{"id":64867,"date":"2024-04-22T16:06:18","date_gmt":"2024-04-22T16:06:18","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/businesses-in-south-africa-are-struggling-with-the-new-normal"},"modified":"2024-04-22T16:35:06","modified_gmt":"2024-04-22T16:35:06","slug":"businesses-in-south-africa-are-struggling-with-the-new-normal","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/businesses-in-south-africa-are-struggling-with-the-new-normal","title":{"rendered":"Businesses in South Africa are struggling with the \u2018new normal\u2019"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>Pessimism may be dropping amongst businesses in South Africa; however, this is not because of a turnaround in the economy but rather an acceptance of the serious challenges in the nation.<\/p>\n

According to Stats SA, liquidations in January rose by 34.6% year-on-year (109 businesses) in January.<\/p>\n

The industries severely impacted included the financing, insurance, real estate, and hospitality sectors.<\/p>\n

<\/p>\n

Speaking at a pre-budget media roundtable, Jo Mitchell-Marais, Africa Turnaround & Restructuring Leader for Deloitte Africa, said liquidations could rise in 2024, with many businesses in the \u201czombie zone\u201c.<\/p>\n

Businesses in the zombie zone only have enough to pay off their operating expenses and service debt, but have no capital for expanding their operations. One major shock could have the potential to push these businesses over the edge.<\/p>\n

This was the case with JSE-listed electronics manufacturer and distributor Ellies, which failed to acquire Bundu Power and is now going into liquidation after its business rescue practitioners saw no possible avenue for the company\u2019s rescue.<\/p>\n

According to the new Deloitte Africa Restructuring Survey, respondents believed the local economy could take up to three years to reach pre-pandemic levels.<\/p>\n

However, the survey showed that \u2018pessimism\u2019 has fallen from 81% in 2023 to 75% in 2024.<\/p>\n

Mitchell-Marais said that the new rating doesn\u2019t necessarily mean that respondents feel optimistic but that they have accepted the current economic situation and are demonstrating resilience in the face of uncertainty.<\/p>\n

<\/p>\n

The \u201cnew normal\u201d is seen as elevated load shedding, soaring interest rates\u2014multi-decade high interest rates\u2014ineffective ports, and ongoing political uncertainty due to the May election.<\/p>\n

\u201cCompanies are trying to operate in spite of these challenges, but we are far from being \u2018optimistic\u2019 given the Fitch Ratings forecast of real GDP growth only increasing by 0,9% in 2024 and 1.3% in 2025,\u201d said Mitchell-Marais.<\/p>\n

With this new normal, South African organisations are expected to face real challenges and further business distress can be expected.<\/p>\n

The survey showed that informal operational restructuring will take centre stage with business rescue seen as a last resort.<\/p>\n

Moreover, the primary internal factor triggering distress flagged by respondents was weak board governance, followed by a lack of cash management and weak financial controls.<\/p>\n

\u201cThe development of skilled and qualified directors will go a long way in assisting to improve the board\u2019s ability to both identify early warning signs of distress and take appropriate, timely, and corrective action.\u201d<\/p>\n

\u201cIt is crucial that they have their finger on the pulse of the business and broader socio-political and economic activity.\u201d<\/p>\n

<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. Pessimism may be dropping amongst businesses in South Africa; however, this is not because of a turnaround in the economy but rather an acceptance of the serious challenges in the nation. According to Stats SA, liquidations in January rose by 34.6% year-on-year (109 businesses) in January. The industries severely impacted included the […]<\/p>\n","protected":false},"author":84,"featured_media":64866,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-64867","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nBusinesses in South Africa are struggling with the \u2018new normal\u2019 - South Africa<\/title>\n<meta name=\"description\" content=\"Pessimism may be dropping amongst businesses in South Africa; however, this is not because of a turnaround in the econom ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/businesses-in-south-africa-are-struggling-with-the-new-normal\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Businesses in South Africa are struggling with the \u2018new normal\u2019\" \/>\n<meta property=\"og:description\" content=\"Pessimism may be dropping amongst businesses in South Africa; 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