Trade and industrial policy for South Africa’s future

South Africa faces a trade and industrial policy crisis. Over the past decade, deindustrialisation has continued, with manufacturing’s share of employment declining. Exports have stagnated, reflected in falling real exports relative to GDP, fewer exporters, and reduced export diversity and complexity. Policy responses have turned inward through localisation, based on the view that tariff liberalisation drove deindustrialisation. This paper argues instead that long-term drivers include the collapse of mining and investment, relatively rapid productivity growth in manufacturing, domestic supply constraints such as electricity, and a failure to transition towards export-led growth. A reorientation towards building a competitive, export-oriented industrial sector is required. This involves facilitating access to imports, implementing firm-focused horizontal policies, and strengthening coordination between government, business, and labour through revised Master Plans that prioritise exporting. Trade policy should simplify tariffs, remove duties on non-produced goods, pursue trade agreements with new markets, and reduce regulatory barriers to services trade.