Fewer Businesses Close Shop

Positive: Late-Year Spike in Closures Raises Questions, Also Has Owners Optimistic

- Tiaan Herbst

South Africa's business landscape has seen fewer companies close their doors last year, offering a glimmer of economic resilience in an otherwise challenging climate.

According to the latest liquidations data, the number of firms shutting down between January and November 2024 declined by nearly 4% compared to the same period last year.

Yet this overall reprieve has been somewhat tempered by a recent uptick in closures toward the end of last year, leaving many business owners and analysts cautiously optimistic and watchful.

Encouraging overall decline

From January to November 2024, a total of 1,461 liquidations were recorded—down from 1,520 during the equivalent period in 2023. A significant contributor to this downward trend was the drop in voluntary liquidations, suggesting that some businesses that might otherwise have opted to fold are instead managing to persevere. Observers point to slightly improved economic conditions, such as stabilizing interest rates, as a potential factor behind this resilience.

Economists note that high borrowing costs dominated much of 2023, which led to a wave of closures early on. Those businesses that survived appear to have shored up their balance sheets by reducing debt or securing more favorable repayment terms. Many have also streamlined operations, cut back on overhead costs, and renegotiated supplier contracts.