As the country marks the one-year anniversary of the July riots this week, larger businesses remain hesitant to build capacity back to pre-riot levels, while in KwaZulu-Natal some firms that are still struggling to recover are considering relocating to other provinces.
Large businesses, which have seen more of a recovery after last year's events that affected KZN and parts of Gauteng, fear there could be a repeat as none of the ringleaders of the mayhem that unfolded between July 8 and 14 have been prosecuted.
Cas Coovadia, CEO of Business Unity SA (Busa), said he believed there had been some recovery, particularly among larger businesses but they have not ramped up operations to pre-looting levels.
“That is because incidents like these force business decisions. Businesses ask themselves whether this could happen again and this informs decisions about how much they invest to rebuild operations. I think this uncertainty has led us to not having experienced a full recovery. The corporate sector may hold back on investments to a certain extent.”
Melanie Veness, CEO of the Pietermaritzburg & Midlands Chamber of Commerce, said this week that the economy in the region was struggling to recover because of hesitancy to invest, partly because of a loss of confidence after the unrest and because the environment is not conducive.
“Load-shedding and infrastructure failure are the main contributors to the poor operating environment. Some businesses have fully reopened. Some small businesses have not been able to reopen; others are struggling to achieve pre-unrest levels of operation.”
Veness said several businesses had rationalised their operations, while others have chosen to remain partly open in Pietermaritzburg and surrounding areas, but decided to test operations in other localities.
“The danger of this is that if operations in the other locations turn out to be more feasible we’ll see further disinvestment as operations slowly move across to the new locations. Some facilities that were destroyed are still being constructed. We’ve lost some stores and warehousing to other provinces.”
The Durban Chamber of Commerce and Industry NPC said that while there were specific sectors that suffered “immense consequences,all economic sectors have been hit by these macro events”.
President Nigel Ward said the tourism and manufacturing sectors were the worst affected, adding that the challenges were relentless.
“Many of these sectors depend on reliable infrastructure and on the inflow and outflow of tourists to sustain their operations. The pandemic, the July unrest and the April floods restricted travel. Furthermore, the April floods derailed some of the country’s largest manufacturers and many major plants were flooded, bringing production to a halt.”
He said the financial and economic loss to Durban had been “truly shattering”.
A survey by the City of eThekwini and with the chamber’s assistance showed that the value of lost sales and stock because of the unrest amounted to R40bn, while the damage to property was estimated at R15bn. The value of lost equipment and machinery totalled R20bn, while 16,000 businesses were “negatively affected” with 9,100 jobs put at risk.
But the chamber was confident that businesses were committed to rebuilding in Durban and KwaZulu-Natal.
The events of last year, which saw wide-scale destruction of malls, shops and supply chains came as SA was still reeling from the economic fallout of the pandemic and lockdowns. The unrest was initially sparked by protests by supporters of Jacob Zuma wanting him released from prison and which soon degenerated into criminal mayhem.
Coovadia said the risk remained that SA may see a repeat of the violence and unrest. He said that while he believed that poverty, unemployment and hunger may have been contributing factors behind the insurrection, “the timing of it with Zuma’s imprisonment and the social media voices behind it clearly shows that this was planned by a faction supporting the former president”.
He said while the government had subsequently said it had identified ringleaders, no-one had been prosecuted. At the same time, the “political terrain is still very messy and contested and one can see in the run up to the ANC conference in December that there are factions positioning themselves”.
The combination of the effect of several editions of hard lockdowns, the July 2021 mayhem, devastating floods in April and, now, ongoing load-shedding can prove too much for any business, particularly small firms
— John Dludlu, CEO of the Small Business Institute
John Dludlu, CEO of the Small Business Institute, said that while SA’s small businesses were resilient, the challenges experienced over the past two years, including hard lockdowns, the riots and floods, were unprecedented.
“The combination of the effect of several editions of hard lockdowns, the July 2021 mayhem, devastating floods in April and, now, ongoing load-shedding can prove too much for any business, particularly small firms. The feedback is that small businesses are deferring their expansion plans and intentions to take on new employees given the energy crisis and lack of short-term plans to alleviate power blackouts.”
He said the institute’s affiliates had also shared “concerns and frustrations about the fact that the perpetrators of last year’s rampage are still roaming the streets”.
Dludlu said the institute had escalated this issue to the government for urgent attention, adding there were major concerns that these events could be repeated.
“There's very little evidence that the state's capacity to prevent last year's mayhem has significantly improved. If anything, in the past few months, we have seen an increase in incidents of lawlessness and disorder which should worry us all, especially small business owners.”
Neil Gopal, CEO of the South African Property Owners' Association (Sapoa), which has more than 800 members including JSE-listed real estate counters, said the July events had “raised significant implications for future investment in KwaZulu-Natal, but perhaps that will pass with time”.
He added: “I suspect that in the short to medium term KZN will still be viewed as a 'hotspot' and that investments may likely flow to other cities and provinces as a result of the unrest experienced.”
Gopal said the overall recovery for property groups and other businesses, particularly those in KZN, may be further delayed by the flood damage.
One of the changes brought about by the riots has been an increased focus on security.
Gopal said Sapoa’s members, many of them mall owners, had beefed up security at their premises. This was no surprise considering that a survey of its members — completed after the riots — showed there was a view that the SAPS and SANDF played a limited role in their ability to protect property and shopping centres.
Sapoa has estimated that 112 shopping centres in KZN and Gauteng were looted and damaged during the riots.
Gopal said greater efforts were being made in “partnering and communicating with the local community given that the shopping centres are a source of necessities and employment”.
Gareth Ackerman, co-chair of the Consumer Goods Council of SA, said the looting and riots resulted in damage of more than R5bn in the retail sector alone. This had set it back as its members have had to invest money in repairing and rebuilding damaged stores and infrastructure, in addition to restocking looted and damaged goods.
“Despite these challenges and that none of the offending ringleaders have been charged, we remain fully committed to continue investing for growth and to create jobs,” said Ackerman, who is also chair of supermarket group Pick n Pay.
