“A new survey of South African manufacturers has found that 68.8% of respondents consider government support for the manufacturing sector weak or very weak, raising fresh concerns about the effectiveness of the country’s industrial and business policies. The findings come as the government seeks to reverse deindustrialisation through its 2026 Industrial Development Strategy, localisation measures, infrastructure investment and reforms designed to make South Africa more competitive.”
South African Manufacturers Warn That Weak Government Support Is Undermining Industrial Growth
South Africa’s manufacturing sector is facing renewed questions over the effectiveness of government business policy after a new industry survey found that 68.8% of participating manufacturers regard public-sector support as weak or very weak. The finding is particularly significant because manufacturing remains one of the country’s most important sources of employment, industrial capacity, exports and economic activity.
The survey forms part of the inaugural quarterly South African Manufacturing Report for the second quarter of 2026, prepared by the Centre for African Industrialisation. The report collected responses from 48 manufacturing firms representing major industrial regions and sectors, with the participating facilities employing more than 35,000 people.
The results highlight a significant gap between South Africa’s stated industrial policy ambitions and the experience of many businesses operating on the ground.
Government has repeatedly identified manufacturing, localisation, infrastructure development and industrial investment as central components of its economic strategy. The Department of Trade, Industry and Competition’s Industrial Development Strategy 2026, for example, specifically identifies deindustrialisation, weak economic growth, declining industrial capacity, inadequate infrastructure and poor logistics as major structural challenges facing the country.
However, manufacturers surveyed for the latest report say that policy intentions are not consistently translating into an operating environment that enables companies to expand, invest and compete.
Manufacturing Remains Critical to the Economy
The importance of the manufacturing sector makes the survey findings particularly significant.
According to the report cited by Moneyweb, manufacturing remains responsible for more than 1.5 million direct jobs and contributes more than 12% of South Africa’s GDP. Government figures have also placed the sector’s contribution at approximately 13% of GDP, with more than 1.6 million direct jobs.
Manufacturing also supports a much broader network of economic activity.
Factories require raw materials, transport services, electricity, financial services, engineering, maintenance, logistics, professional services and thousands of other inputs. Consequently, when manufacturing production expands, the benefits can spread through the wider economy.
Conversely, when manufacturers close factories, reduce production or postpone investment, the effects can extend far beyond the factory floor.
This is why industrial policy is considered a central component of South Africa’s broader economic-development strategy.
The government’s Industrial Development Strategy 2026 acknowledges that declining manufacturing capacity has contributed to deindustrialisation and has been compounded by weak local demand, ageing infrastructure and inadequate energy, logistics and transport services.
Businesses Point to Government Support Problems
The new survey suggests that many manufacturers are experiencing precisely these structural difficulties.
According to Moneyweb’s report, manufacturers gave particularly negative assessments of municipal government, with more than half rating the quality and reliability of municipal services very poorly. Companies also highlighted rising utility and municipal-service costs as factors affecting their competitiveness.
For businesses operating in competitive international markets, these costs can have a direct impact on investment decisions.
A manufacturer competing with companies in countries where electricity, transport, water and municipal services are more reliable may face difficulty keeping its prices competitive even when its underlying production processes are efficient.
The problem therefore extends beyond conventional questions about subsidies or direct financial assistance.
For many manufacturers, effective business policy means creating an environment where infrastructure works, regulations are predictable, logistics are reliable and the cost of doing business remains competitive.
Logistics Remains a Major Business Policy Challenge
Transport infrastructure is another area highlighted by the survey.
Manufacturers reportedly rated rail and port logistics particularly poorly in terms of quality and reliability. Rail reliability was rated very low by 57.1% of respondents.
This is an important concern for an economy seeking to increase exports.
South African manufacturers often need to move raw materials into factories and finished products to domestic and international markets. Delays at ports, unreliable rail services and expensive road transport can therefore increase production costs and reduce the competitiveness of locally manufactured products.
There are, however, signs of improvement in parts of the logistics system.
Moneyweb reported that the Port of Durban has been recognised as one of the world’s most improved ports, while the ports of Ngqura and Port Elizabeth also performed strongly in global improvement rankings. Transport authorities have also announced measures to address operational problems at the Durban Gateway Terminal, including estimated investments of R737 million in immediate measures and a further R1.17 billion in longer-term interventions.
The challenge for policymakers is to ensure that these improvements become sustained operational gains rather than isolated interventions.
The Localisation Policy Question
One of the most important issues raised by the manufacturing survey concerns localisation.
South Africa has increasingly relied on localisation as part of its industrial strategy. The objective is to increase domestic production, strengthen local supply chains, support South African companies and create employment.
The government’s Industrial Development Strategy 2026 identifies localisation and industrial development as important tools for addressing deindustrialisation.
Yet the latest survey indicates that some manufacturers perceive government support for localisation as very low.
This creates a policy contradiction.
If government wants businesses to source more goods and services locally, domestic producers need an environment that allows them to compete successfully against imported products. That requires reliable electricity, transport infrastructure, efficient ports, access to finance, skilled workers and predictable regulation.
Localisation policies alone cannot compensate for structural weaknesses.
A business cannot become internationally competitive simply because government asks consumers or state institutions to buy locally produced goods. Local suppliers must also be able to meet standards, deliver reliably and compete on price.
Government’s Industrial Strategy Faces an Implementation Test
The criticism arrives only months after government introduced its Industrial Development Strategy 2026.
The strategy acknowledges many of the problems raised by manufacturers and seeks to address them through sectoral masterplans, industrial investment, infrastructure development and policies aimed at improving productive capacity.
Government has also repeatedly emphasised the importance of creating an environment that encourages private investment.
In the 2026 State of the Nation Address, President Cyril Ramaphosa said government wanted to create conditions for firms to invest through a stable macroeconomic framework, functioning infrastructure, a conducive regulatory environment and focused industrial policy.
The latest manufacturing survey therefore presents a practical test for these commitments.
The question is no longer simply whether South Africa has an industrial strategy. The more important question is whether businesses are experiencing measurable improvements as a result of that strategy.
Economic Conditions Are Adding Pressure
The manufacturing sector is operating against a difficult economic backdrop.
The second-quarter 2026 data cited in the report showed manufacturing output contracting by 1.8% quarter-on-quarter, while overall GDP declined by 0.2%. More than a quarter of survey respondents experienced severe contractions in sales, domestic sales or operating profits.
Manufacturing employment also declined during the period.
These conditions create a difficult environment for companies considering new investment.
When demand is weak and operating costs are rising, businesses are more likely to delay expansion projects. If infrastructure and regulatory problems are added to those pressures, the incentive to invest can weaken further.
This is particularly concerning for South Africa because the country needs stronger private-sector investment to raise economic growth and employment.
There Are Also Signs of Resilience
Despite the criticism, the survey does not suggest that South African manufacturing is universally failing.
The report found that many businesses continue to demonstrate internal stability. About 81.3% of respondents reported healthy or very healthy labour relations, while 64.6% rated physical workplace safety as safe or very safe.
This suggests that some of the sector’s challenges are external rather than simply the result of poor company management.
Manufacturers are continuing to operate, retain workers and invest in productive capacity despite difficult conditions.
The challenge is to create a policy environment that allows those companies to expand.
Why Business Policy Matters for Jobs
Manufacturing policy ultimately has a direct connection to employment.
Factories provide direct employment, but they also create indirect jobs throughout supply chains. A growing manufacturer may purchase components from small businesses, contract transport operators, employ maintenance companies and create demand for professional services.
Government therefore has a strong interest in maintaining a healthy manufacturing base.
South Africa’s own policy documents recognise this. The country’s industrial strategy describes manufacturing as important not only for GDP and employment but also for exports, technological innovation and industrialisation.
The challenge is balancing industrial support with competitiveness.
Effective business policy should help productive companies overcome structural obstacles while encouraging efficiency and innovation.
What Manufacturers Need From Government
The latest survey points toward several areas where policy implementation could have the greatest impact.
First, manufacturers need reliable infrastructure. Electricity, water, roads, railways, ports and municipal services are fundamental inputs into production.
Second, businesses need predictable regulation. Frequent policy changes or uncertainty can make long-term investment decisions more difficult.
Third, companies need competitive logistics. Export-oriented manufacturers cannot compete internationally if moving goods through domestic infrastructure remains unnecessarily expensive or unreliable.
Fourth, localisation policy needs to be accompanied by supplier development and investment support. Domestic manufacturers must have the capacity to meet increased local demand.
Finally, government needs stronger cooperation with business.
The Reserve Bank has recently expanded its own engagement with businesses to obtain direct information about investment, demand, business costs, wage pressures and pricing behaviour. The bank says direct industry engagement can provide timely information that complements official statistics.
A similar principle can apply to industrial policy: policymakers need reliable feedback from companies operating on the ground.
The Bigger Business Policy Challenge
The latest manufacturing report highlights a broader issue facing South Africa.
The country has many industrial-policy ambitions, but successful policy ultimately depends on implementation.
South Africa’s Industrial Development Strategy recognises that the economy has experienced deindustrialisation, declining industrial capacity, infrastructure backlogs and weak investment.
The private sector, meanwhile, is asking whether government action is sufficiently strong to reverse those trends.
There are positive developments, including investment in automotive manufacturing, infrastructure reforms and efforts to improve logistics. Cabinet has also highlighted major automotive investments, including Toyota’s R10.4 billion investment in its Prospecton plant and the revitalisation of the former Nissan facility in Rosslyn.
These investments demonstrate that South Africa can still attract significant industrial capital.
But the new manufacturing survey shows that isolated successes will not be enough.
Conclusion
South Africa’s manufacturing sector has delivered a clear message to policymakers: industrial policy must translate into practical improvements in the cost, reliability and predictability of doing business.
The finding that 68.8% of surveyed manufacturers consider government support weak or very weak should therefore be treated as more than an industry complaint. It is an important warning about the gap that can emerge between policy objectives and implementation.
Government has already identified manufacturing as a priority and has established an Industrial Development Strategy aimed at tackling deindustrialisation. The next challenge is demonstrating that these policies can improve conditions for businesses operating across South Africa.
For manufacturers, the priorities are clear: dependable infrastructure, efficient logistics, competitive costs, predictable regulation and meaningful support for local production.
If those conditions improve, South Africa could strengthen its manufacturing base, attract new investment, protect existing jobs and expand its export capacity.
If they do not, the country risks continuing to lose productive capacity despite having ambitious industrial policies on paper.
The debate over South Africa’s Business Policy is therefore moving into a crucial phase: from designing strategies to proving that those strategies can deliver measurable results for the businesses, workers and communities that depend on the manufacturing economy.
