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LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA

- THE CASE OF CATO M ANOR -

January 2003 Etienne Nel Trevor Hill Wim Eising1

Professor Etienne Nel is Head of Geography, Geography Department, Rhodes University, Grahamstown. Dr Trevor Hill is Senior Lecturer, Discipline of Geography, School of Applied Environmental Sciences, University of Natal, Pietermaritzburg. Wim Eising is Manager LED at Cato Manor Development Association and Technical Assistant for the European Union to the CMDA.

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

TABLE OF CONTENTS:
1 INTRODUCTION 1 2 3 4 4 5 5 5 6 7 8 9 10 12 12 12 15 15 16 17 19 19 21 23 24 24 25 27 29 30 31

2 THEORETICAL CONTEXT 2.1 Overview of LED Internationally A Broad Strategic Approaches to Local Economic Development: B Major Categories of LED Interventions: C Major LED Programmes: D New City Foci: 2.2 LED in South Africa A Policy Context B South African Examples C Evaluating Developmental Local Government (In South Africa) 2.3 Area-focussed LED 2.4 Contextualising the Cato Manor Experience 3 3.1 3.2 3.3 LOCAL ECONOMIC DEVELOPMENT IN CATO MANOR Introduction The LED Objectives and Operational Principles in Cato Manor Core LED Activities A Community Development And Co-Operatives B Training And Financial Support C Production And Retail Provision And Support D Tourism Promotion And Intuthuko Junction E Key Facets Of The LED Programme 3.4 Assessment 4 LED LESSONS FROM THE CATO MANOR EXPERIENCE 4.1 Lessons A Strategic Approach To Project Design B Project Design And Vision C Operational Strategies D Project Management E Project Implementation 5. REFERENCES:

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 have been 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 country both urban and rural were 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 the scale 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

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 paucity of 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 Manor can be situated (Section 2), to detail, analyse and critique the various LED interventions which have taken place in Cato Manor (Sections 2.4 and 3), and to extract the key lessons of the experience both positive and negative so as 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).

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
2

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

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

the World Bank (2000, p.1): LED is the process by which public, business and nongovernmental 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 brings economic 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: 2.1 - 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 (Section 2.4).

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 the nation state, compel a local-level response, economic change within localities, varying from de-industrialization to localinnovation which requires local leadership initiative, response and direction, and the dubious results achieved by macro-level planning and regional development 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 crises especially 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

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 support 2. Land and building development 3. Information and marketing assistance 4. New planning and organisational structures 5. Training and Employment (Bovaird, 1992; Clarke and Gaile, 1992; Lever, 1992, 1993; Reese, 1993a, 1993b; SANCO, 1995).

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 growth 2. Support for new enterprises 3. Improving the local investment climate 4. The promotion of inward investment 5. The provision of both hard and soft infrastructure 6. Sector support for identified lead sectors 7. Area targeting to address unique challenges 8. Poverty reduction to ensure equity and 9. 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 direct production activities, usually in manufacturing. 2. Centres of consumption where the focus is on service sector employment and tourism. 3. Centres of information processing and corporate decision-making. This is often quite a limited category which concerns the larger, more attractive investment locations. 4. Centres for the reception of central government funds i.e. centres which become 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 5

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 established or 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 1996 the 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 to generate 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 participatory approach to integrate economic, sectoral, spatial, social, institutional, environmental

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 assist municipalities 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 governments Urban 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 draw in 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 Directorate respectively. 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 towns subjected to severe economic stress. These include mining towns, such as in the Free 7

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 places such 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 the active change agent 2. NGO / Community-led LED, where often in the absence of other logical economic 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 Initiatives there are several examples of 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 or external 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 Economic Affairs 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;

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

In many ventures, particularly in smaller centres, there is only limited private sector involvement; What is being achieved is the provision of facilities of a global standard in certain localities versus constrained achievements in the poorer areas; The politicisation of development is an issue where individual interests override the greater common good; Projects appear to move through a life-cycle which often sees the demise of once promising endeavours; There is a clear problem of grant dependence and the limited sustainability of many projects; The economic aspects of projects, especially the marketing of products are often undersold in planning and often threaten project sustainability; A question needs to be raised as to whether local authorities should be driving economic 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 required to 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 of high 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 addressed or 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:

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

enterprise or empowerment zones in the USA, UK and France, and inner-urban renewal areas common 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 sector usually 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 Corporations 3 frequently operate in deprived areas and tend to have quite specific foci such 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 purposecreated LED council has been operational since 1997 in an endeavour to address the problems 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 the general 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

Particularly 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 two dimensions market-led and market-critical (i.e. community focussed). This is 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 the internationally identified sub-divisions of LED, namely; 1. Financial support 2. Land and building development 3. Information and marketing assistance 4. New planning and organisational structures 5. 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 city development (see page 5, section 2.1 D), Cato Manor only manifests elements of production and consumption (i.e. incipient moves to encourage tourismbased development). Relative to Nels (2001) institutionally based categorization of LED in South Africa, 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 case scenario, 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
3.1

LOCAL ECONOMIC DEVELOPMENT IN CATO MANOR


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 (though justifying 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 of critical 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 selfemployment 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 with CMDAs 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 Provincial Housing 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 direct input 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 selfworth 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 of the 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 sector4, 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 the middle-level downwards to the bottom end of the ladder (Eising, 2002).
Private sector Investment
Investment per project

Tim

Private sector Investment

Programme budget
Subsistence

ee ffo rt

Time effort per project

Subsistence

Small enterprises

Medium enterprises

Small enterprises

Medium enterprises

Target Group

Target Group

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, training etc. Through job creation etc this investment will trickle down to the lower end of the job spectrum.

3.3

Core LED Activities In undertaking LED a range of core activities has risen to the fore during the period of 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 the subsistence vs. more developed businesses.

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LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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, the establishment of Environmental Committees and the establishment of a series of cooperatives (Mulqueeny, 1999). The latter includes the development of the Masimbambane Cleaning Co-operative, the Umkhumbane block making Cooperative, 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 7000 people 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 16

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

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 is clearly 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 the most 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 wideranging 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 facilities for 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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LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

2. Manufacturing Facilities: These range from the retail/manufacturing facilities in the 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 Cato Manor/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 onesixth 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 of infrastructural provision and building development. 4. In parallel with tourism promotion (see D1 below), craft industries are being actively 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/Ntinga MSP, 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 annual small 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 of inter-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 cooperatives is being supported to encourage local production and sales.
5

For this special purpose the key leaders of the Cato Crest Small Business Association have established 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 are the 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 and international) 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 Cato Manor museum, heritage trail and entertainment sites. To actualise these programmes 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 the CMDA 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 areafocussed 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 the community 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 are the 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 as development 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 blackheaded 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, the CMDA, in anticipation of this scenario, will establish: 1. A Durban low-income area development fund, which will oversee the property currently 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 the SED 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 for sustainable 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. As a result, Hindson (2000, p.6) concludes that the CMDP is Durban and South Africas pioneer in large scale, integrated, area-based development at submetropolitan (and sub-council) level. generally positive, community based support, despite the fact that such community 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 different levels. 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 further pursued (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 (in 2003)? 21

LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

sustainability and replicability actually rests on reconstituting the CMDA as an 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 of COMSEC (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 the opportunities 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 difficult process, 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, with the activities of Coke-a-Cola being the most positively noticeable in this regard (Eising, 2002). The support from the Municipal government (City) to the project has so far not 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 be established as soon as possible; external financial and other forms of financial support will remain essential for the foreseeable future and need to be accessed and secured(P. Mtshali, 2000); the key base laid in terms of empowering the community must be strengthened and enhanced; high levels of unemployment and low skills levels must continue to be addressed as a matter of urgency if the area is to be transformed (ImaniCapricorn Consortium, 2000); current projects need to be consolidated and extended wherever possible and the industrial estates and ESC need to become operational as soon as is possible; and the income augmentation projects such as urban agriculture need to become firmly established.

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 of potential 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 is overseen 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 and contained areas and communities, - development overseen by a dedicated Development Agency (Section 21 Company) 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 7

CMDA website: www.CMDA.org.za ; LED SA website: www.LED-SA.org.za This would included issues like best practice key figures for SED projects, like construction costs per m2, Project Management costs per m2 delivered rental space and rental income/ROI for accommodation 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 charts for different types of projects are envisaged to be included.

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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 development agencies, and integration in the development process, which reduces overlap and wastage 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 topdown 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 exclusively bottom-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 key component 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 lowincome areas like Cato Manor, very close links clearly exist between LED and Social Development8 and the two need to be seen as having fundamental linkages. 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. In addition, 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 cooperatives, where the economic objectives (job creation and improving access to finance) coincide with 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 could be helpful. Related issues are: a. Whilst a LED intervention is part of an area-based initiative, it should 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 and successful, it should be encouraged to expand its focus to other areas and residents in order to maximise replication of bestpractice 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 and autonomy must be assured and ideally its long-term existence guaranteed to prevent the destabilizing effects of restricted authority, limited budget and shorttime frame of its existence. 8. LED visions and objectives need to be determined in a manner which is appropriate 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 largescale 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 community capacity, development endeavours must be run on business-like lines. This does 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

Though 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 other articles in this book). 11. Development in a low-income area is not something that can be undertaken on a short-term basis. In areas with low-skills, capacity, resources and a legacy of depravation and disempowerment aggravated in the South African context by the immeasurable impact of inferior education and discrimination generating 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. 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. 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 must always 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 level where they are at, empowering and encouraging them and providing appropriate support to new and pre-existing activities (bottom-up), but it must also encourage 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 and supported. 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 through projects. 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 ensure local 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 to precede 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 skills depravation, 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 in which to ensure economic sustainability. 22. Development projects require good base-line data and needs analyses need to be undertaken in order to correctly identify development interventions and target support. 23. Related to the preceding point, the implementing agency must have a clear understanding 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 an area 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-like fashion in order to operate effectively and deal with external agencies and business in a professional manner. Business-like means, amongst other things, preparing proper annual workplans and budgets, intensive on-going monitoring of expenses vs. budgets, detailed performance contracts with staff and consultants with performance indicators, timeframes and penalties, professional project Return on Investment (ROI) calculations to select projects with highest impact (financial, economic), and ensuring maximum sustainability. 26. In parallel with the preceding, links with the local authority, external agencies and the business sector must always be maintained on a sound footing. Operating not in a line-function but rather in a programme fashion which allows for integration between key branches of the development agency in a synergistic fashion clearly reaps multiple rewards and ensures efficient and sound operational procedures. This approach includes outsourcing of tasks to other departments, city authorities and consultants11.

10

This form of income creation has long been recognised as planning gain, but here the development agent has captured/capitalised on its structural position as only land owner. It could be argued that such monopolistic position is rare in development. Planning Gain is another way to tax speculation gains and may be an appropriate tool in some cases. 11 E.g. Economic Hive: CMDA LED does need analysis, project definition, project packaging, set up Steering Committee, community communication/preparation, project leadership, TOR for research consultants. Then CMDA Construction department (Public Buildings) tenders for construction management contract, and performs Project Management under supervision/TOR of the LED project leader, who has the final project responsibility. Construction Dept outsource design, QS and physical construction to external companies

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27. Critical for the success of such development programme is the ability of the implementing agency to appropriately deal with political and other external power issues, both at council level and in the target community. At council level the main issue is the role of line departments and senior officials. In the community the role of councillors and the representation vs. governance by the community are topical issues. Though CMDA has managed to deal with these external power issues to a reasonable extent, these issues have had a significant negative impact on the effectiveness of the organisation and the programme and will have in the near future12. 28. Whilst higher levels of skills training and mentoring can be contracted in, it is important to note that, at the lower end of the spectrum, permanent trainers / community development officers need to be employed. The latter is based on the inability of community members to maintain reliable links with external agencies and the obvious value of trusted, recognized local contact people with whom a long-term relationship of trust and support exists. Employing people at this level, with whom the host community can identify with in terms of culture, language and race is important.

E PROJECT IMPLEMENTATION 29. Regular monitoring, evaluation of and feedback to the programme is important to pursue. In order to do so, one needs to clearly define the expected objectives, purpose, outcomes and indicators of the programme and its projects. A helpful tool would be the internationally accepted Logical Framework method. 30. Local assets such as crafts, culture, tourism potential and heritage and history should be promoted for their cultural significance and tourism/ economic potential. 31. Multi-level skills development and training must be striven for, which addresses the needs of recipients, but which also equips them for employment. Parallel processes of supplying or assuring access to work / retail /manufacturing space, job placement and training with firms are equally essential. 32. Economic infrastructure projects are important for LED. The following requirements apply: a. It must be affordable for potential tenants; b. It must be well located relative to transport routes and population concentrations; c. Ownership and Facility Management must be arranged and role of community partners enhanced in this regard; d. Operational subsidies are often necessary in the first years;
12

See other paper in this book for an elaboration on the issue of community participation and governance.

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LOCAL ECONOMIC DEVELOPMENT IN A LOW INCOME AREA - THE CASE OF CATO M ANOR

e. It must be based on a community needs analysis; f. Proper marketing to potential tenants (in the community) must be undertaken; g. Strong project management/leadership is needed to oversee the design, construction and operation of such facilities. 33. Basic Economic Life Skills training, focussing on increasing ones understanding of basic principles of life, in particular on how to improve household expenditure patterns, is a crucial element of SED programmes. 34. Though outsourcing of tasks to external role-players/consultants is an effective management model13 (CMDA is mostly a control centre rather than performing direct implementation!), development agencies must be careful not to outsource too many activities. Local communities often dont have the ability to maintain links with outside agencies and an in-situ development agency, by contrast, is a logical and semi-permanent point of continued support and advice. Core activities (e.g. overall project management, strategic planning, evaluation, monitoring and budgeting) and community liaison should remain in the agency, but other activities, particularly those of a short-term or less permanent nature such as training and financing can be outsourced. When an agency decides to outsource, it should focus on strong mentoring and quality control. 35. The reluctance of commercial lending institutions to participate in lowincome areas must be recognized and responded to in an appropriate fashion, as far as is possible. Facilitation in the form of meetings, workshops, and small business fairs and loan incentive schemes could encourage those lending institutions to enter the low-income market. Parallel to this, strengthening of saving clubs and establishing a community-run community bank would also cater for the financial needs of emerging micro-businesses.

5. REFERENCES:
Published Literature:
ANC (African National Congress), 1994: Reconstruction and Development Programme., Johannesburg: ANC. Bovaird, T.,1992: Local economic development and the city, Urban Studies, 29, 3/4, pp.343368. Bruntland Commission, 1987: Our Common Future, World Commission on Environment and Development. Oxford University Press, Oxford.
13

Strong input from the implementing agent is needed, esp. in community communication, and through monitoring and quality control.

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Clarke, S.E. and Gaile, G.L., 1992: The next wave: post-federal local economic development strategies, Economic Development Quarterly, 6, 2, pp.187-198. DPLG (Department of Provincial and Local Government), 2000: A policy paper on integrated development planning, (produced by M. Oranje, P. Harrison, E. Meyer and E. van Huyssteen), DPLG, Pretoria. DPLG (Department of Provincial and Local Government), 2002: Draft Local Economic Development Policy, DPLG, Pretoria. Demaziere, C. and P.A. Wilson, 1996: Local Economic Development in Europe and the Americas. London: Mansell. Dewar, M.E., 1998: Why state and LED programs cause so little economic development. Economic Development Quarterly 12 (1): 68-87. Escobar, A., 1995: Imaging in a post-development era, in Crush, J. (ed.), Power of Development, London, Routledge, pp.211-227. Harvey, D., 1989: From managerialism to entrepreneurialism: the transformation in urban governance in late capitalism. Geografiska Annaler 71B (1): 3-17. Lemon, T. (ed.), 1991: Homes Apart: South Africa's Segregated Cities, Paul Chapman, London. Lever, W.F. , 1992: Local authority responses to economic changes in West Central Scotland, Urban Studies, 29, 6, pp.935-948. Lever, W.F., 1993: Policy instruments in West Central Scotland and their local authority context, in Meyer, B.P. (ed.), Comparative Studies in Local Economic Development. Westport: Greenwood Press, pp. 69-83. Mufamadi, F.S. (Minister for Provincial and Local Government), 2001: Keynote address at the African Cities in Change Conference, Johannesburg, 15 October 2001. Nel, E.L., 1994: Local Development Initiatives, a new development paradigm for urban areas an assessment with reference to Stutterheim, Development Southern Africa, 11, 3, 363378. Nel, E.L., 2001: Local Economic Development: A Review and Assessment of its Current Status in South Africa, Urban Studies, 38, 7, 1003-1024. RSA (Republic of South Africa), 1996a: The Constitution of the Republic of South Africa. Act No. 108 of 1996. RSA, 1998: Local Government White Paper, Pretoria: RSA. RSA, 2000: Local Government: Municipal Systems Act, Pretoria: RSA.

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Reese, L.A., 1993a: Categories of local economic development techniques: an empirical analysis, Policy Studies General, 21, 3, pp.492-506. Reese, L.A., 1993b: Local economic development practices across the northern border, Urban Affairs Quarterly, 28, 4, pp.571-592. Rodriguez-Pose, A., Tomaney, J. and Klink, J., 2001: Local empowerment through economic restructuring in Brazil, Geoforum, 32, 459-469. Rogerson, C.M., 1997: Local economic development and post-apartheid reconstruction in South Africa, Singapore Journal of Tropical Geography, 18, 2, pp175-195. Rogerson, C.M., 2000: Local economic development in an era of globalisation: the case of South African cities, Tijdschrift voor Economische en Sociale Geografie, 91, 4, pp397411. SANCO (South African National Civics Association), 1995: Strategies and Policies for Local Economic Development in the New South Africa. Johannesburg: SANCO / Friedrich Ebert Stiftung. Scott, G. and E. Pawson, 1999: Local development initiatives and unemployment in New Zealand. Tijdschrift voor Economische en Sociale Geografie 90 (2): 184-195. Turok, I., 2001: Persistent polarisation post-apartheid? Progress towards urban integration in Cape Town, Urban Studies, 38, 13, pp2349-2377. World Bank, 2000, 2002: http://www.worldbank.org. Local Economic Development Home Page,

Zaaijer, M. and L.M. Sara. 1993: Local economic development as an instrument for urban poverty alleviation: a case from Lima, Peru. Third World Planning Review, 15 (2): 127142.

CMDA Sources:
Brian Stewart and Associates, 2002a: Enhancing Business Performance in Cato Manor, Brian Stewart and Associates, Hillcrest. Brian Stewart and Associates, 2002b: Business Plan: SEDCO, Cato Manor, Durban. CMDA, 2000: Status Report 2000, CMDA, Durban. CMDA, 2001a: Ward 29; Participation Framework Workshop, 1-11th November 2001, CMDA, Durban. CMDA, 2001b: Sanlam Cato Manor Small Business Fair 2001, CMDA, Durban. CMDA, 2002a: Best Practice Submission: Cato Manor Development Project, CMDA, Durban.

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CMDA, 2000b: LED Projects Update # 4, CMDA, Durban. Eising, W,, 2001, Cato Manor Local Economic and Industrial Development Strategy (draft), CMDA, Durban. CSIR, 2001: Implementation Strategy and Business Plan for Cato Manor ESC, CSIR. DELCA Research, 2002: CMDA Business Audit and Business Survey Project: Second Progress Report, Overport. Eising, Wim, 4-6 June 2002: personal communication, Head LED, CMDA, Durban. Garlicke and Bousfield Inc., 2001: Cato Manor Development Project: Structure of Proposed Property Holding Vehicle(s) for Booth Road Industrial Park and Edwin Swales Industrial Park. Hindson, D., 2000: Local Economic Development in Cato Manor: Mid-term Review, CMDA, Durban. Imani-Capricorn Consortium, 2000: Cato Manor Entrepreneurial Support Centre: Feasibility Study. Leamy, M., no date: Cato Manor Guarantee Funds Administrator Questionnaire, CMDA, Durban. Mulqueeny, Judy, 6 June 2002, personal communication, Community Development, CMDA, Durban. Mulqueeny, J., 1999: Process Evaluation of the Home Ownership Education Programme Phase One and Two (Pilot), CMDA, Durban. Marriott Property Services Ltd., 1999: Industrial Development Strategy: Cato Manor, Marriott Property Services, Durban. McIntosh, Xaba and Associates, 2001: Report Back on the Sanlam Cato Manor Small Business Fair 2001, McIntosh, Xaba and Associates, Bishopsgate. McIntosh, Xaba and Associates, 2002a: Best Practices Newsletter, January-March 2002, McIntosh, Xaba and Associates, Bishopgate. Mtshali, P., 2001: Feasibility Study / Research report for Cato Manor small business loans project, 2001, Pat Mtshali and Associates, Durban. Wright, P. of Secprop 118 Investments, 2001: Report on the Institutional and Management Structure and the Financial Feasibility of Heritage Based Tourism Projects in Cato Manor. Silimela, K., 2002, Terms of Reference: Local Economic Development Committee, CMDA, Durban.

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Vaughan, A. and Payne, A., 2000, A Strategy to Mobilise and Develop Small Business in Cato Manor, McIntosh, Xaba and Associates, Bishopgate. Winter, Robin, 6 June 2002, personal communication, ESC, CMDA, Durban. World Education / Ntinga MSP, 2000a: Feasibility Survey report for Craft Merchandising Activity in Cato Manor, Durban. World Education / Ntinga MSP, 2000b: Business Plan Proposal: Sustainable MicroEntrepreneurial Development through Craft Industry, Durban.

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