Confidence in Durban’s business climate surged to a record high as it increased by 17.07 index points to 55.49 points in the second quarter of this year – up from 38.42 points in the first quarter.
According to the BCI report compiled by the Macroeconomics Research Unit at the University of KwaZulu-Natal, this was the first time since its inception in the third quarter of 2022 that the index breached the 50-point mark, which signified a strong rebound in confidence in Durban’s business environment.
The unit said while Durban’s BCI typically moved in the same direction as the national BCI, it was currently far above the national index compiled by the Bureau of Economic Research (BER).
Overall, it said all sectors recorded improvements in business confidence, leading to a substantial rise in the overall confidence in Durban’s business climate.
“On the whole, this improvement can be attributed to the outcome of the recent general elections in which no political party obtained an outright majority, forcing parties to form coalitions and consequently leveraging each party’s strengths for the greater good,” the unit said in its report.
“The ease and speed with which the government was established in the province of KwaZulu-Natal also signalled a political commitment to servicing the province.”
Sihle Ngcamu, acting CEO of Trade and Investment KwaZulu-Natal (TIKZN), welcomed the optimism expressed by the business confidence index in Durban following the May, 2024 elections.
“The positive business sentiment reflects renewed faith in the province’s economic policies and governance, acting as a catalyst for attracting both local and international investors and paving the way for significant economic growth,” Ngcamu said.
“The election results and subsequent formation of the government of the day have provided a stable environment, which is crucial for sustained economic prosperity,” he said.
The Macroeconomics Research Unit added that the reported overall index concealed significant differences across various sectors of the economy.
For example, confidence in the manufacturing sector increased from 39.83 to 50.8, representing an improvement of 10.97 index points. Year on year, the industry recorded a 46.19% increase in the second quarter of this year compared to a 22.67% increase in the first one.
“This significant improvement could be ascribed to improvements in electricity supply, which has long plagued the country’s economic prospects,” it said.
“The stabilisation of inflation and the possibility of an interest rate cut towards the end of the year could also explain the improvement in the manufacturing sector’s confidence.”
In this period, confidence in the electricity and gas sector rose significantly, recorded at 73.81 from 36.92 in the previous one, representing an increase of 36.89 index points.
The financial sector also showed a significant improvement, with confidence rising from 33.65 in the first quarter of this year to 54.04 in the second quarter.
The wholesale and retail trade sector, including the repair of motor vehicles, motorcycles, personal and household goods, catering, and accommodation significantly improved by 25.93 index points from 40.04 to 65.97, reflecting a slight decrease in the cost of living, which has boosted aggregate demand.
However, service delivery remained the biggest challenge that eThekwini Metro needed to address. Among the surveyed participants, 76.4% stated that if they (or anyone) complained about poor service delivery, it was unlikely that the metro would deal with it within a reasonable time.
Among others, the metro has had to deal with service disruptions due to heavy rains, floods, tornadoes, and an industrial strike of municipal workers (towards the end of the first quarter of this year.
BUSINESS REPORT