Liquidations in First Half of 2026 Are a Grave Warning for South Africa

South Africa liquidated 1,361 businesses in the first half of 2026. That number is slightly lower than the same period last year. But don’t be misled by the 0.9% decline. Behind the headline figure is a far more disturbing story: small and medium-sized businesses are being squeezed from both sides, by rising costs and weakening demand.

Data released by Statistics South Africa (Stats SA) shows that 1,361 businesses were liquidated during the first six months of 2026.

On the face of it, the 0.9% decrease from the same period in 2025 might appear encouraging.

It isn’t.

The more important story is what lies beneath the number.

South Africa is quietly losing the small and medium-sized businesses that form the backbone of local economies and provide a substantial share of employment. Their disappearance rarely makes national headlines. But hundreds of closures, spread across towns, suburbs and business districts, gradually drain communities of jobs, spending and tax revenue.

Small Businesses Bear the Brunt

A common assumption during an economic downturn is that business failures are driven by large corporations.

That isn’t how liquidation generally works.

Large industrial groups and major listed companies have access to considerably more capital and restructuring options. They can sell assets, refinance debt or enter business rescue long before liquidation becomes inevitable.

Clarification on Tongaat Hulett: Despite the company’s high-profile financial difficulties, Tongaat Hulett has not been liquidated. It remains under Business Rescue, initiated in October 2022, while it implements a restructuring plan under the Vision Consortium.

The liquidation figures tell a different story at the smaller end of the economy.

Private companies (Pty) Ltds) account for approximately 95% of categorised business closures, while close corporations continue to experience high failure rates because they generally have much thinner cash-flow buffers.

The hardest-hit sectors include finance, real estate and business services, followed by trade, catering and accommodation.

This matters.

When a major corporation fails, thousands of jobs can be lost in one highly visible event. When hundreds of small businesses disappear quietly, the damage is spread across the economy and becomes much easier to ignore.

But the economic effect is no less real.

Compulsory Liquidations Are the More Ominous Signal

There is another warning hidden in the figures.

Roughly 91% of liquidations in the first half of 2026 were voluntary, meaning that owners chose to wind up their businesses.

But compulsory liquidations increased year-on-year.

That is a much more worrying indicator.

A voluntary liquidation can mean that an owner has decided that the business is no longer viable and would rather close it down than continue losing money.

A compulsory liquidation is different.

It means creditors have gone to court because they cannot recover what they are owed.

By the time that happens, cash reserves have generally been exhausted and conventional attempts to restructure the debt have failed.

In other words, the business has run out of road.

This Is More Than the “Cost of Doing Business”

It is easy to blame business failures on the familiar phrase “the cost of doing business.”

And there is plenty of evidence to support that argument.

But rising costs are only one side of the problem.

The real pressure on South African SMEs comes from a vicious squeeze.

The SME Compression Cycle

Supply-side pressures

• Soaring fuel costs

• High interest rates

• Rising electricity tariffs

• Tax and debt-recovery pressures

• Increasing security costs

Demand-side pressures

• Stagnant household disposable income

• High consumer debt

• Reduced discretionary spending

• Weak retail demand

The result is straightforward:

Rising costs + weak demand = squeezed margins ? cash-flow pressure ? shutdown or liquidation.

The Supply-Side Squeeze

Fuel and energy costs continue to put pressure on operating margins.

The cost of borrowing remains another problem. Even where interest rates have eased from their peaks, debt remains expensive for businesses that need working capital to survive or expand.

Then there is SARS.

The South African Revenue Service has a legitimate responsibility to collect taxes. But aggressive debt-recovery action can leave a struggling small business with very little room to negotiate its way through a temporary cash-flow crisis.

For a large company, a financial squeeze can sometimes be absorbed.

For a small business operating on thin margins, it can be fatal.

The Demand Problem

There is another side to the equation that receives less attention.

Customers have to spend money.

A business can survive rising costs if its revenues rise with them. But when household disposable income is under pressure, consumers cut back.

They postpone purchases.

They trade down.

They stop eating out.

They buy less.

That leaves small businesses caught between rising costs and declining revenue.

No amount of clever management can indefinitely overcome that combination.

Then There Are the Problems That Don’t Appear on the Balance Sheet

The liquidation figures also have to be viewed against South Africa’s broader structural problems.

Policy uncertainty has made it difficult for businesses to plan with confidence. The country still lacks the sort of clear, coherent economic growth strategy that would encourage sustained investment and give local businesses greater certainty about the future.

Then there are the logistics problems.

Freight transport, ports and municipal infrastructure remain sources of friction and additional cost. Decades of underinvestment and inefficiency effectively impose another tax on businesses that move physical goods.

And then there is crime.

Small businesses increasingly have to contend with theft, extortion, protection rackets and the cost of security simply to protect their premises, staff and stock.

These costs rarely appear as a single line item called “failure of the state.”

They are scattered through the accounts as security, insurance, lost working hours, damaged equipment, delayed deliveries and lost sales.

But they are real costs.

Traditional economic commentary tends to describe these problems in sanitised language such as “headwinds”, “infrastructure constraints” and “operational challenges”.

Ask the owner of a small business trying to keep the doors open and the language is likely to be rather less diplomatic.

Where Does This Leave South Africa?

The obvious question is: What can actually be done?

The first step in fixing any crisis is acknowledging that it exists.

That is precisely what seems to be missing.

The government appears deaf to the warning bells coming from the trade and service sectors. Instead of decisive economic relief and structural reform, businesses are confronted with policy inertia while the pressures continue to accumulate.

There is no magic solution.

South Africa needs stronger economic growth, reliable infrastructure, functioning logistics, greater policy certainty and a far more hostile environment for organised crime and corruption.

It also needs an economy in which consumers have enough disposable income to spend.

Those are not quick fixes.

Meaningful structural reform may ultimately require a fundamental political realignment. But political change does not happen overnight, and there is no immediate prospect of a change of government solving these problems.

In the meantime, the country’s business engine is being slowly stripped of its smaller components.

The 1,361 liquidations recorded in the first half of 2026 are therefore more than a statistic.

They are a warning.

South Africa’s small and medium-sized businesses are being squeezed from both sides. And unless something changes, the quiet death spiral will continue — one liquidation at a time.

Eighty percent of entrepreneurs make this costly idea mistake

Train your mind to look for and create income opportunities with the “Breakthrough Ideas” manual.

Most people wanting to start a new income stream come up with the wrong ideas because they focus on a product or service idea.

You see, when you go for a new idea you can face too many obstacles. You have to spend money testing your idea. You need to develop your idea and find distribution. All this costs money. The worst thing is that you only have an outside chance of success.

Even the big companies in FMCG don’t get new product development right. Something like 76% of new products in FMCG failed between 2011 to 2013 within a year. About 66% of the products never reach the sales volume of 10,000 items, according to a news report. Continue reading “Eighty percent of entrepreneurs make this costly idea mistake”

Did this small business sign personal sureties?

Stadium progress - March 2008
Stadium progress – March 2008 (Photo credit: warrenski)

The weekend newspaper in the Western Cape covered the assets of a construction company under liquidation in its auction pages. When you look at the concrete mixer, generators and cut-off saw machine you get struck by the sadness of a business going into bankruptcy.

The sale didn’t only include these items but also the company’s construction, road and survey equipment and its office equipment and furniture. These items included containers, compactors, compressors, water pumps, moisture density gauges, generators and Leica Land Surveyor and large quantities of tools, ladders, drills and spares, scaffolding and trailers. Continue reading “Did this small business sign personal sureties?”

How to market test your product at low-cost

George opens in Johannesburg
George opens in Johannesburg

My daughter wanted a shoulder bag to take with her on an upcoming holiday and we went to the new George clothing store in the Cresta Shopping Centre, Northcliffe, Johannesburg.

We weren’t in the shop for more than five minutes when my daughter found exactly what she was looking for and better quality than she would have found in similar priced local clothing stores.

What interested me is the temporary format of this clothing store to test the local market. George, which is owned by Asda, a subsidiary of Walmart in the UK, has been brought out to South Africa by Massmart (owned now by Walmart). Continue reading “How to market test your product at low-cost”

Fishy tales of snoek in False Bay

Recreational fishermen still catch snoek in the occasional run. Local Fish Hoek business person Alf Caplen looking happy after a morning catching snoek in the bay.
Recreational fishermen still catch snoek during the occasional run in the bay. Local Fish Hoek business owner Alf Caplen looking happy after a morning of catching snoek.

Lawrence Green, the gem of South African writers who loved the country so deeply, recalls meeting the old fishermen at Saldanha who talked of the days when one man could “haul in 200, even 300 snoek in a great day’s fishing.”

As Green says, “… the fishermen needed enormous catches when a snoek fetched only twopence on the wharf.”

I never caught much above 100 snoek in False Bay and the times that I did break through the hundred mark I could count on one hand.

Already in the mid-1970s commercial fishing was taking its toll on snoek fishing in False Bay. Even the professional fishermen from Kalk Bay did not often catch 100 each a day. Yet there was a legendary skipper nicknamed “Hondered Bedonderd” (Hundred Crazy”) who regularly reached his target. Continue reading “Fishy tales of snoek in False Bay”

Big game fishing off Cape Point – the ones that got away

Credit:  U.S. National Oceanic and Atmospheric Administration.
Credit: U.S. National Oceanic and Atmospheric Administration.

My first fishing experience goes so far back into my early childhood that most of it is like a blurry dream. Flashes of memory place me at a fishing spot behind Clovelly station off the rocks. My father had handed me the rod but I can’t remember pulling in the fish. My next image is seeing a large white Steenbras on a rock next to the water’s edge with white surf rushing in. I did not see the Steenbras escape but I know I lost it and I have always remembered the bad feeling I experienced afterwards.

Charles Horne recounts how on Wednesday, January 9, 1957 fisherman at Rooikrantz, near Cape Point, landed about 200 tunny weighing from 9 kg (20 lb) to about 20 kg (60 lb). He says in “Big Game Fishing in South Africa” that “no estimate will ever be made of the number of big fish that threw the hooks or broke away” and how many were lost on light or weak tackle. Continue reading “Big game fishing off Cape Point – the ones that got away”

An innovator shows how new uses for products can open new markets

Technology developed in Africa shows how innovation can lead to new uses for products which can open new markets.

greysanatomy1A small to medium-sized company developed an x-ray scanner for detecting diamonds at mines in South Africa. Because regular checks were made the scanner had to emit minimum levels of radiation.

The innovative entrepreneurs making the scanner were not satisfied with this one market for their product. They began looking for new uses for applications for their scanner technology.

Now Lodox Systems has supplied more than 40 of their x-ray scanners to hospitals in South Africa and around the world. Their Xmplar-dr scanner takes 13 seconds to produce a full body overview of injuries and foreign bodies (such as bullets in gunshot victims). Continue reading “An innovator shows how new uses for products can open new markets”

An idea that led an entrepreneur to a new food product

512px-Peanut_Butter_Texture (2)I spent two years working in a peanut butter factory in Randfontein, South Africa, and loved it. So forgive me when I get excited about peanut butter and associated food products.

Last year Pick ‘n Pay introduced the Planters range of peanut butter in its stores but sadly with the economy as it is even its flagship on William Nicol Drive, Bryanston, no longer stocks Planters. Pity. But they’ve cut away a lot of frills since opening that store including sometimes no flowers, fancy hand wash or electronically dispensed paper towels in the men’s toilets.

The interesting and innovative part of the Planters product, a company always known for its quality nuts, was that it decided after something like 80 years to introduce a peanut butter. Not only that but the positioning is towards the more mature adult rather than children.

I came across an entrepreneur Justin Gold who came up with an idea from goo packs, gels another squeezable energy boosts sold in stores. Continue reading “An idea that led an entrepreneur to a new food product”

Winter snoek fishing from Hout Bay and mountain water

English: Hout Bay, South Africa
English: Hout Bay, South Africa (Photo credit: Wikipedia)

When you are young the places you experience and the people you meet seem so extraordinary that you promise yourself you’ll never forget those great days that seem to have come out of a dream.

Growing up we lived in Kalk Bay, which sits in the heart of False Bay, and did most of our fishing there in the summer and autumn months. But when the winter came with the cold and the rain and those strong North Easters we’d head out to Hout Bay, travelling across Chapman’s Peak towing the ski boat behind the Land Rover at four in the morning.

One morning when we got to the ski boat slipway at Hout Bay harbour the queue was long. It was so freezing cold that time of the morning that my friend Peter and me took an empty two-stroke oil can, filled it with sand and poured petrol into it. After a few attempts we lit the petrol and huddled around the lighted can to keep our hands warm. Continue reading “Winter snoek fishing from Hout Bay and mountain water”

5 overlooked opportunities for your small business in this sick economy

Shipyard_Crane
Shipyard_Crane (Photo credit: shoebappa)

I heard this story once about a shipbuilder who would wait for an economic recession to build new ships. He could get labour, steel and services far cheaper when times were bad. By the time the economy mended itself and was growing again, the shipbuilder would sell his ships. Demand for ships was stronger again. That’s how he made big money.

This economic downturn has been running for five years. In South Africa, although we experienced 0.9 percent GDP growth in the first quarter (not unlike Mexico, at 0.8 GDP growth, mind you) we still haven’t gotten into negative territory. Some sectors have but here we are talking overall.

Look what the sick economy has brought: high administered prices, shocking energy spikes (electricity and petrol), tightening of cash and weak demand. As costs have risen so has inflation and wage demands. Small business has experience increased theft, stock loss and armed robberies.

Yet while many things are going south in this rocky economy, smart-thinking small business owners have been fine-tuning their costs, negotiating harder and sweeping out the dead wood.

Here are five overlooked opportunities for your small business in this sick economy: Continue reading “5 overlooked opportunities for your small business in this sick economy”