By Takatso Sello
Spend enough time sitting across the table from South African manufacturers, and a pattern emerges. Conversations almost always begin with strategy: localisation ambitions, reducing cross-border supplier risk, and building operations resilient enough to absorb constant disruption. Bringing supply chains closer to home has increasingly become part of that thinking. Then someone pulls up the numbers, and the mood shifts. Because the trade data, right now, is telling a different story from the one industrial policy is aiming to deliver.
South Africa’s total imports reached approximately R1.87 trillion in 2025, up from R1.84 trillion the year before.
Historically, imports have grown faster than exports; exports grew by 11% and 3% in 2022 and 2023, respectively, while imports grew by 32% and 7% over the same period.
Although the pace has moderated from earlier post-pandemic levels, the structural imbalance remains firmly in place. Over the four years from 2021 to 2025, imports rose by more than 36% in aggregate, with imports from China alone climbing close to 46%.
These figures arrive against a backdrop of continued government commitment to localisation. That gap between policy ambition and economic reality is where the real story of South African manufacturing sits.
There is a version of this story that places fault entirely on policy, but that misses the broader picture.
Intent has been substantial, frameworks exist, and commitments have been made at the highest levels. The problem is that progress is not moving at the pace the environment demands. By the time localisation initiatives translate into actual production capacity, the competitive pressure from imports may have intensified further, reducing the market share available to domestic producers.
In the meantime, manufacturers are making rational commercial decisions every day, weighing survival and growth in a high-cost, highly competitive operating environment.
When local input is available at a competitive price, companies source it. When an imported alternative is cheaper, faster, or more reliably available, it ends up on the order sheet. We see this consistently across the sector, and manufacturers are losing customers as a result.
The global shift toward supply chain resilience was supposed to change this calculus in South Africa’s favour. For decades, manufacturers structured operations around just-in-time methodologies designed to maximise efficiency and reduce inventory costs.
Mounting disruptions, including geopolitical fragmentation, infrastructure instability, and logistics volatility, forced businesses to adopt more cautious operating models. That reconfiguration was expected to create greater space for local producers. In practice, it has introduced additional cost pressure that many are struggling to absorb. Estimates suggest operational costs will increase by 10% to 15% due to infrastructure inefficiencies and the costs of shorter turnaround times and more localised supply arrangements. Manufacturers then face a further commercial question: whether those higher costs can realistically be passed on while remaining competitive against imports. In many cases, that trade-off still does not favour localisation.
The deeper constraint is capital, which sits at the centre of almost every growth conversation in the sector. Competing in this environment requires sustained investment in automation, advanced machinery and digital production systems. Sit with a mid-sized producer reviewing capital allocation and the picture becomes concrete quickly: the business case for modernisation is clear, but securing the financing required to execute it remains a challenge. Mid-sized firms, which form the backbone of the industrial base, consistently find that access to capital at the required scale and speed is difficult to unlock. The sector largely understands the direction it needs to move in. Getting there is the challenge.
Logistics is inflicting damage that is anything but abstract. Port delays, deteriorating rail performance and rising freight costs are compressing margins, disrupting production planning and extending delivery timelines in ways that compound month over month. Working capital cycles stretch. Costs that once sat in the background have moved to the centre of every commercial conversation. And as local input costs rise, manufacturers find themselves increasingly unable to pass those increases through to prices, particularly when imported goods, produced in lower-cost environments with more reliable infrastructure, continue to undercut them.
Africa is regularly positioned as the strategic answer to these pressures. Over the past four years, South Africa’s exports to the continent have grown by approximately 48%, with the African Continental Free Trade Area opening commercial pathways that did not previously exist. That momentum is genuine. However, framing Africa as the near-term solution to South Africa’s manufacturing competitiveness challenges requires more optimism than the data currently supports. Markets across the continent remain relatively small compared to established trading relationships with Europe and the United States, infrastructure is uneven, and currency volatility continues to add friction to already-thin margins. The opportunity is real and long-term, but it is unlikely to absorb the pressure manufacturers are facing today.
What sits beneath all of this is a coordination problem that successive policy cycles have identified but struggled to resolve. Industrial strategy, infrastructure investment, financing and market access development are all progressing, but at different speeds and without sufficient alignment. There are conversations happening, but not enough coordination, translating into changed conditions on the ground. The result is a sector operating with a narrow margin for error, absorbing global disruption and domestic cost pressure simultaneously, while the structural conditions required to compete remain unresolved.
The localisation argument is sound, and the long-term case for a more resilient industrial base is real. But manufacturers are making decisions now, on this month’s orders, against this quarter’s cost base, with the financing they can actually access. The trade data reflects where things stand in that reality: imports rising, exports lagging, and the gap between what localisation promises and what the balance sheet shows widening each year. Until policy, capital and execution begin moving together at the same pace, that gap will remain the defining feature of South African manufacturing.
Takatso Sello is a Senior Manager for Manufacturing at Nedbank Commercial Banking
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