So far this year, almost 240 South African firms have been liquidated.
According to new Statistics South Africa statistics, 243 enterprises were dissolved between the beginning of January 2023 and the end of February 2023.
There were 162 liquidations in February alone, which was 1.3% higher than the previous year (160). Stats SA also stated that forced liquidations climbed by 17 instances during this time, while voluntary liquidations declined by 15 cases.
The overall number of liquidations remained same between the three months concluded February 2023 and the three months ended February 2022, according to the group.
The number of liquidations in January this year was 81, the lowest in the prior six years, with January 2017 being the second lowest at 91. Nevertheless, February 2023 saw a resumption to the trend, with liquidations coming extremely near to statistics from the previous year, 2020, and 2018.
The graph below compares the number of liquidations at the start of each year over a decade:
With 68 enterprises closed in February, the financing, insurance, real estate, and business services area was the worst impacted.
Unclassified industries came in second with 39 liquidations, while the commerce, catering, and accommodation business came in third with 26 liquidations.
Throughout February, there were no liquidations in the mining and quarrying sectors, as well as the power, petrol and water industries.
Companies around the nation have found themselves between a rock and a hard place, battling to keep the lights on as Eskom, the country’s troubled power utility, offers inconsistent electricity.
Operational costs have risen, with large merchants obliged to spend billions of rands in diesel bills for their generators. These expenses are mirrored to a lesser extent in medium and small-scale firms.
The Bureau for Economic Research (BER) has indicated that retail company confidence in South Africa is presently comparable to the 2009 financial crisis, owing mostly to load shedding and weaker consumer demand.
Load shedding is showing minimal improvement. The return of Stage 3 rolling blackouts was recently confirmed by Eskom. This comes after somewhat lower levels the previous week. Analysts, however, continue to see the winter months as a source of concern for South Africans, with load shedding expected to intensify.
South Africa’s economic prognosis remains bleak. On March 23, the International Monetary Fund (IMF) reduced the country’s GDP prediction to 0.1% in 2023.
This compares with its January estimate of 1.2% and the National Treasury’s projection of 0.9% – load shedding has been cited as the primary driver of downward revisions.
