MechChem Africa July-August 2025

⎪ Local manufacturing and food processing ⎪

Manufacturing must be at the centre of industrial strategy Amith Singh, National Manager of Manufacturing for Nedbank Commercial Banking, outlines the challenges facing South Africa’s manufacturing sector while finding opportunities to reposition manufacturing as a platform for value-added production, regional trade, and innovation-driven growth.

S outh Africa’s manufacturing sector has always been a key contribu tor to industrial development, job creation, and economic transfor mation. Yet in recent years, its influence has waned, challenged by systemic issues including energy insecurity, infrastructure failures, global competition, and policy uncertainty. Despite these pressures, manufacturing remains one of the most powerful levers we have to stimulate growth, reindustrialise the economy, and position the country for long-term resilience. With the right interventions, the sec tor can become the driving force behind South Africa’s recovery. From peak contribution levels of over 23% of GDP in the early 1990s, the sector declined to just 13.2% by 2021. According to Stats SA, manufacturing output in April 2025 decreased by 6.3% year-on-year, the steepest decline in over a year, with vehicle production down 13% and broad contraction across key subsectors. This decline isn’t due to a lack of capability or talent. Rather, it reflects underinvestment, outdated infrastructure, rising production costs, unreliable energy, and a complex regulatory environment. The result has been shrinking competitiveness and investor hesitancy. Meanwhile, the operating context is grow ing more demanding. Manufacturers are con tending with global supply chain disruptions, escalating input costs, logistics backlogs, and climate-related pressures. Infrastructure con straints, from ports to rail, inflate costs, while the persistent energy crisis disrupts production and delays projects. And yet, in these challenges lies opportunity: to reposition South African manufacturing as a platform for value-added production, regional trade, and innovation-driven growth. The African Continental Free Trade Area (AfCFTA) provides a catalytic framework. With access to over 1.3-billion consumers, AfCFTA makes a compelling case for manufacturers to scale operations and diversify. However, this must be matched by strategy, adequate capital, and effective execution capability. To realise this, four areas demand urgent focus: • Structural and policy reform: A com petitive sector depends on consistent,

industry-aligned policy and regulatory certainty. Investors need predictabil ity. We need a streamlined industrial framework that supports localisation, drives competitiveness, and prioritises sectors aligned with the green and digital economy. Decision-making on licenses, permits, and trade agreements must also accelerate to keep pace with global shifts in industrial dynamics. • Infrastructure modernisation: Reliable infrastructure, energy, water, ports, rail, and digital networks are essential. Without this foundation, the sector cannot thrive. Investment must be fast-tracked, especial ly via public-private partnerships that un lock funding and delivery capacity. Energy tops the list. Load-shedding costs the industry billions annually. Manufacturers urgently need clarity on embedded gen eration, grid access, and green energy procurement to build resilience. • Manufacturing and innovation: Global manufacturing is embracing digitalisa tion, automation, and sustainability. South Africa must follow suit. Whether in steel, food processing, chemicals, or automotive components, Industry 4.0 is now a key driver of competitiveness. Technologies such as smart sensors, robotics, additive manufacturing, and predictive mainte nance can enhance quality, reduce costs, and increase productivity. Yet uptake remains patchy, often due to capital and skills constraints.That’s where financial institutions play a vital role. At Nedbank Commercial Banking, we partner with manufacturers to unlock finance, enhance efficiency, and support digital upgrades. We also work with industry bodies to in tegrate best practices in climate resilience and sustainability. • Climate resilience and ESG: Manufacturing is becoming increasingly vulnerable to climate-related risks, includ ing water scarcity and supply chain disrup tions. At the same time, ESG standards are becoming non-negotiable, with growing pressure from customers, regulators, and funders. This is no longer just a compliance issue. It’s strategic. Businesses that embed sustainability

are better positioned to access green finance, meetexportrequirements,andmaintainmarket relevance. South African manufacturers must prioritise water reuse, energy efficiency, waste reduction, and low-carbon design. The payoff: lower costs, greater resilience, and long-term growth. What now? The road ahead requires more than hope. It calls for data-led, collaborative action between government, business, financiers, and labour. We must manufacture our way to economic revival, not by clinging to past models, but by reimagining the sector as a driver of high-tech, export-led, and climate-smart development. By investing in infrastructure, aligning policy, embracing innovation, and embedding resilience, manufacturing can reclaim its place as a national growth engine. South Africa’s manufacturing sector has what it takes: skill, grit, and real potential. But unlocking that promise demands urgency and ambition. At Nedbank Commercial Banking, we believe this is the time to think bigger, to look beyond the challenges and see the op portunity to lead. Manufacturing isn’t just a sector; it’s a na tional asset. With the right partnerships, invest ment, and long-term vision, we can transform it into a powerful engine of inclusive, lasting growth. From energy efficiency to advanced machinery, from the shop floor to the export market, this is where our future is made. https://business.nedbank.co.za value-added production, regional trade, and innovation-driven growth,” says Amith Singh, National Manager of Manufacturing for Nedbank Commercial Banking. “In these challenges lies opportunity: to reposition South African manufacturing as a platform for

July-August 2025 • MechChem Africa ¦ 39