Report lays naked the injury Covid-19 precipitated to companies
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Johannesburg – The latest data from Statistics SA (Stats SA) has highlighted the trend of liquidations during the Covid-19 pandemic and lockdown after more than 200 companies were liquidated in March.
Stats SA has published the report Statistics of liquidations and bankruptcies, which shows the total number of liquidations recorded in March of this year compared to March of last year.
The report released on Monday found that the total number of registered liquidations was up 49% in March compared to March 2020. The total number of liquidations registered in March was 216, an increase of 71 from March 2020.
According to the report, voluntary liquidations rose by 61 cases in March from 137 voluntary liquidations in March 2020 to 198 in March 2021. Forced liquidations also followed, showing an upward trend from 18 in March 2021, which increased by 10 cases in March 2020.
“The total number of liquidations rose 18.9% in the first quarter of 2021 compared to the first quarter of 2020,” the report said.
The total number of liquidations in the first quarter of 2021 is 516, and the total from the same period last year was 434.
Since the beginning of 2021, Stats SA has registered 466 voluntary liquidations and 50 compulsory liquidations.
In the statistical report, the total number of liquidations was further broken down by industry. Of all sectors, finance, insurance, real estate, business services with 77 liquidations, commerce, catering and housing with 47 liquidations, and manufacturing with 10 liquidations are the hardest hit industries.
The estimated number of bankruptcies decreased by 60.2% in February compared to February 2020, according to Stats SA.
“In the three months to February 2021, a decrease of 26.9% was estimated from the three months to February 2020,” the report said.
Business consultants said the hardship was a direct result of last year’s global coronavirus crisis and affected smaller businesses the most.
“It’s not like more companies suddenly got into trouble. Many of the businesses that failed in March, most likely mostly small and medium-sized businesses, had problems for months, if not longer, before closing, ”said Lings Naidoo, co-founder of BeyondCOVID.
The BeyondCOVID Business Survey was started last year as part of a tough lockdown with the aim of assessing the effects of the pandemic on small, medium-sized and micro-enterprises (SMEs) in particular.
“Our research has shown that in times of economic upheaval, small, micro, and medium-sized businesses are generally 26 times more likely to close their doors than their corporate counterparts,” said Naidoo.
He added that 26% of SMEs that responded to the survey conducted by specialist management consultancy Redflank had to close temporarily or permanently during the lockdown. “In addition, 54% of respondents said they were working below their usual capacity and a third said they needed funding to continue trading,” BeyondCOVID said.
Naidoo added that there was security in numbers for businesses during this time.
“Being part of a larger organization that has the resources that individual smaller companies lack creates more stability. This is exactly what companies and South Africa need in uncertain times. Covid-19 will stay here for a while. We have to work with this reality and not fight, ”he said.
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