The agricultural sector of KwaZulu-Natal continues to face challenges in the recovery process. Johnstice Matarutse, a senior economist at Spatial Econ, emphasized the need for strategic growth and diversification to overcome the effects of the Covid-19 pandemic.
Production recovery in KwaZulu-Natal remains fragile as the economy of eThekwini struggles to return to pre-pandemic levels. The average number of workers in the city's manufacturing enterprises has decreased, and business confidence has fallen back into negative territory.
Enterprises in the province continue to be affected by successive difficulties, including the Covid-19 lockdown, the July 2021 unrest, the 2022 floods, as well as persistent issues with electricity supply, water supply, and logistics.
Business Confidence
Data presented yesterday by Johnstice Matarutse, Senior Economist at Spatial Econ, showed that manufacturing confidence decreased by 7% compared to the previous quarter, although it remained 13.87% higher than the previous year. Matarutse, speaking at the Nedbank Business and Commercial Banking event, noted that Spatial Econ's analysis revealed a loss of momentum following the recovery after the lockdown.
The Durban Business Confidence Index, compiled by the Macroeconomics Research Group at the University of KwaZulu-Natal, also reflected this decline. It showed a drop in confidence to 48.82 in the second quarter of 2026 compared to 50.63 in the first quarter. A figure below 50 signals negative sentiment.
In 2025, the province exported goods worth 315.6 billion rand and recorded a trade surplus of 100.8 billion rand at current prices. When adjusted for inflation, exports were 18% higher than in 2019, but 15% lower than the 2022 peak. Between 2023 and 2025, real exports decreased by an average of 5.6% per year, while imports grew by 2.9%.
Spatial Econ warned that customs data reflects declaration locations, not necessarily production sites. Matarutse reiterated that businesses have weathered the Covid-19 lockdown, the July 2021 unrest, the 2022 floods, and ongoing utility problems. He stated that productivity in eThekwini has declined because the ratio of workers to manufacturing enterprises decreased by approximately 16% between 2019 and 2025, despite an increase in the number of enterprises, and this decline was not offset by higher productivity.
As an example of a wider gap, Matarutse mentioned that the gross value added per employee in the Cape Town retail sector is almost double the equivalent figure for eThekwini. He concluded: 'We are lagging in productivity in eThekwini. We have not been able to break out of the productivity slump caused by Covid, and we see that Cape Town is starting to achieve some success.'
Manufacturers continue to face unreliable municipal services. Interruptions can be particularly costly for plastics manufacturers who risk losing entire batches during a power outage during production. Local difficulties are compounded by changing tariffs, geopolitical tensions, increased delivery routes, and rising prices for fuel, chemicals, and fertilizers. Furthermore, producers face currency exchange rate fluctuations and costs for storing extra stock to guard against supply delays.
Spatial Econ found that KwaZulu-Natal's concentration in several large export sectors increases its vulnerability to international shocks. Precious metals, ores, vehicles and components, aluminum, and wood pulp accounted for 73% of the province's export volume in 2025. The analysis showed that trading partners were moderately diversified across KwaZulu-Natal's overall exports, but individual sectors had a sharper dependence. India and China accounted for 79% of the province's wood pulp exports, while 99.8% of bauxite imports, a critical raw material for the aluminum industry, came from Australia.
Despite the pressure, Matarutse noted opportunities to expand exports beyond the province's dominant sectors. Spatial Econ identified 151 groups of intermediate products, termed KwaZulu-Natal's 'scalable core', which generated exports worth 62.3 billion rand in 2025. Additional growth can be achieved through smaller products already sold abroad. Matarutse believes the opportunity lies in increasing exports of existing small and medium product categories, rather than developing new ones.
These products include fabricated structures, sunflower oil, mechanical instruments, cosmetics, medical dressings, and refrigeration equipment. Dube TradePort positions itself as one platform for this type of expansion. Kayaletu Ngakaka, CEO of the investment corporation, reported that the complex has attracted over 50 investors, nine of whom are foreign, and demand for space is growing. He added that the complex focuses on automotive, pharmaceutical, agro-processing, electronic, and renewable energy, offering plots and connections to investors.
Spatial Econ identified potential in eThekwini, Pietermaritzburg, Newcastle, Ladysmith, Richards Bay, and parts of the Southern Coast. Takatso Sello, Senior Production Manager at Nedbank Commercial Banking, advised companies to seek financial and technical advice before making urgent decisions about orders or expansion. He stressed that often, when a producer approaches the bank, it is too late. Sello added that businesses cannot wait for all infrastructure problems to be solved before planning growth, because 'problems will not get easier. The reality is that expansion is necessary. But do you have the right person to approach these areas?'