Morocco Overtakes SA as Africa’s Leading Industrial Economy, New Reports Reveal

According to the Africa Industrialization Index 2025, 41 out of 54 African countries improved their industrialization scores between 2010 and 2024, with overall continental industrial performance rising by six percent.

Africa is experiencing what experts describe as a "silent but irreversible" industrial transformation, with new reports showing growing momentum across much of the continent despite persistent structural challenges and uneven progress.

The findings were unveiled during the African Development Bank Group's 2026 Annual Meetings in Brazzaville, where the Bank released the latest Africa Industrialization Index (AII) 2025 alongside the inaugural Africa Industrial Investment Barometer (AfIIB). Together, the reports provide one of the most detailed assessments yet of industrial growth, investment flows, and economic integration across Africa.

While the reports point to improving industrial performance in many African countries, they also warn that fragmented markets, weak regional integration, limited infrastructure, and low value addition continue to constrain the continent's industrial ambitions.

Industrial Progress Expanding Across Africa

According to the Africa Industrialization Index 2025, 41 out of 54 African countries improved their industrialization scores between 2010 and 2024, with overall continental industrial performance rising by six percent.

The strongest improvements were recorded among lower-performing economies, suggesting some convergence between more advanced and less industrialized countries.

However, the report emphasizes that Africa still represents only a small share of global manufacturing activity.

The continent currently accounts for:

• Less than 2 percent of global manufacturing output

• Only 1.4 percent of global manufacturing exports

• Manufacturing value-added levels below pre-2014 performance on a per capita basis

These figures highlight the scale of the challenge facing African economies as they attempt to shift from raw commodity dependence toward higher-value industrial production.

Morocco Emerges as Africa's Top Industrial Economy

One of the report's most notable findings is that Morocco has overtaken South Africa as the continent's leading industrial economy.

Researchers attribute Morocco's rise to sustained industrial modernization, strong export diversification, and long-term industrial policy planning.

The country has heavily invested in sectors such as automotive manufacturing, aerospace, renewable energy, and advanced industrial infrastructure over the past decade.

South Africa, while still regarded as one of Africa's major industrial powers, has reportedly experienced a gradual decline in competitiveness.

The reports note that North Africa and Southern Africa continue to dominate the continent in terms of industrial output and export sophistication, while East, West, and Central Africa generally remain less industrialized.

Weak Regional Integration Holding Back Growth

Despite progress in industrialization, both reports identify weak regional economic integration as one of Africa's biggest barriers to long-term industrial development.

Intra-African trade currently accounts for only 14.4 percent of the continent's total trade volume, reflecting limited regional production linkages and fragmented industrial ecosystems.

Experts argue that many African economies continue to operate largely in isolation, exporting raw materials abroad rather than developing interconnected regional manufacturing networks.

The reports call for deeper economic integration under the African Continental Free Trade Area (AfCFTA), emphasizing the need to move beyond basic tariff reductions toward:

• Cross-border industrial corridors

• Harmonized standards and regulations

• Improved transport and logistics infrastructure

• Coordinated manufacturing value chains

Officials believe stronger regional integration could significantly boost industrial competitiveness and reduce dependence on imported manufactured goods.

Investment Flows Concentrated in North Africa

The Africa Industrial Investment Barometer found that North Africa leads the continent in industrial diversification, investment attractiveness, and productive anchoring — a measure of how deeply investment becomes integrated into local economies.

Between 2020 and 2025, North Africa attracted 56 percent of cumulative industrial investment across the continent, with Morocco and Egypt emerging as key investment destinations.

The report suggests that policy consistency, infrastructure quality, and industrial planning have helped position these countries as regional manufacturing hubs.

Value Addition Remains Limited in Many Regions

While attracting investment is important, the Barometer warns that investment alone does not guarantee meaningful local economic transformation.

Several regions continue to struggle with weak value addition and limited downstream industrial processing.

East Africa Showing Stronger Local Integration

East Africa recorded the continent's second-highest productive anchoring score due to stronger regional integration and more complete agricultural value chains.

This suggests that investment in East Africa is generating broader local economic linkages and supporting more diversified production systems.

Southern Africa Faces Vertical Integration Challenges

Southern Africa attracts some of Africa's highest-value industrial investment, particularly in automotive manufacturing.

However, the report notes that many factories still rely heavily on imported components rather than local supplier networks.

For example, automotive assembly plants often import ready-made kits instead of sourcing parts from domestic industries, limiting broader economic benefits.

West and Central Africa Still Commodity-Dependent

The reports also highlight ongoing dependence on raw material exports in West and Central Africa.

Examples include:

• Ivorian cocoa exported mainly as powder rather than finished chocolate

• Guinean bauxite shipped abroad without local processing

• Sahelian gold and uranium exported without downstream industries

Experts say this pattern prevents African economies from capturing larger shares of global value chains and creating higher-skilled industrial jobs.

Infrastructure and Energy Identified as Key Challenges

Both reports stress that industrial growth cannot accelerate without major improvements in infrastructure and energy systems.

Reliable electricity, transport networks, industrial parks, logistics systems, and digital infrastructure are viewed as essential foundations for competitive manufacturing.

The reports also call for:

• Long-term local currency financing

• Expanded technical and vocational education

• Better harmonization of industrial standards

• Stronger governance and policy continuity

According to Dr. Harouna Kaboré, President of WITBA Invest, Africa's biggest challenge is no longer the absence of industrial strategies but rather the difficulty of implementing them consistently and coherently.

Pressure to Decarbonize Industry

The Africa Industrial Investment Barometer also warns that African industries must begin transitioning toward lower-carbon production systems.

With Europe and the United States preparing stricter carbon border taxes and environmental regulations in coming years, industries with high carbon emissions may face growing export disadvantages.

The report argues that African manufacturers should prioritize decarbonization early to remain competitive in international markets.

Investors See Strong Opportunities

Despite the challenges, the reports suggest Africa still offers strong investment opportunities in several industrial sectors.

Areas highlighted for above-average returns include:

• Construction materials

• Agro-processing

• Fertilizer production

• Generic pharmaceuticals

However, researchers stress that successful industrial investment in Africa will require patient capital, long-term partnerships, and stronger coordination between governments and private investors.

Industrialization Seen as Key to Africa's Economic Future

African Development Bank officials described the reports as both a diagnosis of current industrial challenges and a roadmap for future transformation.

The Bank argues that scaling up industrialization is essential for creating jobs, reducing poverty, improving trade balances, and supporting long-term economic resilience across the continent.

As African economies continue to navigate global economic uncertainty, industrial development is increasingly viewed as a critical pathway toward greater economic independence and sustainable growth.