There is no sugar coating the economy in South Africa even when analysts state the liquidation numbers are down since the lock down numbers in 2020-2022. There is one big difference since those days as the number of business has declined considerably so the starting point as a reference is smaller.
The month of September showed another 145 businesses closed their doors bringing the total shutdowns for the first 9 months of 2025 to 1180. This is a 23.95% increase versus 2024 which is a worrying sign that is reflecting the SA economy.
Having a business in South Africa you are constantly battling local failed infrastructure, ever increasing electricity tariffs and service providers, black empowerment policies, expensive unskilled labor, internal corruption and theft. It is not surprising to see those numbers steadily increasing as just being able to survive barely making ends meet cannot continue for years on end and it seems many businesses are calling it quits.
The businesses feeling the heat are those in finance, business services and real estate. The business services I can understand as what business is going to spend on extras when they can do it themselves or hold off? Trade, catering and accommodation again falls into a similar thought process as catering one can do themselves if required and accommodation would be work employees travelling which with correct budgeting and planning can be avoided.
I do expect manufacturing, transport and storage to start showing signs of strain by the end of the first quarter next year when the US Tariffs will start showing signs of impacting the economy in real terms. Up till now it has all been about declining percentages and figures and the real story will be closed businesses and job losses.
SA Government Should Have Made A Trade Deal With The US
The African Growth and Opportunity Act (AGOA) which helped Southern Sahara Africa have special trade deals with the US ended in September this year. The talk was this special deal would be extended for another 12 months with the only problem being the US Congress has to vote to keep the deal alive. The US Government is shut down and until they open up again no one knows the time line and this is now day 35 and counting since AGOA stopped. This impacts thousands of businesses and more than 500 000 workers. The agricultural and automotive industries rely on this deal and the fall out will happen.
The way the government has been speaking or the press is they still think they have a hope of keeping this AGOA deal alive and I just do not see it. Why place tariffs on a country if you have another deal that is offering a free trade zone which would nullify the tariffs? This makes no sense and enforcing the Tariffs was meant to enforce political change in SA with regard to racist policies and racist business practices. AGOA is a non starter and SA must move on and forget about it.
The problem with the US tariffs is they are not 30% and are actually much higher due to SA being part of the Most Favored Nation (MFN) agreement being a member of the World Trade Organization. This is a standard customs duty applied to all WTO members and SA was exempt from this due to the AGOA deal and since that ended the MFN custom rates apply. These rates vary depending on the category of the item. Imagine not being able to negotiate a trade deal when you had the opportunity to do so and now have left your country's economy hanging.
Posted Using INLEO