Companies forced to shut down in South Africa

The total number of liquidations in South Africa is declining, but more companies are forced to shut down by local authorities and their inability to pay their debts.

According to Stats SA, the number of liquidations in South Africa decreased by 8.0% in March 2025 compared to March 2024, dropping from 138 to 127.

The latest figure takes the total number of liquidations in South Africa for the first quarter to 373, which Stats SA noted is a 3.7% decrease from Q1 2024.

On a per-industry basis, the financing, insurance, real estate, and business services industry saw the most liquidations, at 139, since the start of 2025.

Although March’s statistics indicate an overall improvement, the notable increase in compulsory liquidations is a cause for concern.

Craig Blumenthal, director of business rescue, dispute resolution, and insolvency at Fluxmans’s Attorneys, previously said liquidation data can tell very different stories about the economy.

Although high levels of liquidations could cause trouble for businesses in South Africa, it is essential to distinguish between voluntary and compulsory liquidation.

Voluntary liquidations reflect regular business activity, where certain companies or special-purpose vehicles are liquidated for transactions.

On the other hand, compulsory liquidations are usually court-ordered or forced due to insolvency.

While most liquidations have been voluntary, the number of compulsory liquidations has increased by 69%, rising from 13 in March 2024 to 22 in March 2025.

The increase comes off the back of compulsory liquidations rising 32% over the first two months of 2025.

Since the start of the quarter, compulsory liquidations have accounted for 14% of liquidations—an increase from the 11.8% observed throughout 2024.

However, Blumenthal noted that even in the case of compulsory liquidations, the numbers aren’t straightforward.

For example, a low number of compulsory liquidations could mean an improved business environment, fewer forced shutdowns, or fewer businesses are left to shut down.

Breaking down the numbers

In addition to official statistics, other figures can help in understanding the current mood in South Africa, such as the GDP and the Business Confidence Index.

South Africa’s GDP has seen minimal growth in 2024, with the country recording measly increases of 0.7% in 2023 and 2024.

When considering South Africa’s population growth of roughly 1.5%, the country’s population is becoming poorer on average. 

The outlook for 2025 has also deteriorated progressively, with the IMF recently reducing its forecast for South African GDP growth from 1.5% to 1.0%.

The IMF noted that US President Donald Trump’s tariffs will likely affect South Africa and every other country in the world.

Although South Africa’s 30% tariff was suspended for 90 days, South Africans still face the growing risks of a trade war between China and the USA.

Looking domestically, despite the ANC and DA seemingly overcoming their differences, the country remains unattractive for business expansion due to a constrained power grid and ineffective economic policies.

The MB/BER Business Confidence Index (BCI) was 45% in Q1 2025, below the neutral mark of 50.

Therefore, most businesses in South Africa are still generally pessimistic about operating conditions.

Although the figure is higher than a year ago and just above the long-term trend for South Africa, the BER said this is a worrying sign.

Four of the five sectors tracking confidence dropped relative to Q4 2024, and most respondents across sectors remain pessimistic over the current business conditions in South Africa.

Thus, although the overall liquidations may be lower compared to 2024, there may be fewer businesses in operation that can be shut down.