How manufacturing can stage a comeback

State-build projects and the AfCFTA market can help galvanise growth

- By Mark Goliath

Severe economic headwinds experienced over the past decade have significantly impacted local manufacturing.

Blame it on shifting dynamics in the global trade regime or the sector's adoption of more advanced manufacturing technologies, these factors have shaken the core of South Africa's industrial base. As such, local products are battling to compete against cheap imports. Southern Africa, which not so long ago ranked as one of the export markets for South African products, is now dominated by imports from the Far East.

The reality is that local manufacturing is facing an existential threat. Importantly, its significance to the local economy cannot be overemphasised. Employing nearly 1.6 million people, this sector contributes nearly 13% to local GDP - a factor that positions South Africa as the continent's leading industrial hub. However, figures by StatsSA paint a concerning trend that shows a decline in employment numbers over the past 14 years, from 2010 to 2024. Over this period, the sector has shed 309 000 jobs. This decline is part of a broader trend of job losses in the sector. It's important, though, to state that the challenges facing the sector are not unique to South Africa but are characteristic of many economies spread across the globe.

In addition to other factors cited above, the Covid -19 pandemic likely exacerbated this decline. However, more concerning to local manufacturing and growth prospects is the repercussions of the looming 30% tariffs imposed by the US government on South African exports into the lucrative US market. The new tariff order, if effected, will significantly impact the local automotive components, steel, and aluminium among other sectors of our economy.