By Nco Dube | 20 October 2026

South Africa has become remarkably good at celebrating the appearance of industrial progress. A factory opens, politicians arrive, investment figures are announced and speeches are delivered about jobs, transformation and economic growth. There is usually a photograph of somebody cutting a ribbon, accompanied by assurances that the investment demonstrates confidence in the country.

What we seldom ask with sufficient seriousness is how much actual industrial capacity has been created. Are we producing things we could not produce before? Are South African businesses acquiring new technologies and manufacturing capabilities? Are we developing the skills, machinery and supply chains that would allow these industries to survive and compete long after the politicians have left?

Or are we simply becoming better at assembling, packaging and distributing things manufactured elsewhere?

Last week’s announcement by Trade, Industry and Competition Minister Parks Tau that government will phase out support for semi-knocked-down vehicle assembly operations brings these questions into sharp focus. These operations rely heavily on imported vehicle kits, with relatively limited manufacturing undertaken locally. Government now wants to encourage deeper production and greater local content rather than continue supporting what can amount to little more than assembly.

It is a welcome intervention, although it raises an obvious question about why such activities qualified for industrial support in the first place. More importantly, the automotive sector offers a useful illustration of a much wider weakness in South Africa’s economic development: our persistent failure to distinguish between industrial activity and genuine industrialisation.

The two are not necessarily the same.

Industrialisation is not simply the existence of factories or the employment of workers in production facilities. It is the progressive development of an economy’s capacity to manufacture increasingly sophisticated goods, acquire technology, improve productivity and create businesses capable of competing in domestic and international markets. It requires the accumulation of knowledge, technical skills, capital and productive capabilities that deepen over time.

The slow hollowing out of our industrial base

South Africa once possessed a considerably broader manufacturing base than it does today. Industrial towns were built around steel, textiles, machinery, chemicals, furniture and food processing. These industries were hardly free of the economic distortions and racial exclusions of apartheid, but they represented productive capacity that could have been modernised, transformed and expanded under democracy.

Instead, much of that capacity has weakened. Factories have closed, industrial towns have declined and manufacturing has lost ground in the economy. Government’s own 2026 Industrial Development Strategy acknowledges the problem, placing manufacturing at approximately 13% of GDP and employment at around 1.6 million people.

Behind those statistics are communities whose economic foundations have been gradually eroded. When a large factory closes, the consequences extend well beyond its employees. Transport operators lose customers, local shops lose spending power, suppliers lose contracts and municipalities lose revenue. A productive ecosystem built over decades can unravel remarkably quickly. Rebuilding it is considerably harder than announcing another industrial development zone.

This is why deindustrialisation should trouble us far more than it appears to. A country with South Africa’s unemployment crisis cannot afford to become an economy in which increasingly large numbers of people depend on distributing, financing, transporting and consuming goods produced somewhere else.

Of course, services are important economic activities in their own right. Modern manufacturing itself depends heavily on engineering, design, logistics, software and finance. The problem is not that these activities are growing. It is that our economy is failing to generate enough new productive capacity alongside them.

Consider the contradictions within our own resource economy. South Africa possesses substantial mineral wealth, yet much of our economic relationship with that wealth remains concentrated on extraction and the early stages of processing. We export raw or relatively low-value materials while importing machinery, equipment and sophisticated manufactured products that embody far greater technological capability.

We cannot manufacture everything simply because we possess the minerals used in its production. Industrial value chains are complicated, internationally integrated and governed by economies of scale. But surely our ambition should extend beyond digging resources out of the ground and hoping somebody else will turn them into products of greater value.

You cannot industrialise around a failing state

Even where we have established processing industries, we are struggling to preserve them. The pressures on ferrochrome smelting, particularly high electricity costs, illustrate the absurdity of discussing mineral beneficiation without ensuring that energy-intensive manufacturers can operate competitively. A country can possess the raw materials, industrial experience and skilled workers, yet still lose production because the conditions necessary to sustain it have deteriorated.

One cannot build an industrial economy through policy declarations while allowing the infrastructure on which industry depends to collapse.

Electricity, freight rail, ports, roads, water and functioning municipalities are not peripheral concerns to be dealt with after the industrial strategy has been written. They are part of the industrial strategy itself. Every additional cost imposed by inefficient logistics or unreliable municipal services weakens the competitiveness of a South African manufacturer.

Government cannot keep urging businesses to localise production while presiding over conditions that make local production unnecessarily expensive.

Protection is not an entitlement

But business must also face uncomfortable questions.

Established industries have benefited over the years from tariff protection, government incentives, development finance and procurement preferences. There are legitimate reasons for these interventions, particularly where emerging industries require time to develop scale and capability. However, public support should come with demanding expectations concerning investment, productivity, technology transfer, supplier development and employment.

We should be wary of industrial policy that protects existing businesses without requiring them to become more competitive. Protection can create breathing space for industrial development, but it can also become a comfortable shelter for firms with little incentive to innovate.

Protection without performance is simply an expensive way of subsidising stagnation.

Nor should localisation become an ideological obsession divorced from economic reality. It would make little sense for South Africa to manufacture every product domestically regardless of cost, quality or available expertise. Modern economies depend on international trade, specialised production and access to global technologies.

The point is to make deliberate choices about where South Africa can develop sustainable competitive capabilities, and then organise public policy around building those capabilities.

That requires something more demanding than issuing lists of products that should be purchased locally.

Take the furniture industry. It is one of the sectors in which South Africa has attempted to develop a master plan. The country has timber resources, designers, artisans and an established retail market. Yet building a competitive furniture industry involves considerably more than persuading retailers to stock locally manufactured products. It requires modern machinery, reliable inputs, skilled workers, efficient production systems, access to finance and the ability to produce consistently at prices consumers can afford.

The same logic applies to clothing, food processing, pharmaceuticals, agricultural equipment and countless other industries in which domestic demand could support greater production.

Government has developed sector master plans covering automotive manufacturing, clothing and textiles, poultry, sugar, steel, furniture and other industries. Some have produced useful investments and helped sustain employment. But the existence of a master plan is not evidence that an industry has been transformed.

We have become too comfortable measuring government performance through the number of strategies approved, agreements signed and investment commitments announced. A more useful assessment would ask how much additional production has actually materialised, how many sustainable firms have emerged and whether South African manufacturers have become more capable of competing without permanent support.

Transformation must create producers, not just beneficiaries

The distinction is particularly important when discussing economic transformation.

For more than thirty years, South Africa has rightly sought to change the racial patterns of ownership and participation in the economy. But too often our understanding of transformation has been narrower than the task requires. We have concentrated heavily on who owns shares, who receives contracts and who qualifies for preferential treatment, without always placing equal emphasis on who acquires the capacity to produce.

Ownership is important. It is simply not sufficient.

A black industrialist who owns machinery, employs engineers and artisans, develops specialised manufacturing capabilities and supplies competitive products represents a deeper form of economic transformation than an intermediary whose principal commercial activity is facilitating transactions between established producers and customers.

One is building productive capacity. The other may merely be acquiring a share of value created elsewhere.

Both can have a legitimate place in commerce, but we should not confuse them when assessing the success of transformation policy. If we want to change the structure of the economy, we must deliberately develop new producers, not simply change the beneficiaries of existing production.

This means taking technical education, apprenticeships, engineering capacity, industrial finance and support for emerging manufacturers far more seriously. It means recognising that a small manufacturer often requires patient capital and reliable customers long before it can compete with established firms. It also means ensuring that public procurement develops productive enterprises rather than rewarding politically connected middlemen.

There is an additional dimension that receives insufficient attention. South Africa cannot industrialise successfully while treating the wider African market as an afterthought. Our domestic economy is simply too small to sustain competitive production in every industry we might wish to develop. Regional markets offer opportunities for greater scale, specialised manufacturing and integrated supply chains.

But access to those markets requires more than continental trade agreements. It requires functioning border systems, competitive transport networks, reliable infrastructure and businesses capable of meeting demand consistently.

We should also be careful not to build tomorrow’s industrial policy entirely around yesterday’s industries. Energy technologies, advanced manufacturing, digital systems and changing global supply chains are creating new opportunities, while simultaneously threatening established forms of production. South Africa needs to preserve viable industrial capabilities while acquiring new ones.

This is a demanding undertaking. It requires coordination between government, manufacturers, financiers, educational institutions and workers. It requires long-term commitment, but also a willingness to withdraw support from programmes that consistently fail to deliver.

Above all, it requires a change in how we judge economic progress.

An investment announcement is not a factory. A factory is not necessarily a competitive industry. And a competitive industry does not emerge merely because government has declared it a national priority.

The decision to discourage superficial vehicle assembly is a useful starting point because it recognises that the appearance of manufacturing is not enough. The same principle should now be applied much more broadly across our industrial policy.

After three decades of democracy, South Africa should be asking not only who participates in the economy, but what our economy is increasingly capable of producing.

We cannot keep celebrating ribbons, investment pledges and industrial master plans while the country’s productive foundations continue to weaken.

A country does not industrialise by announcing what it intends to make. It industrialises by acquiring the capacity to make it.