Faith Nyasuguta
South Africa’s economy is facing a storm. In just the first four months of 2025, a staggering 482 businesses have shut down, according to new data from Statistics South Africa (Stats SA). In April alone, 109 businesses were liquidated – a clear sign that the nation’s business climate is deteriorating under both internal and external pressure.
Compared to the same time last year, the April figures represent a 13.2% increase in business closures. But it’s not just about numbers — the pattern behind the statistics tells a deeper story. Voluntary liquidations, where business owners choose to wind down operations themselves, rose by 25.7% year-on-year.
In contrast, compulsory liquidations, initiated by creditors due to unpaid debts, fell by 29.4%. This shift suggests that many entrepreneurs are stepping away from unsustainable operations before being forced out.
Behind this mass exodus lie rising interest rates, low consumer demand, and relentless operational challenges. Borrowing money has become more expensive, while weak household spending has dried up key revenue streams. For many businesses, especially small and medium-sized enterprises (SMEs), staying afloat is becoming nearly impossible.
One of the biggest operational hurdles remains South Africa’s ongoing energy crisis. With load shedding – the term for widespread power outages – continuing to plague the country, businesses are forced to rely on costly alternatives like diesel-powered generators. The result? Spiraling operational costs and unpredictable production timelines. On top of that, rising transport and logistics expenses are weighing heavily on already-thin profit margins.
According to the Small Business Institute, the rising wave of liquidations is a glaring warning sign. Many businesses are simply unable to sustain their operations under the current economic pressure, and without targeted interventions, the situation could worsen.
But it’s not just local challenges making life difficult. South Africa is now caught in the crossfire of global trade tensions, particularly following the return of U.S. President Donald Trump and his renewed tariff war. On April 5, Trump imposed a blanket 10% global tariff, then followed it up with more aggressive “reciprocal” tariffs aimed at select countries, South Africa included.
Branded the “Liberation Day” tariff, the measure was briefly paused for 90 days, but the damage was done. These moves have shaken global markets and pushed many South African companies into survival mode, with some delaying investments and halting expansion plans altogether.
To make matters worse, South Africa’s own Government of National Unity (GNU) has been struggling with internal budget conflicts, adding yet another layer of uncertainty for the private sector.
As the country moves deeper into 2025, the rise in business closures sends a clear message: without bold economic interventions and policy clarity, more businesses could follow the same fate, and with them, thousands of jobs and livelihoods.
RELATED:
