Perceptions of service delivery in Durban worsened in the first quarter of 2025.
Image: Doctor Ngcobo/Independent Newspapers
The Durban Business Confidence Index (DBCI) reported a notable decline in business confidence, falling from 60.74 in the fourth quarter of 2024 to 56.32 in the first quarter of 2025.
This 7% quarter-on-quarter dip marked the second consecutive drop for the index, instigating renewed calls for proactive measures to bolster the local economy.
Despite these figures, the overall sentiment among businesspeople remained buoyant, suggesting previous interventions to rehabilitate the city are having a positive impact.
The DBCI, which is compiled by the Nzimande Macroeconomics Research Unit at the University of KwaZulu-Natal, serves as a barometer of the business climate, reflecting the sentiment of entrepreneurs and investors about their day-to-day operations.
Although the latest figures indicated a decline, the index remained well above the neutral zone of 50 points.
On a year-on-year basis, the DBCI has significantly improved, climbing from 38.42 in the first quarter of 2024. This tracking revealed a substantial recovery in the business landscape, a transformation driven by various initiatives aimed at revitalising Durban.
Despite the improving annual statistics, the index's recent decline mirrors the unsettling global environment and internal political strife within South Africa's Government of National Unity (GNU).
The index's authours, Prof Harold Ngalawa and Dr Ntokozo Nzimande, said instances of fragmentation within the GNU raised concerns over the long-term sustainability of coalition governance, fuelling uncertainty that trickles down into the provincial business landscape.
"The uncertainties at thenational government level spill over to “coalition” governments in the provinces, resulting in business environment uncertainty," they said.
"Ongoing global tensions, breakdowns in diplomatic relations, and uncertainties regarding the future of the African Growth and Opportunity Act (Agoa) are among the issues affecting the trade landscape and economic stability."
While the overall index faces challenges, sector-specific performance tells a different story. Sectors such as Community, Social, and Personal Services; Manufacturing; and Agriculture have shown resilience and marked improvements.
Manufacturing, celebrated for its job-creation potentials, surged from 55.54 in the previous quarter to 61.71 in the latest, reflecting a dramatic year-on-year gain of 55%. Enhancements in electricity supply have catalysed this growth, a significant factor previously hindering production capacity.
Conversely, the wholesale and retail sector, including repairs for motor vehicles and accommodation services, saw a sharp decline in confidence.
This particular sector plummeted from 67.34 points to a low of 43.79, showcasing a staggering 35% quarterly drop, yet still maintains a 9% improvement annually. Such stark contrasts underscore the diverse impacts of prevailing economic conditions across various industries.
The agricultural sector stood out as an anomaly amid declining business confidence, registering a robust 83.10 points in the first quarter of 2025, buoyed by favourable weather conditions anticipated due to the La Niña phenomenon.
Despite experiencing a significant drought in 2024 that reduced output by 30%, the future appears more optimistic for agriculture, hunting, and fishing.
The authors said that as the resilience of Durban's business community was tested, optimistic leadership was essential.
They said the establishment of the Presidential eThekwini Working Group (PeWG) aimed to provide stability and drive initiatives that promote further investment in Durban and the surrounding areas.
However, they said the pressing need for infrastructure development and enhanced promotional efforts for the city stood evident as challenges loom in the political and economic landscape.
The latest DBCI findings revealed a dip in confidence in Durban's economic landscape. but said it was crucial to remain vigilant and proactive in promoting the city’s revitalisation, with government tensions and global instabilities threatening progress.
BUSINESS REPORT
