The Pan-African Manufacturers Association has issued a stark warning in its March 2026 Manufacturing Review, revealing that Africa’s share of global Foreign Direct Investment remains trapped in a narrow corridor of four per cent to six per cent.
Despite significant spikes in previous years, the report suggests that the continent is struggling to move beyond a “peripheral position” in global manufacturing systems. This stagnation occurs even as global FDI saw a 14 per cent increase to $1.6tn in 2025, a period during which inflows to Africa plummeted 38 per cent to just $59bn.
The review characterises the current investment climate as one of “extreme volatility and shallow industrialisation”, noting that the surge to $97bn in 2024 was largely driven by isolated major projects rather than a fundamental shift in industrial capacity.
PAMA researchers argue that the continent is caught in a cycle where capital is consistently funnelled into extractive industries and low-value-added services rather than the high-productivity manufacturing needed for long-term transformation.
The report indicated, “The dominance of low-value-added activities has constrained the continent’s ability to achieve industrial upgrading, value chain integration, and large-scale employment generation.”
Regional performance remains deeply polarised, with North African nations like Egypt and Morocco successfully leveraging trade linkages to Europe to anchor automotive and textile hubs.
In contrast, Southern Africa has faced significant headwinds, most notably in South Africa, which recorded negative inflows of $6bn due to capital withdrawals and divestment.
PAMA highlights that “investors often adopt low-risk, low-complexity production models, reinforcing a pattern of shallow industrialisation” that leaves economies vulnerable to external shocks and policy inconsistencies.
The association is now calling for an urgent pivot in how African nations court international capital, suggesting that the era of “generic openness” must end. PAMA contends that “Africa’s FDI strategy must shift from openness to precision, anchored on policy certainty, regulatory discipline, and macroeconomic stability as non-negotiables for investor confidence.”
To bridge the gap, the review emphasises that incentives must be “strategic, not generic, linked to performance, technology transfer, and local value creation, supported by world-class industrial infrastructure”.”
Beyond policy, the report identifies persistent structural deficits in energy and technical skills as the primary anchors dragging down growth. PAMA notes that “unreliable electricity and logistics bottlenecks often result in production disruptions, relocation decisions, or reduced investment scale”, while the “skills mismatch continues to constrain the attraction of higher-value, technology-intensive manufacturing FDI.”
The review concludes that the operationalisation of the African Continental Free Trade Area remains the continent’s best hope for creating the “integrated markets enabling scale, cross-border value chains, and regional production networks” necessary to break the 6 per cent ceiling.
PAMA is pushing for “deep integration”, such as the DRC-Zambia Battery and Electric Vehicle value chain. This project aims to process cobalt and copper locally rather than shipping raw ore to Asia, serving as the “proof of concept” for the manufacturing precision PAMA recommends.
There is a continent-wide shift toward Special Economic Zones, like those in Ethiopia and Morocco, to insulate manufacturers from the broader infrastructure deficits (power outages and port congestion mentioned in the report).
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