Durban's economic fortunes have been mixed with the number of businesses declining but there has been an uptick in employment. Picture: Doctor Ngcobo Independent Newspapers
Image: Doctor Ngcobo Independent Newspapers
Medium-sized businesses that should be the engine for economic growth and job creation are being lost to Durban.
Hundreds of these businesses, with employees between 5 and 10, have either closed down or moved away from the city.
This was revealed by an official from the Durban Chamber of Commerce and Industry (DCCI) during a business breakfast meeting to discuss the country's and the city's economic outlook yesterday.
Ajiv Maharaj, the DCCI Economic Affairs chairperson and a senior official at the eThekwini Municipality, said the information was extracted from the data supplied by the SA Revenue Service.
Maharaj outlined the city's performance and revealed that its economic fortunes are mixed. He noted that while the recovery from Covid-19 and natural disasters was progressing well, some key performance indicators, like tourist numbers, were still below pre-pandemic levels.
Maharaj said the city has lost a number of firms since 2020.“We have lost a few hundred firms, and the area in which we lost the most is in that middle range of firms that employ 5-10 employees, and slightly bigger ones with 20-50 employees,” he told The Mercury.
Durban businessman Moses Tembe said some of these businesses could have closed down due to an unfriendly business environment.
"The impact of looting and Covid-19, although these events occurred a few years ago, is really being felt now. I can tell you about my own children; they used to run about 12 businesses employing 400 people. Now, they are down to one business that employs just 60 people."
Tembe, who is also the co-chairperson of the KZN Growth Coalition, said another factor is that Covid-19 changed the way many businesses operated.
"Those that were unable to adjust quickly and move online, or did not have the resources to do so, would have eventually failed to continue operating."
Economist Dawie Roodt said any business that has 5-10 employees is in fact a small business, and if its revenue is below a million a year, that means it is not even a small business but a micro business, with a turnover of least R10 million.
“Small businesses generally do not survive, that is a problem across the world, it is especially pronounced in South Africa. There are a variety of factors that lead to these businesses failing.
“It is the weak economy, load shedding, crime, tax burdens, excessive taxes, labour cost, increase in the minimum wage and compliance costs – while a bigger business can hire someone to fill in the paperwork – the smaller business cannot,” he said.
However, the situation is not all doom and gloom. Maharaj said generally, the city is performing well, as indicated by job creation, with close to 70 000 job opportunities created – one of the highest among all metros.
However, he continued, eThekwini has been under the R460 billion GDP mark since 2018. Over the past four to five years, it has been making up lost ground but is still below that mark.
In 2024, he said, it is estimated that the economy grew by 0.3%, and in 2025, it will grow by just under 1%."If you drill deeper, the sectors that are performing well align closely with the national picture," he said.
In terms of employment, Maharaj said, the city has performed exceptionally well. "According to the Stats SA labour force survey over the last four quarters, in 2024 almost 70 000 jobs were created in eThekwini… This trend is expected to continue in 2025.“What was so significant about those jobs being created in eThekwini is that the majority went to the youth, and we saw unemployment among the youth drop from 31% to 25%,” he said.