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The year began with optimistic predictions from economists, including the International Monetary Fund, that Africa's growth would overtake Asia's for the first time.
This is good news for the continent.
However, as Africa's largest, most industrialized and technologically advanced economy, South Africa cannot rest on this long-held position.
Countries must embrace innovation and flexibility – and, most importantly, act quickly to reform policy and prepare themselves to take advantage of opportunities across Africa.
South Africa's position as Africa's economic powerhouse and gateway to the continent continues to weaken. According to the African Development Bank, 12 of the world's fastest growing economies are in Africa – and we're not even listed among them.
In the automotive sector, sales of locally manufactured vehicles have declined from 80% of domestic sales in 2000 to 33% last year, having accelerated dramatically over the past five years.
This is happening against the backdrop of the domestic automobile market not growing significantly. The increase in sales of vehicles imported from India and China does not represent overall sales growth; Rather, it reflects the substitution of imports for locally manufactured vehicles.
The impact on jobs created by original equipment manufacturers carrying out complete knock-down (CKD) assembly in the country should not be underestimated.
Domestic sales of locally manufactured vehicles have declined from 80% to 33% since 2000, with the sharpest decline in the past five years.
This change is not due to market growth, but because cheap imports from India and China are displacing local production, threatening thousands of assembly and manufacturing jobs.
General Motors closed its manufacturing operations in Nelson Mandela Bay in 2017, affecting the volumes and sustainability of many local component manufacturers.
While it is encouraging that Nissan's plant in Tshwane has been sold to Chinese automaker Chery, clarity is needed on whether it will operate as a CKD or SKD (semi-knocked down) assembler, and on the extent of localization in its operations.
SKD assemblers generally do not use locally manufactured components in their assembly processes.
The displacement of local automakers has a direct impact on the surrounding ecosystem, as seen in the tire stream with the closure of Firestone, Conti-Tech, and most recently, Goodyear.
According to the National Association of Automotive Component and Allied Manufacturers (NACAM), 13 component manufacturers have closed their doors in the past three years.
South African auto manufacturing is largely export-driven, with 65% of production destined for export markets, primarily the UK and Europe.
While increases in import tariffs by the US and Mexico (both important destinations for SA component exports) have effectively driven South African-made vehicles out of those markets, the recent renewal of the African Growth and Opportunity Act (AGOA) by the US has provided little benefit to the local auto sector, which continues to face 25% tariffs under various laws.
At the same time, other countries are increasingly moving to secure trade deals, resulting in multinationals reviewing their manufacturing footprints around the world to determine the most competitive locations for their assembly operations.
Europe's shift to new energy vehicles (NEVs) and internal combustion engine (ICE) bans, as well as increased tariffs under the Carbon Border Adjustment Mechanism (CBAM), are a further threat to SA's vehicle exports, particularly as uncertainty remains over domestic policy to support NEV manufacturing and consumer adoption.
This means we have to look at the countries on our doorstep as our key growth opportunity, with ICE vehicles likely to remain available for a long time, even as the rest of the world shifts to NEVs.
South Africa's internal economy is relatively small compared to the Asian giants with which we compete in our markets. The only way to achieve economies of scale to justify investment is to expand our export footprint and volumes.
China and India are rapidly increasing their presence in African markets, while South Africa, with a few exceptions, has little impact on the continental automotive market, which is projected to reach five million vehicle sales annually over the next decade or so.
Last year, Morocco overtook South Africa as the continent's leading auto maker, reaching the production milestone of one million vehicles, while SA's output stood at about 600,000.
Algeria's automotive manufacturing is showing strong growth on a low base, while Egypt, Ghana and Kenya are making new investments in manufacturing capacity.
For example, Kenya is taking strategic steps to shift from primarily a used vehicle market to a regional hub for local assembly and component manufacturing.
The “Buy Kenya, Make Kenya” initiative provides substantial tax incentives, exemptions and import duty mechanisms that are succeeding in attracting global auto brands such as Isuzu and Toyota to invest in promoting or setting up local assembly plants.
The country has taken advantage of its geographical strategic position to create a “manufacturing bridge” between Europe, Africa and the Middle East. Global automakers such as Renault and Stellantis stepped in and today, Morocco is Africa's largest car exporter, shipping hundreds of thousands of vehicles annually.
Advanced technology manufacturing, including aerospace, has been pursued.
This was possible because its automotive industry was established, with policy support, to create a strong manufacturing ecosystem.
The strategy was built on logistics and location, energy availability – particularly green energy – and building the infrastructure to support it. This is exemplified by the growth and global prominence of the port of Tanger Med, along with free trade zones and improved rail and logistics networks.
Although the depth of value chains within Morocco is shallow, employment has been created through labor-intensive assembly of imported components.
Today, exports of cars, aircraft parts and electronics now exceed tourism revenues.
Amid the current crisis in the Middle East, particularly affecting oil and gas shipments, South Africa is well placed on a conflict-free trade route – provided our ports can rapidly increase efficiency.
Without this, the increase in activity risks being hampered by congestion and delays, potentially disrupting the time to market for SA exports and vital imports into the country.
As a measure of port efficiency in cargo handling and turnaround times, the backbone of global supply chains, the 2025 World Bank Container Port Performance Index (CPPI) highlights the declining performance of South African ports.
While it is positive to see two South African ports – Cape Town and Ngqura – in the top five showing the largest year-on-year improvements from 2023 to 2024 due to targeted investment and operational improvements, our major ports of Durban, Cape Town, Ngqura and Port Elizabeth were still ranked in the bottom 10 of the world's worst performing ports.
In contrast, Port Said in Egypt and the deepwater port Tanger Med in Morocco are ranked among the world's top five best performing ports for 2020-2024.
The two ports, as well as Alexandria (Egypt) and the growing West African transshipment hub, the port of Lomé in Togo, all rank among the global top 100 most efficient ports.
South Africa is also leading in the case of Mogadishu (Somalia) and Senegal's Dakar ports, the most efficient ports in East Africa.
Closer to home, Walvis Bay in Namibia, as well as Maputo and Beira in Mozambique, have emerged as strong contenders to challenge Durban and other SA ports as gateways to Africa.
It is important that this upward momentum continues, and that public-private partnerships in port operations (as well as rail) are realized as soon as possible to further improve efficiency and competitiveness.
In a positive development, the African Union last month signed the rules of origin for automotive products under the African Continental Free Trade Area (AfCFTA) – a move described by the African Association of Automotive Manufacturers as “a decisive milestone towards creating an integrated and globally competitive African automotive market”.
The rules provide the benefits of duty-free and quota-free trade across the continent, with opportunities arising from the requirement that vehicles and components contain a minimum of 40% African-origin content.
The core fundamentals of manufacturing in South Africa remain in place, but this foundation now requires technological advances in digitally driven manufacturing, as well as the skills development necessary to support it.
African rules of origin provide opportunities for greater localization of automotive components – an area in which South Africa has established strengths and advanced technological capabilities in meeting global standards.
This is also the area where the largest employment multiplier effect is located.
This is a foundation where SA can play a strategic role, leveraging its automotive value chains and technological expertise to become an anchor for regional, cross-border supply chains, with each country playing to its strengths rather than duplicating efforts.
If Africa is to move forward in leveraging its mineral resources – creating value-added products rather than remaining a net exporter of raw materials that are then re-imported as finished goods – then SA has an important strategic role to play in unlocking this opportunity through a collaborative, continent-wide effort.
However, we must move more quickly to respond to global geopolitical, energy and trade changes, implementing policies that support the retention and growth of local manufacturing, investment and employment.
At the same time, we need to firmly position South Africa as a major player on the African continent by strengthening inter-continental supply chains, promoting implementation and participation in the AfCFTA, and building a continent-wide advantage in minerals and raw materials.
Dennis van Huysteen is the CEO of the Nelson Mandela Bay Business Chamber.
This article was first published moneyweb