Follow Us on Google
Manufacturing competitiveness across Africa will increasingly depend on effective industrial policies, reliable infrastructure, affordable financing and efficient logistics, rather than production costs alone
In a recent manufacturing review, Secretary General, Pan African Manufacturers Association (PAMA), Segun Ajayi-Kadir, examined developments in the global manufacturing economy in June 2026, noting that governments were taking a more active role in shaping industrial ecosystems as geopolitical tensions, changing trade policies and supply-chain disruptions continued to influence production and investment decisions.
According to the report, industrial performance is now determined not only by the efficiency of individual firms but also by the quality of policies, institutions and productive infrastructure supporting businesses.
It cited Nigeria’s insurance recapitalisation reforms, South Africa’s Industrial Development Strategy and Kenya’s Health Products and Technologies Local Manufacturing Strategy as examples of policy interventions aimed at strengthening domestic industrial capacity, supplier development and investment.
The report also noted that developments outside Africa were reshaping the competitive environment for African manufacturers. The European Union’s Carbon Border Adjustment Mechanism, alongside tighter steel safeguard measures in Europe and the United Kingdom, demonstrates the growing importance of environmental standards and trade policies in determining access to international markets.
It warned that African manufacturers seeking to compete globally would need to look beyond price and product quality to factors such as regulatory certainty, logistics, customs efficiency, infrastructure and resilient supply chains.
Findings from the PAMA Industry Pulse Survey for the second quarter of 2026, based on responses from more than 100 manufacturers across Africa, identified energy reliability, financing costs and logistics as the three major constraints to manufacturing growth.
The survey found that unreliable electricity supply, high tariffs and dependence on expensive diesel-powered self-generation continued to place significant pressure on manufacturers’ operating costs and profitability.
Other News
High interest rates and limited access to affordable capital were also identified as major obstacles, restricting manufacturers’ ability to invest, expand production and upgrade their operations.
Logistics and cross-border trade barriers, including customs delays, transport bottlenecks and non-harmonised regulations, were another major concern despite progress under the African Continental Free Trade Area (AfCFTA).
The review said the challenges demonstrated that manufacturing growth could not be sustained through subsidies, favourable exchange rates or other short-term incentives alone.
It stressed the need for firms to strengthen operational efficiency, quality control, process reliability and waste reduction while governments improve infrastructure, financing conditions, trade facilitation and the broader business environment.
The report further noted that temporary relief from moderating crude oil prices and easing freight costs during June did little to change the structural challenges confronting manufacturers, particularly high borrowing costs, currency pressures and logistics constraints.
It said the success of AfCFTA would ultimately depend on manufacturers’ ability to meet technical and supply standards and develop reliable regional supply chains capable of supporting cross-border production and trade.
Despite the challenges, manufacturers surveyed expressed cautious optimism, with expectations of gradual improvement over the next three months, supported by greater supply-chain stability and expanding regional trade opportunities under AfCFTA.
The review concluded that sustainable manufacturing competitiveness would require simultaneous progress in industrial policy, infrastructure, finance and enterprise capability, warning that improvements in one area could not fully compensate for weaknesses in another.
