Good business basics Our gateway advantage has dissipated

The word ‘gateway’ has been bandied around a lot these past few weeks by politicians and economists.

For those not so familiar with its use in an economic context, a gateway can be described as a geographic location, which together with other attributes such as infrastructure (transport, IT) opens economic opportunities in adjoining regional or international markets.

One we have all been familiar with in our region, is being described as the gateway to the Eastern Cape.

More recently, Premier Sihle Zikalala has been going on about (re) positioning KZN as the gateway to Africa and the world, in his reconstruction plans post the widescale looting and destruction in July.

ALSO READ: Good Business Basics: Allocate resources to fight newer cases 

I am going to argue in this article that he is chasing good money after bad.

To begin, let’s examine how I believe we squandered our gateway advantage into the Eastern Cape.

For years, most of the businesses located on the other side of the Umtamvuna bridge, as far as Umtata, used our well-developed wholesale sector to keep their businesses stocked. In addition, our medical sector drew clients from all over the province. While it was inevitable that over time, savvy investors would fill the gaps in the markets in these various small towns by enticing the big stores to open, excessive pricing and poor service by local suppliers no doubt accelerated the process.

The other golden opportunity that we missed as well, was the development of a distribution and logistics capacity that could have attracted the big retailers, lowering their logistical costs associated with trucking goods in from Durban or beyond.

Turning to the Premier’s comments, I simply do not share his confidence for the following reason, the infrastructure that supports the ‘gateway’ aspiration, particularly ports and roads are deeply problematic. The congestion at the Durban port due to mismanagement, corruption and general underperformance, shows no signs of being resolved anytime soon.

The widely publicised partnership with the private sector to boost investment in the port, to the tune of R100 billion, is going to be a hard sell, as this writer to the Business Times proves, ‘No competent business owners would or should plough that kind of capital into a project with world-class kleptocrats in charge’ the writer argues.

Then we have the lawlessness plaguing the N3 corridor to Johannesburg and beyond, which has seen hundreds of millions of rand of trucks and cargo destroyed for reasons that the security forces have been unable to pin down, and firmly eradicate.

With the opening of new, state of the art, well managed port infrastructure coming on stream in Ethiopia, Egypt and Morocco, and closer to home Mozambique and Angola, international businesses eyeing the African market are being offered more logistical choices, and it is going to be an uphill task for the Port of Durban to claw back lost market.

Vijay Naidoo writes in his personal capacity as CEO of the Port Shepstone Business Forum. The views expressed are the author’s own and do not necessarily reflect those of this publication.

HAVE YOUR SAY

Like the South Coast Herald’s Facebook page, follow us on Twitter and Instagram