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ECONOMIC DEVELOPMENT FRAMEWORK
& STRATEGY FOR CAPE TOWN:
OVERVIEW FOR SA CITIES NETWORK
“THINK TANK” ON CITY ECONOMIC
DEVELOPMENT STRATEGIES
by Ms Kim van Deventer
Director: Economic Development & Tourism
City of Cape Town
18 November 2002
CONTENTS
•
•
•
•
Brief profile of Cape Town
Some key concepts
The route we have travelled
Our “Building Global Competitiveness /
Reducing Poverty” Framework
• Fitting the pieces together
• Pro’s & Con’s of our journey
CAPE TOWN: BRIEF PROFILE
Area:
2487 km2
Current population:
3 222 801 (2002) 563 612 (1996)
Census)
Population growth rate:
2001-2006 = approx. 2.1% per annum
No. of households (1996):
653 076
CAPE TOWN: BRIEF PROFILE cont.
Number of jobs:
Formal employment (2001): 867 052
Informal employment (2001): 145 066 – 239 455
(range depends on unemployment definition used)
Unemployment (%) 2001:
19.7% of economically active population
(official/narrow definition)
27.3% of economically active population (expanded
definition). Need 7% annual GGP growth rate
to prevent from worsening
Skills level (1996):
Households living below Household
subsistence level (1 708) at 2000:
Informal housing (% of households):
No schooling: 9% (213 629 out of 2 321 889)
Matric: 15% (344 871 out of 2 321 889)
approx 32.8%
Approx 16% of all shelter units (Census 1996) were
classified “informal” in CMA
[See Cape Town’s Economy: “Current Trends & Future Prospects” document 2001 and 2002
update for further details on www.capetown.gov.za/publications/default.asp]
CAPE TOWN: BRIEF PROFILE cont.
Poverty index (1996):
Households with no income: 38 436
(5.8%). Households less than R18 000:
165 794 (25%)
Municipal Budget: 2003/04:
Operating: R7.4 billion. Capital: R1.9 billion
(ED&T Opex Budget = 0.82% of total
budget!)
Airport:
4.5 m passengers per annum – voted best in
Africa
Port:
Handles 11m tons of cargo
CAPE TOWN: BRIEF PROFILE cont.
GGP:
R93 998 billion (nominal 2001) – 75% of
Western Cape’s economy
GGP as a % of GDP:
11%
GGP growth rate:
3% (2001) between 1991-2000 average
growth rate = 2.6%
Informal sector:
12% of total output/employs 18% of
economically active
SMME’s:
95% of 60 000 formal businesses are
SMME’s – contribute 50% total
output/40% formal employment
PERCENTAGE NOMINAL GGP PER
SECTOR 2001
Manufacturing
3%
8%
2%
25%
Trade& Catering
Finance & Real Estate
19%
Services
20%
23%
Transport &
Communication
Construction
Other (eg Agric,
electricity)
NOTE: Tourism generates ± 10% of GGP
Job creation ratio 1:19 (SA average 1:26)
International tourists spend more than ½ their total time in SA – in
Cape Town
Source: City of Cape Town (May 2002)
THREE KEY TRENDS
• The Cape metropolitan area has a diverse
and growing economy and the skills-based
sectors are growing.
• There is an increasing mismatch between
skills supply and demand.
• Unemployment and poverty are increasing,
and are concentrated in particular sections of
the community
The City and Province offer a rich array of
strengths for both to leverage
Province
• Agricultural / Fishing
sector
• Eco-tourism
opportunities /
experiences
• Deep sea port
• Secondary settlements
• Access to national
resources / processes
• Domestic market
• Source of inputs
• Cape Wine / Cape Fruit
international brands
• ‘Shop-front’
• Infrastructure
• Transactional/
service hub
• World Class Brand
name
• Skilled labour
• Global connection
points (eg: airport,
port &
telecommunications)
• Strengths in global
growth sectors
• Population density
City
KEY CONCEPTS
• Vision – expression of the community’s most cherished
hopes for what we think our city could and should
become. A vision should convey the ideal towards which
we would like to strive and it should begin to give an
indication of how that goal could be achieved.
• Framework – Set of guidelines intended to highlight
priority action areas and to align actions of multiple
‘players’, avoid duplication, facilitate co-ordination and
support operational efficiency. The elements of the
Economic Development Framework will remain constant
over time, while strategies and actions are likely to change
as development occurs. The Framework is not unique to
the city.
KEY CONCEPTS cont.
• Strategy – Plan of action, reflecting local priorities
and current opportunities, resources and constraints.
Needs to have short, medium and long term
elements. An overemphasis on the short term may
deny long term benefits. Requires choices and tradeoffs. Unique to the city.
• Targets/performance indicators – objectives
expressed as “outputs” to be achieved in a given
time. Identified after strategies. Used to assess the
success of strategies and actions.
THE ROUTE WE HAVE
TRAVELLED….
1997: No info on the city economy
“Economic Trends & Spatial Patterns Study”
• Overview / Summary
• Statistical Database
• Local Area Studies
• Investor Survey Review
• Policy Review
1998: Trends info highlighted that we
had limited literature on
poverty/economic development links
“Poverty Reduction Framework & Strategy”
• Overview / Proposed Framework
• Poverty Profile of Cape Town
• Methodology for Conducting Poverty
Audits in Cape Town
• Poverty Reduction Indicators
1999: Need for framework to
i) capture link between growth/poverty and
ii) align stakeholders
“Going Global, Working Local: Economic
Development Framework and Local
Government Strategy” – to align actions
of public, private, NGO & community
stakeholders and to clearly define local
government’s role/priorities
2000:Time not right for city-wide
strategy development process
• Communicated framework, and
• Started actioning specific key initiatives (inc:
conscious pro-poor interventions) as identified
in the Local Government Strategy
2001/02: Need for input into IDP
and an institutional revamp
“Towards an Economic Development Strategy” discussion document containing Vision, stretch
targets & key initiatives)
and
“Transformation Programme” to ensure the development of partnerships &
institutional arrangements to achieve targets /
implement the initiatives - including addressing
broader transformation challenges
2003: Time right for city-wide
Economic Development
strategy process?
ECONOMIC DEVELOPMENT FRAMEWORK
Global
competitiveness
Sustainable Economic
Development
Poverty
reduction
Market, Population
& Demographic
changes
•Skills development
•Access to
national/provincial
welfare programmes
•Infrastructure & service
delivery
•Urban renewal (inc
community development)
•Economic
empowerment
•Infrastructure & service
delivery (inc Info & Comm
Technology)
•Key Sector Development (inc
small business dev)
•Branding & Marketing
•Local investment, savings,
expenditure
•Foreign investment eg:
tourism/exports
NOTE: Content of framework
i)
Explicitly designed to enable public, private NGO & community stakeholders to formulate & carry
out aligned decision-making and actions
ii)
Requires small, medium & long term actions in each of the 10 fields
OUR GOLDEN THREAD
• It is not a question of choosing “global
competitiveness” OR the “reduction of
poverty” – Cape Town will achieve both or
neither
• Reducing poverty will strengthen global
competitiveness and greater global
competitiveness will permit reduction of
poverty through economic growth & job
creation
FITTING THE PIECES TOGETHER
City-wide Economic Dev Strategy
Remove constraints to
competitiveness and
foster enabling
environment
•Sustainable
Econ Dev
•Spread the
benefits
Strengthen
network/connections
Community – based Economic Dev (L.E.D.)
Get basic services &
regulations right
•Sustainable
Econ Dev
•Spread the
benefits
Strengthen
local potential
connections
Business
Development
as key link
WHO’S WHO
Category of business
Number
Percentage
of total
Globally competitive
1,350
2.3%
Growth oriented
3,150
5.4%
Emerging/stable
40,500
69.2%
Survivalist/necessity
entrepreneurs
13,500
23.1%
58,500
100%
TOTAL
• There are approx. 1,100 organisations
providing general business support services
in Cape Town and approx. 840 providing
sector, or industry focused support
Sophistication of businesses requiring service
MAJOR MARKET SEGMENTS FOR
BUSINESS DEVELOPMENT SERVICES
More
2.
Specialist
business services
1.
Basic
economic
infrastructure
and services
3.
Generic
business
services
Less
Lo
Hi
Sophistication of business services demanded
More on the Framework ….
• Our “Building Competitiveness/Reducing Poverty” Framework
seeks to align those actions so that duplication is minimized,
complementary initiatives can benefit from each other, potential
partners can be identified and critical gaps can be revealed;
• As development takes place, the 10 essential Fields of Action will
remain the same, but the priority actions within each will change. It
is essential to periodically review the City’s economic
development position to reassess key opportunities, constraints
and priority actions;
• The Framework facilitates a process of benchmarking, target
setting and performance assessment specific to each Field of
Action so that the effectiveness of Local Government and other
actors’ initiatives can be evaluated;
• The Framework provides a working tool to guide
resource allocation decisions, and to record and
monitor expenditure and action;
and
• The Framework does not provide guidance on the
relative benefits of investment in one Field over
another. Each stakeholder will need to define their
priority interventions in terms of issues which they
can most effectively influence and support. Local
Government business planning will need to build in
methods to assist prioritization.
OUR JOURNEY
PRO’S
•
•
•
•
Over 500 projects being delivered –
all of them via partnerships.
(covering wide range of
constituencies / geographical
areas/fields of actions and
structured in a variety of ways)
Enriched the approach
Encouraged us to find ways to
identify impacts/appeal to “strategic
IQ” eg:
“What’s at stake” Joint Marketing
strategy impact assessment – R6
bn by 2007
Put in place key “ back room
platforms” eg: databases
•
•
•
CON’S
Loose power of overall
alignment & impact on decisions
Loose opportunity for creating
city-wide “vibe”
Loose opportunity to mobiise
resources above & beyond
project / programme specific
SECTOR SUPPORT
Case study theme
The City of Cape Town supports:
• Globally competitive sectors with growth and
employment potential (eg: tourism, oil and gas, film,
IT and manufacturing);
• Transforming sectors that are currently struggling but
which are big employers and contributors to the
economy :eg: clothing and textiles (which employ
over 170 000 people); and
• Promotes emerging growth sectors eg:
biotechnology, boat building and high value crafts
SECTOR /CLUSTER SUPPORT
Vision
A City internationally respected for developing globally
competitive sectors
Key Targets
• Identify and maximise support for 3-8 key sectors
and niches which can individually achieve 5%+
annual economic growth (e.g. information
technology, tourism, film, niche agri-industries)
• Assist the transformation of declining industries
(e.g. clothing) and areas (e.g. Atlantis) to limit job
losses
SECTOR / CLUSTER SUPPORT
Key Initiatives
•
•
•
•
Minimise local government input costs for key sectors
Facilitate access to national incentives
Ensure appropriate support infrastructure
Develop a flexible and effective system for:
identifying niche and sector opportunities
building collaboration to achieve competitive
growth and benefits spread (SMME’s)
supporting exports
reviewing success