A national sector under strain
The national backdrop is sobering. In the first quarter of 2026, manufacturing fell 0.8% quarter-on-quarter, the only industry that dragged GDP growth down. Output then slumped 4.3% year-on-year in May, edged up 1.1% in July and fell 4.3% again in August. Producer inflation on final manufactured goods hit 7.8% in May, up from 4.8% in April, squeezing margins as the Iran war lifted oil and input costs.
There is a flicker of relief. Absa’s purchasing managers’ index rose to 50.7 in September from 45.8 in August, its first reading above the neutral 50 mark since May, and manufacturers’ six-month outlook improved to 55.3. One good month is not a recovery, but it suggests firms see the weakness as temporary.
The Western Cape is running against the tide
Cape Town is the exception worth examining. Manufacturing makes up about 15% of the Western Cape’s economy and is its third-largest sector. Premier Alan Winde reported that the province added 13,000 manufacturing jobs in the past year, equivalent to roughly 4% of a workforce estimated at about 337,000.
The city generates 72% of the province’s economic output and nearly two-thirds of its jobs, yet unemployment sits at 25%, because growth is concentrated in finance and business services that mostly hire skilled workers. Factories hire across skill levels, which is why the City wants more of them.
Thinking bigger, spending less
The City Council’s Manufacturing Support Policy widens support from six industrial areas under the 2018 incentives to all 33, more than five times as many. The shift is as important as the scale. The City concedes that the 2018 incentives drew investment but were costly and sometimes produced limited job creation. Manufacturers told it what they valued most was faster approvals, permit guidance and hands-on facilitation, so the new policy leans on non-financial support while retaining measures that speed up development applications.
Alderman James Vos, the Mayoral Committee Member for Economic Growth, wants the city’s industrial areas “firing on all cylinders”. There are early proofs of concept. Cape Town-based battery-storage maker Solar MD recently expanded into a new Richmond Park facility, and clothing and textiles contributed R17.6 billion to the provincial economy in 2025, with more than 140 million garments made locally.
The headwind from Washington
The policy cannot fix what happens at the border. Western Cape exports to the US fell 16.2% to R14.51 billion in 2025 as additional tariffs and a lapse in preferential trade benefits took hold. Exporters Western Cape says the province built a market for specialised manufactured goods that American buyers valued, and that years of relationship-building cannot simply be redirected elsewhere. Winde has urged national government to repair diplomatic ties, arguing that Western Cape firms “can’t afford” high tariffs and still compete.
This is the gap in the City’s pitch. Cape Town can shorten a permit queue, but it cannot set a tariff, fix the rand or guarantee electricity.
What to watch
The summit’s organisers frame Cape Town as a manufacturing gateway to Africa, a sensible ambition for a port city. But neither the City’s announcement nor the policy summaries I found set out a headline jobs target, so the real test will be delivery. The numbers to watch are the number of new factories in the 33 areas, approval turnaround times, and whether the Western Cape’s manufacturing job gains survive a national downturn. If they do, Cape Town will have shown that the most valuable industrial incentive may be a municipality that gets out of the way.
Written by:
*Sesona Mdlokovana
Associate at BRICS+ Consulting Group
Africa Specialist
**The views expressed do not necessarily reflect the views of IOL.
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