Another 140 businesses shut their doors in South Africa

South Africa has seen another 141 businesses liquidated in May 2025, taking the total to 623 closures in the first five months of 2025.

Stats SA’s latest data showed that 538 businesses have shut their doors voluntarily this year so far, while another 85 did so on a compulsory basis.

According to the group, South Africa has seen a 2.4% drop in the number of liquidations recorded in the first five months of 2025 compared with the first five months of 2024.

However, bucking the trend of fewer liquidations year-on-year over the past few months, May 2025 saw a sizeable increase in closures, including a notable increase in compulsory liquidations.

The total number of liquidations increased by 12.8% year-on-year in May, with 141 liquidations recorded.

Stats SA said that the liquidations of companies increased by 12 cases and the liquidations of close corporations increased by 4 cases during this period.

In May 2025, 122 businesses were closed down voluntarily, while 19 were closed on a compulsory basis.

Many liquidations were in the Financing, insurance, real estate, business services (37); and trade, catering and accommodation sectors (23).

The decrease for the first five months of 2025 comes off an already low base in 2024, where 1,551 liquidations for the year were the lowest in nearly a decade.

However, this included many ups and downs, with a sharp spike in closures in October 2024, similar to the one in May 2025.

Craig Blumenthal from Fluxmans Attorneys previously noted that the Master’s Office’s delay in the processing of liquidations in the middle of 2024 caused a spike in October. 

He also noted that courts, which are overburdened, could also result in data taking longer to be released.

When speaking to BusinessTech in March, Blumenthal said that liquidation data can reveal insights into the economy’s performance.

A high levels of liquidations could mean that businesses are facing increased pressure, or it could signal increased business activity.

The distinction between voluntary and compulsory liquidations is essential, he said.

Voluntary liquidations could reflect regular business activity, with certain companies or special-purpose vehicles liquidated for transactions.

These liquidations can simply indicate business activity, rather than a business shutting down due to solvency issues.

Compulsory liquidations, meanwhile, are typically court-ordered or forced due to insolvency. However, even in these cases, the numbers are not straightforward.

A low number of compulsory liquidations could mean an improved business environment as there are fewer forced shutdowns, but it can also simply mean that there are fewer businesses left to shut down.

Although the total number of liquidations may be down year-to-date compared to 2024, compulsory liquidations are up 14%, indicating significant pressure on businesses in the country.

Trouble ahead

Outside of the hard numbers, other metrics, such as GDP, can indicate how businesses and the economy are performing in South Africa.

South Africa’s economic growth has remained muted, hitting a weak 0.6% in 2024. The economy just avoided a recession in the second half of the year, thanks to strong consumer demand in Q4 2024.

Despite the low base, the nation’s GDP grew by a marginal 0.1% in Q1 2025, indicating weak economic growth.

With South Africa’s population growing at about 1.5% yearly, anything less means the nation is getting poorer on a GDP per capita basis.

Unfortunately for South Africa, the country’s economic prospects are diminishing, with economists and analysts cutting growth forecasts for the year with alarming frequency.

After starting the year with a forecast of around 2.0% GDP growth in 2025, geopolitical tensions and chaotic policy moves by the United States quickly cut this down to 1.5%.

Local budget issues, though relatively short-lived, added pressure to the outlook, while the government’s snail-pace reforms have dampened sentiment.

Among the market bears, South Africa is likely to only post 1% growth, with more economists now positioning themselves below this point.

Investec Chief Economist Annabel Bishop is the latest to again revise 2025’s forecast GDP growth rate, with the bank cutting its outlook to just 0.9% y/y.

This is based on South Africa’s already poor GDP outcome for the first quarter of the year, exacerbated by weakening global growth environment and insufficient progress at Transnet.

Bloomberg’s consensus forecast is now near 1.0% y/y.

June’s Bloomberg forecast, which is a median of twenty-four economists’ estimates, has seen a downward trajectory from 1.3% y/y in May to 1.1% y/y in June, with 1.5% y/y in March and April, and 1.7% y/y in February.

“GDP growth has averaged 1.7% y/y over the past decade, from 4.2% y/y in the 2000s but 0.4% y/y this decade to date,” ” Bishop said.

“The Covid-19 lockdowns (were) not the sole reason by any means for the collapse in South Africa’s economic growth rate this decade.”

Bishop said South Africa’s growth this year is expected to be above 2024’s weak 0.6% y/y, but much depends on Transnet’s capacity to lift its freight delivery substantially further for economic growth to near 3.0% y/y, which is still only likely by the end of this decade.