News ยป Durban

Thabiso Goba
3 minute read
15 Dec 2021
06:33

Trade deficit for Durban, as city’s exports decline

Thabiso Goba

The City of Durban exported R3,01 billion less goods from its shores this year compared to previous years.

The City of Durban exported R3,01 billion less in goods from its shores this year compared to previous years.

This is according to a handover report prepared by the city’s acting municipal manager Musa Mbhele.

This was part of the agenda at the executive committee meeting this week.

At the start of a new political administration, following municipal elections, the previous municipal manager must present a report to the eThekwini Municipality’s executive committee detailing the state of affairs in the city over the previous five years.

Due to the Covid-19 pandemic, the July civil unrest and other external factors, Durban’s economy has taken a hard hit, according to the report.

“The decline in economic activity between 2016 and 2021 cannot solely be attributed to external factors, as the real GDP (Gross Domestic Product) of other cities grew on average by 1,1% over the same period,”
Report by acting municipal manager Musa Mbhele

Between 2016 and 2021, imports (R317 billion) grew faster than exports (R262 billion), which created a trade deficit for the city, said the report.

“The trend of international trade is more directly related to external factors than other indicators, however, due [to] the importance of exports in Durban, the decline in exports particularly in 2020 and 2021 has been negative for the city’s economy,” the report reads.

Motor vehicles, parts and accessories, basic iron and steel represented more than 60% of Durban’s exports.

African countries received the bulk of Durban’s exports, while imports are usually sourced from Asian countries.

Japan is the city’s number one export partner, while China and Germany are the top import partners, the report notes.

Overall, the city’s economy has decreased by 1,9% (a value of R8,4 billion) in the five year period.

“The decline in economic activity between 2016 and 2021 cannot solely be attributed to external factors, as the real GDP (Gross Domestic Product) of other cities grew on average by 1,1% over the same period,” the report reads.

“Other factors may include the July 2021 looting, interruptions to construction projects by business forums and the need for innovation in the facilitation of investments.”

A graph illustrated in the report shows that the city’s economy grew for the first three years but declined sharply in 2019 and 2020.

The report forecasts the city’s economy to grow by 4,5% in the current financial year, which would be lower than the 2019 levels but “is a positive trend that gives a lot of hope to an otherwise doomed economy.”

Another issue highlighted in the report is the high levels of unemployment in Durban which worsened in the study period.

However, Durban is still the country’s top tourist destination. During the five-year period, the report shows that local tourism grew by 44%.

Johannesburg reported a six percent increase over the same period.

Professor Bonke Dumisa, an independent economic analyst, said the long documented inefficiencies at the Durban harbour has had a negative impact on trade in the City.

“If imports are more than exports, we spend more South African rands buying other currencies and that weakens the rand, which further increases the cost of doing business and living in SA,”
Professor Bonke Dumisa, economic analyst

“There are always stacks and stacks of cargo ships waiting to be allowed into the harbour and that led to many importers wanting to shift their ports to other ports like Mozambique and other places,” he said.

Dumisa said a high trade deficit spells trouble for the city’s economy.

“If imports are more than exports, we spend more South African rands buying other currencies and that weakens the rand, which further increases the cost of doing business and living in SA,” he said. 

“The simple solution is that the Durban port must up their
services.”