The State of SAs’ Economy: Over 1,600 Company Liquidations in 2023 Amidst a Push for Employment Opportunities

In an economy striving to bounce back, South Africa has confronted its fair share of corporate hardship with over 1,600 companies facing liquidation in 2023. The latest figures from Statistics South Africa (StatsSA) convey a sobering reality, yet not without silver linings. The country witnessed a 13.1% decline in company closures as compared to the previous year, suggesting resilience within the business community.

The most striking decrement was seen in company liquidations which fell by 15.6% from 1,091 down to 921. Close corporations followed suit with a 9.8% decrease from 816 to 736. A closer inspection of the fourth quarter figures reinforces the trend of recovery and respite for the economy, as a 13.5% decrease was recorded in comparison to the same period in 2022.

This downward trend in liquidations brings a mixed bag of sector-specific impacts. The finance, insurance, real estate, and business services realm was the worst hit—554 business entities shut their doors over the course of the year. The trading landscape, which encompasses catering and accommodation services, didn't fare much better with 318 enterprises succumbing to economic pressures.

On a slightly brighter note, the community, social, and personal services sectors saw 130 businesses close, marking a less severe blow compared to other industries. However, the spectrum of liquidations casts long shadows on South Africa's employment landscape.

Despite this challenging terrain, the nation is charting a path towards mitigating unemployment woes. The latest Quarterly Labour Force Survey (QLFS) broadcast a positive signal as the unemployment rate saw a reduction to 31.9% in the third quarter, marking the lowest in a year—a ray of hope that 979,000 new jobs were weaved into the economy's fabric.

Nevertheless, South Africa grapples with some of the highest unemployment figures globally, sitting at the world's second-highest according to the International Monetary Fund (IMF), with roughly eight million individuals out of work. Saifaddin Galal from Statista sketches a daunting projection for 2024, expecting South Africa to still lead in unemployment rates across Africa.

Amid these challenges, President Cyril Ramaphosa turned the spotlight onto young job-seekers, extolling the business sector to forego the stipulation of prior work experience to inflame the prospects of youth employment. Advocating for strategic and inclusive talent acquisition, Ramaphosa emphasized the critical role of businesses in nurturing the nation's future and tackling the substantial unemployment rates.

As South Africa continues to navigate its multifaceted economic landscape, the agenda for recovery expands beyond mere statistics—it calls for a collective, sustained effort to revitalize the market and empower the upcoming workforce.