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UNCDF to Explore Ways to Promote Greater Private Sector Investment at the local level through Local Authorities in Africa

 

Several ongoing studies and a new generation of local development programmes to lead the way



An LED-related strategy involves a re-orientation of local governments from their traditional role of delivering social services to “one which includes facilitating and supporting private sector development and investment," resulting in vibrant markets and productive economic activity, such as here in northern Benin.  Photo by Adam Rogers/ UNCDF.

JOHANNESBURG, 26 February 2008:  Whilst working to strengthen the capacity of local governments to plan, finance and manage their own development, the United Nations Capital Development Fund is expanding its programmes to focus on finding ways local authorities in Africa can facilitate and support the growth of a vibrant private sector. 

Since the 1990s, many African national governments and the donor community have displayed a growing interest in Local Economic Development (LED) as a means of spurring economic growth and bringing economic benefits to deprived communities. The assumption is that while the public sector can best provide the basic engine for economic development through the provision of roads, markets and electricity, it is the local private sector that ultimately provides the fuel to generate the levels of growth that can bring people out of poverty.

“Ironically, even in a context where the basic principles of democratic decentralization and governance are stressed, many LED-related initiatives have underestimated, neglected or ignored the potential role and functions of Local Authorities,” said Kodjo Mensah-Abrampa, UNCDF Regional Technical Advisor for Eastern and Southern Africa. “The economic development of particular localities and regions is still critically dependant on central government interventions, but many of these interventions have been implicit and discrete rather than based on an explicit policy for local economic development.”

Mensah-Abrampaadded that an LED-related strategy would involve a re-orientation of local governments from their traditional role of delivering social services to “one which includes facilitating and supporting private sector development and investment.”

Aladeen Shawa, UNCDF Technical Advisor for Local Economic Development, added that an immediate and critical step involves fostering district and sub-district structures and stakeholder fora that can ensure that the social and economic development process is participatory and inclusive.

“The growth of the private sector can be aided or impeded by a whole range of actions of government at the local level,” added Shawa.  “This may include improving the local business climate by reducing public sector impediments to economic activity and facilitating public investment and services to targeted sectors.  This can, for example, contribute significantly to growth and the reduction of poverty. Local authorities are already deeply involved in local business activities, as they are the suppliers of infrastructure, collectors of fees and taxes, providers of basic social services and regulators of land, buildings and activities.”

As part of its effort to further advance the knowledge and understanding of the practice, the UNCDF/Local Development Unit, with support from Austria Cooperation, recently initiated a technical study on Local Economic Development.  The multi-stakeholder consultation is intended to identify the strengths and weaknesses of the approach while clarifying assumptions and identifying success indicators.  The first meeting of experts on the subject took place in Kampala, Uganda in November 2007; the second meeting is scheduled to take place in March 2008.

Over the past few years, UNCDF has undertaken several assessments and case studies on LED.  A new generation of UNCDF programmes focusing on local governance and LED has been formulated and launched, most notably in Tanzania.  In addition, significant innovative experiences are evolving within the context of ongoing UNCDF local governance support programmes in Uganda and Mozambique.

Kadmiel Wekwete, Director of UNCDF’s Local Development Unit, said UNCDF’s approach to LED is grounded in the best practices of its two programme units: Local Development and Inclusive Finance.  “Our approach responds to the local development process in an integrative manner,” said Wekwete.   “The idea is to strengthen the role of local authorities to find innovative solutions that address the needs of their constituents.  Promoting the development of a vibrant private sector is the surest way of sustaining the process and also makes use of the great comparative advantage of UNCDF.”

 

Available for Download:

  • Country LED Situation Report – Uganda: [ pdf ]
  • Country LED Situation Report – Tanzania: [ pdf ]
  • Country LED Situation Report – Malawi: [ pdf ]
  • Report of First Experts Meeting on LED in Southern and Eastern Africa (November 2007): [ pdf ]