LED Programme: Rural Economic Development Initiative (REDI)


In August 2007, the DBSA initiated a process to establish a Local Economic Development Fund (LEDF). The following five business units now fall within the DBSA Development Fund:

  • Project Management,
  • Rural Development,
  • Sustainable Communities,
  • Agencies, and
  • the Vulindlela Academy.

The Fund's vision is to stimulate a reconfiguration of the space economy by unlocking economic potential within identified localities to drive shared growth.

sme bike repair

Photo: SME development in Genadendal, Theewaterskloof Local Municipality: Promoting the area for bicycle tourism also strengthens local business development.

Programme Background & Rationale

Since 1994, South Africa has made great strides towards achieving many of the socio-economic goals outlined in the RDP. However, whilst the country is predicted to remain on a growth trajectory of over 4 - 5%, millions of South Africans continue to live in poverty, excluded from the benefits of increasing prosperity. The continuing prevalence of apartheid spatial settlement patterns that consign the majority black population to the periphery of economic activity and access to opportunity is a key contributant to this phenomenon. Such marginalization not only ensures that the asset base of the poor is weak – which is why growth does not ‘trickle-down’ – but that base continues to be eroded through high transportation costs etc.

Hence, whilst the government has embarked on a number of initiatives aimed at promoting shared growth (e.g. ASGI-SA), ultimately all these initiatives must be played out in a geographic space. Thus, the characteristics of the national as well as local space economies become very important as enablers or disablers of economic growth as well as social and economic inclusion.

In terms of the national space economy, the three primary economic cores of Gauteng, greater Cape Town and eThekwini-uMsunduzi remain economically dominant, whilst there are a number of other areas with high levels of economic potential which have yet to be fully realized. From a shared growth perspective, the implications of this are three-fold:

  • Firstly, within the context of the increasing urbanization of poverty, we have to find a way to ensure that the economies of our major urban areas act as spaces of inclusion not exclusion, of economic integration and not growing marginalization and inequity.
  • Second, we need to find a way of spreading opportunity through maximizing the economic potential of areas outside the dominant cores, through fostering local space economies that drive shared growth.
  • Third, we need to take advantage of high-impact, quick-win investment opportunities that could have a catalytic ripple effect on economic growth.

However, Local Economic Development (LED) initiatives in South Africa to date have not risen to these development challenges.


The LEDF, now the Rural Development programme, aims to integrate development interventions in poor regions so as to catalyse economic growth through improved infrastructure and service delivery.

The LEDF thus encapsulates the following value proposition:

  • Enables strategic action through intelligence-driven development planning
  • Fosters structured, holistic and integrated programme implementation
  • Leverages economic potential earlier
  • Ensures sustainability in community growth
  • Accelerates infrastructure delivery
  • Simulates absorption capacity (quicker access to the Financial Market)
  • Eliminates fiscal drag earlier
  • Eliminates cost escalation inherent in the long term rollout of Infrastructure
  • Decreases the risk of political hazard inherent in long term planning

In this way, the LEDF address the critical gaps outlined above but also focus on LED interventions with high multiplier effects

Current Status

Programmes in three pilot sites were brought into implementation:

The Fund provided technical assistance to develop economic and institutional turnaround strategies for these municipalities, and identified 24 catalytic development projects. The beneficiary municipalities have since taken over the responsibility for these projects.

hydro power cdm

Photo: The LEDI team in Cacadu District Municipality is assisting Blue Crane Development Agency in the development of an implementation study for the generation of hydro-electricity along the Fish River.

Two innovative project finance products were also developed. The first, the Regional Economic Model, forecasts the impact that an investment in a specific sector will have on economic growth. The model is being tested in the Theewaterskloof Local Municipality and the eThekwini Metropolitan Municipality. The second, a MIG-leveraged product, is intended to assist rural and under-resourced municipalities in frontloading MIG allocations. This shortens the project implementation cycle and enables them to fast-track infrastructure service delivery.

Theoretical Knowledge

Currently no content available. If you have some further information please submit this to us: contact@led.co.za.

Practical Knowledge

Title & Detailssort descending User Ranking Popularity
REDI Case Study: Cacadu District Municipality
Author(s): SA LED Network
Year: 2011
Format: Case Study
No votes yet
REDI Case Study: Theewaterskloof Local Municipality
Author(s): SA LED Network
Year: 2011
Format: Case Study
No votes yet
REDI Case Study: Ugu District Municipality
Author(s): SA LED Network
Year: 2011
Format: Case Study
Average: 3 (4 votes)






DBSA Head office
1258 Lever Road Headway Hill
Midrand , Gauteng
South Africa
Phone: +27 11 313 3911
Fax: +27 11 313 3086
Gauteng ZA