Durban will lose around 1.8% of annual GDP and it will take around three months to get the city and its businesses back to where the economy was operating before the flood disaster struck last week.
eThekwini Municipality mayor Mxolisi Kaunda highlighted the preliminary estimates of the more-than R700 million in operational losses – excluding the cost to repair damaged infrastructure and properties – in a special online mayoral meeting with business leaders on Friday.
“The economic impact of these floods has been severe as many industries had to cease operations. Preliminary estimates indicate that the loss to the eThekwini GDP since 14 April 2022 is R737m.
“This loss was occasioned by the fact that the city has 1 152 businesses located within eThekwini’s floodplain, and the majority of them were impacted by the flooding,” Kaunda said.
A total of 38% of these businesses are within the manufacturing sector, 32% in wholesale and retail trade, and a further 11% are in the government sector.
He said of the 19 chemical and furniture factories affected, 15 were in the footwear and leather industry.
“Based on the preliminary data from the survey we have conducted, the most affected sectors of our economy are manufacturing with estimated damages of R431m, agriculture R12.6m, construction R18m, wholesale and retail R46m and warehousing and logistics R33m. It is important to highlight that we are currently engaging the provincial and national government on what support can be provided to all affected businesses, including SMMEs,” Kaunda said.
“We are aware that companies like Sappi, Mondi, Sapref and Toyota had to shut down due to flooding. As the leadership of the city, we want to commit ourselves to work with you to ensure that services such as water and electricity are fully restored so that production is not interrupted going forward,” he said.
eThekwini Municipality deputy head for economic development Ajiv Maharaj said that in a situation where 80% of businesses were not operating, it cost the city more than R28m per day in lost GDP. A total of 1 250 businesses are located in the city’s floodplains, in areas such as Durban South, Umgeni, Glen Anil and Sea Cow Lake, and many had reported that insurers had refused to insure them because of the repeated floods the province had endured in recent years.
“The floods occurred in April, outside our normal rain, and insurers were refusing to insure businesses because of flooding in those areas, so this is a major concern for the government and how we support those businesses that are not insured,” he said.
“The city will take about three months to get back to pre-flood levels and it should reduce the city’s annual GDP by about 1.8 %.”
The port lost just under two days of operations.
“The damage to Bayhead Road has reduced the flow of trucks into the port. A backlog of about 8 000 to 9 000 containers will take about a week to clear,” Maharaj said.
He added that the freight sector needed to build greater resilience as it had been hard hit in recent months.
“The freight sector has been impacted a number of times, trucks have been burned, and the freeway and roads have been damaged. We now need to look from a strategic perspective to see how we can support that sector.”
