According to the African Development Bank (AfDB), Morocco has emerged as the continent's top industrial economy, overtaking South Africa. While manufacturing output is rising, structural challenges like high energy costs remain.
- Morocco has overtaken South Africa as the continent's leading industrial economy in the AfDB index.
- Africa's manufacturing value-added rose to $351bn in 2025, up from $285bn in 2020.
- The continent accounts for less than 2% of global manufacturing output.
- High electricity costs and low labor productivity are hindering competitiveness in countries like Kenya.
Industrialization has long been the cornerstone of Africa's development agenda. However, decades after independence, the continent has seen uneven progress. While some nations have integrated into global value chains, many others struggle with slow growth. The African Development Bank (AfDB), in its 'Africa Industrialisation Index 2025', highlights that despite renewed momentum, the continent's industrial transformation remains sluggish.
The report notes that the value of manufacturing value-added goods in Africa climbed from $285 billion in 2020 to $351 billion in 2025. While this 24% increase is notable, it pales in comparison to global benchmarks. Africa contributes less than 2% to global manufacturing output and only 1.4% to global manufacturing exports. To put this in perspective, Africa's total manufacturing output is slightly less than the annual sales generated by German automaker Volkswagen.
The Rise of Morocco and the Decline of South Africa
In a significant shift in the continent's economic landscape, Morocco has officially overtaken South Africa as the leading industrial powerhouse. Scoring 0.8415 on the AfDB index, Morocco surpassed South Africa's 0.8396. This transition is attributed to Morocco's sustained industrial upgrading, aggressive export diversification, and robust industrial policies.
Morocco has overtaken South Africa as the continent’s leading industrial economy, driven by sustained industrial upgrading and strong industrial policy.
While North Africa remains a dominant force, the index shows varying levels of development across the continent. In West Africa, Senegal and Côte d’Ivoire are leading, while East Africa sees Kenya and Uganda as key players. However, the transition toward a manufacturing-led economy is not without significant hurdles.
Why This Matters
BozokMedia analysis shows that for Africa to secure its industrial future, it must address deep-seated structural constraints. It is not enough to simply increase production; the continent must achieve cost-competitiveness to compete with giants like China and India.
Kenya serves as a cautionary tale. The manufacturing sector's contribution to Kenya's GDP has plummeted from 15% in the 1990s to just 7.2% today. A primary culprit is the cost of electricity. Kenya's industrial power tariff ranges between $0.18 and $0.23 per kWh, significantly higher than Morocco ($0.09-$0.12) or Ethiopia ($0.01-$0.02).
| Country | Industrial Power Tariff (per kWh) | Competitiveness Status |
|---|---|---|
| Ethiopia | $0.01 - $0.02 | Highly Competitive |
| Morocco | $0.09 - $0.12 | Competitive |
| Kenya | $0.18 - $0.23 | Low Competitiveness |
Furthermore, the debate over minimum wage often overshadows the more critical issue of labor productivity. Experts argue that even with low wages, African manufacturers cannot compete if their workers' output per hour is significantly lower than their global counterparts. Addressing energy reliability and boosting human capital are essential for long-term survival.
Frequently Asked Questions
1. Why did Morocco overtake South Africa?
Morocco's success is driven by strategic industrial policies, export diversification, and continuous upgrading of its industrial sectors.
2. What is the main barrier to manufacturing in Kenya?
High electricity costs and a decline in the manufacturing sector's contribution to the GDP are the primary obstacles in Kenya.
