Business confidence plummets to all-time low in iLembe District

The majority (45%) of iLembe businesses noted that inconsistent responses to mitigate the impact of Covid-19 has left them unable to operate effectively.

This follows the findings of the 2021 Mid-Year iLembe Business Confidence Index (iBCI) report.

Compiled by the iLembe Chamber of Commerce, Industry and Tourism (The Chamber) in conjunction with Enterprise iLembe, the report provides a bi-annual picture of business confidence.

Confidence across all sectors had plummeted to the lowest levels recorded in iLembe since the first confidence index was published in 2015.

The largest drivers included Covid-19, combined with the civil unrest of July.

This has created significant uncertainty within the region’s economy, which has further seen the tourism, catering, accommodation and property management sectors note the most negative outlook following the cancellation of the Comrades Marathon and the postponement of the Ballito Pro, both major drawcards for tourism.

“The most common concern was the urgent need to attract local and international tourists back to the North Coast, and to reassure them that it is a safe destination.

“The impact of event tourism being suspended was a body blow for the sector and the end of the road for many businesses,” said Chamber chief executive, Cobus Oelofse.

Businesses said the ‘stop-start’ of Covid-19 lockdown had played havoc on cashflow and profits, leaving normally well-run businesses in shambles.

Others cited high rates, taxes and water costs as issues which left them unable to pay suppliers in the wake of a lack of government support.

Manufacturing and assembly sectors also had a grave outlook, with constant issues of loadshedding, power failures, industrial and community unrest, coupled with inadequate security and the decaying and inadequate infrastructure in industrial nodes as drivers which left the sector with a negative outlook.

A number of respondents said they were actively seeking alternative premises.

“Business expectations for the second half of the year improves markedly, but remains negative.

“This dejected business outlook emphasises the extreme disruption caused by pandemic induced lockdown regulations and the apprehension in the aftermath of the provincial unrest,” said Oelofse.

Businesses were not convinced that the destructive impact of the pandemic and unrest on the region’s economy would improve significantly over the next 6 months.

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The most confident sectors remained construction, property development and the property sales sectors – however the sector had declined in confidence, dropping to 42.1 below the neutral level of 50 index points.

“This key sector in the iLembe District’s economy remained firmly in the negative, despite being the most confident,” said Oelofse.

Unrest had again contributed to the negativity, with disruptions to existing contracts, impact on the market demand and investor sentiment being quoted as determinants of rebuilding, reinvestment and new investments.

“Views expressed repeated concerns around delayed planning approvals and unwieldly building control processes.”

Regional business leaders and investors indicated their sentiment about economic and business performance, which was recorded at its most pessimistic level since the inception of the iBCI in 2015.

The agriculture, forestry and hunting sectors also continue to be negatively impacted by economic downturn, onerous regulations, rising operational costs and uncertainty around government policies.

Major contributors toward the negativity included illegal poaching and hunting, which has become a threat to lives and crops, the report found.

The perceived disinterest of the South African Police Service (Saps) to deal with the threat has caused increased spend in security.

Vandalism of crops had also become a regular occurrence.

Businesses are pleading for assistance in the form of rates concessions and tariff adjustments which will help them navigate the crisis they are faced with.

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