135 companies shutting down in South Africa just the tip of the iceberg
South Africa’s corporate sector is facing extreme financial pressures, even as the latest data from Stats SA shows a year-on-year decline in the total number of liquidations.
Stats SA data showed that the country recorded 135 closures in February 2026, up from 96 in January. However, this still was 3.6% down from February 2025, with year-to-date figures also down 6.1%.
The liquidation data published by Stats SA is nuanced and should not be viewed in isolation, as the vast majority of liquidations are voluntary.
A more important measure is tracking compulsory liquidations, where businesses close their doors following a court-ordered process initiated by stakeholders due to solvency or operational issues.
In February, voluntary liquidations were relatively flat year-on-year, 127 in February 2026 compared to 126 in February 2025, while compulsory liquidations declined from 14 a year prior to only 8.
The data also showed that the liquidations of close corporations declined during the period, while company liquidations increased slightly.
Coface said that while liquidations are down, the number of corporations under financial distress continues to rise.
The company said that the liquidations reflect the cumulative impact of high interest rates, weak demand, infrastructure constraints, logistical challenges, and external pressures.
“These factors continue to erode margins and restrict cash flow, particularly for small and medium‑sized enterprises,” it said.
“Sectors that are more fragmented and/or have a large population of SMEs account for a significant share of liquidations.”
This includes finance, insurance, real estate, business services, trade, catering, and accommodation services.
Debt and late payments remain an Achilles heel
Unpaid invoices and delayed payments remain a major reason for business failure, as the default of a single large debtor can put viable businesses under severe financial strain.
These issues can accelerate the path to liquidation for many businesses, even if the initial cause was not their fault. Risk management tools, such as insurance, can be valuable to businesses under pressure.
“In periods of economic strain, businesses that actively protect their income streams are far better positioned to survive and recover,” said Abdul Vally, CEO of Coface South Africa.
Although the February liquidation figures showed a modest improvement, broader economic indicators show incredibly fragile business confidence amid the challenging economic environment.
One sector facing operational challenges is South Africa’s construction sector. Despite being one of the largest employers in the country, the sector is being hurt by late government payments.
This is according to Euan Massey, director at construction experts MDA Attorneys, who said that contractors are increasingly being forced to finance projects out of their own pockets.
While the sector employs 1.2 million people, data from the National Treasury shows a worsening late-payment crisis among national and provincial government departments.
Massey said that the problem is widespread in the construction industry when public sector projects are involved, where widespread non-compliance is common despite legislation giving 30 days to pay.
“Contractors are really left to their own devices to collect money, and to be innovative in doing that,” Massey said.
He warned that this is having a disastrous impact on smaller firms that lack the financial capacity to carry out projects for extended periods.
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