A total of 128 companies permanently shut their doors in South Africa in June, representing an 11.7% decline in company liquidations compared to the same month in 2022.
According to data released by Statistics SA on Monday, the country has seen 802 liquidations this year, 14% less than in the same six-month period last year.
Normalisation
According to Stats SA’s statistician general Risenga Maluleke, the downward trend of liquidations reported across most industries in the local economy this year could represent a rebalancing of trends following a volatile Covid-19 pandemic period which saw significant peaks in business liquidations.
“It is important to note that liquidating a company follows an administrative process and also that it takes time for a failing company to reach the point of liquidation,” Maluleke told Moneyweb.
“The slowdown we are seeing could, therefore, mean that the companies that didn’t survive Covid-19 have already been liquidated, and we are now approaching normalcy.”
Independent economist Dawie Roodt says the latest figures indicate that the country’s economy is working as it should – and that despite the significant number of companies reportedly liquidated, what matters most is the economy’s ability to create new companies.“A healthy economy is an economy that keeps on destroying and keeps on creating new companies and that’s a sign of a vibrant economy,” Roodt explains.
“The fact that we’ve liquidated several companies – I am not too concerned about that. That could simply be a sign that the economy is getting rid of some dead wood and restructuring itself, but of course, we want new companies to be created at the same time as well.”
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