The Pan-African Manufacturers Association (PAMA) predicts that the ongoing trade war between the United States and China will drive increased foreign direct investment (FDI) inflows into Africa, particularly in the automotive, textiles, and electronics manufacturing sectors.
This insight comes from the January 2025 edition of PAMA's monthly bulletin, which highlights shifts in global trade dynamics due to rising protectionism policies in the West.
US-China Trade War: A Catalyst for African Industrial Growth
Following his inauguration, U.S. President Donald Trump imposed an additional 10% tariff on all Chinese imports, in addition to a previous 10% tariff introduced under former President Joe Biden.
China retaliated with counter-tariffs, including:
15% additional duties on U.S. coal, coke, and liquefied natural gas (LNG).
10% additional duties on U.S. crude oil, agricultural machinery, large-displacement vehicles, and pickup trucks.
Africa's Rising Appeal for Global Investors
PAMA projects that Africa will be among the least exposed regions to the economic effects of Western protectionism, positioning the continent as an attractive destination for global investors seeking new opportunities.
"We strongly expect the US-China trade tensions to fuel foreign investment inflows into Africa, with a focus on automotive, textiles, and electronics manufacturing," PAMA stated.
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The association also forecasts that Africa's manufacturing sector will grow by 4% in 2025, driven by economic diversification, local production expansion, and deeper regional market integration.
Strengthening Regional Integration for Sustainable Growth
To maximize investment opportunities, PAMA has urged African governments to:
Enhance cross-border trade by removing non-tariff barriers and harmonizing trade regulations.
Invest in digital technologies, automation, and AI-driven production to enhance manufacturing competitiveness.
Improve transportation and energy infrastructure to support industrial growth.
Provide tax incentives and political risk guarantees to attract global investors.
Diversify trade routes and scale up regional air freight and rail networks to reduce reliance on high-risk sea routes.
PAMA also emphasized the need for AfCFTA (African Continental Free Trade Agreement) implementation, as well as strategic innovations and sustainability-focused policies, to strengthen Africa's industrial resilience amid evolving global economic conditions.
With these strategic measures, Africa is poised to become a key destination for foreign investors, leveraging global trade shifts to bolster its manufacturing capabilities and economic transformation.
