PACA - Participatory Appraisal of Competitive Advantage Creating a Competitive Advantage for the...

PACA - Participatory Appraisal of Competitive Advantage

Creating a Competitive AdvantageCreating a Competitive Advantagefor the Highveld Ridgefor the Highveld Ridge

Bernhard AdamBernhard AdamHenning BanthienHenning BanthienJörg Meyer-StamerJörg Meyer-Stamer

Carl-Duisberg-GesellschaftCarl-Duisberg-Gesellschaft(CDG)(CDG)


1. Creating a Competitive Advantage:1. Creating a Competitive Advantage:Key Issues in Local Economic Key Issues in Local Economic

DevelopmentDevelopment


What isn’t What isn’t Local Economic DevelopmentLocal Economic Development

Attraction ofnew investment= investmentpromotion

SMME support+ development

Skillsdevelopment

Employmentcreation

Communitydevelopment

... in a segmented and fragmented way!


What is What is Local Economic DevelopmentLocal Economic Development

Attraction ofnew investment

SMMEdevelopment

Skillsdevelopment

Employmentcreation

Communitydevelopment


How does local economic development How does local economic development relate to other activities?relate to other activities?

Local development

SMMEpromotion

Infrastructure

Transport

Energy

Technology

Health

Schools

Water / sewage

Community development

Employmentcreation

Poverty alleviation

Housing

Education

Urbanization

Local economicdevelopment

Investmentpromotion

Skillsdevelopment

SMMEdevelopment


Why there is a tension between Why there is a tension between economic and community developmenteconomic and community development

Principles of economic development:

– Rivalry / competition– Invisible hand of the

market– Survival of the fittest

Principles of community development:

– Solidarity– Collaboration– Support for the weak and

disadvantaged

Consequences:– It is important to separate economic development and

community development in terms of organization and implementation

– It is possible, and indeed essential, to seek areas of overlap, to create synergies, and to learn from each other


Three key issues in local economic Three key issues in local economic developmentdevelopment

– Target groups of local economic development– Strengthening locational advantages– Synergy between economic development and

employment promotion


Target groups of local economic Target groups of local economic development: firmsdevelopment: firms

-streng-thening

local firms

Attractionof newfirms

Promotionof start-upsand entre-

preneurship

supplier development,outsourcing, spin-off;

support for ownersuccession

Attract suppliers andcomplementary firms,manufacturers ofcapital goods,service providers

new business opportunities

in industry and services


Strengthening locational advantagesStrengthening locational advantages

Intangible locational factors

Tangible locational factors

Relevant forindividuals

Relevantfor firms

LocationInfrastructure

Real estate

LaborEnergy + environmentTaxes + incentives

Competence of public administrationImage of cityProximity of related industriesUniversities, R&DBusiness associations

Quality of habitationEnvironmental quality

Quality of schoolsSocial infrastructure

Leisure infrastructure


Synergy between economic development Synergy between economic development and employment promotionand employment promotion

Economic development Employment promotion

* Development of real estate* Attraction of investment* SMME support* Support forfirms in crisis* Businessdevelopment * Improving quality

of life

* Promotionof start-ups

* Rehabilitation ofdeprived estates* Development of

infrastructure

* Workprogrammes* Skills development * Internships for special target groups * Adequate labormarket informationsystems


2.2.A first diagnostic of theA first diagnostic of the

Highveld RidgeHighveld Ridge


Structure of this sectionStructure of this section

– General observations– Marketing– SMME development– Sasol– Communication and cooperation


General observations:General observations: Strengths Strengths

– Spirit: developmental orientation, communication, competent individuals

– Preoccupation and effort with skills development

– Practical orientation of education effort

– Basic structure of supporting institutions

– Excellent infrastructure

– Sasol: economic dynamism, market access, community involvement

– Positive examples of black entrepreneurship

– Quality of life


General observations:General observations:WeaknessesWeaknesses

– Confusion between economic development and community development

– Fragmentation of business associations– Lack of quality of life in eMbalenhle– Complaints about housing, crime, lack of jobs– Frustration -- based on unrealistic expectations

regarding speed of structural change– Self-reference / lack of international perspective;

strong Sasol-focus


MarketingMarketing

Strengths– TLC work on regional

marketing– Competence region in

synthetic fuel and chemicals (“petrochemical heartbeat”)

Weaknesses– Regional marketing is little

known -- no shared effort– Stakeholders’ Forum is

perceived as “Sasol’s Stakeholders’ Forum”= unclear mission

– Block C: little frequented– Small black businesses:

unclear profile / statement


SMME Development:SMME Development:StrengthsStrengths

– Availability of capital in the region– Availability of know-how in the region– High political priority for SMME development


SMME Development: SMME Development: Weaknesses (1)Weaknesses (1)

– Inadequate business models– “What is my skill” instead of “Where is a market

niche I can serve”– Finance -- access to credit, lack of start-up capital– No micro-finance institution– Lack of entrepreneurial skills– Exaggerated orientation at Sasol and other big

customers


SMME Development:SMME Development:Weaknesses (2)Weaknesses (2)

– Small black businesspeople mixing politics and business

– Lack of know-how about support central government -- region promotion agencies -- businesses

– Political priority is not translated into significant action– HBDC:

unclear mission -- tender advice vs start-up support mixing community development and business

development


Sasol’s developmental role (1)Sasol’s developmental role (1)

Strength

Black empowerment– Outsourcing /

promoting black entrepreneurs

– in-house promotion– in-house skills

development

Locational development– industrial park east

of Sasol– SMME park

Weakness

Tendering and subcontraction– incomplete information– unclear criteria– discretionary decisions

Small tender is unsustainable for small subcontractors and Sasol

– creating unrealistic expectations– black and white businesses are

frustrated

Outsourcing– market distortions (e.g. sub-market

rents)


Sasol’s developmental role (2)Sasol’s developmental role (2)

Strength

Community development– HBDC– Stakeholders’ Forum– Osizweni– eMbalenhle– Esperanza– Sports development– Woman and youth

development

Weakness

Mixing of economic development and community development

– Small tenders– Unclear role of HBDC:

Sasol tender centre for disadvantaged microfirms or business development centre


Cooperation and communication (1)Cooperation and communication (1)

Expectations– Joint development effort

– Effective, result-oriented Stakeholders’ Forum

– Effective business associations

Obstacles– Too general development goals– No neutral support structure– Unclear representativeness– Possible conflict with elected

representatives– Unclear role and mandate of

participants– Fragmentation, parallel

structures– No clear goals– No clear vision of tasks



Expectations– Effective task groups /

organizations (Osizweni, HBDC, ...)

– Transparency and information flows

Obstacles– Unclear goals– No defined milestones– Unclear status of decisions

made– No monitoring and evaluation– Task Groups: Little follow-

up / leadership– Little information flows– Lots of hearsay and

prejudice– Lack of trust


Some suggestionsSome suggestions


MarketingMarketing

– Block C-fair (HBDC)– Focus group => clarify business profile (André

Roos + Petrus Mpete)– Strategic profile of the region: Survey of 5 leading

chemical regions in the world -- Joint-venture TLC and Sasol (Albert Olivier, Pieter Bouer)


SMME-DevelopmentSMME-Development

– Coaching and business angel model (Deon van Garderen, Black Management Forum)

– Bank managers presenting credit products at NAFCOC


Sasol’s development role (1)Sasol’s development role (1)

Evaluate black empowerment practice– Minimize distortions (overpromotion of few, unmet and

unrealistic expectations of many)– Enhance transparency– Separate community development and economic

development = do empowerment with a business logic in mind

Eliminate micro-tenders– create subsidiary to contract micro-enterprises– sustainable business relations– kick-off meeting HBDC - NAFCOC - Sasol– NAFCOC gives speeches to small black SMMEs


Sasol’s development role (2)Sasol’s development role (2)

Analyse the potential to use current non-product output commercially

– low-temperature energy to create high-value biomass in greenhouses

– methan fuel-gas for house fires



Business associations– Business Forum voices business interests and gives

services to members– Business associations as social gatherings

Process Management – Definition of goals => breaking down goals

use GOPP methodology– Define milestones => establish monitoring– Set incentives, work on mutual interests– Stepwise, project-oriented work– Open learning process



Trust and expectation– Stepwise approach– “You’re always a beginner”– Try to thing the way your counterpart thinks– Try to overcome boundaries

between organizations between sectors (e.g. SMME and Labor)


Some International ExperienceSome International Experience


Income generation for small farmersIncome generation for small farmers

Small NGO in Southern Brazil:

– Managing the entire production chain

– Market-driven approach– Scanning international

best practices– Strictly business approach– Strictly working with

associations, not with individuals


Combining skills development with Combining skills development with other activitiesother activities

– Converting an old steel plant in Duisburg / Germany into a recreational area:

– Training courses for long-term unemployed metalworking gardening and

landscaping– Re-integration of skilled

unemployed into the formal labor market


Combining skills development with Combining skills development with other activitiesother activities

– Renovating a chapel in a former seminar and future museum and research center in Rio Negro / Brazil

– Hiring 1 specialist– Offering a training course

in chapel renovation for up to 10 students

– Training course takes place on-site at chapel

– Monthly fee of R 400 per student


How do you plan the unthinkable?How do you plan the unthinkable?

– Planning = learning– Implementation =

learning Perpetual process

of planning, implementation, monitoring & evaluation, new planning

You’re never there!

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