs bank for development
*Build a pool of finance to support projects to save and
self-reliant development in local access small loans
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
7POLICY THRUST KEY OBJECTIVES INTERVENTIONS
communities *Set up a local LED fund
*Create institutions that can with local businesses to
house technical experts for co- support local development
operative development and
expansion.
Ensure Participatory and * Mainstream the IDP process in * Design and foster an IDP
Integrated Planning local governance process that plans LED
* Limit the technocratic and top and fosters participatory
down approach to development budgeting
*Develop a system of * Ensure that needs,
participatory budgeting priorities and resources
*Give communities control over are planned for
development * Empower and capacitate
*Decentralise resources and participants in the process
power in the development
process
*Strengthen the
public/Community partnership for
development
*Develop a sound base of
information on the regional
economy and data on the impact
of LED projects and policies
Maintain linkages with the *Contribute to the formation of *Facilitate, engage and
industrial base development capital in ‘township negotiate with local
economies’ businesses about their role
*Assist and enable skills transfer and contribution to overall
and reskilling LED strategy
*Foster local entrepreneurship *Devise strategies for each
*Reduce factor costs for sector of the economy
industries *Ensure that local
*Promote job retention within businesses are lead (sic)
existing industries. and positioned within the
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
8POLICY THRUST KEY OBJECTIVES INTERVENTIONS
LED development strategy
to make commitments to a
common vision for the
regional economy
*Facilitate the
implementation of national
government trade
incentives
*Create opportunities for
local businesses to make
contributions to loan
guarantee funds, venture
capital for SMMEs, skills
development programs,
mentoring programs and
incubation facilities for
grassroots entrepreneurs.
Facilitate and Grow SMMEs *Promote black economic *Develop linkages wit
empowerment national programmes of
*Develop a support environment DTI, Ntsika and Khula on
for SMMEs finance and information.
* Establish linkages between *Facilitate a local SMME
existing big businesses and council
emergent enterprises *Supply information about
*Create jobs business opportunities
*Contribute to poverty eradication *Provide one-stop centres
*Provide women, youth and to deal with technical
disabled with entrepreneurial advice and support
skills *Set up incubators to
assist emergent
entrepreneurs to establish
their enterprises
*Support the growth of
informal traders into small
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
9POLICY THRUST KEY OBJECTIVES INTERVENTIONS
businesses
*Provide infrastructure,
technical support and
business advice and
access to finance to
informal traders
Affirm Local Procurement * Promote BEE *Promote a local buy ethic
* Support SMEs and other forms *Ensure transparency in
of collective enterprise the Metro procurement
*Contribute to state-led economic process
transformation *Establish and implement
*Allocate resources to the a percentage quota for
township economy start-up businesses
*Build resources and capacities in *Ensure that procurement
previously disadvantaged procedures are friendly
communities. and accessible to locals,
coops and SMMEs
The above ten policy thrusts are underpinned by the eight development
principles which are shown on Table 2.
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
10Table 2: Development Principles of Ekurhuleni’s LED Policy (Source:
Ekurhuleni Municipality 2003b).
DEVELOPMENT PRINCIPLE
1. A People Focus – Putting the Poor First
2. Recognition of the Differences Between Communities
3.Recognition of the holistic nature of people’s lives
4. Linking the micro with the macro
5. Accessible Institutions and processes
6. Mainstreaming the environment within the holistic approach
7. State-led partnership approaches between communities, labour and the
private sector.
8. Learning to listen
Overall, it is evident from Tables 1 and 2 that there is an over-riding pro-poor
focus in the LED Policy of Ekurhuleni. The key underpinning development
principle of “putting the poor first” is reflected directly in many of the policy thrusts
for creating a people-centred economy, not least the heavy emphasis accorded
to self-reliance, BEE, disadvantaged groups, the empowerment of women, youth,
the development of co-ops and the socialised third sector.
The Ekurhuleni Economic Strategy represents the second component of the
local economic development framework. It is argued that whilst the LED
framework “addresses interventions to close the poverty gap, the economic
strategy “points to how the Metro could organize itself and all its services to
realize improved service delivery and capacitation in the economy” (Ekurhuleni
Municipality 2003c). This focus derives from the belief that “the local
government’s ability to act in the economic arena is limited” (Ekurhuleni
Municipality 2003c) and that the “principal role of the Municipality in sustaining
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
11the economy is to provide core infrastructure for day-to-day economic activity”.
More specifically, the core infrastructure in terms of provision of electricity, water
management and waste disposal is viewed as “the backbone of the economy”
(Ekurhuleni Municipality 2003c) and it is re-stated that “the municipality’s core
business is the provision of services” (Ekurhuleni Municipality 2003c).
Beyond infrastructure, it is asserted that another key dimension to growing the
local economy is “developing an integrated approach where the Metropolitan
area is consolidated into one economic region, taking into account all the
imbalances and inequities in wealth, skills and access to infrastructure”
(Ekurhuleni Municipality 2003c). The absence of any economic analysis in the
economic strategy is brushed side in the sweeping belief that “the market-led
economy will continue to grow” and re-assertion that local government’s role is to
“restructure itself to play the leading role in facilitating the implementation of
national programs on economic development, in particular Black Economic
Empowerment, Co-operative forms of ownership, and the economic
empowerment of women”.
A number of strategic interventions are proposed in order to realise the economic
strategy with the major targets of interventions being “to create jobs in small and
micro enterprises and in cooperatives”; to diversify the economy by providing for
local needs and to attempt to increase export revenue, as well as to provide
ownership opportunities for black people and women and the poor”. Nine sets of
strategic interventions are outlined.
1. A focus on administered pricing and tariffs to ensure wider affordability of
services
2. Ring-fencing of revenue from electricity, water, sewage and refuse removal to
ensure that surpluses improve the reach and range of these services
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
123. Development Zones to be established to cover the entire region with no area
left out
4. Harnessing conditional grants for supporting infrastructure, public works, skills
development, transport and tourism
5. Mainstreaming the informal economy and women – it is argued that a “key
thrust in economic regeneration is the formalisation of informal businesses in
order to move them out of subsistence survival to production of adequate
surpluses”
6. Procurement needs to be local and in support of economic growth with set
targets to ensure 20 percent of all procurement is with start-up businesses.
7. Service levels to business and industry linked to retention plans – quality of
services provided to business and industry is to be “directly linked to the
willingness to remain in the region”.
8. Establishment of a register of all formal and informal businesses.
9. Developing and sustaining economic sectors
(a) Agriculture – support to build food security and restructure local state assets
in terms of the municipal fresh produce market in order to realise BEE.
(b) Mining – establish a mining forum and job creation projects to clean up the
environment, including developing profitable business opportunities through
recovering gold and other materials in surface revenue deposits
(c) Manufacturing – needs to be retained and supported/facilitated to become
more competitive in order to tackle the crucial problem of rising rates of
unemployment. The main role of local government is seen as “engaging with
industry to achieve its developmental objectives by anticipating interventions that
industry would make, gather information, analyse the strategic path of
manufacturing and coordinating activities and initiatives of institutions engaged in
industrial development”. Under the heading of the manufacturing support there is
also a focus on the upgrade and revitalisation of commercial areas in terms of
township infrastructure and support for skills development.
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
13(d) Services – this sector needs to respond to HIV-AIDS and care work and to
respond to the challenge of commercialising home skills such as cleaning,
catering and domestic skills as important linkages to tourism.
Finally, the LED Policy and Strategy Implementation framework provides detail
on Key Performance Areas for LED in Ekurhuleni (albeit no information on details
of monitoring) and on implementation mechanisms to reach objectives and
deliver KPAs (Ekurhuleni Municipality 2003a). The implementation mechanisms
focus on the establishment of sets of internal inter-departmental forums and
external sectoral programmes to involve other stakeholders, such as the private
sector. Table 3 lists the KPAs as indicated in the municipal policy and strategy
implementation framework.
Table 3: KPAs for Ekurhuleni LED (Source: Ekurhuleni Municipality 2003a)
Key Performance Area Issues for Monitoring
Provide economic friendly municipal * Facilitate review and development of
procedures and regulations economic activity friendly by-laws
* Provide municipal procedures that promote
economic activity
Develop and sustain all economic sectors * Facilitate the regeneration of the
manufacturing sector and other sectors
* Monitor the growth of tourism and the
linkages to the sector
* Facilitate the growth of agriculture
* Facilitate the development and growth of the
IT sector
* Monitor the performance of various sectors
* Facilitate the reskilling of the labour force
* Facilitate the regeneration of industrial areas
and CBDs and upgrade of residential areas
*Input into the spatial plan
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
14Key Performance Area Issues for Monitoring
Mainstream all economic activity into the formal *Facilitate the acquisition of economic skills
economy *Facilitate the utilisation of coops in the
municipality’s procurement system
* Facilitate the growth and contribution of
SMMEs
Align procurement processes for economic *Monitor the implementation of the preferential
development procurement policy to support economic
development
Promote and market investment for sustainable *Develop investment incentives packages
job creation *Market Ekurhuleni as a friendly investment
destination
Facilitate the growth of Co-operatives * Promote credit and savings unions
* Facilitate the development of financial
services co-ops
*Encourage the community to form coops
Assess the effectiveness and efficiencies of * Facilitate the review of all utilities
Utilities * Ensure revenue generation in utilities
* Monitor the efficiencies of utilities
In reviewing the Ekurhuleni policy framework for LED it is apparent that pro-poor
LED is explicitly viewed as the major focus of activity for local government. What
is entirely missing, however, is any economic driver for this LED strategy and
especially for the crucial manufacturing sector. Rather, the municipality sidesteps
this issue with the argument that provision of infrastructure is its core mandate
and the faith that “the market-led economy will continue to grow”. In the final
section of this report attention turns to a body of detailed work and analysis which
seeks to ensure that the market economy is sustained through the development
of a local industrial policy for Ekurhuleni.
3. Towards a Local Industrial Policy for Driving Pro-Poor Growth
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
15The process of seeking to refine a more nuanced economic strategy for
Ekurhuleni that addresses the metro’s core economic base – the manufacturing
sector – began in late 2002. It was aimed at “consulting with manufacturers with
respect to how local government can assist to improve productivity and bring
about economic growth as well as job creation” (Ekurhuleni Municipality 2003d).
During late 2002 the municipality’s LED department launched a study to assess
the economy and to devise a long-term economic sustainability strategy and in
2003 entered a partnership with the Corporate Strategy and Industrial
Development Research Project based at the School of Economic and Business
Sciences, University of the Witwatersrand in Johannesburg. Under this
partnership a series of studies were carried out to assess the performance of
firms as well as the strengths and weaknesses of various industries. The results
of this work have “informed the process of developing competitiveness in the
economy and increasing the rate of investment” (Ekurhuleni Municipality 2003d,
p. 1).
In terms of identifying best practice the methodology of the research is of
considerable significance. The analysis is anchored on understanding enterprise
competitiveness as based upon a range of factors which relate to firms
production processes, use of technologies, supply linkages and marketing and
distribution. The theoretical lens of the commodity or value chain framework is
applied in order to examine the progressive value addition from raw materials
through to finished products and the production capabilities and competitiveness
conditions at each stage. Value chain analysis highlights the importance of
linkages and raises questions of governance by firms at different levels in the
chain (Kaplinsky and Morris, 2002; McCormick and Schmitz, 2002).Issues of
governance further relate “To the organisation of inter-firm relations, including the
provision of common services, in the nature of business associations, and in
government’s industrial policy frameworks” (Macjaka and Roberts, 2004, p. 3).
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
16The approach of value chain analysis is seen as implicit within the national
Department of Trade and Industry’s (2002) industrial policy framework document
which stresses the importance of related activities, such as logistics, and speaks
in terms of the language of value matrices. Moreover, a significant role also is
specified for LED in the implementation of national industrial policy (Machaka
and Roberts, 2004). Overall, therefore, a significant contribution here is made in
terms of the framework used for interpreting and seeking to enhance
competitiveness and job creation within the Ekurhuleni local economy. It is
asserted that “Understanding the nature of industry within Ekurhuleni ultimately
creates an enabling environment in which local government can embrace its role
in facilitating local economic development” (Ekurhuleni Municipality, 2003d, p. 6).
In the adopted framework “local economic development and industrial policy can
be approached through understanding: firm production capabilities and
performance; firms strategies and decisions (such as around training); the nature
of inter-firm relationships; and the role of local government” (Machaka and
Roberts, 2004, p. 4).
The approach was applied through undertaking a detailed survey of
manufacturing firms in Ekurhuleni. In addition a series of sectoral studies were
pursued (Phele and Steuart, 2004; Roberts, 2004; Taka, 2004) which were
complemented by focussed issue investigations on procurement (Chabane,
2004) and innovation through technological change (Pogue and Maharajh, 2004).
Among the key findings, conclusions and recommendations that derived from this
survey were the following:
• The local economy is dominated by relatively labour-intensive rather than
capital-intensive industries. Historically, national industrial policy has
focussed on the strategic needs of the latter and neglected the
development of downstream manufacturing, which represents the
predominant local industrial base (Machaka and Roberts, 2004).
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
17• The existing local strengths to be built upon are in sectors or niches within
plastic products, foundries and mining machinery (Ekurhuleni Municipality,
2003d; Phel and Steuart, 2004; Taka, 2004).
• Employment growth and output are strongest in a group of dynamic or
successful firms, the majority of which were medium-sized (Ekurhuleni
Municipality, 2003d).
• Key features of successful firms include, inter alia, a tendency to export, to
focus on quality and delivery time for competitiveness, to invest in
improving their capabilities in terms of both upgrading machinery and
equipment as well as investing in training, accessing the national skills
development levy and using other government incentives, especially the
SMEDP (Ekurhuleni Municipality, 2003d).
• Education and skills levels in the local economy are of concern and skills
development is viewed a strategic priority. The most dynamic firms are
building production capabilities through training and are not held back by
the apartheid legacy of poor education levels (Machaka and Roberts,
2004).
• The core support requirements from local government are identified
(especially by better performing firms) as the improvement of public
transport (in order to allow split factory shifts) and more reliable public
services (especially uninterrupted electricity supplies) (Phele and Steuart,
2004; Roberts, 2004).
• The need for establishment of local technical centres under the Advanced
Manufacturing Strategy points to an important coordinating role to bring
together industry and relevant branches of government to identify suitable
locations (Taka, 2004). Technical centres would strengthen the local
capacity of enterprises to take international products and flexibly reverse
engineer them such that they are South African appropriate (Ekurhuleni
Municipality, 2003d)
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
18• The level of national government capital spending on infrastructure is a
critical determinant of the local economic health of especially the metal
products and machinery sectors (Roberts, 2004).
• For machinery and equipment firms a partnership needs to be coordinated
by local government to ensure coordination of national industrial policy
and the Mining Charter with plans for local sector and technology support
centres ((Ekurhuleni Municipality, 2003d).
• A critical challenge for local government is to provide appropriate
institutions to support firm learning, skills upgrading and technological
development (Machaka and Roberts, 2004).
• Specific support is required to nurture the existing sectoral strengths in
Ekurhuleni’s industrial economy with “interventions to support firm
capabilities, training and collective learning in these sectors, in conjunction
with the building of more coherent industry organisations” (Machaka and
Roberts, 2004, p. 17).
4. Concluding Remarks
As a result of the historical context of the amalgamation of several separate
municipalities, currently institutional development at the metropolitan level is
weak across Ekurhuleni (Machaka and Roberts, 2004), more especially as
compared to South Africa’s other five metropolitan municipalities (SACN, 2004).
Nevertheless, LED policy development in Ekurhuleni is of considerable interest in
particular for its overwhelming pro-poor stance for the making of a people-
centred economy.
The major gaps and weaknesses of the proposed local economic strategy for
Ekurhuleni currently are being addressed through an important focus using a
value chain framework designed to unpack the obstacles and opportunities of
local enterprise performance. This approach is important in terms of generating
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
19the bases for developing a local industrial policy in Ekurhuleni which incorporates
the ‘new determinants of competitiveness’. The framework and value chain
approach as utilised in Ekurhuleni has been acknowledged by the national
Department of Trade and Industry as requiring that for restructuring or supporting
industrial agglomerations “three key platforms need to be in place, those for
developing skills, infrastructure and technology” (Zalk, 2004, p. 8). These critical
ingredients for a pro-poor growth strategy require “high quality institutions and
coordination of policy and implementation efforts, both at the level of the national
economy and at the sub-national level” (Zalk, 2004, p. 8).
Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
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Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
24Case Study prepared for the World Bank-Netherlands Partnership Program Evaluating and Disseminating
Experiences in Local Economic Development (LED) Investigation of Pro-Poor LED in South Africa, 2005.
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