In 2024 South Africa saw 1551 businesses liquidated being the lowest number for the last 7 years. This is not the economy improving which some would like to think, but more about what businesses are left and those numbers being whittled away. Soon you won't have many choices remaining as there is going to be no competition left besides a few companies in each industry. The downward spiral is still evident as there are still major challenges that lie ahead.
Unfortunately most of this downward spiral can be blamed on corruption due to the fact the tax money does not filter back into society like it should. This has been going on since 2015 and has depressed the local economy so much which has kept the country in a continuous cycle of recession.
When the economy is struggling the business service sector is what is going to take the hit. Businesses look to cut spending and the services is where they can find these savings as they do not reinvest in this area and keep what they have.
Many of these businesses that closed this year are big number employees like construction and manufacturing. The manufacturing I can understand as we had load shedding for the bulk of 2023 which gave the no chance due to the cost of back up power making the costs non competitive.
According to stats 294 000 jobs were lost between September 2023 and September 2024 with 133 000 of those jobs being lost between July and September 2024. The 15-30 age group is sitting at an official 60% unemployment which tells us this is higher as the official unemployment rate is 32.1% which is not the real figure and believe it is closer to 50%. The obvious issue is the economic growth is insufficient to impact the unemployment stats and why these numbers will just slowly deteriorate. This does not have to be this way and there are easy fixes to get the economy moving.
The problem with so many unemployed is the buying power is shrinking and it is no wonder businesses are disappearing as the client base is not the same as what it was 10 years ago.
The other issue is investors are leaving South Africa especially after the Government announced land expropriation laws which will allow the state to seize/steal land without compensation. As an investor this sends the wrong type of message and it is no wonder the Rand has been sliding.
Investors are very wary even though there are favorable yields on offer, but the risk is too high. Many believe SA is going to face strict tariff hikes from the US even though the US is SA's 2nd biggest trading partner. Why would anyone invest in a country that is clearly on the slide and with risk of even more trouble ahead?
The press will give off mixed signals stating the coalition government (GNU) has bought in new confidence with over seas investors yet more money is flowing out than coming in. I live her and refuse to bring money from outside in as that would not be very smart. There are other people I know who have also been sending money out officially and unofficially via various means. I feel blessed to have a crypto portfolio priced in USD and do not have much invested here in SA besides property.
Load shedding started again this weekend which is another big worry with the State Owned Enterprise owing more in debt than the assets it owns meaning they are officially bankrupt and rely solely on government bailouts to stay operational. If load shedding continues like it did back in 2023 then these liquidation numbers will continue to thin out what is left remaining.
Posted Using INLEO
Sounds like a tough economic situation which could get even worse with a global tariff war that is coming...
It will be a total shambles and SA will be in big trouble.
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