South Africa faces rising trade credit risk and insolvencies

South Africa is facing increasing trade credit risk and rising business insolvencies despite signs of stabilizing inflation and interest rates. Stress signals are appearing across various sectors, most notably in agriculture, food value chains, and consumer-linked industries.

Economic pressure is being driven by second-round effects of geopolitical conflicts, such as those in the Middle East. While initial impacts include higher oil prices and shipping disruptions, the subsequent rise in fuel and transport costs is driving up the price of goods. This trend is placing pressure on consumer demand and lengthening cash conversion cycles, leading to increased risk for businesses regarding their debtor books.