South Africa’s Manufacturing Dilemma
GDP and Productivity: 1960s vs Post-1994
South Africa’s Manufacturing Dilemma – where to begin.
- 1960s Peak: Real GDP growth in the 1960s averaged roughly 6% per annum, driven by a booming commodity market and industrial expansion.
- Post-1994 Trends: Average annual growth since 1994 has been 3.3%. While the economy tripled in size between 1994 and 2014, recent years have seen a sharp decline, with 2024 growth at only 0.54% and a projected 1.3% for 2025.
- Productivity Gap: Manufacturing now accounts for only 13.9% of GDP, while services dominate at 73%, reflecting a shift away from high-productivity industrial sectors.
STEM crises in schools – overhaul needed
The STEM Education Crisis (2025)
- Teacher Shortage: There is a persistent shortage of qualified STEM (Science, Technology, Engineering, and Mathematics) teachers due to retirements and low training output.
- Matric Outcomes: In 2024, only 30.2% of mathematics candidates and 29.4% of physical science candidates achieved a grade of 50% or above.
- Employment Mismatch: Youth unemployment for those aged 15-24 remains critical at approximately 61.4% to 62.2% as of late 2025, partly because the education system is not producing the technical skills required for modern industry.
Manufacturing Opportunities: Renewable Energy
- Import Dependency: In 2025, the renewable energy industry has criticized policies (such as the “staged-consignments” policy) that allow duty-free imports of entire projects, which they claim undermines local battery and inverter manufacturing.
- Cost Drivers: Electricity tariffs have surged by over 450% since the power crisis began, with a further 12.7% increase granted for 2025/2026, making local manufacturing more expensive and imports more attractive.
- Masterplan: The South African Renewable Energy Masterplan (SAREM) is set to officially launch in early 2025 to drive local industrial development in these value chains
Decay in Manufacture – South Africa. Credit AndNowProjekt
Case Study: The Pineapple Industry
- Sector Status: Once thriving in East London, the sector is currently in a state of “volatile transformation”.
- Recent Growth: The market reached a value of $171 million in 2024 (a 12% rise), but actual production output has struggled to match the highs of a decade ago due to climate stress and logistical port delays.
- Shift in Strategy: Producers are diversifying away from European markets toward Asia and the Middle East to find better margins.
The Road Ahead
Trade Skills: There is a significant 2025 push for an overhaul of the teaching system to prioritize trade courses (plumbing, electrical, mechanical) where AI cannot replace human labor, yet the national focus remains heavily on matric pass rates rather than vocational readiness.
Have a look at some of the schools in South Africa which focus on the Special Skills requirement for certain youngsters where proficiency in academia is not central to the learning system.
I am a big advocate for change in the educational sector. If you are an international reader please comment. South Africans are welcome to submit as well. The results I will share with private podcasters in South Africa.
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The point on the ‘STEM crisis’ is vital, but I would argue the solution isn’t just ‘better matric results’—it’s a return to vocational respect.
South Africa has an obsession with university degrees while we have a desperate shortage of qualified artisans.
The ‘apprentice system’ of previous decades, for all its faults, successfully churned out the mechanics, fitters, and turners that built the industrial base mentioned in your 1960s stats.
We are currently producing youth who are ‘unemployable’ because they have academic certificates but no trade skills.
Promoting plumbing, electrical, and mechanical trades over general academic passes is exactly the shift we need to lower that 61% youth unemployment figure
Interesting takeaway here in Thailand where I currently reside is that unemployment is 1% which I would challenge at being correct however unemployment is highest in the under 24 years old and then a surprise, graduates have less chance of getting a job than non-graduates.
Should add to my previous comment
While the statistics on GDP decline and the skills gap are accurate, this analysis glosses over the ‘elephant in the room’ for 2025:
Logistics.
You mention ‘port delays’ in the pineapple case study, but for South African manufacturers, the collapse of Transnet (rail and ports) is currently more damaging than the skills shortage.
We can fix the schools and we can even pay the 450% higher electricity tariffs, but if we cannot get our goods out of Durban or Cape Town efficiently, we are dead in the water.
The dilemma isn’t just about ‘what’ to manufacture; it’s about the cost of doing business in a failing infrastructure environment.
We don’t need more ‘Masterplans’ (like SAREM); we need cranes that work and trains that run
[…] IoT Ecosystem was inspired by the article: South Africa’s Manufacturing Dilemma. Originally drafted in 2018 it has been rewritten and published in 2025. Amazing to see how […]
Thanks for your input, Michael. I have addressed the vocational issue, which remains a significant concern in SA and many other regions. As the late Charlie Kirk often pointed out, many students and parents accumulate massive debt pursuing degrees that offer little value to any economic sector. In contrast, qualifications in STEM subjects remain in high demand.
Regarding your comment that graduates have a lower chance of finding employment than non-graduates, this typically applies to those unable to find work in their specific field of study—such as flower arranging—which may lack commercial viability. This is a global issue driven by an employment sector focused primarily on ‘net profit.’
In South Africa, a teacher at the De Grendel School of Skills in Milnerton noted that their primary mission is to equip students with practical work skills. Their success rate is exceptionally high—statistically exceeding that of standard matriculants.
On a side note, during my time in the Merchant Navy in the late 70s and early 80s, Port Elizabeth harbour held the world record for loading and discharging break-bulk cargo (excluding commodities like ore and grain). Conversely, the slowest ports were Beira and Maputo, where discharging just 100 tons of blankets could take five days.
Both Beira and Maputo’s performance now far exceeds Durban, PE and Cape Town, according to the World Bank Container Port Performance Index, which reflects the disgraceful position we are in.