The contribution of local economic development funded projects in job creation and poverty eradication in Alfred Nzo district municipality

Abstract

Job creation and poverty eradication have been the top priority of the South African government over the past few years and continues to be on the agenda. The government is making numerous efforts to aggressively address poverty levels and create jobs. In 1994 the African National Congress (ANC) led government inherited an economy that had glaring disparities. Most of the important economic resources of the country are concentrated in urban areas, while very few economic activities and resources are found in the rural areas. While about 70% of the country’s poorest people live in rural areas, the abundance of economic resources in towns and cities has led to minimal growth taking place in rural areas. High poverty levels continue to manifest itself in various forms and shapes in communities. The negative effects of unemployment continue to threaten our societal well-being and stability. It is evident that in poverty stricken communities there are limited economic development opportunities and have thus become trapped in a poverty cycle, and economic growth is the only sustainable approach of addressing poverty and unemployment. Local economic development (LED) is but one intervention that could be used to create jobs and eradicate poverty at a given locality. LED has been regarded as an approach towards economic development and growth whereby local people are encouraged to work in collaboration in order to achieve sustainable economic growth, bringing economic benefits and improved quality of life for all community members in a municipal area. LED is an intervention solely based at a local level being driven by local people to realise economic benefits that would improve their quality of life. A qualitative study was conducted at Alfred Nzo District Municipality to assess the contribution of LED on job creation and poverty eradication. The target population included LED managers, Project Practitioners, LED Project Beneficiaries, LED Portfolio Councillors in the Alfred Nzo District Municipality and its Local Municipalities as well as relevant sector departments and Public Entities. The study examined the contribution of LED funded projects in job creation and poverty eradication. The project also assessed the problems, issues and challenges in LED and how they are being addressed. The study found that the implementation of LED in Alfred Nzo continues to be ineffective and confronted with numerous challenges. LED has been viewed as one of the tools for job creation targeted at unskilled and unemployed members of the community. Municipalities seem to be under utilising the Municipal Infrastructure Grant (MIG) and Equitable Share for funding the LED programme. In most municipalities LED is still regarded as an unfunded mandate. Most municipalities rely heavily on grant funding from sector departments and state owned enterprises for LED. A point of concern is the lack of regular and structured discussions on LED issues within municipalities which continue to re-enforce uncoordinated planning, insufficient budgeting and poor implementation of programmes within the municipality. The study noted serious skills shortages within the project beneficiaries which hamper effective implementation of LED projects. These skills include financial management, project management, conflict resolution and business management. These are core skills for the sound and viability of management of LED projects. Access to markets has been raised as an on-going concern for LED practitioners. It is recommended that a change is made from project-based LED to a business-based approach in LED. This would require all LED projects to be registered business entities, be liable for tax and require them to produce sound business plans before receiving grant funding