South Africa likely to see 1,540 business failures in 2026 as cost pressures mount

South Africa is expected to see 1,540 business insolvencies in 2026, marking a slight increase after years of decline.

The forecast comes from Allianz Trade, the global trade credit insurer. The company says South African businesses have so far enjoyed historically low failure rates, but rising costs, tighter financial conditions, and global uncertainties are starting to put pressure on local firms.

Allianz Trade also noted that the long-term fall in business failures, which began in 2020, is slowing down.

Last year, insolvencies fell by just 1%, compared with 6% in 2024 and 13% in 2023. Allianz Trade said the number of business failures is expected to rise slightly to 1,540 cases in 2026 and 1,590 in 2027, as global economic pressures, including the ongoing crisis in the Middle East, begin to affect local companies.

“While South Africa has benefited from a multi‑year decline in business insolvencies, the environment is clearly becoming more fragile. Global geopolitical tensions, particularly in the Middle East, are reversing some of the tailwinds that supported local businesses in recent years,” Luke Morawitz, Country Manager of Allianz Trade South Africa, said.

“As cost pressures rise and financial conditions tighten, South African companies will need to reassess their risk exposure and place greater focus on cash‑flow resilience and credit risk management.”

The company also warned that a prolonged disruption in the Strait of Hormuz could further strain global supply chains.

“A sustained and widespread escalation would see global insolvencies increase by +10% in 2026 and +3% in 2027. This would translate into around 4,100 additional insolvency cases in the US and 10,500 in Western Europe over the 2026–2027 period,” Maxime Lemerle, Lead Analyst for insolvency research at Allianz Trade, said. 

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