Calm before the storm for critical South African industry

South Africa’s manufacturing sector has seen a slight recovery since the start of the year, but concerns around the sustainability of this recovery are being raised.

The Absa Purchasing Manager’s Index (PMI), compiled by the Bureau for Economic Research (BER), rose to 52.6 points in April 2026, up from 49 points the month before.

This is the first time the PMI has risen above the neutral 50-point mark since September 2025, signalling positive growth in the country’s manufacturing sector.

This was driven largely by increased business activity and new sales orders, reflecting stronger domestic demand and a decline in export sales.

While this is indicative of positive growth for manufacturing, BER’s report said this is likely due to front-loading demand for products before their prices are expected to increase.

This has raised concerns about the long-term sustainability of South Africa’s manufacturing sector, with demand for goods expected to drop in the coming months as prices rise.

Bridgestone EMEA Regional Vice President Jacques Rikhotso explained to BusinessDayTV how structural weaknesses within the sector have diminished its potential for real growth.

“Over a long period, what we have seen is a de-industrialising of South Africa,” Rikhotso said. “We have lost steel-making capacity, which is a product that goes into the base of supplying our automotive sector.”

“In there, we have lost a particular segment of local content in our locally assembled vehicles. What you see then is the importation of steel components which were previously manufactured in South Africa.”

Rikhotso, who also serves as chairperson of the South African Tyre Manufacturers Conference, used the local tyre industry to illustrate his point.

Local tyre production in South Africa decreased by 15.5% between 2015 and 2024, with the country having a current capacity to produce approximately 9.8 million tyres per year.

“Last year, we saw one of our competitors in the tyre manufacturing market exit the country,” Rikhotso said. “This means even vehicles manufactured in South Africa now have less choice of components.”

Rikhotso said this is detrimental to South Africa’s local employment and job creation, as more local manufacturers choose to exit the country due to their inability to compete with cheap imports.

Fair trade to protect local manufacturers

Rikhotso said the implementation of stronger fair trade policies is the most effective way to shield South Africa’s manufacturing sector from further decline.

He explained that South Africa’s smaller economy, compared to manufacturing giants like China, necessitates the imposition of anti-dumping duties.

These are tariffs imposed by governments on foreign imports which are priced below fair market value, and the duties are designed to protect local industries from material injuries.

Countries engaging in “dumping” activities will export goods to other markets at a lower price than their home market price or their cost of production.

This is often used to gain market share in a particular country, eliminate competition, or dispose of surplus inventory.

Rikhotso said the South African government had been responsive towards ensuring foreign importers do not engage in dumping.

The state-owned International Trade Administration Commission (ITAC), which is responsible for ensuring fair trade practices in South Africa, has used anti-dumping duties to protect local industries.

Towards the end of April 2026, ITAC introduced duties ranging from 9.39% to 67.11% on the import of top-loading washing machines from China and Thailand.

Rikhotso called for higher independence in South Africa’s manufacturing sector, as a means of protecting the country’s local industrial capacity.

“We can’t afford to lose our capability from a technical point of view, and outsource all our industrial capability to importation,” Rikhotso said.

“We have seen what this does in other parts of the world. If everything is dependent on imports, what you see is an erosion of capability in the country. “

Rikhotso also mentioned how South Africa’s struggles with energy availability greatly impacted the local manufacturing sector over the past decade.

Eskom’s struggle to provide a consistent energy supply and its implementation of load-shedding severely strained many factories, even forcing some to shut down entirely.

Rikhotso said Eskom’s recent improvements in energy availability, coupled with the end of load shedding, are a positive sign for the sector’s future potential.

However, he also warned that the price of energy in recent years has outpaced inflation, and that this could potentially squeeze both consumers and manufacturers.

“Unless this trajectory changes, we are going to see more and more of our local capability in manufacturing our own products being compromised,” Rikhotso said.