The Paradoxes of Green Industrial Policy in Southern Africa

The resurgence of industrial policy discourse globally has generated significant enthusiasm for 'green industrial policy' as a vehicle for combining climate transition with economic development in the Global South. However, research conducted through a series of collaborative seminars with researchers, policy analysts, trade unionists and civil society actors across Southern Africa between November 2024 and September 2025 reveals fundamental paradoxes: while institutional frameworks for green industrial policy have become increasingly sophisticated, the actual implementation capacity and political will to deploy these frameworks remain severely constrained. The past five years have witnessed the resurgence of industrial policy as a legitimate object of serious academic and policy debates. For decades, industrial policy had been effectively prohibited for developing countries through the architecture of international trade rules and the conditions attached to development finance (Chang, 2002; Rodrik, 2008; Stiglitz, 2010). The standard refrain from the International Monetary Fund and World Bank was that industrial policy was the policy 'that shall not be named': a relic of protectionism and import-substitution industrialisation that had purportedly failed and should be abandoned in favour of market-led development.

Consensus regarding the inappropriateness of industrial policy for development has shifted dramatically. The rise to power of governmental teams in the United States and European Union committed to state-directed industrial policy, combined with the rise of China as a world power and the urgency of climate transition, has rehabilitated supposedly green industrial plans and strategies as serious policy instruments. Suddenly, research centres and universities in the region and across the world are producing work on industrial policy at scales that would have been unthinkable a decade ago (Asiama et al., 2025). The language has changed from scepticism to enthusiasm.

However, the enthusiasm with which industrial policy is now discussed in Global North policy circles contrasts sharply with the cautious and often ambivalent reception it receives in the Global South. Here, industrial policy has become entangled with climate politics, development finance, and the question of who bears the costs and captures the benefits of economic transition. It is in this context that a series of collaborative research seminars was organised by TNI and the GreenPaths project across Southern Africa in 2024 and 2025, bringing together researchers, policy analysts, trade unionists, and civil society actors to interrogate the actual trajectories of green industrial policy implementation in the region.

Drawing on seminar transcripts with diverse social, political and institutional stakeholders, our analysis argues that the disconnect between policy ambition and political reality reveals something more profound than simple implementation failure. Instead, it demonstrates how green industrial policy can become a mechanism for legitimising continued extractivism and reinforcing subordinate positions within global value chains, unless grounded in transformative approaches to state capacity, democratic participation, and power redistribution.

Our case study identifies four critical paradoxes that must be confronted: the budget defunding paradox, the politics-policy disconnect, the extractivism contradiction, and the distributional question of who industrial policy actually benefits. These paradoxes are not technical problems requiring better policy design; they are fundamentally political questions requiring political solutions.

Our research investigation is structured around several central inquiries. How do institutional frameworks for green industrial policy become disconnected from political capacity and political will? How can green industrial policy function as a mechanism for continued extractivism and subordination rather than genuine transformation? Who benefits from industrial policy, and on what terms are benefits distributed? What political conditions and power configurations would be necessary to make green industrial policy genuinely transformative in the service of workers and communities rather than capital? How do the experiences of Southern Africa compare to industrial policy trajectories in Asia and Latin America? How might we reimagine green industrial policy through the lens of justice and participation, ensuring that diverse communities have a meaningful voice in policy design and implementation? These research questions emerged through collaborative consultation with research partners across the region, reflecting both academic concerns and practical challenges identified by policymakers, activists, and community leaders.

Underlying these questions is a fundamental proposition: the bottlenecks constraining green industrial policy lie not primarily in the technical or institutional policy domain, but rather in the political terrain. Genuine transformation requires shifts in power configurations, changes in the distribution of interests, and the political actors' will and capacity to challenge entrenched structures of extraction and subordination. Our research operates from the conviction that understanding these political dimensions is essential for developing effective responses to green industrial policy challenges in the Global South. Policy frameworks, however sophisticated, cannot overcome political constraints and the absence of genuine democratic participation and state autonomy. Addressing these challenges requires moving beyond technical solutions to engage fundamentally with questions of power, distribution, and political will.

Research Context and Institutional Partnerships

Our article draws on qualitative research conducted through a series of collaborative seminars organised by the Transnational Institute (TNI) and the GreenPaths project (https://greenpaths.info/) in partnership with several university-based research centres and think tanks. The seminars were designed as spaces for sustained dialogue among diverse research and policy communities, including academic researchers in development economics, political economy and environmental sciences; independent policy analysts and think tank researchers; government officials working on industrial policy, energy transition, and economic development; trade unionists and labour movement representatives; and civil society activists working on environmental protection, human rights, and social justice. Participant selection reflected deliberate efforts to bring together people working on green industrial policy from different disciplinary backgrounds and institutional locations.

Three seminars were held at the University of Cape Town, the University of Johannesburg, and Stellenbosch University between November 2024 and March 2025. A fourth seminar was organised by TNI in Johannesburg in September 2025, in partnership with the Pretoria-based TIPS research centre and the TIDE Centre of the University of Oxford. Our geographical spread reflected deliberate efforts to engage with research communities across the region, while acknowledging that universities remain important sites of knowledge production and contestation, even in contexts where academic autonomy faces significant constraints. The diversity of individual participants, institutional backgrounds and expertise proved crucial, as it prevented the conversations from being captured by any single disciplinary frame or institutional interest.

All seminars operated under Chatham House rules, allowing open discussion without attribution of specific comments to named individuals. Our methodological choice was very appropriate, as it enabled participants to discuss sensitive political and policy issues, including criticism of government policies, analysis of corruption and state capture, and frank assessment of China's or Europe's role in African development, with greater frankness than might otherwise have been possible. Without Chatham House protection, some of the most candid and valuable discussions would likely not have occurred.

Horizontal and Collaborative Knowledge Production

The seminars operated explicitly on a principle of collaborative knowledge production rather than extractive research. Rather than researchers interviewing passive subjects or observing communities from a position of external authority, the seminars brought together diverse communities of practice with distinctive knowledge, experience, and analytical frameworks to collectively interrogate shared problems and think through potential solutions.

The conversations were structured around several key themes developed in advance through consultation with research partners: the conceptualisation of green industrial policy and its relationship to broader development objectives; the actual role of the state and state capacity in implementing industrial policy across different contexts; the  distributive question of who benefits from industrial policy and on what terms; regional cooperation and collective capacity building in the Global South; and the intersection of industrial policy with extractivism, environmental protection, and democratic participation of civil society in policy design and implementation. Although these themes provided structure, the seminars explicitly rejected a rigid research instrument approach, instead operating on the principle of collaborative interrogation, where initial questions served as entry points for discussion rather than fixed frameworks. Some of the most important insights emerged when researchers and practitioners were given space to pursue lines of questioning rooted in their own experience and preoccupations.

The Budget Defunding Paradox

One of the most striking observations to emerge from the seminars was the paradox of budget defunding. Research participants repeatedly noted that green industrial policy has become ubiquitous in policy discourse and has featured prominently in government frameworks, academic research, international development agendas, and the strategies of multilateral development banks (Asiama et al., 2025). Nevertheless, this discursive prominence coexists with the systematic defunding of the actual machinery of industrial policy at the state level.

Governments announce industrial policy frameworks and strategies with considerable rhetorical flourish. International institutions praise the sophistication of governance arrangements. Nevertheless, the actual fiscal allocation of resources to implement these strategies remains severely constrained. One seminar participant captured the contradiction with particular clarity: 'You can see green industrial policy everywhere except on the budget, even though that's not true of all countries. But, at the same time, the expectation is that green industrial policy can solve the problems of Mpumalanga's energy transition, where the aim is to essentially manage down coal and coal-based energy. People will lose jobs, but somehow industrial policy alone is expected to come in and solve those problems, create the jobs to replace those that would have been lost, and deal with the social and environmental spillovers that have been accrued over decades.'

A grotesque situation has thus emerged in which enormous expectations are loaded onto what green industrial policy can accomplish: solving unemployment, managing just transitions, creating new industries, and building productive capacity. The actual resources dedicated to industrial policy have been systematically reduced. Such defunding reflects broader patterns of austerity and fiscal constraint that have characterised macro-economic policy in much of Southern Africa and the rest of the Global South for the past two decades (UNCTAD, 2023). However, it also reflects the reality that industrial policy itself has never been a priority for the kinds of administrations and international institutions that have wielded significant influence over African economies. The rehabilitation of industrial policy rhetoric has not, in most cases, been accompanied by the rehabilitation of industrial policy finance.

In South Africa's coal transition in Mpumalanga, workers displaced from coal mining are offered access to reskilling programmes that lack adequate resourcing, economic diversification strategies that are poorly funded, and alternative employment opportunities that simply do not exist at the scale required (Bhorat et al., 2024). Seminar participants noted that the defunding of industrial policy reflects political choices about what matters. Mining communities affected by coal transition have been expected to absorb the costs of decarbonisation, while receiving minimal public investment in economic alternatives.

The budget defunding paradox connects directly to a broader crisis of financing mechanisms that emerged as a central concern at the TIDE-TIPS-TNI convening. Participants emphasised that the green transition is fundamentally shaped by entrenched power asymmetries in the control and deployment of financial flows. A recurring concern was the profound disconnect between those who control financial resources, primarily donors, multilateral development institutions, and governments in the Global North, and the communities in the Global South most affected by environmental degradation and economic transition. Civil society organisations are frequently compelled to align with donor priorities, compete with state institutions for scarce resources, or serve merely as implementers of externally defined programmes. Solutions require radical restructuring of both domestic and international financing systems: moving from donor-driven agendas and debt-based climate finance toward redistributive mechanisms such as progressive taxation, public investment, and mobilisation of domestic resources. Reframing financing for green transitions as redistributive justice recognises the ecological debt owed by industrialised nations and the right of Global South communities to determine their own development pathways.

The seminars generated extensive qualitative data documenting the perspectives, experiences, and analyses of over 45 researchers, policymakers, trade unionists, civil society activists, and community organisers from 22 countries across the Global South. Analysis of seminar discussions, conducted through a systematic review of transcripts and notes, identified four central paradoxes characterising the implementation of green industrial policy in the region. Our findings reveal fundamental disconnections between policy frameworks and political realities, between stated development objectives and distributional outcomes, and between rhetorical commitment to green transitions and actual resource allocation.

The methodological significance of conducting this research through collaborative seminars cannot be overstated. Rather than imposing external analytical frameworks on the region, the seminars allowed for dialogue-based knowledge production that reflected the lived experiences and analytical sophistication of researchers, policymakers, and activists working across Southern Africa. The diversity of participants ensured that emerging findings reflected not the views of any single institutional perspective or disciplinary frame, but rather a consensus that emerged across multiple communities of practice.

One of the most methodologically significant findings concerns the gap between announced frameworks and lived implementation. Countries have shown considerable creativity in designing governance frameworks and policy instruments for green industrial policy. However, the actual fiscal allocation of resources to implement these strategies remains severely constrained. Industrial policy exists as a set of ideas and institutional arrangements, but lacks the financial sinews to become an effective practice. Analysis of these four paradoxes reveals that the problem with green industrial policy in the Global South is not primarily a problem of policy design or institutional innovation. Instead, the problem is the unwillingness of dominant political and economic actors to commit the fiscal resources required to make industrial policy effective. The following sections present the primary findings, organised around four critical paradoxes that emerged consistently across seminars held in partnership with universities and research centres across Southern Africa.

Our research findings demonstrate that the disconnect between sophisticated policy frameworks and constrained political will is not simply a management problem that can be resolved through better coordination or improved communication. Instead, it reflects fundamental conflicts of interest between those who would benefit from a genuine transformation of development patterns and those who benefit from maintaining current structures of extraction and subordination. Understanding this dimension is essential for developing effective strategies for change.

The four paradoxes identified in our research are not incidental problems that can be solved with better technical solutions. They are fundamental features of how green industrial policy has actually been implemented in the Global South. They reflect the reality that, however sophisticated, policy frameworks cannot overcome political constraints or the absence of genuine democratic participation and state autonomy. Our findings are sobering. Across Southern Africa, implementation of even well- designed policy frameworks falls dramatically short of their ambitions.

South Africa's just transition framework presents a particularly instructive case. The Presidential Climate Commission (2022) articulated a comprehensive framework of policy objectives. Communities in Mpumalanga, the heartland of South African coal mining, report limited consultation with workers about their futures. Reskilling programmes exist but are frequently inaccessible or irrelevant to actual labour market opportunities. The stated commitment to a just transition coexists with coal plant closures that proceed without parallel investment in alternative livelihoods. The result is that workers and communities experience policies as inadequately resourced gestures rather than as comprehensive programmes genuinely committed to meeting their needs.

A broader observation emerged from the seminars: that industrial policy can only be as transformative as the political movement supporting it. Without powerful labour unions, community organisations, and civil society pressure, governments will typically align themselves with business interests. With such movements, governments can be pressured and constrained into adopting policies more aligned with workers' and communities' interests. Another dimension of the policy-practice gap concerns state capacity. Even when political will exists, states often lack the technical and administrative capacity to implement complex industrial policies effectively. Administering beneficiation requirements, conducting due diligence on mining contracts, managing development banks, and directing investment strategically all require significant state capacity that many Southern African countries struggle to maintain. Capacity deficits are themselves partially political. Decades of neoliberal austerity have systematically defunded state institutions, particularly in technical and administrative areas. Such movements represent the organised voice of those most affected by industrial policy decisions and possess the power to constrain governmental alignment with narrow business interests. Seminar participants consistently emphasised this fundamental reality.

Underlying the implementation gap is a fundamental question of political will. Technically well-designed policy frameworks can still fail if political actors lack genuine commitment to implementing them. Enormous expectations are being placed on green industrial policy to meet economic and social objectives, in a context where industrial policy has been systematically defunded. If implementing just transition comprehensively would require significant state investment in economic alternatives to mining, such investment would necessarily reduce capital accumulation by mining companies and their owners. The question becomes: will governments privilege the interests of displaced workers and communities, or will they accept the subordination of social concerns to continued capital accumulation? The answer, as suggested by implementation evidence across Southern Africa, is sobering. Governments have frequently chosen the latter course. Mining and energy companies are permitted to proceed with closures and retrenchments without comprehensive transition support.

Addressing the four paradoxes requires what might be termed transformative green industrial politics: politics and policies grounded in deliberate efforts to enhance state autonomy, extend democratic participation, and use industrial policy as an instrument for redistributing power. What would such a policy look like in practice? Our seminars generated several consistent proposals, though it is important to note that these remain contested and subject to ongoing debate among researchers, activists, and policymakers.

First, rebuilding state fiscal capacity. Governments in Southern Africa must reclaim fiscal space through debt restructuring, mobilising domestic resources, and using monetary policy powers to direct development (UNCTAD, 2023). Such efforts may involve capital controls, exchange rate management, and the deployment of development banks to finance strategic investments. It requires treating fiscal space as a political choice rather than a technical constraint. The role of development banks is exceptionally important in this space, as they are influential actors that can navigate the relationships among the public, the state, and the private in a developmental way. Strengthening African development banks, giving them capacity and autonomy to finance industrial development according to regional priorities, emerged as important in seminar discussions.

Second, extending democratic participation beyond consultation. Current frameworks for stakeholder participation in industrial policy typically involve consultation and information-sharing. Transformative approaches would involve workers and communities exercising veto power over major industrial developments affecting their livelihoods. Such participation might involve worker representatives on state development agencies with genuine decision-making authority, community veto rights over extractive projects, and revenue-sharing arrangements giving mining communities direct control over development investments. If industrial policy is to serve worker and community interests rather than capital interests, then labour organisations and civil society movements become crucial actors.

Third, deploying state ownership as a developmental instrument (Chavez and Steinfort, 2022). Rather than accepting private ownership of strategic industries, states might use public ownership to ensure that industrial policy serves public purposes rather than private profit. Such approaches might involve state-owned enterprises in critical minerals processing, state participation in renewable energy manufacturing, and state direction of development finance toward strategic objectives.

Fourth, subordinating extraction to processing and manufacturing. Industrial policy should be oriented toward moving away from raw material exports toward processing, manufacturing, and value addition. Such reorientation requires refusing to accept the roles assigned to resource-rich countries within global value chains. It requires willingness to restrict or prohibit raw material exports in the absence of domestic processing. It requires regional coordination to ensure that no country undercuts others by accepting less advantageous terms.

Fifth, prioritising domestic and regional markets. Instead of orienting industrial policy purely toward export markets, states might prioritise production for domestic consumption and regional trade. Such approaches require creating regional market integration, harmonised standards, and coordinated tariff policies that protect emerging industries until they reach competitive capacity.