National Framework for Local Economic Development

Local Economic Development (LED)


What is in this guide?

This guide summarises government policy on Local Economic Development. It has the following sections:

  1. Role and Responsibilities of National and Provincial Governments and Municipalities
  2. What are the intended outcomes of LED?
  3. LED strategies for Municipalities

  1. What is local economic development?

Local economic development (LED) is seen as one of the most important ways of decreasing poverty. Local economic development must aim to create jobs by making the local economy grow.  This means that more businesses and factories should be started in the municipal area. As part of the IDP, key stakeholders in a municipality must come together to reach agreement and take decisions to make the economy grow and create income opportunities for more people, especially the poor. 

National government makes policy and provides funds, research and other support for local economic development.  Municipalities decide on LED strategies and the process of arriving at a LED strategy must be part of the Integrated Development Planning (IDP) process. 

The LED strategies should be based on the overall vision outlined in the IDP and should take into account the result of the analysis done to identify problems and prioritise development projects. It should also look at things like integrating our residential and work areas, building development corridors between areas and supporting the economy with good public transport.

National and Provincial government provides support for municipalities in developing local economic strategies

The Department of Provincial and Local Government has identified the following as key principles underlying LED:

  • Poverty and unemployment are the main challenges facing South Africa.  LED strategies must prioritise job creation and poverty alleviation
  • LED must target previously disadvantaged people, marginalised communities and geographical regions, black economic empowerment enterprises and SMMEs to allow them to participate fully in the economic life of the country
  • There is no single approach to LED.  Each locality may develop an approach that is best suited to its local context
  • LED promotes local ownership, community involvement, local leadership and joint decision making
  • LED involves local, national, and international partnerships between communities, businesses and government to solve problems, create joint business ventures and build local areas
  • LED uses local resources and skills and maximizes opportunities for development
  • LED involves the integration of diverse economic initiatives in an all-inclusive approach to local development
  • LED relies on flexible approaches to respond to changing circumstances at local, national and international level
  1. LED strategies for Municipalities

Developing an LED Strategy requires that a municipality does an analysis of the existing situation, look at opportunities for growth and decide on the best strategies to achieve their goals.

The following are some key strategies that a municipality can put in place to meet its goals:

  • Developing the infrastructure of the municipality to make it easier for businesses to operate (i.e.  houses, transport, roads, water and electricity etc). This is mainly addressed in the IDP of the municipality. Whilst it contributes to providing better living conditions it also creates an environment that promotes economic growth.
  • Promoting tourism, which currently is one of the biggest growth industries in South Africa. This includes developing local tourist sites and facilities, improving security and ensuring that all residents are welcoming of tourists.
  • The municipalities tender and procurement policies must favour small contractors and emerging businesses. Where these companies cannot provide the required services, steps must be taken to get larger companies to enter into joint ventures with smaller partners.
  • Marketing the municipality, its infrastructure and people to local and international businesses. This can be combined with service centres that provide assistance and information to businesses that wants to start operations in the municipality.


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Phokwane Local Municipality
Tel: 053 474 9700
Fax: Fax: 053 474 1768
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