A study of the Drakenstein Local Municipality's five main urban economic sectors with special reference to the municipality's strategic objectives.

Transcription

1 A study of the Drakenstein Local Municipality's five main urban economic sectors with special reference to the municipality's strategic objectives. RonelH.Slinger Thesis presented in partial fulfillment of the requirements for the degree Master of Arts in Public and Development Management at the University of Stellenbosch. Supervisor: Babette Rabie March 2007

2 DECLARATION I, the undersigned, hereby declare that the work contained in this thesis is my own original work and that I have not previousiy in it's entireiy or in part submitted it at any university for a degree. Signature:.~.. Ront~1 Helene Slinger Date: March 2007

3 ii ABSTRACT "The South African Constitution (1996) promotes the improvement of living environments and livelihoods for all constituents by means of a developmental approach to local governance" (IDASA, 2005:2). The development roie of local government can be understood through the consideration of four basic drivers which includes planning for development, governance and administration, regulation and service delivery. The Drakenstein Local Municipality is committed to ensure sustainable economic growth and development by increasing national and provincial competitiveness as well as the reduction of poverty. Key to this process is the retention and expansion of existing businesses as well as the attraction of new investment. The main focus of this research study is the promotion of business development as it forms part of local economic development (LED) and is also an integral part of integrated development planning (IDP) at local government level. The introduction of proposed targeted investment incentives is aimed at facilitating the implementation of the Drakenstein Local Municipality's strategic development objectives. The proposed intervention options should be a special effort to attract investment to the study area which will result in a positive spill-over effect in the Drakenstein Local Municipality's local economy. Intervention options can be developed in terms of investment incentives that can bring about job creation, economic development and poverty alleviation in the study area as set out in their strategic deveiopment objectives. OPSOMMING "Die Suid-Afrikaanse Grondwet (1996) bevorder die verbetering van lewensomstandighede van al sy kiesers deur middel van' n ontwikkelings benadering ten opsigte van plaaslike regering" (IDASA, 2005:2). Die ontwikkelings rol van plaaslike regering kan verstaan word deur die oorweging van vier basiese strategiee (dryfvere) wat insluit die beplanning van ontwikkeling, goeie regering en administrasie, regulering en dienslewering. Die Drakenstein Munisipaliteit is verbind daartoe om te verseker dat volhoubare ekonomiese groei en ontwikkeling plaasvind deur nasionale en provinsiale mededinging te verhoog sowel as armoede te verlig, Die sleutel tot die sukses van hierdie proses is die behoud van en uitbreiding van bestaande besighede sowel as die aansporing tot nuwe beleggings (investering) in die area, Die hoof focus van hierdie tesis is die bevorderlng van besigheidsontwikkeling as deel van piaaslike ekonomiese ontwikkeling en is ook 'n integrale deei van die geintegreerde ontwikkelings plan op plaaslike regeringsvlak, Die invoer van voorgestelde spesifieke beleggings aansporings maatreels is gerig op die fasilitering van die implementering van die Drakenstein Munisipaliteit se strategiese doelwitte, Die voorgestelde intervensie opsies moet 'n spesiale poging wees om beleggings na die studie area te 10k wat 'n positiewe oorspoel effek in die Drakenstein Munisipaliteit se plaaslike ekonomie sal verseker,

4 iii ACKNOWLEDGEMENTS I would first and foremost like to thank my Lord and Saviour for giving me the strength and determination to accomplish the goals that I have set for myself in life. I would also like to give great acknowledgement and deep thanks to my parents, Lucas and Rachei Slinger, for their love and support throughout this experience. Thank you for your constant encouragement and love. I would like to thank my brother, Lucian, for setting the bar so high. I love and admire you and your accomplishments, both professionally and personally. I would also like to thank Clayton for his constant encouragement, love and support through this whole experience. You have contributed greatly to this thesis I have learnt so much more than what is encompassed in this thesis and I feel that I have grown both in my professional and personal life. To my supervisor, Babette Rabie, thank you for your commitment and enthusiasm. Your valuable input, comments and guidance, are deeply appreciated. Special thanks to Prof. Johan Burger for his words of advice and special thanks to the INCA Capacity Building Fund, for their financial assistance, which resulted in the successfui completion of my MPA degree.

5 iv TABLE OF CONTENTS DECLARATION ABSTRACT ii OPSOMMING ii ACKNOWLEDGEMENTS iii TABLE OF CONTENTS iv LIST OF FIGURES AND TABLES viii CHAPTER ONE: INTRODUCTION Introduction Background Research Problem and Hypothesis Aim and Objective ofthe Research Research Design and Methodology Chapter Outline Summary 7 CHAPTER TWO: THEORETICAL FRAMEWORK Introduction Defining Integrated Development Planning Integrated Development Planning: The Legal, Policy and Development Framework The White Paper on Local Government of The Legal and Development Framework Core Components of the Integrated Development Plan Integrated Development Planning and Local Government Batho Pele Principles and Integrated Development Planning Local Economic Deveiopment (LED) and Integrated Deveiopment Planning (IDP) Drakenstein Local Municipality's Strategic Objectives Participation in Development Planning Summary 24 CHAPTER THREE: DRAKENSTEIN LOCAL MUNICIPAL AREA Introduction Drakenstein Local Municipality's Economic Overview 27

6 v Sectoral Definitions Economic Profile Tourism: Western Cape and Drakenstein Introduction: Tourism in South Africa Foreign Tourists: Western Cape Domestic Tourists: Western Cape Tourism Overview for the Drakenstein Local Municipal Area 3.3 Socio-Economic Profile Population Growth Age and Gender Household Size Highest Level of Education Level of Employment Occupation Industry Employed Household Dwelling Type Household Tenure Household Goods Annual Household Income Living Standard Measurement (LSM) Classification 3.4 Local Prospects for Business Investment Incentives 3.5 Summary CHAPTER FOUR: ANALYSIS OF THE RESEARCH FINDINGS 4.1 Introduction 4.2 Overview of the Trade Sector Defining the Trade (Retail) Sector Classification of the Trade Sector Trade Sector Research Results 4.3 Overview of the Construction Sector Introduction Construction Sector Research Results 4.4 Overview of the Business and Finance Sector Defining the Business and Finance (Office) Sector Business and Finance (Office) Sector Research Results 4.5 Overview of the Manufacturing Sector

7 vi Defining the Manufacturing (Industrial) Sector Manufacturing (Industrial) Sector Research Results Overview of the Tourism Sector Defining Tourism Tourism Sector Research Results Development Potential and Growth Forecasts for the five main urban economic sectors Residential Sector (Construction) Office Sector (Finance and Business Service) Industrial Sector (Manufacturing) Retail Sector (Trade) Tourism Sector Synthesis and Summary Trade (Retail) Sector Construction Sector Business and Finance Sector Manufacturing Sector Tourism Sector Summary 82 CHAPTER FIVE: RECOMMENDATIONS AND CONCLUSION Introduction Guiding Principles for Business Investment Incentives National Investment Incentives and Business Support Programmes (SA) Drakenstein Local Municipality's Proposed General Business Investment Incentive Scheme General Financial Investment Incentives Performance-based Investment Incentives Non-financial investment incentives Administrative non-financial incentives Non-financial incentives that provide information SMME and secondary economy investment incentives Management Framework Implementation Guidelines Conclusion Key challenges for Drakenstein as Rural Destination Main Development and Investment Opportunities in the Drakenstein

8 vii Municipal area Concluding Remarks BIBLIOGRAPHY ANNEXURE A: LIVING STANDARD MEASUREMENT

9 viii LIST OF FIGURES AND TABLES Figures Figure 3.1: Figure 3.2: Figure 3.3: Figure 3.4: Figure 3.5: Figure 3.6: Figure 3.7: Figure 3.8: Figure 3.9: Figure 3.10: Figure 3.11 : Figure 3.12: Figure 3.13: Figure 3.14: Figure 3.15: Figure 3.16: Figure 3.17: Figure 3.18: Figure 3.19: Figure 3.20: Figure 4.1: Figure 4.2: Figure 5.1 Figure 5.2: Figure 5.3: The Western Cape & Drakenstein's Sectoral Contribution (2004) Sectoral Contributions to Drakenstein's GDP, 2000 to 2004 Economic Growth within the Drakenstein and Western Cape Economies, 1996 to 2004 Sector Employment Distributions, 2000 to 2004 Number of foreign arrivals in the Western Cape (1998 to 2003) Accommodation used by foreign visitors, 2004 The number of bed nights spent in the Western Cape, 2003 & 2004 Foreign and Domestic Tourists staying over in the Drakenstein area, 2004 & 2005 Accessibility to top tourism attractions Projected population growth ( ) Age and gender distribution, 2001 Household size, 2001 Highest level of education, 2001 Level of employment, 2001 Occupation, 2001 Industry Employed, 2001 Household Dwelling Type, 2001 Household Tenure Status, 2001 Ownership of Household Goods, 2001 Annual Household Income, 2001 Formal and Informal Trade Sector Private Consumption Expenditure Model Application scale and economic impact of the proposed incentives The incentives management team functions Investment Incentives Package Implementation Plan Tables Table 3.1: Table 3.2: Table 3.3: Sectoral Growth, 2000 to 2004 Employment Growth, 2000 to 2004 Percentage of Domestic Tourist Visits per Province,

10 ix Table 3.4: Table 4.1: Table 4.2: Table 4.3: Table 4.4: Table 4.5: Table 4.6: Table 4.7: Table 4.8: Table 4.9: Table 4.10: Table 5.1: Table 52: Table 5.3: Table 5.4: LSM Profile Population Growth in Drakensteln's population, 2005 to 2020 Existing population numbers and growth projections, 2001 to 2020 Demand for Office space, 2005 to 2020 Office market gap, 2005 to 2020 Output and Employment per Industrial sub-sector, 2004 and Growth Indicators Net Space Demand (ha) within the Drakenstein area, 2005 to 2020 Income spent on different retail goods (2005) Demand for retail space in 2005 to 2020 LSM Status classification for retail space, 2005 to 2020 Retail Market Gap, 2005 to 2020 National Investment Incentives and Business Support Programmes Potential Drakenstein Local Municipality Investment Incentives An example of a typical General Prioritisation Model Proposed in-depth incentive package implementation plan

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