THE Durban Business Confidence Index (DBCI), indicating the sentiment of businesspeople in conducting day-to-day business in the greater eThekwini Municipality, recorded a 3.6% quarter-on-quarter drop and 59% year-on-year improvement in the fourth quarter of 2024.
Prof Harold Ngalawa and Dr Ntokozo Nzimande from the Macroeconomics Research Unit at the University of Kwa-Zulu-Natal comment that the easing macroeconomic conditions coupled with government interventions to revitalise Durban continue to sustain business confidence in the City above the neutral or 50-point mark.
The BCI was recorded at 60.7 index points in the fourth quarter of 2024, representing a 59% year-on-year improvement. In 2023 Q4, it was reported at 38.1 index points. This signals that the relatively stable macroeconomic environment and interventions to revive the City are yielding positive results, according to the academics who compute the index.
Following two successive improvements, the Durban BCI dropped to 60.7 in the fourth quarter of 2024 from 63.0 in the previous quarter, representing a 3.6% deterioration in confidence in the City’s economy. Despite this drop, business confidence remains bullish, staying well above the 50- point mark, and reflecting a positive outlook on business conditions in Durban.
Year-on-year, business confidence improved substantially by 59%, implying that business conditions significantly improved in 2024 compared to 2023. The Durban BCI typically moves in the same direction as the national BCI. However, in the present period, the two indices moved in different directions. The national BCI changed from 38 index points in 2024 Q3 to 45 in 2024 Q4, Ngalawa and Nzimande note.
“The decline in Durban’s business confidence may be driven by various factors, including ‘political developments’ that threaten the sustainability of the current government arrangements, especially in the KwaZulu-Natal province. It is noteworthy that the Durban BCI has consistently remained above the national index computed by the Bureau of Economic Research (BER).
“The reported overall business confidence index masks significant heterogeneities across various sectors. For example, the manufacturing sector recorded a decline from 62.9 index points in 2024 Q3 to 55.5 in 2024 Q4, while the transport, storage, and communication sector dropped from 76.9 in 2024 Q3 to 70.6 in 2024 Q4. The current easing of financial and global macroeconomic conditions, among others, continues to stimulate business confidence in the financial intermediation, insurance, real estate, and business services sectors. Business confidence in these sectors improved by 17% from 57 index points in 2024 Q3 to 67.7 in 2024 Q4.
“The wholesale and retail trade sector, including the repair of motor vehicles, motorcycles, personal and household goods, catering, and accommodation experienced an improvement in business confidence from 67.1 index points in 2024 Q3 to 67.3 in 2024 Q4, representing a 0.3% increase in confidence. This can be largely ascribed to the typical surge in demand in the last quarter of the year associated with the festive season.
“The construction sector, on the other hand, witnessed a marginal decline in business confidence in 2024 Q4 to 66.3 index points from 68.9 in 2024 Q4. The electricity, gas, and water supply sector experienced a reduction in business confidence from 75.2 index points in 2024 Q3 to 69.5 in the final quarter of 2024,” Ngalawa and Nzimande comment.
The two authors hold the view that proactive measures such as promoting Durban and revitalising its infrastructure, and a relatively stable macroeconomic environment, among others, are crucial for sustaining long-term business confidence in the City.
Service delivery
Service delivery perceptions of the business community improved significantly in the fourth quarter of 2024. In the 2024 Q4 Survey of Business Opinion in Durban, 57.6% of businesses reported that if they (or anyone) complained about poor service delivery, it is unlikely that the local municipality will deal with it within a reasonable time. This represents a significant improvement from 73.7% in the previous quarter. This may be partly explained by the factors that sustained the positive business confidence in Durban during 2024 Q3 and 2024 Q4, according to Ngalawa and Nzimande.
The authors comment that among the currently poor services delivered by the authorities, management of the environment (sewerage, solid waste and parks) was the worst (33.3% in 2024 Q4 compared to 29.7% in 2024 Q3), followed by water (24.2% in 2024 Q4 compared to 27% in 2024 Q3) and public safety (15.2% in 2024 Q4 compared to 21.6% in 2024 Q3) and roads (15.2% in 2024 Q4 compared to 13.5% in 2024 Q3).
Electricity remained a relatively minor concern, although the proportion of respondents who complained about electricity increased slightly from 8.2% in 2024 Q3 to 12.1% in 2024 Q4. This may be explained by the sustained absence of loadshedding, which continues to buoy performance of the electricity sector, that in turn has enhanced sentiment towards risk-taking by businesses.
About the DBCI
The Durban Business Confidence Index (BCI) presents the mood or sentiment of businesspeople in conducting their day-to-day business in the greater eThekwini Municipality. The index ranges from 0 to 100, where the extreme values of 0 and 100 represent a complete lack of confidence and full confidence, respectively, in the Durban economy. A BCI of 50 indicates that the business situation is normal/neutral, less than 50 denotes a lack of confidence, and greater than 50 shows confidence in the Durban economy. The Macroeconomics Research Unit (MRU) at the University of KwaZulu-Natal computes the index once every quarter using survey data on business conditions and expectations.