Over 240 South African businesses have been liquidated so far this year.
New data from Statistics South Africa shows that from the start of January 2023 until the end of February, 243 businesses have liquidated.
In February alone, there were 162 liquidations, 1.3% more than in February the year before (160). Stats SA also reported that compulsory liquidations increased by 17 cases, while voluntary liquidations decreased by 15 cases during this period.
The total number of liquidations remained unchanged during the three months ended February 2023 compared with the three months ended February 2022, added the group.
January this year reported 81 liquidations, the lowest number in the last six years, with January 2017 being the second lowest at 91. February 2023 was, however, a return to the pattern, with liquidations falling very close to figures from last year, 2020 and 2018.
The graph below shows the number of liquidations over the start of each year compared to a decade:
The Financing, insurance, real estate and business services industry was the hardest hit in February, with 68 businesses liquidated.
Unclassified industries followed suit in second with 39 liquidations, while the trade, catering and accommodation industry had the third-highest number of liquidations at 26.
The mining and quarrying, as well as the electricity, gas and water industries, saw no liquidations at all during February.
Businesses across the country have found themselves between a rock and a hard place, fighting to keep the lights on as the embattled Eskom provides unstable energy.
Operational expenses have skyrocketed, with major retailers being forced to fork out billions of rands to pay a hefty diesel bills for their generators. These costs are mimicked to a smaller degree in medium and small-scale businesses as well.
The Bureau for Economic Research (BER) recently reported that sentiment for retail businesses in South Africa is currently at levels similar to the 2009 financial crisis – primarily driven by load shedding and lower consumer demand.
Load shedding shows little sign of improvement. Eskom recently announced the return of Stage 3 rolling blackouts. This follows slightly lower levels over the week before. However, analysts still point to the winter months being a sore point for South Africans, with load shedding to worsen.
The economic outlook for South Africa remains dire. The International Monetary Fund (IMF), on 23 March, slashed the country’s GDP forecast 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.
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