Interrogating the institutional capacity of local government to support local economic development agencies in KwaZulu-Natal province of South Africa

Local Economic Development Agencies (LEDAs) were established as municipal entities with the institutional support of the Industrial Development Corporation (IDC) to address the failures of local government-led development, and to put an impetus to Local Economic Development (LED). However, after a change in the legislative framework and the end of IDC donor funding to LEDAs, municipalities were left with the burden of institutionally supporting LEDAs. This article is based on a qualitative study in which semi-structure interviews were undertaken with key gatekeepers. The article assesses the institutional capacity of local municipalities to support LEDAs through case studies of three KwaZulu-Natal LEDAs. The results reveal that local municipalities do not have the institutional support required by LEDAs, because the municipalities themselves are mired in institutional inefficiencies. Operationally, local municipalities lack the capacity to support LEDAs because of a dearth of competent LED officials, and LED is not regarded as a priority by municipalities. Financially, municipalities also do not have the ability to support LEDAs, as they can barely sustain themselves because of a failure to collect revenues. The provincial government should prioritise institutional support to LEDAs by dedicating a provincial unit to deliberately and proactively support LEDAs institutionally.