Cape Town’s water crisis – how it effects the economy
The water crisis will not just affect Capetonian bathing habits or how much water there is in their swimming pools. Cape Town without water is set to have a catastrophic effect on its business landscape. According to ratings agency Moody, the city’s credit rating is under review for a downgrade due to the ongoing crisis. Furthermore, 94% of companies in the province have reported water as a direct risk to their operations.
Besides the obvious pool installers, plant nurseries and car wash businesses, some business sectors will be more affected than others.
Here are the sectors in for a dry spell:
The Agriculture Sector
The agricultural sector is set to be hit the hardest. The Western Cape’s farming sector is a major supplier and exporter of fruit and wines and is infamously water intensive. Recently it cut its water usage by 80 percent, which has had a serious impact on production. The reduced output will hurt export earnings and is set to further impact 50 000 seasonal labour jobs. Also… your favourite bottle of Cab Sav? Prepare for a possible price hike.
The Tourism Sector
News of Cape Town’s water crisis has spread abroad, and tourists are taking note. Prospecting visitors are increasingly cancelling visits to the city and who would blame them? The thought of a shower less holiday would deter the best of us. But this decline in arrivals is set to place the R38 billion tourism industry at risk.
The water restrictions have had specific implications for the construction industry, forcing them to utilize treated effluent water available for industry operations. However, the far-reaching effects are yet unknown.
Thinking of investing in that flat by the beach? Perhaps you should think twice, at least for now. According to new data released by Standard Bank, house price inflation in Cape Town slowed to 9,7% in the fourth quarter of last year. Consumer confidence has taken a dip and as a result demand for property is slowly declining.
Want to find out more? Visit: http://www.capetown.gov.za/Family%20and%20home/residential-utility-services/residential-water-and-sanitation-services/make-water-saving-a-way-of-life
Article originally posted on: http://www.icb.org.za