The total number of liquidations in South Africa increased by 44.8% in August 2022 compared with the same period a year ago, new data from Stats South Africa (Stats SA) shows.
Liquidations of close corporations increased by 62 cases, and liquidations of companies increased by 12 cases during this period. The total number of liquidations increased by 18.8% in the three months ended August 2022 compared with the three months ended August 2021.
However, an increase of just 0.8% was recorded in the first eight months of 2022 compared with the first eight months of 2021.
Absa noted in a research report that seasonally adjusted liquidations rose by 30.2% m/m in August after falling 3.4% in July. “Despite the notable m/m rise in August, liquidations are just 0.8% higher year-to-date,” it said.
“At this stage, we can see no particular reason why liquidations would have jumped so sharply in August and, for now, view it as a blip in the data rather than a big break to a more deteriorated pattern,” said Absa.
South Africa recorded 239 liquidations in August 2022, largely focused on the financing, insurance, real estate and business services segment. The trade, catering and accommodation segment saw the second largest number of liquidations, followed by community, social and personal services.
Although there are signs of increasing tourism activity in the country, the numbers are some way off any positive benchmark, and the industry remains under enormous pressure. The state of electricity in the country could yet also have an enormous impact on smaller businesses in particular and their ability to remain open.
The country’s airline industry is a mess, following a number of liquidations in 2022, while the insurance industry is still struggling to recover from the Covid pandemic, civil unrest a year ago, and flooding in KwaZulu-Natal.
Higher interest rates and other policy responses to rising inflation in the country will continue to pose a threat to households and businesses in the coming months, with the property industry set for a challenging period.
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