Home Southern Africa South Africa Faces 140 Additional Business Closures in February: Economic Implications

Southern Africa

South Africa Faces 140 Additional Business Closures in February: Economic Implications

March 27, 2025

(3 Minutes Read)

In February 2025, South Africa experienced an additional 140 business closures, bringing the total liquidations for the year to 246. While this marks a slight increase compared to February 2024, the overall trend for 2025 seems somewhat better than the previous year.

According to Statistics South Africa (Stats SA), liquidations from December 2024 to February 2025 fell by 12.5% compared to the same timeframe last year. However, February saw a 1.4% rise in liquidations compared to February 2024, suggesting a potential slowdown in the downward trend.

In 2024, South Africa reported 1,551 business closures, the lowest in nearly ten years. Yet, fluctuations throughout the year, especially a notable spike in October, indicate ongoing instability in business conditions. Craig Blumenthal, a director at Fluxmans Attorneys, notes that delays in the Master’s Office and overloaded courts may have affected the timing of liquidation data, complicating year-on-year comparisons.

The nature of liquidations is also significant. The majority of cases in 2025 are voluntary liquidations, typically part of normal business restructuring or investment cycles. In contrast, compulsory liquidations—court-mandated closures due to insolvency—are more alarming. The number of compulsory liquidations has surged by 32% since early 2024, reflecting increasing financial distress among businesses.

The economic situation in South Africa remains tough, with GDP growth recorded at just 0.7% in 2024, following 0.6% in 2023. Ongoing issues like unreliable electricity, deteriorating infrastructure, and slow policy reforms have created a challenging business environment.

The latest Business Confidence Index (BCI), released in March 2025, shows that business sentiment is still largely negative, with a score of 45—five points below the neutral mark of 50—indicating widespread pessimism among businesses about operating in South Africa.

While the drop in overall liquidations suggests some stability, it may also indicate that there are fewer businesses left to close, underscoring the urgent need for policy reforms and economic support to boost investor and business confidence.

As South Africa moves through 2025, data indicates that although business closures are tapering off, financial distress remains high. The sharp increase in compulsory liquidations and persistent business pessimism signal that challenges continue to loom large.

For businesses, navigating this landscape demands resilience, meticulous financial planning, and flexibility. For policymakers, addressing fundamental economic issues—such as energy security and regulatory inefficiencies—is essential for fostering long-term business viability.