Africa’s share of global Foreign Direct Investment (FDI) remains stagnant, hovering between 4% and 6%, according to the March 2026 Manufacturing Review by the Pan-African Manufacturers Association (PAMA). This indicates the continent is struggling to move beyond a peripheral position in global manufacturing systems.
The report highlights that while global FDI saw a 14% increase to $1.6tn in 2025, inflows to Africa plummeted by 38% to just $59bn. This occurred despite a spike to $97bn in 2024, which PAMA researchers attribute to isolated major projects rather than a fundamental shift in industrial capacity.
PAMA researchers argue that Africa 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 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 is deeply polarised. North African nations such as Egypt and Morocco are successfully leveraging trade linkages to Europe to anchor automotive and textile hubs. In contrast, Southern Africa has faced significant headwinds, particularly South Africa, which recorded negative inflows of $6bn due to capital withdrawals and divestment.
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. PAMA is 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. Incentives must be strategic, linked to performance, technology transfer, and local value creation, supported by world-class industrial infrastructure.
Persistent structural deficits in energy and technical skills are identified as primary anchors dragging down growth. Unreliable electricity and logistics bottlenecks often result in production disruptions, relocation decisions, or reduced investment scale. The skills mismatch continues to constrain the attraction of higher-value, technology-intensive manufacturing FDI.
The operationalisation of the African Continental Free Trade Area remains the continent’s best hope for creating integrated markets enabling scale, cross-border value chains, and regional production networks necessary to break the 6% ceiling. PAMA is pushing for deep integration, such as the DRC-Zambia Battery and Electric Vehicle value chain, which aims to process cobalt and copper locally rather than shipping raw ore to Asia.
There is a continent-wide shift toward Special Economic Zones, like those in Ethiopia and Morocco, to insulate manufacturers from broader infrastructure deficits such as power outages and port congestion.
