Manufacturers have expressed a cautiously optimistic outlook for the second half (H1) despite persistent energy, financing and logistics challenges, the latest Industry Pulse Survey by the Pan African Manufacturers Association (PAMA) said.

Presenting their findings, the association’s Secretary-General, Segun Ajayi-Kadir, said the survey, which captured responses from over 100 manufacturers across the continent, showed operators are becoming increasingly resilient through operational efficiency, supplier diversification and expansion into regional markets under the African Continental Free Trade Area (AfCFTA).

He noted that while manufacturers expect business conditions to improve over the next three months, structural constraints, particularly access to affordable long-term finance and reliable electricity, continue to hinder industrial growth.

“The survey reveals a manufacturing sector that remains resilient despite significant headwinds. Companies are adapting through innovation, digitalisation and regional market expansion, but sustainable industrial growth will require decisive policy action to address longstanding structural challenges,” he said.

He said energy and power reliability remained the biggest operational challenge facing manufacturers. High electricity tariffs, unreliable public power supply and continued reliance on expensive diesel-powered self-generation continue to erode profitability across the continent, he said.

The second major challenge identified was high cost of capital, with elevated interest rates across many African economies limiting access to affordable credit for working capital, investment and expansion.

Cross-border logistics also ranked among the top constraints despite growing regional trade opportunities under AfCFTA.

It said manufacturers cited customs delays, non-harmonised regulations and transport bottlenecks as major factors increasing the cost and complexity of doing business across African borders.

The survey’s business outlook indicators pointed to gradual improvements over the next quarter.

Ajayi-Kadir explained that manufacturers attributed their improved outlook to stabilising supply chains, expanding regional trade opportunities under AfCFTA and moderating global energy prices.

“Businesses are increasingly shifting away from survival strategies towards productivity-led growth. Investment in automation, digital technologies and regional value chains is becoming central to Africa’s industrial transformation,” he said.

He urged governments to prioritise industrial competitiveness by improving electricity supply, strengthening transport infrastructure and implementing predictable industrial policies that encourage long-term investment.

He also called on development finance institutions (DFIs) to expand access to affordable long-term local currency financing, particularly for manufacturers investing in modernisation, while urging AfCFTA institutions to accelerate customs reforms, harmonise standards, digitise trade documentation and improve border efficiency.

He added that stronger collaboration between governments, manufacturers’ associations and development partners would be critical to unlocking Africa’s manufacturing potential.

“The findings demonstrate that African manufacturing is not standing still. Despite extremely difficult operating conditions, manufacturers are building resilience, embracing innovation and positioning themselves for greater participation in regional value chains. With the right policy environment and improved access to finance and energy, the sector can become a far more powerful engine of economic growth, industrialisation and job creation across the continent,” he said.