National real gross domestic product decreased by 0,7% in the second quarter of 2022, following a revised increase of 1,7% in the first quarter of 2022. This is a result of seven industries recording negative growth between the first and second quarter of 2022.
Noteworthy decreases were seen in the primary and secondary sectors. The agriculture industry decreased by (7,7%) and the mining and quarrying industry decreased by (3,5%). All three industries in the secondary sector contracted in 2022Q2. The manufacturing industry decreased by (5,9%); the construction industry (2,4%) and the electricity industry decreased by (1,4%).
SA’s economic performance for the quarter provides an idea of what the City’s economy may look like for 2022Q2, however the influence of the primary sector (agriculture and mining) is muted at the local level, due to their negligible size in Durban (accounting for only 2,1% combined).
Figure 1: SA’s GDP growth 2022Q2
While SA’s major cities experienced sluggish growth during the Covid-19 pandemic and have since recovered, Durban’s growth remains subdued. Durban’s economy hadn’t recovered to pre-Covid GDP levels by 2022Q1 even though the City recorded relatively impressive growth of 2,3%. However the country’s growth was also subdued in the same quarter and has been revised down by StatsSA from 1,9% to 1,7% in 2022Q1, eventually decreasing to 0,7% in 2022Q2.
Figure 2: Durban’s GDP growth vs major cities
Nonetheless, the manufacturing industry is the biggest contributor to Durban’s economic recovery contributing R143 billion to GDP in 2021. The sector is a catalyst for growth with newly launched investments in the City and surrounding areas.
A chemical manufacturing plant investment “Synergy Blenders” worth R120million was launched in La Mercy in a bid to boost economic growth. Another investment for which Phase 1 of construction is due to kick off is the R30 billion ‘mini city’ development called Westown. This is a mixed-use and retail component in the greater Shongweni Urban Development aimed at creating a new economic hub in the region and will be important in expediting the corridor of development between Pietermaritzburg and Durban. The project was scheduled to launch in 2020 but was delayed due to the Covid-19 pandemic. Westown is being developed by Fundamentum through a partnership with eThekwini Municipality and sugar giant Tongaat Hulett. Phase one of the project is value dat R2,5 billion and eThekwini Municipality has invested R595 million towards municipal infrastructure. A total of R200 million is targeted at being allocated to local suppliers. Upon completion of phase one, the municipality is expected to collect revenue returns of R300 million a year from the project. These investments stand to catalyse investment, localisation, stimulate job creation, and contribute significantly to the city’s economic growth.
Wastewater pipelines damaged in the April 2022 floods have led to clogging and overflows from manholes and sewage spills. However, some sewer pump stations that are contributing to sewage spills are because of poor infrastructure maintenance. Further to this, the sewage spills have led to high levels of E-coli in the water that has killed dozens of fish on the beach. This has become a health hazard and has led to beach closures and water activities being prohibited. This will negatively impact the tourism sector because the beach and the warm climate are what attract a substantial number of tourists to the city.
Post flooding efforts have been made to remedy the situation of damaged infrastructure. Due to reduced water supply from the Durban heights water treatment plant, the City implemented a water rationing system to ensure that water supply distribution is balanced on an equitable basis to all customers until repairs to the pipelines were done. Transnet in partnership with the City is also in the process of restoring the Umlass Canal to its pre-flooding condition and ensuring the maintenance of the Canal takes priority.
Historical trends have shown that following economic shocks, the economy always recovers and stabilises. The rebuilding efforts following the floods have the potential to stimulate economic activity, but nonetheless, Durban’s economic growth is still behind compared to other cities because of the lasting impact of the unrest and flooding. The City has managed to secure investments and is eager to create a conducive and efficient environment for businesses to prosper. On the other hand, it is estimated that replacement of the bulk water infrastructure would cost close to R10 billion, and replacement of the City’s ageing water infrastructure and sewerage infrastructure would cost an additional R4,5 billion. More still needs to be done to build an inclusive system that is better equipped for changing world.