Thabiso Goba
4 minute read
5 Mar 2022
06:00

Counting the cost: Devastating impact of Covid-19 on Durban’s economy

Thabiso Goba

Over 104 000 jobs have been lost in Durban since 2019 as the effects of Covid-19 continue to wreak havoc on the city’s economy.

Over 104 000 jobs have been lost in Durban since 2019 as the effects of Covid-19 continue to wreak havoc on the city’s economy.

This is according to the latest March report, for the whole of Durban, by Durban Edge, eThekwini Municipality’s economic research hub.

The report also says that the office vacancy rate has increased from 12,6% to 15,4% in the same period, “which may be a combination of the decline in the economy and a relocation of office space.”

The office vacancy rate in the Durban CBD (Central Business District) alone currently sits at 20% which is higher than Cape Town and Johannesburg, the report states. The empty offices throughout Durban have also meant a loss in revenue for the city.

“Going forward if South Africa is faced with a disaster of this magnitude, government needs to prioritise consultation with the private sector to ensure we work together to develop solutions that will be sustainable for all, and will focus on the overall objective of economic recovery.”
Palesa Phili, chief executive officer of the Durban Chamber of Commerce and Industry

Perhaps the biggest vacancy in Durban is the iconic Hilton Hotel which “temporarily” closed its doors last January.

At the time, the Hilton Hotel Group cited low booking rates due to the Covid-19 pandemic which made it difficult for them to justify staying open.

The 14-floor hotel, with its iconic blue-tinted windows that project up into the Durban sky, now stands empty.

A few security guards patrol the hotel while there is security tape surrounding the entrance.

Local and provincial governments have repeatedly vowed to work with the Hilton Group to get it to re-open its doors.

Last November, the Hilton Group said they were encouraged by the hosting of international events at the Durban International Convention Centre, with which it shares a symbiotic relationship.

“Hilton Durban is currently engaged in discussions with various stakeholders around its re-opening plans, and whilst no date is currently confirmed, we hope to be welcoming guests back to Hilton Durban soon,” the Hilton Group said to The Witness.

“Team Members impacted by the closure [of the hotel] were either redeployed or unfortunately retrenched.”

Palesa Phili, chief executive officer of the Durban Chamber of Commerce and Industry, said they did not have a definitive number of how many businesses had closed due to the Covid-19.

Phili said: 

“However, based on our observation and interaction with the business community, all business sectors have been hard hit by the pandemic and its consequences, including disease burden and lockdown.”

“For example, the tourism value chain has been negatively impacted, inclusive of large hotel groups and tour operators all the way to township businesses and informal businesses operating within this sector.”

Mxolisi Kaunda, eThekwini Municipality mayor, recently announced that the city disbursed R30 000 each to over 700 small, medium and macro enterprises that applied for the city’s Covid-19 recovery programme.

Phili said while there have been programmes, at local and national levels, to help businesses, she said it’s not sufficient for a full economic recovery.

Looking back at the impact Covid-19 and the subsequent lockdowns had on businesses, Phili said the business sector would have appreciated more collaborative consultation from the government.

“Going forward if South Africa is faced with a disaster of this magnitude, government needs to prioritise consultation with the private sector to ensure we work together to develop solutions that will be sustainable for all, and will focus on the overall objective of economic recovery,” she said.

Melanie Veness, CEO of Pietermaritzburg and Midlands Chamber of Business, said in hindsight the economy was restricted for “far too long”.

“There were a number of small businesses that never reopened after the Covid lockdown, they simply couldn’t sustain themselves with no income coming in. Sectors like travel, tourism and events were chronically impacted by the ongoing restrictions and many are still battling to recover,” she said.

Veness said there has been a determination from the business community to go again but they need the Msunduzi Municipality to meet them halfway by creating a conducive environment.

Dawie Roodt, chief economist of the Efficient Group, said a full economic recovery would take at least three years.

Roodt said it was worrying that more than 11 million people have been added to the country’s social welfare programmes. In his recent budget speech, Finance Minister Enoch Godongwana announced that the total number of grant beneficiaries increased by close to one million while 10,5 million people currently receive the R350 Covid-19 social relief grant.

Roodt said: 

“Without a doubt the SA economy has taken a massive knock but the question is, was it handled correctly? Well it’s hard to criticise because they did not know at the time. What I can criticise though is that the government did not learn fast enough.”

Roodt said hard times are still on the horizon with petrol prices still expected to increase if the war between Ukraine and Russia gets worse. “We are paying the price for a destructive government and the things they have done to the economy.”