Over 800 businesses in South Africa have closed their doors since the start of 2023

The number of liquidations in South Africa increased by 128 in June, data from Stats SA shows.

According to Stats SA, 116 businesses closed their doors voluntarily, while 12 did so on a compulsory basis.

This takes the total number of liquidations in South Africa since the start of the year to 802, adding to the 151 businesses that were liquidated in May.

However, it should be noted that the number of liquidations in South Africa has decreased substantially compared to 2022.

Stats SA said that there was an 11.7% decrease in liquidations from June 2022 to June 2023.

It also said that there was a 17.0% decrease in liquidations in Q2 2023 compared to Q2 2022.

The total number of liquidations also declined by 14.0% from the first half of 2022 to the first half of 2023.

According to the data, the financing, insurance, real estate, and business services industry was the hardest hit, with 41 liquidations.

This was followed by the unclassified industry with 40 liquidations and the trade, catering and accommodation industry with 20.

On the other end of the scale, the electricity, gas and water industry saw no liquidations during the month, with it yet to see a single liquidation in 2023.

Across the whole year, the financing, insurance, real estate, and business services industry has been the worst hit, with 278 liquidations since the start of the year.

Sentiment is shifting

Although South Africa still faces a challenging economic enviroment, and many businesses could still be on the chopping block, recent economic news has been broadly positive.

A very obvious sign was the reduction in load shedding in June, with a reduction in demand, less maintenance and improved performance of the nation’s coal fleet, enabling Eskom to keep the lights on for longer.

Consumer Price Inflation also cooled from 6.3% in May to 5.4% in June, which led to the South African Reserve Bank keeping rates on hold after ten consecutive hikes.

Moreover, BankservAfrica Economic Transactions Index (BETI) – a standardised value of all the economic transactions in the South African economy – grew from 132.2 in May to 133.6 in June, the most elevated status since July 2022.

Although the BETI in June was still in negative territory compared to the previous year, it had progressed compared to previous months.

The 7.4% decline in May grew to a 2.0% decline in June, with a low-cost calculation adding to the improvement.

BankservAfrica said that the BETI’s improvement signals a positive growth rate for Q2 2023, as the BETI from March to June improved by 2.6%.

“With many economic challenges remaining, and as the possibility of elevated load shedding levels for winter remains, the improvement in the BETI is not necessarily the start of a sustained synchronised economic recovery, but it indeed signals that the economy has probably fared better in Q2 than initially expected,” Elize Kruger, an Independent Economist, said.

Read: Massive shift in shopping habits in South Africa as consumers adapt to load shedding