Report highlights catastrophic blow to North Coast economy

An economic and business impact assessment report for the iLembe region paints a dark picture for the economic hub of the North Coast.

In a joint assessment conducted by the iLembe Chamber of Commerce, Enterprise iLembe and Vuthela comparing March to July for 2019 and 2020, it was found that visitor spending had dropped from 2019’s R1 351 670 880 to some R183 848 280, an 86% drop.

While the report paints a gloomy picture of the future of the North Coast, iLembe Chamber of Commerce CEO, Cobus Oelofse believes that the iLembe District is better placed than any other in the country to weather the storm.

Shockingly, the assessment revealed a 33% cancellation and postponement of capital projects, severely impacting economic contribution.

One such upcoming project was the world’s second largest beer brewer, Heineken.

Heineken aimed to set up shop at the Inyaninga site near Dube TradePort where it planned to build a R6-billion brewery.

It would have given a massive boost to the region, created 400 permanent jobs and made many more service-related work opportunities available.

However, Heineken’s expansion plans have since been halted owing to the immense pressure it endured during lockdown.

“Heineken is obviously the most high profile instance, but it also impacts on a range of businesses in downstream industries. The cancellation or delay of expansion, upgrade and maintenance projects impacts on a range of services, from professional support to technical and operational execution, often over extended periods,” said Oelofse.

Of the businesses surveyed in the assessment over the period of March to July, it was found that those most heavily impacted included tourism, catering, accommodation, property management and construction, property development and property sales.

Oelofse believes these sectors need to be paid special attention given the current economy.

These are also the sectors which make up the financial backbone of the iLembe District.

And while figures have shown an increase in a return to business as normal with the gradual ease of lockdown, the damage has been done.

“For some businesses, government support and specifically financial support won’t materialise. It is critical for business to reflect on its viability, especially if loan commitments were created to sustain itself through the lockdown periods. Business liquidity has become a major concern.”

Oelofse believes that our local economy had been impacted by as much as 50%, with a decline of 57% in tourism and 45% in construction alone.

“The challenge for our regional economy remains our ability to claw back in real terms, and not a recovery artificially induced by relief and other stimulus induced, especially with consumer spending being severely constrained.”