South Africa is projected to record approximately 1,540 business insolvency cases in 2026, and whilst this figure represents a continuation of the broader downward trend observed since the start of the decade, the extensive risks stemming from the ongoing Iran conflict are threatening to reverse much of that progress. This is according to the latest Insolvency Report published by Allianz Trade, which provides a comprehensive assessment of non-payment risks facing corporate entities in both 2026 and 2027.
Key Takeaways
- South Africa is forecast to see 1,540 business insolvency cases in 2026, rising to 1,590 in 2027: This follows a sustained multi-year decline, with 2025 recording a historic low of 1,534 cases – sitting 18% below the 10-year average and 40% below the 20-year average.
- Global insolvencies are rising for the fifth consecutive year, with a 6% increase projected for 2026: The Middle East conflict is the primary new risk factor, driving up energy costs, disrupting supply chains, and tightening financial conditions worldwide – with a sustained escalation potentially pushing that figure to 10%.
- South African businesses face a more fragile operating environment as key tailwinds fade: Rising fuel prices, a weakening rand, and tighter credit conditions are reversing the benefits of recent interest rate cuts and improved sentiment, making cash-flow resilience and proactive credit risk management more critical than ever.
About Arcadia Finance
Secure your loan with ease through Arcadia Finance. Compare offers from 19 trusted NCR-compliant lenders with no application fees and a simple, hassle-free process.
What the Report Covers
The Allianz Trade Insolvency Report provides a wide-ranging examination of the key risk dimensions facing corporates on a global scale, covering non-payment exposure across industries and geographies, the impact of geopolitical shocks on trade credit risk, short- and medium-term insolvency forecasts broken down by country, and sector-specific vulnerabilities within global supply chains.
- Non-payment exposure across industries and geographies
- The impact of geopolitical shocks on trade credit risk
- Short- and medium-term insolvency forecasts by country
- Sector-specific vulnerabilities in global supply chains
Global Insolvencies on the Rise for a Fifth Consecutive Year
Allianz Trade, recognised as the world leader in trade credit insurance, has projected that global business insolvencies will rise by 6% over the course of 2026. Should this forecast materialise, it would mark the fifth consecutive year of increasing insolvencies on a worldwide basis – a streak that underscores the structural fragility that has persisted in the global business environment since the economic disruptions of the early 2020s.
Whilst global insolvencies are anticipated to plateau at an elevated level in 2027, Allianz Trade has cautioned that a prolonged military conflict in the Middle East would substantially amplify insolvency risks far beyond its current baseline forecasts.
The Iran Conflict and Its Ripple Effects on Global Markets
The Middle East crisis that followed military strikes by the United States and Israel on Iran, and the subsequent targeting of energy infrastructure across the region, has thrown global markets into considerable turmoil. The conflict has introduced a new layer of instability at a time when businesses were already navigating elevated borrowing costs and fragile consumer demand.
Businesses with supply chains that rely on Middle Eastern energy inputs, including petrochemicals, fertilisers, and shipping routes through the Persian Gulf, should immediately review their supplier diversification strategies and stress-test fuel cost assumptions.
In South Africa specifically, the crisis has triggered a significant rise in domestic fuel prices, a marked weakening of the rand against major currencies, and a pronounced increase in risk-off sentiment among investors and businesses alike.
The Strait of Hormuz – A Chokepoint of Global Significance
Whilst diplomatic discussions between the United States and Iran have been underway for several weeks, tensions remain acutely high – particularly around the Strait of Hormuz, one of the most strategically critical maritime passages in the world.
Approximately 20% of the world’s oil supply – and roughly one-third of global liquefied natural gas (LNG) – passes through the Strait of Hormuz each day. A sustained blockade of this waterway would be among the most consequential economic disruptions in modern history.
Should a blockade of the Strait persist, secondary and tertiary effects could further disrupt the supply of oil, natural gas, and a range of other essential commodities – including fertilisers critical to food production and helium used in high-technology manufacturing and medical applications.
Broader Economic Consequences
Allianz Trade has noted that the Middle East crisis has significantly amplified volatility and uncertainty across energy markets, shipping costs, and global supply chains. The second-round effects are already beginning to manifest in the form of accelerating inflation, tighter financial conditions, and a broad deterioration in business confidence.
According to Allianz Trade’s chief executive, Aylin Somersan Coqui, the situation is driving up costs across global value chains – spanning sectors from agrifood to manufacturing, healthcare, and technology. She added that the combination of weakening demand, rising input costs, and tighter financial conditions is placing severe strain on companies that are characterised by weak pricing power, thin profit margins, high debt levels, or structurally elevated working capital requirements.
Escalation Scenarios and Insolvency Projections
Maxime Lemerle, Lead Analyst for insolvency research at Allianz Trade, stated that a sustained and widespread escalation of the conflict would see global insolvencies increase by 10% in 2026 and by a further 3% in 2027 – materially above the baseline projection.
| Scenario | Global Insolvency Change 2026 | Global Insolvency Change 2027 |
|---|---|---|
| Baseline (current forecast) | +6% | Plateau at high level |
| Escalation (prolonged conflict) | +10% | +3% |
A 10% rise in global insolvencies in a single year would be consistent with the kind of shock previously associated with major financial crises, such as the aftermath of the 2008 global financial crisis, when insolvencies in many advanced economies rose sharply over 2009 and 2010.
A Decade of Declining Insolvencies
South Africa presents a notably different picture to the global trend, and Allianz Trade has described it as an interesting case study. The country has experienced a gradual, sustained decline in business insolvencies over recent years, with 2026 expected to see a plateau – arriving earlier than the rest of the world is anticipated to stabilise.
Allianz Trade’s analysis confirms that the multi-year decrease in business insolvencies, which has been the dominant trend since 2020, is continuing to soften and is now approaching a floor. South Africa recorded a 1% decrease in business insolvencies in 2025 – a considerably slower pace of decline compared to the 6% reduction seen in 2024 and the 13% contraction recorded in 2023.
Business insolvencies reached 1,534 cases in 2025, representing a new historic low in the country’s long-term data series. That figure was 18% below the preceding 10-year average and a striking 40% below the 20-year average – reflecting how dramatically the post-pandemic environment reshaped the insolvency landscape in South Africa.
South Africa’s Insolvency Trajectory at a Glance
| Year | Estimated Cases | Year-on-Year Change |
|---|---|---|
| 2023 | ~1,730 (est.) | -13% |
| 2024 | ~1,548 (est.) | -6% |
| 2025 | 1,534 | -1% |
| 2026 (forecast) | 1,540 | +0.4% (plateau) |
| 2027 (forecast) | 1,590 | +3.3% |
The Tailwinds That Are Now Fading
Allianz Trade has warned that the current environment, shaped significantly by the Middle East conflict, will in all likelihood reverse the tailwinds that had been supporting South African businesses in recent years. Those supportive conditions included interest rate reductions by the South African Reserve Bank, lower global fuel prices, and a general improvement in business sentiment – all of which have now come under considerable pressure.
What Local Business Leaders Are Saying
Luke Morawitz, Country Manager at Allianz Trade South Africa, acknowledged that whilst the country has benefited from a multi-year decline in business insolvencies, the operating environment is clearly becoming more fragile. He pointed to global geopolitical tensions – particularly in the Middle East – as a key factor reversing some of the tailwinds that supported local businesses in recent years.
Morawitz further noted that as cost pressures intensify and financial conditions tighten, local companies will need to conduct a thorough reassessment of their risk exposure and place a significantly greater emphasis on cash-flow resilience and proactive credit risk management.
Practical steps South African businesses can take now to strengthen their financial resilience include:
- Reviewing debtor payment terms and tightening credit limits for higher-risk customers
- Considering trade credit insurance to protect against non-payment by clients
- Building cash reserves equivalent to at least three months of fixed operating costs
- Engaging with financial advisers to review the sustainability of existing debt structures
- Monitoring rand volatility closely and where possible, hedging significant foreign currency exposures
Conclusion
As South Africa navigates an increasingly uncertain global landscape, the country’s relatively strong insolvency track record offers some grounds for cautious optimism – but the road ahead is far from straightforward. The convergence of Middle East conflict spillovers, rising fuel costs, a weakening rand, and tightening financial conditions means that the multi-year decline in business insolvencies is unlikely to continue at its previous pace, with a plateau now firmly in sight and an uptick projected for 2027. Businesses that act decisively – by strengthening cash flows, reassessing credit exposure, and building operational resilience – will be far better positioned to weather the pressures that lie ahead than those that wait for conditions to stabilise on their own.
Fast, uncomplicated, and trustworthy loan comparisons
At Arcadia Finance, you can compare loan offers from multiple lenders with no obligation and free of charge. Get a clear overview of your options and choose the best deal for you.
Fill out our form today to easily compare interest rates from 19 banks and find the right loan for you.
