South Africa’s formal business sector is carrying nearly R10 trillion in debt, underlining how heavily companies rely on borrowing to finance operations, expansion and infrastructure.
That’s 145% of gross domestic product – the total value of economic output – based on an economic value of $410 billion for last year and an exchange rate of R16.46.
Statistics South Africa’s latest Annual Financial Statistics survey shows total liabilities in the formal business sector reached R9.8 trillion in 2024.
“Debt can quickly become a curse if businesses take on more than they can handle,” Statistics South Africa said in the report.
While the number is enormous, the data also signals a shift. Total business debt declined by 0.7% compared with 2023, marking the first drop recorded since the survey’s time series began in 2005.
The decline was driven largely by lower borrowing in the business services sector, followed by construction and manufacturing.
Other industries moved in the opposite direction. Transport, storage and communication recorded the biggest increase in liabilities.
Businesses typically rely on a mix of long-term and short-term borrowing. Long-term liabilities include loans and lease obligations, while short-term liabilities can include bank overdrafts and trade payables owed to suppliers.
But the size of debt alone does not necessarily indicate financial strain.
A clearer picture emerges when liabilities are compared with assets – what companies owe against what they own.
Economists often use the debt-to-assets ratio to measure this balance. The ratio compares total liabilities with total assets to show how much of a company’s resources are financed through borrowing.
Across the formal business sector, the ratio has remained relatively steady for two decades.
Statistics South Africa data shows it fluctuating within a narrow band of between 0.6 and 0.7 since 2005. In 2024, the ratio was at 0.67, meaning about 67% of business assets were financed through debt.
Or, put another way, 67c of every R1 in assets is financed with debt.
Before the COVID-19 pandemic the ratio was slightly lower, at 0.66 in 2019.
The stability masks significant differences between industries.
Electricity, gas and water supply recorded the highest debt-to-assets ratio both before and after the pandemic, indicating a heavy reliance on borrowing to finance infrastructure and operations.
At the other end of the scale, forestry and fishing recorded the lowest ratio during the same period.
The data also highlights sectors where debt pressures have intensified. Since 2019, the business services industry recorded the largest increase in its debt-to-assets ratio, followed by mining and quarrying and manufacturing.
Construction recorded the biggest decline in the ratio, suggesting a reduction in borrowing relative to assets.
Small enterprises face slightly greater pressure than the broader business sector.
In 2024, small firms recorded a debt-to-assets ratio of 0.68, marginally higher than the overall sector.
In two industries, small businesses were carrying more liabilities than assets.
Small enterprises in electricity, gas and water supply and in mining and quarrying both recorded ratios above one, meaning their liabilities exceeded the value of their assets.
Borrowing plays a particularly large role in these sectors.
Among small mining and quarrying firms, long-term loans account for about two-thirds of total liabilities.
In electricity, gas and water supply, bank overdrafts make up the second-largest share of liabilities after long-term loans, accounting for 22%.
Looking at assets, long-term investments account for the largest share of holdings among small enterprises overall, representing 37% of total assets.
Property, plant and equipment dominate balance sheets in most industries, although business services stands out as an exception where long-term investments make up the largest share.
Statistics South Africa’s Annual Financial Statistics survey tracks the financial health of industries using data from company financial statements, covering indicators such as turnover, employment costs, capital expenditure and debt levels.
The figures also feed into estimates of South Africa’s gross domestic product.
While the overall debt burden of the formal business sector has remained relatively stable when measured against assets, the industry breakdown shows that some sectors – particularly utilities and mining among small enterprises – are carrying significantly heavier borrowing loads.
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