Power outages, costly credit, and poor logistics are weighing on African manufacturers’ competitiveness.
According to the PAMA Industry Pulse Survey, which surveyed over 100 manufacturers, these three factors were consistently ranked as the primary barriers to competitiveness.
Despite that, the survey shows that manufacturers remain cautiously optimistic for the third quarter. They pointed to improving supply chains, expanding trade under the African Continental Free Trade Area (AfCTA) and moderating global energy prices as support.
However, they stressed that stronger industrial performance will require stable policies, better infrastructure and cheaper funding.
From agro-processors to brewers to banks and pharmaceuticals, operating costs have more than doubled for businesses across the continent owing to poor power supply.
In Nigeria, manufacturers rely heavily on diesel and gas to power their factories, and the prices of both commodities have surged over 100 percent in recent months owing to the Iran war.
Energy accounts for 30-40 per of production costs for manufacturers like cement, steel, and food processing. That makes African goods more expensive than imports from Asia, the U.S., and Europe.
Nigerian manufacturers spent N1.4 trillion on power generation in 2025, underscoring the heavy cost burden it continues to impose on the sector.
Inefficient logistics raises costs, slows delivery, and breaks supply chains. Until goods can move faster and cheaper across Africa, manufacturers will struggle to scale regionally.
These inefficiencies have far-reaching consequences — they inflate food prices, exacerbate waste, and heighten vulnerability to disruptions caused by climate change, conflict, and global supply chain shocks.
The survey also highlighted the need for industry-level efficiency. Manufacturing cannot rely only on favorable exchange rates, lower commodity prices, or government incentives.
“Operational efficiency, product quality, and process reliability are decisive in increasingly competitive regional and global markets.”
PAMA called for the same logic to be applied to AfCFTA. “Success will not depend on tariff preferences alone, but on manufacturers’ ability to meet rules of origin, comply with technical standards, build reliable supply chains and compete consistently across markets.”
Overall, the PAMA stated that competitiveness depends on the interaction of industrial policy, macroeconomic stability, infrastructure, finance, regulation, supply-chain resilience and firm capability. “Gains in one area cannot offset weaknesses in another.”
The report called for coordinated action across government, finance, trade bodies and industry. “For manufacturers, it means tracking policy with the same discipline as markets and technology.”
“For policymakers, it means treating competitiveness as an ecosystem, not isolated interventions and for regional bodies, it means turning continental initiatives into measurable gains in trade facilitation, connectivity and industrial cooperation.”
It urged governments to guarantee reliable power and transport while maintaining stable policies, while calling on development finance institutions to expand affordable, long-term local currency lending to manufacturers, especially SMEs.
PAMA urged AfCFTA institutions to speed up implementation with simpler customs, recognized standards, and digital documentation.
For the industry, PAMA recommended closer work with the government and more investment in skills, innovation, automation, and digital manufacturing to secure Africa’s long-term industrial competitiveness.
