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Local Economic and Social Development’s (LESD) role in shared prosperity

By Joshua Machinga

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20 July 2017

Resources have become a source of conflict rather than opportunity and in many instances, communities, let alone countries that are rich in mineral resources suffer from poverty, corruption and conflict stemming from weak governance. A classic example is that of African continent, with about 30% of the world’s mineral reserves, 10% of the world’s oil and 8% of the world’s natural gas yet approximately 43% of its people live in extreme poverty. Governance, improved domestic resource mobilization, transparency and inclusive growth results in improved livelihoods of the marginalized communities. If managed in transparent, inclusive and sustainable ways, resource dependent economies score high on Human Development Index (HDI).

It is against this background that Local Economic and Social Development (LESD) becomes pivotal in bringing shared prosperity. This is because LESD seeks to enhance the resilience of the macro-economic growth through increased local economic growth, employment creation and development initiatives within the context of sustainable development. For LESD to be successful, both backward and forward linkages become crucial. Backward linkage is the demand-side connections a firm has with existing firms and exist when investments in an industry profit from inputs. Forward linkages thus the supply-side connections a firm has with other existing firms and provide a measure of the size of the potential market for entrant and exist when investments in an industry profit from outputs

Given developing countries governments emphasis on poverty reduction, one of the Sustainable Development Goals (SDGs) to end poverty, protect the planet and prosperity for all, there is increased responsibility being placed on local government to develop strategies that revitalizes economies. LESD initiatives encourage local participation in determining economic and social welfare of communities through promoting local approaches that respond to local needs and conditions. Consequently, this will reinforce and re-enforce good governance and identify sustainable income generating opportunities for the local community, particularly for the poor.

Since LESD initiatives emphasis benefiting the locals, positive LED results are improbable to be accomplished lest potential and needs of the informal sector are adequately considered, as it is now the country’s (Zimbabwe) largest employer owing to economic nosedive. The need for addressing the informal sector is because it indirectly contributes to the fiscal revenue through Value Added Tax (VAT), employs a significant number of people, the formal sector sources its inputs from this sector (increase in corporate tax), thus contributing largely to Gross Domestic Product (GDP) of a country. These reasons create the conducive environment that enables LESD targets to be achieved.

Joshua Machinga (@macjoshy) Joshua Y Machinga is a volunteer with the Zimbabwe Environmental Law Association. He blogs at Articles on Natural Resource Governance, Mining and Human Rights