Power cuts, expensive borrowing, and weak supply networks are crippling the competitiveness of manufacturers across Africa. The PAMA Industry Pulse Survey interviewed over 100 manufacturers and found these three obstacles consistently cited as the biggest threats to their ability to compete.
Despite these headwinds, manufacturers expressed measured hope for the third quarter. They pointed to recovering supply chains, growth opportunities under the African Continental Free Trade Area, and easing global energy costs as reasons for cautious optimism.
Yet industry players stressed that real industrial gains will demand policy certainty, stronger infrastructure, and access to cheaper credit. Agro-processing firms, breweries, pharmaceutical makers, and financial institutions across the continent have watched operating costs more than double because of unreliable electricity supply.
Nigerian manufacturers rely heavily on diesel and gas to run their plants, with both fuels jumping over 100 percent in price recently due to tensions in the Iran region. This creates a severe cost disadvantage compared to competitors in Asia, America, and Europe.
Energy consumes 30-40 percent of production costs for sectors like cement, steel, and food processing. The burden has become staggering: Nigerian manufacturers spent N1.4 trillion on power generation in 2025 alone.
Poor logistics networks compound the problem by raising expenses, slowing product movement, and disrupting supply lines. Until goods can flow faster and cheaper across the continent, manufacturers won't achieve regional scale.
These inefficiencies ripple outward, driving up food costs, increasing waste, and leaving businesses exposed when climate shocks or geopolitical crises strike. PAMA stressed that competitiveness can't rest on favourable exchange rates, lower commodity prices, or government support alone.
"Operational efficiency, product quality, and process reliability are decisive in increasingly competitive regional and global markets," the survey found. The same discipline must apply to the AfCFTA framework.
"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," PAMA noted. True competitiveness emerges from 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 warned. PAMA called for coordinated action among government, finance institutions, trade bodies, and industry players themselves.
Governments must guarantee reliable electricity and transport while maintaining steady policies. Development finance institutions should expand affordable, long-term local currency loans to manufacturers, particularly small and medium enterprises.
AfCFTA bodies must accelerate implementation through simplified customs procedures, harmonized standards, and digital documentation systems. For manufacturers, success means monitoring policy changes with the same rigour they apply to markets and technology.
