iLembe Business Confidence Softens at Mid-Year, but Firms Stay Upbeat on the Second Half

KwaDukuza, iLembe District - Business confidence across the iLembe District softened in the first half of 2026, even as the underlying regional economy held up and business owners grew more optimistic about the months ahead.

The iLembe Business Confidence Index (iBCI) for mid-year 2026 came in at 51.0 points, down 4.5 points from the record high of 55.5 reached at year-end 2025. The index remains just above the neutral 50 mark, signalling a cooling in sentiment rather than a collapse.

The iBCI is produced twice a year by the iLembe Chamber of Commerce, Industry and Tourism in partnership with Enterprise iLembe. It blends a business confidence survey of firms operating in the district with a weighted index of key financial and economic indicators.

Activity holds up while sentiment slips

It was a tale of two indices. The Economic Activity Index stayed relatively strong at 57.5 points, its twelfth straight positive reading, easing only slightly from 58.6. The Survey Index, which captures how businesses feel about current trading, fell sharply to 44.5 points, an 8.0-point drop from year-end 2025 and below the neutral threshold.

In other words, firms are experiencing noticeably tougher day-to-day trading than the broader activity numbers alone would suggest. Every business indicator in the survey declined and sat below neutral, and confidence remained uneven across sectors.

What is weighing on confidence

Weak economic growth, higher fuel costs, renewed inflation, subdued consumer spending and global uncertainty all added pressure on demand, margins and operating costs. At provincial level, KwaZulu-Natal continued to grapple with fiscal, governance and infrastructure constraints, with political shifts in the Government of Provincial Unity adding to the uncertainty.

Locally, businesses again pointed to service delivery, infrastructure, municipal costs, regulatory compliance and governance as significant brakes on performance and investment.

Sector sentiment

Confidence varied widely by sector at mid-year:

• Tourism, catering, accommodation and property management: 40.9 (down)
• Wholesale, retail and vehicle trade: 41.3 (down)
• Construction, property development and property sales: 46.0 (down)
• Agriculture-related: 48.3 (down)
• Manufacturing and assembly: 57.1 (up)

Sales volumes (43.5) and employment (47.7) reflected weaker demand and mounting pressure on businesses, while late delivery of orders and delayed services (36.9) was the weakest operational indicator.

Businesses stay upbeat on the second half

Despite the tougher conditions, expectations for the second half of 2026 rose to 57.1 points, 12.6 points above current sentiment. This positive expectations gap suggests firms have not lost faith in the district's underlying prospects.

What businesses are asking for

The constraints remain real. Some 63% of participating businesses cited market size, economic decline, competitiveness and adaptability as primary constraints, while 73% pointed to public-sector issues: service delivery and infrastructure, regulations and compliance, and property rates and taxes.

The Chamber and Enterprise iLembe say the findings underline the need to treat the business environment itself as an economic-growth intervention. Faster, more predictable approvals, reliable infrastructure, transparent regulation and predictable municipal charges can directly lift business performance, investment confidence and the district's appeal. Measures that reduce friction for investment and trading, they argue, should be seen not as administrative tweaks but as tools to support growth, investment and employment.

About the iLembe Business Confidence Index

The iBCI is a biannual index reflecting the business climate in the iLembe District of KwaZulu-Natal. It weighs economic and market-related factors that shape the business mood, and is regarded as a useful leading indicator of the regional and national business cycle. The next release, covering year-end 2026, is due in mid-February 2027.

Enquiries

Cobus Oelofse, CEO, iLembe Chamber of Commerce, Industry and Tourism: ceo@ilembechamber.co.za, 087 354 6343.
Siyabonga Mazibuko, CEO, Enterprise iLembe: mazibukos@enterpriseilembe.co.za, 032 946 1256.
Richard Downing, Economist, Econdow: econdow@axxess.co.za.