South Africa’s manufacturing competitiveness will depend on coordinated action to address structural inefficiencies in electricity, transport, water and logistics, rather than relying on short-term interventions alone.
This was the central message from a keynote panel examining Threats and opportunities in South Africa’s industrial future, held at the C&I Energy+Storage Summit, co-located with the Energy Intensive User’s Group (EIUG) Conference.
Moderator Kay Walsh, Managing Director at Nova Economics, emphasised that concessionary electricity tariffs and targeted trade measures could provide immediate relief to struggling manufacturers, but should be treated as temporary bridging measures. She explained that retaining or attracting electricity demand can help Eskom spread fixed costs across a larger customer base, but lasting competitiveness requires underlying costs to come down through structural reform.
Lubabalo Luyaba, Senior Water Specialist at the World Bank, highlighted the interdependence of water, electricity and industry. He pointed to the encouraging progress in structural reform and the role of concessional finance, combined with delivery reforms, in funding essential infrastructure.
Charles Dos Santos, Managing Director of Air Products South Africa, supported this view, reinforcing the importance of financing and infrastructure delivery in strengthening the foundations of industrial competitiveness.
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Unlocking South Africa’s comparative advantages
Despite mounting competition from China and India, panellists identified significant opportunities for South Africa, particularly its renewable energy resources, mineral wealth and potential access to competitively priced regional gas and hydropower.
Gaylor Montmasson-Clair, Director and Co-Founder of Southern Transitions, stressed the need to pursue these advantages deliberately, pointing to Namibia’s first industrial-scale green iron plant as an example of the opportunities emerging in the region.
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Dos Santos also highlighted opportunities to reduce reliance on imported fuels through cost-competitive local alternatives, including electricity for passenger vehicles and green hydrogen for heavy vehicles such as mine haul trucks.
However, translating renewable resources into industrial competitiveness requires more than additional generation. Transmission infrastructure and affordable firm capacity remain critical to meeting the continuous power requirements of energy-intensive manufacturers.
Walsh argued that technology-neutral, market-compatible capacity and flexibility auctions could help identify the least-cost solutions for firming renewable energy.
The panel concluded that the window to protect industrial capacity is narrowing. Government and industry must prioritise interventions, establish clear delivery timelines and remain accountable for structural reform. Short-term relief may buy time, but lasting competitiveness will depend on addressing the underlying constraints facing South African industry.
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