It’s been a tough year for businesses in South Africa. As of July 2024, 892 companies have thrown in the towel and called it quits. That’s an average of about 130 businesses every month—yikes! According to Stats SA, most of the liquidations have come from the financing, insurance, real estate, and business services sectors. Not exactly surprising when you consider how many entrepreneurs are trying to keep afloat in today’s economic waters.
In second place for business closures is the trade, catering, and accommodation sector. These sectors are feeling the pinch, with double-digit liquidations in July alone and triple-digit losses year-to-date. However, before we start mourning, there is a silver lining: liquidations have actually decreased compared to last year. July 2024 saw a 5% drop in liquidations compared to July 2023, and the three-month period from May to July showed a 9.5% improvement. The trend seems to be heading in the right direction, and if it continues, 2024 could be the year with the lowest number of liquidations in over five years.
That said, the liquidations might be down, but the number of big brands heading for business rescue is still alarming. High-profile casualties like Cross Trainer, AutoZone, West Pack Lifestyle, and Ellies have all had their turn in the business rescue hot seat. If they don’t make it out, liquidation is still on the cards.
The Job Situation: Not Great, But Not Terrible Either
On the employment front, things aren’t looking much better. South Africa’s unemployment rate rose by 0.6% from 32.9% in Q1 to 33.5% in Q2 of 2024. Even more concerning is the expanded unemployment rate, which shot up to 42.6%. Stats SA reports a net loss of 92,000 jobs in Q2, with trade, agriculture, and private households taking the biggest hits.
On the plus side, some sectors have seen job growth, including manufacturing (up by 49,000 jobs) and community services (up by 36,000 jobs). But overall, the job market is still a tough place to be.
Bottom Line: Things Are Tough, But There’s Hope
While businesses are still struggling and job losses continue, the overall picture in 2024 is a bit less grim than last year. Fewer businesses are closing, and there’s a slight improvement in the economy—small wins, but wins nonetheless. Here’s hoping the trend continues as we head into the latter half of the year!
For now, if you’re one of the lucky ones still going strong, make sure to keep an eye on your business’ financial health and maybe even explore business rescue options if you hit a rough patch. Better safe than sorry, right?
Source Info: https://businesstech.co.za/news/business/788705/end-of-the-road-for-890-businesses-in-south-africa