Wednesday, 25 May, 2022

Floods heap woes on South Africa trading hub

Floods heap woes on South Africa trading hub

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

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

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

The port of Durban is the country's biggest trade platform for the agricultural, automotive and mining sectors.

Durban is the largest and busiest harbour in South Africa, handling over 60 percent of its container traffic, says PwC senior economist Christie Viljoen.

Estimates of the cost of the floods that struck KZN this month, fuelled by record-breaking rains, are sketchy.

Many flooded areas remain inaccessible due to road damage.

The mayor of greater Durban, Mxolisi Kaunda says lost production alone will cost 740 million rand ($47.3 million / 44 million euros), according to preliminary estimates.

Most of the region's 1,150 businesses are located on a flood plain and were badly battered.

But these "operational losses" do not include the cost of fixing roads, railway lines, bridges, power line, water pipes and sewerage, or damage to homes -- a bill that will be many billions of rand.

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

"The city will take about three months to get back to where it was to pre-flood levels and it should reduce the city's annual GDP by about 1.8 percent," said Ajiv Maharaj, a senior official in charge of local economic development.

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

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

"Export shipments and revenues will be under pressure in the short term," said Viljoen.

"Damaged goods in warehouses and at ports cannot necessarily be replaced and will result in weaker export revenues."