Africa’s industrial financing gaps, weak intra-continental value capture and limited manufacturing depth remain central constraints to structural transformation, even as new data from the African Development Bank Group (AfDB) points to gradual but uneven progress across the continent.
The Bank’s 2025 Africa Industrialization Index (AII) and the inaugural Africa Industrial Investment Barometer (AfIIB), launched on the sidelines of the AfDB 2026 Annual Meetings in Brazzaville, indicate that Africa continues to struggle with low industrial integration, with intra-African trade accounting for just 14.4 percent of total trade.
The figures highlight “fragmented industrial ecosystems” and limited regional production linkages, despite ongoing policy reforms under the African Continental Free Trade Area (AfCFTA).
According to the AII 2025, which evaluates industrial performance across 54 countries between 2010 and 2024, 41 economies recorded improvements in their industrialization scores, reflecting a modest six percent continental increase. However, the report highlights that Africa still contributes less than two percent of global manufacturing output and only 1.4 percent of manufacturing exports, with manufacturing value-added per capita now below pre-2014 levels.
AfDB officials describe the findings as both progress and a warning. Ousmane Fall, Director for Industrial and Trade Development at the Bank Group, noted that countries are “moving in the right direction,” but stressed that scaling industrialization requires “resilient infrastructure” and “value addition close to source,” alongside financing structures “mobilised on African terms.”
A key shift identified in the index shows Morocco overtaking South Africa as the continent’s leading industrial economy. The transition is attributed to sustained industrial upgrading, export diversification and targeted industrial policy execution. While South Africa remains a major industrial base, the report indicates a gradual erosion in its competitiveness over time. North Africa and Southern Africa continue to dominate industrial output and export sophistication, while East, West and Central Africa lag.
The AfIIB report further highlights that North Africa attracted 56 percent of cumulative industrial investment between 2020 and 2025, with Morocco and Egypt emerging as key investment destinations. The Barometer assesses industrial performance through diversification, investment attractiveness and “productive anchoring,” which measures how deeply investment is embedded within local economies.
Despite high investment inflows in some regions, the report warns that capital inflow does not automatically translate into domestic value retention. East Africa, for instance, records relatively strong productive anchoring due to deeper regional integration and integrated agricultural value chains. In contrast, Southern Africa attracts significant high-value investment but demonstrates weaker vertical integration, with industries such as automotive assembly relying heavily on imported inputs rather than local supplier ecosystems.
West and Central Africa remain structurally constrained in early-stage processing. The report cites continued export of raw or semi-processed commodities, including cocoa from Côte d’Ivoire in powder form rather than finished chocolate, as well as unprocessed mineral exports such as bauxite, gold and uranium.
Dr Harouna Kaboré, President of WITBA Invest, described Africa’s core challenge as less about strategy and more about implementation, pointing to gaps in “execution discipline,” “policy continuity”, and “systemic coherence” between energy, infrastructure, skills development and financing frameworks. He emphasised that industrialisation must shift from policy intent to “measurable, managed dynamics” supported by coordinated institutional action.
Both reports identify infrastructure deficits, energy reliability constraints, limited access to long-term local currency financing, and skills shortages as binding constraints to industrial expansion. They also stress the urgency of aligning industrial strategies with global environmental standards, warning that African producers risk competitive disadvantages from emerging carbon border adjustment mechanisms in Europe and the United States if decarbonisation is delayed.
The AfDB further argues that Africa’s industrial investment potential is strongest in construction materials, agro-processing, fertilisers and generic pharmaceuticals, though sustained returns will depend on “patient capital” and deeper structural partnerships between public and private actors.
