Creating a Local Creating a Local Competitive Advantage for Competitive Advantage for Ilembe: FoIlembe: Foccus on us on Manufacturing in IsithebeManufacturing in Isithebe

Results of the PACA Exercise16 - 20 February 2004

Part 1: IntroductionPart 1: Introduction

What is Participatory Appraisal of What is Participatory Appraisal of Competitive Advantage (PACACompetitive Advantage (PACA®®

)?)?

Participatory

Appraisal of

Competitive Advantage

Involve local stakeholders Motivate local stakeholders to take an

active role in an LED initiative Transfer know-how to local stakeholders

and businesses

Do a quick scan of the local economy Assess and refocus ongoing local

economic development activities

Identify strengths, skills, talents and opportunities

Identify business and LED opportunities

What is the objective of PACA?What is the objective of PACA?

Identify, with a rapid appraisal, the main strengths and weaknesses of the local economy and its main sectors (duration: 1 - 2 weeks)

Identify options for practical activities to strengthen the competitiveness of firms -- Criteria:– feasible with local resources– quickly implementable (starting next week)– quick, visible results (with 3 months)

The PACA TeamThe PACA Team

A team of LED consultants drawn from all over South Africa

Contracted by Enterprise Ilembe and GTZ

Facilitated by Mesopartner

What have we been doing? What have we been doing?

Review of secondary literature Built on previous work – PACAs in Agriculture

and tourism in Ilembe in 2003 Kick-off workshop 18 interviews with businesses on the estate 4 mini-workshops with businesses Walking & interviews (7) in Sundumbili township

& plaza Interviews with micro-enterprises (9) at

sundumbili Plaza & Ithala small business park Feed-back workshop (today)

Part 2: DiagnosisPart 2: Diagnosis

Main findings Main findings

Key locational strengths are infrastructure and basic services

Access to pool of labour Negative impact of HIV/Aids on productivity Little communication, networking and linkages

between businesses Disconnection between Isithebe and environs Many local firms are relying on comparative

advantage rather than developing competitive advantages

Isithebe is showing signs of decline, not collapse

Key locational strengths are Key locational strengths are infrastructure & basic servicesinfrastructure & basic services

Generally input costs are low There is existing management of the

industrial estate Basic service problems do exist – but

issues relating to water are being resolved There is a critical mass of existing

businesses Transport costs remain an issue of

concern, not very critical Crime is a problem requiring attention

Access to pool of labourAccess to pool of labour

Historical cost advantage still a strength but being eroded by wage parity

Large pool of appropriate skills & experience, but not at a higher level

Poor linkages to training providers to address apparent skills gap

Impact of HIV/AidsImpact of HIV/Aids

Recognised by organisations as an issue – some existing initiatives

Beginning to impact on labour productivity (eg absenteeism) and bottom line

Few firms have proactive strategies Lack of cooperation & coordination

between organisations to build on existing initiatives

Little communication, networking & Little communication, networking & linkages between businesseslinkages between businesses

In thriving industrial districts firms network to increase business, reduce costs and create healthy competition

The general absence of this is a matter for concern

Isithebe business need to have a common point of contact

Disconnection between Disconnection between Isithebe and environsIsithebe and environs

Perceptions of “unhealthy” relationship between estate and Sundumbili

Little obvious signs of corporate citizenship

Emerging enterprises are not being integrated into the local mainstream economy

Smaller firms on the estate feel marginalised

Firms rely on comparative advantage Firms rely on comparative advantage rather than developing competitive rather than developing competitive advantageadvantage

Many firms in low end, cost-based markets

Firms admit to little product and process innovation, although many have this potential and expertise

Lack of market expansion – focus on local rather than national and international markets

Isithebe is showing signs of Isithebe is showing signs of decline, not collapsedecline, not collapse

Many firms still committed Some firms expanding and investing Challenges likely to intensify and cannot

look to government for help Negative perceptions are contagious –

general view is that “the glass is half empty rather than half full”!

Isithebe is in fact doing better than many other industrial estates – especially those established with decentralisation incentives

Part 3: ProposalsPart 3: Proposals

The proposal are based on the diagnosis

The criteria used:– use of local resources– can it start next week– will there be a visible difference within three months

1. Opportunities for local firms to 1. Opportunities for local firms to reduce transport costsreduce transport costs

Set up Internet-based system to identify opportunities for part loads / load sharing

Ithala – create opportunity for transport broker

Business – drive process

Ithala – start-up support

2. Enhancing the marketing and 2. Enhancing the marketing and promotion of Ipromotion of Isithebe sithebe

Creating targeted and aggressive marketing – Attracting complimentary businesses

that will improve local competitiveness– Explicitly address the perception that

Isithebe is in decline: Emphasize emerging new profile of Isithebe

Enterprise Ilembe and Ithala to define the marketing opportunities

3. Creating a safer business 3. Creating a safer business environmentenvironment

To improve local visible policing and resources

Fast-track proposals to redefine Police Station boundaries

BAC, Ilembe and Ithala to meet the Provincial Commissioner to press for urgent decision

4. Establishing opportunities for 4. Establishing opportunities for Emerging Enterprises?Emerging Enterprises?

Emerging enterprises to define what they have to offer and package it in such a way that it is attractive to established Isithebe business

Establish emerging entrepreneurs database to be used for linking and outsource opportunities with establish business

Champion?

5. Addressing the impact of 5. Addressing the impact of HIV/AIDSHIV/AIDS

To get business to know what to do and how to do it

Ask Brad Mears from Durban Chamber of Commerce and Industry to brief business next week on what they could do and the resources available to assist Business

Maximise synergy with the existing Love Life local interventions and resources that business can use

Other ideas and opportunities?Other ideas and opportunities?

Labour Broker Agency Labour Relations and HR services An on site stationary outlet Linking traditional herbalists to the DEDT

Agri-unit initiative Developing basic trading infrastructure for

emerging business in Sundumbili