May 12, 2022

Floods wreak havoc on South Africa’s trade hub

First it was the Covid, then the riots and now the floods: the province of KwaZulu-Natal (NZN), South Africa’s gateway to the Indian Ocean, is reeling from a series unprecedented disasters.

Here is a fact sheet on the area:

– Economic giant –

KZN employs 2.4 million workers out of 14.5 million in South Africa’s formal economy and accounts for more than a sixth of the national GDP.

It is the second largest contributor to GDP after the economic hub of Gauteng which is home to Johannesburg, according to global auditors PwC.

The Port of Durban is the country’s largest trading hub for agriculture, automotive and mining.

Durban is South Africa’s biggest and busiest port, handling more than 60% of its container traffic, says Christie Viljoen, senior economist at PwC.

– Flood bill –

Estimates of the cost of the floods that hit KZN this month, fueled by record rains, are sketchy.

Many flooded areas remain inaccessible due to road damage.

Greater Durban Mayor Mxolisi Kaunda said the lost production alone would cost 740 million rand ($47.3 million/44 million euros), according to preliminary estimates.

Most of the region’s 1,150 businesses are located in a flood plain and have been hard hit.

But these “operational losses” do not include the cost of repairing roads, railway lines, bridges, power lines, water pipes and sewers, or damage to homes – a bill that will amount to several billion rand.

Economists and business leaders say the floods could have a potentially crippling impact on growth in 2022.

“It will take about three months for the city to return to pre-flood levels and this is expected to reduce the city’s annual GDP by about 1.8 percent,” said Ajiv Maharaj, a senior local economic development official. .

– Pressure on exports –

Experts say damage to businesses and the port of Durban, adding to the supply chain impact of the war in Ukraine, will curb exports.

Durban Chamber of Commerce and Industry CEO Palesa Phili said road freight between Durban and Gauteng was currently at half normal levels.

“Shipping and export earnings will be under pressure in the short term,” Viljoen said.

“Goods damaged in warehouses and ports cannot necessarily be replaced and will lead to lower export earnings.”

The Durban region manufactures food, drink and tobacco, textiles and leather goods, and petroleum and chemical products.

Its auto industry is also a big employer.

Toyota has temporarily suspended operations at its Durban plant, warning of delays in the delivery of popular models such as the Hilux pick-up – or “bakkie”, as these trucks are nicknamed here.

– Agriculture affected –

The province is a key agricultural region, known primarily for its sugar cane fields in the Tongaat region.

Agriculture Minister Thoko Didiza has estimated losses in the agricultural sector at more than 500 million rand ($32 million).

About half of these losses will be suffered by sugarcane growers, although no shortage of sugar is expected.

– Worried tourism –

Durban is a top tourist destination, popular for its warm subtropical climate, idyllic beaches and nearby wildlife sanctuaries.

The region was hoping for a rebound from the Covid-19 pandemic for the upcoming northern hemisphere summer, but is now bracing for cancellations from local and international travellers.

A crucial test will come next month when Durban holds an annual business conference, the Africa Travel Indaba, for which 6,000 people were expected.

“The show is going as we planned,” said Themba Khumalo, head of SA Tourism.

“In times of crisis like this, now is not the time to back down…it is time for us to show our economic support for Durban,” he said.