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Businesses in KZN will be in an uphill battle to recover after floods and July unrest

Flooding in KwaZulu-Natal will have long-term financial impact on businesses who were just recovering from the July unrest, and leave a longer-term socio-economic impact relating to climate change. Picture: Nqobile Mbonambi/African News Agency (ANA)

Flooding in KwaZulu-Natal will have long-term financial impact on businesses who were just recovering from the July unrest, and leave a longer-term socio-economic impact relating to climate change. Picture: Nqobile Mbonambi/African News Agency (ANA)

Published Apr 13, 2022

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Flooding in KwaZulu-Natal will have long-term financial impact on businesses who were just recovering from the July unrest, and leave a longer-term socio-economic impact relating to climate change.

This was the opinion of Andrew Bahlmann, chief executive of corporate advisory firm Deal Leaders International, on Wednesday in response to the devastating floods that left at least 60 people dead and hundreds of millions of rand in infrastructure damage.

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Bahlmann said the current business disruption was rubbing salt into a very open wound following last year’s unrest that left a R50 billion economic damage.

He said that in the short term, business performance was being impacted severely due to the geographic concentration risk.

“This is highlighted by KZN’s pivotal role in South Africa’s supply chain and logistics, with the closure of container terminals at the Port of Durban illustrating just how unusually severe this crisis is, with the impact spreading far wider than KZN,” he said.

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“These catastrophic floods - on top of the power crisis, economic pressure and global uncertainty - are forcing business owners to look at risk mitigation strategies like bringing on larger partners to support them during tough times, product and market diversification.

“Climate change is increasing the insurance and recovery costs following more frequent and severe floods, as well as other disasters such as fires.

“It begs the question of whether people should be set up for ruin by simply allowing them to build back in areas which in the future are going to be affected time and again. It is fair to say that taxpayers carry a huge burden of paying for rescue and relief costs.”

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State-owned logistics company Transnet has suspended operations across the Durban Terminals.

Access roads around the Port have been damaged, container yards, truck depots and trucks themselves have been flooded and damaged and the area is a disaster.

Shipping has been suspended until further notice as a result of environmental damage caused by the adverse weather, and vessels on berth are on standby.

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There are already long queues of trucks along the N3 highway, with the Marianhill plaza having a backlog of 10km all the way to Hammarsdale.

Authorities in KZN have requested that, where possible, all freight movements (trucks) towards the Port of Durban be suspended or withheld until the situation at the Port has improved.

The Road Freight Association chief executive Gavin Kelly said logistics operations will be impacted, but no foreseeable shortages in foodstuffs and fuel were expected.

“There will be delivery disruptions for goods being imported. The Association has advised members to delay any departures towards Durban, and to find depots and safe parking areas along the way,” Kelly said.

“Where possible, Members have been requested to assist one another to get any vehicles off the road and to secure holding areas until the logistics chain is up and running again.”

The damage to infrastructure, businesses and homes will in turn have a devastating impact on the manufacturing, travel and tourism, agriculture, and many other sectors.

Anchor Capital investment analyst Casey Delport said that whilst the economic impact of the provincial KZN economy is already severe, the flooding will in turn have a detrimental impact on the greater South African economy,” Delport said.

“The harbour is a key trade route for South Africa and its landlocked neighbours including Botswana, Zimbabwe and Zambia. Consequently, this will further constrain already tight supply chains, driving up inflation and further constraining South Africa’s already lacklustre economic growth prospects.”

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