A persistent question confronts policymakers and analysts in South Africa: Why has sustained economic growth not occurred at the scale and pace required to transform the economy and reduce poverty and unemployment?
Despite the country’s wealth in natural resources, relatively advanced infrastructure and a sophisticated financial system, the economy remains constrained by structural weaknesses. These include low productivity, high levels of unemployment and premature deindustrialisation.
In their Decadal Plan Report, released in March this year, the department of science and innovation identifies three broad areas around which the long-term development strategy is structured.
The first is societal grand challenges and associated economic enablers. These include climate change and environmental sustainability, with a focus on the circular economy and a just transition that protects vulnerable households as the country shifts to green energy.
They include future-proofing education and skills to address the mismatch between schooling outcomes and the requirements of a digital economy. They also encompass the future of society, where innovation is directed towards resolving the interlinked challenges of poverty, inequality and unemployment.
The plan emphasises modernising traditional sectors such as agriculture, mining and manufacturing through technological upgrading, as well as health and energy innovation, including vaccine production and renewable energy solutions to stabilise the national grid.
The second pillar is the construction of a capable and inclusive state. The emphasis is on strengthening decision-support tools through data analytics, satellite data and geographic information systems to improve municipal service delivery. It also includes a commitment to spatial transformation by aligning science, technology and innovation investment with the District Development Model, thereby extending the footprint of innovation beyond metropolitan centres.
Taken together, the priorities reflect an implicit recognition that economic transformation is not driven solely by policy instruments but by the underlying institutional and social conditions that shape how the instruments are absorbed and translated into productive activity.
The insight resonates with the thinking of the 18th-century sage of the Caledon Valley, Morena Mohlomi, a Mosotho chief, philosopher and mentor to Morena Moshoeshoe, the founder of the Basotho nation.
Mohlomi’s conception of leadership is neither neutral nor procedural. He distinguishes between responsible and irresponsible leadership, defining the former as a leader who understands themselves and those they lead, pursues peaceful and productive alliances, accommodates stakeholders and deploys new instruments of power to create intergenerational value.
What is notable is not simply the emphasis on ethical conduct but the implicit theory of the causation it contains. Leadership, in this view, shapes the conditions under which societies organise themselves, generate knowledge and sustain productive system.
The causal pathway provides the intellectual basis for understanding the social foundation of industrial experience as both an outcome of leadership and a determinant of long-term economic performance. Against this background, this article examines one dimension of South Africa’s underperformance: the role of the social foundation of industrial experience in shaping the country’s industrial capabilities and its broader implications for long-term growth.
The concept of the social foundation of industrial experience refers to the set of social, institutional and cultural conditions that influence how individuals and communities engage with, participate in and benefit from industrial activity. It encompasses systems of education and training, labour relations, workplace norms, social identity, community structures and access to economic opportunity across race, class and gender.
In societies where the foundation is strong, individuals are equipped with the skills, networks and institutional support required to contribute meaningfully to industrial processes. This, in turn, promotes innovation, enhances productivity and facilitates broader participation in economic development.
Conversely, a weak social foundation undermines industrial capability by disconnecting individuals from opportunity, limiting the accumulation of productive knowledge and reproducing structural inequality and inefficiency.
While the Decadal Plan’s emphasis on decision-support tools and spatial transformation seeks to address some of the constraints, the persistence of the conditions suggests deeper systemic limitations. When viewed through this lens, South Africa presents a clear illustration of how a weak social foundation constrains industrial development and reinforces structural inefficiencies.
The social foundation of industrial experience has been undermined by systemic inequality, inadequate investment in vocational education and poor alignment between education, skills development and industry demands. The endurance of colonial and apartheid legacies continues to shape the structure of the real economy. The outcomes of post-apartheid investments in both basic and post-school education are particularly concerning given the scale of public expenditure.
South Africa allocates a higher share of its gross domestic product to education than many of its global peers, with substantial resources directed towards the sector education and training authorities and the higher education system. Yet the real economy continues to reflect weak educational outcomes.
Persistent deficiencies in literacy and numeracy, low throughput from schools into post-school training and a misalignment between qualifications and labour market needs continue to constrain the development of a skilled and adaptable workforce. The conditions have contributed to a manufacturing base that is both narrow and shallow, with limited capacity to upgrade or diversify.
Outside relatively well-supported sectors such as automotive manufacturing, South Africa struggles to attract sophisticated industrial investment. The shortage of skilled labour and weak institutional coordination discourage both domestic and foreign investors.
This has led to a cycle of low productivity and high unemployment, where industrial stagnation continues to erode the capabilities required to rebuild. At its core, this reflects a constrained accumulation of productive knowledge rooted in the social foundation’s weaknesses.
The importance of diversifying productive knowledge has been extensively researched by the Harvard Growth Lab, which argues that growth can be driven by diversifying know-how to produce a broader, increasingly complex set of goods and services. This insight emphasises that development is a process of acquiring and applying new knowledge in more sophisticated ways.
For South Africa, this requires not only economic reform but also a deliberate effort to cultivate the institutional and social conditions necessary to support complex production systems. In other words, structural transformation must be rooted in a strong social foundation that equips people to contribute to and benefit from industrial transformation.
President Cyril Ramaphosa’s 2025 State of the Nation address recognised the need to rebuild the foundation and implement reforms that target the underlying constraints to growth. He emphasised the urgent need to realign education and skills development with the needs of a modern economy, stating that South Africa is shifting towards an approach that combines academic and skills-based training.
He called on the private sector to provide experiential learning placements for youth and announced the expansion of technical and vocational education and training colleges to produce more artisans. The reforms represent a step towards strengthening the human capital base and improving the employability of young South Africans.
The president also highlighted a broader programme of institutional reform, including the investment of more than R940 billion in infrastructure over three years and efforts to revitalise state-owned enterprises such as Eskom and Transnet. The reforms aim to restore the efficiency and reliability of the state’s economic coordination mechanisms, improving investor confidence and facilitating industrial development.
Ramaphosa reaffirmed his government’s commitment to Operation Vulindlela, a reform initiative aimed at unlocking growth in sectors such as energy, transport and digital infrastructure. To fully realise the potential of the reforms, South Africa must go beyond administrative changes and adopt a mission-oriented industrial strategy that targets both short-term opportunities and long-term transformation.
Diversifying the country’s know-how must involve targeted efforts to revitalise vocational education, enhance research and development capacity and foster closer collaboration between the state, industry and educational institutions. In short, the advanced manufacturing skills agenda must be driven by industry rather than bureaucratic coordination alone.
Sectors such as agro-processing, mineral beneficiation and green industrial production present opportunities for value addition that build on comparative advantages while contributing to industrial upgrading. The sectors offer potential for economic diversification, employment creation and rural development.
Ultimately, the rebuilding of South Africa’s industrial capacity depends on strengthening its social foundation, which reflects the quality of leadership and shapes the country’s long-term industrial capability.
Without a skilled and empowered workforce, functional public institutions and effective systems of coordination, efforts to attract investment and stimulate growth will remain constrained.
The success of the reforms outlined in the 2025 State of the Nation Address will depend on the state’s ability to implement them coherently and inclusively. Aligning education, innovation and industrial policy within a broader social framework will enable South Africa to construct a more resilient and inclusive growth path and move closer to an economic model that is both more productive and more just.
The question before us, therefore, is whether the country can meet the standard of responsible leadership articulated by Morena Mohlomi to generate intergenerational value.
Busani Ngcaweni is the director of the Centre for Public Policy and African Studies at the University of Johannesburg and Dr Pali Lehohla is a distinguished data strategist, public educator and global keynote speaker dedicated to harnessing statistical evidence as a force for peace, policy and progress. He is also the former statistician-general of South Africa and professor of practice at the University of Johannesburg.
The country presents a clear illustration of how a weak social foundation constrains industrial development and reinforces structural inefficiencies but we can change that