UNIVERSITY OF KWAZULU-NATAL Agriculture and Local Economic Development: A case study of the uMshwathi Local Municipality by Claudia Ada Ariatti 761760555 A dissertation submitted in partial fulfilment of the requirements for the degree of Master of Business Administration Graduate School of Business and Leadership College of Law and Management Studies University of KwaZulu-Natal Supervisor: Dr Mihalis Chasomeris November 2013 University of KwaZulu-Natal Graduate School of Business and Leadership College of Law and Management Studies DECLARATION I Claudia Ada Ariatti declare that (i) The research reported in this dissertation/thesis, except where otherwise indicated, is my original research. (ii) This dissertation/thesis has not been submitted for any degree or examination at any other university. (iii) This dissertation/thesis does not contain other persons‘ data, pictures, graphs or other information, unless specifically acknowledged as being sourced from other persons. (iv) This dissertation/thesis does not contain other persons‘ writing, unless specifically acknowledged as being sourced from other researchers. Where other written sources have been quoted, then: a) their words have been re-written but the general information attributed to them has been referenced: b) where their exact words have been used, their writing has been placed inside quotation marks, and referenced. (v) This dissertation/thesis does not contain text, graphics or tables copied and pasted from the Internet, unless specifically acknowledged, and the source being detailed in the dissertation/thesis and in the References sections. Signature: ii ACKNOWLEDGEMENTS ―Even though the future arises out of an infinitely complex mix of occurrences, the sense- making process of stepping out into the imaginary is always a communal one. This means that others share in the creation of our future‖ (Edwards, 2008:174). I wish to express my sincere appreciation and gratitude to: My Lord, for walking with me at all times; My supervisor, Dr Mihalis Chasomeris for his knowledgeable and invaluable guidance and patience throughout the course of this study; Mr Alec Bozas for his helpful suggestions and encouragement; My husband Mario, without whose cherished love, dedicated discernment and unwavering assistance, this course of study would not have been possible; The lecturers and support staff of the Graduate School of Business and Leadership for their professionalism; My fellow MBA students for their support and companionship on our common journey; My friends for their interest and concern; And finally but not least, my parents, sisters, brother and mother-in-law for their love, comprehension and constant encouragement. iii ABSTRACT Local economic development (LED) is a process encompassing the mobilisation of resources for competitive advantage by locally-owned or managed courses of action, identified through participation and social dialogue, in a strategically defined territory. Local economic development based on sound economic and business principles can contribute to economic growth, job creation and poverty alleviation. Government policy has accorded prominence to agriculture. LED in South Africa is mandated to local municipalities and a challenge is to identify LED strategies that combine a pro-growth (market-led), with a pro-poor (market-critical) dimension. The present study reviews the literature on local economic development and analyses mainly secondary data in the case study on the Local Municipality of uMshwathi (District Municipality of uMgungundlovu, KwaZulu-Natal). Theories are applied and tested in the case study and the research objectives focus on the development, implementation and growth of all- inclusive job creation LED strategies in uMshwathi, using local resources and skills, able to generate partnerships and respond to changing circumstances. uMshwathi residents suffer from unemployment, poor functional literacy and poverty. The potential role of agriculture in the acceleration of local economic development in uMshwathi is confirmed. A grand strategy and functional strategies are proposed. Agricultural land is of a high potential and smallholder and organic farming are practicable. Findings show the presence of locational development-inducing factors. LED suffers from the Municipality‘s lack of capacity and there is uncertainty between social and economic policy objectives. There is no provincial strategy in place to use the Dube TradePort Corporation as a platform for targeted economic development of the agricultural sector. The Ingonyama Trust and associated land issues need to be urgently addressed. Horizontal and vertical cooperation and coordination between stakeholders is essential. Professional LED practitioners should be employed in all LED Units. The establishment of an Agricultural Forum in uMshwathi, and an LED Agency in the uMgungundlovu District, is recommended. Networks must be established with Agricultural Unions and significant stakeholders. The implementation of a strategy for agriculture development with a focus on exporting through the Dube TradePort Corporation is deemed necessary. iv TABLE OF CONTENTS DESCRIPTION PAGE Title Page i Acknowledgements iii Abstract iv Table of Contents v Abbreviations and Acronyms ix List of Figures xii List of Tables xii List of Maps xiv CHAPTER ONE INTRODUCTION TO THE RESEARCH 1.1 Background and Context 1 1.2 Problem Statement 2 1.3 Purpose for the Study 4 1.4 Research Questions 5 1.5 Limitations of the Study 6 1.6 Overview of the Study 7 1.7 Chapter Summary 9 CHAPTER TWO LITERATURE REVIEW ON LOCAL ECONOMIC DEVELOPMENT: A GLOBAL PERSPECTIVE 2.1 Introduction 11 2.2 Defining Local Economic Development 12 2.3 A Brief History of Economic Development 17 2.4 Local Economic Development is a Global Phenomenon 25 2.5 Local Economic Development: An African Perspective 30 2.6 Conclusion 40 v CHAPTER THREE LITERATURE REVIEW ON LOCAL ECONOMIC DEVELOPMENT TRENDS IN SOUTH AFRICA 3.1 Introduction 42 3.2 The Developmental State 42 3.2.1 AsgiSA and JIPSA 43 3.2.2 National Development Planning 44 3.2.3 Institutional Framework 49 3.3 National Spatial Development Framework 53 3.3.1 The KwaZulu-Natal Provincial Growth and Development Strategy 54 3.4 National Industrial Policy Framework 56 3.5 Local Economic Development 57 3.5.1 Local Economic Development Policy 57 3.5.2 Local Economic Development Environment and Challenges 60 3.5.3 The Professionalization of Local Economic Development 72 3.6 Contemporary Models of Local Economic Development 76 3.6.1 The concept of Systemic Competitiveness 77 3.6.2 Metaphors for Local Economic Development 81 3.7 Conclusion 88 CHAPTER FOUR RESEARCH METHODOLOGY 4.1 Introduction 91 4.2 Research Process 91 4.3 Aim and Objectives of Study 93 4.4 Research Design 94 4.4.1 Literature Review 94 4.4.2 Secondary Data Analysis 96 4.4.3 The Case Study 97 4.5 Conclusion 98 vi CHAPTER FIVE A CASE STUDY OF THE UMSHWATHI LOCAL MUNICIPALITY 5.1 Introduction 100 5.2 Review of the uMshwathi Local Municipality 101 5.2.1 uMshwathi Local Municipality: Overview and Situational Analysis 101 5.2.2 Political Milieu, Traditional Authority and Related Land Issues 109 5.2.3 Demographics, Social Assistance and Basic Service Delivery 117 5.2.4 Provincial Economic Outlook and Rural Development 133 5.3 uMshwathi Local Municipality: Integrated Development Planning, Local Economic Development and the Strategic Prioritization of Agriculture 147 5.3.1 Introduction 147 5.3.2 Integrated Development Planning 147 5.3.3 Local Economic Development, the LED Plan and the Strategic Prioritization of Agriculture 165 5.4 Environmental Management Framework for the Proposed uMshwathi City Development Node 184 5.4.1 Introduction 184 5.4.2 The uMshwathi City Development Node 185 5.5 Conclusion 191 CHAPTER SIX CONCLUSIONS AND RECOMMENDATIONS 6.1 Introduction 193 6.2 Summary of the Findings 195 6.2.1 Conclusions in Relation to the Objectives 195 6.2.1.1 Objective 1 195 6.2.1.2 Objective 2 196 6.2.1.3 Objectives 3 and 4 197 6.3 Recommendations 198 6.4 Concluding Remarks 200 REFERENCES 201 vii APPENDIX A Development Aid to Africa 219 APPENDIX B Table B.1: Rural Development Guidelines 221 Table B.2: Cluster Programmes and Projects: Economic Issues and Employment 222 Table B.3: Cluster Programmes and Projects: Infrastructure Development, Human Development, Social Protection and Community Development 223 Table B.4: Cluster Programmes and Projects: Governance and Administration, and Justice, Crime Prevention and Security 224 APPENDIX C Table C.1: Gijima Funds 225 APPENDIX D Ethical Clearance 227 viii ABBREVIATIONS AND ACRONYMS Abbreviation Full description ACFID Australian Council for International Development ADB Asian Development Bank AIDS acquired immune deficiency syndrome ANC African National Congress APRM African Peer Review Mechanism AsgiSA Accelerated and Shared Growth Initiative for South Africa AU African Union BBBEE Broad Based Black Economic Empowerment BEE Black economic empowerment BNPP World Bank-Netherlands Partnership Program BPO Business Process Outsourcing BRICS Brazil Russia India China and South Africa BRS Business Retention Strategies BUSA Business Unity South Africa CAADP Comprehensive Africa Agriculture Development Program CBO Community Based Organisation CoGTA Cooperative Government and Traditional Affairs COMESA Common Market for Eastern and Southern Africa COSATU Congress of South African Trade Unions DBSA Development Bank of Southern Africa DED Department of Economic Development DFA Development Facilitation