1 week ago
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The Pan-African Manufacturers Association (PAMA) has projected that the ongoing trade war between the United States and China will significantly boost foreign direct investment (FDI) inflows into Africa, particularly in the manufacturing sector.
This projection was made in the January 2025 edition of PAMA’s monthly bulletin, where it analyzed the potential economic impact of rising protectionism between the two global economic giants.
The escalating trade war, which has seen both nations impose tariffs and counter-tariffs, has raised concerns over supply chain disruptions and market realignments.
Shortly after assuming office, U.S. President Donald Trump imposed a 10 per cent tariff on all Chinese imports, building on a similar 10 per cent tariff implemented by former President Joe Biden.
In response, China retaliated with additional duties, including a 15 per cent tariff on U.S. coal, coke, and liquefied natural gas, as well as a 10 per cent tariff on U.S. crude oil, agricultural machinery, and large-displacement vehicles.
According to PAMA, these tensions could benefit Africa by making the continent’s manufacturing and automotive sectors more attractive to global investors seeking alternative markets.
“While Africa remains among the least exposed to the rising protectionism in U.S. trade policy, we strongly expect the U.S.-China trade tensions to fuel foreign investment inflows in Africa, particularly in the automotive, textiles, and electronics manufacturing industries,” PAMA stated.
The association also forecasted a 4 per cent growth in Africa’s manufacturing sector in 2025, citing an improving economic climate as a key driver of investor confidence.
“FDI inflows into Africa’s manufacturing sector are projected to grow modestly by around 4 per cent in 2025, as global investors seek opportunities amid improving economic conditions and the potential spillover effects of shifting trade policies. However, the geopolitical landscape and ongoing conflicts will still pose risks that could deter potential investors from key sectors,” PAMA noted.
Economic experts have echoed PAMA’s sentiments, emphasizing Africa’s growing appeal as a manufacturing hub. Dr. Kwame Adebayo, an economist at the African Development Institute, highlighted the strategic opportunity for African economies:
“Africa is poised to benefit from the realignment of global trade routes. The ongoing U.S.-China tensions are forcing multinational corporations to diversify their supply chains, and Africa presents a viable alternative, given its vast natural resources, growing workforce, and regional trade agreements,” Dr. Adebayo explained.
PAMA has urged African nations to strengthen intra-continental trade through improved collaboration and the full implementation of the African Continental Free Trade Agreement (AfCFTA).
English (US) ·