Despite being over the Covid-19 second wave, the South African economy continues to struggle, according to new data by Statistics South Africa .
The new Statistics of Liquidations and insolvencies report, released on 26 April, shows that 216 companies liquidated in March this year, compared to 178 the month before – a 21% jump. This is almost 50% higher than March last year.
Despite economic improvements, the situation in South Africa remains precarious, with the number of liquidations between March last year and the same month this year jumping by 49%.
All in all, the total number of liquidations increased by 18,9% in the first quarter of 2021 compared with the first quarter of 2020, StatsSA says. Of all sectors, financing, insurance, real estate, business services (77 liquidations), trade, catering, and accommodation (47), and manufacturing (10) are the hardest hit.
The hardship is a direct result of the past year and affects smaller companies the most, according to Lings Naidoo, co-founder of BeyondCovid. “It is not that more companies suddenly found themselves in trouble. Many of the businesses that have folded in March this year, in all likelihood mostly smaller and medium-sized businesses, have struggled for many months before having to close, if not longer.”
Launched last year during the hard lockdown, the BeyondCovid Business Survey, conducted by specialist management consultancy Redflank, aims to evaluate the impact of the pandemic on SMMEs in particular. “Our research has shown that smaller, micro, and medium-sized businesses, in general, are 26 times more likely to close their doors in times of economic upheaval than their corporate counterparts,” says Naidoo.
As such, 26% of SMMEs that participated in the survey had to close during the lockdown, temporarily or permanently, the BeyondCovid Business Survey shows. In addition, 54% of respondents said they were working below their usual capacity, and a third expressed they needed funding to continue to trade.
BeyondCovid is a registered non-profit company that aims to help businesses cope by providing them with trends, forecasts, and information they can use to develop survival strategies.