Over 1,000 businesses shut their doors in South Africa in 2024
South Africa has seen over 1,000 businesses liquidate in the first eight months of 2024.
According to Stats SA, the total number of liquidations decreased by 9.9% in August 2024 compared with August 2023, declining from 142 to 128 year on year.
Voluntary liquidations decreased by 11 cases to 117, and compulsory liquidations decreased by 3 to 11 during August.
The number of liquidations decreased by 6.8% (from 410 to 382) in the three months ended August 2024 compared with the same period in 2023.
The total number of liquidations year-to-date also breached 1,000, with 1,020 businesses shut down in 2024 so far.
Although this is a 5.9% decrease from the 1,084 liquidations seen in 2023, it is still a high number. More positively, though, the trendline is pointing down and is showing a declining trend, even compared to pre-Covid 19.
When looking at specific industries, the worst-hit industries were again unclassified at 47.
The next worst performers in August were financing, Insurance, real estate, business services (33) and trade, catering and accommodation (27).
The mining, quarrying, and electricity, gas and water industries saw no liquidations in August.
Since the start of the year, the worst-affected industries have been unclassifieds (351); financing, Insurance, real estate, business services (288); and trade, catering, and accommodation (197).
Although the number of liquidations is down from 2023, the improvements will do little to stem South Africa’s high unemployment rate.
Stats SA’s latest Quarterly Labour Force Survey showed the official unemployment rate increased by 0.6 percentage points from 32.9% in Q1 2024 to 33.5% in Q2 2024.
More worryingly, the expanded unemployment rate in Q2 of 2024 increased by 0.7 percentage points to 42.6%.
The latest Quarterly Employment Statistics (QES), however, did show that total employment in South Africa increased by 42,000 or 0.4% quarter-on-quarter, from 10,674,000 in March 2024 to 10,716,000 in June 2024.
While QES data reflects explicitly the number of people receiving formal salaries, the QLFS follows more comprehensive employment and unemployment trends.
Even with the slight uptick in the QES, there is no getting around the fact that South Africa’s employment statistics are easily among the worst in the world.
To make matters worse, several major international companies are scaling back their operations in South Africa.
UK-based bank HSBC has recently announced that it has reached an agreement to transfer the business of its branch in South Africa to FirstRand Bank, marking its exit from the country after 29 years of operations.
HSBC said that the transaction will include transferring the branch’s clients and banking assets and liabilities and will provide transferred clients with continued access to banking services in South Africa. HSBC’s branch employees will also move to FirstRand as part of the agreement.
HSBC is the latest European financial services provider to exit the South African market following strategic reviews.
French-based BNP Paribas officially closed its corporate and investment bank in South Africa in May 2024, while Barclays, Standard Chartered and Societe Generale have scaled back in Africa.
Other notable ‘exits’ include Shell’s plan to sell its South African downstream business, including its petrol stations, and Anglo American’s plan to unbundle Anglo American Platinum.
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