Personal bankruptcies and company failures in south Africa have climbed sharply this year, with the pace set to quicken as soaring inflation and the rising cost of debt squeeze the economy. Company liquidations rose 7.2 per cent in the first five months of this year despite a dip of 2.9 per cent, marking the first increase for that period since 2002, according to statistics.
Bankruptcies soared 9.7 per cent in the first four months of this year, rising by an annual rate of 3.4 per cent in April. In May and June, two interest rate increases and the likelihood of further hikes wolud put more financial pressure on consumers and companies. Luke Doig, asenior economist at Credit Guarantee Insurance of Africa, said: ” We expect corporate closures to escalate sharply in the months ahead, escalating input cost pressures, the squeeze on consumption demand and higher working capital finance costs will all exact a toll. We do not expect any sector or firm to escape the tightening noose”,
The data showed that the highest number of company failure were seen in the economy’s three main sectors financial services, manufacturing and retail.