Cabinet vows to tackle manufacturing and logistics woes amid dwindling economic growth

The gross domestic product (GDP) figures released by Statistics South Africa also indicated that the economy grew by 0.1% in the first quarter of 2025 following a downwardly revised increase of 0.4% in the fourth quarter of 2024. 

During a post-Cabinet media briefing on Thursday, Minister in the Presidency Khumbudzo Ntshavheni, said the government was now working to fine-tune the country’s industrial policy. 

“Cabinet remains concerned about the decline in the manufacturing industry, more so when the government has prioritised boosting local manufacturing and thus awaits the finalisation of the revised Industrial Policy,” Ntshavheni said. 

“The government understands the impact of the challenges within freight and logistics that continues to impact the growth of the mining industry, and we are maintaining a razor-sharp focus on the work of Operation Vulindlela Phase 2 and the Government Business Partnership in urgently resolving the logistics challenges of the country.”

Industrial policy during the Sixth Administration was characterised by innovation within the confines of an increasingly complex context, characterised by global instability and system-level shocks and trends. 

South Africa's industrial policy framework, primarily articulated in the National Industrial Policy Framework (NIPF) and its subsequent iterations, aims to drive industrialization and create a more robust and diversified economy. 

The NIPF focuses on strengthening the manufacturing sector and supporting the development of non-traditional tradable goods and services. Key components include investment facilitation, trade promotion, technology development, and support for small businesses, as well as competition and labor market policies. 

However, the economy is facing domestic and global headwinds, particularly from the looming US import tariffs that would cripple the South African manufacturing industry. 

On April 2, US President Donald Trump introduced a 10% base tariff on nearly all imports into the US, with additional reciprocal tariffs for specific countries. 

However, these reciprocal tariffs were suspended for 90 days to allow room for negotiations.

Trade, industry and competition minister Parks Tau has acknowledged the current uncertainty around what decision the US will make on July 9, adding that South Africa was exposed to both direct and indirect trade and growth risks. 

Everest Wealth CEO, Thys van Zy, on Thursday said the government must end the wait-and-see approach on the economy.

Van Zyl said the looming July 9 deadline for the possible implementation of 30% reciprocal tariffs on South African exports to the US — and the uncertainty surrounding it — should serve as yet another wake-up call for the government on the importance of bold decision-making.

He said should the 30% tariffs be implemented, they are likely to significantly impact export-dependent industries – especially automotive manufacturing, agricultural products like citrus and wine, and the steel and mining sectors.

“These sectors contribute significantly to South Africa’s GDP and job creation, and higher tariffs will not only undermine exports but also threaten local investment and production,” Van Zyl said.

“The government must use this negotiation window to secure a new, mutually beneficial trade agreement that protects and expands South Africa’s economic interests. The focus should be on maintaining preferential access to the US market and avoiding higher tariffs that could harm our exports.”

BUSINESS REPORT

Cabinet has expressed deep worry over the contraction in the manufacturing industry in South Africa, and has vowed to ramp up structural reforms in a bid to resolve the crippling logistics crisis.

This comes after manufacturing output fell 6.3% year-on-year in April following a revised 1.2% contraction in March. This was the sixth consecutive monthly contraction and the sharpest drop since March 2024. 

It also comes on the back of critical manufacturing companies such as Goodyear South Africa announcing that they would be closing down their tyre production plant in the country, impacting nearly 1 000 jobs.