Stats SA has released the statistics for liquidations in South Africa up to January 2009.

The figures tell the effects of the decline in the economy and the resultant dramatic increase in the number of businesses, particular small businesses trading as close corporations, failing.

From a credit providers perspective these figures confirm what we have been advising clients for quite a while now – tighten up on your credit granting procedures and increasing credit vetting of your existing clients.

The effects on the South African economy at this stage indicate increased liquidations but no real increase in civil judgments which would seem to indicate that the effects on the economy are being felt more at this stage by businesses and not individual consumers. Obviously as things get tighter for businesses and more businesses fail this will be passed on to employees or consumers in for form of unemployment and deceases in working time and salary increases.

Key findings regarding liquidations for January 2009

Total number of liquidations increases

The total number of liquidations recorded for the three months ended January 2009 increased by 53,0% (from 560 to 857) compared with the three months ended January 2008. The total number of liquidations recorded for January 2009 increased by 68,8% (from 160 to 270) compared with January 2008 (see Table A and Tables 14 and 15).

The 53,0% increase in the total number of liquidations for the three months ended January 2009 was largely due to an increase of 54,4% in voluntary liquidations (from 509 to 786) and 39,2% in compulsory liquidations (from 51 to 71).

When comparing January 2008 and January 2009, there were increases of 113,7% in close corporations liquidations and 31,0% in company liquidations.