Major CEO sends a warning to South Africa

Italtile CEO Lance Foxcroft said South Africa has one of the least manufacturing-friendly economies, creating an unstable environment.

Foxcroft warned that this environment is detrimental to the industry’s growth and accelerates South Africa’s de-industrialisation.

In Italtile’s latest Integrated Annual Report for its 2025 financial year, Foxcroft outlined how difficult South Africa’s trading environment is for manufacturers.

In particular, he pointed to an onerous regulatory environment, deteriorating infrastructure, uncertain energy supply and spiralling municipal costs as factors making it difficult for manufacturers.

“The trading environment is expected to remain challenging in the short to medium-term as intense competition persists due to the imbalance between excess supply and weak demand,” he said.

“South Africa persists in allowing unequal playing fields due to uncontrolled dumping of product in the country, which, coupled with import tariffs imposed by neighbouring countries, worsens the trading environment and places margins under pressure.”

In the longer term, Foxcroft believes South Africa’s manufacturing industry will see further consolidation and rationalisation of capacity.

For Italtile, this unfriendly trading environment has led to over-capacity and subdued demand, exerting pressure on tile manufacturers worldwide.

“As many seek to find alternative markets, tariffs have been applied in local markets and dumping has increased in those without tariffs, resulting in increased competition in domestic markets,” Foxcroft said.

He explained that South Africa’s subdued economy has not only impacted Italtile and other manufacturers but also the country’s consumers.

“The local political environment and consumer confidence deteriorated as a result of instability in the GNU, uncertainty around VAT increases and the delayed release of the South African budget,” he said.

“Deteriorating global macro-economic conditions arising from trade uncertainty, changed tariffs, and geopolitical conflict further weighed on the local economy.”

This, along with South Africa’s manufacturing-unfriendly environment, have hit the sector hard.

Foxcroft pointed out that manufacturing production has fallen significantly, with six consecutive months of contraction.

South Africa’s environment bad for business

Foxcroft’s concerns echo those expressed by the International Monetary Fund (IMF) earlier this year, which shows South Africa’s unfriendly trading environment extends beyond the manufacturing industry.

Earlier this year, the IMF measured South Africa’s ease of doing business against 49 other countries, and it came last.

The organisation said that if South Africa could even just achieve an ease of doing business equal to the average, the country’s economic growth rate would double.

The World Bank’s latest report on South Africa, Driving Inclusive Growth in South Africa, also said strengthening market competition and more efficient institutions are low-hanging fruit for the country.

“Today, many of South Africa’s markets lack dynamism. Firm entry and exit are a third of the average of a typical middle-income country,” the lender said.

In other words, very few new businesses, small or large, are being created that can employ South Africans and contribute to the country’s economic activity. 

The World Bank said this is one of the major reasons behind South Africa’s high unemployment rate and the difficulty individuals face in finding stable and productive jobs in the country.

The bank said the burden on South African institutions has become excessive – not only for businesses and citizens but also for public administration.

It explained that one easy way to drive short-term results is to strengthen and broaden market competition in South Africa by easing the regulatory burden on businesses.

This view is supported by data from the Organisation for Economic Co-operation and Development (OECD), which shows how South Africa ranks in terms of product market regulation – a proxy for the ease of doing business.

This ranking can be seen in the graph below, which shows South Africa is the least competition-friendly country among OECD countries.