Strategic Local Economic Development by Local Governance Support Program in ARMM

STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments Copyright ÂŠ 2009 Local Governance Support Program in ARMM (LGSPA) All rights reserved. The Local Governance Support Program in ARMM (LGSPA) encourages the use, translation, adaptation and copying of this material for noncommercial use, with appropriate credit given to LGSPA. Although reasonable care has been taken in the preparation of this manual, neither the publisher nor contributor, nor writer can accept any liability for any consequences arising from the use thereof or from any information contained herein. ISBN 978-971-94065-9-4 Printed and bound in Davao City, Philippines Published by: Local Governance Support Program in ARMM (LGSPA) Unit 72 Landco Corporate Centre J.P. Laurel Avenue, Bajada 8000 Davao City, Philippines Tel. No. 63 2 227 7980-81 www.lgspa.org.ph This project was undertaken with the financial support of the Government of Canada provided through the Canadian International Development Agency (CIDA). LGSPA was implemented by Agriteam Canada. www.agriteam.ca

Te c h n i c a l Te a m Photography Bobby Timonera cover photo, pages 13, 21, 75

Technical Advisor Emma Barbara Remitio

Technical Review Team Myn Garcia Mags Z. Maglana Rizal Barandino Edgar Catalan Sef Carandang

Editorial and Creative Direction Myn Garcia

Technical Coordination Maya Vandenbroeck

Cover Design and Layout Tata Lao

Writers Chona Balagat Anami Canag

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Contents

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Foreword Assalamo Alaikum Warahmatullahi Wabarakatuho! Today many local governments are already looking beyond planning and the delivery of social welfare services as priorities. LGUs are now findings ways of undertaking programs and improving capacities that would enable constituents to take part in promoting and implementing initiatives that spur local economic development. The transformation of communities from being recipients of services to becoming active participants in economic development is gaining ground and wider acceptance among LGUs. Strategic Local Economic Development: A Guide for Local Governments is a very timely publication considering the growing clamor for local governments to take active part in promoting local economic development both as a goal and as a program in local governance. This publication serves not only as an eye opener but also as a guide for LGUs to understand and integrate local economic development processes and mechanisms into local government functions. The LGU experiences featured in the publication are good examples of how local leadership can steer economic progress through participatory, transparent and accountable governance. The publication is also inspiring coming as it is from the experiences of local governments in the Autonomous Region in Muslim Mindanao (ARMM). One important insight is that local economic development can happen in any type or class of LGU. This Guide also highlights the importance of LGU, community stakeholders and government agency interaction as a critical element in achieving local economic development. Each one has a role to play in the local economic development process. The steps provided in this Guide are not only useful to LGUs but also to other stakeholders, especially to agencies such as the DTI-ARMM. Strategic Local Economic Development: A Guide for Local Governments emboldens us to strengthen further our efforts in integrating the LED process within the DTI-ARMMâ&#x20AC;&#x2122;s mandate, plans and programs. We trust that this publication will motivate and inspire more LGUs to embark on a meaningful, deliberate and strategic LED process. Our congratulations to the LGSPA for coming out with this relevant and most useful knowledge resource!

SAJID S. DRUZ ALI

Regional Secretary Department of Trade and Industry-ARMM (DTI-ARMM) 2

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Acknowledgements This publication was made possible through the dedication and collective efforts of individuals and teams who willingly shared their ideas and valuable time in conceptualizing and developing this Guide. The Local Governance Support Program in ARMM thanks: The local economic development stakeholders of the municipalities of Upi, Datu Odin Sinsuat, Sultan Kudarat and Parang in Maguindanao; Wao and Tugaya in Lanao del Sur; Lamitan in Basilan, Bongao in TawiTawi; and Jolo in Sulu, whose experience in facilitating local economic development in their respective areas inspired the writing of this Guide LGSPA Program Officers Jaime Dumarpa, Jim Hassan, Veronica Quinday, Fatima Darwissa Yussah and Assistant Manager Cecile Isubal for providing technical assistance to their respective LGUs in undertaking the LED process The DTI-ARMM LED coach team headed by ASec Maritess Maguindra for continuing the support to LGUs and for integrating the LED process in their agencyâ&#x20AC;&#x2122;s programs The technical team of this publication -- Chona Balagat, Anami Canag, Emma Barbara Remitio, Myn Garcia, Rizal Barandino, Edgar Catalan, Mags Z. Maglana, Maya Vandenbroeck, Sef Carandang and Tata Lao -- who passionately saw through the development and completion of this Guide LGSPA managers and staff who contributed in many ways to promoting local economic development and to producing this knowledge product

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Preface Strategic Local Economic Development: A Guide for Local Governments is the embodiment of the collective experience of local government units, government agencies and the Local Governance Support Program in ARMM (LGSPA) in promoting local economic development in the Autonomous Region in Muslim Mindanao. Despite difficulties and conditions that were inimical to durable economic development and peace, the work of LGSPA has produced a wealth of knowledge that contributes to the further evolution of the framework and strategies in local economic development promotion that were initially pursued in the second phase of the Local Government Support Program (LGSP II). In this connection, the electronic file of the Local Economic Development: Stimulating Growth and Improving Quality of Life publication of LGSP II has been included as a companion CD to this material. Strategic Local Economic Development: A Guide for Local Governments is based on the field application by LGSPA of existing local economic development (LED) general processes and guidelines. Using the tenets of good governance as anchors, the LGSPA experience highlights the importance of participation, transparency and accountability as very important elements in local government-facilitated economic development. In the context of the ARMM, the experience underscores the importance of integrated, collaborative and purposive undertakings among economic agencies, private stakeholders and local government units in maximizing opportunities for local economic development. This Guide hopes to fill in knowledge gaps in boosting the capacities of local governments to engage stakeholders and players of local economic development. It emphasizes the industry approach, promotes entrepreneurship for wealth and job creation and recommends more robust ways of assessing competitiveness and crafting LED strategies. It also links LED to gender equality and poverty reduction, themes that are equally important to LGUs and citizens. The Guide includes LED experiences in ARMM through the work of LGSPA and of other areas in the Philippines. With Strategic Local Economic Development: A Guide for Local Governments, LGSPA hopes to have shown that local economic development can be implemented in the context of promoting good governance and that good governance is vital to local economic development. Local Governance Support Program in ARMM (LGSPA)

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Acronyms ABC ADB AI AIP ARD-GOLD

Association of Barangay Captains Asian Development Bank Artificial Insemination Annual Investment Plan Associates in Rural Development â&#x20AC;&#x201C; Governance and Local Democracy ARMM Autonomous Region in Muslim Mindanao ATI Agricultural Training Institute BDC Business Development Center BEMO Bohol Environmental Management Office BEPO Bohol Employment and Placement Office BIPC Bohol Investment Promotion Center BIPP Bohol Investment Promotion Program BIR Bureau of Internal Revenue BLECS Bohol Law Enforcement Communication System BOL Build-Operate-Lease BOO Build-Operate-Own BOT Build-Operate-Transfer BPRMO Bohol Poverty Reduction and Management Office CALABARZON Cavite, Laguna, Batangas, Rizal, Quezon Economic Zone CDP Comprehensive Development Plan CDS City Development Strategy CLUP Comprehensive Land Use Plan CMU Central Mindanao University CSO Civil Society Organization DA Department of Agriculture DAR Department of Agrarian Reform DENR Department of Environment and Natural Resources DepEd Department of Education DILG Department of the Interior and Local Government DOH Department of Health DOLE Department of Labor and Employment DOST Department of Science and Technology DOT Department of Tourism DPWH Department of Public Works and Highways

DSWD DTI ELA EO e-TRACS EU FARMC GAD GFI GTZ HVCC IEC ILO IPAG IRA IT KAS LCE LDC LDIP LDIS LECA LED LGPMS LGSP II LGSPA LGU LRED LRIA M&E MEDCo MNDC MPDC MSME

Department of Social Welfare and Development Department of Trade and Industry Executive-Legislative Agenda Executive Order Electronic Tax and Revenue Assessment and Collection System European Union Fisheries and Aquatic Resources Management Council Gender and Development Government Financing Institutions German Technical Cooperation High Value Commercial Crops Information, Education, Communication International Labor Organization Investment Promotion Advisory Group Internal Revenue Allotment Information Technology Konrad Adenauer Stiftung Local Chief Executive Local Development Council Local Development Investment Program Local Development Indicator System Local Economy and Competitiveness Assessment Local Economic Development Local Governance Performance Management System Local Government Support Program Phase 2 Local Governance Support Program in the Autonomous Region in Muslim Mindanao Local Government Unit Local and Regional Economic Development Local Resource Inventory and Assessment Monitoring and Evaluation Mindanao Economic Development Council Metro Naga Development Council Municipal Planning and Development Coordinator Micro, Small and Medium-Scale Enterprise STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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MPDC MSME MSU-IIT MTDP NCCA NCR NEA NEDA NGO NIA NSO OBOL ODA OECD OFWs OTOP PAHRDF PAssO PBIA PCARRD PCE PCC PEE PESO PGMA PMS PO PPP PSP PTEZ 6

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Municipal Planning and Development Coordinator Micro, Small and Medium-Scale Enterprise Mindanao State University - Iligan Institute of Technology Medium Term Development Plan National Commission for Culture and the Arts National Capital Region National Electrification Administration National Economic Development Authority Non-Government Organization National Irrigation Administration National Statistics Office One Barangay One Livelihood Official Development Assistance Organisation for Economic Co-operation and Development Overseas Filipino Workers One Town One Product Philippines-Australia Human Resource Development Facility Provincial Assessor’s Office Panglao Bohol International Airport Philippine Center for Agricultural Research on Rural Development Philippine Center for Entrepreneurship Philippine Carabao Center Public Economic Enterprise Public Employment Service Office Provincial Government Media Affairs Presidential Management Office People’s Organization Public–Private Partnerships Private Sector Participation Panglao Tourism Economic Zone

QUEDANCOR Quedan and Rural Credit Guarantee Corporation RA Republic Act SB Sangguniang Bayan SCALOG System on Competency Assessment for Local Governments SDC Swiss Agency for Development Cooperation SEC Security and Exchange Commission SEZ Special Economic Zone SMART Specific, Measurable, Achievable, Relevant, Time-bound SME Small and Medium Enterprise SMEDC Small and Medium Enterprise Development Council SP Sangguniang Panlalawigan SWOT Strengths, Weaknesses, Opportunities and Threats TCTLDC Tuguegarao City Technology and Livelihood Development Center TESDA Technical Education and Skills Development Authority TOP Technology of Participation TWG Technical Working Group UNCDF United Nations Capital Development Fund UNESCO United Nations Educational, Scientific and Cultural Organization UN-HABITAT United Nations Human Settlements Programme UNIDO United Nations Industrial Development Organization UNWTO United Nations World Tourism Organization USAID United States Agency for International Development WB World Bank WFO World Food Organization

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Introduction It is at the local level that the greatest potentials for spurring development — for promoting investments, creating jobs and boosting demand – exist. With the decentralization of certain powers and functions brought about by the Local Government Code of 1991, the role of local government units (LGUs) in development have also expanded. It is for this reason that LGUs are now viewed not just as providers of public goods and basic social services, but more importantly as promoters of local economic development or LED. The LGUs have a critical role to play as agents of economic development in their respective communities. However, LGU support to LED for the most part has been ad hoc and limited to one-off ‘livelihood’ projects that have proven to be unsustainable and often counterproductive in attaining the overarching goal of poverty reduction. Among the pressing concerns of the LGUs are limited economic activities, especially in the rural areas. Since most LGUs belong to the 3rd to 5th income classes, they are faced with the problem of limited local funds to finance economic projects and related activities. They also have limited capacity and technology to manage or link with other resource institutions, markets and other potential partners. Strategic Local Economic Development: A Guide for Local Governments is intended to provide practical steps and tools on the application of the LED process in Local Government Units (LGUs). These procedures are based on the experiences of the Local Governance Support Program in ARMM (LGSPA), the Local Government Support Program (LGSP) II and other pioneering LED-related interventions in the Philippines. This knowledge product is a companion piece to the 2003 LGSP resource book, Local Economic Development: Stimulating Growth and Improving Quality of Life. The LGU-facilitated strategic LED process described in this Guide follows the five-stage strategic planning process proposed in two excellent references published by the World Bank: the Local Economic Development: A Primer - Developing and Implementing Local Economic Development Strategies and Action Plans, and the Making Local Economic Development Strategies: A Trainer’s Manual. This Guide, however, offers a new perspective on the LED process in three ways based on the experience of the LGSPA: 1. 2.

It describes the LGU-facilitated LED process as part of the economic sector development function and integrated in the planning, implementation, monitoring, evaluation and policymaking systems of an LGU; It gives emphasis to value chain and industry-based LED strategy formulation; and STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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It demonstrates the use of small, medium and enterprise development, performance management, and poverty-sensitive and gender-responsive strategies in the implementation of the LED plan.

The specific steps, tools and examples under each stage are mostly drawn from the LGSPA experience in the ARMM, which are also practical and relevant to any LGU in the Philippines wishing to undertake a systematic and participatory process of formulating a LED strategy. The Guide has five major parts:

• • • • •

Introduction Chapter 1 – Understanding the Local Economy Chapter 2 – Integrating LED in Local Government Processes Chapter 3 – LED in Practice Chapter 4 – Lessons Learned

The Introduction gives a synopsis of the fundamentals of LED – rationale, nature, goals, principles, legal framework, stakeholders and their roles and responsibilities – which are expounded in the LED: Stimulating Growth and Improving Quality of Life resource book. Having an appreciation of the concepts and merits of undertaking the LED process is necessary before proceeding to its specific steps and methodologies. Chapter 1 – Understanding the Local Economy shows how the flow of money coming in, circulating, and leaving a community impacts the economic development and wealth creation in the locality. This chapter also discusses the five fundamental components of the local economy (labor, technology, infrastructure, financial capital and leadership) and some of the issues related to these components that LGUs may have to deal with in the LED process. Chapter 2 – Integrating LED in Local Government Processes translates the concepts and principles of LED into concrete actions by presenting step by step procedures and tools in planning and implementing the LED Strategy. This chapter discusses the five-stage Strategic LED process, namely: 1) Organizing the LED Effort, 2) Doing the Local Economy and Competitiveness Assessment or the LECA, 3) Formulating the LED strategy, 4) Implementing the LED Strategy, and 5) Reviewing the LED Strategy. Chapter 3 – LED in Practice is a compendium of LED experiences, innovations and good practices of selected LGUs in the Philippines including those of Wao and Tugaya in Lanao del Sur, and Upi in Maguindanao, which are municipalities covered by the LGSPA. LED initiatives of the provincial government of Bohol, the city government of Tuguegarao in Cagayan, the city government of Naga 8

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in Camarines Sur and the municipal government of Baybay in Leyte are also featured. Useful insights can be drawn from the different approaches and strategies resorted to by these LGUs in stimulating economic growth in their respective areas of responsibility. Chapter 4 â&#x20AC;&#x201C; Lessons Learned documents the learning gained from the LGSP II and LGSPA LED projects. These include strategies that work or do not, as well as factors that facilitate or hinder the LED process. These lessons are presented so that other LGUs can gain some ideas on which approaches to avoid, adopt or modify based on local conditions. What is Local Economic Development? Essentially, economic development is a process and the practice of increasing the rate of wealth creation by mobilizing human, financial, organizational, physical, and natural resources to generate more marketable goods and services whereby the economic developer influences the process for the benefit of the whole community (McSweeney, n.d.). Countless economic policies and strategies have been initiated in the past by the national government to address poverty and equitable growth but more focus was given on larger enterprises, urban and urbanizing communities and centralized planning that overlooked the indispensable role of the LGUs. As a result, rural economy where most Filipinos are living and working remained sluggish resulting to increased poverty incidence and poorer quality of life (LGSP, 2003). LED offers an alternative approach that aims to fill in the gaps of the previous initiatives. Local economic development (LED) is the process by which actors (governments, private sector and civil society) within localities, work collectively with the result that there are improved conditions for economic growth, employment generation and quality of life for all (Adapted from the World Bank definition). The term Local in the definition signifies that LED involves building the economic strength of a local area by optimizing local resources and capacities; the prime movers or driving forces are economic stakeholders in barangays, municipalities, cities and provinces singly or collectively; and it is territorial (or area-based) in its approach. Although the focus is local, there are links to the regional, national and international levels. The Economic in local economic development drives home the importance of identifying and seizing business opportunities, supporting entrepreneurial initiatives (whether formal or informal, micro or large), facilitating market access and creating a climate conducive to investment and business activity. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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The term Development emphasizes that LED is holistic; it does not only cover the economic dimension but also includes social, politico-administrative and cultural aspects. The quality and direction of growth is as important as its quantity and size. Sustainable development is at the heart of LED which means satisfying the needs of the present generation without sacrificing the future of succeeding ones (LGSP, 2003). LED enables and promotes the coordination and optimization of scarce resources available in an area, the integration of LED plans, priorities and programs into regional and national plans (with direction from the bottom going up) and citizen participation and consensus building among stakeholders. Goals and Principles of LED The goals of LED are to create wealth, generate jobs, increase incomes and, ultimately, reduce poverty and improve the quality of life in the locality. LED operates on several principles. First, LED promotes equitable and sustainable economic growth. Equitable means opportunities to wealth creation are open to both men and women of working-age, to the rich and poor, to urban and rural dwellers, and to all ethnic and religious groups. To sustain economic growth, local resources may be transformed to marketable goods for the current population but it must be continuously regenerated so as not to deprive the future generation of the same resources. Second, LED is a multi-stakeholder partnership. Those who are affected and can affect the economic growth in the locality (such as government, business and civil society) have a stake and a role in LED. Third, the private sector is the acknowledged engine of employment and growth and as such, LGUs must be conscious of its “enabler” role, which is setting the right environment for the local economy to grow. The LGU may, however, prudently decide to provide certain services in situations where there are insufficient private or voluntary sector providers of such services or when cartels control the prices of certain commodities in the locality. Finally, good economy thrives when there is transparent and accountable governance – a practice that should permeate the political and economic structures in the community. The LGU Mandates and Related Laws on LED Some LGUs have already started economic programs and activities, drawing power and authority from existing statutes. These laws and mandates are fully discussed in LED: Stimulating Growth and Improving Quality of Life. Among these laws is the Local Government Code of 1991 (RA 7160) which has given the 10

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LGUs more power and authority to accelerate local economic development and improve the quality of life in their communities. RA 8425 or the Social Reform and Poverty Alleviation Act also mandates LGUs through the Local Development Councils (LDCs) to formulate, implement, monitor and evaluate poverty reduction programs in their respective jurisdictions, which are consistent with the poverty reduction strategy of the national government. These are further bolstered by the laws on the development of Small and MediumScale Enterprises (SMEs) such as the Magna Carta for Small Enterprises (RA 6977), Kalakalan 20 (RA 6810), An Act Providing Assistance to Women Entrepreneurs (RA 7882) and the Omnibus Investment Code (EO 226). The Department of the Interior and Local Government (DILG) has also issued memorandum circulars to the local governments pertinent to the pursuit of local economic growth and poverty reduction. See Annex A for a complete list of LGU mandates and related laws on LED. The LED Stakeholders, their Roles and Responsibilities The LED process calls for the collective efforts of local stakeholders to spur economic growth. They bring with them different levels of knowledge and expertise, perspectives, resources or assets that would render LED effective and successful in attaining its targets. No matter how small the role of a stakeholder is, engaging it is important in spreading ownership of the communityâ&#x20AC;&#x2122;s economic development strategies. Actions of community and government leaders can change, alter and direct the condition of their local economy. The economic quality of life of the residents and the success of businesses many times are directly affected by the policies and leadership of those who have the influence and power to create a climate conducive to economic growth (Fruth, W., n.d.). The LGU takes the role of provider, enabler or facilitator of local economic development. As provider, it sees to it that the infrastructure and subsidy requirements of existing and potential industries are in place. As enabler or facilitator, it ensures the economic playersâ&#x20AC;&#x2122; access to information and advisory services, formulates relevant and supportive policies and regulations, provides incentives, and works for the stability of peace and order. In addition, it has to carry out regular functions that have bearing on the success of LED, namely: policy making and taxation; regulatory functions; planning and budgeting; information collection, storage and dissemination; procurement of goods and services; marketing and public relations; investment and enterprise promotion; management of public economic enterprises (PEE) and the provision of physical facilities; public safety and cultural heritage activities; and, provision of social and environmental services.

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The LGU may also take on the role of service provider in situations where there are insufficient private or voluntary sector providers or when the capacities of these service providers are inadequate. This option, however, must be weighed carefully and the extent of LGU intervention must be clearly qualified considering its limited resources and array of social concerns other than infrastructure and economic projects. The private or business sector is represented by micro, small, medium and large-scale enterprises. With their role as engine for local employment and growth, they are tasked to scan and seize opportunities, take risks, develop markets and create economic value. Micro enterprises represent the informal economy and though not a significant generator of employment, they are considered incubators of bigger enterprises and fallback mechanism in times of economic crisis. Small and medium-scale enterprises are employment generators, the largest taxpayers, users of the latest technologies, and sources of managerial, technical and financial competencies. Organized business groups like chambers of commerce, industry associations, craft and professional associations and local guilds play a crucial role in setting and enforcing quality standards, upgrading human and technological resources, product development, marketing, business development, financing and creation of an LGU brand. Cooperatives (producers, credit, consumers) and microfinance institutions serve as depositories of community savings; providers of credit assistance, social protection measures such as health insurance, mortuary packages, and emergency loans; and promoters of frugality, discipline, trust, self and mutual help, and entrepreneurship. Civil social organizations (CSOs) such as non-government organizations (NGOs) and peopleâ&#x20AC;&#x2122;s organizations (POs) from the informal sector (vendors, tricycle drivers) and agriculture sector (farmers, fishers), represent the grassrootsâ&#x20AC;&#x2122; sentiments, needs and views making them excellent collaborators in planning, service delivery, community organizing and mobilization and in monitoring and evaluation of projects thereby promoting transparency and accountability. Educational institutions are providers of knowledge, developers and promoters of new technologies, trainers, and providers of talents and services for business institutions. National government agencies assist the LGU in the organization, planning, implementation and evaluation of the LED strategy by providing technical assistance, helping in fund sourcing, advocating LED among the stakeholders, developing and enforcing standards, and providing information and other market and resource linkages. 12

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Chapter

Understanding the Local Economy

shows how the flow of money coming in, circulating, and leaving a community impacts the economic development and wealth creation in the locality. This chapter also discusses the five fundamental components of the local economy (labor, technology, infrastructure, financial capital and leadership) and some of the issues related to these components that LGUs may have to deal with in the LED process.

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Understanding the Local Economy The Introduction provided a brief background on LED concepts and principles and underscored the importance of mobilizing local people and organizations in provinces, cities or municipalities to attain a vibrant local economy. However, to better understand the context in which the LED process operates, it is important to have an appreciation of how the local economy works and the factors that determine economic growth. How a Local Economy Works A local economy is a geographic area where people predominantly live and work and also earn and spend (Fruth, W., n.d.). As used in this Guide, the local economy refers to the geographic area within a political unit which could be a province, city or municipality. Money flows into the local economy in two ways: first, from the earned monies when products are sold to an outside customer (exported) and when people work out-of-town; second, from the unearned monies from outside sources to the local government and to community citizens. Also referred to as captured monies, these come from social security, retirement payments, interest income, rent and dividend from outside investments, revenue allotments and grants from national governmental agencies, grants and investments from official development assistance (ODA), foundations, NGOs, cooperatives and investors and remittances from family members working outside the community (Darling, 1991). When money pours in, it is circulated through spending on local goods and services. Some are spent locally, thus, generating more jobs and employment as goods and services are consumed. Money also flows out of the community in several ways: when local business firms and their employees buy their needs from outside sources, pay their taxes and social security to national governmental offices; when local households buy goods and services out-of-town; when local residents invest their money in businesses outside the locality; when there is inefficient use of local assets such as land, buildings and human skills and talents or when local investments do not pay off; when estate settlements are bequeathed to heirs living in other areas; and through investments on education of children who eventually leave the area for better opportunities elsewhere. The inflow and outflow of money in a local economy can be illustrated using the “leaking barrel” of wealth model. The example in Figure 1 shows that the money coming into a municipality’s local economy largely come from tourists and visitors, the LGU’s Internal Revenue Allotment (IRA), family member remittances, and agricultural products sold to buyers and consumers outside the locality. The leaks in the barrel represent the money or income leaving the economy. In the example, the leaks in the economy come in the form of crop production inputs, construction materials and labor that come from outside 14

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Understanding the Local Economy sources; printing and publishing services that are absent in the municipality; local residents shopping in other cities; and, LGU expenditures outside the municipality. As money is imported into the community, it enters the barrel where it is mixed and blended, going from person to person, business to business, creating local employment and wealth. It is impossible to seal a community’s economic boundaries completely (Schmidt & Myles, n.d.) but when nothing is done to “plug the leaks” or slow down the rate of money flowing out, wealth will not multiply within the local economy. Figure 1. Example of Money Flow in a Local Economy

Economic Generators Tourist & Visitors Agri-aqua Production

= P

Internal Revenue Allotment (P73 M)

= P

Remittances of family members working outside the municipality

= P

MUNICIPALITY’S LOCAL ECONOMY = P

Local Residents Shopping in other Cities

= P

Leakage Out of the Municipality = P

LGU Expenditures outside the Municipality

= P

Crop Production Inputs (Fertilizers, Seeds, etc.)

Construction Materials

= P

Construction Labor Printing & Publishing Services

Source: Adapted from McSweeney (n.d.) STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Understanding the Local Economy Fundamental Components of the Local Economy Local economic growth is determined by the interplay of the economy’s labor, financial capital, technology, infrastructure and leadership components. These are the factors that must be analyzed during the LED process particularly in the Local Economy and Competitiveness Assessment (LECA) so that specific issues (strengths, weaknesses, opportunities and threats) in each of the component can be pinpointed and later addressed accordingly during the LED strategy formulation. Labor Labor, as a factor of production, pertains to the community’s most precious and abundant resource – its workforce. Factors affecting labor productivity in the local economy include housing, health and education services, skills availability, security, and training opportunities. Some of the problems besetting the labor sector of our local communities are the high unemployment rate in the rural area, among female and male youths and those with higher education (LGSPA, 2007). This suggests that population growth is higher than the production growth. Although there are masses of people who can provide “raw labor,” the quality of human capital is still below par making it difficult for job seekers to meet the required qualifications. The current demand gives preference to a broader set of skills such as better analytical, problem-solving and communication skills. The quality of labor is becoming more important than the cost of labor. In terms of gender equality, more women are now joining the workforce and a significant number are occupying management level positions. The Philippines is the 2nd highest in percentage of entrepreneurially active females (among 42 countries) (Madarang, Habito, & Philippine Center for Enterpreneurship (PCE), n.d.). The service sector has been absorbing an increasing number of workers, particularly women (LGSPA, 2007). The human resource is the means for social and material progress and at the same time the end or object of development. Economic development is concerned with the equitable distribution of real income, which is indicated by the average per capita income of the working age population and improved purchasing power of individuals. A productive labor force requires continuing enhancement of human capital. Investments on education, skills training, health and basic infrastructure like water, roads and electricity have positive effects on the locality’s manpower. By providing these facilities and services, the LGU can help educated, healthy, creative, proactive, and skilled male and female workers meet the labor requirements of businesses 16

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Understanding the Local Economy in or outside the locality. Generating local business investments and jobs to absorb the communityâ&#x20AC;&#x2122;s unemployed is another challenge to the LGU. Technology Technology generally refers to better techniques or methods of production (Fajardo, 1985). The development of a new technique is an invention and its application to production is called innovation. Technological advances impact the local economy by changing the nature of products and production techniques and improving productivity so that the economy remains competitive. Industry and business have become so knowledge-driven that the cost of products, particularly those requiring advanced technology, are driven by investments on knowledge or research rather than by actual production costs. Given their limited resources to conduct research and development, LGUs can harness the expertise of institutions and individuals by eliciting their participation in local economic development planning and implementation. Examples of research and technology development institutions are the Agricultural Training Institute (ATI), universities and colleges, Department of Science and Technology (DOST), Technical Education and Skills Development Authority (TESDA), Philippine Center for Agricultural Research on Rural Development (PCARRD), Technology and Livelihood Development Center (TLDC) as well as corporations that are willing to provide technical assistance on product development to small businesses as part of their corporate social responsibility. Infrastructure Infrastructures are large-scale public systems, services and facilities that are necessary for economic activities, including power and water supplies, public transportation, telecommunications, roads, schools, training and research centers, and health care facilities. The infrastructure needs of business have changed in recent years. The quality of service in terms of dependability, timeliness and convenience has become more important to the investors and the consuming public. Public investment in infrastructure leads to increased return on investment for business, higher productivity and a boost in private sector investment. The absence or lack of infrastructure, particularly in the rural areas, is due to the fact that most LGUs are cash-strapped. Some innovative and proactive LGUs have tapped the private sector for infrastructure development and management through such schemes as Build-Operate-Transfer (BOT), Build-OperateOwn (BOO), and Build-Operate-Lease (BOL). LGUs who have aggressively sought assistance, networked and demonstrated exemplary governance practices have attracted foreign funding agencies to finance the STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Understanding the Local Economy establishment of local infrastructures. Unfortunately, there are infrastructure projects that have turned into white elephants or have benefited only a few because investment decisions were not based on sound economic analysis and financial planning. An example of this is a seaweed processing plant lying idle because of inadequate working capital. These unutilized or underutilized facilities present another leak in the communityâ&#x20AC;&#x2122;s barrel of wealth and could be prevented through careful analysis and planning that is being espoused in the LED process. Financial Capital Financial capital fuels businesses. There are two types of financial capital and both are required at different stages of business growth. The first type is debt which is the lending or loaning of money with interest. It involves minimal risk to the lender because it is being secured by requiring collateral from the business or its owner. It requires regular payments of the loan principal and the interest. The second type of financial capital is equity which is money invested without interest. It involves a higher risk since it is unsecured by assets. In return for his or her investment, the investor acquires shares of ownership and sometimes is involved in the management of the business (McSweeney, n.d.). The lack of financial capital is the hindering factor most frequently cited by micro, small and mediumscale enterprise owners. The usual measure being adopted by LGUs, national government agencies, foundations and other development institutions in response to this issue is the shelling out of small livelihood grants or loans, without sufficient support to other aspects of the business like production and marketing. This one-off intervention, by and large, serves only as a temporary remedy and seldom results to sustained economic activity. Financial capital may be generated from various internal and external sources including the LGU (with its IRA and local revenues), banks, cooperatives, microfinance institutions, government financing institutions, NGOs/foundations, foreign-assisted projects, local businesses/industries and family savings (from remittances of family members, retirement fees, property rentals, pensions and insurances). Capital may also pour in from investors outside of the locality, which can be maximized by the LGU through investorfriendly policies. Leadership The leadership triangle in Figure 2 shows that there are three economic development interests that must cooperate for a successful local economic development. These are the local government or political 18

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Understanding the Local Economy leadership, the business community leadership, and the professional leadership (McSweeney, n.d.). Local government regulates the environment, provides or facilitates economic development incentives and programs, develops and manages human and financial resources and provides basic infrastructure. The business community leadership is represented by the industry players, the Small and Medium Enterprise Development Council (SMEDC) and the Chamber of Commerce, if any. They take the lead in creating wealth by generating marketable goods and services. Professional leadership are those that provide technical assistance (on small and medium enterprises, business planning, feasibility studies) such as LED and business consultants, Department of Trade and Industry (DTI) specialists, economic agencies, academic institutions, and other organizations with economic development mandates. These lead entities minimize barriers to growth, create opportunities and conditions to speed up the rate of wealth creation and facilitate the exploitation of these opportunities. The potential roles of government, business and professional sectors in LED planning and implementation are further discussed in Chapter 2. Figure 2. Economic Development Leadership

BUSINESS LEADERSHIP

LOCAL GOVERNMENT LEADERSHIP

Successful Local Economic Development

PROFESSIONAL LEADERSHIP

Source: McSweeney (n.d.)

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Chapter

Integrating LED in Local Government

Processes

translates the concepts and principles of LED into concrete actions by presenting step by step procedures and tools in planning and implementing the LED strategy. This chapter discusses the fivestage Strategic LED Process, namely: 1) Organizing the LED Effort, 2) Doing the Local Economy and Competitiveness Assessment or the LECA, 3) Formulating the LED strategy, 4) Implementing the LED strategy, and 5) Reviewing the LED strategy.

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Integrating LED in Local Government Processes

“For a LED initiative to be successful it has to be clearly defined around economically functional space, and should be locally owned and championed. Leadership is key to bring together shared vision, actors and resources. The generic processes, approaches and tools have to be adapted and contextualized.” – (Kebede, 2008)

The previous chapter discussed how the local economy works from a perspective of money flowing into, circulating in and leaving a locality. It also presented the major components that affect the productive capacity of a local economy: labor force, technology, infrastructure, financial capital, and leadership. These factors and the strategies to create wealth are some of the issues that can be addressed within the LED process. It must be recognized though that the “leaking barrel of wealth” model and the components of economic growth as described in Chapter 1 may only be a partial representation of the economic reality in a specific locality. In the course of undertaking the LED process, other factors that impact a community or locality may unfold and will have to be considered in the formulation of the LED strategy. In this chapter, the concepts and principles of LED are translated into concrete actions in an LGUfacilitated LED process. The components of the local economy presented in Chapter 1 provide the bases for analysis and strategy formulation during the LED process. What critical issues in the locality’s labor force, technology and other components should be addressed and how? One of the most important insights gained from the LGSP and LGSPA LED initiatives is that the success and sustainability of LED rest on a participatory, strategic and planned approach. It should be a process that is purposeful, deliberate and founded on sound analyses. Undertaking a strategic planning process is 22

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Integrating LED in Local Government Processes necessary to guide local leaders and implementers in identifying and carrying out the best alternatives to an LGU-facilitated LED. The LED Strategic Plan is the landmark document in the LED process. This Guide is not designed to prescribe implementation activities for specific LED programs and projects. This is because LED approaches are wide-ranging and different for each LGU, depending on local conditions. However, the basic factors to consider in implementing and monitoring the LED strategy are incorporated in this chapter. Also, examples of actual LED strategies and how these were implemented by LGUs are provided throughout this Guide. When does an LGU do the Strategic LED Process? LGUs in the Philippines are mandated to prepare two major plans â&#x20AC;&#x201C; the Comprehensive Land Use Plan (CLUP) and the Comprehensive Development Plan (CDP). The CLUP is a long-term plan that outlines strategies for managing the local territory in terms of its physical land use. The CDP, on the other hand, set out the vision, goals, objectives, programs, projects and activities relevant to five development sectors, namely, social, economic, infrastructure, environmental and institutional. LGUs operationalize these plans with an organized mechanisms and instruments including the term-based Executive and Legislative Agenda (ELA), the Local Development Investment Program (LDIP), and the Annual Investment Plan (AIP). These plans and strategies are all products of an integrated and iterative process that include economic sector planning (LGSPA, 2008). The strategic LED process, which involves a participatory process of formulating and implementing a LED Strategic Plan between the LGU and stakeholders, is both a vehicle to implement and an instrument to concretize the economic sector plan of the LGU. The LED Strategic Plan should serve as the economic sector plan integral to the bigger local development plans of the LGU. It should tie to and build on the LGUâ&#x20AC;&#x2122;s overall vision and goals as articulated in the CDP and ELA. Thus, it would be ideal if the LED strategy formulation is done in conjunction with the preparation of the CDP, ELA or the Provincial Physical Framework Development Plan. The LED process, however, may also be done at any other time as long as the LGU is ready to pursue LED.

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Integrating LED in Local Government Processes The Five-Stage Strategic LED Process There are five stages in the LED Process, as follows: THE FIVE-STAGE STRATEGIC LED PROCESS Stage 1: Organizing the LED Effort Stage 2: Doing the Local Economy and Competitiveness Assessment (LECA) Stage 3: Formulating the LED Strategy Stage 4: Implementing the LED Strategy Stage 5: Reviewing the LED Strategy Stage 1: Organizing the LED Effort The main activity here is organizing institutional arrangements and stakeholder involvement to successfully develop and implement a LED strategy. At this stage, an LGU LED team is created to provide leadership and establish systems and structures in undertaking the LED process. A LED stakeholders group is also created as a multistakeholder mechanism that will ensure the active participation of the community from planning to implementation to monitoring and evaluation. Stage 2: Doing the Local Economy and Competitiveness Assessment (LECA) This entails gathering and analyzing available quantitative and qualitative data on the sources, structures and trends in production and employment, skills, and other resources to help identify the strategic direction for the local economy as well as potential programs and projects. Stage 3: Formulating the LED Strategy At this stage, the LGU LED team together with the LED stakeholders group develops the LED Strategic Plan, which contains the economic vision, goals and objectives as well as specific strategies in the form of programs and projects.

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Integrating LED in Local Government Processes

Stage 4: Implementing the LED Strategy LED program and project implementers from the LGU and other stakeholders carry out the LED strategy guided by the LED Strategic Plan, the overall LED implementation strategy, and individual project action plans. Stage 5: Reviewing the LED Strategy This involves monitoring and evaluation (M & E) activities and reviewing and enhancing the LED Strategy based on the M & E results and on changing local conditions. The following sections discuss in detail how the LED process is carried out and integrated in LGU functions and activities. Stage 1: Organizing the LED Effort This marks the beginning of a collaborative undertaking wherein the LGU and community stakeholders agree on pursuing LED as an end result and as a process. The primary goal of Stage 1 is for the LGU to organize institutional arrangements and stakeholder involvement in LED planning and implementation. The principle of participatory governance should be appreciated and demonstrated by the LGU as early as Stage 1 in order to gain public support and credibility. By engaging and organizing stakeholders at the outset, the LED activity becomes a province, city or municipal-wide undertaking. Following the general guide outlined in the World Bank documents, organizing the LED effort may be divided into four steps: Stage 1: ORGANIZING THE LED EFFORT Step 1: Identify and establish the LGU LED Team Step 2: Establish and maintain active involvement of LGU political leaders in the LED Process Step 3: Develop a LED Stakeholders Group Step 4: Identify other tiers of government (provincial/ regional/ national) to work with

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Step 1: Identify & establish the LGU LED Team The LGU LED team is composed of LGU officials and staff that shall take the lead in initiating and facilitating the LED process. The LGU LED team is expected to provide the leadership of and establish the structures and systems in the whole LED process. It is not only concerned with managing the technical side of the process but also in getting ‘buy-in’ from political leaders, the relevant and related government agencies, business and non-government sector. Thus, it is important to have a good mix of relevant technical staff and elected officials in the LGU LED team who can influence and build partnerships with other stakeholders and resource institutions. The following considerations are important in the LED team composition: Involvement and leadership of the LCE and the Legislative Council. A very important consideration in the formation of the team is the degree of participation and involvement of the LCE and the members of the local legislative council (Sangguniang Bayan, Panglunsod or Panlalawigan). The LCE in particular should provide a visible leadership of the team to bring in the legitimacy, credibility and commitment of all the sectors involved in the process. The Sangguniang members, on the other hand, have a key role in terms of pushing legislation and approving budget appropriation in relation to LED. In the LGSPA experience, one thing common among successful LED cases is the Mayor himself/herself taking primary responsibility for LED as the Team Leader. The leadership of the mayor facilitates and moves the implementation of activities faster. Multi-disciplinary. The LED process requires multi-disciplinary and multi-faceted activities. The members of the LED team should have the background, skills and the attitude to push forward and champion the process. It should be a multi-disciplinary team that can work across LGU departmental lines, as well as between governmental and non-governmental lines. The LGU LED team and the departments that will be involved in the process, at the minimum, should have knowledge and skills of the following: • Socio-economic and environment development concepts, principles and realities in the community • Agricultural, industrial and service sector development concepts, principles and realities in the locality 26

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Integrating LED in Local Government Processes • Partnership building and networking • Group processes and dynamics (e.g., “vested interests,” political linkages and “turf” protection) • Management concepts and skills such as team-building, problem-solving and decision-making processes, project management, financial management and fund-raising • Organizational and capacity development framework and design • Facilitation, training and communications For LGUs that have completed the CDP-ELA, the economic sector planning committee can serve as the initial core members of the LGU LED team. This can be expanded based on the requirements of the LED process. Table 1. Sample composition of the LED Team SUGGESTED COMPOSITION OF THE LGU LED TEAM

Who? Local Chief Executive/Mayor Municipal Planning and Development Coordinator Municipal Agriculture Officer Municipal Treasurer Municipal Assessor Municipal Budget Officer Chairperson of the Legislative Council Committee on Agriculture Chairperson of the Legislative Council Committee on Finance Municipal Tourism Officer Municipal Local Government Operations Officer

Why? Can provide leadership and political influence in the formulation and establishment of structures and systems LED planning is integral in municipal planning; can facilitate the integration of the LED Strategy into the CDP, ELA and other LGU plans. Most of the municipality’s economic activities are agri-based; can facilitate implementation of agri-based LED programs and projects Can provide information on the LGU resources that will be available for the process. Can provide information on the valuation of land and resources in the locality Can provide information on the budget available for the LED activities. Can recommend policies in support of local economic development Can push for the appropriation of budget necessary for LED implementation. Tourism is also a significant source of income of the municipality; can facilitate the implementation of tourism programs and projects Can help champion the LED process and guide team regarding LGU mandates

In establishing the LGU LED team, it is important to level off on the task and responsibilities of the team. The following activities and decisions are therefore critical in establishing a coherent team: a) Conduct orientation and preparatory meetings to level off on LED process, concepts and objectives STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes Orientation meetings should provide guidance on the LGU LED team on the overall objective, scope and concepts of the LED process. The team should fully understand and recognize LED as:

• • • •

A strategy for wealth creation, job and income generation, and, ultimately, alleviation of poverty and improved quality of life. A process that promotes self-help, empowerment, innovation, public, private and civil society sector collaboration, bottom-up planning, and sustainable development incorporating environmental, social and cultural responsibility with economic development A potential contributor to the LGU’s future revenue growth A purposeful and planned approach to pursuing economic transformation, which is an aspiration and mandate inherent in all local governments

The following decision makers and department heads are relevant and must be present, where applicable, in the team orientation:

• • • • • • • • • • • •

LCE (Mayor or Governor) Vice Mayor or Vice Governor Planning and Development Coordinator Treasurer Budget Officer Agriculture Officer Tourism Officer Administrator Assessor Chairpersons of the Committees on Economic Development, Agriculture, and Finance and Appropriation of the local Sangguniang Government agencies’ staff working with in the LGU like the DILG’s Local Government Operations Officer (LGOOs), the DA’s Agriculture Officer, DTI technical staff Other department heads that the LGU sees fit

It is important that the decision makers understand their individual and collective role in facilitating the LED process. For instance, the Planning and Development Coordinator can facilitate the technical and day-to-day LED process, in behalf of the LCE. It can also facilitate the discussion with the members of the Local Development Council (LDC) as the secretariat of the council. On the other hand, the Planning Coordinator, together with the Treasurer and Budget Officer are the core members of the Local Finance Committee (LFC) which is the body task with determining LGU finances and budget ceilings and therefore plays very important role in ensuring that LED projects 28

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Integrating LED in Local Government Processes and activities are prioritize and allocated resources. The LGU can tap LED experts coming from the government (i.e., DTI), the private sector (e.g., local consultants, business groups, or entrepreneurs) or the academe to assist in the orientation and the orientation and initial preparations for the LED process. b) Agree on the terms of reference for the LGU LED Team In the course of team meetings and consultations, the LGU LED team has to agree on is its own terms of reference. As mentioned, the main objectives of the LGU LED team are to provide leadership in the LED process and establish the structures and systems in the formulation and implementation of the LED Plan. The LGU LED team members and their functions and activities at each stage of the LED process should also be specified in a terms of reference so that there is a clear delineation of responsibilities and accountabilities. The team has also to agree on the operational guidelines of the whole LED process. While the LCE can exercise overall leadership, the functional and day-to-day project management and coordination work can be delegated to a key office. In the LGSPA experience, this task is normally delegated to the Municipal Planning and Development Coordinator (MPDC), or the Municipal Administrator or another senior officer who has the LCEâ&#x20AC;&#x2122;s confidence. Sometimes, a member of the LED team who, in the course of the LED process, exhibits leadership qualities and develops a reputation of getting things done becomes the de facto Assistant Team Leader. Table 2 gives an example of the decisions made by an LGU regarding the specific roles of the LGU LED team. After such working arrangements are agreed upon, the LCE then issues an executive order creating the LGU LED team and defining its composition and functions.

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Integrating LED in Local Government Processes Table 2. Example of LGU LED Team Roles and Scope of Work FUNCTIONS OF THE LGU LED TEAM • Facilitate the diagnosis and assessment of the local economy including data gathering, profiling, analyzing/assessing the economy • Facilitate the formulation of the LED Strategic Plan • Facilitate the legitimization of the LED Strategic Plan • Provide the political leadership in the implementation of the LED Strategic Plan • Organize the LED stakeholders group and coordinate their activities • Serve as the Technical Working Group (if no structures are organized yet) in the implementation of the LED Plan ACTIVITIES OF THE LGU LED TEAM IN THE LED STAGES Stage 1: Organizing the LED Effort

Stage 2: Doing the Local Economy and Competitiveness Assessment (LECA) Stage 3: Formulating the LED Strategy

Stage 4: Implementing the LED Strategy Stage 5: Reviewing the LED Strategy

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• Stakeholder analysis and organizing of the LED stakeholders group • Organize a technical working group (TWG) and other required committees, structures and systems • Identify other tiers of government to work with • Local economic data and information gathering with LED stakeholders • Local economy profiling with LED stakeholders • Local economy assessment and analysis with LED stakeholders

• Facilitate strategy formulation • In collaboration with the LED stakeholders group develop the LED Strategic Plan • Coordinate the implementation of the LED Strategic Plan • Create Technical Working Groups, Project Implementation Teams or ad hoc committees to implement the programs and projects • Facilitate the evaluation and review of the LED strategy together with the LED stakeholders group.

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Integrating LED in Local Government Processes c) Determine the appropriate budget for the LED Strategy formulation A key decision that the LGU LED team has to agree is the budget required for the LED process. The LGU LED team should have enough resources for meetings, coordination, data collection and workshops. The budget for LED organizing up to planning may include cost of materials, meals, transportation, printing, communication, as well as the cost of LED experts that may be tapped by the LGU. d) Determine where the LGU LED Team will be established in the LGU In the initial stages of the LED process, the activities of the LED team can be coordinated by the office of the Mayor (or Governor) especially if the LCE is the designated leader of the LED team. In the course of the LED process and particularly in the execution of the LED strategy, the LGU eventually have to decide to organize mechanisms to support the implementation of the LED plan including the possible formalizing of the LED team as an economic coordinating or support group in the LGU. In the LED project of LGSPA, the LGU LED team was usually lodged in the Mayor’s Office. Establishing the LED team in the office of the LCE has the advantage of ‘visibility’ and political weight. Situated in this department, LED is likely to have a higher profile and exhibit more of a policy and facilitation focus, which in turn can help guarantee coordination with other LGU departments. Step 2: Establish and maintain active participation and involvement of LGU political leaders As already emphasized, the strong and visible support from the leaders is important and imperative in the LED process from planning up to the execution of the economic development strategy. The consistent participation and interest of the LGU political leaders are important from the planning to the executing stages of the LED process. The LGU LED team should agree on the involvement of the political leaders in the entire LED process and not just on the membership in the team. The political leaders as managers and as esteemed community leaders should champion the process within the LGU and among the community stakeholders. The political leaders need to ensure that the LED process and strategy are incorporated or adopted in the formal development plans of the LGU such as the CDP and ELA. The LGU leaders also need to assure that the LED process and strategy are included in the long term and annual investment programs of the STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes LGU. Other areas where participation of political leaders may be concretized in the LED process are by:

a) Involving the Local Development Councils, relevant Local Special Bodies, and the Association of Barangay Captains in the LED planning and implementation mechanisms.

b) Establishing monitoring, evaluation and reporting system and performance management system that

would include participation from stakeholders and relevant special bodies that would become a basis for economic plan improvement and policy development

c) Ensuring that the LED process and strategy are given due importance and priority in the LGU annual budget process

Step 3: Develop a LED Stakeholders Group With the LGU LED team formally organized, it can now move on to the heart of LED process - the identification and involvement of the community-based stakeholders group. The World Bankâ&#x20AC;&#x2122;s LED Trainerâ&#x20AC;&#x2122;s Manual defines stakeholders as individuals, businesses, organizations or groups in the public, private and non-profit sectors that have an interest in strategizing and implementing LED programs and projects. These are individuals and organizations who: a) have a stake in LED issues, b) might benefit or be affected negatively by the LED process, c) should be included because of their formal position, d) should be included because they control resources or e) have the power to block LED implementation. LED stakeholders vary across LGUs. Normally in low-income and generally rural/urbanizing areas, private sector economic stakeholders largely come from producers (e.g., farmers and farmer groups) and traders including cooperatives. The critical question that the LGU LED team needs to answer is who are its economic development stakeholders? Who is the private sector in the locality? Aside from the private business sector, the LGU LED team also needs to identify stakeholders from the public sector (including the appropriate regional and provincial line agencies), the labor sector, and the community and civil society organizations. National, regional and provincial levels of governments have a key role to play in facilitating an environment that is conducive to local economic development, and it is therefore appropriate to include these levels of government into the strategic planning process when necessary (Swinburn et al., 2006). 32

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Integrating LED in Local Government Processes In the context of the ARMM, the following agencies and offices in the Autonomous Regional Government (ARG) were included as stakeholders in the LGU LED process: Department of Trade and IndustryARMM (DTI-ARMM); Department of Agriculture and Fisheries (DAF-ARMM) and attached agencies like the Philippine Carabao Center (PCC); Department of Science and Technology; chambers of commerce; business councils; provincial government; government financing institutions such as Land Bank of the Philippines; state colleges and universities. It is also important to add that stakeholders identified should be those that have offices or area of operations located in the city/municipality if it is a city/municipal LED process or located in the province if it is a provincial LED process. Table 3 provides a list of potential stakeholders in the LED process in a locality. The list is not meant to be exhaustive. Table 3. Examples of Stakeholders in the LED Process Public Sector

Business and Labor

• Local government including technical departments, e.g., o Office of the Mayor or Governor o Legislative Council Committees on Agriculture, Infrastructure, and Finance o Planning and Development Office o Agriculture Office • Provincial, district, regional or national government department or agency • Institutions of research and higher learning such as public schools and state universities • Public utilities • Government financial institutions

• Micro, small and medium-scale entrepreneurs • Large corporations • Cooperatives & farmers and fisherfolks associations • Banks, pawnshops and other private financial institutions • Rice and corn millers • Chambers of Commerce • Professional associations • News media • Transport associations • Market vendors associations • Private utilities • Private education establishments

Community and CSOs • Civil society organizations o People’s organizations (whether or not registered) o Non-government organizations o Women’s associations • Agriculture and Fisheries Council • Fisheries and Aquatic Resources Management Council Community leaders

Engaging the stakeholders’ group will involve two key tasks: a. Conduct Stakeholders Analysis After a long list of stakeholders is drawn up, the LGU LED team analyzes each identified stakeholder in terms of their interests, role and contribution in the LED process. An example of this analysis is illustrated in Table 4. This type of analysis is useful in identifying key stakeholders that will compose the LED stakeholders group. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes Table 4. Example of Stakeholders Analysis for Partnership Stakeholder

Description of Interest in LED

Partnership Assessment

Key Potential Role in the LED Process

Barangay Government Units LED impact area, poverty alleviation in rural areas

Essential

Partner in implementation

Vendors Association

Expansion of client base

Essential

Strategic planning program/ project implementation

Farmersâ&#x20AC;&#x2122; Cooperative

Business opportunity, market expansion, productivity enhancement

Important

Strategic planning program/ project implementation

Rubber Budders Association Business opportunity, production and market expansion

Important

Program/project implementation

Womenâ&#x20AC;&#x2122;s Federation

Business opportunity, skills development

Important

Program/project implementation

Electric Cooperative

Expansion of client base

Important

Program/project implementation

Philippine National Police

Mandated to protect the people and maintenance of peace and order

Minor

Provide protective services

b. Orient and level off with the LED Stakeholders Group The LED stakeholders group serves as a forum for eliciting inputs from industry and civil society perspectives, discussing and resolving economic issues, building networks and linkages, and pooling resources for LED implementation. The LED stakeholders group should be engaged throughout the five stages of the LED process and become the core of a permanent public-private partnership to manage the implementation of the LED Strategic Plan. The LED stakeholders group serves as a forum for eliciting inputs from industry and civil society perspectives, discussing and resolving economic issues, building networks and linkages, and pooling resources for LED implementation. The LED stakeholders group should be engaged throughout the five stages of the LED process and become the core of a permanent public-private partnership to manage the implementation of the LED Strategic Plan. 34

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Integrating LED in Local Government Processes The LED stakeholders group must be large enough to ensure representation of all major groups in the community, but small enough to carry on meaningful discussions and reach consensus (USAID LED Ukraine, n.d.). A minimum of 20 and a maximum of about 35 members would be a good size. In the LGU-facilitated LED cases in LGSPA, the Mayor also headed the LED stakeholders group. A secretariat of about three to five people from the LGU and (in the case of Tugaya) the private sector was also formed to provide administrative and support services including documentation, record-keeping, communications, arranging meetings and keeping the Mayor abreast with LED activities. The LED stakeholders group may start out as an ad-hoc advisory body created through an executive order and, in the course of LED implementation, evolves into a formal organization by virtue of a Legislative Council resolution. It can take the form of a coordinative council, a task force, an advisory committee or any other variation. For example, the Provincial LED stakeholders group in the province of Sulu is the Sulu Kahawa Sug Task Force. The provincial, city or municipal Small and Medium Enterprise Development Council (SMEDC), which is mandated by DILG Memorandum Circular 2002-107, may also be looked into as a possible organization to function as the stakeholders group. Whether or not the stakeholders group should be subsumed in any existing multi-sectoral body is a decision that rests with the LGU and other stakeholders. Like the LGU LED team, the LED stakeholders group should also draw up a â&#x20AC;&#x2DC;terms of referenceâ&#x20AC;&#x2122; as to their objectives, functions and composition as illustrated in Table 5

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Integrating LED in Local Government Processes Table 5. Example of LED Stakeholders Group Composition and Scope of Work Composition of the LED Stakeholders Group Who?

Why?

Rural Bank

Can provide information on the economy and participate in LED strategy implementation

Electric Cooperative Colleges

Can help out in LECA and strategy formulation Can provide human resource development intervention and technical assistance

Market Vendors Association Filipino - Chinese Chamber of Commerce

Can help out in LECA, strategy formulation and implementation Can help out in LECA, strategy formulation and implementation

Barangay Public Employment Service Office (PESO) Coordinators Association

LED is directed towards employment generation Can help out in LECA

Functions of the LED Stakeholders Group • • • • • •

Create public awareness of the LED process and the need for community input and support Invite others to participate in various stages of the process to broaden awareness and commitment Provide inputs in the gathering, interpretation and analysis of the LECA Actively participate in the LED strategy formulation and in the in the Technical Working Groups Contribute in the implementation of the LED strategy either in advocacy, actual investment, technical assistance Liaise with provincial, regional and national economic agencies and other institutions with economic development mandate to ensure that local priorities are known to them and supported by them • Advocate and work for strengthening the capacities of the members of the LED stakeholders group

Activities of the LED Stakeholders Group in the LED Stages Stage 1: Organizing the LED Effort • Participate in planning the activities for the LED stages Stage 2: Doing the Local Economy and Competitiveness Assessment (LECA) • Undertake LECA • Provide data on the economy • Provide technical assistance in the analysis Stage 3: Formulating the LED Strategy • Provide technical assistance in strategy formulation • Provide information and skills in value chain analysis

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Stage 4: Implementing the LED Strategy • Steer the implementation of the LED strategy • Provide resources (human, technology, financial) and technical assistance on required training and capacity building interventions • Conduct linkaging and networking Stage 5: Reviewing the LED Strategy • Review and evaluate LED strategy implementation

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Stage 2: Doing the Local Economy and Competitiveness Assessment (LECA) A good Local Economy and Competitiveness Assessment (LECA) is the foundation of a solid LED strategy. In the context of the LGSPA experience, the LECA is a valuable process in the LGU specifically in the economic sector planning and in identifying the industry sector that would contribute to the wealth creation program of the LGU. The LECA is anchored on the value chain and industry competitive assessment. A detailed assessment of the basic components of economic development is also conducted particularly in relation to job creation, poverty reduction strategies and gender sensitivity promotion. The steps, contents and organization of Stage 2 in this Guide are largely based on the design, inputs and tools used in LGSPA’s LGU capacity-building project on facilitating LED. The whole LECA process can be done in six sub-steps namely: Stage 2: Doing the LECA Step 1: Collect and assess local economic data Step 2: Conduct Local Resource Inventory and Assessment Step 3: Conduct a SWOT Analysis of the local economy Step 4: Conduct Value Chain Analysis Step 5: Identify priority industries Step 6: Document the LECA Step 1: Collect and assess local economic data The data needed for the local economy profiling are categorized into the following: •

Demographic – This includes data on LGU population size, growth, density, age distribution; labor and employment; highest educational attainment; and, presence of institutions providing education, training and research services.

•

Economic – This includes data on production, number of firms and employment in each of the three industry sectors (primary, secondary, tertiary1 ) of the economy. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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1 According to the Philippine Standard Industry Classification, the following activities are listed under each sector: i. Primary Sector - Agriculture, livestock, fishery and forestry ii. Secondary Sector - Mining and quarrying; manufacturing; electricity, gas and water; and, construction iii. Tertiary Sector - Wholesale and retail trade; transportation, storage and communication; finance, insurance, real estate and business services; and, community, social and personal services

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Business enabling environment – This include data on the availability of business enabling and support systems in the LGU taxation and business registration system, bureaucratic procedures, and business and investment promotion services. This also includes an assessment of the local government capacity to carry out local economic development functions based on LGU income, assets, capacity of the structures, skills of key LGU officials on LED planning and implementation, and existence of approved development plans.

•

Infrastructure – This includes data on the availability and condition of utilities, road, transport modalities, telecommunication, land and real estate development, and agriculture development infrastructure.

•

Provincial, regional, and national economic factors that impact the local economy such as provincial, regional, and national programs and policies and global trends.

The full list data requirement for the economic profiling is attached in Annex B of this Guide. The LGU LED team and the LED stakeholders group should identify sources and plan where to collect the data required for the local economy profiling. Data Sources A broad range of approaches can be used to obtain information for the profiling such as desk-based research, questionnaires and surveys (e.g., local business enabling environment and business attitude surveys), structured/unstructured key informant interviews and focus group discussions. The LGU should choose the approach that is the most doable given the availability of data and time and cost considerations. One excellent source of information is the Socio-Economic Profile (SEP) and the Ecological Profile (EP) updated by the LGU in the formulation of the CDP-ELA. Updating the SEP and EP during the LED process reinforces the importance of socio-economic data and thus, contributes to the enhancement and development of the LGU’s economic database and sectoral plans. Among the specific data sources are the National Statistics Office for official statistics on population and demographics. For the economic data, sources include the DTI, DA, NEDA, area-based offices such as the MEDCo (in Mindanao) and other similar agencies, and the provincial government. For the business enabling environment, the information on this can be generated from the LGU personnel and the LED stakeholders group through a focus group discussion or survey. LGU self-assessment of the LGPMS is also an important source particularly for the indicators under the Economic Governance 38

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Integrating LED in Local Government Processes performance area of the system. The following information, which are the result of the analysis of the economic data as discussed in the Guide to Comprehensive Development Plan (CDP) for the Local Government Unit (DILG, 2008), can also be used as reference for LGUs that have already undertaken these kinds of economic analysis during CDP formulation: • • • • • •

Food self-sufficiency or security Level of urbanization or the percentage of the population engaged in non-agricultural activities. Structural shift or changes in the relative share of each sector (primary, secondary and tertiary) to the total economy over time. The locality’s industry or sector specialization using the location quotient (L.Q.), which is an indicator of the relative importance of an area in terms of selected industry types or sectors. Linked economic activities in terms of production backward and forward linkages as well as trade and services linkages. The inflow and outflow of money into the local economy using the money flow theory (like the “leaking barrel” model shown in Chapter 1).

Results of performance and competitive assessments are also important sources of information that the LGU can utilize. This includes information generated from the Local Governance Performance Management System (LGPMS)2 and other systems such as the Competitive Assessment Program (used mostly by cities), Balance Scorecard and others. Understanding the data The collected data are then organized according to Local Economy Profile outline. For data to be meaningful, these have to be interpreted and presented in context. For example, if the volume of corn production in a municipality is 100 tons annually, how does this compare against other crops in the area, against corn production in other municipalities or against the provincial or regional performance? In assessing the local economy, it is necessary to compare, contrast and evaluate local data with the larger area of which the LGU is a part: nation, region and province. Understanding the community’s relative competitiveness requires a comparison with other municipalities or communities located nearby, perhaps within the same metropolitan area or region, or adjacent to the community. It is important to evaluate local indicators and trends, and compare them with national data to determine differences and commonalities. This can provide important information on the competitiveness of an LGU at a national level. A local economy assessment also requires comparisons of trends over time. (World Bank & Cities of Change, n.d.). STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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2 The LGPMS is a web-based database system of an LGU selfassessment tool that enables provincial, city and municipal governments to monitor and evaluate their performance in five performance areas/ sectors, namely, governance, administration, social services, economic development and environmental management, at three levels of results: input, output and outcome levels (LGSPA, 2008). LGUs are required by the DILG to collect data and assess their performance against these LGPMS measures.

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Step 2: Conduct Local Resource Inventory and Assessment The Local Resource Inventory and Assessment (LRIA) is used to determine the major economic resources in the area and to assess the potential contribution of each resource to local economic development. The LRIA forms the basis for value chain analysis and priority industry selection. Some of the data needed for this step can be obtained from the data generated in Step 1. In the LRIA, as illustrated in Table 5, the LED stakeholders group determines the: a)

Major land, sea and forest resources in the area under the three economic sectors: primary, secondary and tertiary. b) Location and size of each resource in terms of area covered and value and volume of production. c) Existing local economic activities with regards to each resource d) Forward and backward linkages of these industries/economic activities, including linkages outside of the local economy. Production, trade and services linkages identified in the CDP formulation can be used as a reference for this. Industry players and industry studies can also provide more information. e) Opportunities for development including regional, provincial, national programs and policies that provide financial, technical, development services in support to the development of the resource such as official development assistance and national agencies’ program assistance relevant to the resource. These can be gleaned from the “Provincial, Regional, and International Factors” section of the Local Economy Profile. Opportunities can also include potential markets for each resource. Table 6. Example of Template for Local Resource Inventory and Assessment Sector/Resource

Location and Size

Activities Done in the Locality

Forward and Backward Linkages

Opportunities for Development

Land Resources Example: Agriculture Sector Corn

20 barangays 18,268 hectares 67% of agricultural land

Corn farming Corn shelling

Volume: 36,000 tons/year Value: PhP468 million/year

Forward: Milling Trading Warehousing

DA subsidizes seeds and provides technical and marketing assistance

Backward: Seedling production Pesticide production Fertilizer production Machinery fabrication Sea/Aquamarine Resources Forest and Mineral Resources

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Step 3: Conduct a SWOT Analysis of the Local Economy Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis is conducted by the LGU LED team together with the LED stakeholders group to integrate and summarize data, information and perceptions on the local economy from a standpoint of overall competitiveness (Cities Alliance, 2007). A community’s competitive position is a function of internal (strengths and weaknesses) and external (opportunities and threats) factors. The Local Economic Profile and the result of the LRIA are important sources of information for this exercise. Internal factors are attributes of the locality and are within the influence of the LGU while external factors refer to trends and conditions of the external environment that are beyond the LGU’s control. Strengths are local assets or factors that give the area an advantage and make it attractive for investment, growth and development. Weaknesses are local obstacles or constraints to a thriving economy: these can be social, legal, physical, environmental, financial or regulatory constraints. Opportunities are external factors that make it easier to develop a competitive advantage. Threats are unfavorable trends or developments external to the economy that can lead to a decline in competitive advantage. The SWOT Analysis is most useful in defining the focus of the LED Strategic Plan. Issues identified in the SWOT inform the crafting of the vision, goals and objectives and designing of programs and projects that eliminate or minimize the weaknesses, maximize strengths, take advantage of opportunities and overcome or reduce the influence of threats. Table 7 gives specific parameters, based on the five fundamental components of the economy discussed in Chapter 1, which can be used in doing a SWOT analysis of the local economy. Source: Adopted from World Bank & Cities of Change LED Trainer’s Manual

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Integrating LED in Local Government Processes Table 7. Example of a Template for SWOT Analysis of the Local Economy FACTOR

INTERNAL ANALYSIS STRENGTHS WEAKNESSES

EXTERNAL ANALYSIS OPPORTUNITIES THREATS

Labor Market Skills Wage Rates Availability Financial Capital Private capital Public capital Access to Markets Proximity or distance to market centers Proximity to suppliers Transportation Access to major highways Access to airports Access to ports Access to trains Sites and facilities Number of sites and size Infrastructure Utilities Telecommunications Number of existing structures Knowledge Resources Research/Development facilities Industry or trade Association Education and Training Colleges or universities Higher technical training Vocational skills training Business services and Technical Support Business Climate Government responsiveness (including capacity to carry out LED functions) Taxes Regulations and controls Cooperation/assistance with private sector Quality of Life Cost of living Culture and recreation Public services (including peace and order) Attractiveness of city Natural resources

Source: Adopted from World Bank & Cities of Change LED Trainerâ&#x20AC;&#x2122;s Manual 42

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Step 4: Conduct Value Chain Analysis The LED stakeholders group then selects as much as the top ten resources of the LGU in terms of value or volume of production as determined in Step 2, the LRIA. Each of the resources is subjected to a value chain analysis, which is a tool in mapping industry structure (how industry participants interact to bring products to the market) and assessing industry-specific competitiveness. The result of the SWOT analysis is also important information in the value chain analysis. A value chain can be defined as all the firms within a subsector or industry that buy and sell from each other in order to supply a particular set of products or services to final consumers (Lusby & Panlibuton, 2007). It shows the relationships and linkages among buyers, suppliers, and a range of market actors in between. The basic objectives of the value chain analysis are to:

• • • • •

Identify market channels, market trends and market potentials within the value chain Identify the primary actors in the value chain, their number, roles, and interrelationships, including the number of women industry players Identify constraints (weaknesses and threats) that are holding back growth and competitiveness of local firms participating in the value chain Pinpoint priority areas for reform within the environment in which these industries or firms operate Identify the strengths of the industry and opportunities for stimulating wealth creation and alleviating poverty in the local economy

Table 8 describes the industry competitiveness factors (market demand, reach, presence of MSMEs, forward and backward linkages, and participation of women) that can be analyzed using the value chain:

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Integrating LED in Local Government Processes Table 8: Examples of Factors to Consider in a Value Chain Analysis FACTOR

DESCRIPTION

Market Demand

• • • •

Reach

• Estimate of the number of enterprises for each type of firm in the value chain (input suppliers, producers, wholesalers, etc.) • Average firm size for the different types of value chain firms in terms of capitalization and number of employees/employed • Average salary/wages for employees in different types of value chain firms

Significant Presence of MSMEs in the rural areas*

• Estimate (in a few geographic zones) of the number of MSMEs (at all levels of the subsector) that exist outside of urban areas • Description of the type of enterprises in the value chain that operate outside of the major urban areas

Opinions and data from key informants on market trends and industry competitiveness Information from existing statistics/ studies Examples of businesses that have problems meeting demand Comparisons within the region (based on opinions from key informants of market information)

Significance of • Description of the different kind of transactions that take place among local market actors in the Forward and value chain Backward Linkages • General description of the volume and number of these transactions between a given number of among Local firms Market Actors Participation of Women

• Number of women who are self employed, own businesses or work as employees in the value chain (should include participation at all levels of the value chain)

*In this example, emphasis is given to the rural area it being the target of poverty reduction goals.

A good starting point for conducting any analysis is to access existing studies, reports, or statistics that provide information on the targeted value chain. These can be found in government agencies, with donors, and with implementing organizations. It is also important to identify “key informants” who are particularly knowledgeable about the value chain as a whole (Lusby & Panlibuton, 2007). They can include members of the LED stakeholders group. The value chain analysis activity can bring together producers, government agencies and other stakeholders in the different segments of the value chain to jointly seek solutions to overcome key impediments that affect the performance of the chain (The World Bank Group, 2007). A value chain map presents, in graphical form, all the major actors in a targeted value chain as illustrated in Figure 3. The determination of forward and backward linkages that is done in the LRIA provides the starting point for the value chain analysis.

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Integrating LED in Local Government Processes Figure 3. Value Chain Map: Dairy Subsector

D O M E S T I C M A R K E T

SUPPORT INDUSTRIES INFRA SUPPORT UTILITIES Water, Power & Communication

FINANCING HR DEVELOPMENT

RESEARCH AND DEVELOPMENT ANIMAL WASTE AND UTILIZATION

Source: Wao, Lanao Sur Livestock and Poultry Industry Study, 2007.

Step 5: Identify priority industries Priority industry selection is important so that the LGU can maximize the use of its limited resources and give focus to local industries which have the greatest potential of pushing local economic development. Table 8 shows a tool that can be used for industry prioritization. Using a tool such as this will allow the LED stakeholders group to identify – in a systematic way – industries or products which have a competitive advantage that it would like to develop and promote (similar to the One Town One Product concept). However, the LGU may opt to skip this industry ranking and prioritization process if there are obviously only a few, say one to three, industries in the locality that can have a substantial and widereaching impact on the economy. The criteria for selection can include availability of resources (human, physical, capital and knowledge resources, and infrastructure), demand conditions, number of supplier industries, number of local players STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes operating in the industry, number of forward and backward linkages, and relative ease in promoting and developing the industry. It can also include other criteria that reflect the priorities of the LGU such as potential for employment generation, participation of women or environmental conservation. Industries with the highest weighted scores are the priority industries. Table 9. Sample Criteria Used in Priority Industry Selection Factors/Criteriaa

Description/Remarks

A. Conditions of Factors of Production

1. Human resources

Weight (%) 25

Availability of human resources (in terms of quantity and skills) Location, abundance, quality, accessibility and cost of water, land and other physical resources necessary to compete in the industry Amount and cost of capital available to the industry The stock of scientific, technical, and market knowledge on the industry The type, quality and user cost of infrastructure available that affects the industry

1. Size of local demand 2. Number of independent buyers

Based on opinions & data from key informants on market trends & value chain competitiveness & information from existing statistics/studies.

C. Number of Related and Supporting /Supplier Industries (Indicated by the number of activities that are located locally)

Based on the number of enterprises for each type of firm in the value chain (input suppliers, producers, wholesalers, etc.)

D. Number of Players in the Industry

Based on the number of MSMEs (at all levels of the subsector) that exists in rural areas.

E. Number of forward and backward linkages

Based on the volume and number of transactions that take place among domestic market actors in the value chain

2. Physical resources 3. Capital resources 4. Knowledge resources 5. Infrastructure

Industry Scoreb

Weighted Score (Score x Weight)

7 7 2 4

B. Demand Conditionsc

F. Requires relatively modest or unsophisticated private & social investment or easiest to develop or address as it is supported by ODA and government programs

Notes: a Most factors are based on Michael Porterâ&#x20AC;&#x2122;s Model for Industry Analysis. b Each industry is assigned a score per criterion ranging from 1 to 3, with 3 as the highest score. c Refer to results of the value chain analysis as illustrated in Table 7. 46

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Step 6: Document the LECA The LGU LED team then puts together and packages the LECA Report and presents the final output to the LED stakeholders group for validation before the strategy formulation workshops begin. Box 1 gives an example of a LECA Report outline. Box 1: Example of a Local Economy and Competitive Assessment Report Outline I. Introduction (Location and Background of the LGU) II. Local Economy and Competitiveness Assessment A. Local Economy Profile 1. Demographic 2. Economic Profile 3. Business Environment 4. Infrastructure 5. Provincial, Regional, International Factors B. Competitiveness Assessment 1. Local Resource Inventory and Assessment (LRIA) 1.1 Land Resources 1.2 Sea/Aquamarine Resources 1.3 Forest and Mineral Resources 2. SWOT Analysis of the Local Economy 2.1 Strengths 2.2 Weakness 2.3 Opportunities 2.4 Threats 3. List of Industries, Ranked in Order of Competitiveness 4. Top 5 Industries that the Locality has Competitive Advantage 4.1 Profile and Value Chain Analysis of Industry A 4.2 Profile and Value Chain Analysis of Industry B 4.3 Profile and Value Chain Analysis of Industry C 4.4 Profile and Value Chain Analysis of Industry D 4.5 Profile and Value Chain Analysis of Industry E

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Stage 3: Formulating the LED Strategy At this stage, the LGU LED team together with the LED stakeholders group develops the LED Strategic Plan in order to set out the economic future of the locality and to address the issues identified in the LECA. The LED Strategic Plan has following key elements: vision, goals, objectives, programs and projects. As in the comprehensive development planning, the intent is to achieve an integrated approach to local economic development strategic planning. In devising this strategy, practitioners in local government and principal stakeholder groups will need to balance local economic development with environmental and social needs (Swinburn et al., 2006). Stage 3 can be divided into eight major steps: Stage 3: FORMULATING THE LED STRATEGY Step 1: Identify critical issues from the LECA Step 2: Create a Vision Step 3: Develop Goals Step 4: Develop Objectives and Performance Indicators Step 5: Develop Programs Step 6: Select Projects Step 7: Mainstreaming Gender Responsiveness and Sensitivity to Poverty in LED Strategy Formulation Step 8: Document the LED Strategic Plan and Integrate in LGU Plans and Processes

Step 1: Identify critical issues from the LECA Prior to the â&#x20AC;&#x153;Visioningâ&#x20AC;? workshop, it is important that LED stakeholders are able to relate strategy formulation to issues identified in Stage 2. Here are some guide questions that can be posed to stakeholders to trigger analysis and provide a clearer context and basis for vision setting and strategy formulation: a) 48

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b) c) d) e)

addressed? What strengths and opportunities can the LED strategy seek to build on? What conclusions can be made about the competitive position of the locality? What can be realistically achieved in the timeframe of the LED strategy? What groups in the community are perceived to be disadvantaged (e.g., rural poor, indigenous people) and must be given special attention?

Step 2: Create a Vision In a workshop, the LED stakeholders group dialogue and agree on a vision of the preferred economic future of the community. Stakeholders are first asked to give concise statements about their “dreams for the economic future of the community.” They can draw ideas and inspiration from the critical issues identified in Step 1 in composing a vision statement. In Tugaya, recognizing the municipality’s competitive position in arts and culture-based industries, the LED stakeholders group came up with this LED vision “A prosperous and productive Tugaya that is the center of Maranao Arts and Culture in the Philippines, as showcased by its metal and wood craft industry.” The LGU’s overall vision as articulated in the CDP and ELA can also be reviewed and reframed to reflect economic aspects and aspirations of the locality. In general, vision statements should be: a) understood and shared by members of the community, b) broad enough to allow a diverse variety of local perspectives to be encompassed within them, c) inspiring and uplifting to everyone involved, and d) easy to communicate (Nagy & Fawcett, n.d.). Step 3: Develop Goals Goals point to specific outcomes that the community seeks to achieve. Goals are much more descriptive and concrete than a vision statement, and should be directly related to the findings from the LECA including the key issues arising from Step 1. Good practice indicates that in selecting goals, a manageable number is usually no more than six (Swinburn et al., 2006).

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Integrating LED in Local Government Processes Table 10 illustrates how goal statements are linked to LED issues. Table 10. Example of Goal Statements and their Link to LED Issues

Goal

Link to LED Issues from the LECA

To be the leading producer of cattle, carabao and goats in the region

• Strengths: vast land resources for forage and pasture development and abundant supply of crops and agricultural by-products for feedstuffs • Opportunities: proximity to several research and training centers on livestock production, proximity to market centers outside of municipality through well paved roads • Livestock industry is number 2 in the LECA industry competitiveness ranking

To be the halal organic fertilizer capital in the region

• Value chain analysis: fertilizers, seeds, and pesticides accounted for 80% of the value of local corn production. Of the PhP500 million annual value of corn production, PhP400 million were draining out of the local economy because farmers were buying inputs from outside sources • Local organic fertilizer production will reduce cost of inputs in crop production, provide income opportunities and protect the environment

To develop an efficient municipal power supply system

• Weakness: Inadequate power supply. 115 individual generators in 23 barangays are being used whenever electricity from the provincial electric cooperative is not available • Adequate power supply is necessary in order to increase productivity and quality of metalcraft and woodcraft production

Each goal statement should have the following characteristics: a)

Clear regarding what is to be done and why – it should be based on the LECA and flow directly from the vision formulated in Step 1 b) Outcome oriented – represents specific key result areas on which the LED strategy will focus to achieve the vision. The specific key result areas will be the gaps and critical issues identified in the SWOT Analysis c) Robust - it leaves open a variety of possible means d) Inclusive - reflects the voices of all people who are involved and the greatest needs and highest economic priorities of the municipality e) Concise The set of goals can include statements that are industry-specific as well as goals that impact and cut across all economic activities such as “improved local business investment climate.” What is important is that these goals reflect the LGU priorities and addresses the major LED issues. Having industry-based goals, however, provide focus or a clear sense of purpose to the LGU and these normally become the 50

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Integrating LED in Local Government Processes bases and motivation in the development and improvement of the various enterprise-related programs and services of the local government. Step 4: Develop Objectives and Performance Indicators Objectives are even more specific. They serve as performance standards and targets for each goal identified in Step 3. In developing objectives, it is important to clearly describe the markers or benchmarks that would help the community assess where it is now (baseline or pre-intervention) and where it will be if the initiative were successful (objectives). For example: “To increase corn production by 10% by 2010.” Objectives should be specific, measurable, attainable, realistic, and time bound (SMART). To measure progress toward the achievement of goals and objectives, a clear and structured set of key performance indicators should be developed. Performance indicators can be both quantitative and qualitative. Quantitative indicators will include numbers, percentages, percentage changes, etc. Qualitative indicators are more difficult to measure. They focus on aspects such as the quality of a result or an individual’s attitude towards a new service (Swinburn et al., 2006). As suggested in the World Bank LED Primer, indicators should be:

• • • • • • • •

valid - they are valid in the eyes of the key participatory M&E stakeholders and should actually measure what they set out to measure reliable - conclusions based on the indicators should be the same if measured by different people gender sensitive - indicators should be disaggregated by sex sensitive - they should be sensitive enough to measure important changes in the situation being observed cost-effective - the information/learning should be well worth the time and money it costs to collect the data timely - it should be possible to collect and analyze the data fairly quickly in-line with local capabilities/resources - they should not be overly complex and burdensome to the project partners build on what exists - indicators should not ‘reinvent the wheel’ and should draw on existing local data collection activities, or from indicators used with other projects, where possible. For example, local economic development performance indicators available in the Local Governance Performance Management System (LGPMS) of the DILG can be used as a guide in framing performance indicators.

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Step 5: Develop Programs Having completed the LECA and determined the vision, goals and objectives, the LED stakeholders group will need to decide on the key programs that will become the core of its LED strategy. A program is a package of interrelated projects. Programs and projects should seek to build on strengths, minimize weaknesses, exploit opportunities or mitigate threats identified in the LECA, particularly in the SWOT and value chain analyses. In developing programs and projects, identify: a)

Those participants/beneficiaries that are to be targeted at each different level - i.e., individuals, groups, organizations and sectors, and/or broader systems. These targets should be linked to the highlights of the LECA. They could be the economic players of the priority industries or of areas that have been adjudged as economic strengths of the locality or opportunities.

b) The personal and environmental factors to be addressed by the initiative

â&#x20AC;˘ â&#x20AC;˘

Personal factors can include: knowledge, beliefs, skills, education and training, experience, cultural norms and practices, social status, cognitive or physical abilities, gender, age Environmental factors can include: social support, available resources and services, barriers (including financial, physical, and communication), social approval, policies, environmental hazards, living conditions

Those who can contribute and how they can be reached or involved in the effort. Identify agents of change or LED champions, i.e., those who may be in a position to contribute to the initiative or commit to leading it. It is a good practice to undertake programs and projects where clear champions are committed to being involved in leading them. Project champions may come from local government, the private sector, community or other sectors (e.g. research or educational institution) (Swinburn et al., 2006).

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Integrating LED in Local Government Processes The results of the above scoping can be rendered as part of a matrix for strategy formulation as presented in table 11. Table 11. Matrix for Strategy Formulation LEVELS & LIST OF TARGET PARTICIPANTS/BENEFICIARIES (1)

POTENTIAL CHAMPIONS (4)

A. Individuals 1. 2. x.

1. 2. x.

B. Groups & Organizations 1. 2. x.

1. 2. x.

C. Sectors 1. 2. x.

1. 2. x.

D. Broader Systems 1. 2. x.

1. 2. x.

Recommended Approach to LED Program Development Chapter 4 of the first LGSP resource book on LED presents some of the programs that can be adopted by the LGU to facilitate LED. A comprehensive list of program options is also discussed in detail in the World Bank LED Primer. Although there are other several recommendations in various LED and enterprise development resources and literature, clearly, program and project selection must be limited according to the needs and resources of the LGU and must be consistent with the LED vision, goals and objectives. However, some already existing frameworks or theories related to economic development are highlighted in this Guide, namely the Money Flow or â&#x20AC;&#x153;Leaking Barrelâ&#x20AC;? theory, the SME Development Framework, the LGPMS economic development indicators, and Integrating Gender Equality and Poverty Reduction in LED, STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes which can aid the LGU in ensuring that issues affecting all components of the local economy (discussed in Chapter 1) are taken into account in the formulation of programs and projects and, ultimately, come up with an integrated plan. A set of procedures is recommended to help LGUs come up with LED programs that are coherent and have added value. a. Using LGPMS Indicators to Review LGU Performance in LED There are also indicators set out in the LGPMS wherein the economic development sector is divided into two â&#x20AC;&#x153;service areasâ&#x20AC;?, namely 1) Agriculture and Fisheries Development and 2) Entrepreneurship, Business and Industry Promotion. They exemplify standard LGU inputs and outputs that directly concern local economic development. For each service area governance performance indicators have been identified. Hence, it is helpful to check LGU performance in the indicators shown in Table 12 and to verify gaps or areas that need to be improved. Those LGPMS economic development indicators that have not been addressed or require further strengthening and which are directly linked to the priority industries need to be among the programs that the LGU should focus on. Among the outcome indicators in LGPMS that needs to be addressed include unemployment and underemployment rates, poverty incidence, income per capita and family income.

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Integrating LED in Local Government Processes Table 12. LGPMS Economic Governance Performance Indicators SERVICE AREA: AGRICULTURE AND FISHERIES DEVELOPMENT Infrastructure support for agriculture development, e.g., 9 Rehabilitation or construction of irrigation system for irrigated or irrigable areas. 9 Provision of post-harvest equipment, machines or facilities 9 Rehabilitation or construction of feeder roads or farm-to-market roads Local government agricultural extension and on-site research services or facilities, e.g., 9 Credit facilitation services 9 Production support services 9 Research and development services 9 Market development services 9 Other alternative and innovative assistance to farmers Making the Fisheries and Aquatic Resources Management Council (FARMC) functional Infrastructure support for fishery development, e.g., 9 Rehabilitation or construction of fishery related infrastructure 9 Credit facilitation services 9 Production support services 9 Research and development services 9 Market development services 9 Other alternative and innovative assistance to fisherfolks SERVICE AREA: ENTREPRENEURSHIP, BUSINESS AND INDUSTRY PROMOTION Promoting a business-friendly environment and promoting businesses, enterprises and industries, e.g., 9 Improving business application and processing time 9 A local government-supported administrative body that is responsible in the promotion of business and industry in the LGU 9 Provision of tax incentive 9 Assistance in product labeling especially for small and medium enterprises 9 Training of business-employed personnel or private sector employees 9 Maintenance of industrial peace 9 Support to job fairs Source: LGPMS Manual

The Manual on the Local Planning Process: Formulating CDP and ELA for ARMM, another LGSPA knowledge product, presents in detail how the LGPMS can be used in both strategy formulation and monitoring and evaluation.

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Integrating LED in Local Government Processes b. Using the Money Flow or the “Leaking Barrel” Theory As shown in Chapter 1, money flows in and out of the local economy like water flowing in and out a barrel. The water level in the barrel will rise and fall and represents the level of wealth or prosperity in the community. This theory can help LGUs analyze how to increase wealth in the local economy and how to reduce income leakage. It suggests the following economic strategies (Darling, 1991) that the LED planners can consider in formulating programs and projects: To increase inflows:

• •

Selling more goods and services to outside customers (export) Accessing resources from ODA programs, higher government agencies and other external organizations

To slow down outflows and create more wealth locally:

•

• • •

Providing locally those goods or services currently being purchased outside the area. This idea is called import substitution. (For example: producing organic fertilizer locally in order to reduce dependence on inorganic fertilizers from outside sources). This creates new businesses in the locality and will entail improving linkages between local buyers and sellers Encouraging people to invest their savings locally. This keeps the money circulating in the economy and adds to the productive capacity of the local economy Improving the community’s quality of life, which is important not only to retain and attract residents but also outside investors Putting the inefficiently utilized local resource to work more productively

The level of wealth is not only dependent on the volume of money inflows and outflows but also on the productive capacity of all firms, households, government units and other producing and consuming entities participating in the local economy. When these are functioning at full capacity, the level of prosperity is high (Darling, 1991). Local firms will respond to changes in internal and external markets. However, their ability to react to changes in markets will depend upon the condition of the fundamental components of the economy within the locality, that is, the availability of resources such as investment capital, skilled workers, and the know-how to produce at costs that are competitive, as well as the presence of adequate infrastructure and an environment conducive to business. LED planners should give emphasis to programs that would help grow the level of wealth in the locality and that have a direct bearing on the results of the LECA – those that would optimize local strengths and available opportunities and develop the priority industries. 56

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Integrating LED in Local Government Processes c. Using the SME Development Framework One of the most effective ways of facilitating wealth and job creation is to develop LED programs and projects that improve the local business enabling environment and support the development of micro, small and medium sized businesses3 (Swinburn et al., 2006). The Philippines’ SME Development Plan 20042010 prescribes integrated efforts to strengthen and stimulate the SME (includes “micro-enterprises”) sector so it can contribute significantly to the country’s development. CATEGORY

VALUE OF TOTAL ASSETS IN PhP

NUMBER OF EMPLOYEES

Micro-enterprises

3,000,000 – or less

1–9

Small Enterprises

3,000,001 – 15,000,000

10 – 99

Medium Enterprise

15,000,001 – 100,000,000

100 – 199

These enterprises may fall under any industry classi¿cation (e.g. manufacturing, agriculture, service) and includes farmers, ¿sherfolks and the informal (unregistered) sector. “SME” includes micro-enterprises.

The Plan presents four major SME development outcomes (DTI, n.d.), as follows: • • • •

Enhancing the Business and Investment Enabling Environment (BIEE) Enhancing Access to Finance (A2F) Enhancing Access to Market (A2M) Enhancing Productivity and Efficiency (P&E)

LED planners should look at programs that would meet the requirements of the priority industries in terms of materials, technology, finance, markets and policy support. Table 13 shows a list of possible interventions to enhance the business and investment environment, access to finance, access to markets, and productivity and efficiency of SMEs that can be incorporated in the LED Strategic Plan.

3Philippine SMEs are categorized based on assets (excluding land) and number of employees. In January 2003, the SMED Council categorized the SME sector into: STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes Table 13. Examples of SME Development Strategies SME OBJECTIVES AND STRATEGIES Strategies to enhance the Business and Investment Enabling Environment, e.g., 9 Streamlining of business regulatory requirements (e.g., one-stop licensing and business registration office) 9 Promotion of ordinances/ policies supporting local SMEs (e.g., Zoning Ordinance, CLUP) 9 Organizing of structures supporting local SMEs (e.g., LED Assistance Unit, Business Development Center, Technology and Livelihood Development Center) Strategies to enhance Access to Finance, e.g., 9 Local SME financing programs 9 Encouraging the setting up of rural banks 9 Partnering with national line agencies regarding financing programs like the Multi-livestock Development Loan Program 9 Systems and structures to assist SMEs in accessing financing programs like the One Town One Product of the DTI Strategies to enhance Access to Market, e.g., 9 SME market information support 9 Facilitating partnership/ linkages with suppliers and buyers 9 Systems and structures to assist SMEs link with programs that enhance access to market 9 Infrastructures that enhance access to market Strategies to enhance Access to Production, e.g., 9 Business development and extension services 9 Entrepreneurship training 9 Skills training to improve productivity or provide livelihood opportunities 9 Systems and structures to assist local industry productivity and product quality enhancement 9 Infrastructures that enhance productivity and product quality

Rationalizing the Priority Programs At this point in the LED strategy formulation, the team and stakeholders would have come up with a long list of programs that must be systematically trimmed down to a set of focused, coherent and integrated initiatives. The long list of program would have come from reviewing LGU performance in the LGPMS economic development service area, from applying the leaking barrel theory, and from utilizing the SME development framework The short-listing process can be aided by verifying the links of and matching the programs to: â&#x20AC;˘ The identified Goals and Objectives and Performance Indicators 58

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Integrating LED in Local Government Processes • Strengths and Opportunities of the LECA particularly the priority industries so that they could be optimized • Weaknesses and Threats to the local economy and its competitiveness, particularly to the priority industries in order to mitigate/manage them • The target participants/beneficiaries and the relevant personal and environmental factors that need to be addressed The planners can also begin to brainstorm on which government agency to involve as well as the potential champions from the private sector, academe or civil society organizations that could be mobilized (refer to Table 14) mindful that further particularization and finalization would occur as the programs are translated into projects. In relation to role definition, the programs that are considered as part of LGU mandates are those that are linked to LGPMS (infrastructure support for agricultural development, local government agricultural extension and on-site research services or facilities making the FARMC functional, and promoting a business-friendly environment and promoting businesses, enterprises and industries); programs that are “public” in nature and can not be taken on by other levels of government; and those that are “strategic” and can not (yet) be taken on by the private sector. Table 14. Brainstorm Matrix on LED Program Development LEVELS & LIST OF TARGET PARTICIPANTS/BENEFICIARIES (1)

PRIORITY STRATEGIES (2)

RESPONSIBLE GOV’T OFFICE (3)

POTENTIAL CHAMPIONS (4)

A. Individuals 1. 2. x.

1. 2. x.

B. Groups & Organizations 1. 2. x.

1. 2. x.

C. Sectors 1. 2. x.

1. 2. x.

D. Broader Systems 1. 2. x.

1. 2. x. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes

Step 6: Select Projects Within each program area, the next step is to propose and select projects on the basis of clear criteria. LGUs are often interested in comparing the benefits of a project proposal in terms of generating new jobs, improving income, creating new enterprises, increasing revenue, and value-for-money (Swinburn et al., 2006). The potential impact to a target sector, such as women, may also be a factor. Each proposed project should also be assessed as to whether it meets the broader LED goals, objectives and priorities that were agreed by the LED stakeholders group. Including â&#x20AC;&#x2DC;early-winâ&#x20AC;&#x2122; projects that will achieve visible and tangible impact in the short-term will be fundamental to the overall LED strategy development process in ensuring the continued support of the different stakeholders. Complex projects with larger resource and longer timeframe requirements will need to go through a more rigorous selection process and should include an initial viability assessment, feasibility studies, design review, business plan preparation and tailored monitoring and evaluation program (Swinburn et al., 2006). Table 15 shows the LED Vision to Projects Matrix formulated by the LED stakeholders group of the municipality of Wao, Lanao del Sur.

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Integrating LED in Local Government Processes Table 15. LED Vision to Projects Matrix of the Municipality of Wao, Lanao del Sur VISION Food Security and Environmental Sustainability

PROGRAMS

PROJECTS

1. To develop the Wao livestock and poultry production in order to provide additional income source to farmers

GOALS

1.1 To increase number of livestock and poultry producers by 10% each year

OBJECTIVES

Wao Livestock and Poultry Industry Development Program

• Livestock and poultry industry/ enterprise profiling project • Study Tour • Training of Village-based A.I. Technicians • Goat Dairy Module Project

2. To increase Wao corn productivity in order to increase income of corn farmers

2.1 To Increase corn production by 10% per year

Wao Corn Industry Development Program

• Organic Fertilizer Production Project • Seeds Production Project • Integrated Pest Management Farmers Field School Project

3. To develop organic fancy rice production in order to conserve Wao’s land resources

3.1 To increase organic rice production by 10% in 2010

Organic Rice Production Development Program

• Organic Fancy Rice Production project

4. To develop Wao’s rubber industry in order to increase forest cover and income of farmers

4.1To increase rubber production area by 20% in 2010

Rubber Industry Development Program

• Rubber Nursery Project

5. To develop highvalue commercial crops production in order to provide additional income and promote diversified farming in the municipality

5.1 To develop 2,000 hectares planted to HVCC by 2010

Wao HVCC Production Program

• HVCC Bagsakan Center Project • HVCC Seedlings/ Nursery Development Project

6. To develop organic fertilizer production in order to provide farm inputs that conserve Wao’s land resources and provide income opportunities for the women sector.

6.1 To establish one organic fertilizer processing plant by year 2010

Wao Commercial Organic Fertilizer Industry Program

• Composting Project under the Solid Waste Management Program • Organic Fertilizer Raw Materials Production Training Project • Organic Fertilizer Plant Project

Source: Wao LED Strategic Plan

Again, it is important that the LED stakeholders are involved in project selection. This way the potential roles and contributions of the LGU and of relevant individual stakeholders, businesses or institutions, in project implementation can be ascertained early on. Some projects may require private sector investments with the local government providing enterprise organizing, linkages, training and other types of assistance without necessarily infusing any equity capital to a business. In certain conditions, the LGU STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes may also opt to set up a public economic enterprise in order to provide the intended product or service itself. Still other projects may be developed as public-private sector joint ventures. The roles of the LGU and stakeholders should be set out in the individual project action plan, which will be discussed in the next chapter. The LGSPA’s Manual on the Local Planning Process: Formulating CDP and ELA for ARMM provides a tool (Table 16) for sifting projects to define possible ownership and for guiding the LGU LED team in integrating projects to higher level plans, or for categorizing projects according to administrative responsibility (provincial, city/municipal or barangay) or for identifying projects which can be better done by the private sector. This approach is practical especially if the LGU LED team and the stakeholders consider the LGUs limited resources and also to maximize the roles of the stakeholders in the LED Strategic Plan. Table 16. Sifting Projects for Ownership PROJECT

NATIONAL Province

x x

• Organic Fertilizer Production Project

• Seeds Production Project

• Integrated Pest Management Farmers Field School Project • HVCC Bagsakan Center Project

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x x x

• HVCC Seedlings/ Nursery Development Project

• Composting Project under the Solid Waste Management Program

• Organic Fertilizer Plant Project 62

PRIVATE

• Livestock and poultry industry/ enterprise profiling project • Training of Village-based A.I. Technicians

LOCAL GOVERNMENT Municipal Barangay

x x

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Integrating LED in Local Government Processes

Step 7: Mainstreaming Gender Responsiveness and Sensitivity to Poverty in LED Strategy Formulation In the Philippines, about 69% of businesses that are 3.5 months old are owned by women. However, of the businesses that are more than 42 months old, only 44% are owned by women (Madarang et al., n.d.). Although the initiative to set up an enterprise usually comes from women, only a small percentage of them are able to continue their business because of conflicts with family time or child-rearing, issues with the husband, gender discrimination and health-related concerns. Hence, the LED Strategic Plan should include programs and projects that create an enabling environment for women entrepreneurs and that provide business development services in support of women (LGSPA, 2007). The LGU may use the GAD budget to allocate additional resources for such programs and services. Box 2 shows a checklist that the LGU can use to assess whether gender equality is integrated in the LED Strategy. Box 2. Gender Equality Checklist for LED Strategy Formulation 9 Do the LED policies, programs and services support women’s equal access to productive resources for enter prise development? • Markets: local and global markets • Raw materials • Technology • Capital • Training: skills training, management training • Business services • Information 9 Will women workers be protected from gender-based violence and other labor law violations? 9 Will the informal sector producers and workers be able to avail of support mechanisms (such as social protection, child-minding centers, etc.) that empower women? 9 Do skills trainings and product-related services delivered to women avoid gender stereotyping? 9 Are issues and concerns that impact on women’s ability to access productive resources or to become economically empowered addressed? • Relations between women and their partners • Personal empowerment i.e. building self-esteem • Equity concerns, i.e. exclusion due to religion, ethnicity • Reproductive concerns • Women’s overall lack of political empowerment which affect their decision making 9 Do the strategies pay special attention to the needs of rural women and indigenous women?

Source: LGSPA, 2009. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes Also, the LED strategy should be able contribute to poverty alleviation targets and positively impact the most vulnerable sectors of the population. The following are some guide questions on assessing a program or project’s sensitivity to the needs of the poor:

• • • • •

Will the program or project benefit a large number of poor families? Will the program or project empower these families to meet the minimum basic needs of income, employment, health, nutrition, shelter, water and sanitation, basic education, and peace and order? Will the impact on each of the basic needs or poverty dimensions be direct or indirect? What is the anticipated degree of impact of the program or project on each basic need: high, medium, low? Will the benefits of the program or project be felt immediately, in the medium-term or the long term?

Priority should be given to programs and projects with more direct, a higher degree and wider-reaching impact on the ability of the community to meet its basic needs. Step 8: Document the LED Strategic Plan and Integrate in LGU Plans and Processes At this point, the LGU LED team has five important tasks: a)

Put together the LED Strategic Plan according to an outline agreed upon by stakeholders(see Box 3 for an example of the LED Strategic Plan Outline)

b) Plan for strategy presentation to and approval by the Local Development Council and Legislative Council c)

Integrate the LED Strategic Plan in the CDP and ELA

d) Prioritize the programs and projects identified in the LED plan in the LGUs 3-year Local Development Investment Program (LDIP) and the Annual Investment Plan; and e) Incorporate the LED plan and accomplishments in the LGU annual processes including the preparation of the department or unit-level operations plans and budgets, the State of Local Governance Reports (SLGR), Annual Reports and the LCEs State of the Municipality/City/ Province Address (SOMA/SOCA/SOPA) In integrating the LED Strategic Plan, the planning team should also be able to make the links between 64

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Integrating LED in Local Government Processes the clearly entrepreneurial or economic strategies in the LED Strategic Plan and the other strategies contained in the CDP and ELA that would impact on the local economy in the overall. Some examples are social service and environmental management strategies that would shape the human capital and ecological and natural resources in the locality in the medium to long-term. Box 3. Example of a LED Strategic Plan Outline LOCAL ECONOMIC DEVELOPMENT STRATEGIC PLAN OUTLINE Executive Summary I. Introduction A. Rationale/ LGU Background B. The LGU LED Team C. The LED Stakeholders Group II. Local Economy and Competitive Assessment A. Local Economy Profile 1. Demographic 2. Economic 3. Business Environment 4. Hard Infrastructure 5. Provincial, Regional, and National Factors B. Competitiveness Assessment 1. Local Resource Inventory and Assessment 2. Strengths, Weaknesses, Opportunities, and Threats of the Local Economy 3. Profile and Value Chain Analysis of Industries that the Locality Has Competitive Advantage III. LED Strategic Plan A. Vision, Goals, Objectives and Performance Indicators B. LED Strategies (Programs and Projects) IV. Annexes A. Demographic Data and Information Tables B. Local Industry Competitiveness Ranking Matrix

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Stage 4: Implementing the LED Strategy For the LED process to gain credibility and for the LGU and other LED stakeholders to demonstrate their commitment to this endeavor, implementation should be carried out immediately after the LED Strategic Plan is completed. This is also to take advantage of the momentum created in the preceding stages. Stage 4 can be broken down into five steps: Stage 4: IMPLEMENTING THE LED STRATEGY Step 1: Prepare an Overall LED Implementation Strategy Step 2: Prepare Individual Project Action Plans Step 3: Build Institutional Frameworks for LED Implementation, Monitoring and Sustainability Step 4: Build Linkages with other Tiers of Government Step 5: Carry Out Tasks in Project Action Plans

Step 1: Prepare an Overall LED Implementation Strategy The execution of the LED Plan is driven by a broad implementation strategy, which in turn is driven by individual project action plans. The overall implementation strategy lays out the budgetary, human resource, institutional and procedural implications. It is thus the point of integration of all LED programs and projects (Swinburn et al., 2006). Swinburn et al. (2006) enumerates the key issues in implementing the LED Strategic Plan, as follows: a) b) c) d)

Who takes responsibility for each program or project? What are the targets in terms of outputs and timing? What steps need to be taken to achieve the targets? What will the reporting structures and communication strategy consist of and how will they be put into effect? e) What are the performance monitoring and evaluation systems and processes? f) What are the budgetary and human resource requirements for the sustained delivery of the project or program? 66

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Integrating LED in Local Government Processes g)

What are the institutional implications of the LED programs and projects, including internal implications of the procedures and processes of the LGU? h) What new departmental and staff coordination will be necessary to fulfill the project? i) What are the new skills required for the implementation of programs and projects? (This is similar to the LGUâ&#x20AC;&#x2122;s Capacity Development Plan for ELA Implementation) Step 2: Prepare Individual Project Action Plans After program and project selection has been completed, it is necessary to detail the actions that need to be undertaken to implement each project. Table 17 shows an example of a project action plan template that can be used to organize project components and activities, the expected results, the target sector, the possible stakeholders and their respective roles or contributions, the project manager, the source of funding, and the timeframe, outputs and costs of each activity. Table 17. Example of a Project Action Planning Template Project Title: LED Program Title: Short Description of the Project (Project components and major activities): Expected Results (Objectives): Target individuals, groups, organizations and sectors, and/ 1. or broader systems: 2. 3. 4. Contributions to the Project: Stakeholders: 1. 2. 3. 4. Source(s) of Funding: Project Manager: 1. 2. 3. 4.

Activity

Timeframe per Activity

Outputs per Activity

Cost per Activity

The individual action plans can then be discussed by the LGU LED team and select members of the stakeholders group with the Local Finance Committee (LFC) for prioritization in the LGUs Annual Investment Plan and for linking the actions plans to LGU budget. The LFC, together with the Local Development Council (LDC), is a very important body in the LGU as it is in charge of setting up of the level of annual expenditures and ceilings including that of the LED priority projects. In making the case for LED programs and projects and seeking local government funding, it would be STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes helpful for the LGU LED team to present to the Local Finance Council, the LDC and the Legislative Council a cost-benefit analysis, showing how the economic benefits outweigh the investment and operating costs. The same can also be done when accessing external fund sources. Step 3: Build Institutional Frameworks for LED Implementation, Monitoring and Sustainability As the LED process moves from planning to implementation, the LGU needs to study the organizational needs for implementing the LED Strategic Plan. Based on the LED strategy, programs and projects, and the resources available for implementation, the LGU should analyze requirements for an effective LED implementation. The following considerations can guide the LGU on its decision-making in this regard: a) Propose an organizational â&#x20AC;&#x2DC;homeâ&#x20AC;&#x2122; and structure for LED implementation. Identify the three main reasons why this is the most favorable solution for the LGU. For example, the LGU LED team headed by the Mayor may still continue to coordinate strategy implementation but with project management duties delegated to the respective project implementation teams, committees or technical working groups consisting of members from the LGU LED team and the LED stakeholders group. The LGU LED team and LED stakeholders group, which started off as ad hoc structures in Stage 1, may be formalized through a Legislative Council resolution or a separate LED Assistance Unit may be created through a local ordinance. b) Based on the LED project action plans, identify which committees, task forces or teams should participate in project implementation. c) For the chosen home and structure, indicate how this structure will be established, how it will be funded and what the reporting structure will be. Indicate the potential obstacles or problems that are likely to need resolving in establishing and funding this organizational structure. In Upi, the LGU passed a municipal ordinance creating a Business Development Center (i.e., as a separate unit dedicated to facilitate LED programs and projects). This is to ensure that the structure will remain even beyond the term of the current LCE. The BDC reports to the LGU LED team, which in turn reports to the LED stakeholders group in regular monthly or quarterly meetings. The BDC has a dedicated manager and staff to take the lead in the execution of the LED strategy and provide business development and assistance services. In Tugaya, primary cooperatives were organized to support the LGU implement the LED strategy. The cooperatives manage common service facilities (kiln dryer and metal foundry) for its metal-craft 68

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Integrating LED in Local Government Processes and woodcraft industries as separate business enterprises. d) Establish a group profile of the types of individuals that will comprise the key staff, and identify the types of skills that these staff will need. Estimate the likely budget for undertaking this. In the case of Upi’s Business Development Center, three plantilla positions were created including that of the Business Manager. Four additional personnel from other LGU departments were detailed to the office. e) Determine which partner organizations or institutions are crucial to achieving successful project implementation. What should their respective role be in the management and coordination of the project? Depending on the nature of the project, the private sector may be called on to provide logistical support, technical assistance or even invest in an industry or enterprise being proposed in the LED plan. In Upi, the active participation of the business sector in the LED stakeholders group led to the establishment of the Upi Agricultural Ventures Corporation, a SEC-registered company, that is partly owned by the LGU and some private investors. The corporation will own, operate and manage a Halal organic fertilizer production enterprise as part of Upi’s LED Strategy implementation. In Wao, the setting up of a rubber nursery, identified as one of the projects in the LGU’s LED plan, was also taken on by private investors. f)

Organize the necessary policy, legislative and administrative support mechanisms needed to implement the LED Strategic Plan. The LGU LED team and technical staff, in coordination with the legislative council, should ensure that required legislations are included in the Legislative Agenda of the Council. The LED team, together with the LCE and other elected officials, also need to ensure that technical and legislative coordination and complementation are establish for programs and projects that requires support at all levels (e.g., regional, provincial or barangay governments). The political leaders can use their influence to initiate and build multi-level partnerships and networks to support the LED process, and make the case for LED resource allocation (Swinburn et al., 2006). They can engage the business sector and secure support from higher-level government agencies.

Step 4: Build Linkages with Other Tiers of Government The LED process also entails not only working with other local organizations but also with other tiers of government as discussed in Stage 1 and shown in Figure 4. Building linkages with other tiers of government at the provincial, regional and national levels is necessary STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes in planning for specific economic projects, formulating implementation strategies, and accessing external technical and financial resources. For example, what provincial, regional and national programs are available for industry sectors that the LGU deems as their most competitive? If livestock development is a priority, what agencies have mandates related to livestock development? Figure 4. Links with Other Tiers of Government National Level

National Government Agencies and Attached Agencies such as DTI, DA, QUEDANCOR

Regional Level

Regional Office of Agencies such as DTI, DA, DOST

Provincial Level

SMEDC, Chamber of Commerce, Industry Association, Provincial Offices of DTI, DA

L O C A L

L E V E L

Step 5: Carry Out Tasks in Project Action Plans In carrying out the Project Action Plans, make sure that: a)

A Project Manager is designated for each project. It is not necessary that the project manager has a high level of expertise. However, he or she has to have a reasonable understanding of the technical needs of the project. Political sensitivity, leadership and ability to handle stress are other skills normally required of the project manager b) Members of the TWGs, Project Implementation Teams or committees have a clear grasp of their respective roles and responsibilities in the project implementation c) A Business Plan is prepared for each enterprise development project d) A memorandum of agreement (MOA) is forged with any institution the LGU wants to partner with during project implementation. The LGU of Tugaya, Lanao del Sur, for example, has forged a MOA with the Mindanao State University-Iligan Institute of Technology (MSU-IIT) whereby the latter will provide technical assistance on the setting up and operations of a wood kiln dryer and metal foundry for a period of five years e) Regular project monitoring and evaluation is conducted through meetings, site inspections, and progress reporting 70

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Stage 5: Reviewing the LED Strategy Although the LED strategy is usually written for a five to 10-year period, it should be quickly reviewed each year in case it needs to be adjusted in response to dynamic local economic conditions. It is not something set in stone, but a dynamic instrument that should be changed as local conditions change (Swinburn, 2006). The implementation of the LED strategy should go through a more rigorous annual assessment. This review should make use of established monitoring and evaluation indicators of the local economy and resources available for the strategy effort. The review needs to cover not just inputs, outputs, outcomes (and where possible impact), but the implementation processes, including levels of participation. Alongside the review of the entire strategy, systems should be in place to monitor the progress of every project. All these systems will give decision-makers the tools they need to adjust the strategy in response to dynamic local conditions (Swinburn, 2006). This stage can be broken down into two steps: Stage 5: REVIEWING THE LED STRATEGY Step 1: Implement an M & E Strategy Step 2: Revise the LED Strategy according to M & E Results Step 1: Implement an M & E Strategy Monitoring is the continuous assessment of the LED strategy and/or project implementation in relation to agreed schedules, and of the use of inputs, infrastructure, and services by project beneficiaries (Swinburn et al., 2006). Evaluation is the periodic assessment of a LED project’s relevance, performance, efficiency, and impact (both planned and unplanned) in relation to stated objectives. Evaluations can be divided into two categories. ‘Process evaluations’ focus on the implementation of programs or projects, while ‘outcome evaluations’ focus on program results. Process evaluation is concerned with how a program can be improved while outcome evaluation is concerned with whether the program actually works. Process evaluations overlap with monitoring activities and both are concerned with project or program implementation (Swinburn et al., 2006). STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Integrating LED in Local Government Processes Monitoring and evaluation (M&E) is a very important management tool in the LED implementation. Performance indicators as laid out Stage 3 particularly in the step on “Objectives and Performance Indicators” will be a major component of the LED Implementation M&E system. Input and output tracking are also important regular activity of the LED M&E system along with process assessments. LED impact assessments should also be done and should coincide with the other outcome assessments in the LGU like the LGPMS development assessments which is done every three years. The M&E system should also include existing performance self-assessment systems that would help enhance the LGUs capacity to implement the LED strategy. This includes the LGPMS, the System on Competency Assessment for Local Governments (SCALOG), competitive assessments programs and others. As described in the LGSPA Manual on the Local Planning Process, the following are the key elements of an M & E strategy: a)

Performance indicators and targets to measure progress towards the achievement of goals, objectives and outputs developed in Stage 3 b) Data source to assess performance vis-à-vis target c) Collection methods to gather data on each indicator d) Frequency at which measurements will be made e) Responsibility centers for monitoring progress towards each result It can also include the frequency of reporting the M&E results and to whom. For example, M&E results can be reported back to the LED stakeholders group during monthly or quarterly meetings as well as to the Local Development Council. These can also be fed into the annual LGPMS database and, consequently, to the State of Local Governance Report. Information on significant LED outputs or outcomes may also be disseminated to the general public through the LCE’s State of the Municipality/ City/Province Address (SOMA/SOCA/SOPA). The LED M&E system should also build on and utilize existing monitoring and evaluation mechanisms in the LGU. For instance, impact assessments can be assigned to the Local Planning and Development Office together with the appropriate sectoral committee of the LDC. The LDCs Project Monitoring Committee (PMC) can also be tapped for monitoring of LED projects funded by the LGU development funds, ODA and national funds.

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Step 2: Revise the LED Strategy according to M&E Results The LED Strategic Plan can then be reviewed and enhanced periodically based on the results of the M&E to ensure that it continues to be relevant and responsive to current conditions. The World Bank LED Primer recommends that the following issues should be taken into account when revising the LED strategy:

• • • • • • • • •

Is the SWOT analysis still valid or have circumstances changed? Is more information available and have key issues changed as a result? Should changes be made to the vision, goals or objectives to reflect changing circumstances? Are projects achieving the expected results? If not, what can be done? Are performance indicators being met? If not, why not? What changes need to be made? Should the indicators be changed? Should there be more action on projects? Should the projects be changed?

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Chapter

LED in Practice

is a compendium of LED experiences, innovations and good practices of selected LGUs in the Philippines including those of Wao and Tugaya in Lanao del Sur, and Upi in Maguindanao, which are municipalities covered by the LGSPA. LED initiatives of the provincial government of Bohol the city government of Tuguegarao in Cagayan, the city government of Naga in Camarines Sur and the municipal government of Baybay in Leyte are also featured. Useful insights can be drawn from the different approaches and strategies resorted to by these LGUs in stimulating economic growth in their respective areas of responsibility. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice This chapter presents some notable practices and positive results that were engendered in the application of the LED process by selected LGUs. The first three cases follow the experiences of three LGUs in the ARMM in the formulation of their LED strategies, their achievements to date (just one year into the implementation of their LED plans) and the major factors that facilitated the LED process. The last four stories feature local governments in other regions that also pursued economic development initiatives through a strategic planning and participatory development process with assistance from other development or foreign-funded programs. Hopefully, these success stories will motivate and inspire more LGUs and LED practitioners to advocate LED both as a process and as a goal of good local governance. Tugaya, Lanao Del Sur: Culture as an Engine of Local Economic Development Tugaya is a small municipality along the western shore of Lake Lanao in the Province of Lanao del Sur, with a population of 20,000 and a land area of a little over 4,000 hectares. The industry that fuels its economy is its age-old arts and crafts that have been preserved and handed down through generations. The whole town is virtually a workshop and a “museum” of Maranao arts and crafts – all intricately and painstakingly done using traditional tools and methods and indigenous decorative designs. In fact, due to its cultural value that is fostered by the distinctive artistry and skills of its people, Tugaya has earned an NCCA (National Commission for Culture and the Arts) nomination to the United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage List. Despite this recognition, Tugaya is largely unknown in the country as the source of Maranao brasswares, handlooms, hand-carved wooden chests (baor) and furniture which are being sold in native crafts and furniture stores. Formulating and Implementing the LED Strategy In 2006, through the LGSPA’s LGU capacity-building project on facilitating LED, Tugaya completed its LED Strategic Plan. As contained in the plan, the LGU envisions a “prosperous and productive Tugaya that is the center of Maranao Arts and Culture in the Philippines, as showcased by its metal and wood craft industry”. In its Local Economic and Competitiveness Assessment (LECA), the LGU LED Team, together with the private sector and other LED stakeholders (including representatives from the Tugaya Brassware Producers Association, Baor Producers Cooperative, Loom Weaving Association and the Pandiaranao Womens’ Association), identified the following as the town’s most competitive industries: handloom weaving, iron works, brass wares, wood carving, and goldsmithing. In 2007, LGSPA organized a study tour for the Tugaya LED team and private sector representatives to LGUs in Luzon known for their metal and wood crafts. This opened more opportunities in terms of networking and market and production expansion. It also turned out that Tugaya was the first LGU to visit the NCCA. The commission was so impressed by Tugaya’s initiative that it offered to provide technical and financial assistance for a “cultural mapping” to support its nomination as a World Heritage 76

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1 PM

LED in Practice Site. The LGU LED team then enhanced the wood and metal crafts industry development plan incorporating the learnings and knowledge gained from the study tour. A multi-disciplinary committee composed of representatives from POs, academic institutions and metal and woodcraft organizations was also formed by the LGU to conduct the cultural mapping, i.e., the research and documentation of the Maranao tradition and culture in the municipality. In 2008, the LGU passed a municipal ordinance to preserve, conserve and protect all places, structures, relics and the like that are part of the heritage of Tugaya, particularly its metal and woodcraft industry. It also passed a municipal resolution declaring metal and wood craft as its priority product under the â&#x20AC;&#x153;One Town One Productâ&#x20AC;? (OTOP) program of the Department of Trade and Industry. Of late, the LED stakeholders group developed a business plan for its metal and woodcrafts industry and is in the process of establishing a multi-purpose wood kiln dryer, a melting furnace, and a blacksmithing facility in order to improve productivity and product quality. Two more benchmarking tours were conducted to observe the design and operations of such facilities in Mindanao. The LGU and the Mindanao State University - Iligan Institute of Technology (MSU-IIT) also reached a Memorandum of Agreement whereby MSU-IIT shall provide technical assistance in the design, setting up, and operations and maintenance of the said facilities. However, as mandated by the municipal ordinance, sites that use traditional equipment and methods will still be preserved. Towards the end of the LED project, LGSPA assisted the LGU organize the artisans and craftsmen into three cooperatives. The wood and metal craft cooperatives will operate their respective common service facilities as a business. The handicrafts cooperative, composed mainly of women weavers, will set up a microfinance facility and a consumer store, and undertake bulk buying of raw materials. Prior to the LGSPA LED project, the LGU was focused mainly on expanding the market of its handicrafts, particularly in the retail market. After undergoing the LECA and LED strategy formulation, the LGU realized that the development of the industry required an integrated approach addressing all aspects of an enterprise, including: a) ensuring a sustainable supply of raw materials through environmentally sound utilization of resources and production methods, b) enhancing productivity and product quality through new but appropriate technologies that keep cultural integrity intact, c) accessing or facilitating access to financial resources such as the OTOP, d) building LGU brand recognition and breaking into new and institutional markets such as hotels, restaurants and interior decorators, and, e) creating a business and investment enabling environment including the provision of infrastructure and power and water utilities required by the industry. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice Factors that Facilitated the LED Process The LED process by no means had a smooth start in Tugaya and only began to resonate to participants when arts and culture, in which all of them had a common stake, was identified as the town’s main economic driver. The participants also began to appreciate the process more when inputs and discussions were translated or done in the Maranao language. Moreover, the nomination to the World Heritage List produced a renewed sense of purpose to the LGU, private sector, academe and other government agencies. With this recognition, the LGU hopes to position the municipality as a cultural tourism destination and attract more support and investments for the preservation and promotion of its arts and crafts. It has already received an award for “Culture-friendly Local Government” from the Office of the President. The arts have been instrumental in facilitating social cohesion, bringing tourism to unlikely places, fostering a sense of belonging, and preserving collective memory (Creative City Network of Canada, 2005). Despite a long history of clan feuding and political rivalries, the arts and crafts have truly built community identity and pride in Tugaya. In fact, due to a shared interest and passion for their art, the LED process has brought together community members from different clans and of different political colors (as evidenced by the profile of the LGU LED team, stakeholders group and PO members). With the continued collaboration in the implementation of the LED strategy, Tugaya will be an excellent testament that culture-based industries can also provide a strong impetus to achieving local economic development and peace. Wao, Lanao del Sur: Pursuing Food Security and Environmental Sustainability through the LED Process The municipality of Wao is one of the 37 municipalities of the province of Lanao del Sur and geographically the farthest from the seat of the provincial government in Marawi City, which is 325 kilometers away via the Bukidnon - Cagayan de Oro City - Iligan City route. Formulating and Implementing the LED Strategy In 2007, with technical assistance from the LGSPA, the Wao LED stakeholders completed the LGU LED strategy that articulates their vision of food security and environmental sustainability and their industry priorities: upgrading and increasing the local herd of cattle and carabao, goat and dairy production, organic fertilizer production, organic rice production, rice and corn seeds production, and rubber tree farming. (See Table 12 in Chapter 2 for a summary of the Wao LED strategy). Livestock industry development was first on the LGU’s LED implementation agenda. The LGU LED team of Wao along with teams from two other LGUs in the ARMM went on a study tour organized by the 78

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LED in Practice LGSPA to LGU-managed livestock production centers and relevant government institutions in Mindanao. As a result, Wao was able to enhance its LED strategy, refine its livestock industry action plan, and secure technical support from the Philippine Carabao Center (PCC) at the Central Mindanao University (CMU) in Bukidnon and from the livestock division of the Department of Agriculture - Region X in Cagayan de Oro City. The partnership between LGU and PCC-CMU for the implementation of the Wao Livestock Industry Development Program was formalized through a Memorandum of Agreement. Wao sent seven technicians to the PCC-CMU for a month-long training on Artificial Insemination (AI) for large ruminants. The PCC-CMU has also provided the LGU with AI equipment while the LGU has set aside budget for liquid nitrogen and AI supplies. In addition, the LGU is conducting IEC activities and working with the newly trained village-level technicians to promote the use of AI in large ruminants. Technical Working Groups composed of members of the LGU LED team and the LED stakeholders group are now finalizing business plans for the organic fertilizer production enterprise, goat production enterprise and rubber production. The LGSPA organized a study tour for the team to visit organic fertilizer producers in Mindanao and gain more knowledge about production and marketing. The organic fertilizer enterprise will make use of compost from the LGU’s materials recovery facility that has equipment to convert the biodegradable component of collected municipal wastes into compost. The enterprise will also be working closely with the people’s organizations and households in several barangays that have already been taught vermicomposting by the Helen Keller Foundation. It will buy vermicast from these households as feedstock to the organic fertilizer production. The LGU is studying two options as to the enterprise organization: a public economic enterprise or a corporation wherein the LGU will own 40% to 60% of the stock while the rest will be private investments. Meanwhile, a supplemental budget for the operations of the goat production public economic enterprise has already been approved by the Sangguniang Bayan. Goat housing facilities have already been set-up; an order for 25 upgraded does and one Anglo-Nubian buck has already been booked with the CMU; and, staffing and management group of the goat farm has already been drawn-up. As for rubber production, a rubber nursery has been established and is being managed by the private sector. Factors that Facilitated the LED Process The integration of crosscutting themes, particularly poverty reduction, gender equality and environmental sustainability, is evident in Wao LGU’s priority programs and advances the principles of sustainable development. To illustrate, the proposed organic fertilizer production ties with the LGU’s concerns for solid waste management, land conservation, job creation, and gender equality (since women are actively involved in vermicomposting). The LGU’s goat dairy production is envisioned to supply fresh milk to the LGU’s feeding program, an initiative to address the high rate of malnutrition in the locality, as well as create an alternative source of income to livestock farmers. Goat raising and milk processing also provide STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice business opportunities for women. Rubber tree production, on the other hand, is not only a source of income but can be used for reforestation purposes. The momentum of the LED process was only disrupted once and this was around the time of the local elections when a change in administration resulted in the shuffling of technical personnel from one department to another. But despite the many local industry development action plans simultaneously getting off the ground, the Wao LGU has been able to keep the LED strategy implementation moving due to several factors: • • • •

•

Systems for participatory governance are in place from the barangay to the municipal level Proximity to and continued partnership-building with resource institutions relevant to identified priority industries such as the PCC, CMU, and DA Region X Sustained collaboration with private sector, banks, academe, POs, CSOs from the planning to implementation stage A dedicated LGU LED Team and creation of technical working groups for the crops, livestock and organic fertilizer projects. The Municipal Agriculture Office personnel in charge of crops and livestock head the TWGs for the first two concerns. The Municipal Environment and Natural Resources Office, on the other hand, is spearheading the organic fertilizer project The Vice Mayor and the Chairperson of SB Committee on Agriculture are active LED champions. Thus, local funds for the LED projects are easily accessed

Upi, Maguindanao: Developing the Entrepreneurial LGU through the LED Process Upi, a 3rd class municipality, is one of the more progressive municipalities in the province of Maguindanao in ARMM. A community of “tri-people”, Upi is predominantly populated by Tedurays (44%), the native inhabitant of the place, followed by the Maguindanaons (27%) and the Ilonggos and other settlers (17%). It has a total land area of 74,295 hectares with 24, 350 hectares devoted to Forest area. It has a population is at 51,650. Economically, the municipality is known for its corn (18,268 hectares) and upland rice (6,724 hectares) production. Based on its municipal agricultural profile, the area has 25,000 farmers with an average annual income of P50, 000.00. Employment and business shares a small percentage. Native handicrafts such as bags, baskets, decors made of rattan and bamboo craft are available and can be customized upon request. Culturally, Upi promotes its tri-people approach to traditions through celebrations like the Meguyaya Festival.

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LED in Practice Formulating and Implementing the LED Strategy The LED program of the municipality of Upi, Maguindanao started in 2005 during LGSP II. This was followed up by LGSPA in 2008 with technical support for the implementation of the Upi LED Strategic Plan. This particular assistance was aimed at a) deepening the Upi LED team and the Upi stakeholders group’s appreciation of the LED process and of the Upi LED program, b) building their knowledge and skills in identifying priority industries or economic sectors, and c) enhancing their capacity to support and assist local SMEs, especially in these priority sectors. The LED stakeholders group identified cereals, high-value commercial crops, rubber, ecotourism and livestock as the municipality’s most competitive industries. The group then undertook a series of planning workshops and study tours to enhance the strategic plan and fine-tune individual project action plans. While doing the value chain analysis of Upi’s corn industry, the LED stakeholders group discovered that fertilizers, seeds, and pesticides accounted for 80% of the cost of local corn production. Of the PhP500 million annual value of corn production in Upi, PhP400 million was draining out of the local economy because farmers were buying these inputs from outside sources. The LGU then saw an opportunity for import substitution, job creation, and reduction in crop production cost in setting up a Halal organic fertilizer enterprise. This enterprise eventually became a top priority in the LED strategy implementation. The Upi LGU in partnership with the business sector has created the Upi Agricultural Ventures Corporation, a SEC-registered company, that will own, operate and manage the organic fertilizer enterprise. The business sector has invested PhP200,000 to the corporation while the LGU has put up PhP2 million for the licensing fee of a particular organic fertilizer brand. In 2007, the LGU created a Business Development Center (BDC), a unit under the Mayor’s Office, to provide business development support services to entrepreneurs. LGSPA assisted Upi in the formulation of the BDC operations manual and strengthened its capacity in mainstreaming gender equality in the BDC services and the LED programs and projects. During a review of the BDC structure, systems and operations plan in 2009, the Upi LED stakeholders’ group agreed that the BDC functions would encompass the strategies for SME development (See Stage 4 of the LED Process), namely, business investment and environment, facilitating access of Upi SMEs to finance and market, and providing support services to enhance productivity including improvement of production of Upi SMEs. As of writing, the BDC is working on establishing a one-stop office for business registration in partnership with the DTI Maguindanao Provincial Office and organizing farmer-entrepreneurs, including the Upi Women’s Federation, as LGU partners in developing the ginger and other high value commercial crops production and the organic fertilizer raw material production. In addition, the LGU is negotiating with the Land Bank of the Philippines to establish the first ever banking services in the municipality. It is also developing its tourism potential through the Tourism Council to STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice promote spelunking, waterfalls, and other outdoor challenge activities. Factors that Facilitated the LED Process Like other successful LED cases, the local chief Executive in Upi took primary responsibility for LED planning and implementation. Guided by Mayor Ramon Piang’s drive, leadership and analytical skills, the LGU was able to make significant investments in the LED program in a short period of time. Other helpful factors include the active participation of the private sector through the LED stakeholders group, the LGU’s judicious use of funds, and its strong linkages with higher levels of government. Tuguegarao City, Cagayan: Enhancing the Business Enabling Environment for Community-Based Enterprises Tuguegarao City is the capital of the Province of Cagayan and the center of the Cagayan Valley Region, located in Northeast Philippines. It is one of the cities included in Phase 2 of the City Development Strategy4 (CDS) Program in the Philippines in 2002. The CDS is a participatory planning process that is a combination of learnings derived from the CDS process developed by the World Bank and the Local Environmental Planning and Management Program, which is based on the Sustainable Cities Approach of UNDP. The objectives of the CDS are to: a)

Guide the city’s direction for economic development with the aim of creating more employment opportunities; b) Develop a consensus building process to establish the city’s priorities, strategies and actions; c) Assist the local authorities outline their financing and investment strategies; and d) Build local capacity for more effective urban management. 4In the annual Cities Alliance Public Policy Forum in 2007, the League of Cities of the Philippines (LCP) Secretary General Mayor Mel Senen Sarmiento of Calbayog City said that “Through the CDS, cities have adopted a new approach to managing their cities. First and foremost is the realization of the city as an economic space. Cities are identifying their competitive advantages and maximizing these in promoting local economic development.” (Retrieved from http:// www.lcp.org.ph/04142008_ PhilCities.htm).

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Strategies Employed In a speech given in a 2004 CDS Conference in Hanoi Vietnam, then Mayor Randoph S. Ting of Tuguegarao shared that several tools were used in formulating their CDS. These include the Technology of Participation (TOP), Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis, Priority Identification, Consensusbuilding, Strategy Formulation, Decision Analysis, Forecasting and Capital Investment Planning. He said that CDS has taught the LGU to involve all stakeholders in developing their urban indicators, formulating the City Vision, agreeing on strategies and priority projects, deciding on the best mix of resources and reviewing their efforts together. One of the LED programs adopted by Tuguegarao under its CDS is the One Barangay, One Livelihood (OBOL) Program, which was inspired by the One Village, One Product Movement of the Oita Prefecture STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice of Japan. The program is aimed at enabling barangays to successfully operate economic activities, provide gainful employment, boost the local economy, and create products that shall become their respective trademarks. In 2003, the LGU also launched the Tuguegarao City Technology and Livelihood Development Center (TCTLDC), a knowledge and skills center in the countryside (Tuguegarao LGU, n.d.). It is tasked to provide the needed technology and networks to transform Tuguegaraoeños into self-reliant and globally competitive entrepreneurs. It offers the following services to the public:

• • • •

Technical Assistance (on-site trainings, post training services and techno forum) Business/Livelihood Technology Trainings (project development and packaging. Business counseling and capability building Marketing Services (market linkages, trade fairs, events marketing) Financing Assistance (micro/project lending and venture capital)

In 2005, the TCTLDC conducted a total of 20 trainings, techno-demos and seminar-workshops including the highly successful livelihood-training-workshop “Isang Gunting, Isang Suklay, Hanapbuhay.” Market linkages and promotions for the Padday na Ybanag products were also strengthened through participation in local and national trade fairs. Tuguegarao City also launched a “Kasanayan sa Hanapbuhay” (Apprenticeship and Learnership Program), an employment generation strategy in cooperation with TESDA, DTI, DOLE and the private sector. Thirty firms registered and successfully completed the training of 244 apprentices/learners. Results Achieved In his 2004 speech, Mayor Randolph Ting said that the CDS has dramatically improved the implementation of the LGU’s Poverty Reduction Agenda and Local Economic Development program. The number of households living below the poverty threshold has decreased from 11,416 households in 2000 to 5,121 households in 2003 (Ting, 2004). As of 2004, under the OBOL program, the city government has successfully facilitated the establishment and operations of community-based enterprises in 21 out of its 49 barangays. The most popular products include the roasted peanuts of Pallua, the carabao milk candy and chocomilk of Namabbalan and the cacao choco balls of Capatan, which is a favorite centuries-old family recipe. The wide-ranging OBOL enterprises featured in the Tuguegarao City government website, http://www.tuguegaraocity.gov.ph, include swine fattening in Libag Sur, organic fertilizer production in Cataggaman Nuevo, and metal craft in Larion Bajo, among others. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice Naga City, Camarines Sur: Good Governance as Catalyst of Economic Growth Naga City is located in the province of Camarines Sur, Bicol region (Region V) and is 450 kilometers southeast of the National Capital Region (NCR). It has a total population of 160,516 as of 2007 (NSO Census) and a land area of 8,448 hectares. In the early 1980’s, Naga City was not a desirable place to live in as gambling and other vices proliferated, the city government was spending more than its resources and the quality of life was not getting any better. This situation turned around when then 29 year-old Jesse Robredo was elected as city mayor in the 1988 election (Mangahas, 2006). Strategies Employed Naga’s achievements were not realized overnight. Its exemplary governance practices evolved over time through the following initiatives (Mangahas, 2006): Economic Governance - The city government propelled economic activities by instituting and nurturing strong partnerships with organized sectors, encouraging people’s participation, taking the lead in strategic planning, and empowering the private sector. Improved Local Government Capability – Personnel hiring and staffing is based on aptitude and competence, not on patronage. A Productivity Improvement Program and a Merit and Promotion Board were established to encourage innovation and productivity improvement. Formation of the Metro Naga Development Council (MNDC) or Metro Naga – The Council, comprising of Naga City and 14 towns of Camarines Sur, is a mechanism that allows complementation of limited resources and pooling of investment potentials and comparative advantages to ensure balanced growth and sustainable development in the Metro Naga region. The city government of Naga served as a competent and willing regional development catalyst by spearheading the formation of an economic region out of disparate political units in the province. Partnerships with the Private Sector - The city government encouraged private sector partnerships by improving cost-efficiency in the construction of public works, practicing transparency in its operations, and implementing other confidence-building measures. Institutionalized Participatory and Inclusive Governance – The city government organized and authorized a People’s Council (composed of accredited NGOs) to sit in every legislative committee and local special body through Ordinance 95-092. It also published the Naga Citizen’s Charter that provides 84

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LED in Practice step-by-step procedures for availing its 150 frontline services and has set up a website (www.naga.gov. ph) that updates citizens on the city’s finances, policies and activities. Local Policies and Initiatives - By virtue of Ordinance No. 97-114, the city government grants incentives to investors in preferred industries to generate jobs and promote balanced growth. The Investment Promotions and Action Center implements the investment Board’s objectives, markets Metro Naga as an investment site, facilitates joint venture projects with local and external investors, and provides assistance to investors. Economic Planning and Analysis – The Mayor transformed the planning process into one that is participatory, need-focused, long-term and views the city as an economic space whose sustainability also depends on conditions beyond its geographic environment. Financing Development – Development projects were financed from bank borrowings, mixed publicprivate financing, grants and local revenues (which account for over 40% of the city’s total income). Results Achieved As a result, the city government income rose from $0.5 million in 1988 to about $6.0 million in 2001. To date, Naga boasts of a dynamic economy made evident by its 6.5% average annual growth rate, an average family income that is 126% and 42% higher than the national and regional averages, lower unemployment rate of 5.2%, and a lower poverty incidence of 29% compared to 50% of the region. It accounts for 21% of total investments in the Bicol region. It has garnered more then 100 international, national, and regional awards. The most notable of which are being one of the Philippines’ most livable cities (Interface Newsmagazine), one of four most improved cities in Asia (Asiaweek,1999), and having one of the Top 10 Best Practices worldwide (Dubai International Award, 1998). Naga City is now one of the country’s brightest economic spots, a model local government unit and a center for innovation in local governance (Naga LGU, n.d.). The Naga Governance Model has been tested and fine-tuned over the years and rests on three key elements, namely: progressive development perspective, functional partnerships and people participation. Growth-oriented and equity-building strategies were particularly employed to forge and nurture city government and private sector partnership (Naga LGU, n.d.). Growth-oriented strategies promote economic development and expand investment opportunities while equity-building strategies ensure that the poor benefit from the fruits of development. These are service delivery mechanisms that fulfill the promise of development for all, particularly the poorest sectors of society.

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LED in Practice Baybay, Leyte: Setting the LED Direction through Participatory Economic Planning5 Baybay is one of the 41 towns of Leyte Province. It has 92 barangays with a total land area of 46,050 hectares, making it the largest town in Eastern Visayas (Region VIII). Based on the 2007 NSO census, Baybay registered a total population of 102,526. It is home to the world renowned Visayas State University (VSU), the biggest agricultural school in the Philippines. It is an agricultural community with a high potential for agro-industries. Specialty Pulp Manufacturing, the largest abaca pulp mill in Asia, two coconut mills and a big activated carbon plant are some of Baybay’s industry locators. Strategies Employed The local government unit (LGU) of Baybay believed that huge resources are required for local economic projects to be successful. This mindset plus the traditional practice of implementing projects from a list prepared and prioritized by department heads characterized the development outlook of the LGU prior to the Department of Trade and Industry (DTI) and German Technical Cooperation (GTZ) interventions. In 2005, consultation workshops were held to build a consensus on the economic issues, local needs and doable strategies that would stimulate economic growth in the municipality. The participatory planning process of the Local and Regional Economic Development (LRED) approach was introduced to the participants who came from both public and private sectors. Emphasis on building private-public partnerships, motivation and engagement of the stakeholders, encouraging learning and creativity, shifting ways of thinking, building local ownership and securing “buy-in” of key stakeholders to actively cooperate for a common economic good were emphasized. This initiative was made possible through the Small and Medium Enterprise Development for Sustainable Employment Program (SMEDSEP), a development cooperation project between the Republic of the Philippines and the Federal Republic of Germany that aims to improve the Business and Investment Climate for Small and Medium Enterprises (SMEs) in the Philippines, especially in the Visayas. SMEDSEP is implemented in partnership with the DTI at the national, regional and provincial levels and the GTZ on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). 5This account is largely based on the Small and Medium Enterprise Development for Sustainable Employment Program’s (SMEDSEP) success story on Baybay written by Ria Adapon (n.d.).

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The participatory planning process was appreciated by the participants representing stakeholders from the private sector, community residents, local partner NGOs and the local government. As a result, a strong sense of ownership of the Local Economic Development (LED) Action Plan of Baybay emerged and motivated the stakeholders group into action. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice The LGU ensured the smooth implementation of the LED Action Plan by having four representatives from the public and private sectors trained and coached by GTZ SMEDSEP and DTI on specific tools for planning, implementation, monitoring and assessing the progress of the Action Plan and communicating its results not only within the municipality but also to other areas in the Eastern Visayas Region. These facilitators guided the local stakeholders in the LRED process with DTI and GTZ providing coaching support. Mayor Jose Carlos Cari and Councilor Vic Veloso championed the process and their active involvement facilitated the realization of the plan. Mayor Cari advocated the LRED in Knowledge Sharing Fora and in Sensitizing Workshops in the Eastern Visayas. The LGU and private sector representatives jointly monitored the progress of the Action Plan every month. The progress meetings, most often attended by the Mayor, discussed key milestones, issues and next steps. The LED Action Plan focused on tourism and investment promotion as its priority development areas. The LGU reactivated the Tourism and Investment Council which established the Tourism and Investment Promotion Office (TIPO). The position of Tourism and Investment Officer (TIO) was created and was tasked to operate the TIPO. The TIO also acted as the LGU’s focal person for the LRED initiatives closely coordinating with the GTZ and the regional office of the Department of Tourism. Results Achieved Consequently, Baybay was recognized for its effectiveness in tourism and investment promotion through its promotion materials, participation in outbound investment and benchmarking missions to Malaysia and Singapore, and active participation to Tourism Fairs outside the Leyte Province. Better coordination with the regional Department of Tourism (DOT) has likewise resulted to the inclusion of Baybay in the region’s promotional materials, activities and in the Tourism Map of Eastern Visayas. The Baybay Tourism and Investment Promotion Office has also aggressively promoted the municipality as a location for business and a tourist destination in its website and has established links directly with hotels and tourism operators in the Visayas. Since 2005, approximately PhP 125 million was invested in Baybay, a clear demonstration that Baybay has improved its business climate and institutional environment. As a result, the Philippine Chamber of Commerce and Industry’s Most Business Friendly LGU Award Program cited LGU Baybay in 2006 for its efficient Investment Promotion. While the LGU recognizes the quick wins, specifically in the areas of Tourism and Investment Promotion, it has further taken the following steps in 2007 to sustain the gains: integrating the short term LRED Action Plan to its Comprehensive Development Plan and applying the participatory planning approach of LRED in all planning activities. The LGU is also committed to institutionalize the planning approach through iterative capacity building, allocation of financial resources to sustain LRED initiatives and creation of monitoring mechanisms. STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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LED in Practice Bohol: Local Economic Development (LED) through Investments Promotion and Good Governance Bohol is the tenth largest island in the country, located between the islands of Cebu and Leyte (Gawad Galing Pook, 2001). It has a population of 1,230,110 (2007 NSO Census) and a land area of 4,117 square kilometers. It consists of 47 municipalities and one city. Bohol was one of the provinces that experienced severe unemployment and massive out-migration due to lack of countryside opportunities. This led to a low population growth rate (average of 0.89% yearly) (Gawad Galing Pook, 2001), underinvestment and brain drain. Then Governor Rene Relampagos initiated the Bohol Investment Promotion Program (BIPP) to promote Bohol as an investment and tourist destination; to encourage business and finance projects; involve citizens in policy formulation on investment promotion; and establish and maintain an information base to aid policy formulation and technical assistance. Strategies Employed A brief account of BIPCâ&#x20AC;&#x2122;s humble beginnings was documented by Gawad Galing Pook (2001), as follows: 1. Public Consultation -The provincial government with the assistance of the ARD-GOLD of the USAID conducted a series of consultation-workshops from October 1995 to December 1996 using the Technology of Participation. These were participated in by provincial and municipal officials, selected national agencies, NGOs and private sector. Participants were clustered by municipalities based on the grouping of the League of Municipalities. Determining the provinceâ&#x20AC;&#x2122;s preferred growth focus, the strategic public and private investments and project requirements per growth focus were done. A Technical Working Group (TWG) was created to define the direction of the province, followed by the formation of the multi-sectoral Bohol Investment Promotion Advisory Group (IPAG) which took on the functions identified by the TWG. The consultations identified three drivers of economic growth: eco-cultural tourism, agro-industrialization and light manufacturing. 2. Creation of the Bohol Investment Promotion Center - The program capacitated the technical support group called Bohol Investment Promotion team on investment promotion through cross-visits, formal orientations on special skills, production of promotion collaterals and project packaging. The provincial government provided office space, equipment and materials amounting to PhP1.4 million. A series of Industry Assessment Workshops on the agro-industrial sector were also conducted that led to the identification of nine priority agricultural sub-sectors. The Bohol Investment Promotion Team was 88

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LED in Practice replaced by the Bohol Investment Promotion Center (BIPC), which is tasked to facilitate the immediate setting up of investors’ projects. In October 1998, BIPC was created through an Executive Order by the Provincial Governor. It was formally established on February 1999 by virtue of a Sangguniang Panlalawigan ordinance. The BIPC embarked on promotion activities such as materials production for the investors, infrastructuresupport organizations, government agencies and private sector; participation in travel marts, investment exhibits, study and promotion missions to CALABARZON, Laguna, Cavite, United States and Osaka, Japan to gain more insights on promotion and marketing, operation, and management. BIPC also developed a website to provide access to international information-seekers. 3. Creation of a Livelihood Promotion Unit – In March 2000, a Livelihood Unit was created under the BIPC to respond to the needs of existing and would-be small entrepreneurs. 4. Adoption of the Bohol Investment Code – The Sangguniang Panlalawigan adopted the Investment Code that serves as a guide in the granting of fiscal and non-fiscal incentives. 5. Financing the Program – The Bohol Investment Promotion Program was financed by the Provincial Government from various sources. Results Achieved After 13 years of persistent participatory and transparent home-grown initiatives, Bohol has successfully extricated itself from “Club 20”, i.e., the 20 poorest provinces in the country. Bohol has been a recipient of various awards and citations for its exemplary performance in poverty reduction and economic growth. In 2008, it was cited by the Konrad Adenauer Stiftung (KAS) for its excellence in governance and sustainable development. Incumbent Governor Erico Aumentado was awarded a KAS Medal of Excellence for piloting Bohol’s phenomenal growth and sustained development (Blanco, 2008a). Gawad Galing Pook has been consistently giving out awards from 2000 to 2005 to the Provincial Government of Bohol for its programs. It cited as Trailblazing Programs Bohol’s Investment Promotion Program Providing Barangay Livestock Assistance for Income Generation and Sustainable Livelihood in 2000 and the Poverty Reduction, Peace and Development Program in 2005. Included in Gawad Galing Pook’s Top Ten Programs in the country were Bohol’s Cultural Renaissance: Towards Synergy of Heritage, Arts and Eco-cultural Tourism Development in 2002; the Bohol Coastal Law Enforcement Council in 2003; and, Bohol Ecotourism Development Program in 2004 (Gawad Galing Pook, 2005). Bohol has hugely attracted both public and private investors in the country and abroad. ODA, national STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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government funding, private sector investments, and grants from foundations or NGOs have been pouring in to finance and stimulate Boholâ&#x20AC;&#x2122;s economic drivers. Funding for hard infrastructure such as roads, bridges, international airport, irrigation, mini hydro-electric plant, school buildings among others has been sourced out. Likewise, technical assistance, job placements, human resource development and other soft infrastructure are being provided by foreign-funded programs and international agencies like the ADB, WB, GTZ, WFO, UNWTO, PAHRDF, USAID, EU; the governments of South Korea, Austria, Bulgaria, China; national agencies like the PMS, DPWH, NEA, DA, NIA, DepEd, DTI, DAR, DOH, DSWD and DOST; and, NGOs and foundations.

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Chapter

Lessons

Learned

documents the learning gained from the LGSP II and LGSPA LED projects. These include strategies that work or do not, as well as factors that facilitate or hinder the LED process. These lessons are presented so that other LGUs can gain some ideas on which approaches to avoid, adopt or modify based on local conditions.

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Lessons Learned This chapter presents some insights drawn from the LGSP II and LGSPA LED experiences. It includes the factors that contribute to or hinder the successful implementation of the LED process as well as the strategies that were found effective and those that were not. These LED experiences offer the following lessons that will hopefully prove invaluable in enhancing approaches and strategies in advocating and facilitating the LED process. 1. The prospect of community wealth creation is the major ‘selling point’ that has motivated LGUs and stakeholders to buy into and commit to the LED Process. In all communities, especially where there is chronic inability to meet basic needs, the proposition of generating jobs, creating wealth and, ultimately, reducing poverty by embarking on the LED process appeals to government and ordinary citizens alike. These are the themes that resonate to all stakeholders – the poor and the vulnerable sector, civil society organizations, learning institutions, the business sector, and all tiers of government. Some local leaders also recognize that a successful LGU-facilitated LED, with its anticipated impact on the poorer and larger segment of the population, makes for good political platform. It is thus important that individuals and organizations advocating the LED process should be able to communicate its connection to wealth creation, empowerment, sustainable development and other good governance principles to be able to gain the attention and cooperation of LGUs and other stakeholders. One way this can be concretely done is to make the links to economic and poverty data from the LECA, the LGPMS and sectoral plans such as the Local Poverty Reduction Action Plan. 2. Any LGU can undertake the LED process. The LED process can be done in or by any LGU, whether a municipality, city or province, and regardless of income classification, as long as it is interested and willing to pursue local economic development following the principles and procedures presented in this Guide. There are no other requirements or criteria that an LGU should meet in order to begin the LED process or to qualify for technical assistance from any program, institution or individual that provide capacity-building interventions to LGUs on LED. 3. A new initiative requires champions and new structures for implementation. One of the immediate objectives of LED is to marshal the stakeholders and gain their acceptance and cooperation to undertake the LED process. Championing this initiative primarily rests with the local chief executive (LCE) who holds the greatest influence and authority among the local actors. Among LGSPA92

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Lessons Learned assisted LGUs, the ones that have made significant strides in LED are those with LCEs that have bought into and shown commitment to the LED process. It is also essential to get the cooperation of members of the legislature so that ordinances and resolutions toward a favorable business climate can be passed and fund allocation for LED programs and project can be facilitated. LED champions may also come from the private sector and the community. The more advocates, the greater the likelihood of success in achieving the LED goals. Developing systems and structures for LED implementation begins with the organization of the LGU LED team and the LED stakeholders group. These structures provide the foundation for more formal and long-term collaboration – to include public-private enterprise partnerships – among representatives of the three economic leaderships (Figure 2) in carrying out LED programs and projects. It is also important to note that the municipal LGUs in LGSPA areas appreciated and recognized structures formed through participatory analysis and planning processes, such as the LED stakeholders group, than they do existing but inactive local bodies that were mostly created simply to comply with a national law. 4. LED success and sustainability rests on a strategic and planned approach. The foundation of a good LED program is a sound participatory planning process. LED stakeholders are able to come up with informed and resolute decisions through a deliberate, organized and systematic strategic planning. Undertaking the Local Economic Competitiveness Assessment (LECA) or Stage 2 of the LED process is critical to be able to formulate LED strategies that are appropriate to the conditions and responsive to the issues in the locality. Recent studies also show that an area’s competitive advantage is determined not so much by one-shot, step-by-step planning but more so by an iterative process of “self-discovery” and “searching and learning” consisting of both flexible planning and entrepreneurial risk-taking. As shown in Figure 5, “Examples of LGU Behavior Models in LED”, a sustainable and purposeful LED program or project is characterized by a high concern for both system (orderliness) and risk. A wellplanned LED stems from a highly systematic approach and an enthusiasm for innovation.

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Lessons Learned Figure 5. Examples of LGU Behavior Models in LED

Examples of LGU Behavior Models in LED HIGH Concern for System

TRADITIONAL LED •Livelihood development? • Most PEE?

PURPOSEFUL/ SUSTAINABLE LED •Planned LED

CRISIS LED

OPPORTUNISTIC LED

•Credit retail (micro-finance)?

•Some PSP/PPP projects? •Some agro-industrial zones?

LOW

Concern for Risk

HIGH

*Adapted from the LGSP II PEE Behavior Models

5. There is not one exclusive approach for LGUs to facilitate LED. In fact, one of the lessons from LED initiatives has been that duplication of initiatives is rarely successful. Each locality is unique and LGUs are themselves entrepreneurial and innovative. Economic interventions should be customized according to the conditions unique to each target community. Although two localities may have the same leading industries or resources, these industries may differ in scale (e.g., volume of production and area covered), technologies used, access to support facilities and markets, and other factors. LED strategies should take into consideration the physical, natural, financial and human resource factors peculiar to each LGU. LED programs proved to be successful in LGUs that are entrepreneurial and innovative. Such LGUs promote competition between service providers. They empower citizens by pushing control out of the bureaucracy, into the community. They measure the performance of their agencies, focusing not on inputs but on outcomes. They are driven by their goals – their missions – not by their rules and regulations. They prefer market mechanisms to bureaucratic mechanisms. They redefine their clients as customers and offer them choices, e.g., between schools, between training programs, between housing options. They prevent problems before they emerge, rather than simply offering solutions afterward. 94

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6 PM

Lessons Learned They put their energies into earning money, not simply spending it. They decentralize authority and embrace participatory management. And they do not simply focus on providing public services, but also on catalyzing all sectors (public, private, and voluntary) into action (Osborne & Gaebler, 1992). 6. LED gains credibility when planned initiatives are immediately carried out. After strategy formulation, it is necessary to immediately move to the implementation of priority LED projects in order that the momentum and the energy created from the previous LED stages can be carried over into implementation, and also for the LED process and its implementers to gain the trust and confidence of stakeholders and the larger community. Concrete results early in the strategy execution will ensure continued support and participation from local and external development partners. Pursuing and sustaining LED then becomes high on the agenda not only of the LGU but of all LED stakeholders. 7. LED gives focus and direction to other programs of the local government. All activities of the LGU influence the local economy. Social programs on health, education and welfare as well as gender and development services impact the productive capacity of the labor sector. Environmental projects protect and improve the localityâ&#x20AC;&#x2122;s natural resource base that is necessary for sustainable economic activities. Infrastructure development facilitates production and marketing of goods. Having a LED strategy, however, provides the various LGU programs a clear basis and focus. For example, identifying organic fertilizer production as a LED priority in Wao provided direction to the solid waste management program of the LGU. Prioritizing the metal craft and woodcraft industry in Tugaya led to the development of programs for biomass fuel production (for kiln drying and firing purposes) and support infrastructure and underscored the need for sustainable forest management. 8. The benefits of LED can be effectively reaped when the partnership between the local government and the community translates into concrete and day-to-day actions the principles of participation, responsiveness, equity, accountability and transparency throughout the LED process. Any LGU committed to LED must put in practice the principles of participation, responsiveness, equity, accountability and transparency. For the LED process to be inclusive and participatory, the LGU must seek the broad representation of the economic sector stakeholders to ensure that economic development strategies capture the interests and have the approval of everyone concerned. The convergence of the stakeholdersâ&#x20AC;&#x2122; ideas, resources and networks is critical in successfully pushing economic growth. It also ensures the responsiveness of strategies, programs and projects to the needs and core competitiveness of the community. On the STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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Lessons Learned contrary, economic strategies that are left to the hands of a privileged and influential few promote elitism and often fail. Equity is crystallized when economic gains, privileges, rights and responsibilities are, as much as possible, equitably distributed. Economic growth should not only be characterized by increasing total earnings in the local economy (such as growth in the “Gross Community Product”) but also by a narrowing of the income gap between the rich and the poor. Accountability should also be established for every deliverable in the LED process in order to get things done right, on time and within budget. That is why the roles, duties and responsibilities of the stakeholders group, LGU LED team and TWGs should be clearly defined from the very start but modifications and innovations can be done later or when necessary. Economic interventions can go to waste due to unorganized and uncoordinated implementation. No less important among these principles is transparency, which promotes mutual trust among stakeholders. This entails instituting mechanisms for information-sharing, making available economic sector information to the general public and clarifying government economic rules, regulations, and decisions. Transparency mechanisms include regular LED program or project performance (including financial) reporting to LED stakeholders and the Local Development Council, community feedback mechanisms, and participatory decision-making and monitoring. 9. Analyzing LED strategies through the gender lens promotes women’s economic empowerment Women play an important role in community building and local economic development. As cited in Chapter 2, although more women than men have the propensity to start a business venture, more women-owned enterprises fold prematurely. This phenomenon should be one of the concerns to be addressed within the LED process. Gender equality should be analyzed in the LECA and espoused and integrated in LED strategic plans. The LED process can serve as the springboard for women’s economic empowerment. 10. There is a need to ensure that the LED process is supported and that key outputs are achieved. In undertaking the activities in the LED process, specific LED technical expert maybe required to ensure the accomplishment of the activity. For instance, based on the LGSPA experience LGUs need technical assistance in determining their comparative advantage and in formulating strategies to harness this (tools, information requirements, an entrepreneurial mindset, replicable practices, new models). LED experts 96

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Lessons Learned may come from government agencies (e.g., DTI), from the private sector (e.g. consulting firms or even entrepreneurs), and from the academe. Appropriate technical support is also needed in guiding the LGUs in various approaches in implementing the LED Plan (start-up versus scaling up; including agricultural, ensuring an entrepreneurial and value chain-oriented approach; opting for a strategic response: enabling or facilitative; if direct service provider, with a clear exit strategy).

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Reference List Adapon, R. (n.d.) Success Stories: Managing the Promotion of Capacities for Sustainable Development. Retrieved from http://www.smedsep.ph/Download/SS%20LRED%20 v3%2027Nov07.pdf Blanco, J. S. (2008a, October - November). KAS cites Bohol for Excellence. The Capitol News. The official publication of the Provincial Government of Bohol. 5 (1), p. 10. Retrieved from http://www.bohol.gov.ph/downloads/october-november. pdf Blanco, J. S. (2008b, October - November). Guv assures no casualty in Capitol reengineering. The Capitol News. The official publication of the Provincial Government of Bohol. 5 (1), pp. 4, 8. Retrieved from http://www.bohol.gov.ph/ downloads/october-november.pdf Creative City Network of Canada. (2005) Making the Case for Culture - Building Community Identity And Pride. Vancouver, BC: Author. Retrieved from http://creativecity.ca/makingthe-case/building-comm-identity-pride.pdf Darling, D., Jr. (1991, May). Understanding Your Communityâ&#x20AC;&#x2122;s Economy. Community Development Series, L-775. Kansas State University Agricultural Experiment Station and Cooperative Extension Service. Department of the Interior and Local Government, Philippines (2008). Guide to Comprehensive Development Plan (CDP) Preparation. Retrieved from http://www.dilg.gov.ph/ attachments/0000/1349/CDP_GUIDE_-_Updated.pdf Fajardo, F. R. (1990). Economic Development (Revised Edition). Navotas City, Philippines: National Book Store, Inc. Fruth, W. H. (n.d.) The Flow of Money and Its Impact on Local Economies. Retrieved from http://www.naiop.org/ governmentaffairs/growth/fruth_report.pdf. Gawad Galing Pook (2001). Kaban Galing: The Philippine Case Bank on Innovation and Exemplary Practices in Local Governance. Volume No. 3: Transforming the Local Economy. 98

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Gawad Galing Pook (2005). Province of Bohol Award for Continuing Excellence. Retrieved from http://www.galingpook.org/ awardees/2005/2005_ace01_bohol.htm Kebede, G. (2008). Local economic development: a snapshot of capacity building needs and lessons. Villes en dĂŠveloppement, 80. Retrieved from http://www.citiesalliance.org/doc/ resources/cds/ved-80-eng.pdf Local Governance Support Program in ARMM (LGSPA). (2007). Mainstreaming Gender Equality in Enterprise Development Initiatives of ARMM LGUs [PowerPoint slides]. Unpublished document. Local Governance Support Program in ARMM (LGSPA). (2008). Manual on the Local Planning Process for ARMM. Manila, Philippines: Author. Local Governance Support Program in ARMM (LGSPA). (2009). Experiences & Insights on Facilitating Sustainable Local Economic Development: Lessons from LGSP & LGSPA [PowerPoint slides]. Unpublished document. Lusby, F. & Panlibuton, H. (2007). Value Chain Program Design: Promoting Market-Based Solutions for MSME and Industry Competitiveness. Retrieved from http://www. actionforenterprise.org/paper07.pdf Madarang, I. J., Habito, C. F. & Philippine Center for Enterpreneurship (PCE). (n.d.) Global Entrepreneurship Monitor (GEM) - The Philippine Report (2006-2007) [PowerPoint slides]. Mangahas, J. V. (2006). The Philippines. In B. Roberts & T. Kanaley (Eds.), Urbanization and Sustainability in Asia: Case Studies of Good Practice. (pp. 295-299). Philippines: Asian Development Bank. Retrieved from http://www. adb.org/Documents/Books/Urbanization-Sustainability/ urbanization-sustainability.pdf. McSweeney, E. (n.d.) Strategic Economic Planning & Economic Development. [Powerpoint Slides].

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Reference List Naga LGU (n.d.) Naga: Innovations and Best Practices. Retrieved from http://www.naga.gov.ph Nagy, J. & Fawcett, S. (n.d.). An Overview of Strategic Planning or “VMOSA” (Vision, Mission, Objectives, Strategies, and Action Plans). Retrieved June 9, 2009 from http://ctb.ku.edu/en/ tablecontents/sub_section_main_1085.htm Osborne, D. and Gaebler, T. (1992). Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector. Addison-Wesley, Reading.

The Cities Alliance. (2007). Understanding Your Local Economy: A Resource Guide for Cities. Washington, D.C.: Author. Retrieved from http://www.citiesalliance.org/doc/ resources/led/full-led-guide.pdf Ting, R. (2004, November). Strategies for Moving CDS to Scale. Paper presented at Cities Development Strategies Conference From Vision to Growth to Poverty Reduction, Hanoi, Vietnam. Retrieved from http://www.citiesalliance. org/events/2004/2004-cds-hanoi/hanoi-web/files/ Session%203/S3-02-Randolph%20Ting%20docEN.pdf

Philippines-Canada Local Government Support Program (LGSP). (2003). Local Economic Development: Stimulating Growth and Improving Quality of Life. Manila, Philippines: Author. Schmidt, J.F. & Myles, A.E. (n.d.). Understanding Your Community’s Economy. Mississippi State University. Retrieved from http://msucares.com/pubs/publications/p1646.htm

Tuguegarao LGU (n.d.). Livelihood Development. Retrieved from http://www.tuguegaraocity.gov.ph

Swinburn, G. (2006). Local Economic Development LED Quick Reference. Retrieved from http://www.worldbank.org/ urban/led

United States Agency for International Development (USAID) LED Ukraine. (n.d.) LED Toolkit. Retrieved from http:// site50.tangram-studio.com/eng/tools/index.html

Swinburn, G., Goga, S., & Murphy, F. (2006). Local Economic Development: A Primer - Developing and Implementing Local Economic Development Strategies and Action Plans. Retrieved from http://siteresources.worldbank.org/ INTLED/423069-1099670772921/20738133/led_primer. pdf

World Bank & Cities of Change Initiative. (n.d.). Making Local Economic Development Strategies: A Trainer’s Manual. Retrieved from http://www.worldbank.org/urban/local/ toolkit/pages/home.htm

The World Bank Group (2007). Moving Toward Competitiveness: A Value Chain Approach. Retrieved from http://www.ifc. org/ifcext/fias.nsf/AttachmentsByTitle/MovingTowardCo mpetitiveness/$FILE/Value+Chain+Manual.pdf

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• AN ACT PROVIDING ASSISTANCE TO WOMEN ENTREPRENEURS (R.A. 7882) Government financial institutions are mandated to provide financial assistance to non-government organizations engaged in developing women entrepreneurs engaged in manufacturing, processing, service and trading businesses

• MC NO. 2001-109: Initial Areas for Action in the Implementation of Programs on Poverty Reduction and Local Economic Transformation

• THE OMNIBUS INVESTMENT CODE (E.O. 226) SMEs that are engaged in the priority areas of the investment priorities plan are entitled to the standard incentives under the code such as income tax holiday for 4-6 years, tax and duty free importation of capital equipment, additional deduction from taxable income for labor expense, exemption from contractor’s tax, unrestricted use of consigned equipment, and access to bonded manufacturing warehouses. Additional incentives are given to SMEs that locate in less developed areas. SMEs that are registered with the Board of Investments (BOI) may avail of technical and other support services provided by the agency.

• MC NO. 2002-30: Guidelines Prescribing Time Periods on the Adoption, Review and Approval of Comprehensive and Land Use Plans (CLUPS)/ZONING ORDINANCES (ZOs) of Municipalities, Component Cities, Highly Urbanized Cities and Provinces

4. DILG Memorandum Circulars (MC) on LED

• MC NO. 2001-19: Solid Waste Management Program Implementation of Republic Act No. 9003 Otherwise Known as the Ecological Solid Waste Management Act 2000

The LGUs can also draw authority from the following DILG Memorandum Circulars and the Joint Memorandum of DILG, DBM and NCRFW when pursuing LED: (For a detailed description, refer to the LGSP Resource Book, Local Economic Development: Stimulating Growth and Improving Quality of Life). • MC NO. 2002-48: Local Economic Transformation Program for Local Governments • MC NO. 2002-107: Organization and/or Strengthening of Local Small and Medium Enterprise Development Councils (SMEDCS) • MC NO. 2002-09: Implementation of the LGU-Cluster Development Approach Project (LGU-CLAP) as a Strategy in the Adoption of One Village, One-Product Movement • MC NO. 2001-172: Guidelines on Poverty Reduction Program for Local Governments

• MC NO. 2001-105: Designation of Local Poverty Reduction Program Action Officers and the Functions of the LPRAO

• MC NO. 2002-81: Creation of Local Culture and the Arts Council • MC NO. 95-162: Inventory of LGU Tourism, Culture and the Arts Councils

• MC NO. 2001-38: Addendum to DILG MC 2001-19 ReImplementation of Republic Act 9003, Otherwise Known as the Ecological Solid Waste Management Act of 2000 • MC NO. 2001-48: Addendum to DILG MC 2001-19 ReImplementation of Republic Act 9003, Otherwise Known as the Ecological Solid Waste Management Act Of 2000 • MC NO. 2001-48: Inventory of all Solid Waste Disposal Facilities and Sites in LGUs • JOINT MEMORANDUM (DILG, DBM, NCRFW) CIRCULAR NO. 2001-01: Guidelines for Integrating Gender and Development (GAD) in the Local Planning and Budgeting System through the Formulation of GAD Plans • MC NO. 2002-163: Creation of Local Council for Women

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ANNEX B Data for Local Economy Profiling

1. Demographic 1.1 Population • Population Size (Compare w/ other municipalities in the province and in the region) • Population Growth rate (compare with other municipalities in the province and in the region) • Population Density (compare with the other municipalities in the province) • Population By Age Distribution (to be used to analyze the labor factor) - 0-14 yrs old - 15-64 - 65 above 1.2 Labor and Employment Use the ‘Table: Household Population 15-65 Years Old by Employment Status and Sex’ to show data and information on Labor and Employment. This is contained in all Socio-economic or Ecological Profiles of LGUs and NSO Population Surveys 1.3 Education and Training • Colleges or tertiary education establishments by type and numbers attending. (Include vocational and technical schools) • Educational attainment levels by numbers and types. Use the ‘Table: Population 5 Years Old and Over By Highest Educational Attainment Completed and Sex’. This is contained in all Socio-economic Profiles of LGUs and NSO Population Surveys. • Number of training centers and research institutions in the locality. • Regular training programs conducted (e.g., TESDA trainings) 2. Economic Profile 2.1. Primary Sector (Agriculture) a. Crops (other than fruits and vegetables, e.g., rice, corn, coconut, sugarcane, cassava, coffee, rubber tree, etc.) • Production – hectares planted, % to total municipal area,% to total agricultural land, location (barangays), average yearly volume and value of production (Compare with other municipalities in the province and in the region), average yield per hectare (Compare with provincial or regional figures from the Department of Agriculture Bureau of Agricultural Statistics) • Per Capita Consumption – Use average provincial per capita consumption and compare it with regional and national. Important for staple food crops like rice, corn, and cassava. • Number of farmers/ firms engaged in the production

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STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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2.4 Unaccounted (informal economy) Type, number of firms, name of firms, and number employed in each firm 3. Business Environment - Data and information that detail how the local government helps or hinders businesses in the formal and informal sectors. • • • • •

•

Taxation of businesses Amount of ‘red tape’ or excessive and complicated bureaucratic procedures Existence of business support networks and institutions such as Chambers of Commerce Local government economic development support – services offered or subsidized (e.g., Business Development Services) Assessment of municipal government capacity to carry out local economic development functions (LGU income, assets, capacity of the structures, skills of key LGU officials on LED planning and implementation, existence of approved CLUP).

Access to funding (training grants, business incentives)

4. Infrastructure • • • • •

Condition of water, electricity and wastewater and waste management in areas of economic activities Provision of land, real estate/office space for economic development activities including markets and Central Business Districts Availability and quality of road and other transport modalities to nearest/major markets (e.g. ports, airports, railroads, fishports, etc.) Availability of telecommunications infrastructure. Description of agriculture development infrastructure support (e.g. irrigation system, farm-to-market roads, solar dryers, water impounding system, public markets/trading post/food terminals, etc.)

5. Provincial, Regional, and International Factors - Presents Provincial, Regional and National information that impact the local economy. • • • • • • • •

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What neighboring municipalities are doing in terms of their local economic development How neighbors are competing How they can collaborate What is happening at the national level What are provincial, regional, and national programs that have local impact (positive or negative) Major international / global trends that may impact the local area ODAs, bilateral programs, etc. that have local impact The opportunities provided by national development programs (SME DEV Plan, HVCC programs, BFAR programs, PCA programs, National Dairy Development program, etc.)

STRATEGIC LOCAL ECONOMIC DEVELOPMENT: A Guide for Local Governments

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