Rural Economic and Enterprise

Development: A framework for analysis

and joint action

Bloemfontein, South Africa 25 January, 2004

Junior Davis and Felicity Proctor

Natural Resources Institute (UK)

j.davis@gre.ac.uk

f.j.proctor@gre.ac.uk

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Workshop Objectives

Present the Rural Economic and Enterprise Development (REED) Framework

Exchange relevant current and planned project and programme experience between practitioners and review in the light of the REED framework

Review the potential utility of the REED framework in the South African context

Consider options for follow up action research and learning in partnership with the NRI led programme

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Hoped for Outputs

Better understanding of REED as a framework to support multi-stakeholder processes for rural economic development and poverty reduction

Shared learning between South African programme practitioners set within rural and local economic development

Emergence of a learning platform/network on REED/LED to support ongoing and future programme interventions

Agreement on whether and how to take forward work on the validation of REED in the South African context and possible future uptake

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What is Local Economic Development

Local economic development is about local people working together to achieve sustainable economic growth that brings economic benefits and quality of life improvements for all in the community. “Community” is here defined as a city, town, metropolitan area, or sub national region (World Bank, 2004).

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Focus Tools

1960s to early 1980s: mobile manufacturing

investment, attracting outside investment, especially the attraction of foreign direct investment

hard infrastructure investments

To achieve this regions/ government/ NGOs used:

massive grants subsidized loans usually aimed at

inward investing manufacturers & tax breaks

subsidized hard infrastructure investment

1980s to mid 1990s: the retention and growing of

existing local businesses still with an emphasis on

inward investment attraction, but usually this was becoming more targeted to specific sectors or from certain geographic areas

To achieve this regions/government/NGOs provided:

direct payments to individual businesses

business incubators/workspace advice and training for small- and

medium-sized firms & technical support

business start-up support some hard and soft infrastructure

investment

During this third (and current) wave of LED, more focus is placed on:

soft infrastructure investments public/private partnerships networking and the leveraging

of private sector investments for the public good

highly targeted inward investment attraction to add to the competitive advantages of local areas

To achieve this regions/government/NGOs are:

developing a holistic strategy aimed at growing local firms & providing a competitive local investment climate

supporting and encouraging networking and collaboration

encouraging the development of business clusters

encouraging workforce development and education

closely targeting inward investment to support cluster growth; supporting quality of life improvements

Three Waves of Local Economic Development

Research on Local Economic Development highlights:

Significant role played by extensive and established local economy clusters

Municipal/ local government plays a key role in impacting these economies

Constraints are often inadequate political decentralization and regressive urban planning regulatory frameworks

A purely "industrial" or “agricultural” focus excludes:

• extensive livelihood linkages in the rural and urban economy,

• governance aspects. • importance of extensive trade networks

inter-connecting distinctive local economies both rural and urban

The Rural Economic and Enterprise Development is a framework based on the analysis of successes and experiences of programmes and projects by an international group of practitioners from different professional backgrounds and countries.

REED framework offers a flexible tool for joint analysis, planning, evaluation and learning among stakeholders concerned with rural economic and enterprise development.

It is an example of an holistic and spatial approach to local, rural and urban development.

What is REED?

Joint donor initiative (GTZ, DFID, SDC, IFAD, CTA, FAO, WB) to overcome fragmentation

Framework developed based on success factors of operational experience from a diverse range of programmes (Berlin workshop November 2002)

This was developed using the Learning Wheel methodology.

The Evolution of REED

4. Functioning and

effective infrastructure (hard and soft)

3. Active private sector

institutions and links

8. Local organisation, groups and associations (representing the poor) as building

blocks

9.Active participatio

n and ownership

of developme

nt processes

by well linked

stakeholders

FosteringRural

Economic and

Enterprise Developm

ent

1. An enabling environment that provides

for an attractive investment climate and

dynamic entrepreneurshi

p

2. Effective mechanisms

and structures

that address local needs

5. Access to

integrated and open markets

6. Access to

effective and

efficient support services

and resources

7. Adaptive management capacity and entrepreneur

ial competence

within business and enterprises

10. Ongoing learning

from success

and failures by

all stakeholde

rs

Use of the framework in the planning process for poverty oriented LED in rural and urban areas

As a checklist in the planning process

As a tool to define priorities with stakeholders and decision makers

As a guideline in participatory planning with stakeholders

As a tool for joint planning with different projects and donors

As resource material for the REED/LED planning process

Using REED: in the planning process

Using the framework as a tool for selecting amongst intervention priorities (gateway function)

For example:

local and regional economic development

promotion of value chains

training and human resource development

rural and urban business development services

microfinance

....

Using REED: in prioritising interventions

Use the framework for monitoring and evaluation:

As a guideline to establish a M & E System

As a tool for discussions with decision makers on changes observed

As a tool for joint evaluation of different projects in the same region

To help define indicators for results and impacts on different levels

As a tool to establish benchmarks for regions and countries

Using REED: in monitoring & evaluation

Each cornerstone contains

The aim of a cornerstone in the overall context of REED/LED

Core elements of the cornerstone

Key strategies to achieve best results

Instruments and means of implementation

Links to websites with information, experiences and best practices

The Cornerstones of Rural Economic and Enterprise Development framework

Cornerstone 1. An enabling environment for an attractive investment climate and entrepreneurship.

Good governance, improved reformed regulation, taxation, licensing, remove tariff and

non-tariff barriers

Cornerstone 2. Effective mechanisms and structures that address local needs.

Effective decentralisation, empowerment of communities

Cornerstone 3. Effective private sector institutions & links

Build capacity of private BDS, enhance organisational capacity, create local business networks

The key elements of the ten REED Cornerstones

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The key elements of the ten REED Cornerstones

Cornerstone 4. Functioning and effective infrastructure (hard and soft). Identify infrastructure needs of rural SMEs, Providing

& maintaining required infrastructure, integrating into wider systems, quality dimensions

Cornerstone 5. Access to integrated and effectively functioning markets. Access to markets, transparency & stability of

markets, market chain integration & management, market development

Cornerstone 6. Access to effective and efficient support services and resources. Provide information & specialised services, Develop

market for service provision, provide contracted business services, supply inputs, access to finance & R&D facilities

Cornerstone 7. Adaptive management capacity and entrepreneurial competence within business and enterprises.

Management & organisation, production & service generation, financing, marketing,

networking

Cornerstone 8. Local organisations, groups and associations (representing the poor) as building blocks.

Understand organisational arrangements, motivate self-mobilisation, facilitate organisational development, ensure organisational graduation to higher and appropriate levels of formalisation

The key elements of the ten REED Cornerstones

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The key elements of the ten REED Cornerstones

Cornerstone 9. Active participation in and ownership of joint learning processes by well-linked stakeholders. Identifying stakeholders, building stakeholder

convergence, creating structured platforms & for a for negotiations, creating networks for learning

Cornerstone 10. Ongoing learning from success and failure by all stakeholders Create platforms to share and review information,

agree vision and M&E framework, creating an effective knowledge management system

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CONTENT KEY STRATEGIES & PROCESSES

POSSIBLE WAYS TO IMPLEMENT

Identifying the infrastructure required by rural enterprises

1. 1.Assess the existing infrastructure and identify gaps and the necessary improvements;

2. 2.Improve access to the infrastructure

3. 3.Identify ways and means to reduce costs of accessing the infrastructure.

1. Survey of existing infrastructure and business needs;

2. Identification of priorities and contributions in multi-stakeholder forums;

3. Increase in the volume of goods or services using the infrastructure;

4. Provision of low-cost solutions to enterprise needs.

Providing the required infrastructure

1. 1.Encourage public and private investment in infrastructure;

1. Development of sound proposals for new or improved facilities with benefits to rural enterprise and the public.

1. 2.Privatise state utility service providers;

1. An independent regulatory body; Invitations to tender for management of service delivery contracts.

1. 3.Promote local, self-funded facilities, e.g, collective or cooperative services;

1. Development of innovative schemes for self-funding.

1. 4.Establish facilities on a correct and legal basis, e.g, access.

1. Investigation into the local regulatory or legal position.

Cornerstone 4. Functioning and effective infrastructure (hard and soft).

The following steps are proposed:

l. Define geographical area (e.g., district, province),

II. The framework could be applied to analyse the existing situation in that area and identify potential areas of improvement.

III. Cornerstones, their interdependencies, strengths and gaps could be identified by detailed analysis and self-assessment.

Scenario for using the REED framework in an LED setting

(l)

IV. The gaps or shortcomings blocking the exploitation of the economic potential of the region should be analysed in detail and prioritised by their negative effects on the system.

V. Factors with the greatest negative impact should be addressed through intervention.

VI. Once the possible interventions are identified, implementation strategies can be planned and the roles of the different actors and their mutual expectations can be clarified.

Scenario for using the REED framework in an LED setting

(ll)

How REED can add value

1. Thinking about economic and livelihood strategies to compliment other spatial planning and management efforts is new. Critical linkages which combine to direct resources and interventions strategically and spatially need to be considered.

2. Public administrations should conceptualize REED/LED strategies in a trans-locational (village, small towns, cities) perspective, including its institutional setting and prioritise according to cost effectiveness and socio-economic impact.

3. REED provides a common platform and mechanism to link policy, procedures and interventions from a multidisciplinary perspective.

NRI Action research and shared learning on REED

The research aims to develop further the conceptual framework and project tool for the fostering of rural economic and enterprise development in South Africa and Bangladesh

In pursuit of this, the project aims to: Apply the REED framework and share

emerging practice on pro-poor public policy and institutional support at local and national government levels

Refine and develop the conceptual framework so that it can address gaps in the framework

Approach

Collaboration with In-country partners

Collaboration with UK and EU partners

Consultation with key stakeholders

Policy and Institutional focusPolicy dialogue

Methodological issues

Study site selection criteriaUnit of analysisQuantitative and Qualitative

Research

Methodologies and tools

Issue(s)/Purpose Potential Methodological Tool(s)

Assessment of community physical/natural assets

Participatory Resource MappingSecondary data on economy, employment and demography

Exploration of local resources and development conditions

Transect walksFocus group discussions

Understanding of different SME and MSME activities

Focus group discussions

Gaining in-depth knowledge of specific issues, structures and organizations

Key informant discussionsIn-depth interviews and Institutional audits

Following up and illustrating specific issues

Case studies – semi structured interviews

Stakeholder perceptions, attitudes, meanings and values (social assets)

Focus group workshops semi-structured interviews

Impact of sectoral policy frameworks on LED

Empirical analysis of secondary dataCase studies – SAM/PAM

Information on the factors that constrain poor’s access to employment and SME development.

HH survey/ secondary data/ questionnaire/ Enterprise questionnaire

Identification of needs for the development of the LED

Focus group discussions, Key informant discussion, enterprise QNR

Policy uptake and dissemination

Stakeholder involvement and shared learning platform at in South Africa and Bangladesh

Input into DFID, World Bank and EU programme and investment processes

Published Outputs and WebsiteNetworkingSeminars and Workshops

Thanks for your Thanks for your attention!attention!

For related reports see:

The Natural Resources Institute website

http://www.nri.org/projects/reed