Over 900 South African businesses have closed in 2023 – but there is a silver lining
Data from Stats SA shows that 140 businesses in South Africa were liquidated in July.
According to Stats SA, the 127 businesses closed down voluntarily, while 13 did so on a compulsory basis.
This takes the total number of liquidations in South Africa since the start of the year to 942, adding to the 128 businesses that were liquidated in June.
That said, South Africa’s liquidations have declined significantly since 2022.
Stats SA said that the total number of liquidations decreased from 15.2% when comparing July 2022 and July 2023.
The number of liquidations also dropped by 15.9% in the three months ended July 2023 compared to the three months ended July 2022.
There has also been a 14.2% decrease in the number of liquidations for the first seven months of 2023 compared to the same period in 2022.
Industry
The financing, insurance, real estate and business services industry has continued to be the worst-performing industry in terms of liquidations, with 54 in July,
The unclassified (37) and trade, catering and accommodating (22) also saw a large number of liquidations in the first month of Q3 2023.
On the other end of the scale, the electricity, gas and water industry is still yet to see a liquidation in 2023.
The agriculture, hunting, forestry and fishing, and mining and quarrying industries also only saw one liquidation each in July.
Positive signs
Despite two periods of intensified load shedding in July, economic data for July was largely positive.
For instance, the BankservAfrica Take-home Pay Index (BTPI) grew substantially in July.
“The average nominal take-home pay in July was R15,503, notably higher than the R14,169 in June and R14,509 in July 2022,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
BanskervAfrica said that many industries have become more resilient to load shedding, leading to the underlying positivity seen over the last few months.
Annual consumer price inflation (CPI) also dropped from 5.4% in June to 4.7% in July – the lowest reading since 4.6% in July 2021.
Inflation is now within 0.1% of the South African Reserve Bank’s inflation target midpoint, adding to the likelihood that the bank will keep interest rates on hold in September.
However, Independent Economist Elize Kruger said inflation will likely start ticking up following the expected fuel price increase in September.
“The renewed pressure on fuel prices has surfaced again, and the depreciation of the rand exchange rate will add to the cost of imported products, pushing inflation higher,” Independent Economist Elize Kruger.
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