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20 Years of Freedom and Democracy
Gradual economic gains for Durban

​A positive start to the year can be attributed to gradual economic gains as revealed by an overview of the state of the City’s economy.  There has also been an increase in employment as businesses start to recover.

While full economic recovery may take some time, the City is committed to prioritising catalytic projects and investments to fast-track economic growth, create jobs and generate revenue. Despite the pandemic, the City has attracted R3.5 billion in Foreign Direct Investment (FDI) for the 2020/2021 financial year. Toyota was Durban’s main investment amounting to R4.3 billion.

The three main sectors with expansions underway and FDI linked aftercare are the automotive, agri-processing and chemicals valued at R2.43 billion, R800 million and R200 million respectively. In order for the City to make strides, support is required by top political and executive leadership to foster engagement with key stakeholders like Transnet, to accelerate practical economic recovery measures, more frequent engagement with a greater number of ‘anchor investors’ in key sectors, public support for business forums and swift responses to SOS calls where necessary. IT is also necessary to secure more strategic and impactful budget allocations to targeted units, directly responsible for securing and retaining investment.

The initial ease of lockdown regulations catapulted an increase in productivity in all sectors, resulting in a slight growth in annualised Gross Domestic Product (GDP). Noticeable annualised growth is seen in the 3rd quarter (Q3) of 2020 with 64.5 percent quarter on quarter as compared to the colossal loss of -60.2 percent in quarter 2 (Q2).

According to the latest Durban Edge data story, an increase in formal sector employment was up approximately 1.059m in Q3 of 2020 which is indicative of 73 000 or 7.4 percent increase from the previous quarter.

This was mainly due to the easing of lockdown restrictions in Q3 as job opportunities increased with businesses recovering. Stats show an increase in employment in the trade industry of 31 000 followed by the community services with 26 000 employees, construction industry with 21 000 employees and manufacturing industry with 8 000 employees. However, the labour market has still not recovered to 2019 levels and youth unemployment remains a concern. 

The second wave and extended lockdown level 3 could see the City’s economy lose approximately R3.59 billion in GDP (just over 1 percent of Durban’s R302 billionn 2019 GDP). The biggest losses have been in manufacturing, trade, construction and travel and tourism respectively.

Initial impact estimates indicate that consumption of services and the City’s ability to charge for services are closely linked.

Deputy Head of the Economic Development Unit, Dr Ajiv Maharaj said: “GDP growth is a major determinant in consumption, therefore retaining large scale manufacturing and retail is critical for City finances.”

An assessment by the City’s Economic Development Unit found that just a selection of six capital investments is likely to increase economic growth approximately by one percent per year.

Implementing these same projects would further increase employment in the City by 0.9 percent of the labour force, or approximately 10 000 jobs, although the majority would be temporary construction work opportunities.

Some of the quick win investment projects expected to have substantial impact once completed are:

  • Oceans uMhlanga: estimated annual rates of R34.4 million, GDP contribution of R4.7 billion over its construction, while providing for 21 000 jobs during construction and 10 300 permanent jobs.
  • Keystone: estimated to generate annual rates of R179 million, GDP contribution of R7.2 billion over its construction and create 6 500 jobs on completion.
  • Ntshongweni Phase 1: estimated to generate annual rates of R500 million, GDP contribution of R8.9 billion over its construction, and 8 500 jobs.
  • Whetstone: estimated to generate annual rates of R45 million, GDP contribution of R779 million over its construction period, with 1 650 during construction and 1 000 permanent jobs.

The wavering of application fees for the construction sector as part of the City Economic Recovery Plan has also reaped positives with an estimated R3.4 billion in investment planned.


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