Commentary: Business Churn in South Africa

StatsSA recently released its Statistics of Liquidations report for the month of May 2023 and the data is quite interesting. Although a total of 11,629 companies were liquidated between 2017-2022 (the figure rises to 12,303 if the current 2023 figures are counted [January to May]), there has been a slight decline in the number of liquidations since the pandemic started in 2020. Could this mean companies in South Africa are becoming more financially resilient?

These figures piqued my interest as to the relationship between the number of liquidations & the annual number of new business registrations between 2017-2022. Using data from the World Bank and the CIPC, I found that the business churn (the number of liquidations per 1000 new businesses) has been relatively steady, hovering between 4 and 5 liquidations per 1000 new businesses registered.