The South African government has worked to establish a legal framework to support decentralised local economic development. It has also begun using a Rural Economic Enterprise Development approach to rural poverty alleviation. What lessons can this provide for local development?

Rural Economic Enterprise Development (REED) aims to develop an institutional framework that promotes enterprise development, economic diversification and innovation in the rural economy, and stimulate links between agriculture and non-farm activities. It stresses the need for local government, the private and not-for-profit sectors, and local communities to work together to develop the local economy.

A report from the Natural Resources Institute in the UK describes the REED approach to local economic development (LED) in the Free State, South Africa. It also analyses five-year integrated development plans in two districts, Dihlabeng and Xhariep, in terms of REED.

In the Free State, there has been little infrastructure development to support small business development initiatives. The rural non-farm economy, which generates a quarter of employment and accounts for 21 percent of the economy, is being affected by migration from rural areas to small towns, where economic opportunities are also limited.

Integrated development plans have the potential to coordinate LED better with other strategies. They provide a legal and regulatory framework for achieving economic growth and poverty reduction. They also clarify the roles, responsibilities and participation of civil society, the government and the private sector in achieving these aims.

The success of integrated development plans in Dihlabeng and Xhariep has been mixed:

Both municipalities’ plans have poverty and economic development as objectives. In Dihlabeng, however, poverty reduction programmes only address the effects of poverty, not the causes, and do not consider this in relation to economic growth. Xhariep’s poverty reduction strategy is more integrated and is the main objective of LED.

Both assign resources for healthcare, social infrastructure, communication, and training, which is critical in poverty relief intervention.

Both districts focus on tourism as a key economic driver, although this has yet to be proven effective. While Xhariep also maintains the central role of agriculture, Dihlabeng focuses on this less and explores manufacturing and services instead.

Effective mechanisms for involving civil society, especially poor people, are missing from Dihlabeng’s plan.

Experience of using the REED approach in the Free State, and lessons from analysing the two municipals’ integrated development plans, highlight the importance of:

• building and developing local resources, assets and services that are relevant to people’s livelihoods needs, including agricultural skills, community networks, the transportation system and storage facilities for agricultural outputs
• decentralising local policymaking and developmental objectives to local/regional government that is responsive to, and supports, poor people’s economic activities
• providing support to municipalities to devise effective policies and programmes
• developing approaches that make it easier to identify local potential and spatial opportunities where assets can be utilised more fully, such as peri-urban smallholdings
• promoting inter-sectoral integration at local level.

Source(s):
‘Fostering Rural and Local Economic Development in the Free State of South Africa’, Working Note, Natural Resources Unit, Junior Davis, Daniela Tavasci and Lochner Marais, May 2006 (PDF) Full document.
Pro-poor Rural Economic and Enterprise Development: A framework for analysis and action (REED) Project pages Full document.
Further details about this research project ‘Rural, economic and enterprise development (REED) - a framework’ can be found on the DFID Research for Development website Full document.

Funded by: UK Department for International Development (Policy Orientated Research Programme – PORP, R8369)

id21 Research Highlight: 11 October 2007

Further Information:
Junior Davis
Natural Resources Institute
University of Greenwich at Medway
Central Avenue
Chatham Maritime
Chatham, Kent ME4 4TB
UK

Tel: +44 (0)1634 880088
Fax: +44 (0)1634 880077/883386
Contact the contributor: junior.davis@btinternet.com; j.davis@gre.ac.uk

Natural Resources Institute, UK

Daniela Tavasci
Department of Economics
School of Oriental and African Studies
Thornhaugh Street
Russell Square, London WC1H 0XG
UK

Tel: +44 (0)20 76372388
Fax: +44 (0)20 74363844
Contact the contributor: dt28@soas.ac.uk

Department of Economics, School of Oriental and African Studies, UK

Lochner Marais
Centre for Development Support University of the Free State
P.O. Box 339
Bloemfontein 9300
South Africa

Tel: +27 (0)51 4012978
Contact the contributor: maraisl.ekw@mail.uovs.ac.za

Centre for Development Support University of the Free State, South Africa

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