The Demise Of Manufacturing In South Africa And What This Means For The Economy

The Demise Of Manufacturing In South Africa And What This Means For The Economy


Declining growth in the manufacturing sector in South Africa shows that is continues to drag down the overall performance of the economy. In recent years, with changes in technology, the very future of manufacturing has been called into question. 

The sector accounted for 20.9% of South Africa’s Gross Domestic Product (GDP) in 1994. Its contribution has since declined to around 12%. 

What has led to the demise of manufacturing in South Africa? 

There is no one specific cause, but what is clear is that it has been as a result of a range of factors that must be dealt with collectively. 

Fierce competition in domestic and world markets has also factored into the demise of manufacturing in South Africa. 

Further challenges in the sector include electricity shortages, currency volatility and skills constraints. 

What can be done? 

What is evident is that government-supported interventions are needed to stabilise the manufacturing sector. Improved agricultural production and mining production could help to improve manufacturing production. 

The sector is dominated by a few subsectors, i.e. chemicals, metals as well as machinery and food processing. There is a need for South Africa to become more creative about products that are manufactured as well as how to benefit from the exporting of these products. There is a need to strive to remain globally competitive with the products the sector produces.  

South Africa needs to embark on an aggressive export drive across Africa. This will drive demand upwards, thus creating the need for investment in manufacturing infrastructure and skilled labour. 

Further countermeasures to the demise of manufacturing in South Africa include localisation, trade policy reviews as well as competitive and stable currency. With concerted efforts at improving these factors, the manufacturing sector in South Africa could make a significant recovery.

Categories: Business

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