The Business Confidence Index (BCI) for Durban shows that confidence levels in the local business environment have remained stable from the fourth quarter of 2023 to the first quarter of 2024.
The BCI assesses business confidence in the broader eThekwini Municipality.
The index goes from 0 to 100, with 0 indicating complete lack of confidence and 100 indicating full trust in the Durban economy.
A BCI of 50 suggests a normal/neutral business situation, while a score below 50 indicates a lack of confidence in the Durban economy. A score above 50 indicates confidence in the economy.
The Macroeconomics Research Unit (MRU) at the University of KwaZulu-Natal (UKZN) calculates the index quarterly using survey data on business conditions and expectations. The report was written by Harold Ngalawa and Ntokozo Nzimande of the Macroeconomics Research Unit at UKZN.
The BCI slightly increased by 0.3 index points from 38.12 in the fourth quarter of 2023 to 38.42 in the first quarter of 2024.
“By contrast, business confidence in Durban remains slightly above the national business confidence, which registered a decline in the first quarter of 2024,” revealed the survey.
The national index decreased from 33 in Q3 2023 to 31 in the following quarter and 30 in the first quarter of 2024, marking the second consecutive reduction.
“The persistently low confidence at both the national and Durban levels is concerning. While the national and the City figures differ, they both indicate that at least 6 out of 10 people surveyed had no confidence in the economy.
“The low index at both national and Durban City levels is not surprising, especially because of the upcoming elections scheduled for May 29, 2024.”
This is because the elections are often accompanied with policy and economic uncertainty. Investors tend to be cautious about the economy until certainty is restored.
The published total index conceals significant heterogeneity (diversity) among sectors of the economy.
Community, social, and personal services saw a significant improvement in confidence from 26.52 index points in Q4 2023 to 35.05 points in Q1 2024, representing an increase of 8.5 index points quarter-on-quarter QoQ. The sector’s index rose by 32% Q-o-Q, declining by 24.6% Year-on-Year (YoY).
Here is what was found by the survey:
Manufacturing sector
This industry recorded an uptick in confidence, rising from 33.08 in Quarter 4 of 2023 to 39.83 index points in the first quarter of 2024.
“These improvements may be attributed to positive strides in electricity supply, which has long troubled the country’s economic prospects. The stabilisation of interest rates, with a strong likelihood for a decrease towards the end of the year, along with the relatively stronger rand, could also explain the improved confidence in the manufacturing sector,” stated the report.
Electricity sector
In Q1 of 2024, confidence reached 39.83, indicating significant improvements.
The sector’s confidence increased by 22% year-on-year. This supposedly displays trust in steps to address the country’s electrical supply issues.
Improvements in this industry may lead to increased trust in other sectors.
Service delivery
Satisfaction with service delivery remains poor in Durban. The survey found that 90.7% of respondents believed that if they complained about poor service delivery, the authorities would not address the issue within a reasonable time frame. Only 9.3% were confident that the problem would be addressed.
Durban’s lowest services include power (34.9%), water (20.9%), public safety (police, fire, ambulance), environment (16.3%), and roads (11.6%).
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