According to the latest liquidation statistics from StatsSA, the country recorded 135 liquidations in February. (Photo: Olivier Le Moal/ iStock)
Liquidations in South Africa are decreasing slightly, with fewer companies having to close their doors in the first two months of the year compared to the same period last year.
Although the drop is relatively small, it indicates a degree of stabilization in a still challenging economic environment.
According to the latest liquidation statistics from Statistics South Africa (StatsSA), the country recorded 135 liquidations in February. This is a decrease of 140 liquidations compared to last year and an annual decrease of 3.6%.
According to the data, large company liquidations increased slightly in this period, but closed company liquidations only slightly decreased.
The findings reflect the cumulative impact of high interest rates, weak demand, infrastructure constraints, logistical challenges and external pressures. These factors continue to reduce margins and limit cash flow, especially for small and medium-sized businesses.
According to the data, large company liquidations increased slightly in this period, but closed company liquidations only slightly decreased. (Photo: Nicholas Ahonen/ iStock)
Overdue payments and payments that are made late also make a major contribution to the liquidation of a company.
Abdul Vally, CEO of Coface South Africa, says that when one large debtor does not pay, it often puts otherwise healthy companies under severe financial pressure and accelerates their demise. Vally emphasizes that proactive credit risk management is one of the most effective tools for businesses operating under uncertain conditions.
Trade credit insurance and business information solutions help companies protect cash flow, reduce exposure to default and make informed credit decisions.
“In times of economic pressure, businesses that actively protect their income streams are much better positioned to survive and recover. While February’s liquidation figures show a modest improvement, broader economic indicators still reflect fragile business confidence. This reinforces the importance of disciplined risk management, early intervention and data-driven decision-making as South African businesses navigate ongoing uncertainty,” says Vally.
The Ekapa mine is one of the companies that was liquidated in the High Court in Kimberley in February. All operations at the diamond mine in Kimberley had to be stopped with immediate effect because of the liquidation. This means that hundreds of miners were suddenly left without work.
The Ekapa mine is one of the companies liquidated in February. (Photo: Northern Cape Provincial Government)
Maroela Media earlier reported that an application for liquidation was submitted after the mine’s management apparently checked the mine’s financial statements and came to the conclusion that it was no longer financially viable to continue as a mining and processing business.
The future of the sugar giant Tongaat Hulett is also in the balance after business rescue practitioners filed an application in the KwaZulu-Natal High Court in February for an order to provisionally liquidate the sugar mill after the company was put into business rescue in 2022. This liquidation application is expected to be heard in the High Court in Durban in April.