Morocco has become Africa’s leading industrial economy, overtaking South Africa in new African Development Bank reports released this week during the Bank’s annual meetings in Brazzaville.
The reports describe Africa’s industrial transformation as ‘silent but irreversible’ despite persistent regional disparities and structural weaknesses across the continent.
The assessment emerged from two flagship reports unveiled during the African Development Bank Group’s 2026 Annual Meetings: the 2025 Africa Industrialisation Index and the first-ever Africa Industrial Investment Barometer, developed by WITBA Invest SA in partnership with Trendeo.
Together, the reports provide one of the clearest assessments yet of Africa’s manufacturing and industrial investment trajectory, revealing which economies are advancing fastest and where industrial capital is flowing.
They also highlight how much value addition remains within African markets under the African Continental Free Trade Area framework and where major industrial integration gaps persist.
Morocco rises as industrial leader
One of the most significant findings in the reports is Morocco’s emergence as Africa’s leading industrial economy, overtaking South Africa for the first time.
According to the Africa Industrialisation Index, Morocco’s rise has been driven by sustained industrial upgrading, export diversification and long-term industrial policy implementation. The country has increasingly positioned itself as a manufacturing and export hub in sectors including automotive production, aerospace and renewable energy technologies. The findings come as Morocco accelerates industrial expansion projects, including Africa’s largest tyre factory, reinforcing the country’s ambition to dominate regional industrial supply chains.
Analysts say Morocco’s industrial momentum has also benefited from its geographic proximity to European markets, long-term policy consistency and strategic integration into global automotive and logistics supply chains. The country has increasingly attracted manufacturers seeking alternative production hubs closer to Europe amid rising global supply chain disruptions and geopolitical tensions affecting Asian trade routes.
South Africa, while still one of the continent’s largest industrial powers, has seen a gradual erosion of competitiveness in recent years, the report said. Structural economic challenges, electricity shortages and weaker manufacturing momentum have affected its relative standing.
North Africa and Southern Africa continue to dominate Africa’s industrial production and export sophistication. However, East, West and Central Africa remain significantly behind in manufacturing depth, industrial diversification and higher-value processing.
The Africa Industrialisation Index evaluated 54 African economies between 2010 and 2024 and found that 41 countries improved their industrialisation scores during the period. Overall continental industrial performance rose by six percent, with several lower-ranked economies recording some of the strongest gains.
The findings suggest that industrial convergence across Africa is slowly taking shape despite uneven progress.
Manufacturing still lags globally
Despite the improvements, Africa’s overall manufacturing footprint remains small compared with global competitors.
The reports show that the continent still contributes less than two percent of global manufacturing output and only 1.4 percent of global manufacturing exports. Manufacturing value-added per capita also remains below levels recorded before 2014. Morocco’s industrial rise has been closely linked to its automotive strategy, with the country transforming itself into Africa’s top car exporter through aggressive industrial policy, export-oriented manufacturing and supplier ecosystem development.
Ousmane Fall, Director for Industrial and Trade Development at the African Development Bank Group, said the reports should be viewed both as an assessment and a strategic guide for policymakers.
‘This report is a roadmap as much as a diagnosis,’ Fall said.
‘It shows that 41 of our 54 countries are now moving in the right direction, but it also reminds us that industrialisation at scale demands resilient infrastructure, value addition close to source, and finance mobilised on African terms.’
Economic analyst David Monyae, Director of the Centre for Africa-China Studies at the University of Johannesburg, said African industrialisation efforts would only succeed if governments maintain long-term policy continuity and regional co-ordination.
‘Africa has the market size and resource base to industrialise more rapidly, but fragmented implementation and weak infrastructure continue to slow manufacturing growth across multiple regions,’ Monyae said.
Intra-African trade remains weak
The reports identified weak industrial integration as one of Africa’s most persistent structural challenges.
Intra-African trade currently accounts for only 14.4 percent of the continent’s total trade, reflecting fragmented production systems, limited regional value chains and weak industrial connectivity between neighbouring economies.
The Africa Industrialisation Index argues that the success of the African Continental Free Trade Area will depend not only on tariff reductions, but also on the development of functional economic corridors, harmonised standards and improved cross-border infrastructure. Efforts to deepen continental trade integration are already underway through the AfCFTA digital trade pilot involving Kenya, Nigeria and Morocco, which aims to improve cross-border commercial connectivity and streamline regional commerce.
Analysts involved in the reports warned that many African economies continue to export raw materials with minimal local value addition, limiting job creation, manufacturing growth and industrial competitiveness.
North Africa dominates industrial capital flows
The Africa Industrial Investment Barometer assessed industrialisation using three indicators: industrial diversification, investment attractiveness and productive anchoring, which measures how deeply investments integrate into domestic economies.
North Africa emerged as the strongest-performing region across all indicators.
Between 2020 and 2025, the region attracted 56 percent of cumulative industrial investment flows into Africa, with Morocco and Egypt identified as the continent’s primary industrial investment destinations.
Harouna Kaboré, President of WITBA Invest, said the continent’s biggest challenge is no longer the absence of industrial strategies but implementation failures.
‘African industrialisation can no longer remain a statement of intent or a theoretical projection,’ Kaboré said.
‘It must become a measurable, managed, and strategically driven dynamic.’
East Africa was identified as the continent’s second-strongest region for productive anchoring, supported by growing regional integration and stronger agricultural value chains.
By contrast, Southern Africa continues to attract sophisticated industrial investment but struggles with weak vertical integration. The reports pointed to the automotive sector, where many assembly plants still rely heavily on imported components instead of local supplier ecosystems.
West Africa and Central Africa remain largely dependent on first-stage commodity processing. Examples cited in the reports include cocoa exports from Cote d’Ivoire, raw bauxite shipments from Guinea and mineral exports from the Sahel without significant downstream industrial development.
Energy and green transition now central
The reports identified reliable electricity supply, industrial infrastructure, local currency financing, technical skills development and harmonised industrial standards as critical drivers for Africa’s next phase of industrial expansion.
The Africa Industrial Investment Barometer also warned that African industries must begin decarbonising rapidly to avoid future disadvantages from carbon border adjustment measures expected from Europe and the United States.
For investors, the reports highlighted strong opportunities in agro-processing, fertiliser production, construction materials and generic pharmaceuticals.
However, analysts cautioned that Africa’s industrial transformation will ultimately require patient capital, deeper regional integration and long-term partnerships capable of supporting structural economic change.
