Confidence in Durban's business environment surged 17.07 index points to 55.49 points in the second quarter of this year, a record high from 38.42 points in the first quarter.
The BCI report, compiled by the University of KwaZulu-Natal's Macroeconomic Research Unit, said it was the first time since the start of the third quarter of 2022 that the index had risen above 50 points, signalling a strong recovery in confidence in Durban's business environment.
The institute said Durban's BCI generally moves in the same direction as the national BCI but is currently well above the national index compiled by the Research Institute for Economic Studies (BER).
Overall, business confidence improved across all sectors and overall confidence in Durban's business environment was reported to have increased significantly.
“Overall, this improvement is due to the outcome of the recent general election in which no party won a majority, forcing parties to form coalitions and, as a result, leveraging each party's strengths for the collective good,” the department said in its report.
“The ease and speed with which a government was established in KwaZulu-Natal also demonstrates the political determination to serve the province.”
Trade and Investment KwaZulu-Natal (TIKZN) interim CEO Sihle Ngccom has welcomed the optimistic outlook shown in the Durban business confidence index following the May 2024 elections.
“The positive business sentiment reflects restored confidence in the state's economic policies and governance, acting as a catalyst to attract domestic and international investors and pave the way for significant economic growth,” Ngcom said.
“The election results and subsequent establishment of the current government have provided a stable environment that is crucial for sustained economic prosperity,” he said.
The Macroeconomic Research Unit added that the reported overall index masks large differences between different sectors of the economy.
For example, manufacturing confidence rose from 39.83 to 50.8, improving the index by 10.97 points. Year-on-year, manufacturing grew 46.19% in the second quarter of this year, compared with a 22.67% increase in the first quarter.
“This significant improvement can likely be attributed to improved electricity supply, which has long been a plague on the country's economic outlook,” the report said.
“Stabilizing inflation and the possibility of interest rate cuts towards the end of the year may also explain the improvement in manufacturing confidence.”
During this period, confidence in the electricity and gas sector increased significantly, recording 73.81 from 36.92 in the previous quarter, an increase of 36.89 index points.
The financial sector also showed 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, which includes repairs of motor vehicles, motorcycles, personal and household goods, food, beverages and accommodation, boosted aggregate demand with the index improving significantly by 25.93 points from 40.04 to 65.97, reflecting a slight decline in the cost of living.
However, service delivery remained the biggest challenge eThekwini Metro needed to address: 76.4% of those surveyed said that if they (or someone else) complained about poor service delivery, it was unlikely that the Metro would act within a reasonable time.
Among other things, the subway has had to deal with service interruptions due to heavy rains, floods, tornadoes, and an industrial strike by city workers (late in the first quarter of this year).
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