The R110.5-billion Durban port upgrade project of State-owned Transnet National Ports Authority (TNPA) and Transnet Port Terminals (TPT) is the most significant project currently under way in KwaZulu-Natal, providing significant opportunities for economic development in the province.
The old Durban International Airport will be the site of a new dug-out port. This project does not form part of the R110.5-billion investment, but will further increase cargo volumes moving in and out of the city.
Advisory firm Deloitte partner and Africa infrastructure and capital projects lead Andre Pottas notes that the project will not only have a significant impact on job creation in the province but will also help grow the economy of Durban, owing to the port being the primary import and export hub of South Africa.
“Durban is a maritime-based city and, as such, its economy relies heavily on the port. Transport, logistics, supplies into the shipping sector, boat building and repairs, and customs comprise the bulk of the city’s economy. Manufacturers in Durban are mainly there as a result of port access.
“The project will alleviate capacity constraints at the current harbour, which will be good for Durban’s maritime-based economy and for South Africa,” Pottas states.
He notes that tackling the current capacity constraints at the port will also help address road congestion in Durban, as the upgrade will ease access for trucks to the ports and divert them from the city’s streets.
“A lot of work is being done to ease access to the port. A lot of trucks are moving through the city, slowing down the supply chain, which has economic implications.
“Businesses operating in the logistics sphere have the greatest potential for growth in KwaZulu-Natal as a result of the port expansion. Logistics will still be the bedrock of the Durban economy,” Pottas says.
He highlights that the port upgrade project will have a direct impact on the local labour force and businesses operating in Durban, particularly local businesses contracted by TNPA or TPT for construction work.
“Once the project is complete, the vehicle sector will benefit significantly, as there will be a dedicated motor vehicle import/export terminal.
Companies involved in and around the shipping industry will also benefit from this project. The upgrade could also result in other manufacturers wanting to have a base operation near the port,” Pottas adds.
Deloitte KwaZulu-Natal corporate finance senior manager Leon Bezuidenhout notes that the south of Durban is developing businesses centred on automotive parts supply to further promote the automotive industry.
“The tourism sector will also benefit, as part of the upgrade involves the development of a new passenger terminal. “This will alleviate some of the current constraints experienced at the current passenger terminal, and more passenger ships will be able to use Durban as a port of entry,” he states.
Pottas notes that tourism continues to be a key aspect of the Durban economy, as evidenced by the recent completion of a new promenade at the beachfront.
“The Dube TradePort (DTP) also offers significant growth opportunities. Manufacturing and industrial phases are being rolled out at the DTP, which will enable the high-tech manufacture of goods for local consumption and export,” he adds.
Pottas adds that municipalities’ inability to provide bulk services, such as road access, electricity, water and sewerage, for new industrial and mixed-use developments is the result of municipal infrastructure grants having been dedicated to basic social infrastructure development in previously disadvantaged areas, which received little investment during the years of apartheid.
“While no one argues that investment in these areas is required and that spending should be targeted at correcting the imbalances of apartheid, a result is that larger projects, with the capacity to push economic growth and job creation, are being stalled, as the municipalities do not have the funding to provide bulk services at sites.
“Municipalities are struggling in terms of budget allocations between what is provided for previously disadvantaged communities and what is allocated to economic growth,” he explains.
Pottas highlights that the KwaZulu-Natal provincial government has displayed significant commitment to the economic growth of the province, focusing on attracting international manufacturers and further promoting tourism.
“Durban private business sector partnership agency the Durban Investment Promotion Agency is an excellent organisation that works closely with the Office of the Premier, the KwaZulu-Natal Treasury, the Department of Economic Development, and trade and inward investment promotion agency Trade & Investment KwaZulu-Natal.
“There is good cooperation between the provincial government, municipal governments and the private sector in terms of resolving impediments that arise during projects, which is encouraging and certainly makes doing business easier,” he asserts.
Bezuidenhout adds that there are teams under the Office of the Premier, such as the project brokering unit, which assists in alleviating bottlenecks at public sector-led projects.
Pottas notes that while it is challenging, it is necessary to ensure that the growth in areas, such as Durban and the DTP, filters to the rest of the province.
“In the northern, southern and central areas of KwaZulu-Natal, we have some of the more impoverished communities in South Africa, in which there has been little development. “The challenge is to emulate the growth of the metropolitan areas in these areas,” he notes, concluding that agricultural business and processing have particular promise in this regard.