Statistics South Africa has published its latest report on liquidations and insolvencies, with the data showing a steep annual increase in liquidations across the country.
216 companies were liquidated in March 2021, compared to the 178 the month before – a 21% jump. Voluntary liquidations increased by 61 cases and compulsory liquidations increased by 10 cases.
This is 49% higher than the total liquidations registered in March 2020. The report also shows that the total number of liquidations increased by 18.9% in the first quarter of 2021 compared with the first quarter of 2020.
Liquidation refers to the winding-up of the affairs of a company or close corporation when liabilities exceed assets and it can be resolved by voluntary action or by an order of the court.
The below table highlights the business categories which reported the most liquidations in the first quarter of 2021.
Of all sectors, financing, insurance, real estate, business services (77 liquidations), trade, catering, and accommodation (47) and manufacturing (10) are the hardest hit.
Commenting on the data Lings Naidoo, co-founder of BeyondCOVID, said it is not that more companies suddenly find themselves in trouble, but many businesses have folded in March this year and it is likely, mostly smaller, and medium-sized businesses have struggled for many months before having to close, if not longer.
Launched last year during the hard national lockdown, the BeyondCOVID Business Survey, conducted by specialist management consultancy Redflank, aims to evaluate the impact of the pandemic on SMMEs.
“Our research has shown that smaller, micro, and medium-sized businesses, in general, are 26 times most likely to close their doors in times of economic upheaval than their corporate counterparts,” said Naidoo.
26% of SMMEs that participated in the survey had to close during the lockdown, temporarily or permanently, the BeyondCOVID Business Survey shows.
In addition, 54% of respondents say they were working below their usual capacity, and a third expressed they needed funding to continue trade.