Recent World Bank data highlight a troubling trend: manufacturing in Africa has fallen from 18% of GDP in 1981 to a mere 11% in 2023. This decline raises pressing questions about the forces undermining Africa’s industrial ambitions, from the impact of global trade liberalisation to the economic focus on resource extraction over value-added production. For Africa to reverse this trend, it must confront both structural and policy-based challenges that have held back manufacturing.
By Brighton Musonza
Global Trade Liberalisation and Competitive Pressures
In the 1990s, global trade liberalisation began removing trade barriers and opening up markets worldwide. Yet this shift has not benefitted African manufacturing, which struggles to compete with established manufacturing giants like China and India. Low production costs and economies of scale in these countries mean their goods are often far cheaper than what African manufacturers can produce, especially as Africa’s domestic currencies continue to underperform. This economic reality has left local markets flooded with inexpensive imports, while many African businesses, without strong support systems or incentives, have found it difficult to survive, let alone expand.
Compounding this issue is Africa’s heavy reliance on resource extraction—mining, oil, and gas—at the expense of manufacturing. Across the continent, from Zimbabwe to Nigeria, leaders and investors have fixated on mining as an economic driver, overlooking the long-term benefits that industrialisation and value-added production could bring. Extractive industries generate export revenue, but they often do not create lasting jobs or transfer skills to the local population. This short-sighted focus on raw material exports has left little incentive to invest in manufacturing or develop industries that could transform raw resources into finished products, adding greater value within African economies.
Infrastructure Deficits and Energy Challenges
Africa’s infrastructural challenges also pose significant obstacles to manufacturing. Unreliable electricity, poor transportation networks, and limited digital connectivity raise production costs and hinder competitiveness. Given the global impact of climate change, hydroelectric output has become increasingly uncertain, affecting energy-dependent industries. An investment in diverse energy sources, such as nuclear power, could offer Africa more sustainable options and make local manufacturing more viable, yet these solutions remain underexplored. Without sufficient infrastructure, businesses face steep operational costs, and countries struggle to establish a manufacturing base that can compete with international players.
Political Instability and Economic Disruptions
Political instability has been another major impediment to Africa’s industrial growth. Frequent economic disruptions—such as contested elections, violence against opposition groups, and mismanaged leadership transitions—erode investor confidence and make long-term planning nearly impossible. Corruption and regulatory unpredictability further complicate the business environment, as manufacturing requires stability, clear policies, and consistent regulations to flourish. External influences and an arrogant ruling class in some regions have often exacerbated these issues, leading to economic fragmentation and creating an environment in which industrial investments seem too risky for both local and foreign investors.
The Skills Gap and Education Policy Missteps
A robust manufacturing sector demands a skilled workforce, yet Africa faces a significant skills gap. Many African nations have made strides in expanding access to education, but there remains a shortage of technical and vocational training, which is essential for developing industrial skills. The education policies drawn from the African Union’s focus on expanding universities have produced more academic graduates but have arguably overlooked the need for practical, trade-based vocational skills that drive manufacturing. This mismatch between educational output and market needs leaves many young Africans without the competencies required for industrial jobs, further stunting productivity and limiting the manufacturing sector’s growth potential.
Urbanisation Without Industrialisation
Rapid urbanisation across Africa has also outpaced industrial development. Large populations are migrating to cities in search of better opportunities, yet without a strong manufacturing base, most end up in informal or service-sector jobs. This trend reduces the potential for manufacturing to absorb urban workers and stifles opportunities for economic transformation. The proliferation of informal economies, while meeting immediate employment needs, often hampers the development of formal manufacturing by increasing reliance on cheap, imported goods. The lack of local production for export markets weakens Africa’s ability to compete on a global scale, creating a self-reinforcing cycle that limits both productivity and economic growth.
Legacy of Structural Adjustment Programs
The International Monetary Fund (IMF) and World Bank’s structural adjustment programs (SAPs) in the 1980s and 1990s left a lasting imprint on Africa’s economic landscape. These reforms prioritized market liberalisation, often at the expense of nurturing local manufacturing. Many state-supported industrial ventures were dismantled, leaving a void that was quickly filled by cheaper imports. Trade agreements, such as the African Growth and Opportunity Act (AGOA) between the US and South Africa, further tilted the playing field against local manufacturers. The open-market policies ushered in by these programs allowed foreign goods to penetrate African markets without giving African industries the time or support needed to grow competitive. While SAPs aimed to stimulate economic growth, they ultimately accelerated Africa’s dependence on raw material exports and services, making it even harder for manufacturing to take root.
Charting a New Path for African Manufacturing
Africa’s manufacturing decline is a product of complex and interconnected challenges, but it is not an irreversible trend. African leaders, businesses, and institutions must actively reshape policies to foster industrialisation. Infrastructure investment, energy diversification, and a realignment of educational priorities towards practical skills development are essential. With adequate support, Africa could develop a competitive manufacturing sector capable of producing goods for both domestic consumption and export, creating jobs and driving sustainable economic growth.
By rethinking its economic priorities and addressing structural issues, Africa can pave the way for a more diversified economy. Repatriating industrial policy from a focus on extraction to one that encourages local manufacturing and value-added production could transform Africa from a resource-based economy to one that thrives on innovation and industrial strength.
Brighton Musonza (MBA) is a UK-based business, economics and political analyst. He can be contacted at musomusonza@gmail.com