Demise of 83 000 firms in 10 years

Regulatory burdens and the global financial crisis of the past decade are blamed

A THINK tank for enterprise research has blamed regulatory burdens and the global financial crisis of the past decade for the loss of 83 000 firms in South Africa in the last 10 years.

Enterprise Observatory of SA said the developments saw the closure of insurance firms and brokers.

The group’s Johannes Wessels said other sectors that recorded declines were retail, agencies, wholesale trade, as well as transport and storage. Sectors that have experienced growth included construction, social and community services, personal and household services, catering and hospitality.

Wessels said financial crisis dramatically reduced profits with a 79.6 percent decrease in the taxable turnover from 2008 to 2010.

“Low profitability, depleted cash reserves and a struggle to procure loans triggered both the collapse of firmsas well as substantial consolidation,” Wessels said.

Sars Company Income Tax (CIT) data showed companies in the financial and business services sector that submitted tax returns had shrunk by 37 percent to 139 664 in 2016 from 222 532 companies in 2007.

Wessels said in his latest blog that the biggest fall was recorded in the long-term insurers sector, which contracted by 78 percent to 69 in 2016 from 312 in 2007.

“Where the 312 had taxable income of R19.9 billion in 2007, 69 in 2016 jointly registered losses of R6.6bn,” Wessels said. “The fact that CIT from