Business confidence in the eThekwini Municipality has experienced a remarkable surge, reaching 63.01 in the third quarter of 2024, a notable increase from the previous quarter’s 55.49, as revealed by the latest Durban Business Confidence Index (BCI) report.
Authored by Professor Harold Ngalawa and Dr. Ntokozo Nzimande from the Macroeconomics Research Unit at the University of KwaZulu-Natal, the report provides insights into the prevailing sentiments among local business leaders regarding their operational environment.
The index reflected a consistent trend of positivity, having previously exceeded the critical 50-point mark for the first time since its inception in 2022.
The recent increase of 7.52 index points signified not only a recovery but a 41.02% year-on-year improvement — undoubtedly a cause for celebration among the business community in Durban.
As eThekwini Municipality navigates through these promising developments, the combination of improved economic conditions and strengthened political frameworks may just set the stage for a vibrant future in business growth and sustainability.
Several macroeconomic factors have contributed to this uptick in confidence.
The decline in petroleum prices, bolstered by an appreciation of the rand and a dip in international crude oil prices, along with uninterrupted electricity supply, have all played a role.
Moreover, a decrease in inflation rates for the third consecutive month as of August 2024 has supplemented the positive climate for business investment. The easing of interest rates, which had been maintained for 16 months, further added to the optimistic outlook.
The political landscape, bolstered by the establishment of the Government of National Unity, presented a stable environment conducive to business.
Likewise, the local Government of Provincial Unity in KwaZulu-Natal fostered collaboration among parties to enhance governance and transparency, building greater public trust and confidence among business owners.
Disaggregated data revealed significant sectoral variations in confidence.
The agriculture, hunting, forestry, and fishing sector witnessed an impressive leap from 40.12 to 70.3, marking a staggering 75% increase quarter-on-quarter. The manufacturing sector similarly improved from 50.8 to 62.94, demonstrating a 23.89% rise.
Improved conditions in electricity service delivery have been notably impactful to confidence. Previously a major concern, only 8.2% of surveyed businesses cited electricity-related issues this quarter.
Consequently, confidence in the electricity, gas, and water supply sector saw a modest rise to 75.24, up from 73.81.
Other sectors, such as construction, also benefited from this newfound optimism, witnessing an impressive leap from 61.59 to 68.91, equating to a 359.4% increase year-on-year.
The transport, storage, and communication industry rose by 12.61%, while business in the financial intermediation, insurance, real estate, and business services sector improved modestly from 54.04 to 57.62.
Notably, the wholesale and retail trade sector also demonstrated resilience, moving from 65.97 in the second quarter to 67.12 in the third quarter.
However, not all sectors shared this upward trajectory; the community and social services sector faced a 10.67% decline, reflecting the only decrease among the sectors surveyed.
Despite these gains, challenges remained.
Poor service delivery continues to plague the municipality, with 73% of participants uncertain about the local government’s responsiveness to complaints. This lingering issue calls for urgent attention to avoid undermining the strides made in business confidence.
CEO of Trade and Investment KwaZulu-Natal (TIKZN), Sihle Ngcamu, welcomed the rise in confidence, stating it reflects a significant shift in business sentiment, potentially paving the way for increased investment in the region.
“We are committed to leveraging this newfound confidence to attract both domestic and international investments,” Ngcamu said.
Mohamed Gafoor, CFO at Ithala Bank, echoed these sentiments, highlighting the potential for improved economic conditions to assist provincial priorities, such as job creation and poverty reduction.
“This increased business confidence will drive consumer spending and boost local investment,” he said.
BUSINESS REPORT