South Africa has kissed over 700 companies goodbye in 2024

Almost 760 companies have entered into liquidation since the start of this year – a worrying figure yet an improvement from previous years and a potential sign of recovery.

Stats SA recently released the country’s latest liquidation figures, which showed that the total number of liquidations decreased by 5.5% in June 2024 compared with June 2023. 

Voluntary liquidations decreased by 12 cases during this period, bringing the total number of liquidations so far this year to 759.

The number of liquidations decreased by 4.3% – from 391 to 374 – in the second quarter of 2024 compared to the second quarter of 2023.

There was a decrease of 5.4% – from 802 to 759 – in the number of liquidations recorded during the first six months of 2024 compared with the first six months of 2023.

South Africa’s liquidation rates have come down in the past two years as the country recovers from the Covid-19 pandemic.

However, Southern African Advisory Company’s Tiaan Herbst told Kaya Biz last year that it is crucial to interpret liquidation data with caution.

While South Africa’s drop in liquidations could indicate that the country’s economy is improving, it could also reveal that businesses are merely surviving in South Africa’s stagnant, “zombie” economy.

“The decline in liquidations amid periods of identified load-shedding is somewhat surprising as one might expect these power outages to negatively impact businesses, particularly small and medium-sized enterprises,” he said.

However, it seems this is not the case for 2024, as several green shoots have appeared that spell good news for the country’s economic growth this year.

The Bureau for Economic Research (BER) recently said South Africa’s economic trajectory is looking increasingly optimistic. 

The Stellenbosch-based institution has projected 2.2% growth for the country’s economy in 2025, a figure that outshines the more conservative estimates of 1.5% and 1.2% from the South African Reserve Bank and the International Monetary Fund, respectively. 

Such a growth rate would mark the most robust performance in over a decade, excluding the 2021 rebound following the pandemic-induced recession.

At the start of this year, there was significant uncertainty surrounding the country’s trajectory as the outcome of the May general election remained unclear.

Many predicted that the ANC would lose its majority for the first time in 30 years, which would force the former ruling party to form a coalition with opposition parties.

Some feared that this would result in a far left-leaning partnership between the ANC and the EFF or MK Party, which could have been disastrous for the country’s markets and businesses.

However, a pivotal factor in this positive outlook is the formation of a new Government of National Unity, a coalition between the ANC and business-friendly parties like the DA.

The BER said this administration has made a clear commitment to accelerating economic reforms, with a particular emphasis on revitalising the country’s struggling ports and rail networks.

BER senior economist Shannon Bold expressed optimism about a reduction in logistical constraints, which have been a significant drag on economic activity. 

Coupled with a projected resurgence in consumer and business confidence, these factors are expected to contribute significantly to the anticipated growth.

The BER’s analysis is further buoyed by the government’s dedication to investment mobilisation and reform implementation, initiatives that are being spearheaded by Operation Vulindlela, a collaborative effort between the Presidency and the National Treasury. 

The agency’s work has helped generate an investment potential of R500 billion.

In addition, 2025 sees prospects of lower inflation, a stronger currency, and potential interest rate cuts. 

While inflation currently exceeds the central bank’s target range, the bank anticipates a decline to 4.3% in the final quarter of 2024. Should these projections materialise, rate cuts could be on the horizon as early as September this year.