South Africa Sees 140 More Business Closures in February—What It Means for the Economy

South Africa saw 140 more businesses close their doors in February 2025, bringing the total number of liquidations for the year to 246. While this represents a slight increase compared to February 2024, the overall trend for 2025 appears marginally better than the previous year.

According to Statistics South Africa (Stats SA), the total number of business liquidations from December 2024 to February 2025 declined by 12.5% compared to the same period last year. However, February itself saw 1.4% more liquidations than in February 2024, indicating a possible slowing of the downward trend.

A Closer Look at the Liquidation Data

In 2024, South Africa recorded 1,551 business closures—the lowest number in almost a decade. However, fluctuations throughout the year, including a sharp increase in liquidations around October, suggest that business conditions remain unstable.

Craig Blumenthal, director of business rescue, dispute resolution, and insolvency at Fluxmans Attorneys, points out that delays in the Master’s Office and overburdened courts may have influenced the timing of liquidation data, affecting year-on-year comparisons.

More importantly, the nature of liquidations matters. Voluntary liquidations, which make up the majority of cases in 2025, often occur as part of normal business restructuring or investment cycles. In contrast, compulsory liquidations—court-ordered closures due to insolvency—are more concerning.

Alarmingly, the number of compulsory liquidations has risen by 32% compared to early 2024, signaling growing financial distress among businesses.

What This Means for South Africa’s Economy

South Africa’s economic landscape remains challenging, with GDP growth recorded at just 0.7% in 2024, following 0.6% in 2023. Persistent issues such as unreliable electricity supply, failing infrastructure, and slow policy reforms have created an unfavorable business environment.

Additionally, the latest Business Confidence Index (BCI), published in March 2025, shows that business sentiment remains largely negative. With a score of 45—five points below the neutral threshold of 50—most businesses continue to feel pessimistic about operating in South Africa.

While the decline in overall liquidations suggests some stability, it may also reflect the fact that fewer businesses are left to close. This highlights the urgent need for policy reforms and economic support to restore investor and business confidence.

As South Africa navigates 2025, the latest data suggests that while business closures are slowing down, financial distress remains high. The sharp rise in compulsory liquidations and ongoing business pessimism indicate that challenges are far from over.

For businesses, navigating this environment requires resilience, careful financial planning, and adaptability. For policymakers, addressing structural economic issues—such as energy security and regulatory inefficiencies—remains critical in fostering long-term business sustainability.

{Source BusinessTech}

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