Durban business confidence improves amid concerns
Durban business leaders have expressed a slight uptick in confidence in the economy, with sectors such as manufacturing and wholesale and retail contributing significantly to the improvement.
But confidence remains anaemic on the whole, with businesses remaining concerned about the poor delivery of services, especially regarding electricity, water, public safety and the environment, including solid waste removal.
The Durban Business Confidence Index (BCI) released by the macroeconomics research unit at the University of Kwazulu-natal this week shows a rise of 0.3 index points from 38.12 in the fourth quarter of 2023 to 38.42 in 2024’s first quarter.
“Business confidence in Durban remains slightly above the national business confidence,” the report said.
The BCI is a measure of the present mood or sentiment of business people in conducting their day-to-day business in the greater ethekwini municipality. The index ranges from 0 to 100, where values of 0 and 100 represent a complete lack of confidence and full confidence, respectively, in the Durban economy, while 50 indicates that the business situation is normal or neutral.
Nationally, the business confidence index dropped for the second consecutive quarter in Q1 2024 to 30 from 31 in Q4 last year.
“The persistently low confidence at both the national and Durban levels is concerning. While the national
and Durban’s figures differ, they both indicate that at least six out of 10 people surveyed had no confidence in the economy. The low index at both levels is not surprising, especially because of the elections scheduled for 29 May,” the report said.
“Elections are typically associated with policy and economic uncertainty. Thus, investors tend to be sceptical about the economy until certainty is re-established.”
Business leaders’ satisfaction with service delivery remains relatively low in Durban. Among participants surveyed, 90.7% said if they or anyone else complained about poor service delivery, it was unlikely that the authorities would address the problem within a reasonable period, while 9.3% were positive that the authorities would address the problem within a reasonable time frame.
Among perceptions of poor quality of services provided in Durban, electricity was the worst, at 34.9%, followed by water (20.9%), public safety (police, fire and ambulance) (16.3%), environment (sewerage, solid waste and parks) (16.3%) and roads (11.6%).
The report noted that the country’s GDP growth rate remains low, coming in at just 0.2% in Q4 2023, although this was an improvement from the decline of 1% in Q3.
“The improvement in the country’s real output growth, albeit marginal, may be attributed partly to a reduction in load-shedding hours,” it said.
According to Eskom, load-shedding hours declined from 1 801.25 during the period December 2022 to February 2023 to 1217.98 hours from December 2023 to February 2024.
“More needs to be done to minimise or eliminate load-shedding. South Africa’s GDP growth is expected to remain subdued in Q2, especially given the impending general elections,” the report said.