Rising global tensions, shifting domestic politics and ongoing poor service delivery are posing a headache for Durban’s business community.
This is reflected in the Durban Business Confidence Index (BCI) for the first quarter of 2025, which shows business confidence in the city dropped to 56.32 from 60.74 in the fourth quarter of 2024.
This represents a quarter-on-quarter decline of 7% in the Durban business climate, marking a second consecutive decrease in business confidence, according to the report compiled by the macroeconomics research unit of the University of KwaZulu-Natal’s School of Accounting, Economics and Finance in association with the Durban Chamber of Commerce.
Prof Harold Ngalawa and Dr Ntokozo Nzimande, who compiled the report, said the index captured the mood and sentiment of business people in conducting their day-to-day business in the greater eThekwini municipality.
The index ranges from 0 to 100, where the values of 0 and 100 represent a complete lack of confidence and full confidence respectively, in the Durban economy. A BCI score of 50 indicates the business situation is normal or neutral, less than 50 denotes a lack of confidence and greater than 50 shows confidence.
In the fourth quarter of 2024, the index deteriorated by 3.6% compared with the third quarter of the same year.
“Notwithstanding this, the index remains comfortably above the 50-point mark — the neutrality zone. On a year-on year basis, business confidence in the city significantly improved, rising from 38.42 in the first quarter of 2024 to a 47% increase in the first quarter of 2025.
“This suggests that business conditions are considerably better than they were in 2024, primarily due to interventions aimed at revitalising the City of Durban,” the report stated.
Ngalawa and Nzimande believe despite the decline, “the mood remains positive, indicating the efficacy of the interventions to rehabilitate the city.
“There is a need for proactive and determined interventions, such as promoting Durban and infrastructure development,” they said.
However, perceptions of service delivery in Durban worsened in the first quarter of 2025.
In the Survey of Business Opinion conducted recently in Durban, 70% of the respondents — compared with 57.6% in the previous quarter — reported that if they complained about poor service delivery, it was unlikely the municipality would deal with it within a reasonable time frame.
Business confidence in the agricultural sector is exceptionally high, with the industry registering 83.10 points in the first quarter of 2025. Severe drought conditions in 2024 resulted in a 30% reduction in agricultural sector output
The majority of respondents (30%) reported management of the environment — sewerage, solid waste, and parks — is the poorest service provided by the authorities, followed by roads (24%), water (18%), public safety (16%), and public safety — police, fire and ambulance — (12%).
The Durban BCI generally moves in the same direction as the national BCI, but in the final quarter of 2024, the two indices diverged. In the present quarter, the national business confidence index remained unchanged at 45, while the Durban BCI declined.
According to Ngalawa and Nzimande, these differences reflect variations in the timing of data collection.
“The national data was collected in February, while the city’s data was gathered in the last two weeks of March. The latter captures recent developments in the domestic and international political and economic domains.”
On the local front, disagreements within the government of national unity threaten the sustainability of the current government arrangements and create policy uncertainty, they said. The uncertainties at the national government level spill over to coalition governments in the provinces, resulting in business environment uncertainty.
Global tensions, breakdowns in diplomatic relations and uncertainty about the future of the African Growth and Opportunity Act are among the issues affecting the trade landscape and economic stability.
According to the report, the overall index hides substantial differences across the sectors.
Some sectors, such as community, social, and personal services; manufacturing; and agriculture, hunting, forestry and fishing, recorded improvements.
But construction; financial intermediation; insurance; real estate; and business, among others, recorded a deterioration in confidence.
“In particular, the wholesale and retail trade, repair of motor vehicles, motorcycles, and personal and household goods, as well as catering and accommodation, recorded a sharp decline in confidence.”
Manufacturing, a sector often credited for its job-creation capacity, experienced improvements, reflecting better electricity supply.
Business confidence in the construction industry declined by 11%, from 66.25 in the fourth quarter of 2024 to 58.73 in the first quarter of 2025.
Transport, storage and communication witnessed a huge reduction in business confidence (17%) from 70.58 in the final quarter of 2024 to 58.89 index points in the first quarter of 2025.
Financial intermediation, insurance, real estate and business remained optimistic though the levels of optimism declined by 19%, from 67.69 in the fourth quarter of 2024 to 54.85 in the first quarter of this year.
“The confidence in this sector is due to the easing of macroeconomic conditions. However, the hanging cloud of uncertainty, including rising levels of government indebtedness, is working against these gains,” the report said.
Business confidence in the agricultural sector is exceptionally high, with the industry registering 83.10 points in the first quarter of 2025. Severe drought conditions in 2024 resulted in a significant 30% reduction in agricultural sector output.
The La Niña weather cycle is expected to bring higher quantities of precipitation, boosting confidence in agriculture, hunting, forestry, and fishing.
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