Another 130 businesses shut down in South Africa
The latest business liquidation statistics from Stats SA show that South Africa has seen another 130 businesses liquidated in June, bringing the total to over 750 in the first half of 2025.
According to Stats SA, the number of liquidations in June dropped by 0.8% from May, but were up a significant 7.4% from June 2024.
As has become the common trend in the country, businesses in the financing, insurance and services sector and the trade, catering and accommodations sector were hardest hit.
This is reflected in the half-year data as well, tracking the year-to-date liquidations between January and June 2025.
Here, Stats SA recorded 753 liquidations in the country in H1, although the vast majority of these have been done on a voluntary basis.
According to business rescue and insolvency expert, Fluxmans Attorneys’ Craig Blumenthal, the distinction between voluntary and compulsory liquidations is important when analysing the data.
He noted that voluntary liquidations, particularly in the financial services space, could reflect business activity as “companies” can be liquidated for various business purposes not linked to solvency.
To gauge the health and levels of distress for businesses in South Africa, it would be better to look at compulsory liquidations, which are typically court-ordered or otherwise forced due to solvency issues.
“Compulsory liquidations are clearly more related to companies being in financial distress than is the case with the far more opaque voluntary liquidation category, which may speak to typical trading activity,” Blumenthal said.
Taking this into account, Stats SA’s data shows that compulsory liquidations in the first half of the year are up around 7.4% from 2024.
“An upward trend in the number of compulsory liquidations is in my view a sign of potential economic downturn,” he said.
2025 is a tough year for businesses
Looking at the wider trend in Stats SA’s data, liquidations have decreased each year since peaking in 2021.
2025 has started showing an upward turn in the trendline, but is still far off from the peaks.
Blumenthal noted that the liquidations data is difficult to take at face value because of the various components that make up the prevailing business environment.
He added that the data is a “piece of the puzzle” that tells the wider story.
Other pieces include the number of businesses going into business rescue, emigration statistics, the impact of the informal sector, changes in local business laws, and delays at the Master’s Office.
Not only does the declining trend in liquidations not take these factors into account, but it also does not match the “on the ground” experience of business owners.
“It’s no secret that South Africa has been experiencing nearly no actual growth, people are struggling, and institutions are collapsing,” he said.
“In the current market, to try and extrapolate the data and consider that a trend of decreasing liquidations indicates an improving market would be disingenuous when weighed against current experiences.”
He warned that the rest of the year is likely to be even more strenuous for businesses as the geopolitical pressures that built in H1 start following through.
Tough months ahead
Top of the list would be the United States tariffs, which have caused market chaos in 2025.
While the 30% tariff on South Africa’s exports to the United States has now been confirmed, they are not yet in effect.
Even though the first half of the year has been turbulent with budget drama and tensions with the US, this has not yet started affecting the data, but it will.
Blumenthal said that H2 data would reveal the tariffs’ eventual impact, and the expert expressed a degree of pessimism about whether it could be undone.
“I believe many of the government’s current policies and geopolitical stances are incompatible with those of the USA. This is made worse by the overt and very public pressure the USA is placing on dissident countries,” he said.
However, the situation has opened opportunities for South Africa to find other potential trading partners and new growth in other areas, he added.
“But this is yet to be seen, and it is far too early to predict an outcome.”
Blumenthal said large corporates are likely to be less impacted by the coming strain, citing CIPC business rescue data, which has recorded very few of these types of businesses entering the process.
On the other hand, SMEs, which are less supported by formal financial institutions and more susceptible to changes, account for the vast majority of business rescue cases, which may reflect their vulnerability to what’s coming in the second half of the year.
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