Ilembe Business Confidence Index (IBCI) 2018 Year-End

2019-03-01

Enterprise iLembe, in partnership with the iLembe Chamber of Commerce, Industry & Tourism, collaborate to produce the iLembe Business Confidence Index (iBCI), aimed at providing a biannual picture of business confidence in the iLembe District, as well as an overall business outlook.

The iBCI is a hybrid index derived from, firstly, a biannual business survey conducted in the iLembe district and secondly, a weighted index of financial and economic activity variables.

Highlights and key findings The iBCI 2018 Year-End was recorded at 43.7 index points, despite the positive adjustment it remains entrenched in negative territory, i.e. below the neutral level of 50 index points.

The survey component of the iBCI, which was conducted in the latter half of January 2019 and which records subjective business sentiment, showed a positive adjustment of 2.8 index points on the all-time low recorded in the previous six-month period. Feedback to validate this sector’s performance includes a reluctance to invest in larger manufacturing equipment because of the unreliability and cost of electricity, the increasing and unrealistic enterprise development expectations from communities surrounding industrial precincts, the costs of logistics from secluded industrial areas, and the crumbling infrastructure, in especially the Isithebe Industrial Park, and the lack of response from the authorities in this regard.

The negativity of sentiment in the key sector of construction, property development, property sales remained being substantiated by delayed planning approvals, unwieldly building control processes and apathy towards the time sensitivity of property development. In addition, the development of infrastructure, increasing concern about the capacity of the road infrastructure and resulting traffic congestion, work disruptions, stoppages and extortion by “business forums” and land occupations contributed to what one respondent described as a “difficult property market”.

The negative sentiment in the tourism, catering, accommodation, property management sector relates to perceptions expressed that the KZN North Coast is “unsafe” and “unstable”, ongoing concerns about the management of public spaces, especially beach nodes and facilities such as ablutions, and a disregard for municipal by-laws and the associated antisocial behaviour.

Further concerns expressed relates to the growth in Airbnb establishments and the inability of registered establishments to compete on a cost basis with such establishments, as well as a need to promote the KZN North Coast to international tourists. SACCI BCI In summary
SACCI’s BCI confirms that the major challenges for South Africa’s economy still remain slow economic  rowth, structural public finance deficiencies, public sector maladministration, institutional capacity and corruption, unemployment and inadequate fixed investment by the private sector and foreign investors alike.

The debate on land reform and the possible amendment to the Constitution has added an additional uncertainty to economic policy.

The continued poor performance by the domestic economy in 2018 (annual GDP growth of 0.8%) and an anticipated 1.3% for 2019, are stressing the desperate need for policy certainty and appropriate sustainable economic policy.

The private sector and all levels of government within the iLembe District are committed to partnering on specific initiatives that will aid the viability and growth of small and medium enterprises and secure investment in key economic sectors and geographies in our district.