Africa’s Manufacturing Sector to Bounce Back in 2025.

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Africa’s manufacturing sector is poised for moderate growth in 2025, driven by increased regional integration, technological advancements, and growing investment interest in local production. According to the Pan-African Manufacturers Association (PAMA), “The manufacturing sector is expected to grow moderately in 2025, driven by increased regional integration buy-in, technological up-scaling, increased investor confidence, growing investment interest in local production, and a renewed push for zero-defect manufacturing to reduce waste and improve efficiency.”

PAMA expects many countries, including Nigeria, Egypt, Rwanda, and Angola, to experience upward manufacturing growth trajectories. The association also anticipates Africa’s cross-border value chains to expand, particularly in agro-processing, textiles, metallics, and automotive.

Foreign direct investment (FDI) inflows into Africa’s manufacturing sector are projected to grow modestly by around four percent in 2025. PAMA Interim President Engr. Mansur Ahmed and Interim Co-Secretary Segun Ajayi-Kadir noted, “We strongly expect the US-China trade tensions to fuel foreign investment inflows in Africa, with a focus on automotive, textiles, and electronics manufacturing.”

However, PAMA also highlighted some challenges that may impact Africa’s manufacturing growth, including slower growth in countries facing severe conflict, persistent inflationary pressures, and elevated borrowing costs. Additionally, the association noted that the geopolitical landscape and ongoing conflicts will still pose risks that could deter potential investors.

“We expect sea freight prices to rise above 2024 on the rising risk of shipping activities in key international sea routes, including the Red Sea, due to escalating geopolitical conflicts and terrorism,” PAMA stated. “However, the spillover effect of the anticipated decline in global energy and commodity prices may moderate its effect on Africa’s manufacturers.”

PAMA also emphasised that key risks remain, as some persistent challenges from 2024 are expected to linger amid rising new hurdles like stricter sustainability regulations and escalating costs buoyed by factors including freight rate spikes. “Requiring bold innovation and strategic adaptation and collaborative efforts to sustain growth and build resilience,” the association noted.

Looking back at 2024, PAMA recalled that Africa’s manufacturing sector faced significant macroeconomic hurdles that affected its performance. These challenges included high inflationary pressures, rising interest rates, unstable international commodity prices, persistent strengthening in the US dollar, limited infrastructure, low foreign direct investment inflows in manufacturing, high tariffs, and lingering conflicts in several African countries.

Despite these challenges, some countries like Morocco, South Africa, and Egypt showed resilience due to their diversified industrial bases. According to the African Development Bank’s (AfDB) report, manufacturing contributed around 11 percent to Africa’s GDP in 2024. The contribution was driven mostly by agroprocessing (Nigeria, Kenya), automotive (Morocco, South Africa), and pharmaceuticals (Egypt, Rwanda).

“Africa’s manufacturing value addition notably slowed behind the global average in the past year, with expected improvement in the current year but below the pandemic period,” PAMA stated.

In conclusion, PAMA remains optimistic about Africa’s manufacturing prospects in 2025, despite the challenges that lie ahead. As Engr. Mansur Ahmed noted, “With the right policies and investments in place, Africa’s manufacturing sector is poised for significant growth and development in 2025.