US-China trade tensions will fuel foreign investment inflows in Africa – PAMA 

This is contained in the January 2025 edition of the Association’s monthly bulletin.

The two biggest economies in the world are involved in a trade war characterised by the imposition of tariffs and counter-tariffs on one another.

Days into in inauguration as U.S. President, Donald Trump imposed a 10% tariff on all Chinese imports into the U.S. This is in addition to a 10% tariff earlier imposed on China by former President Joe Biden.

China responded with counter-tariffs including a 15% additional duty on imports of US coal, coke, and liquified natural gas, and a 10% additional duty on imports of US crude oil, agricultural machinery, large-displacement vehicles, and pickup trucks, among others.

PAMA projects that the tension between both economic giants as well as other economic disputes in the West will make Africa’s manufacturing and automotive sectors attractive to foreign investors.

“While Africa will remain among the least exposed to the emergence of the protectionism wave in US international trade policy, we strongly expect the US-China trade tensions to fuel foreign investment inflows in Africa, with a focus on automotive, textiles, and electronics manufacturing,” PAMA noted.

It also noted that Africa’s manufacturing sector will grow by 4% in 2025, noting that the continent’s economic climate is improving.

“FDI inflows into Africa’s manufacturing sector are projected to grow modestly by around 4% in 2025, as global investors seek opportunities amid improving economic conditions and the potential spillover effect of the trade shift in the West towards Africa. 

“However, the geopolitical landscape and ongoing conflicts will still pose risks that could deter potential investors to key sectors of interest,”  

The association has advised improved trade collaboration among African countries and the implementation of the Africa Continental Free Trade Act (AfCFTA).

It stressed that such collaboration in addition to innovations and bold adaptations are required to boost the performance of the manufacturing sector.

“There are signs of performance improvement and better strategic opportunities for Africa’s manufacturing sector in 2025, supported by growing investment in local production, deeper regional market integration through tighter implementation of initiatives like the AfCFTA, and broader adoption of human-machine collaboration. 

“However, key risks remain as some persistent challenges from 2024 are expected to linger amid rising new hurdles like stricter sustainability regulations and escalating costs buoyed by factors including freight rate spikes, requiring bold innovation and strategic adaptation, and collaborative efforts to sustain growth and build resilience,” the report states. 

How governments can strengthen regional integration and attract foreign direct investments (FDIs)

PAMA advised African governments to strengthen regional integration and attract foreign direct investments by doing the following:

PAMA advised African governments to strengthen regional integration and attract foreign direct investments by doing the following: