Investor confidence plummets

The violent protests across the Ilembe district last quarter were a severe blow to local business and investor confidence.

This downturn in sentiment is clearly reflected in the newly released mid-year Ilembe Business Confidence Index (iBCI), that slipped by 2.6 index points to 46.4 in June, the lowest level since its inception and firmly in negative territory. The index is measured from a base point of 50 points, where above 50 is deemed positive and below 50 is negative.

Negative outlooks around sales volumes and new orders were the biggest contributors towards the falling iBCI, while levels of employment was the only economic activity that showed any positive movement (51.1).

Sectors that performed the worst were among the largest and most important to the Ilembe economy namely, manufacturing (39.8), wholesale, retail and vehicle trade (39.7) and agriculture (40.7). In contrast, the tourism, catering and accommodation sector showed its resilience to tough economic conditions to score 64.7, underlining its importance to the local economy.

The protests that took place in the first half of 2016 with the most destruction caused in Isithebe and Shaka’s Head saw incidents of looting and petrol bombing. This, combined with a deteriorating national economic sentiment has been a recipe for disaster for our local business sector.

Aranda Textiles KZN director, Harry Pieroni, said the protests definitely contributed to the declining investor confidence.

“First it was the violent protests and then it was the water that was shut down in the Isithebe area by protesters. We supply factories in Johannesburg and if we are not working, it impacts on them as well. It is not just the Ilembe district that is to blame but also the inconsistent national economy. In the last year, we have lost a third of our staff. We went from working seven days a week to four days a week. During the protest in March, our turnover decreased by 25 per cent in one month.”

Pieroni said he has no intention to increase production for the next six months but will maintain current levels with the hope that all will be peaceful in Isithebe. However Ilembe Chamber, CEO, Cobus Oelofse said the upcoming six months look more positive.

“People’s perception is what drives investments and the protests have severely tarnished the reputation of the Ilembe district. We need to proactively manage this damage to our reputation, we cannot just assume that people have forgotten,” said Oelofse.

This is the fifth iBCI report since 2015, produced by Enterprise Ilembe in partnership with the Ilembe Chamber of Commerce, Industry and Tourism which serves to form a biannual picture of business confidence in the district as well as the overall business outlook (during 2015 the iBCL was conducted on a quarterly basis).

The results are derived from a business survey, which takes into the consideration business owner opinions and the index of the national financial and economic variables.

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