The critical elements of a conducive local business environment in selected South African municipalities.

Abstract

It is frequently claimed that the role of government, especially that at the local level, is to facilitate the creation and sustainability of a conducive environment in which business may flourish. Indeed, in the National Framework for Local Economic Development, municipalities are urged to promote the conditions in which business enterprises may flourish, economic equitability may be achieved and jobs will be created. (DPLG, 2006) When the exact nature of a conducive environment is considered, however, there is little clarity as to the elements that contribute towards such an environment. In various endeavours to define the desirable elements of a conducive or enabling business environment, agencies, among them the World Bank, have commissioned or produced reports on this subject. In most cases, however, it is a regulatory arena that has been given attention, and this often at the national rather than local level. The primary concern of this study is not a regulatory framework, which in South Africa is only mildly influenced by local government, but the ways in which municipalities create or inhibit hospitable conditions for business through policies and strategies which often appear to be devoid of understanding as to how business operates and what it requires to flourish. The researcher's experience as the manager of a chamber of commerce over fourteen years during which he has engaged with local businesses and their difficulties and successes, has provided a sense of what the factors are that, particularly, inhibit business growth. Respondents, which are companies of all sizes and types within chambers of commerce in various parts of the country, were asked to assess the extent to which these factors inhibit or promote business. They were also asked to add any others that had not been listed already. The suggested elements fall into various categories ranging from the delivery of municipal services in various spheres to assessments of the skills capacity of local communities. It was expected that the responses would enable the researcher to describe more accurately what constitutes a conducive environment in the experience of business enterprises. The South African Chamber of Commerce and Industry (SACCI) was interested in, and sanctioned, this research which, it is believed could be expanded later into the development of a Hospitability Index by which municipalities may benchmark their establishment and maintenance of an environment conducive to business.