One of South Africa major cities kissing hundreds on businesses goodbye

While the latest employment data shows that Durban has seen a lift in jobs, the city has experienced a notable decline in the number of businesses operating there.

Hundreds of micro and medium-sized businesses, with employees between 5 and 50 employees, have either closed down or moved away from the city.

This was revealed by the Durban Chamber of Commerce and Industry (DCCI) during a business breakfast meeting on Wednesday (18 March) to discuss the country’s and the city’s economic outlook.

Ajiv Maharaj, the DCCI Economic Affairs chairperson and a senior official at the eThekwini Municipality, said the information was extracted from the data supplied by the South African Revenue Service (SARS).

“The city has lost a few hundred firms since 2020, and the area in which we lost the most is in that middle range of firms that employ 5 to 10 employees and slightly bigger ones with 20 to 50 employees,” he said.

Maharaj shed light on the reasons for the drop in these businesses with Newzroom Afrika and said small businesses generally have a high failure rate, and it is a common trend in South Africa for enterprises with around five employees to struggle.

Additionally, he added that some of the recorded declines could be attributed to fewer businesses submitting their tax returns rather than outright closures or relocations.

“While it is possible that many businesses are leaving the city, there could be other contributing factors at play, and further investigation is necessary,” said Maharaj.

“The DCCI is working alongside the Human Sciences Research Council (HSRC) to gain deeper insights into the state of small and medium-sized businesses in Durban.”

Despite the drop in business numbers, employment data presents a more complex picture.

Statistics South Africa’s Quarterly Labour Force Survey indicated that Durban created the highest number of jobs among municipalities in the country last year.

This contradictory trend suggests that while the number of formal businesses may be decreasing, employment is growing, possibly due to businesses shifting to the informal sector.

Despite this positive trend, Maharaj highlighted that multiple crises have heavily impacted Durban’s business environment in recent years.

He noted that one main challenge was the rise in natural disasters in the province, which impacted economic growth and business sentiment.

“In response, the city has taken steps to improve disaster preparedness. An early warning system is operational, and disaster response teams’ coordination has improved.”

However, Maharaj stressed that much more work is needed to ensure that Durban is adequately prepared for future disasters.

“Recovering from natural disasters is especially difficult for small businesses. Many were severely affected by the floods of 2022, which followed the economic strain of the pandemic and the unrest of 2021,” he said.

“Even in recent weeks, Durban has experienced further flooding, making the business climate increasingly challenging.”

Durban businessman Moses Tembe said some of these businesses could have closed down due to an unfriendly business environment.

“The impact of looting and Covid-19, although these events occurred a few years ago, is really being felt now,” said Tembe.

“I can tell you about my own children; they used to run about 12 businesses employing 400 people. Now, they are down to one business that employs just 60 people.”

Tembe, also the co-chairperson of the KZN Growth Coalition, said another factor is that Covid-19 changed how many businesses operate.

“Those that were unable to adjust quickly and move online, or did not have the resources to do so, would have eventually failed to continue operating.”

According to Stats SA’s data on liquidations published in February, over 1,550 businesses shut their doors in South Africa in 2024 through voluntary and compulsory liquidations.

Craig Blumenthal, director of business rescue, dispute resolution and insolvency at Fluxmans’s Attorneys, told BusinessTech that 2025 will likely be another tough year for businesses.

“South Africa faces real growth issues, and the country’s laws, policies, and red tape make driving investment and opening businesses challenging,” he said.

“The current geopolitical landscape—with United States President Donald Trump pushing a global trade war and specifically targeting South Africa—is adding to the country’s entrenched woes.”

“The country is grappling with high unemployment and a strained job market, and growth prospects remain slim to stagnant.”