ACTION SEVEN: Rethink growth, jobs and the DTIC is the latest report in the CDE series AGENDA 2024: Priorities for South Africa’s new government.

This report sets out a series of catalytic actions and priority areas for the Department of Trade, Industry and Competition (DTIC) to drive export-oriented, job creating growth.

From 1960 to 2023 manufacturing as a percentage of gross domestic product fell from 20 per cent to under 13 per cent. Employment in manufacturing declined from 1.8-million in 2001 to less than 1.6-million in 2023.

Only 20 per cent of South African firms export at all. Of these, more than half export less than five per cent of their output. The top five per cent of exporters account for 92 per cent of exports, a much larger share than is typical in the world.

There are many reasons why manufacturing has performed poorly in South Africa. Among these are policies premised on replacing imports with local production, an approach that has led South Africa down an increasingly protectionist path.

The protectionist focus of master plans and other sectoral interventions harms the economy in multiple ways, primarily by reducing competitive pressures on domestic firms and raising costs for consumers and downstream users of protected goods.

To drive competitiveness and improve productivity, the DTIC should reform its trade policies, shift its industrial policies towards promoting exports, and harness the competitive pressures that well-functioning markets can provide.

This new approach will help firms become part of global value chains and produce for global markets, which is the only way to turn the decline of the manufacturing sector around.

Report by the Centre for Development and Enterprise