Given the highly concentrated nature of South Africa’s economy, one would think the Industrial Development Strategy (IDS) released on June 6 by the department of trade, industry & competition, and the Competition Commission’s Concentration Tracker Report 2026, would talk to each other, since they are produced within the department’s stable. Sadly, it doesn’t seem to be the case. Manufacturing’s share of South Africa’s GDP has fallen from 21% in 1994 to 13.6% by 2025, fixed investment has stagnated, and the economy remains tethered to resource-based exports, according to the IDS. The Concentration Tracker Report states that large firms — just 3% of all tax-paying companies — accounted for 78% of total market turnover in 2021, up from 76% in 2017, while the bottom half of all firms by number shared a mere 0.86% of turnover, itself down from 0.96% four years earlier. Small, medium, and micro enterprises (SMMEs) made up 97% of firms by number yet captured only 22% of turnover, down from 24% in 2017, compared with the 50%-60% value-added share this sector typically commands in Organisation for Economic Co-operation and Development (OECD) economies. The IDS is structured around three pathways — decarbonisation, diversification and digitalisation. Sectoral concentration is sharpest precisely where the IDS proposes to focus its decarbonisation pathway: large firms hold about 95% of mining turnover, 86% of electricity, gas and water, and 84% of manufacturing. Small, medium and micro enterprises (SMMEs) are about twice as employment-intensive compared with large firms: they generated 44% of total employment in 2021 despite holding only 22% of turnover. Dismantle barriers to expansionThe commission is explicit that the binding constraint is an inability to expand, with fewer than 0.5% of micro and small firms transitioning into medium or large firms. Its report concludes that “competition policy alone is unlikely to achieve the desired market outcomes” without a genuinely whole-of-government effort to dismantle barriers to expansion, including through public procurement. As for the third “d” ― digitalisation ― South Africa does have a digital transformation roadmap, but one that acknowledges that transformation “has been slow and unco-ordinated”, echoed in the implementation risk the IDS itself identifies. The IDS’s enabling instrument for the resources sector, such as an exploration fund, beneficiation conditions attached to mineral rights, designated special economic zones for chrome beneficiation and a critical minerals strategy, could help junior miners, new entrants and historically disadvantaged firms. But capital required for green hydrogen, transmission build-out or nuclear procurement favours large mining houses, state-owned entities and established engineering and construction firms. Instruments such as the proposed reinstatement of the section 12I tax allowance are calibrated for large-scale greenfield and brownfield investments, with qualifying projects able to claim allowances of up to R900m and by design favour firms with the balance sheets to undertake projects of that magnitude. Without a mechanism addressing the “missing middle” of medium-sized challenger firms, the IDS’s financing architecture may continue to underserve the firm-size category, where structural transformation is most needed. A second gap is institutional rather than sectoral. The IDS lists “Competition Policy (public interest provisions)” as a one-line item among a dozen industrial policy instruments, without engaging with the Competition Commission’s detailed analysis issued every five years. The departmental-led inter-ministerial committee, working with the commission’s market inquiry and merger control functions, could address that caveat. Without a mechanism addressing the “missing middle” of medium-sized challenger firms, the IDS’s financing architecture may continue to underserve the firm-size category, where structural transformation is most needed. A fiscal constraint is working against the department’s SMME ambition regardless of design: its own budget has fallen 40% in real terms since 2013/14, with funding for incentives shrinking from R7.5bn in 2019/20 to R5bn in 2025/26. The commission concludes that growth in market share for SMMEs to date has been negligible even where overall concentration has eased. It has warned that the IDS would do well to take more seriously than its present treatment of “competition policy” as one bullet in a list of suggestions. Industrial policy and competition policy are not substitutes for one another. On the evidence of both documents South Africa needs them pulling in the same direction, with shared subsector diagnostics and shared conditionalities, if employment growth is to come from a genuinely broader base of firms rather than from the same large incumbents that are simply producing and exporting more. • Abba Omar is director of operations at the Mapungubwe Institute for Strategic Reflection.