In June, Cabinet approved South Africa's new Industrial Development Strategy, built around three pillars its authors call the "3Ds": decarbonisation, digitalisation and diversification.
If implemented well, it promises to lift GDP growth towards 3% a year and begin reversing three decades of industrial decline.
Three months later, in parliamentary hearings, those meant to carry the strategy forward spelled out its likely fate.
Mzwandile Masina, who chairs Parliament's trade portfolio committee, warned it "will fail dismally" without a clear funding framework. Business Unity South Africa's Khulekani Mathe said business cannot commit to a strategy with no ring-fenced, multi-year budget behind it.
The Bureau for Economic Research's Roy Havemann was blunter still: without dedicated appropriations, the strategy risks being executed "cheaply" and failing on arrival.
Read together, this was not scepticism. It was a forecast, and South Africa has heard this exact forecast delivered, almost verbatim, before.
This is not a new story. It is the same story, again.
In the meantime, the numbers keep confirming the diagnosis. Statistics South Africa's second-quarter data this year showed manufacturing contracting 1.8%, its third consecutive quarterly decline.
The Industrial Development Corporation warned in August that South Africa's manufacturing trade deficit hit R310 billion in the first five months of 2026 alone, while machinery and equipment investment fell 3.4% in the first quarter.
South African Reserve Bank (Sarb) Governor Lesetja Kganyago, commenting on the same data, put his finger on the paradox: corporate South Africa is sitting on almost R2 trillion in cash, and still "firms are not pouring their energies into growing their South African business."
None of this is happening because of a lack of strategy documents.
South Africa has written industrial strategies before, including sector master plans, localisation frameworks, and special economic zones, all sincerely intended, under-resourced, and eventually shelved.
The new strategy's own diagnosis is honest about part of the problem: "policies implemented in isolation across departments often lack coherence, limiting their effectiveness."
What it has not yet answered, and what Parliament is now asking it to answer, is where the money for decarbonisation, digitalisation, and diversification is meant to come from, in an economy where the fiscus is already “stretched” and government departments face debilitating vacancy rates.
The honest answer is that South Africa keeps asking the wrong question and keeps getting the wrong answer because it is using the wrong theory of money to ask it.
The Treasury view, echoed in every parliamentary hearing about "funding frameworks," treats development finance as a fixed pool of money that must be found first, through the budget, through taxes, or by persuading pension funds and insurers to hold more developmental assets before industrial policy can begin.
This is the loanable funds doctrine: the inherited, mistaken assumption that savings are scarce, that government spending competes with private investment for a limited supply of capital, and that a credible funding plan means locating that capital before committing to anything. It sounds prudent. In fact, it is a theory of money that the institutions that issue money have already renounced.
This is not a fringe heterodox claim. It is the Bank of England's own account of how money is created, published in its quarterly bulletin and independently confirmed by Germany's Bundesbank and the IMF.
They say that commercial banks do not lend out pre-existing deposits; they create new deposits the moment they extend credit. Pretoria's entire funding-framework debate proceeds as though these institutions and eminent scholars, including this author, had never said so. South Africa's state development finance institutions, the IDC and the Development Bank of Southern Africa, currently carry a combined balance sheet of roughly R265 billion.
The retirement-fund industry alone manages about R7 trillion. That gap is not a shortage of national savings. It is a shortage of institutions mandated, capitalised and directed to turn liquidity into productive industrial credit: domestic resource creation, not the mobilisation of resources that were never actually scarce.
This is why the funding debate in Parliament is more consequential than it appears, and why the easy fixes on offer deserve suspicion. Business Unity South Africa and the Bureau for Economic Research are right that a strategy without a multi-year, ring-fenced funding commitment is a wish list. But the deeper failure would be to solve that problem the way South Africa has tried before: by squeezing an already-constrained fiscus harder, or by leaning on retirement funds through "prescribed assets" mandates that compel private savers to underwrite public risk, with no institution capable of properly underwriting the credit.
Neither route addresses the actual constraint, which is architectural, not arithmetical. What the strategy needs is a recapitalised, statutorily protected industrial financing facility housed in the IDC and DBSA, financed through instruments that do not compete with government borrowing for market appetite, and insulated by the governance safeguards, public reporting, rotation rules, and conflict-of-interest audits that any concentrated pool of developmental capital requires.
The Public Investment Corporation, whose governance troubles resurfaced this year around a fund several trillion rand in size, stands as a reminder of what happens when scale outruns safeguards. That is an argument for building the safeguards. It is not an excuse for building nothing.
Sarb compounds the problem, not a neutral bystander.
Manufacturers do not borrow at the 7% repo rate. They borrow at the 10.5% prime rate it sets in motion, for projects that take years to turn a profit.
A central bank holding a structurally high real interest rate stance, parked well above its own 3% target by default, not as a last resort, is pricing long-gestation manufacturing investment out of viability at a time when government is asking Parliament to find that investment a budget line.
No industrial strategy survives contact with a macroeconomic framework that fights every problem with one instrument, one mandate, and one largely discredited theory of how credit and money work.
None of this means the 3Ds are the wrong priorities, or that decarbonisation, digitalisation and diversification are poorly chosen. It means a strategy describes what should be built, not how it gets financed, and South Africa has now written several strategies without ever settling the second question, because the theory of money it keeps reaching for cannot settle it.
A commodity-dependent, deindustrialising economy will not talk, plan or master-plan its way to a factory floor. It needs an institution with the mandate, the balance sheet and the legal protection to lend money into existence, and a central bank willing to stop treating that credit as a threat to be priced out of the market.
Until Parliament forces both answers, the 3Ds will remain, as they have before, a well-argued document waiting for a budget line and a lending rate that never quite arrive.
Redge Nkosi is the executive director of the African Heterodox Economics Network (AHEN), a leading continental and diaspora research network focused on heterodox and post-Keynesian approaches to economic development.
**The views expressed do not necessarily reflect the views of the National Media Group.