Two Diverging Paths: Why South Africa Is Falling Behind as Morocco Rises

Africa’s manufacturing landscape is increasingly defined by divergence. While some countries are losing industrial capacity, others are attracting new factories, technology, and long-term investment. Nowhere is this contrast clearer than between South Africa, once the continent’s industrial anchor, and Morocco, which is rapidly positioning itself as a competitive manufacturing and export platform. Recent developments in both countries reveal two very different trajectories, one shaped by weakening industrial conditions, the other by deliberate alignment between policy, infrastructure, and global value chains.

South Africa has long been Africa’s most industrialised economy, with deep manufacturing roots in automotive, chemicals, metals, food processing, and consumer goods. Yet recent data and corporate decisions show growing strain. British American Tobacco South Africa has announced the closure of its only cigarette manufacturing plant in Heidelberg, citing the overwhelming impact of illicit trade. Illicit cigarettes are now estimated to account for about 75% of the domestic market, eroding legal production volumes to unsustainable levels. By the end of 2026, the company will shift to an import-based model, placing around 230 manufacturing jobs at risk. This is not just a story about tobacco. It is a warning about the vulnerability of manufacturing when enforcement, regulation, and market integrity collapse. When illegal products dominate, legitimate manufacturers cannot compete, investment dries up, and production moves offshore.

At the same time, official data shows that South Africa’s manufacturing output fell by 1.0% year-on-year in November 2025. This decline reflects persistent challenges such as weak domestic demand, rising input costs, energy instability, logistics bottlenecks, and policy uncertainty. Together, these pressures make manufacturing less predictable and less attractive for long-term investment. Illicit trade, infrastructure failures, and inconsistent enforcement are not side issues, they directly undermine the foundations of industrial competitiveness. When firms cannot rely on fair markets, stable energy, or efficient logistics, they reduce investment, cut jobs, or exit entirely. South Africa is not losing manufacturing because it lacks skills or industrial history. It is losing it because the operating environment has become too uncertain for many firms to justify staying and expanding.

While South Africa struggles to defend its industrial base, Morocco is steadily building one. Tata Sons, one of India’s largest industrial groups, is expanding its defence manufacturing footprint by opening a private defence manufacturing facility near Casablanca. The plant is designed to serve markets in Africa and Europe, reflecting how Morocco is being positioned as a bridge between regions and a base for export-oriented manufacturing. This is not an isolated case. Over the past decade, Morocco has attracted major investments in automotive, aerospace, electronics, and industrial equipment. Global firms such as Renault and Stellantis already use Morocco as a production hub linked directly to European markets through efficient ports like Tanger Med, strong logistics networks, and reliable infrastructure.

Morocco’s advantage lies not in cheap labour alone, but in coordination. Industrial zones are connected to ports and highways, trade agreements give access to Europe and beyond, industrial policy priorities are clear, investor support is consistent, and technical skills systems are improving. For multinational manufacturers, Morocco offers predictability. They know where inputs will arrive, how long exports will take, and what rules will apply. That predictability is often more important than incentives.

South Africa and Morocco reveal a deeper truth: industrial success is not about declarations, it is about systems. In South Africa, illicit trade distorts markets, energy failures disrupt production, logistics delays raise costs, and policy uncertainty weakens confidence. Even firms with long histories in the country now question whether local production still makes sense. In Morocco, infrastructure, trade access, and industrial planning are aligned to make manufacturing competitive. Investors can plan long-term, factories become platforms for export, and supplier ecosystems grow around anchor firms. The result is clear: South Africa is increasingly importing goods it once produced, while Morocco is increasingly exporting goods it did not produce before. This is not a matter of luck. It is the outcome of how states manage markets, infrastructure, enforcement, and long-term industrial strategy.

The contrast matters beyond these two countries. It shows that African industrialisation is not inevitable, but neither is deindustrialisation. Countries that protect legal markets, invest in infrastructure, enforce regulations, and coordinate policy with finance and trade can attract global manufacturing. Countries that allow illegal markets to dominate, fail to maintain infrastructure, and create policy uncertainty will slowly lose industrial capacity, even if they once led the continent. South Africa’s decline is not irreversible, but it requires treating illicit trade, infrastructure failure, and industrial instability as national economic emergencies, not side issues. Morocco’s rise shows what is possible when industrialisation is treated as a long-term system rather than a series of announcements.

Africa’s manufacturing future will not be shaped by speeches about industrialisation. It will be shaped by whether countries build environments where firms can operate fairly, predictably, and competitively. South Africa stands at a fork in the road: continue managing decline through imports and closures, or rebuild the systems that once made it Africa’s industrial engine. Morocco has chosen the second path, and the factories, jobs, and exports are following. The lesson is simple but uncomfortable: industrialisation is not promised by history. It is earned by systems.