The Pan-African Manufacturers Association has raised concerns over Africa’s persistently low share of global Foreign Direct Investment, warning that the continent remains stuck between four and six per cent despite global investment growth. In its March 2026 Manufacturing Review, the group described Africa’s position as marginal, noting that it continues to lag behind in global manufacturing integration.
While global FDI rose by 14 per cent to $1.6tn in 2025, inflows into Africa fell sharply by 38 per cent to $59bn. Although the continent recorded a spike to $97bn in 2024, the report clarified that this increase was driven largely by a few large-scale projects rather than sustained industrial growth. As a result, Africa’s overall investment trajectory remains unstable and heavily dependent on isolated developments.
According to the review, the continent’s investment landscape is marked by volatility and shallow industrialisation. Much of the incoming capital continues to flow into extractive sectors and low-value services, rather than into manufacturing industries that can drive long-term economic transformation. This pattern, the report argues, has limited Africa’s ability to upgrade its industries, integrate into global value chains, and generate large-scale employment.
Regional disparities further highlight the uneven nature of investment across the continent. North African countries such as Egypt and Morocco have made progress by strengthening trade ties with Europe and developing manufacturing hubs in sectors like automotive and textiles. In contrast, Southern Africa has struggled, with South Africa recording negative inflows of $6bn due to capital flight and divestment.
The report also points to investor behaviour as a contributing factor. Many investors favour low-risk, low-complexity production models, which reinforce limited industrial depth and leave economies exposed to external shocks. This approach has perpetuated a cycle in which African economies fail to attract higher-value, technology-driven manufacturing investments.
In response, the association is calling for a shift in how African countries approach foreign investment. It argues that broad, non-specific openness to investment is no longer effective. Instead, governments should adopt more targeted strategies that prioritise policy consistency, strong regulatory frameworks, and macroeconomic stability to build investor confidence.
The review emphasises that incentives should be carefully designed to encourage performance, technology transfer, and local value creation. It also highlights the need for modern industrial infrastructure to support manufacturing growth. Without these measures, Africa risks remaining on the margins of global production systems.
Beyond policy challenges, structural issues such as unreliable electricity supply and a shortage of skilled labour continue to hinder progress. Frequent power disruptions and logistical inefficiencies increase production costs and discourage investment, while gaps in technical skills limit the continent’s ability to attract advanced manufacturing projects.
The report identifies the African Continental Free Trade Area as a key opportunity to reverse current trends. By creating larger, integrated markets, AfCFTA could enable economies of scale, foster cross-border value chains, and strengthen regional production networks.
PAMA also points to initiatives like the DRC-Zambia battery and electric vehicle value chain as examples of the type of targeted industrial development needed. Additionally, the expansion of Special Economic Zones in countries such as Ethiopia and Morocco is seen as a practical step toward addressing infrastructure challenges and supporting industrial growth.
Ultimately, the association warns that without decisive reforms and deeper regional integration, Africa will remain constrained within its current low share of global investment.
