Business

Why I believe the north west is up for the challenge

Presenters at last week's Londonderry Chamber of Commerce business event at Magee College in Derry
Presenters at last week's Londonderry Chamber of Commerce business event at Magee College in Derry Presenters at last week's Londonderry Chamber of Commerce business event at Magee College in Derry

Last week I had the pleasure of attending a Danske Bank event at Ulster University’s Magee Campus in Derry, organised in conjunction with the Londonderry Chamber of Commerce and designed to bring together local influencers and policy makers to see how economic prosperity can best be delivered to the north west region.

Derry, like some parts of Belfast, is blighted with higher than average levels of unemployment (the claimant count level for the Derry & Strabane Council area is 7.1 per cent compared with the Northern Ireland average of 3.7 per cent while inactivity rates are also higher than average).

There are other issues, too, which need attention in terms of infrastructure and connectivity. In particular, the main Derry to Belfast road dominated the conference discussion for quite some time. Funding for the local university and the regional further education sector were important to delegates too and there is broad recognition that economic success depends upon the skills and education of the local workforce.

Despite the obvious challenges around growing employment levels and ensuring easy access, there is a lot to be positive about when it comes to the Maiden City and its hinterland. Derry has a great history of enterprise, it has a young population, it has embraced international cultural events like a duck to water and it has shown itself to be a model of tolerance and openness when it comes to cross-cultural events. There have also been some significant investments such as Project Kelvin (the fibre optic link to the United States) and money has been directed into building up the city’s knowledge economy with the creation of a new Science Park and Innovation centre.

Delegates at the conference also had to endure a half hour economic talk from me, but in fairness they didn’t object. Indeed, everyone was keen to contribute to the debate and think about what can be done to ensure that the city thrives and offers work opportunities to its young people. My presentation focused on the bigger economic landscape, but it also drilled down to the North West economy and there were a number of things proposed for raising the game.

It is my view that for the north west to be economically successful, the new district council must develop a really sharp economic plan and targeted industrial strategy. Things rarely happen without a plan! All new District Councils across Northern Ireland now have an expanded responsibility for economic development and therefore the Derry & Strabane Council is the natural leader when it comes to the city’s transformation.

Of course, any sub-regional economic strategy developed at council level in Northern Ireland should chime with the region’s overarching economic strategy, but it should also be specifically tailored to account for regional strengths, weaknesses and opportunities. The north west’s economic strategy should address current barriers to growth and propose remedial actions. All of the city’s investment in infrastructure, skills and education colleges and even tourist events should be aligned with, and support, the local economic strategy. This strategy should also set out clear plans and targets for economic progress. After all, what gets measured gets done.

A targeted industrial strategy for the north west should drill down even further. It would identify particular sectors in the north west where there are already strengths or even potential for future development. Focusing on what the north west is good at is a great place to start and there are a number of sectors which already hold potential. Sectors such as ICT, FinTech, business services, tourism, education, agri-food and the creative sector could thrive in the north west.

Other sectors such as high-end manufacturing or technology-related products in areas such as energy, health and security all hold great promise for creating the jobs of the future. However, the latter would perhaps require better road and rail infrastructure links as firms in these sectors typically need to physically move their product into export markets.

An industrial strategy would also set out plans for building up sectoral clusters in the region. These clusters would allow for better linkages between firms and their suppliers, the local university research base, the local FE colleges (for skills and work placements) and perhaps even Altnagelvin hospital, where ideas and requirements stemming from local medical practitioners can be fed into the creation of new products and technologies. Such clusters would allow for better knowledge spillover between firms and other key stakeholders and also encourage new business formation. New enterprise is a critical component of economic growth.

A good industrial strategy should ensure that business conditions and infrastructure are conducive to each sector in the north west. It should focus on helping companies to become more competitive and raising their game in terms of productivity, innovation and trade.

Our discussion in the Great Hall in Magee last week focused on what was needed and therefore it was inevitable that 'limited resources' to make change emerged as an issue. While there will be some new monies available to the council, there will not be enough to build roads and bridges. In these challenging times for public finances, looking to the Department for Regional Development for full funding is not an option either.

In my view, the north west needs to start thinking innovatively about raising funds for infrastructure investment. Relying on the local Executive for all funding in current times is too risky and decades could go by before things change.

It’s time to consider other options - public-private partnerships, raising bonds, toll bridges and partnering with the Republic of Ireland for European funding on cross-border projects are all possibilities.

Given the desire for change in the north west for the better, I think 2016 could be an interesting year as the region looks set to take control of its own economic destiny.

:: Angela McGowan is chief economist at Danske Bank. Follow her on Twitter: @angela_mcgowan

:: Next week: Jamie Delargy