Reasons for Africa’s Under-Industrialisation

This report by the Institute for Security Studies examines the historical, structural, and policy-driven reasons for Africa's under-industrialisation. It identifies a combination of colonial legacies, infrastructure deficits, skills gaps, and capital constraints as primary barriers, while noting that some countries have seen success through focused industrial strategies and the potential for global supply chain shifts to create new opportunities.

• Africa's industrial struggle is rooted in colonial legacies where economies were designed for extractive industries and commodity exports rather than manufacturing, creating a path-dependency that required post-independence growth to start almost from scratch.
• Policy inconsistency and the failure of early import substitution efforts have hindered growth. While some nations like Morocco and Ethiopia implemented focused strategies in the 2010s, others suffered from deindustrialisation during the structural adjustment programs of the 1980s and 1990s.
• Severe energy instability significantly hampers manufacturing competitiveness. In Nigeria, approximately 90% of manufacturers rely on diesel generators, resulting in an estimated annual loss of US$27 billion due to power outages. In South Africa, Eskom's load-shedding caused regular plant shutdowns from late 2007 to early 2024.
• A critical infrastructure gap in transport increases logistics costs and reduces productivity. In 2018, sub-Saharan Africa had only 6% of global road networks despite representing 17% of the world's land mass. Africa's paved road network is about 680,000 kilometres, which is roughly one-sixth the size of India's.
• The lack of skilled technical personnel and limited R&D investment force firms to rely on expensive expatriate expertise or high training costs. While some technology transfer occurs via foreign investment, such as Japanese car makers in South Africa or Chinese textile firms in Ethiopia, a local technological capacity gap remains.
• Financial constraints are a major barrier, as banks often view manufacturing as too risky compared to resource deals, leading to high interest rates and limited long-term finance. This leaves the sector dependent on development finance institutions like the AfDB and IFC.
• Global market dynamics, including the dominance of Asian producers and the rise of automation, make it difficult for Africa to compete. However, 'China+1' diversification strategies have led some global apparel brands to source from Egypt and Ethiopia, and automobile companies like Nissan and Volkswagen to establish assembly in Ghana, Kenya, and Nigeria.

APA

Cilliers, J., & Ngundu, M. (2026). Reasons for Africa’s Under-Industrialisation. Institute for Security Studies. https://futures.issafrica.org/thematic/guide.pdf?thematic=07-manufacturing&topic=05-reasons-for-under-industrialisation

Chicago

Cilliers, Jakkie, and Marvellous Ngundu. Reasons for Africa’s Under-Industrialisation. Institute for Security Studies, 2026. https://futures.issafrica.org/thematic/guide.pdf?thematic=07-manufacturing&topic=05-reasons-for-under-industrialisation.

Wikipedia

{{cite report |last1=Cilliers |first1=Jakkie |last2=Ngundu |first2=Marvellous |title=Reasons for Africa’s Under-Industrialisation |publisher=Institute for Security Studies |date=29 March 2026 |url=https://futures.issafrica.org/thematic/guide.pdf?thematic=07-manufacturing&topic=05-reasons-for-under-industrialisation |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cilliers2026reasons, author = {Cilliers, Jakkie and Ngundu, Marvellous}, title = {{Reasons for Africa’s Under-Industrialisation}}, institution = {Institute for Security Studies}, year = {2026}, month = mar, url = {https://futures.issafrica.org/thematic/guide.pdf?thematic=07-manufacturing&topic=05-reasons-for-under-industrialisation}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }