With industrial and trade policy firmly back on the global agenda, South African industry is becoming more vocal in highlighting the threats posed to South Africa’s industrial capacity by policy developments elsewhere, as well as in calling for government to intervene to protect domestic capacity.

Such public appeals were made not only at a recent gathering hosted by the National Association of Automotive Component and Allied Manufacturers, in Gqeberha, but also by the Steel and Engineering Industries Federation of Southern Africa (Seifsa) in relation to industrialisation opportunities linked to the Transmission Development Plan (TDP).

Component manufacturers and automotive companies alike used the Eastern Cape event, which was address by Trade, Industry and Competition Minister Parks Tau, to place the challenges being faced by companies across the domestic value chain under the spotlight, while also stating the case for policy intervention.

The industry has been structured to take advantage of South Africa’s once extremely favourable market access to key consuming markets, such as Europe, the UK and the US. This access is now threatened, however, not only by tariff protection but also by changing technologies and policies that are affecting demand for the internal combustion engine vehicles that South Africa mainly produces.

Given the export orientation of the sector, recent tariff developments are already weighing heavily on prospects and have cast serious doubt on the target of producing 1.2-milion vehicles by 2035.

The current output trend is downwards and South Africa is expected to again struggle to achieve 600 000 units this year, having produced a record 633 300-plus units in 2023, and exporting well over half of those vehicles.

Given the export pressures, the domestic market is in focus, including the immediate threat posed by surging imports from China and India. There is, thus, much pressure on government to increase duties on imported new cars and bakkies from 25% to 30%.

Likewise, pressure is being placed on government to address the prevailing uncertainty in relation to stipulating local content in government procurement, notably for the country’s large grid roll-out.

Seifsa CEO-designate Tafadzwa Chibanguza says the TDP stands as the largest build programme South Africa will undertake in the next decade and, thus, could help “anchor a bold industrialisation agenda”.

However, he warns that delays in developing supporting regulations for the Public Procurement Act to prescribe localisation is undermining that agenda, noting that the interim procurement framework has made previous local-content designations unenforceable. This has created an “untenable situation” whereby State organs have become some of the country’s largest importers of goods.

There is no doubt that Tau and his department are alive to these pressures, as is the International Trade Administration Commission of South Africa, which is conducting various tariff reviews.

However, crafting solutions that are not overly onerous for consumers, yet also supportive of safeguarding industrial capability and capacity, while creating scope for the development of new or nascent industries, will be no mean feat.