Trade and Industry

Monday, 03 April 2023

Alignment of local economic development and industrial policy

  • Year: 2022
  • Organisation: TIPS
  • Author(s): Neva Makgetla, Saul Levin, Rapula Diale, Itumeleng Mokoena, Mbofholowo Tsedu, Kelello Mashiane
  • Countries and Regions: South Africa

This Working Paper analyses the linkages between industrial policy and local economic development planning in South Africa in terms of both economics and governance. It outlines the role of four groups of municipalities in the economy: the largest metros (Johannesburg, Tshwane and Ekurhuleni, Cape Town and eThekwini); the five secondary cities in Mpumalanga and the North West that depend on coal and platinum, which have seen an upsurge in the past 20 years; the smaller metros and other secondary cities, where the economic picture is more mixed; and smaller towns in commercial farming and historic labour-sending regions, many of which are struggling. It then asks how municipalities can do more to take forward industrial policy. Answering this starts with an understanding of the authority and capabilities of municipalities around economic development, on the one hand, and the nature of industrial policy on the other. The paper considers each in terms of Constitutional mandates and policy aims; the legal framework; and the systems and capacity for engaging with other spheres. It evaluates the District Development Model, initiated in 2019, which prioritises alignment of national and municipal economic strategies through joint planning at district level. It also reviews the spatial programmes of the Department of Trade, Industry and Competition. These initiatives centre on support for special economic zones and, on a smaller scale, for state-owned industrial parks established as decentralisation points under apartheid.  

Case studies of Makhado, Mbombela and uMhlathuze provide a more textured understanding of the lived realities of local economic development planning.