Political uncertainty, high unemployment rates, slow economic growth and severe drought have created a perfect storm of economic and political events for South Africa, according to advisory firm Deloitte, which published its South African Restructuring Outlook Survey 2016 on Wednesday.
“Restructuring refers to any formal or informal process involving the financial and operational restructuring of a company’s affairs as a result of financial stress,” explained Deloitte South Africa restructuring services leader Nisha Dharamlall.
Deloitte considered the opinions of over 30 key restructuring professionals in the country to better understand the challenges and expectations of South Africa’s restructuring market in 2016.
Survey respondents included a selected mix of commercial banks, development finance institutions, lawyers, business rescue practitioners, academics and other key restructuring professionals.
The survey revealed that close to 39.4% of business restructuring experts expected a recessionary economy driven by political uncertainty and corruption, concerns around global economic health and poor commodity prices.
Deloitte restructuring services leader Daniel Terblanche believed that, despite restructuring being in its infancy in South Africa, results were encouraging as the industry understood that it required more support in financial restructuring.
“This is a significant trend at a time when increasingly more businesses in South Africa will need to become literate in managing financial stress professionally,” he said.