KZN looting and destruction could cost eThekwini R20bn, says acting city manager

Early estimates suggest the recent looting and destruction triggered by former president Jacob Zuma’s arrest could cost the City of eThekwini R20-billion after trucks were torched, shopping malls gutted and ports forced to close.

The acting city manager of eThekwini, Musa Mbhele, said in a statement that initial estimates pointed to more than R1-billion of stock losses and R15-billion of property and equipment damage, with 55,000 informal traders and 40,000 formal business disrupted. 

“The total impact on the loss of GDP in the region is expected to rise to over R20-billion,” Mbhele said. “The city’s estimated financial loss regarding cash collection was R50-million for the first week of the unrest and potential loss of rates income due to damages is estimated to be over R300-million.” 

Economists and analysts have scrambled to model the hit on SA’s economic growth from the public violence, with estimates ranging from a 0.4%-1% reduction of total gross domestic product (GDP) in 2021.

The South African Property Owners Association put the total cost to GDP at R50-billion.

The impact on consumer, business and investor confidence is even harder to gauge, but early signs are that retail will take a big hit, with most of the looters targeting shopping centres and retail sites, and many stores remaining closed even after the violence had simmered down at the end of last week.

“The most immediate and direct impact on GDP will be the loss of household consumption and industrial production in KZN and, to a lesser extent, Gauteng over the past week,” said the Bureau for Economic Research.

“The adverse impact on especially private-sector fixed investment could last well beyond the initial shock to the economy last week,” the Stellenbosch research group added. It, however, maintained its GDP forecast of 3.9% for 2021.

President Cyril Ramaphosa, who was in Durban to meet with close to 100 chief executives, business and government leaders, said there were signs that economic activity was already normalising, especially with the opening and securing of the N3 highway.

“Security forces also have responsibility for keeping critical supply routes open, particularly the N3, and safeguarding the transport of goods,” Ramaphosa said in brief remarks ahead of the closed meeting. 

Rail and ports operator Transnet said the Durban and Richards Bay ports had resumed normal operations over the past two days. The state logistics firm was forced to declare force majeure last week after rioters wrecked rail lines from farms and mines inland, leaving hundreds of goods containers stranded. It said it had run 42 trains since its Natcor line reopened on Friday, good news for the country’s exporters.

Attention will now turn to the SA Reserve Bank, which decides on lending rates on Thursday, to give a detailed account of what the cost to growth will be. DM/BM