Over 1,300 Businesses Liquidated in South Africa in 2024 Amid Challenging Economy

Over 1,300 Businesses Liquidated in South Africa in 2024

South Africa’s economic challenges have led to a wave of business liquidations, with over 1,300 companies shutting down in 2024 so far. October proved to be an especially tough month, recording a 44.1% increase in liquidations compared to the same month in 2023, according to Stats SA.

Key Trends in Liquidations

• October 2024 Surge: Liquidations rose from 136 in October 2023 to 196 in October 2024.
• Annual Decline: Despite the monthly spike, liquidations for the first 10 months of 2024 decreased by 3.1% compared to the same period in 2023.
• Voluntary vs. Compulsory Liquidations:
  • Voluntary liquidations increased by 52 cases in October 2024.
  • Compulsory liquidations rose by 8 cases, indicating more court-ordered closures.

While liquidations have declined from the pandemic-era peak in 2020, the decrease may reflect fewer businesses operating rather than improved economic conditions.

Industry-Specific Insights

• Most Affected Sectors:
  • Financing, insurance, real estate, and business services saw the highest liquidations in October, with 71 closures.
  • The unclassified industry topped the annual list with 433 closures, followed by 398 in financial services.
• Least Affected Sectors:
  • The electricity, gas, and water sectors recorded only two liquidations in 2024, with no closures in October.

Notable Business Closures

Several high-profile companies succumbed to the challenging environment:

1. Ellies Holdings:
   • Once a Johannesburg Stock Exchange (JSE) star, Ellies failed its business rescue and liquidated despite the rise in solar energy demand.
2. Hohm Energy:
   • A solar financing provider, Hohm Energy, faced cash flow issues and mounting debt, struggling after over 200 days without significant load shedding reduced solar demand.
3. Drip Footwear:
   • The South African sneaker brand liquidated after failing to pay a R20 million advertising bill.
4. The Cross Trainer (Frame Leisure Trading):
   • The retailer entered liquidation following unsuccessful business rescue efforts amid pandemic aftershocks and economic strain.

Survival Stories

Some companies avoided liquidation by securing buyers during their business rescue:

• West Pack Lifestyle
• Autozone

Their recoveries highlight the potential for turnaround strategies when the right opportunities arise.

Economic Context

South Africa’s persistent economic challenges—ranging from sluggish growth and post-pandemic recovery to load shedding and subdued consumer demand—continue to place immense pressure on businesses. While some sectors are managing to adapt, others are finding the landscape increasingly difficult to navigate.

The 2024 business liquidation trend underscores the fragile state of South Africa’s economy. As the country battles persistent headwinds, businesses must innovate and adapt to survive. Meanwhile, supportive policies and investment are crucial to foster resilience and growth in the private sector.

For more insights on South Africa’s economic trends and business developments, stay tuned to our updates.