Manufacturing’s Moment: Can It Finally Deliver in South Africa?

South Africa’s economy posted a modest but notable rebound in Q2 2025, growing by 0.8% compared to 0.1% in Q1. Key sectors supporting that growth include manufacturing, mining, and trade, a sign that production is stirring. But the optimism must be tempered. The growth rate is far below what is necessary for job creation and poverty alleviation. 

Manufacturing itself showed a positive turn in Q2,  expanding by roughly 1.8%, contributing meaningfully to GDP. However, that growth arrives after a harsh period of contraction. In Q1, manufacturing shrunk substantially. Several sub-divisions posted negative year-on-year changes, including motor vehicles, parts, food & beverages, and chemical/rubber/plastics. 

So what does this mean in practice? Can manufacturing be a lever for job creation, economic stability, and more equal growth?

The Potential: Jobs, Exports, Local Value

Manufacturing remains a pillar in South Africa’s economy. It employs over 1.6 million people and in 2024 contributed about 13% of GDP. The Tshwane area, in particular, has become a focal point. The Tshwane Automotive Special Economic Zone (SEZ) has already produced 3,244 permanent jobs, more than 5,000 construction jobs, with high participation from youth and women. 

Tshwane's broader economic strategy aims even higher, particularly to attract R17-26 billion in investment, create 80,000 jobs, and push local growth to 3.9% by 2029. The city also has strong export credentials. In 2024 Tshwane's exports reached around R200 billion, almost a third of Gauteng’s total exports.

Manufacturing’s potential ripple effects are many. Local supply chains, technical skills development, downstream industries like logistics, energy, and transportation benefit when manufacturing scales up.

The Headwinds: Infrastructure, Policy Gaps, and Global Pressures

The road forward is steep. Several challenges persist:

• Electrical infrastructure and energy security: Load-shedding remains a pervasive constraint. Manufacturing industries require reliable, often round-the-clock power, which when absent, raises production costs and hurts competitiveness.
• Logistics bottlenecks: Ports, rail, freight networks are lagging. Even when factories are operational, exporting, importing inputs, and distributing finished goods are slowed by transport inefficiencies. 
• Input costs and global competition: Rising costs (energy, materials, regulation) combined with low-cost imports, especially from China, undercut local manufacturing. For example, there are ongoing discussions with Chinese automakers about establishing plants locally, but also concerns about tariff policy to protect domestic manufacturing. 
• Inconsistent policy prioritization: As one Gauteng MEC pointed out, while Tshwane’s strategy has 10 priority sectors, manufacturing isn’t always explicitly included or given its weight, even though the city contributes heavily to manufacturing jobs. 

Another critical pressure comes from international policy shifts. For instance, the EU’s Carbon Border Adjustment Mechanism (CBAM) will soon require exporters to meet strict environmental standards. Those who can’t may face barriers entering European markets. This raises costs and demands rapid adaptation.

Why Growth Is Not Enough (and What Needs to Change)

Economists are cautious. A 0.8% quarterly growth, while better than the prior quarter, is far below what is needed. For context:

• To meaningfully reduce unemployment (which is persistently above 30%), growth closer to 3%+ annually is commonly cited.
• Many sectors are still lagging. Construction, transportation, storage, and communication did not perform well in Q2, meaning gains are uneven.
• The demand side is mixed. While household consumption improved and imports were low, that’s not necessarily a sustainable base. Sustained investment (both domestic and foreign), predictable policy, stable regulation and infrastructure must follow.

So what needs to change?

1. Strategic prioritisation of manufacturing: Making manufacturing a clear priority in all local and provincial economic strategies, with specific measurable targets (jobs, investment, exports). Where manufacturing has been explicitly neglected, as some in Tshwane argue, that needs correction. 
2. Infrastructure investment: Improve energy reliability (restore capacity at power stations, invest in renewables), ensure zoning, water use licences, environment compliance processes are streamlined. Bulk infrastructure constraints must be addressed so that factories can operate without crippling delays or costs. 
3. Trade and tariff policy to defend local industry: While encouraging foreign investment (e.g., in EV manufacturing) is valuable, local manufacturing needs protection where unfair competition threatens it. Tariffs must be calibrated to balance protection and global trade commitments. FTAs and import duties might be tools here.
4. Skill development & value chain linkages: Manufacturing tends to have spill-over benefits if local suppliers, downstream industries, and technical training are part of the picture. Policy must support local content, supplier development, vocational training.
5. Export competitiveness under changing global norms: Firms must be prepared for carbon-footprint regulations abroad; meeting sustainability requirements, adjusting to CBAM-like rules, will be costly but unavoidable. Government support (in incentives, financing, compliance assistance) can help mitigate the transition.

What to Watch in Coming Months

• Will the South African Reserve Bank act on the grounds that Q2 growth is encouraging? Economists expect another rate cut of 25 basis points this year, but inflation risks and cost pressures could complicate this.
• How will Tshwane and Gauteng respond in practice? The investment targets are ambitious, but getting investors in, securing financing, and delivering infrastructure will be tested.
• How will policy respond to global pressures, especially in terms of trade policy, environmental regulations, and competition from cheaper imports?
• Whether local manufacturing revival can go hand in hand with tackling unemployment, poverty, and inequality. Growth must translate into jobs, especially for women and youth, not just profits or output.

Manufacturing in South Africa is at a crossroads. The recent recovery and positive stats offer a glimmer of hope: enough movement to believe revival is possible, but not yet enough to promise it. If the country (and cities like Tshwane) can align strategy, infrastructure, policy, and investment, manufacturing has the potential to pull many out of poverty, reduce import dependency, and generate resilient growth.

But without concerted action, the risks are that spikes in output will be temporary, quick fixes, not deep transformations. Whether this moment becomes a turning point will depend on choices made now: what gets prioritised, how resources are promised and delivered, and whether ordinary people see the benefits in their daily lives.

Written By: 

*Dr Iqbal Survé

Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN

*Chloe Maluleke

Associate at BRICS+ Consulting Group 

African Specialist

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