Over 1,300 businesses in South Africa have shut their doors in 2023

Data from Stats SA shows that 136 businesses closed their doors in October.

According to Stats SA, the 120 businesses closed down voluntarily, while 16 did so on a compulsory basis.

This means that over 1,376 businesses have been liquidated since the start of the year.

However, the number of liquidations actually decreased by 13.4% in October 2023 compared with October 2022.

In addition, the number of liquidations declined by 10.3% in the three months ending October 2023 compared with the same period in 2022.

Moreover, the total number of liquidations decreased by 13.0% in the first ten months of 2023 compared with the first ten months of 2022.

On a per-industry basis, the unclassified industry saw the most liquidations, with 44 in October.

This was followed by the financing, insurance, real estate and business services industry, which saw the most liquidations, with 38 in October. This took its yearly tally to 463 – the most of any industry.

This was followed by trade, catering and accommodation (26) and community, social and personal services (38).

Difficult quarter

Despite the year-on-year decline in liquidations, several pieces of economic data showed that October was an abysmal month.

For instance, the Absa Purchasing Managers’ Index (PMI) dropped from an upwardly revised 46.21 in September to 45.4 in October.

“Given that the frequency and intensity of load shedding eased notably in October, the weak performance from the activity index is perplexing,” the Bureau for Economic Research (BER) said.

“It is now back to the July 2023 level when prolonged disruptions on the N3 transport corridor most likely resulted in a (temporary) shortage of inputs. These transport issues contributed to weak manufacturing output.”

“On the consumer front, elevated relative (food and fuel) prices, as well as restrictive borrowing costs, are depressing demand for local manufactured goods.”

Naamsa’s New Vehicle Sales data also showed a 2% y/y decline from 46,350 units in October 2022 to 45,445 in October 2023. This was the third successive month of decline in the new vehicle market.

Confidence among South African business leaders also remains low due to the challenging economic environment, with the RMB/BER Business Confidence Index dropping by two points to 31 in Q4 2023. This means that less than a third of respondents were happy with the overall business conditions.

The low confidence amongst businesses means that South Africa’s real GDP – which is expected to slow in Q3 – is unlikely to accelerate in momentum in Q4.

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