Ilembe business confidence highest in two years

Business confidence in the iLembe District is the highest it has been in the district in two years, according to the Business Confidence Index (iBCI) 2019 Mid-Year Review by iLembe Chamber of Commerce, Industry & Tourism (iCCIT) and Enterprise iLembe (Ei).

Ilembe is the only district in the country that does a business confidence index. The report looks at economic indicators, as well as how people feel about business in the district.

What is even more encouraging is that the outlook for the next six months is positive, with business expectations of five economic sectors being optimistic, led by Agriculture, Forestry, Hunting (64.2), and the Construction, Property Development and Property Sales (60.6) sectors. Fifty index points translates to a neutral sentiment, therefore anything below 50 is negative and anything above 50 indicates a positive sentiment.

The property market specifically has had some welcome reprieve from the interest rate cut announced in July 2019, according to the iBCI 2019 Mid-Year Review.

The Manufacturing and Assembly sector’s woes continue, according to the report, with the ongoing spates of industrial unrest, community protests and interference with business. This is specifically in the Isithebe Industrial Estate, the industrial heartland of the district, weighing down the sentiment of this sector. Confidence in this sector may also have been affected by the conclusion of the Whirlpool sale of its South African operations, and the announcement by at least one significant employer that it is discontinuing its operations in Isithebe.

As a result, the Mandeni Local Municipality was the least confident region in the district, with one local respondent summarising the sentiment as “the worst market conditions in (the) last 25 years”.

Trevor Graham, plant director at Whirlpool, Isithebe said: “The manufacturing sector suffers when there’s unrest in the area. Then there’s the cost of additional security to make sure your assets are safe. The unrest situation aside, the economy is a bit slow at the moment, but in the light goods sector it’s still pretty good.

“Competition in business proved to be one of the biggest business constraints, with 55 percent of participating businesses selecting competition and market size as the most significant business constraints.

John Coburn, owner of Gianni’s Ristorante, said there had been a tremendous influx of new restaurants in the last 18 to 24 months.

“There have been casualties along the way and a number of them have already closed. I do believe that we are over-traded in our marketplace, especially in Ballito. Having been in the game here for eight years, not every day is Easter or Christmas.”

Thirty-three percent of survey respondents listed skills shortages and other labour related issues as primary business constraints.

The release of the iLembe Skills Needs Assessment Study on August 16 will provide some valuable insight into this, as it continuously features as a primary business constraint in our region, said Cobus Oelofse, CEO of the iLembe Chamber of Commerce, Industry and Tourism.

Twenty-six percent of respondents viewed service delivery and infrastructure provision as a business constraint. The cost of development, cumbersome and inefficient administrative and planning approval processes and the speed of decision making were also highlighted as specific contributors to this business constraint.

With liquidity and the cost of doing business as ongoing concerns to local businesses especially, more than one fifth of respondents listed the level of property rates and taxes as a primary constraint. According to the report, this concern reflects directly on our region’s ongoing competitiveness in attracting investors into the region.

The local sentiment is reflective of national sentiment, said Oelofse.

Commercial property owner in Ballito, Gerard de Billout said the situation was a tenuous one.

“I have been a commercial property owner in Ballito for the last 15 years and rates, water, electricity and security have overtaken rental cost. It cannot sustain itself any longer if it keeps going at this rate. Nowhere else in the world does it work like this. They will have to bring the interest rate down to bring the consumer confidence up,” he said.

For more information contact Cobus Oelofse at ceo@ilembechamber.co.za or Nathi Nkomzwayo, CEO of Enterprise iLembe at nathi@enterpriseilembe.co.za.

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