Africa’s Manufacturing Sector To Witness 4% FDI-Inflow Growth’

Foreign direct investment (FDI) inflows into Africa’s manufactur­ing sector is set to grow modest­ly by four per cent in 2025, says Pan-African Manufacturers As­sociation (PAMA).

This is as global investors seek opportunities amid improving economic conditions and the po­tential spillover effect of the trade shift in the West towards Africa.

The association stated this in its News Bulletin for January 2025 edition.

It noted that, “in 2024, Africa’s manufacturing sector faced a lot of macroeconomic hurdles that significantly affected its perfor­mance.

“Despite the tough environ­ment, some countries like Mo­rocco, South Africa, and Egypt still showed a bit of resilience due to a diversified industrial base. Based on the African De­velopment Bank report, manu­facturing contributes around 11 per cent to Africa’s GDP in 2024.”

The Bulletin added: “There are signs of performance im­provement and better strategic opportunities for Africa’s manu­facturing sector in 2025, support­ed by growing investment in local production, deeper regional mar­ket integration through tighter implementation of initiatives like the AfCFTA, and broader adoption of human-machine collaboration.”

It said, the manufactur­ing sector is expected to grow moderately in 2025, driven by increased regional integration buy-in, technological upscaling, increased investor confidence, growing investment interest in local production, and a renewed push for zero-defect manufactur­ing to reduce waste and improve efficiency.

It emphasized: “While Afri­ca will remain among the least exposed to the emergence of the protectionism wave in US international trade policy, we strongly expect the US-China trade tensions to fuel foreign in­vestment inflows in Africa, with a focus on automotive, textiles, and electronics manufacturing. We expect Africa’s cross-border value chains to expand, particu­larly in agro-processing, textiles, metallics, and automotive.”

PAMA noted: “Export price inflation of manufactures is ex­pected to decline significantly especially in the second half of the year as global disinflation continues to feed deeply into the system.”