Africa's Manufacturing Hubs: Where the Continent Is Building Industry

What happened when AGOA access ended

That arrangement changed in January 2022, when the United States suspended Ethiopia's eligibility for AGOA because of human-rights concerns connected to the war in Tigray.

The effect on the textile industry was rapid. Manufacturers that had built their Ethiopian operations around access to the American market suddenly faced higher costs for selling those same products into the United States.

PVH shut down its Hawassa operations within months. The company cited the loss of AGOA benefits as well as the deteriorating security situation, and ended its joint venture with Arvind.

The consequences extended beyond the anchor investor.

A later report from the National Bank of Ethiopia found that 18 foreign companies left the country following the suspension, more than 11,500 jobs were lost across the industrial parks, and the parks recorded combined revenue losses of roughly $45 million.

Hawassa accounted for 4,321 of the reported job losses. Mekelle lost 2,885 and Bole Lemi lost 1,097.

The potential impact had appeared even larger before the suspension. Ethiopian officials had warned that as many as one million jobs could eventually be affected, with women expected to bear much of the impact because they made up the majority of the garment workforce. Research from Fashionomics Africa found that women accounted for close to 80% of employment in Ethiopia's apparel sector.

Some manufacturers did remain and redirect production toward other markets, particularly Europe. Companies that had already invested heavily in machinery and factories also had reasons to stay.

But the export model had changed. A significant part of Ethiopia's rapid textile expansion had been built around the combination of foreign investment, industrial parks and preferential access to the United States. Once that trade preference disappeared, companies had to reconsider the economics of producing in Ethiopia.

The leather industry

Ethiopia's leather industry shows a different side of the country's manufacturing challenge.

The country has one of Africa's largest livestock populations, with roughly 90 million cattle, sheep and goats. Ethiopian hides and skins, particularly highland sheepskins and goatskins, have also had a long-standing reputation among international leather buyers.

For years, the government tried to turn that raw-material advantage into a larger domestic manufacturing industry.

By the mid-2010s, Ethiopia had around 27 tanneries and a growing footwear industry. Leather export earnings increased from $56 million to $133 million over a five-year period, while footwear exports rose from about 820,000 pairs worth $10 million in 2011/12 to 3.6 million pairs worth $35 million in 2016/17.

The industry has since contracted sharply.

Leather export revenue fell from $133 million to about $25 million over five years, while export volumes declined by 62%. The number of active leather manufacturers also fell from 35 to seven.

Unlike the textile industry, this decline was not primarily caused by the loss of a foreign trade preference. Much of the problem lies within the domestic supply chain.

Ethiopia produces roughly 41 million hides and skins a year, but only about 22 million reach tanneries in usable condition. Large quantities are damaged by poor animal husbandry, disease and inadequate handling between slaughter and collection.

Industry estimates put the resulting loss at around 240 million square feet of usable leather each year.

That means a country can have millions of animals and still struggle to supply its own leather factories with enough good-quality material. The problem begins before the hide ever reaches a tannery.

The government has responded by developing regulations that would restrict exports of raw, untreated hides. The aim is to keep more of the available supply inside Ethiopia and encourage domestic processing. At the same time, the government has set a longer-term target of $827 million in leather exports by 2032.

The two industries therefore arrived at similar problems through very different routes.

Ethiopia's textile industry expanded rapidly because industrial parks, foreign investment and preferential access to the U.S. market came together at the same time. When that access disappeared, the companies operating within that system had to find another market or reconsider their Ethiopian operations.

Leather had a different starting point. Ethiopia already had the livestock and a long-established leather industry, but weaknesses in animal health, collection and processing meant that too little usable raw material was reaching the factories.

Both cases show why building a factory is only one part of building a manufacturing industry. The factory needs customers, reliable inputs, skilled workers, transport, infrastructure and a supply chain that continues working outside the factory gates. Ethiopia managed to build industrial capacity quickly. Keeping that capacity productive has proved considerably harder.

Nigeria: real capacity, badly underused

Nigeria's manufacturing story looks different from Morocco's, Egypt's or Ethiopia's. The country already has a large industrial base, built over decades across cement, food and beverage processing, pharmaceuticals, chemicals, textiles and other industries.

Dangote is the most visible example of what that industrial base can produce at very large scale. The group's refinery, cement operations, fertilizer plants and wider petrochemical investments have been covered in detail in The Dangote Effect elsewhere on this site, so there is no need to repeat that story here. What is more useful here is to look at the manufacturing sector around companies like Dangote, because the contrast between the scale of individual investments and the amount of capacity being used across the wider industry tells us a lot about Nigeria's industrial position.

A large manufacturing base that is not running at full capacity

Manufacturing contributed 8.05% of Nigeria's real GDP in 2025, down from 8.24% in 2024, according to the National Bureau of Statistics. The sector also employs roughly 12% of the country's formal workforce, across industries including food and beverage production, cement, textiles, pharmaceuticals and vehicle assembly.

The challenge is not that Nigeria lacks factories. It is that many of those factories are operating below what they were built to produce.

This is where capacity utilisation comes in. It measures how much of a factory's installed production capacity is actually being used. A plant designed to produce 100,000 units a year but producing 57,000 is operating at 57% capacity utilisation.

Nigeria's manufacturing sector has spent much of the past decade in roughly that range. Capacity utilisation was 54.2% in the second half of 2014, 54.6% in the first half of 2018, and 57.0% in 2024, according to the Manufacturers Association of Nigeria. Central Bank of Nigeria data put it at 57.5% in the second quarter of 2025.

So at the latest measured rate, more than two-fifths of installed manufacturing capacity was not being used.

For a manufacturer, the cost of building a factory does not fall simply because the factory is producing less. The building, machinery, land, maintenance and many other expenses remain. When production is spread across fewer units, those fixed costs become more expensive per unit of output.

One of the biggest reasons Nigerian manufacturers struggle to run their factories continuously is electricity.

The Manufacturers Association of Nigeria estimates that energy can account for around 35% to 40% of production costs for many manufacturers. Companies have increasingly had to supplement grid electricity with diesel generators and other forms of alternative power. Manufacturers reportedly spent about ₦1.35 trillion on alternative power in 2025 alone.

This has been a long-running problem rather than a short disruption. South Africa's manufacturers experienced an intense period of electricity shortages between 2022 and 2024 and have since seen a substantial improvement in supply. Nigerian manufacturers have been dealing with unreliable power for much longer, which means many businesses have built alternative generation into the cost of operating a factory.

That helps explain why a country can have a large manufacturing sector on paper while still struggling to compete with producers in countries where factories can run more consistently.

Pharmaceuticals: building more of the supply chain at home

Pharmaceutical manufacturing provides a useful example of what happens when policy, domestic demand and industrial investment begin pushing in the same direction.

Nigeria has historically depended heavily on imported medicines. NAFDAC has previously estimated that around 70% of pharmaceutical products consumed in the country were imported, with China and India playing major roles in supplying finished medicines and active pharmaceutical ingredients, the chemical compounds that give medicines their therapeutic effect.

Reducing that dependence became a specific policy objective. NAFDAC set out to reduce pharmaceutical import dependence from around 70% toward 30%, with a longer-term ambition of producing about 70% of medicines domestically.

The country has made progress, although it has not reached those targets. NAFDAC has more recently put import dependence at around 60%, which would mean domestic manufacturers are supplying roughly 40% of pharmaceutical consumption.

Another indication of the change comes from the volume of imported finished medicines. The Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria, citing NAFDAC data, reported that imports of finished pharmaceutical products fell from 4.03 billion units to 1.13 billion units in 2025.

Those figures are useful, but they need to be read carefully. They measure the number of units imported, not the monetary value of pharmaceutical consumption in Nigeria. A fall in imported units therefore does not by itself tell us exactly how much of the country's total pharmaceutical spending is now being supplied by domestic manufacturers.

The manufacturing base itself has also expanded. The pharmaceutical industry grew from 20 founding member companies in 1983 to more than 200 manufacturing firms today.

There is an effort to go deeper into the supply chain as well. Emzor Pharmaceutical Industries has been developing an active pharmaceutical ingredient plant in Sagamu, Ogun State. APIs are the chemical building blocks used to make medicines, so producing them locally would address a different part of the import problem from simply manufacturing finished tablets and capsules in Nigeria.

The same constraints affecting other manufacturers remain, particularly electricity costs and delays involved in bringing imported inputs through the country's ports and customs system.

A different kind of industrial story

Nigeria therefore starts from a different position from countries that are still trying to build their first major manufacturing clusters.

The factories already exist. Some companies operate at very large scale, and industries such as cement, food processing and pharmaceuticals have established domestic markets. The Dangote refinery adds another major layer through large-scale petroleum refining and petrochemical production.

The harder question is how much of that existing capacity can be used consistently.

Nigeria's pharmaceutical industry shows what can happen when there is a large domestic market, a clear policy objective and investment in local production. But the sector is still dependent on imported inputs and still faces the energy and logistics problems affecting manufacturers more broadly.

That leaves Nigeria with a manufacturing base that is already substantial, but one where the infrastructure surrounding production has not developed at the same pace as the factories themselves. The country's next stage of industrial growth will depend heavily on whether manufacturers can run more of that existing capacity, while new investments add deeper layers of production rather than operating alongside the same old constraints.

Côte d'Ivoire: processing the crops it already dominates

Côte d'Ivoire's manufacturing strategy starts with two industries the country already knows extremely well: cocoa and cashews.

Rather than trying to build completely new industries around imported raw materials, the government has been trying to move more of the processing of these crops into Côte d'Ivoire itself. That means grinding cocoa beans into butter, powder and other semi-finished products, and turning raw cashew nuts into kernels before they leave the country.

The approach has produced some of the clearest recent growth in agricultural processing on the continent. It has also exposed how difficult it can be to move from producing a commodity at enormous scale to controlling more of what happens after the harvest.

Cocoa: producing the world's largest crop

Côte d'Ivoire produces roughly 40% of the world's cocoa and remains the world's largest cocoa producer. The exact production figure varies depending on whether a source is using a calendar year or cocoa marketing year. Ivorian government data put 2024 production at about 1.89 million tonnes, while USDA-linked reporting used a figure of 1.76 million tonnes for the comparison with domestic processing that year.

For decades, much of that cocoa left the country as raw beans. Processing companies then turned those beans into cocoa liquor, butter and powder elsewhere, with European markets playing a major role in the global cocoa-processing and chocolate industries.

Côte d'Ivoire has been trying to move more of that first stage of processing closer to the farms.

The reason is visible in the export figures. In 2023, the country exported about 1.34 million tonnes of raw cocoa beans worth roughly $3.5 billion. Its exports of processed cocoa products were smaller in volume, at about 648,000 tonnes, but generated around $2.67 billion. On a simple value-per-tonne comparison, the processed exports were worth about 58% more per tonne than the raw beans.

That does not mean that processing automatically produces 58% more profit. Processing also requires factories, electricity, labour, equipment, financing, transport and access to buyers. But the figures show why the government wants more of the processing stages to take place inside the country.

Building more cocoa-processing capacity

The expansion has been happening through both state-backed and private investment.

In June 2025, Transcao CI opened a new cocoa-grinding facility at the Akoupé-Zeudji industrial zone. The project cost 130 billion CFA francs, about $235 million, and includes a 50,000-tonne-per-year grinding unit, a 160,000-tonne storage facility and a training centre. Together with Transcao's existing 50,000-tonne plant in San Pedro, the company now has 100,000 tonnes of annual grinding capacity.

A second facility followed in Divo in August 2025. Cacao SA's $56.4 million plant has an annual processing capacity of 36,000 tonnes and five production lines for cocoa paste, cocoa butter and chocolate.

These projects are part of a much larger expansion. Côte d'Ivoire's installed cocoa-grinding capacity had already reached roughly 972,000 tonnes by 2024, according to the government, with additional plants under construction. A later government update put installed capacity at around 1 million tonnes a year by 2024.

The amount actually processed is lower than the amount factories are capable of processing. USDA data cited in reporting on the 2024 crop put domestic processing at around 777,000 tonnes, or roughly 44% of the 1.76 million-tonne production figure used for that comparison. The country's cocoa-processing rate has therefore moved a long way from earlier levels, but a substantial share of the crop is still exported without undergoing local first-stage processing.

The government has set a much larger goal: 100% local processing by 2030. More recent USDA reporting says the immediate target is to reach 50% over the next two years, before moving toward full domestic processing by 2030.

There are practical obstacles to getting there.

Running a cocoa-processing plant requires a reliable supply of electricity, transport infrastructure, storage and working capital. Domestic processors also have to compete for beans with international companies that have operated in Côte d'Ivoire for decades and have established relationships with farmers, traders, exporters and international buyers.

Financing is another constraint. A 2025 FAO study found that the country's primary cocoa-processing industry already had close to one million tonnes of processing capacity across 15 companies during the 2024/25 season, but identified financing as one of the areas that needs attention if the industry is going to expand further.

There is also a limit to what first-stage processing can achieve on its own. Grinding beans into cocoa butter or powder keeps more industrial activity inside Côte d'Ivoire, but the highest-value parts of the chocolate chain include product development, branding, retail and distribution. Much of that activity still happens outside the country. Research on the cocoa value chain has found that a substantial share of the added value is captured after the semi-finished cocoa products leave Côte d'Ivoire.

So the country's cocoa strategy is moving through several stages. The first is keeping more beans inside the country for grinding. The next is developing more finished cocoa products and stronger local companies capable of selling them beyond the domestic market.

Cashews: a faster expansion

The cashew industry has moved more quickly.

Côte d'Ivoire is the world's largest producer of raw cashew nuts and has spent the past decade building a domestic processing industry around the crop. In 2024, the country produced 944,673 tonnes of raw cashew nuts and processed about 344,000 tonnes locally. That represented a domestic processing rate of 36.4%.

The January 2025 government projection put the year's harvest at 1.15 million tonnes, 20% above the 2024 production figure. The government expected local processors to receive about 400,000 tonnes.

That is considerably different from the figures sometimes reported for 2025, where higher production estimates appeared later in the season. For a publication like this, it is safer to use the official 2024 result and clearly label 2025 figures as projections when they are projections.

The processing industry itself has expanded rapidly.

Côte d'Ivoire had 34 operational cashew-processing units in 2024, with installed capacity reaching 450,000 tonnes a year. The amount of raw cashew nuts processed locally increased from 37,696 tonnes in 2014 to 344,028 tonnes in 2024. The country had become the world's third-largest cashew-processing country and the second-largest supplier of cashew kernels.

Other industry data put the number of active plants at more than 35 by 2024, compared with 17 in 2016. Finished cashew-kernel exports reached about 72,000 tonnes in 2024, up 52% from the previous year and more than five times the 13,500 tonnes exported in 2020. Export earnings from those kernels reached about $440.5 million.

The distinction between raw nuts entering a factory and finished kernels leaving it is important when reading these figures. A factory can process hundreds of thousands of tonnes of raw cashew nuts, but the finished kernels weigh considerably less after the shell and other material are removed. The two numbers therefore should not be treated as equivalent measures of output.

When the global market changed

The expansion of domestic processing also benefited from changes in the international market.

During the 2025 cashew season, tighter controls on raw-nut smuggling and disruptions in international buying helped redirect more of Côte d'Ivoire's crop toward domestic factories. The government had already introduced measures giving local processors priority access to raw cashews during part of the season.

By 2024, domestic processors had already been buying record volumes of raw cashews. Research published on the sector found that factories' average operating capacity had risen from just 16% in 2016 to 63% in 2024, while processors bought about 344,000 tonnes of raw nuts that year.

That increase in factory utilisation is important because having a processing plant and having a processing industry are not quite the same thing. A factory needs enough raw material, working capital, labour, electricity and buyers to keep running.

Côte d'Ivoire has been working on those conditions at the same time as it has added factories. The World Bank reports that domestic cashew-processing capacity increased from 68,515 tonnes in 2015 to 350,000 tonnes in 2024, alongside the creation of more than 18,000 jobs and the development of three agro-industrial zones dedicated to cashew processing.

The government has also set a target of processing at least 50% of the cashew harvest domestically by 2030. By 2025, official government data put the local transformation rate at around 43%, up from 2% in 2011.

That gives the cashew industry a different trajectory from cocoa. Processing has expanded rapidly enough that Côte d'Ivoire is now one of the world's major cashew-processing countries, rather than being primarily a supplier of raw nuts to processors elsewhere.

Two crops, and a broader manufacturing strategy

Côte d'Ivoire's experience with cocoa and cashews shows what happens when agricultural production is followed by deliberate investment in processing.

The country already had the farms, the farmers and the export markets. The industrial challenge was to build the factories and supporting infrastructure that could keep more of the next stage inside the country.

Cocoa is still further from that goal. The country has expanded grinding capacity substantially, but a large share of production continues to leave before processing, and the government's 2030 ambition requires another major increase.

Cashews have moved faster. Domestic processing has risen from a very small base to more than 344,000 tonnes of raw nuts in 2024, while installed capacity has expanded to around 450,000 tonnes. The country is now a significant global processing centre in its own right.

The next stage is less about proving that Côte d'Ivoire can process its crops. It already can. The challenge is expanding the range of products made locally, building stronger domestic companies and ensuring that factories have enough reliable raw materials, finance, power and markets to operate at scale.

That makes Côte d'Ivoire's manufacturing story unusually concentrated. Its industrial expansion is closely tied to two agricultural commodities, but those two commodities are large enough to support a substantial manufacturing industry of their own.

The next wave: Kenya and Tanzania

Not every manufacturing story on the continent has reached the scale of the six countries above. Kenya and Tanzania are at an earlier stage, but both are building industrial capacity around sectors that fit their economies and existing resources.

Kenya has been using industrial zones to attract manufacturers and exporters, particularly in textiles, food processing, pharmaceuticals and vehicle components. Tanzania is putting more emphasis on processing its natural resources, including natural gas, and using them to support industries such as fertilizer manufacturing.

The two countries are smaller manufacturing economies than Morocco, Egypt or South Africa, but they show what the earlier stages of industrial development can look like.

Kenya: building manufacturing around industrial zones

Kenya's manufacturing sector has been relatively small compared with the size of the country's services and agricultural economies. Manufacturing contributed about 7.1% of GDP in 2025, according to the Kenya National Bureau of Statistics.

The government has set a much higher target. Its policy goal is to raise manufacturing's contribution to 15% of GDP by 2027, with industrial clusters, Special Economic Zones and Export Processing Zones forming part of the strategy.

These zones are designed to solve several problems for manufacturers at the same time.

An Export Processing Zone, or EPZ, is an area where companies producing mainly for export can receive incentives and simplified customs procedures. A Special Economic Zone, or SEZ, serves a broader group of businesses and can include manufacturing, logistics, services and other commercial activities.

The attraction for a manufacturer is practical. Setting up a factory requires land, roads, electricity, water, waste management, customs services and access to transport networks. A zone can provide much of that infrastructure in one location while also offering tax and regulatory incentives designed to reduce the cost of setting up.

Kenya has been expanding this network rather than relying on a single industrial centre.

The country's EPZ programme has attracted manufacturers in garments and textiles, food processing, electronics and other export-oriented industries. Newer SEZs are intended to accommodate a wider range of industries, including pharmaceuticals, agro-processing and automotive-related manufacturing.

The country's location also gives manufacturers access to the wider East African market. Kenya has one of the region's largest economies and sits on the Indian Ocean, with the Port of Mombasa providing an established route for imports and exports.

That regional market is important for industries that may not be able to justify a factory based on Kenyan demand alone. A pharmaceutical manufacturer, for example, can potentially serve customers across East Africa. A component manufacturer can supply assemblers in Kenya while developing customers elsewhere in the region.

The EPZ figures show that the programme is still expanding, although the scale remains modest compared with Africa's largest manufacturing hubs.

During a six-month period in 2024, 17 new companies registered under Kenya's EPZ programme, bringing about Sh13.8 billion in investment and generating roughly Sh58 billion in exports. These were additions during that particular period rather than the total value of Kenya's EPZ industry. The figures therefore give an indication of the pace of new investment rather than the size of the entire manufacturing sector.

Textiles and apparel remain particularly important within the export-zone system. Kenya has used duty-free access to major markets, including the United States under the African Growth and Opportunity Act when the country is eligible, to attract garment manufacturers producing for export.

The industry has also been supported by the country's cotton-growing and agricultural base, although Kenya still imports much of the cotton and textile inputs needed by manufacturers. That creates another opportunity for local production: expanding spinning, weaving, dyeing and other upstream activities would allow more of the value chain to take place inside the country rather than bringing intermediate materials in from elsewhere.

Agro-processing offers another route.

Kenya produces large quantities of tea, coffee, horticultural products, grains, dairy products and other agricultural commodities. Processing more of these products domestically can create manufacturing activity around an agricultural sector that is already large, while also producing goods with a longer shelf life and higher value than raw agricultural commodities.

Pharmaceuticals are another area where the government wants to increase domestic production. Kenya has an established pharmaceutical industry, but local manufacturers still depend on imported active pharmaceutical ingredients and other inputs. Increasing domestic production therefore involves more than adding factories for finished medicines. It also means developing the suppliers, technical skills, regulatory systems and financing needed further up the pharmaceutical value chain.

Automotive manufacturing is at an earlier stage.

Kenya has vehicle assembly operations, but much of the industry's activity is still based on assembling vehicles from imported kits and components rather than producing a large share of those components domestically. The government's industrial plans include increasing local production of vehicle parts and encouraging manufacturers to locate within industrial zones.

That creates a familiar problem for an emerging manufacturing economy: a vehicle assembly plant can operate without a large domestic supplier industry, but a deeper automotive cluster requires companies producing wiring systems, seats, glass, tyres, metal parts, electronics and other components close enough to supply the assemblers efficiently.

Kenya is therefore still building the layers around its factories.

The country has the agricultural production, a major port, a sizeable domestic market and access to neighbouring economies. Its industrial zones provide places where manufacturers can operate. The next stage is increasing the amount of production that happens inside those factories and expanding the network of Kenyan suppliers around them.

Tanzania: using natural gas to build industrial capacity

Tanzania is taking a different route.

Its manufacturing sector is smaller than Kenya's in absolute terms, but the country has a significant natural-resource base that can provide inputs for industrial production. Natural gas is particularly important because Tanzania has developed substantial offshore gas reserves while also expanding the infrastructure needed to use gas domestically.

Fertilizer is one of the industries where that resource can feed directly into manufacturing.

Ammonia and urea fertilizer are produced using natural gas as a major feedstock. That gives a gas-producing country an opportunity to convert part of its domestic energy resource into an agricultural input rather than exporting the gas or using it only to generate electricity.

The agricultural market provides a large potential customer base. African agriculture uses less fertilizer per hectare than many other regions, while many African countries also depend heavily on imported fertilizer. Producing more fertilizer within Africa can therefore reduce part of the distance between the continent's farmers and an important agricultural input.

Tanzania already has fertilizer production, and new investment is intended to expand it.

One project being developed with Indonesia's Essa Group in Lindi has been planned around an eventual annual production capacity of about one million tonnes of urea. It is important to describe this as a project under development rather than an operating factory. The investment is part of Tanzania's longer-term attempt to use its natural-gas resources as the basis for a larger petrochemical and fertilizer industry.

A different project is already operating.

ITRACOM's fertilizer facility in Dodoma was launched in 2025 and produces fertilizer using locally available mineral resources. The company has described the plant as part of a broader effort to increase domestic fertilizer production and reduce reliance on imported products.

The two projects therefore represent different stages of Tanzania's industrial expansion. The Essa project is an example of planned large-scale gas-based fertilizer production, while the ITRACOM facility shows a smaller industrial investment already operating within the country.

Fertilizer is not the only manufacturing activity being developed.

Tanzania has also been expanding cement production, food processing, textiles, metals and other industries linked to its domestic market and natural resources. The country's industrial sector as a whole accounted for about 30.4% of GDP in 2024 and grew by 5.5%. Manufacturing itself contributed around 7.3% of GDP and grew by roughly 4.8%.

Those two numbers describe different things.

The broader industrial category includes manufacturing alongside activities such as mining, electricity, construction and other industrial production. Manufacturing is the narrower category covering factories that turn materials into products. So Tanzania can have an industrial sector representing roughly three-tenths of the economy while manufacturing itself represents only around one-fourteenth.

That distinction helps explain where Tanzania currently stands. The country has a substantial industrial economy because of mining, construction, energy and other activities, but the manufacturing base is still developing.

Two countries still building the layers around production

Kenya and Tanzania therefore arrive at manufacturing through different routes.

Kenya is relying heavily on industrial zones, export incentives and its position as a commercial centre in East Africa. Its priority industries include textiles, agro-processing, pharmaceuticals and vehicle-related manufacturing.

Tanzania has more room to build industries around its natural resources, particularly natural gas, minerals and agricultural production. Fertilizer is one example of an industry where a domestic resource can become an industrial input rather than leaving the country in a less processed form.

Neither country yet has the depth of manufacturing supply chains found in Morocco or South Africa. A factory can be established relatively quickly, but the companies that supply that factory, the technical workers who operate it, the transport systems that move its inputs and products, the financing that allows it to expand and the domestic or regional buyers that keep it busy take much longer to develop.

That is why manufacturing figures need to be read alongside the infrastructure and investment behind them.

Kenya's 7.1% manufacturing share of GDP shows the size of the sector today. Its 15% target shows where the government wants to take it. Tanzania's 7.3% manufacturing share shows a similar stage of development, while its much larger industrial share reflects the importance of mining, construction and energy to the wider economy.

The next question for both countries is how much of their existing industrial investment can develop into deeper domestic supply chains and larger export businesses.

That question leads naturally to the continental level, because an individual country's manufacturing market can be quite small. A factory becomes much more attractive when it can sell not only to customers at home, but to buyers across several neighbouring countries without having to build a separate operation in every market.

AfCFTA: the market that could connect these factories

The countries covered above have built their manufacturing industries with different markets in mind. Morocco has developed deep links with Europe through automotive and aerospace exports. Egypt is using the Suez Canal and its large domestic market to connect manufacturers to international trade. South Africa's automotive industry depends heavily on exports to Europe and the United Kingdom, while Côte d'Ivoire's cocoa and cashew industries have historically supplied processors and buyers outside Africa.

Kenya and Tanzania are at an earlier stage, with much of their industrial strategy focused on serving domestic and regional markets as well as building export capacity.

That raises a question that sits above all of these individual country stories: what happens when African manufacturers can treat more of Africa as one market?

The African Continental Free Trade Area, or AfCFTA, is designed to move in that direction.

The agreement entered into force in 2019, and trading under its preferential framework began in January 2021. It has been signed by 54 of the African Union's 55 member states, with Eritrea the only country that has not signed. Together, the participating countries represent a potential market of roughly 1.3 billion people and a combined GDP of more than $3.4 trillion.

But signing the agreement does not mean that a manufacturer can automatically ship a product from one African country to another without tariffs or other restrictions.

Each country still has to implement the agreement through its own legal and administrative systems. Tariff schedules have to be applied, customs procedures have to work, and countries have to agree on the rules that determine whether a product qualifies as African-made under the agreement.

Those last rules are particularly important for manufacturing.

Why rules of origin matter

Imagine a company imports most of the parts for a refrigerator from outside Africa, assembles them in Kenya and then wants to sell the finished refrigerator across the continent under AfCFTA preferences.

Should that product qualify as Kenyan for the purposes of preferential trade?

Rules of origin provide the answer.

They determine how much processing or local and regional content a product needs before it can qualify for preferential treatment. Without them, a country could potentially become little more than a transit point where imported goods are lightly assembled and then re-exported to other African markets with preferential tariffs.

For manufacturers, well-designed rules of origin can therefore encourage companies to source more components from African suppliers. A factory that wants its products to qualify for preferential treatment may have an incentive to buy packaging, components, chemicals, textiles, metals or other inputs from businesses elsewhere on the continent.

That creates the possibility of supply chains extending across several African countries rather than stopping at national borders.

The automotive sector is one of the clearest examples.

By February 2026, AfCFTA's automotive rules of origin had been adopted. The framework establishes the conditions vehicles need to meet to qualify for preferential treatment, including requirements around African content and production processes.

That creates a potential regional market for manufacturers in countries such as Morocco, South Africa, Egypt and Kenya. It also gives component manufacturers a reason to think beyond supplying factories in their own countries.

A wiring-harness company in Morocco, for example, does not need to sell only to Moroccan vehicle plants. If regional trade rules, transport links and customs procedures work effectively, its potential customer base can include manufacturers elsewhere on the continent.

The same principle applies outside automotive manufacturing.

A pharmaceutical company in Kenya could potentially sell medicines across East Africa. A Tanzanian fertilizer manufacturer could serve farmers and distributors in neighbouring countries. Côte d'Ivoire's processors could sell more cocoa and cashew products to African food manufacturers rather than sending those products almost entirely to buyers outside the continent.

The potential market is therefore much larger than the population of any individual country.

Africa still trades relatively little with itself

The opportunity is large partly because the starting point is still relatively low.

The African Development Bank's 2025 Africa Industrialisation Index put intra-African trade at about 14.4% of total African trade between 2022 and 2024. The comparable figures were roughly 60% for Asia and 57% for Europe.

Those figures do not mean that Africa has no regional trade. Countries already buy and sell substantial quantities of food, manufactured goods, minerals, fuel and services from one another.

They show that African countries still conduct a much smaller proportion of their total international trade with other African countries than the European and Asian economies in those comparisons do within their respective regions.

That leaves considerable room for regional supply chains to develop.

Recent projections point toward continued growth. The African Development Bank expects intra-African trade to increase by around 10% in 2026, reaching approximately $230 billion, compared with about $210 billion in 2025. Manufacturing and agri-food products are expected to account for roughly 48% to 50% of that trade, up from about 46% in 2025.

These are projections rather than realised outcomes, so they should be read as an indication of expected direction rather than a guarantee of what trade will look like.

The money has to move too

Goods cannot move easily if paying for them is difficult.

This is where the Pan-African Payment and Settlement System, or PAPSS, comes in.

PAPSS was officially launched in Accra in January 2022 by Afreximbank under an African Union mandate. It allows participating banks and businesses to make cross-border payments using participating African currencies, with the system handling the settlement between the parties.

In practical terms, a buyer in one African country can pay in their local currency while the seller in another country can receive payment in its own currency, reducing the need for every transaction to pass through a hard currency such as the U.S. dollar.

That can matter for smaller manufacturers particularly. A company selling relatively modest shipments across several African markets can face significant foreign-exchange and banking costs if every transaction requires conversion through an external currency.

When PAPSS launched, Afreximbank estimated that broader use of the system could save African economies more than $5 billion a year in currency-conversion costs. That figure was an estimate of potential savings, not money already saved.

Since its launch, PAPSS has expanded its network of participating banks and countries. KCB Group in Kenya and Bank of Kigali in Rwanda were among the institutions that joined in 2025.

Payment infrastructure alone, however, cannot create a manufacturing market. The products still have to cross borders.

The roads, ports and borders still have to work

This is where the practical difficulty of AfCFTA becomes clearer.

A manufacturer can have a product that qualifies for preferential treatment and a customer willing to buy it, but the transaction can still become expensive if a truck spends days waiting at a border, if customs systems require the same information to be entered repeatedly, or if poor roads make a regional delivery unreliable.

Non-tariff barriers remain a significant problem. These include inconsistent customs procedures, different standards and documentation requirements, delays at borders and inadequate transport connections between neighbouring economies.

The infrastructure challenge is particularly large because African manufacturing is spread across a continent where countries are separated by thousands of kilometres and where some of the most important commercial routes do not connect neighbouring countries efficiently.

Morocco's Tanger Med and Egypt's Suez Canal Economic Zone show what investment in trade infrastructure can do within an individual country. AfCFTA requires comparable improvements across national borders, involving roads, railways, ports, warehouses, electricity networks, customs systems and digital infrastructure.

That is a much longer process than signing a trade agreement.

The African Union has recognised this implementation challenge. As of 2026, the AfCFTA High-Level Implementation Committee, chaired by Kenya's president, has been working to accelerate implementation and resolve some of the practical barriers that remain between the agreement's formal commitments and the movement of goods across borders.

What this could mean for African manufacturing

AfCFTA does not build factories. It cannot provide electricity to an industrial park or train a pharmaceutical technician.

What it can do is change the size of the market available to a factory once those things are in place.

That matters because manufacturing becomes easier to justify when a company can sell enough products to spread the cost of machinery, research, skilled workers and production facilities across a larger customer base.

A pharmaceutical plant that serves only one national market may struggle to reach efficient production volumes if demand is limited. The same plant serving several neighbouring countries has a larger potential market.

The same applies to fertilizer, processed foods, vehicle components, textiles, machinery and other manufactured products.

This is one reason regional manufacturing strategies have played such a large role in other parts of the world. Companies can specialise in particular components or stages of production when they know they can sell into a large regional market. Suppliers then have a reason to establish themselves nearby, and manufacturers have more options for sourcing inputs.

Africa is still some distance from that point.

The countries in this article are building factories at different speeds, under very different conditions. Morocco already has sophisticated export supply chains. South Africa has decades of industrial experience but is adapting to changes in electricity supply and vehicle technology. Egypt is expanding an already broad industrial base. Ethiopia is still dealing with the vulnerabilities exposed by its industrial-park model. Nigeria has substantial factories but large amounts of unused capacity. Côte d'Ivoire is building processing industries around crops it already produces at enormous scale. Kenya and Tanzania are still adding many of the supporting layers around their emerging industrial bases.

AfCFTA sits across all of those stories.

If implementation continues, it could give manufacturers a larger market within Africa and create stronger reasons to source more inputs from other African countries. If infrastructure, customs systems, financing and payment networks do not keep pace, the formal removal of tariffs will have a much smaller effect than the size of the agreement suggests.

The factories therefore remain the starting point. The continental market is the next piece.

Where This Leaves Things

Put the six countries examined in detail alongside Kenya and Tanzania, and the manufacturing picture becomes easier to see.

Morocco and Egypt have built the broadest and most diversified industrial bases in this group, although they have taken different routes. Morocco has developed deep manufacturing clusters around automotive, aerospace and phosphate processing, supported by ports, industrial zones and networks of suppliers. Egypt has a wider industrial base spanning textiles, food processing, chemicals, pharmaceuticals, automotive components and building materials, while using its position around the Suez Canal to attract additional investment.

South Africa starts from a different position again. Its automotive industry has been developing for decades and remains a major exporter, but manufacturers had to operate through a severe electricity crisis before power availability improved. The industry is now also adapting to changes in the vehicles being demanded by some of its biggest export markets, with hybrid and electric vehicles becoming a larger part of the global market.

Ethiopia shows how quickly manufacturing capacity can come under pressure when the conditions supporting it change. Its textile industry expanded through industrial parks, foreign investment and preferential access to the U.S. market before Ethiopia lost AGOA eligibility in 2022. Its leather industry faced a different problem: the country had abundant livestock but struggled to supply tanneries with enough good-quality hides and skins. In both cases, having factories was only one part of maintaining an industrial sector.

Nigeria already has a substantial manufacturing base, including cement, food and beverages, pharmaceuticals, chemicals and other industries. The problem is that much of the installed capacity is not being used fully. Electricity costs, unreliable supply, imported inputs and logistics all affect the economics of production. The pharmaceutical industry provides one example of where domestic demand and targeted policy have encouraged manufacturers to expand local production, even though the industry remains dependent on imported inputs.

Côte d'Ivoire is taking a more concentrated approach. Its manufacturing expansion is closely tied to two agricultural commodities that the country already produces at enormous scale: cocoa and cashews. Cocoa processing is expanding, but cashew processing has moved faster, with domestic processing capacity and factory utilisation rising substantially over the past decade. In both cases, the objective is to keep more of the processing stage inside Côte d'Ivoire rather than exporting the crop primarily as a raw commodity.

Kenya and Tanzania are earlier in that process. Kenya is using Export Processing Zones and Special Economic Zones to attract manufacturers in areas including textiles, agro-processing, pharmaceuticals and vehicle components. Tanzania is developing manufacturing around agriculture, minerals and natural gas, with fertilizer among the clearest examples of an industry where a domestic resource can become an industrial input.

The countries are therefore not following one African manufacturing model.

Some are building export industries around global companies. Some are trying to process more of the commodities they already produce. Some are using large domestic markets to support local manufacturing. Others are trying to turn natural resources into industrial inputs.

What they have in common is that the factory itself is only one part of the investment.

A manufacturing plant needs electricity that can support continuous production. It needs roads, ports and customs systems that can move inputs and finished goods. It needs suppliers close enough to provide components and services. It needs workers with specialised skills, access to financing and customers large enough to justify the investment.

That is why Africa's manufacturing position remains difficult to change quickly.

The continent produced about 2% of global manufacturing output in 2025, despite accounting for close to one-fifth of the world's population. Manufacturing value added has grown, from about $285 billion in 2020 to $351 billion in 2025, but manufacturing value added per person was still around $226.70 in 2025, below the 2014 peak of about $254.90.

The individual country stories therefore need to be read alongside the continental numbers. Morocco producing more than 500,000 vehicles in a year, Côte d'Ivoire processing hundreds of thousands of tonnes of cashews, or Nigeria operating some of Africa's largest industrial plants can all represent meaningful industrial capacity without changing the continent's overall position overnight.

What is changing is the number of places where that capacity is being built and the kinds of production being attempted.

More cocoa is being processed in Côte d'Ivoire. More cashews are being processed there as well. Morocco is producing vehicles and aircraft components while developing the suppliers around those industries. Egypt is expanding textile, pharmaceutical and other manufacturing capacity around the Suez Canal. South Africa is adapting an established automotive industry to a changing global market. Nigeria is trying to use more of its existing industrial capacity and reduce dependence on imported products in selected sectors. Kenya and Tanzania are building the industrial zones, processing plants and supplier networks that could support larger manufacturing industries later.

AfCFTA sits across all of these efforts.

A manufacturer that can sell only within one national market faces a different set of economics from one that can sell across several African countries. If tariff preferences are implemented consistently, rules of origin encourage regional sourcing, payment systems reduce currency friction and transport infrastructure improves, manufacturers could have a much larger market in which to spread the cost of factories, equipment and skilled labour.

That possibility does not remove the problems inside individual countries. It makes solving them more valuable.

Reliable electricity becomes more important when a factory can serve customers across a region. A good port becomes more useful when manufacturers can import inputs and export finished products across multiple markets. A domestic supplier can reach a larger customer base when companies in neighbouring countries are able to buy its products without facing the same barriers that currently make regional trade difficult.

The evidence in these eight countries points to manufacturing development happening in stages. First comes the decision to produce. Then comes the infrastructure that makes production possible. After that come suppliers, skills, financing and markets that allow factories to operate at larger scale.

Africa is at different points in those stages depending on the country and industry.

The continent's manufacturing share of global output has not changed enough to describe this as a broad industrial transformation yet. But the investments underway in individual countries show that the manufacturing base is being built in specific places and around specific industries.

The larger question now is how well those separate industrial bases can connect with one another.

If African manufacturers can increasingly source inputs from other African countries and sell finished products into those same regional markets, the factories being built today will have a much larger market around them. If trade barriers, unreliable infrastructure, expensive finance and weak supply chains continue to restrict that movement, individual manufacturing clusters may continue developing without producing the deeper regional networks that make industrialisation easier to sustain.

That is where the next stage of Africa's manufacturing story will be decided: not by the number of factories announced, but by how consistently those factories can produce, how much of their supply chain can be built around them, and how many markets they can reach once the products leave the factory gate.