Further pointers to SA’s ongoing economic revival - Insolvency, liquidation stats add icing to nation’s Xmas cake
That South Africa’s economic revival is firmly on track is manifest in the most recent Statistics SA release of the liquidations and insolvencies numbers yesterday (Tuesday).
Adam Harris, a Director in the Insolvency and Restructuring Department of corporate law firm Bowman Gilfillan, highlights the patterns traced by the Stats SA trend-lines for liquidations and insolvencies, both of which have clearly entered long-term downward trends.
“The downtrend for insolvencies (which relate to individuals) is especially steep,” says Harris. “Having peaked at about 625 in August 2009, the statistic has declined to 317 in October 2010. The liquidations story (ie for companies and close corporations) is also positive, though not as impressive as the insolvency number, with November 2010’s liquidations of 344 slightly down on October 2010’s 393.”
For the first 11 months of 2010, liquidations decreased by 2,2%, while the November year-on-year decline was 29,4% -- from 487 to 344. The corresponding statistics for insolvencies reflect a 32,2% reduction – for the first 10 months of 2010 versus the first 10 months of 2009. On an October year-on-year basis, insolvencies dropped from 403 to 317, equivalent to 21,3%.
The highest numbers of liquidations by sector recorded for the first 11 months of 2010 were:
- financing;
- insurance;
- real estate;
- business services;
- wholesale and retail; and
- catering and accommodation.
Harris points out that the first three such sectors comprised 44% of the total, with the second three accounting for 28,5%.
“In assessing the numbers and their relevance for the economy, one must bear in mind that they are two and three months in arrears. Also worthy of comment is that the insolvency and liquidation statistics relate to the World Cup aftermath – which explains the hardest hit sectors and the economy’s resilience to post World Cup expectations of extended economic malaise.
“All in all, a Christmas cake with a good dollop of icing.”
