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Partnering blog posts

Partnering to achieve an inclusive and thriving economy

Author/s: Ben Tilley, Rushka Ely & Natalie Tannous

Economic growth is at the forefront of every South African economic development conversation. Besides trying to improve annual growth figures, there needs to be a shift in the narrative towards inclusive and sustainable economic growth. The Economic Development Partnership (EDP) promotes inclusive and resilient economic growth strategies, prioritising these over solely focusing on annual growth targets. The Local Economic Development (LED) programme works to influence key economic systems to embrace collaborative practices and do just this.

As a collaborative intermediary organisation, the EDP aims to strengthen the systems that underpin a well-functioning economy. In addition to working with the institutional and infrastructural aspects of these systems, the EDP approach takes careful consideration of the relational sphere to facilitate broad participation across sectors of society and spheres of government. The LED programme aims to demonstrate the necessity of partnering and collaboration towards achieving inclusive economic growth. Particularly, it centralises local, context-driven and community-owned interventions in driving growth, and acknowledges the crucial role of the informal economy in this regard. This recognises that economic development needs to be mobilised from the bottom up and enabled from the top down. This blog post presents the EDP’s LED strategy for working to achieve these outcomes.

Inclusive Economic Development | Supporting the informal economy to grow has incredible potential for unlocking economic growth in South Africa. Photo: EDP 

Shifting from GDP only to a holistic understanding of economic growth

South Africa is projected to enter 2025 in much the same way it did the year before. Unemployment is still high at approximately 33%, with youth unemployment at double this. According to the National Treasury 2024 Budget Review, annual GDP growth has averaged 0.8% since 2012 – a rate which has been insufficient in addressing the country’s growing poverty and unemployment. Long-term growth is highly reliant on an increased capacity in freight rail and ports, energy and – most importantly – on reducing existing structural barriers to economic activity.

Spatial inequality resulting from racial segregation during apartheid is having lasting effects to this day. These factors have a continuing adverse impact on household prosperity. Additionally, poorer households are often concentrated in specific areas, meaning that spatial disadvantages can exacerbate poverty when limited access to economic opportunities overlaps with these regions.

Despite an increase in investor confidence brought on by the government of national unity, traditional approaches to creating economic growth have been ineffective in reducing inequality. Trickle-down economics is the assumption that any economic growth results in benefits for poorer communities. However, inequality has only increased with growing debt and other economic shocks. More recently, the Pro-Poor Growth initiative, within frameworks such as the National Development Plan 2030, developed policies to ensure growth would benefit impoverished people. Despite its strengths, it neglected to account for non-income factors for disadvantage such as race, gender and region. The challenge is made more complex by a lack of resources for economic development coupled with government institutions’ historical difficulty in collaborating and partnering with the private sector.

The challenge of supporting sustainable and inclusive economic development stands looming. Yet from under it emerges a pathway towards a solution. Pairing the strong frameworks of local economic development that already exist with implementation and action will contribute to building an inclusive and resilient economy. The National Framework for LED has taken a more holistic approach to creating economic growth, one which intersects with the direction of the EDP’s LED programme.

Looking for solutions in underlying systems

Inclusive economic growth centres around a holistic approach and consideration of human deprivation and development. It dares to pause and question who is included – and excluded – when economic development is positioned in only monetary terms. The EDP’s LED programme strives to support the creation of a thriving, inclusive and sustainable South African economy by working in the systems that stagnate growth and prevent the lives of marginalised communities from improving. If large-scale economic development initiatives continue to fail to identify the weaknesses in the underpinning systems of society, the inequality gap will only widen.

Inclusive economic growth improves participation by those typically vulnerable to exclusion. During economic downturns, low-income communities face the harshest effects. Marginalised groups face barriers to advancing their own wellbeing. The existing economic systems deprive them of opportunities for more powerful societal interests.

Unlocking collaborative capabilities within underlying systems

Through partnering, the EDP serves as a vital intermediary in the national growth and development agenda. Using a multidisciplinary approach, the EDP stays ahead of the curve in understanding the solutions needed within the economic development field.

The EDP forms partnerships with institutions and organisations that

  • drive inclusive and sustainable economic growth
  • strengthen and create resilient systems and
  • improve the ability of vulnerable communities to participate in the economy

The LED programme and project team adopt a two-pronged approach to aligning the EDP as a valuable go-to partner for national, provincial and local groups focused on economic growth. The first element of this approach is teamwork with the EDP’s existing and future connections at the forefront of national and provincial decision-making about economic development. The second and simultaneous element to this approach is increasing awareness of the EDP’s practice of collaboration and partnering as essential tools in alleviating the barriers towards inclusive economic development.

To achieve more robust LED systems, the EDP recognises the importance of growing both the formal and informal economy. The informal sector grew from 4 million in 2003 to 8.5 million in 2023, and provides income-earning opportunities for a significant number of people experiencing unemployment. The barriers to entering the formal labour market are greatest for many of these individuals; the potential gain is then even bigger for getting economic development in the informal economy right. Initiatives to unlock the potential growth of the informal economy must focus on increasing marginalised communities’ access to resources and opportunities to alleviate poverty. These opportunities must help foster people’s ownership of economic development. In this way, they will work towards plugging the gaps in the systems underpinning South Africa’s economy. Some of the EDP’s projects within the LED programme demonstrate how the EDP works with Small Medium and Micro Enterprises (SMMEs) in the informal market to create and leverage a better connection with the government. Working with the City of Cape Town Urban Waste Management Directorate, the EDP is facilitating partnerships between SMMEs and Producer Responsibility Organisations in the Prince George Drive pilot, for instance. Supporting SMMEs to partner with the public sector in integrating into the City’s waste management ecosystem facilitates inclusive economic growth through job creation in the waste management sector.

Achieving inclusive and sustainable economic growth in South Africa requires a systems-focused approach that prioritises collaboration and community ownership. The EDP’s LED programme reflects this approach by focusing on the informal economy’s critical role. By repairing the cracks that exist in the foundations of local economies and empowering marginalised communities, the EDP strives to create a more equitable and resilient system to allow for better local economic development.

Acknowledgement:
This blog post is based on the LED programme strategy developed by Kgomotso Tolamo during her time as specialised programme lead at the EDP in 2024.

This blog post is subject to the following disclaimer.