South Africa lost its top spot in Africa after it dominated for decades

Morocco surpassed South Africa to become the highest-ranked industrial economy in Africa in 2025, ending South Africa’s dominance on the continent.

The African Development Bank’s (AfDB’s) latest Africa Industrialisation Index report for 2025 revealed this.

Morocco’s performance was bolstered by sustained industrial upgrading, export diversification, and effective implementation of strategic industrial policies.

However, the story is not all about Morocco improving. It is also about South Africa’s decline as an economic powerhouse after 15 years of stagnant growth.

South Africa became the dominant industrial economy in the build-up to WWII over 80 years ago, when investment flooded into the country’s fledgling economy.

It sustained throughout the 1950s and 1960s, as the country developed major heavy industries, from steelmaking to automobile manufacturing and fuel refining.

“While South Africa remains a continental industrial powerhouse, it continues to experience a steady decline in industrial competitiveness,” the AfDB said in the report.

This decline is even starker, given that Africa’s combined consumer and labour markets have made it increasingly attractive for manufacturing investment.

The emergence of a middle class in many African economies has strengthened demand for manufactured goods across the continent.

This was something South Africa was expected to capitalise on, given that it was Africa’s most developed and industrialised economy for decades.

However, it has failed to do so, with repeated policy missteps by the government, the collapse of state-owned enterprises, and increasingly onerous regulations.

The AfDB compiles the industrialisation index from nineteen indicators, which were updated in 2025 to give greater weight to regulatory burdens and the rule of law.

There is also a revised safety and rule-of-law indicator, which focuses on the rule of law, transparency, accountability, and personal safety.

Under the updated index, and along with continued decline, South Africa’s rating slipped from 0.8401 to 0.8396 in 2025, while Morocco’s continued to improve.

This is the first time since 2010 that South Africa did not take top spot in Africa, with its rating steadily declining from 0.8819 in 2010. This is shown in the table below.

Warning about de-industrialisation in South Africa

The Freedom Front Plus (VF Plus) said Morocco overtaking South Africa as Africa’s most industrialised economy was concerning.

“While South Africa remains a significant industrial powerhouse on the continent, this development confirms its continuing decline in industrial competitiveness,” it said.

It blamed years of unreliable electricity supply, state corruption, policy uncertainty, overregulation and poor economic governance.

“These problems have severely undermined South Africa’s attractiveness as an investment destination and constrained economic growth,” it said.

The party said it had been warning the Minister of Trade, Industry and Competition against the dangers of deindustrialisation for years.

“The loss of manufacturing capacity leads to less investment, fewer employment opportunities and increasing economic stagnation,” it said.

It said that South Africa urgently needs to pivot politically to an administration that promotes economic growth through sound free-market principles.

The country must also ensure the right economic policies to restore business confidence and encourage investment.

“The country possesses exceptional potential, but this can only be unlocked through policies that support growth, competitiveness and private enterprise,” it said.