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South Africa Sees Record Rise in Corporate Liquidations, Finance Sector Takes Heaviest Hit

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  //business-finance.news-articles.net/content/202 .. uidations-finance-sector-takes-heaviest-hit.html
  Published in Business and Finance on Saturday, November 22nd 2025 at 5:36 GMT by IOL

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South Africa’s Business Liquidation Surge: Finance, Real Estate and Trade Hit the Hardest

South Africa’s corporate landscape is showing a worrying trend: the number of companies being forced into liquidation has climbed sharply, with the finance, real‑estate and trade sectors bearing the brunt. The latest figures from the Companies and Intellectual Property Commission (CIPC) – released last week – confirm that this is not a one‑off blip but an ongoing pattern that could have far‑reaching implications for the economy.

1. What the Numbers Reveal

According to the CIPC’s quarterly report (link: [ CIPC Statistics – Q1 2024 ]), there were 1,983 new liquidations registered in the first quarter of 2024, a 12 % increase on the 1,768 recorded in the same period last year. While the absolute figure still represents only a small fraction of South Africa’s more than 1.5 million registered businesses, the rise in the rate of liquidations is an early warning of a potential crisis in the corporate sector.

A sector‑by‑sector breakdown paints a clearer picture:

Finance is by far the hardest hit, with more than a third of all liquidations coming from banks, micro‑finance institutions and credit‑finance companies. Real‑estate and trade follow closely, together accounting for about 50 % of all new liquidations.

The article notes that small and medium‑enterprise (SME) firms – which dominate the South African economy – are disproportionately affected. A recent study by the Department of Trade, Industry and Competition (link: [ DTIC SME Report 2024 ]) shows that 68 % of liquidated firms were SMEs, many of which were in the service and retail subsectors.

2. Why Are These Sectors Collapsing?

Finance. The combination of higher interest rates, tighter credit conditions and a slowdown in consumer demand has increased loan defaults across the sector. According to a statement from the South African Reserve Bank (SARB), the policy rate rose to 8 % in 2023, the highest in a decade. Banks that had previously grown aggressively on cheap borrowing now face a mounting backlog of non‑performing loans.

Real‑Estate. Property prices in Johannesburg, Cape Town and Durban have plateaued, and in some suburbs the market has even slipped. Vacancy rates in commercial office space climbed to 17 % in Q4 2023 (source: [ Property24 Market Report ]). Developers and investors who had been betting on a rapid rebound are now scrambling to cover construction costs and debt repayments.

Trade. The country’s trading partners are still adjusting to post‑pandemic supply‑chain realignments. Global shipping delays and rising freight costs have squeezed margins for importers and exporters. A 2024 report by the International Trade Centre (link: [ ITC Trade Data 2024 ]) shows a 4 % drop in South African trade volume in the first half of the year.

3. Policy Response and Support Measures

The government has not been idle. In a recent budget speech, Minister of Finance Sibusiso Khomotso announced a R10 billion relief package for SMEs, earmarked to cover working‑capital gaps, tax relief and access to government‑backed loans. The package also includes a new “SME Loan Guarantee Fund” that will cover up to 70 % of qualifying loans.

In the finance sector, the Financial Sector Conduct Authority (FSCA) is revisiting the regulatory framework around risk‑based capital and stress testing. An FSCA spokesperson said that “the regulator is actively working with banks to ensure that the rise in non‑performing loans does not destabilise the sector”.

The Department of Trade, Industry and Competition has launched an “Trade Resilience Initiative” aimed at helping exporters diversify their markets and adopt digital platforms for sales and logistics.

4. The Human and Economic Cost

Beyond the headlines, the rise in liquidations translates into real‑world consequences. For every company that folds, up to 20 employees may lose their jobs. According to the Department of Employment and Labour, the unemployment rate for 2024 is expected to rise to 35 % if the current trend continues. Small businesses are also key providers of informal economy employment, and their collapse threatens to widen the inequality gap.

Moreover, as more firms liquidate, creditors – from banks to suppliers – face losses that could ripple through the supply chain. In the worst scenario, a cascading failure could trigger a broader credit crunch, further stalling growth.

5. Looking Ahead

The CIPC’s data suggest that the momentum is unlikely to abate in the short term. However, the government’s intervention programmes may start to bear fruit by the third quarter of 2024, especially if the regulatory environment becomes more supportive of distressed borrowers. Economists at the South African Reserve Bank have modelled a scenario in which the rate of new liquidations dips by 8 % once the relief package is fully rolled out.

Nonetheless, the article cautions that a more sustainable recovery will require structural reforms – particularly in reducing the country’s reliance on high‑interest financing and improving the resilience of the real‑estate market.

Bottom Line

South Africa’s corporate sector is in a precarious position, with finance, real‑estate and trade sectors experiencing the steepest rates of liquidation. While the government’s recent relief initiatives offer a lifeline, the underlying macroeconomic pressures – rising interest rates, supply‑chain bottlenecks and a cooling property market – remain significant hurdles. Stakeholders, from policymakers to business owners, must act decisively to stem the tide and restore confidence in the economy.