Gauteng Business News

Send  Share  RSS  Twitter  28 Jan 2015

INSURANCE: Fewer Liquidations Despite Poor Consumer Spending


Recent Gauteng Business News

Formal liquidations fell 14% in December to 123 from 143 a year earlier, taking the calendar figure 13.1% lower to 2064. This is somewhat surprising given that the economy experienced its slowest growth rate since the 2009 recession. The primary sector (agriculture and mining) saw their incidence of failures fall to 37 from 40 in 2013; the secondary sector (manufacturing, energy and construction) experienced 236 closures last year compared to 266 in 2013 while the broader services sector had 1791 liquidations compared to 2068 in 2013. Once again this supposed sharp improvement in the services sector belies the pressures that consumer spend has experienced of late.

“Our default payment leading indicator was broadly flat in January compared to the first month of 2014, with the number and value rising by 4% and 0.7% respectively, says Luke Doig, Senior Economist at Credit Guarantee Insurance Corporation.

“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,” continues Doig.

The economy has recovered marginally from the depressed first half of 2014 although weak external demand and power problems do cloud the current environment. It is virtually impossible to estimate the effect of continued load shedding on countless businesses across the country. ‘Job shedding’ is a very unfortunate reality as Micro, Small and Medium enterprises are the most vulnerable to the effects of being ‘powerless’ for long periods. The probability that more companies will file for business rescue or merely throw in the towel and apply for liquidation in future months, as a result, is inestimable. The manufacturing sector too is as vulnerable, especially those businesses that rely 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 that those businesses fortunate enough to run generators, face in order to keep their operations tenable.

“We have also witnessed an uptick in adverse information notifications over the past two weeks and this also guides our caution. However we are heartened by the fact that our actual claims experience in January 2015 represents a 12% fall in number and 19% fall in value of actual claims paid. Compared to August last year, we estimate the monthly savings for consumers and businesses from the accumulative R3.09 cents per litre for petrol and R2.57 cents per litre for diesel price cuts at approximately R5.5 billion. This is supporting consumer spend and alleviating input cost pressures for most productive sectors and further sizeable price cuts should emerge in February too,” concludes Doig.

study-it-onlineBusiness Profilesspaceacredecor-and-furniturejane-shonfeld

Online Foreign Exchange
Foreign Exchange


Fax 2 Email



Online Casino


Shop Online

Study IT
Study IT Online

Web design
Web Design


Work from Home
Company News


© 2021 All rights reserved.

Daily Newsletter Subscription


Subscribe to the Gauteng Business News Daily News and information email (it's free).

Thank You
Your email address has been added.

Email Address: