Financing Durban's development: 1970-1998

Financing Durban's development: 1970-1998

A first attempt at describing Durban's financial scene 1970 - 1998

This paper therefore represents a first attempt at describing and analysing some aspects of Durban's financial scene in the period between 1970-98; it also attempts to come to (at this stage) an impressionistic view of the kinds of development - industrial, commercial and infrastructural - that the local, national and international financial and corporate sectors made possible in this city.

The central argument advanced in this paper is that access to finance in the city of Durban over the last 25-30 years appears to depend upon whether and how potential borrowers are locked into the larger structure of South Africa's corporate world (the mining-industrial-finance network).

The major features, trends and conclusions that arise out of the study may be summarised as follows:

  • that the local financial scene, including all the financial institutions located here,has tended to be rather static, stagnant and unimaginative for most of the period with which this study is concerned
  • that the large, local corporates, have had little difficulty in accessing finance fortheir capital expenditure and developments needs from a combination of internal and group sources as well as the share market and (to a lesser extent) from bank borrowing
  • that smaller and medium size business has faced more difficulties with raising finance from the formal banking institutions, and have had to rely mainly on their own internal and family resources
  • that some Indian business (an important feature of the local economy) have graduated out of the 'corner-shop' culture into the world of stock markets and large scale bank borrowing
  • that bank borrowing in general, for both large and smaller companies, has been used for only limited short-term purposes, rarely being available on its own for the financing of larger capital and development projects
  • that the major development finance institutions have been important in funding larger development projects in the city, although they too have tended to do this as part of a larger financing package (including share issues, internal funds, and some limited borrowing from private sector financial institutions)
  • that the City of Durban, via its innovative Capital Development Fund, has been able to muster a significant amount of finance for the city's infrastructural development (albeit in racially-skewed ways), while maintaining sound fiscal discipline
  • that concerns have been raised in some corporate circles about city governance, which may both directly and indirectly affect the prospects for further growth and diversification of the financial sector.

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