South Africa is facing a continued rise in business closures, with over 100 companies liquidated in April 2024 marking a 13.2% increase compared to the same period last year, highlighting ongoing challenges for the country’s business environment.

The data shows that voluntary liquidations where business owners decide to close their companies increased by 25.7% year-on-year.

Conversely, compulsory liquidations initiated by creditors due to unpaid debts declined by 29.4%. This shift suggests that more entrepreneurs are choosing to close down operations proactively amid economic difficulties.

Businesses across the country are struggling with a combination of financial and operational pressures.

High interest rates are making borrowing more expensive, while weak consumer demand has reduced revenue streams. These challenges make it difficult for many businesses to remain viable.

Rising operational costs and energy insecurity

Energy supply issues, particularly frequent power outages known as load shedding, continue to disrupt business operations. Companies are forced to use expensive alternatives like generators, which drive up costs.

In addition, logistical hurdles and increasing transport expenses further strain resources, especially for small and medium-sized enterprises.

These compounding factors have contributed to the increased wave of liquidations. The Small Business Institute has noted that the data reflects a worsening business climate, where many companies cannot sustain operations under current economic pressures.

BusinessTech attributes South Africa’s increasingly difficult business climate to mounting external and internal pressures, including the launch of U.S. President Donald Trump’s global tariff war and growing tensions within the Government of National Unity (GNU) over the 2025 budget.

Trump imposed a sweeping 10% global tariff on 5 April, followed by a harsher set of “reciprocal” tariffs targeting select countries including South Africa.

Branded the “Liberation Day” tariff, the latter measure was temporarily paused for 90 days.

Washington's trade war with South Africa, following the nation's land reform laws that allegedly targeted white farmers, further strained relations between the two countries.

Trump's aggressive trade posture triggered significant global uncertainty, disrupting markets and prompting many South African businesses to halt investment and development plans as they adopted a cautious, wait-and-see approach.

As South Africa moves through 2025, the growing number of business liquidations serves as a stark reminder of the need for stronger economic interventions to protect small and medium-sized enterprises, the backbone of the economy, and to foster recovery and growth. (Business Insider Africa)