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Strengthening local economic development policies for poverty reduction in urban cities

Local municipalities around Africa face to varying degrees, the same problems of inequality, unemployment, growing poverty levels, and the daunting challenges posed by global climate change, yet they often have the power to implement the limited provision of basic services to their local communities. These realities are aggravated by international trends and new realities such as urbanization, the technological revolution, globalization, and the increasingly competitive environment globally. The impact of these factors on the economies of cities and towns, in general, is not an exception. A combination of these factors constitutes the new external framework within which local municipalities must address their economic status. Even though municipalities are closer to their local communities, they also have close working relationships with national, provincial, and district structures in terms of securing financial support from the government to carry out their development objectives The new external frameworks is the aspect of the developing economies in African towns and cities, which might be due to several factors that negatively affect their economic status.

The different economies emerging economies are highly defined by market defects, inefficiencies, risk, as well as a lack of an entrepreneurial orientation. This puts a significant burden on the government in terms of fostering economic growth, reducing poverty, and creating jobs. To solve urgent societal issues including excessive unemployment, poverty, and a lack of access to essential services, creative and effective policy measures are required for the growth of local economies. Municipalities are being called upon more and more to act as a bridge between the local and the global, to balance urban competitiveness and poverty alleviation economic development policy, to engage in more open and transparent state-society relations, and to reform intergovernmental relations. Municipalities have a key role in coordinating and promoting local economic development (LED). Municipalities can neither simply focus on providing local services and developing infrastructure, nor limit their involvement with the private sector to regulation through imposing planning restrictions and environmental management rules. Thus, municipalities have become critical role players in the investment decisions of private sector organizations.

Many of the important variables that determine whether a private company decides to invest in an area are the responsibility of municipalities. These include access to development land, the local transport and communications infrastructure, serviced sites, specialized waste disposal facilities, access to trained staff, educational facilities, and housing and recreational amenities to attract and retain skilled staff. In highly competitive developed economies, LED has become a core activity with a significant impact on the local economy and employment. LED policy should balance the need to attract investment with the needs of local communities. The private sector requires a competitive advantage through reduced production costs and enhanced social and physical infrastructure. The municipality should promote this while protecting the environment, stimulating employment, and implementing poverty alleviation strategies. Local economic development serves as a cardinal element for the boosting of local economies, and thereby addresses elevated levels of poverty, unemployment, and inequalities facing Africans and, more importantly, ensures global competitiveness and the integration of the different economies within the global economic context.

There are enormous challenges facing most African emerging economies and their local governments regarding the attainment of both growth and development objectives and targets. Some of the challenges and bottlenecks stem from poverty, unemployment, shortage of skills required to propel growth and development, lack of administrative capacity, absence of sound systems of governance, corruption, and ineffective implementation of economic development policies. These problems chiefly affect the realization of fundamental objectives of developmental local government in terms of the need for maximization of social and economic development and the integration and coordination of local economic development activities and efforts within the sphere of local government. Poverty and inequality in Africa have racial, gender, spatial, and age dimensions (United Nations, 2020). Therefore, as already intimated, the concentration of poverty lies predominantly with Black Africans, particularly women, rural dwellers, and youths. The challenges of state capacity have less to do with a shortage of financial and other resources than with skills and institutional arrangements. These are required to deploy resources efficiently and effectively. Local government faces a twin challenge of resources and skills and systems, a challenge that is invariably met by filling posts with people who do not have suitable skills. Essentially, the perennial problems that continue to stifle the implementation of the local economic development policy in Africa appear to be the following:

  1. The fragmented and specialized planning approach to integrated development plans and local economic development priorities in municipalities

  2. Inadequate skills are required for the implementation of local economic development policies within municipalities.

  3. Inadequate data collection with respect to local economies for LED planning and

  4. The limited resourcing of LED units, structures, and agencies.

In these African emerging economies, many municipalities remain unclear about the meaning of LED and how to implement it, despite the government’s many spins on the topic from Indigenisation Policy, Black Empowerment, and other Sustainable Socio-Economic Transformation policies across the African continent. The issue of non-clarification of roles among the national government, provinces, municipalities, civil society, and the private sector results in different players having distinct levels of understanding and interpretations of the LED policy.

Furthermore, based on personal observation and the strength within the African context, a widely observed phenomenon is that LED is unevenly developed and operationalized within the country. Major divides are glaring in terms of policy development, the institutionalization of LED, and applied practice between the largest, most well-resourced, and capacitated municipalities, on the one hand, and smaller urban centers. Urban municipalities in most of the African countries with emerging economies are thus urged to examine the interrelationships that exist within the growth and development policies of the national, provincial, and local spheres of government. The bottlenecks that stifle the implementation of the local economic development policy within the sphere of local government are also examined. The main lines of their inquiry should rest upon investigating to what extent the LED policy is effectively implemented in the sphere of local government as well as measures to which a bottom-up approach can be implemented considering LED to alleviate poverty.

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