South Africa bade farewell to another 133 businesses in July 2024, taking the total number of companies and close corporations liquidated year-to-date to 892.
According to Stats SA’s latest data on liquidations, the bulk of the business liquidations in July were in the financing, insurance, real estate and business services sectors, reflecting the common trend throughout the year.
This is also the case in the year-to-date figures.
The second hardest-hit sector is the trade, catering, and accommodation sector. Outside of the ‘unclassified’ category, these are the only two sectors to see double-digit liquidations in July and triple-digit liquidations year-to-date.
However, while the business losses are not a good thing, in the context of 2024 versus 2023, the data does show an improvement.
Year-on-year, liquidations for July were down 5% compared to 2023. The running three-month period between May and July also saw an improvement, with liquidations down 9.5%.
The seven months ending July versus the same period in 2023 also showed a 5.3% drop.
This means that, overall, there are fewer liquidations in 2024 than in 2023, so far, with five months of data still to be collected.
For greater context, 1,657 businesses were liquidated in 2023, 13% lower than the 1,907 liquidations in 2022. If current trends continue, 2024 will experience the lowest number of liquidations in over five years.
Despite the apparent improvements in the business environment, however, 2024 has played host to a significant number of high-profile companies and brands going into business rescue.
Business rescue is an instrument available to companies to prevent liquidation—but if the business rescue practitioners cannot execute a plan to save these groups, liquidation is a very possible outcome.
Earlier in August, yet another mainstream brand in South Africa—sports store Cross Trainer—entered into business rescue. This followed major companies like AutoZone, West Pack Lifestyle, and Hohm Energy all going the same route.
Earlier in the year, electronics group Ellies suffered the same fate and ultimately entered into final liquidation at the end of July.
Job losses
Trouble for South African businesses is also reflected in job numbers, with Stats SA’s latest Quarterly Labour Force Survey showing that the country’s unemployment rate increased by 0.6 percentage points from 32.9% in Q1 2024 to 33.5% in Q2 2024.
More worryingly, the expanded unemployment rate in Q2 of 2024 increased by 0.7 percentage points to 42.6%.
Stats SA reported a 92,000 decrease in the number of employed persons to 16.7 million in Q2 2024. Meanwhile, the number of unemployed increased by 158,000 to 8.4 million compared to Q1 2024.
Broadly aligning with the data on liquidations, South Africa’s jobs data shows that 111,000 jobs were lost in the trade sector and 9,000 jobs were lost in the finance sector.
Over the quarter, employment decreases were seen in the following industries:
- Trade (111,000),
- Agriculture (45,000),
- Private households (18,000),
- Construction (11,000) and
- Finance (9,000).
Increases in employment were mainly recorded in Manufacturing (49,000), Community and social services (36,000) and Utilities (9,000).
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