Excessive regulatory burden stifling manufacturing growth

The volume of day-to-day compliance paperwork is among the heaviest constraints on Western Cape manufacturers, according to the Cape Chamber’s 2026 Business Environment Survey. Exactly two-thirds of manufacturing respondents rated the firm-level regulatory compliance burden seriously limiting. Only labour legislation scored higher within the sector.

Where the burden is not felt is as revealing. The same manufacturers rated the rules governing their own sector far less seriously: sector regulation and standards at 28.8 per cent of 52, the lowest reading of any of the eight reportable sectors and 17.7 points below the provincial average of 46.5 per cent. Provincial business regulation sits between the two at 38.9 per cent of 54. The stats suggest the manufacturers’ complaint is about administration; the standards themselves attract markedly less objection.

Rae Wolpe, economist with Impact Economix which ran the survey analysis with the Bureau for Economic Research, said the survey showed manufacturers are not asking to be deregulated. “Two-thirds of them rate the burden of complying as seriously limiting, but fewer than three in ten say the same about the standards their sector is held to, and that is the lowest reading of any sector in the survey.”

“What they are describing is a paperwork problem. The same firms are asking for more enforcement against competitors who do not comply, which is not the request of an industry that wants the rulebook thinned," Wolpe said.

"One medium-sized metro manufacturer set out what a public-sector order looks like from the supply side. An order of 10 washers, costing R10 to produce, requires 50 pages across twelve documents: beneficial ownership, tax clearance, COID, a BEE certificate, the latest CIPC registration, a declaration of interest, a declaration of shareholding, an integrity declaration, general conditions of purchase, a BEE point claim form, an authority to submit and a bidders declaration. The respondent’s own conclusion was blunt: "You must be mad, we'd rather watch TikToks."

A small metro manufacturer applied to SARS for a new export code after its previous code lapsed. Almost a year later, when it answered the survey, it had still not been assisted, and exports to Namibia, Lesotho, Swaziland and neighbouring SADC countries remained suspended.

A medium metro manufacturer lost a large Kenyan customer after the AfCFTA agreement came into force and the Kenyan Revenue Authority reclassified its product under a different HS code. SARS then took more than nine months over the determination. At the time of the survey the firm was still waiting on the Kenyan authority.

Another medium metro manufacturer described injury-on-duty claims stalling when the online systems do not work, with no practical route to resolution: when a problem arises, "it is impossible to resolve it easily or find someone who can help."

A non-metro manufacturer listed three regulatory regimes running at once, NEMBA, the Indigenous Knowledge Systems Act and SAHPRA, with the possibility of falling under the Chemical Bargaining Council on top of them.

Respondents rated 61 named constraints at four levels: their own firm, their precinct, their sector and the province. Manufacturers rated fifteen of the 61 seriously limiting by more than half of those answering, which is a longer list than the sample as a whole produces. These are the constraints that separate manufacturers most sharply from everyone else, in both directions.

Manufacturing was the second-largest sector group in the Western Cape sample, 55 of 308 respondents, behind other services at 71.

Concern about the burden of compliance sits alongside concern about competitors who do not comply. Six manufacturers raised imports, unfair competition and enforcement in their written answers, one of them describing how "cheap Chinese and Indian imports has eroded our ability to manufacture machines because most people have given up". The request is for enforcement against the non-compliant, not for lighter rules, and it fits the sector’s unusually low rating on sector regulation and standards.

Labour legislation is the exception

The one area where manufacturers object to the legislation itself, rather than to its administration, is labour law. Empowerment and equity requirements is the most-raised theme in their written answers, named by 11 of the 43 manufacturers who wrote anything, ahead of the volume of paperwork at nine. The threshold effects are named directly. As one metro manufacturer put it: "We can not transition from 45 staff to more than 50 due to the massive additional cost and legislatively burden posed by EE."