Development agencies worldwide are normally established when an economic development intervention is required and when the city administration feels that such intervention cannot be done by the city administration due to perhaps a shortage of those expertise or capacity. The distinction in roles is important, that a development agency fulfils the catalytic local economic development role and not a municipal basic service delivery role.
Due to rapid economic decline, particularly in the Central Business District (CBD) of Port Elizabeth, the Mandela Bay Development Agency (MBDA) was formed in 2003 by the Nelson Mandela Bay Municipality (NMBM) and the Industrial Development Corporation (IDC) in attempts to turnaround urban decay, resulting in economic decline and capital flight from the CBD of Port Elizabeth.
Up to 2004, the City had seen a rapid decline in the once thriving CBD and many buildings turned into disrepair. At the time the decline led to a general economic decline in the region as well. The general trend of the region dying when a city dies was very evident in 2004.
The MBDA was established as a Special Purpose Vehicle (SPV) to initiate local economic development and urban transformation of the NMBM. Against this backdrop, the MBDA works closely with the political dispensation and executive management of the (NMBM) and other key stakeholders to facilitate and support urban renewal and transformation through urban infrastructure projects as well as softer projects such as general security, cleansing, maintenance in upgraded areas, and other initiatives such special rating areas.
Many of these projects focused on development of a strong tourism real estate sector, a sector that is still not well developed in the City, but displays great potential generally. The City has a relatively competitive motor manufacturing and related industry cluster, but there are no other potentially internationally competitive clusters other than tourism.
Capital projects are selected to either create catalytic economic impact capital projects (e.g. Vuyisile Mini Precinct Upgrade) or provide a basic service delivery intervention (New Brighton swimming pool). Strictly speaking the MBDA should only implement projects with a strong catalytic economic development impact (e.g. Vuyisile Mini Square Upgrade in the CBD and Singaphi Street upgrade in New Brighton). Projects with a basic service delivery rational, such as HURP and the New Brighton Swimming Pool should be implemented by the NMBM.