May 6, 2007
We discuss the evolution of LED in South Africa.
Dear Jorg and Shawn
Thank you for this podcast on LED in South Africa. I found it well produced, interesting and informative. The points below are not intended to detract from that assessment. They are just issues that I personally find important about LED, and my intention in raising them is merely to stimualte discussion.
One point that I think could have emerged is to do with the relationship between LED, business development and poverty reduction. When I first had contact with the PACA approach, what came across very forcefully was not only that competitive advantage should be at its heart, but also that LED is not about poverty reduction. This was an understandable response to the failures of the LEDF to promote LED by setting up poverty alleviation projects, as described by Shawn during your conversation. It was certainly a good antidote in the light of the LEDF\\\\\\\'s failures to stress the role of business development and markets in LED. However the view that LED is not about poverty reduction has itself not proved to be sustainable. Things are a lot clearer now following the debate that occurred over this in South Africa. The distinction between the immediate objectives (economic, employment, and income growth stimulation) and the overall goals of LED (reduced social exclusion and poverty and improved quality of life) has helped resolve this dispute. What remains, though, is to show that business-development oriented LED can actually reduce poverty in practice. The relationship between the two is widely assumed, but has nowhere been convincingly demonstrated, at least from what I have seen. As PACA is applied increasingly to poor areas in low income countries the pressure to make these connections more explicitly both conceptually and methodologically is undoubtedly going to grow. It is interesting to see, for example, the UN-Habitat\\\\\\\'s emphasis on this in the LED manual produced by Ecoplan and, even more so, that of the ILO\\\\\\\'s manual from the Philippines.
A second point that would have been interesting for many listeners is about the racial divide and PACA. One reason why there was resistance to PACA in South Africa at first, was that the idea of business development seemed to favour white business development, simply because most viable businesses at the time where white owned, while poverty and exclusion were associated mainly with blacks. The deeper sources of this resistence lie in the critique of capitalism and its association with apartheid, ideas that are still strong on South Africa, notably in the union movement, but also in the South African Communist Party and in some remaining pockets of the ANC. This may, at least in part, account for the hostile response Jorg reports from a participant at one of his early workshops. How has PACA tackled and changed this, in practice? I believe that the lessons learned from this experience would be of great interest not only in South Africa, but in other countries with a highly unequal distribution of income as well. The literature seems to be saying that there is a positive relationship between economic growth and poverty reduction, but that it tends to be very weak in countries with a highly unequal distribution of income. It would seem to follow that in such countries, LED would need to make special efforts to ensure that growth stimulation translates into reduced social exclusion and poverty reduction.
A final point is about the EU support for LED in a number of provinces. Shawn mentions this as a tremendous advantage for LED in South Africa, and no doubt it should be. Ironically, though, these programmes are encountering something very similar to the problems of the LEDF. On the one hand, they have bureaucratic processes that rival those of the DPLG in their cumbersomeness, the time they take and the costs they impose on applicants. On the other hand, the capacity of local actors in most areas eligible for the EU funds is so low that few are able to mount, let alone successfully submit, applications, unless, of course, they obtain the assistance of highly priced consultants, which itself creates problems for LED promotion. With the LEDF the problem was project failure. With the EU it appears that the problem is failure to mount viable projects. Which produces the worst result is difficult to say. It would be a good time to have a thorough review of the EU projects now that they have been going for a while. It would be interesting to see what kind of LED is actually being promoted by them, and what, in practice, their results are in terms of LED goals and objectives.
Kind regards
Doug
All said above is very true but some issues have been overlooked as in corporation interests and unsecured loans provided for such projects with the false hope of economical rehabilitation. We should have a thorough study on such matters.