Since the Industrial Revolution, rapid economic growth has been closely linked to the size and productivity of the manufacturing sector. However, in Africa, the manufacturing sector's contribution to GDP has either stagnated or declined, with only 12 African countries having a manufacturing sector valued at over $10 billion in 2019.17 Despite these challenges, manufacturing remains crucial for the productive transformation of economies, fostering sustained high growth, job creation, and improved prosperity. Across the continent, manufacturing sectors are experiencing significant expansion, driven by robust demand, improving infrastructure, and growing openness to foreign investment.
Africa's manufacturing sector is expanding due to a number of significant factors, such as the region's openness to foreign investment, infrastructure development, and strong demand growth. The demand for a wide range of manufactured goods is being driven by Africa's fast-expanding population, which is predicted to double by 2050 due to a major growth in urbanization and a huge youth demographic. A competitive and well-planned industrial sector may be essential to generating employment and supporting Africa in reaching its full economic potential. Additionally, by increasing connectivity, opening markets, and lowering production costs, infrastructure investments like industrial parks, logistics hubs, and transportation networks are making African manufacturing industries more competitive. Furthermore, many African countries are actively pursuing foreign investment through favorable policies, tax incentives, and regulatory reforms, making the region an attractive destination for multinational corporations and foreign investors looking to establish manufacturing operations.
The manufacturing output in Sub-Saharan Africa is shown in the chart from 1991 to 2022, demonstrating a consistent rise over time. The output has increased dramatically, notably since the early 2000s, and is now expressed in billions of US dollars. The overall trend is one of expansion, with manufacturing production expected to surpass $250 billion by 2024, despite minor volatility, especially in the late 1990s. Though the manufacturing sector is rising in absolute terms, its relative contribution to the economy has remained relatively stable, as seen by the fact that its share of GDP has not increased in line.
This sector has profound implications for the continent's economic growth, particularly in terms of job creation, value addition, and technology transfer. As manufacturing industries grow, they generate employment opportunities for both skilled and unskilled workers, fostering economic inclusion and helping to reduce poverty. Additionally, manufacturing enables value addition to raw materials, promoting economic diversification and reducing reliance on primary commodities, which in turn boosts export earnings and strengthens economic resilience. Furthermore, foreign investment in the sector often introduces advanced technologies and expertise, driving innovation and skill development, which are crucial for the long-term competitiveness and sustainability of Africa's manufacturing landscape.
If your company is poised to create growth in manufacturing and contribute to Africa's transformative journey, Oxano Capital invites you to explore investment opportunities with us. Together, we can unlock Africa's full potential, driving lasting impact and sustainable returns. Reach out today to join us in building a community-driven, impactful future.