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A participatory approach to LED involves the inclusion of different stakeholders so that their views, concerns and issues can be included in the planning process. This is important because it is here that networks, partnerships and information sharing occur that make better, more practical, strategies possible.<ref>.ND Ngubane, 2005: "Promoting Local Economic Development through Strategic Planning". Volume 1.</ref>
Variables to be considered when conducting this inventory should reflect the components of a functioning economy, such as human and social capital, financial capital, physical capital and [[natural capital]] (UN Habitat, 10).<ref>UN Habitat, Eco-Plan, 2005: "Promoting Local Economic Development through Strategic Planning". Volume 1.</ref>
In South Africa, municipalities are specifically required to involve communities in the affairs of the municipality, to provide services in a financially sustainable manner and to promote development.<ref>RSA, 2000: Local Government Municipal Systems Bill, Government Gazette No. 21071 of 13 April 2000.</ref> For instance, public participation is a key element of the Systems Act, and municipalities are obliged to establish mechanisms for public participation and participatory governance.
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