By Prof. Busisiwe Mavuso
*SONA delivered crucial clarity: the independent TSO will own and operate transmission assets and run the electricity market, resolving December’s policy confusion through direct government-business engagement.
*Manufacturing deindustrialisation received no attention despite factory closures across automotive and other industries due to low-cost imports and illicit trade.
*Urgent action needed: finalise new energy vehicle policy, deploy anti-dumping measures, review tariffs to protect local manufacturing, and intensify enforcement against illicit trade destroying legitimate markets.
*South Africa’s diplomatic network requires professionalisation focused on trade expertise rather than cadre deployment, with business-government partnership essential to identify markets and negotiate agreements serving industrialisation objectives.
As the dust settles from Thursday night’s State of the Nation Address, attention must turn to the rapid implementation of what President Cyril Ramaphosa announced and to addressing what was left unsaid.
There was much to welcome, as BLSA noted in our release after the speech. Most important was the clarity the president brought to the future of our electricity transmission system. The independent Transmission System Operator will own and operate transmission assets and run the electricity market. This resolves the policy confusion that emerged in mid-December when the minister of electricity and energy published an unbundling strategy proposing that transmission assets remain with Eskom rather than transfer to the TSO. The dedicated task team that the president will establish under Necom provides the right mechanism to manage the complex transition and ensure there are no missteps. BLSA looks forward to supporting that process where we can. The end result will be a resilient electricity system that drives the investment urgently needed in grid expansion and future generation capacity.
This resolution demonstrates the value of direct engagement. After we flagged concerns in January, Minister Kgosientsho Ramakgopa met with me within a day. His director-general followed up the following week with substantive discussions. I am grateful to the minister and the president for taking our concerns seriously and moving quickly to provide clarity. The uncertainty that emerged in December was affecting investor confidence. Thursday’s announcement removes that cloud.
The SONA also outlined ambitious steps on water infrastructure and criminal justice capacity to tackle organised crime. These are critical priorities that deserve support and scrutiny as implementation begins.
But it would be remiss not to address what was missing. The biggest omission was any strategy to tackle the rapid deindustrialisation we are facing. We need a decisive response to the destruction of manufacturing capacity that took decades to build and remains key to employment creation.
The scale of the crisis is stark. In the automotive sector, tyre manufacturers Bridgestone closed its Port Elizabeth plant in 2020, and Goodyear announced the closure of its Kariega tyre plant last year. Component manufacturers producing safety belts, airbags and other critical parts have scaled back or closed: 13 closures in the past two years according to Naacam, with more expected. Nissan is selling its Rosslyn plant. Volkswagen has warned of uncertainty over jobs at its Kariega facility. Beyond the automotive sector, British American Tobacco South Africa announced it will close its Heidelberg plant by the end of 2026, following the destruction of the legitimate market by illicit cigarettes.
The common thread is competition from low-cost imports, including from China, that undercut local manufacturers. Chinese vehicle models alone now account for 22% of imports. Yet the SONA offered no plan to address this.
Government must act urgently. Finalise the new energy vehicle policy to enable manufacturers to transition to electric and hybrid production for export markets. Deploy anti-dumping measures where imports, some argue, are being sold below cost. Review tariff structures to protect local manufacturing whilst avoiding damage to local assemblers. Intensify enforcement against illicit trade destroying legitimate businesses. We cannot afford to wait for more factory closures to force action. That day is coming if government doesn’t work with industry right now.
The President did briefly reference strengthening capacity for trade negotiations and expanding missions abroad to drive economic policy. This is necessary, but let’s be clear about the challenge. South Africa maintains an extensive diplomatic network – one of the largest for a country our size – but the problem is effectiveness, not scale. Too many ambassadorial posts have been treated as rewards for loyal or difficult cadres rather than positions requiring serious economic and trade expertise. Many missions in substantial economies have been left without ambassadors or high commissioners for extended periods. Being South Africa’s chief representative in a country must carry the weight it deserves.
A serious professionalisation effort is needed. Our diplomats must be equipped to advance South Africa’s economic interests, identify market opportunities, and negotiate agreements that serve our industrialisation agenda. This requires a partnership with business. BLSA stands ready to help identify priority markets, connect South African exporters with potential customers, and provide input on trade negotiations. We’ve seen in countries like Vietnam and South Korea how business-government collaboration on trade delivers results.
International economic relations have never been as important as now. With the United States disrupting established trading relationships, South Africa must diversify export markets and build partnerships on our own terms. Every trade agreement must be evaluated against clear criteria: does it support industrialisation? Does it create quality employment? Does it build export capacity? Our manufacturing industries must be on a path to becoming globally competitive champions through export-led growth, not permanently sheltered from competition. And our international agreements must be laser-focused on what matters – our economy and the jobs it can create and support.
The electricity reform clarity shows what a focused government-business partnership achieves when both sides commit to solving problems. We resolved policy confusion in weeks through direct engagement. We must apply that same urgency to manufacturing. The automotive crisis, the illicit economy destroying legitimate businesses, and the need for effective trade diplomacy all demand immediate action. The SONA delivered progress on electricity. Now we need a matching commitment to protecting and building industrial capacity – because without manufacturing, we cannot achieve the employment-creating growth South Africa desperately needs.
