MANUFACTURING SECTOR

Global Overview

The global economy has faced several challenges in recent years, including persistent inflation (though currently declining), volatile energy prices, ongoing supply chain disruptions, and the impact of regional conflicts. These challenges have collectively led to reduced demand and a decline in consumer confidence. Furthermore, unless a coordinated and sustainable global response is established, issues such as labour shortages in key industries and the increasing frequency of natural disasters will continue to exacerbate economic instability.

According to the 2024 UNIDO Report, high-tech industries, particularly the automotive sector, are experiencing significant difficulties, while some lower-tech industries, such as printing and beverages, have recorded modest growth. However, Africa and East Asia remain the only regions globally to sustain positive growth.

South Africa Overview

South Africa boasts a highly developed manufacturing sector, contributing significantly to the national economy. In 2023, the sector supported over 1.6 million jobs and contributed 13.0% to the country’s GDP.

Data from Statistics South Africa for the fourth quarter of 2023 (October–December) highlights the following key contributors to manufacturing sales:

• Food and Beverage: 22.3%
• Basic Iron and Steel, Non-Ferrous Metal Products, Metal Products, and Machinery: 20.9%
• Petroleum, Chemical, Rubber, and Plastic Products: 20.1%

On a global scale, South Africa remains a significant player in manufacturing. The United Nations Industrial Development Organization’s (UNIDO) Competitive Industrial Performance (CIP) Index ranked South Africa 51 out of 153 countries in 2022. This ranking underscores South Africa’s technological advancement, global impact on manufacturing, and ability to produce and export goods, solidifying its position as the most industrialized economy on the African continent.

Despite these achievements, the sector continues to navigate a dynamic environment, presenting both challenges and exciting opportunities for growth and innovation.

KwaZulu-Natal Overview

KwaZulu-Natal (KZN) is home to South Africa’s second-largest manufacturing sector, following Gauteng. The province contributes nearly one-third of the country’s manufactured exports, emphasizing its strong export-oriented focus. The diversity of the manufacturing sector plays a significant role in KZN’s economic growth, supporting approximately 20% of all jobs in the province.

Key contributors to the province’s manufacturing output include petroleum, food, and beverage production, while its agricultural sector employs over 90,000 people.

The launch of several major projects in recent years highlights KZN’s potential to drive economic growth and solidify its position as a leading manufacturing hub in South Africa.

Major Players in Key Sub-Sectors

Investment Opportunities

With South Africa’s growing population and KwaZulu-Natal as the second-largest province by population size, the demand for goods and services continues to rise. KZN offers competitive labour costs and world-class infrastructure, making it an attractive destination for investment.

Key opportunities within the manufacturing sector include:

• Pharmaceutical Devices and Medicine Manufacturing
• New Energy Vehicle Assembly and Components Manufacturing
• New Energy Vehicle Battery Manufacturing and Storage
• Clothing and Shoe Manufacturing
• Food and Beverage Processing
• Furniture Manufacturing
• Plastic and Rubber Manufacturing Facilities