DURBAN – The economy of KwaZulu-Natal (KZN),South Africa’s second-largest economy, after Gauteng has contracted by R30 billion in the wake of the Covid-19 global pandemic, according to a statement released by the Office of the KZN Premier Sihle Zikalala.
According to the Statistics South Africa 2019 mid-year population estimates, KZN boasted the country's second largest population, at 11.3 million people who comprised close to a fifth of the country’s total population. Gauteng comprised the largest share of the South African population, with about 15.2 million people.
The provincial government’s spokesperson Lennox Mabaso said KZN derived a significant proportion of its gross domestic product (GDP) from tourism as it (KZN) commanded the lion's share of the domestic tourism market. The tourism sector was adversely affected by the lockdown which restricted traveling in a bid to prevent the spread of Coronavirus.
University of KwaZulu-Natal’s school of accounting, economics and finance’s Dr Ntokozo Nzimande such contraction in provincial economies were expected. “The difference among the provinces would depend on how the sectors opened as the lockdown alerts eased,” said Nzimande.
He added that the tourism sector which contributed significantly to the province’s GDP would not recover as fast as it was expected because while people wanted to travel, they only wanted to do so where necessary as opposed to traveling for leisure because they were still scared.
This economic assault on tourism would have a devastating impact on the people who worked on this sector that was not very skills intensive. Nzimande said those people’s financial recovery would be very difficult.
University of Zululand based economist Professor Irrshad Kaseeram said that the R30 billion contraction was sensible. “While the province had a significant number of people in the formal sector, many people were employed in casual work sectors like restaurants, pubs and entertainment facilities most of which had not functioned for much of the lockdown period,” said Kaseeram.
He added the economy in general was hit from both the demand side as many people had lost portions of their income as well as from the production side. The economist said that people earning casual pay played a significant role assisting the economic cycle creating an economic multiplier effect by boosting consumption and production low.
Kaseeram added that the beating experienced by the province in the tourism sector from the Northern KZN Richards Bay all the way to Umfolozi as well as along the coast also extended beyond the tourism sector to other linked sectors like entertainment and many other informal traders affecting the entire system.
The University of KwaZulu-Natal would host a webinar on the impact of the pandemic on the tourism industry and its recovery henceforth. The sector was a major driver of jobs and growth in South Africa, which was however, altered dramatically by the pandemic.
The impact on tourism enterprises and workers, the majority being young women is said to be unprecedented. The tourism industry has been hit hard by the necessary measures taken to contain the pandemic and it seemed unlikely that the sector would return to normalcy any time soon.
KwaZulu-Natal Premier Sihle Zikalala and members of the Cabinet would visit the King Shaka International Airport in Durban to conduct its state of readiness for the full resumption of flights on Wednesday.