Mbhashe Local Municipality
II. Fire Risk
3.3 KPA 3: LOCAL ECONOMIC DEVELOPMENT This KPA covers the following:-
I. Local Economic Overview
II. Absolute and competitive advantage III. Agricultural development
IV. Economic Infrastructure V. Institutional Framework
VI. Small Enterprise Development VII. Tourism Development
3.3.1 OVERVIEW OF ECONOMIC DEVELOPMENT IN MBHASHE
Mbhashe’s economic size is estimated to be R684 million. The Mbhashe Local economy has a competitive advantage in Agriculture, Tourism, Community Services, Construction and Trade
However, the existing potential in these comparative and competitive advantages has yet to be realized. More needs to be invested in unleashing this potential for LED benefits. While more jobs were realized in the community services, this sector is not a sustainable sector for job creation
The strategic framework for economic development in the Eastern Cape identifies four key areas:-
I. N2 corridor
II. Umzimvubu catchments dam III. Kei rail
IV. Agro-processing
Mbhashe Municipality will benefit most from the Wild Coast IDZ as it will promote and connect fresh produce to international markets. The Wild Coast IDZ currently forms part of a broader, multi-sectoral approach to boosting economic growth in the whole former “Transkei” corridor. This includes the formulation of a sustainable socio-economic development strategy; an integrated development plan and an implementation action plan.
MbhasheLocal Municipality – Review IDP 2015-2016 Page 109
Mbhashe’s economic potential if harnessed can also be used in addressing poverty and meeting the government’s target of halving unemployment and poverty by 2030. Maize milling is one of the projects that Mbhashe is presently working on and is one of the major projects identified by Mbhashe LM and the Department of Agriculture. Large areas of land were left underutilized by farmers who claim that, there’s a lot of machinery needed for them to continue with maize production, and their option is in the bio-fuels industry. The bio-fuels initiative is also a project where Mbhashe could succeed on in creation of employment and fighting poverty.
Participatory Needs Analysis
Key issues identified regarding employment and unemployment needs analysis from the communities.
I. Inadequate access of subsistence farmers to commercial farmers
II. Lack of knowledge of sources of financing of Small Micro Medium Enterprise
III. Large increase on poverty and consequences thereof, including increased crime levels
IV. Non recognition and value of tourists attraction in the identified areas of tourism V. Poor access to tourists sites
VI. Insufficient training and skills development opportunities
VII. Limited market facilities for communities to market local produce and goods
There is a critical need to develop poverty alleviation strategies and mechanisms to engage current communal farmers in productive economic activities. It is important that all efforts be undertaken to facilitate local economic development in the municipal area.
Mbhashe Municipality has a reviewed LED strategy adopted by its council in 2015. The strategy is valid until the end of 2019 and is currently being implemented. This strategy will be revised again in 2019/20 financial year. LED is not a clearly funded competence of local government. Even though there is no consensus on the actual role of local government in economic development, there seems to be adequate guidance in the legislative and policy framework, viz:
National Framework for LED 2014-2019
National Development Plan – Vision 2030
MbhasheLocal Municipality – Review IDP 2015-2016 Page 110
Reconstruction and Development Programme (1996)
South African Constitution’s section 153 states that,
“A municipality must structure and manage its administration, budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community.”
o 1996 Local Government Transition Act
o 1998 Local Government White paper which introduces the concept of developmental local government:
o “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 lives.”
o Municipal Systems Act (2000)
In this piece of legislation the Integrated Development Plan is seen as the key instrument to achieve organic, sustainable local economic development; as well as regulate municipal expenditure in respect of LED and build municipal partnerships for LED.
3.3.2 Regional Industrial Development Strategy The RIDS Strategic Intent is outlined as follows:-
I. To enable all areas in the SA economy to attain their optimal economic potential by facilitating local development embedded in a regional/district through linkages within existing and latent industrial and economic base.
II. To stimulate investments that will promote sustained high growth in a local community
III. To focus on a region’s potential and identify what local stakeholders can and need to do to ensure their local community reaches its potential
IV. To assess a community’s comparative advantage, identify new or existing market opportunities for businesses, and reduce obstacles to business expansion and creation
V. To have an impact on the economic viability districts
VI. To create new jobs, help communities retain existing jobs, help businesses access capital.
VII. To contribute to a broader national framework with a spatial dimension, in order to increase each region’s global competitiveness.
MbhasheLocal Municipality – Review IDP 2015-2016 Page 111
We subscribe to this strategic intent and have systematically designed a programme that will enable us to respond effectively to the challenges of our own economy. As such, we have improved integration of the LED programme with ruling IDP and SDF in order to achieve better spatial economic integration and sustainability in our interventions.
In undertaking this, the IDP takes into account our contributions to regional economy.
Absolute advantage
There are various areas which the municipality feels it have the absolute advantages on;
these range from the following:- I. Crop production
II. Sheep farming III. Eco-tourism
However, these advantages have not been tapped to the fullest.
Comparative advantage / Competitive advantage
There are three areas for investment in the Mbhashe area which have a major economic potential, and those are:-
I. Agriculture
II. Enterprise Development III. Tourism
3.3.3 Other LED Potentials
There are other targeted areas for investment which may have considerable economic potentials in the future, and those are:-