The companies hardest-hit by liquidations in South Africa
Statistics South Africa has published its latest report on liquidations and bankruptcies. The data shows a sharp annual increase in liquidations across the country.
216 companies were wound up in March 2021, compared to 178 in the previous month – a 21% increase. Voluntary liquidations increased by 61 cases and compulsory liquidations increased by 10 cases.
This is 49% more than the liquidations registered in March 2020. The report also shows that the total number of liquidations in Q1 2021 increased 18.9% from Q1 2020.
Liquidation refers to the handling of the business of a company or a related company if the liabilities exceed the assets and can be resolved through voluntary measures or by court order.
The table below shows the business categories that reported the most liquidations in the first quarter of 2021.
Of all sectors, finance, insurance, real estate, business services (77 liquidations), retail, catering and accommodation (47) and manufacturing (10) are hardest hit.
Commenting on the data, Lings Naidoo, co-founder of BeyondCOVID, said it wasn’t like more companies suddenly got into trouble, but many companies collapsed in March of this year and it was likely that mostly small and medium-sized businesses were struggling for many months before they have to close, if not longer.
The BeyondCOVID Business Survey, launched last year during the tough national lockdown and conducted by specialist management consultancy Redflank, aims to assess the impact of the pandemic on SMEs.
“Our research shows 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.
26% of the SMEs taking part in the survey had to close temporarily or permanently during the lockdown, as the BeyondCOVID Business Survey shows.
In addition, 54% of respondents said they were working below their usual capacity and a third said they needed funding to continue trading.
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