July 2025 witnessed a rise in business liquidations in South Africa, intensifying concerns about the strain on small businesses and the overall economy.
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South Africa recorded 155 business liquidations in July 2025, raising fresh concerns about job security and the fragile state of the economy. The latest statistics on liquidations report from Statistics South Africa (Stats SA) show that closures increased by 16.5% compared with July 2024, with close corporations hardest hit.
“The total number of liquidations increased by 16.5% in July 2025 compared with July 2024,” Stats SA said in its release. During the period, liquidations of close corporations rose by 26 cases, while company liquidations decreased by four.
The short-term trend points to mounting strain. “The number of liquidations increased by 12.4% in the three months ended July 2025 compared with the three months ended July 2024,” the agency reported.
Looking at the year to date, “an increase of 1.8% in the number of liquidations was recorded in the first seven months of 2025” compared with the same period last year. Industries most affected in July included financing, insurance, real estate and business services (54 liquidations), followed by trade, catering and accommodation (27), and construction (7).
Stats SA noted that the data covers both voluntary and compulsory liquidations, drawn from the Companies and Intellectual Property Commission (CIPC) and the Department of Trade, Industry and Competition.
The data comes after the RMB/BER Business Confidence index showed a decline by five points to 40 in the second quarter of 2025, after the recovery that started in the first half of 2024 stalled in the first quarter.
The index report noted: “This implies that only four out of ten business respondents in the most cyclically sensitive sectors of the economy were satisfied with prevailing business conditions. The majority of the respondents are thus pessimistic about trading conditions. While remaining above the average of 2023 and 2024, confidence is now a touch below the long-term average level.”
While the statistics point to economic distress in general, a labour union and an economist warned that the real impact is felt by workers and households.
Professor Raymond Parsons from the North West University Business School said the closure of small businesses was concerning. “The casualty rate among small businesses is a worrying trend, bearing in mind the extent to which the SA economy depends on SMMEs to create the bulk of jobs.”
He said earlier surveys identified cumulative factors such as the cost of doing business, Eskom load shedding and the heavy regulatory framework as being damaging to small business resilience.
He added that the latest higher level of small business closures may also be a contributory factor to why the country’s “incipient economic recovery remains weak and uneven.”
“It emphasises why the pace of economic reform in South Africa needs to go further and faster to strengthen the economic environment, including for SMMEs.”
The Federation of Unions of South Africa (FEDUSA) said the closures are especially damaging in labour-absorbing sectors.
“FEDUSA views the rising closure of small businesses with deep concern, particularly in labour-absorbing sectors such as trade, construction, and services. These are critical drivers of employment and economic activity. When small businesses shut down, the immediate impact is devastating for workers who suddenly lose their jobs, income, and stability,” the federation stated.
FEDUSA stressed that workers face multiple challenges when small businesses collapse. These include sudden job and income loss, limited re-employment prospects in a saturated labour market, unpaid salaries and benefits, and severe psychological and financial stress. “The ripple effects extend to households and communities that depend on those wages, deepening poverty and inequality,” the union said.
The union called for stronger government interventions to prevent closures and protect workers. “Relief mechanisms must be simplified and made quickly available to small businesses before closure becomes unavoidable,” it said. FEDUSA also urged investment in skills development, more reliable unemployment insurance, and procurement policies that prioritise small enterprises.
On collaboration, FEDUSA argued that early warning systems and tripartite engagement between labour, business and government were essential.
“As a trade union federation, FEDUSA believes that social dialogue and proactive engagement are the most effective tools to prevent job losses. Job protection, worker security, and sustainable livelihoods remain at the heart of our advocacy,” the federation said.
Independent economist Professor Bonke Dumisa pointed to broader economic conditions as a key driver of closures.
“Interest rates in South Africa remain relatively high despite a sharp decrease in the headline consumer price index,” he said. He also highlighted difficulties small businesses face with tax compliance stating that many find themselves unable to cope with the rigorous requirements. “Most of them just had to close shop because they just couldn't cope with ‘the taxman’.”