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Financial sector still bearing brunt of liquidations

Financial sector still bearing brunt of liquidations

The financial, insurance and real estate sector has seen highest number of liquidations in the year to date – even exceeding those in the hard-hit accommodation and catering sector. This is according to the latest – to August – liquidation and insolvency figures from Statistics SA.

As the table below shows, 427 entities in the finance, insurance, real estate and business services sector were liquidated in the first eight months of this year. Of these, 219 were companies and 208 were close corporations.

However, liquidations in the sector are down compared with August last year.

The main points in StatsSA’s liquidation figures are:

  • The total number of liquidations increased by 12.1% in the first eight months of 2021 compared with the first eight months of 2020.
  • The total number of liquidations decreased by 16.8% in the three months to the end of August 2021 compared with the same period last year.
  • Liquidations fell 27.6% year-on-year in August 2021. Voluntary liquidations decreased by 60 cases and compulsory liquidations decreased by three cases.

According to StatsSA, the estimated number of insolvencies increased by 129.7% in the three months to the end of July 2021 compared with the same period last year.

The insolvency rate increased 157.7% year on year in July 2021.

Seasonally adjusted insolvencies decreased by 15.8% in July 2021 compared with June 2021.

The large number of liquidations in the finance and business services sector dovetails with the Quarterly Labour Force Survey (QLFS) for the second quarter. It found that the financial sector shed 278 000 of the 375 000 jobs lost in the formal sector in the first three months of this year.

Last week, the Bureau for Economic Research at the University of Stellenbosch said the number of jobs supported by South Africa’s tourism industry declined by 960 000 to 640 000 in 2020 from 1.6 million in 2018 as spending by domestic and inbound visitors slumped to R109 billion in 2020 from R273 billion in 2018.

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