Government says improving the use of existing industrial capacity—not just building new factories—will be critical in easing the cost of goods, reducing import dependence and strengthening job creation under the National Development Strategy Two (NDS2).
Industry and Commerce Minister Mangaliso Ndlovu said the economy is expected to maintain positive momentum into 2026, with manufacturers increasingly producing more from plants that have already been expanded.
According to the minister, industrial capacity utilisation stood at 57 percent in 2025 and is projected to rise above 60 percent in 2026, a level that would mark the highest utilisation rate recorded in the sector.
Rather than capacity growth alone, Ndlovu said the focus has shifted to ensuring factories actually run closer to full potential—an approach government believes will translate into lower unit costs and improved price stability.
“Most companies have expanded capacity, and we are now seeing increased utilisation of that expanded capacity,” he said, adding that this trend points to a more efficient and resilient industrial base.
Ndlovu said improved agricultural output is expected to give a strong boost to agro-processing, a sector viewed as central to value addition, rural employment and import substitution. Higher throughput in food processing, he said, could reduce the need for imported finished goods and cushion consumers from external price shocks.
The minister also highlighted renewed focus on strengthening value chains in iron and steel, where downstream and upstream linkages are being prioritised to stimulate local manufacturing activity. He said government is addressing regulatory and operational bottlenecks to ensure smoother production and market access.
One key intervention, Ndlovu said, is the reclassification of iron and steel from a mineral to an industrial processed product—an adjustment aimed at reducing compliance hurdles and improving competitiveness.
Analysts say if higher capacity utilisation is sustained, the manufacturing sector could play a larger role in stabilising prices, narrowing the trade deficit and absorbing labour, reinforcing NDS2’s objective of broad-based economic growth driven by local production rather than imports.
