Businesses need to think local and start small

Janine Espin, managing director at Economic Development Solutions (EDS)

The need for economic development

So, what is economic development? It’s a process of targeted activities and projects that aim to improve the economic wellbeing and quality of life of a community by stimulating local income, diversifying the economy, creating and retaining jobs, and ultimately building the local tax base.

It is not just economic, the effects of unemployment are far-reaching. They include rising levels of crime, increased divorce rates and the inability to service credit at homes, leading to belongings being repossessed and people being left homeless.

Government’s ability to provide for its people is also negatively impacted, as high unemployment means less income tax collected. Even sales tax is affected, because people simply don’t have the money to purchase goods and services. This, in turn, means that the local government has less money with which to deliver public services. Unemployment is a problem for everyone in society, and even people who remain employed will suffer.

Targeted economic development at a local level

The main challenges facing South Africa are poverty and unemployment, which go hand-in-hand. Given that every community is unique, economic development will need to be focused at a grassroots level - i.e Local Economic Development (LED) programmes.

Such LED strategies must prioritise job creation and poverty alleviation by targeting previously disadvantaged people, marginalised communities and geographical regions, and focus on black empowered enterprises and SMMEs to be developed and achieve full economic participation.

Given that there is no single approach to LED due to the uniqueness of each community, each locality will have to develop tactics that best suit local conditions by promoting:

• Local ownership, community involvement, local leadership and joint decision making;
  
• Partnerships between communities, businesses and government to solve problems, create joint business ventures and build local areas; and
  
• The use of local resources and skills leading to the maximisation of opportunities for development.

It’s understandable that businesses would want to prioritise their bottom line over everything else. After all, this is the only way to ensure survival, surely? Unfortunately, such a viewpoint is short-sighted. The best way to ensure business survival is to build up the community and the economy around the local businesses, in order to create a mutually sustainable ecosystem.

Starting small is better than not starting at all

This means thinking local, using local and keeping it local, as much as possible. For some businesses and projects, this will mean employing from the local population for the duration of a construction project, for example.

This might require upskilling programmes and might be more costly than simply bringing in the skills from elsewhere, but will pay off in the long term, with a skilled, committed workforce. For other businesses, it might mean taking a component or portion of their product or process and seeing how best to localise it.

Instead of importing that component, businesses should commit to having that piece made or supplied locally, which will create jobs and stimulate local income. Economic development can be as simple or as complex as businesses want to make it, with every small change having an accumulative effect.