Businesses in the Eastern Cape say the Provincial Government needs to devise an intentional strategy to deal with the negative economic growth that placed the province in recession.
According to the Eastern Cape Socio Economic Consultative Council, the province has recorded a 0.3% decline in GDP for the first quarter of 2024, with the construction industry recording a major decline of 2.9%.
Local business chambers in the province say this is due to the delayed unlocking of constructors’ building plans, as well as the red tape that limits the construction industry from thriving.
A rand value decline of R1.9 billion in GDP for the province in the first quarter of 2024. Apart from construction, manufacturing, mining, transport and government service industries all declined.
Just last month Mercedes-Benz announced its intention to retrench 700 of its employees in its East London plant. Currently, the province’s unemployment rate stands at 42%.
The CEO of Nelson Mandela Bay Business Chamber, Denise van Huyyystteem says the stagnant economic growth is affecting businesses, particularly SMMEs.
“It’s actually not surprising that we are in this position that we are in given we are an economy that is encored around manufacturing. And for manufacturing to succeed we need an enabling environment in place that means reliable power, efficient logistics, and basic infrastructure maintenance.”
Meanwhile, the CEO of the Border Kei Chamber of Business, Lizelle Maurice says corruption has contributed to the recession.
“The last thing that we can do is to ensure that corruption is eradicated, because if you can just think one of the sectors particularly tourism has really been affected by corruption, where tourist establishments had to pay government officials to stay with them. and this is not right that an entrepreneur has to pay kickbacks for business to come to them.”
The Director of the Makhanda-based Public Service Accountability Monitor, Jay Kruze has called on the Provincial Government to explore other avenues to stimulate economic growth.
“PSAM would also encourage the provincial government and municipalities to take action to enhance tourism in the province which can really contribute towards GDP growth. Improving the maintenance of district and minor roads will help communities in diverse ways, and improve tourists’ access to more remote attractions and create greater opportunities for employment at hotels, lodges etc.”
CEO of the Eastern Cape Socio Economic Consultative Council, Luvuyo Mosana says it is in the process of outlining policies for the provincial government to resuscitate the flagging economy.
“We must improve on our own incentives as well as improving local value chains and make sure that you beneficiate in most of the sectors. these are the things that we need to be giving attention to and making sure that the eastern cape economy is not largely importing but is able to produce from within.”
The council says the decline in GDP will further constrain job creation if not reversed.
