The number of formal liquidations in South Africa fell 14% in December to 123 from 143 a year earlier, taking the figure for the 2014 calendar year 13.1% lower to 2 064, underwriting group, the Credit Guarantee Insurance Corporation (CGIC) revealed on Tuesday.

“This is somewhat surprising, given that the economy experienced its slowest growth rate [in 2014] since the 2009 recession,” commented CGIC senior economist Luke Doig.

According to the corporation, the primary sector – agriculture and mining – saw their incidence of failures fall to 37 in 2014 , from 40 in 2013, while the secondary sector – manufacturing, energy and construction – experienced 236 closures last year compared with 266 in 2013.

The broader services sector had 1 791 liquidations in 2014, compared with 2 068 in 2013, which the CGIC said belied the pressures that consumer spend had recently experienced.

“Our default payment leading indicator was broadly flat in January compared with the first month of 2014, with the number and value rising by 4% and 0.7% respectively.

“Last year was characterised by an abnormally early spike in potential defaults as businesses battled with the weak Christmas trading season. Hence, we remain vigilant to see whether the traditional first quarter hangover will be more muted than that seen last year,” Doig noted.

The company added that it was “virtually impossible” to estimate the effect of continued load shedding on businesses across the country, but that it was likely that small, medium-sized and micro industries would be forced to reduce their staff complement.

The probability that more companies would file for business rescue or apply for liquidation as a result, was, according to the CGIC, “inestimable”. 

Meanwhile, the group cautioned that the manufacturing sector remained vulnerable, especially those businesses that relied on heating or cooling in the production process.

“The only glimmer of positivity in this ‘darkest’ of times is the relief brought from reduced petrol and diesel costs,” it outlined.

The group had also witnessed an uptick in adverse information notifications over the past two weeks.

“However, we are heartened by the fact that our actual claims experience in January represents a 12% fall in number and 19% fall in value of actual claims paid,” said Doig.