South Africa’s latest production data reveals a widening divide between a resurgent mining sector and a struggling manufacturing industry, raising concerns about the structure of economic growth and its implications for small businesses.

Recent figures point to an economy gaining momentum in resource-driven sectors while losing ground in industries that are more closely tied to domestic demand and small enterprise activity.

Data released by Statistics South Africa shows that mining production is expected to post strong year-on-year growth in February, building on solid gains recorded in January. At the same time, manufacturing output continues to weaken, extending a trend that has persisted for several months and signalling deeper strain within the sector.

Manufacturing production declined by 2.8% year-on-year in February, with a further 2.2% drop on a month-on-month basis. The contraction has been driven by declines in key subsectors including food and beverages, wood and paper products, and basic iron and steel, all of which form part of broader industrial value chains that support a wide network of small and medium-sized enterprises.

This divergence places the burden of short-term economic growth on mining and services, reinforcing a pattern where gains are concentrated in sectors that are less accessible to smaller businesses. While headline figures may point to recovery, the underlying composition of that growth raises questions about how widely its benefits are being distributed across the economy.

Manufacturing decline weighs directly on SMEs

For SMEs operating within manufacturing-linked industries, the downturn is already translating into weaker demand and increasing cost pressure. Businesses involved in processing, packaging and supply are facing reduced order volumes while continuing to absorb higher input costs linked to fuel, imports and operational overheads.

“We’ve had to scale back production because demand is inconsistent,” said Kutlwano Mahase, who runs a packaging and labelling business in Ekurhuleni. “At the same time, costs keep rising, so even when you do get orders, the margins are not what they used to be.”

The pressure is compounded by the structure of manufacturing supply chains, where smaller firms are often dependent on larger clients and are more exposed to shifts in production cycles. As output slows, opportunities across these networks contract, limiting the ability of SMEs to maintain stable revenue.

Mining growth offers limited access for smaller players

While mining is expected to support overall output, its structure presents challenges for broad-based participation. The sector remains capital-intensive and highly concentrated, with production largely driven by established firms operating at scale.

This limits the extent to which SMEs can benefit directly from periods of strong growth, particularly when compared to manufacturing, which typically supports more extensive supply chains and labour-intensive activity.

The constraints are also evident among small-scale miners, many of whom operate with permits but face barriers that prevent meaningful participation in the sector.

“Having a permit doesn’t mean you can actually operate at scale,” said Andile Khanyile, a small-scale chrome miner in Limpopo. “Without access to funding, equipment and reliable buyers, it’s very difficult to grow beyond a certain point.”

These challenges highlight a structural gap between policy frameworks that support entry into the sector and the practical realities of sustaining operations within it.

An uneven growth path raises longer-term concerns

The contrast between mining strength and manufacturing weakness points to a broader imbalance in the economy. While mining can provide a short-term boost to GDP, its impact on employment and SME development is more limited compared to sectors that are more closely integrated into domestic value chains.

At the same time, continued weakness in manufacturing suggests that businesses operating in these environments may face prolonged pressure, particularly as business confidence remains subdued and input costs remain elevated.

If current trends persist, South Africa risks entrenching a pattern of growth that is not only uneven across sectors, but also limited in its ability to support smaller businesses and broader economic participation.

As the country approaches the release of first-quarter GDP data, the key question is not only whether growth is improving, but whether it is occurring in sectors capable of sustaining employment, supporting SMEs and driving inclusive economic expansion.