Africa’s Manufacturing Crossroads: How Morocco Surged, South Africa Stalled, And What It Means for Industrial Futures

Africa’s industrial story in early 2026 paints a striking contrast: one nation accelerating toward global competitiveness, another struggling to keep its core manufacturing base alive. Nowhere is this more vivid than in the automotive sector, long seen as a litmus test of industrial strength. Morocco’s rise as Africa’s automotive powerhouse, and South Africa’s deepening manufacturing contraction, reveals a tale of strategic policy, global integration, and warning signals for the continent’s economic sovereignty.

From Industrial Leader to Battleground: South Africa’s Manufacturing Crisis

South Africa has historically been the anchor of African industrialisation, with manufacturing accounting for significant GDP contribution and employment. Yet as 2025 closed, the sector showed clear signs of strain. Recent data from the Absa Purchasing Managers’ Index (PMI) reveals the manufacturing sector slipped deeper into contraction, with the PMI falling to 40.5 in December, one of the weakest readings in years and firmly below the expansion threshold.

This contraction has roots in multiple pressures: weak domestic and export demand, inventory drawdowns, and a steep decline in new orders. Business activity across factories remained subdued throughout the latter half of 2025, highlighting structural fragilities that now threaten industrial momentum.

Compounding these internal challenges are external headwinds. U.S. tariffs imposed on South African exports have eroded traditional export markets, threatening tens of thousands of jobs in sectors such as automotive and agriculture. The automotive sector, a linchpin of manufacturing employment and export performance, has already seen closures of multiple firms and thousands of job losses, squeezed by imports, low localisation rates, and deteriorating global demand.

These trends are not isolated figures,  they reflect a deeper crisis of competitiveness. South Africa’s manufacturing output data and PMI histories tell a consistent story of contraction, highlighting urgent structural reform needs.

Morocco’s Strategic Industrial Ascent

In stark contrast, Morocco has engineered a manufacturing success story that Africa cannot ignore. Once a peripheral player in automotive production, Morocco now ranks as the continent’s largest car producer, with annual output exceeding 700,000 vehicles and projected to approach one million in 2025. What was once a modest assembly base is now a dynamic hub of global automotive investment.

This transformation did not occur by accident. Strategic government policies created free trade zones like Tangier Automotive City, linking Moroccan manufacturing directly into European value chains and drawing major players such as Renault, Stellantis, and international suppliers. Export-oriented manufacturing now accounts for a significant slice of industrial GDP, attracts sustained foreign direct investment, and supports an estimated 200,000 jobs.

A key pillar of Morocco’s competitiveness lies in policy coherence and infrastructure, ports, logistics, and tariff advantages that have lowered barriers to production and export. The €1.2 billion expansion of Stellantis’s Kénitra plant, designed to eventually double annual output and increase local sourcing rates, is a testament to this strategic design.

The rise of local initiatives such as Neo Motors, a Moroccan car brand producing domestically manufactured SUVs, further demonstrates how industrial policy combined with entrepreneurship can broaden the manufacturing base beyond multinational assembly.

Why Morocco Outpaced South Africa

The divergence between Morocco and South Africa is not simply quantitative, it is fundamentally structural. Morocco’s industrial success has been built on deliberate integration into regional and global markets, positioning its manufacturing sector as an export-oriented engine rather than a domestically confined industry. This outward-looking strategy has been supported by strong policy incentives and sustained infrastructure investment, particularly in carefully planned industrial clusters linked to ports and logistics corridors. As a result, Morocco has been able to deepen its value chains, moving beyond basic assembly into automotive components and increasingly into electric vehicle and advanced manufacturing segments.

South Africa’s industrial model, by contrast, has struggled to maintain competitiveness in an increasingly demanding global environment. Investment has been constrained by logistics bottlenecks and declining reliability in key infrastructure. High production and energy costs have further weakened the cost structure of local manufacturers, while policy uncertainty has made long-term planning difficult. Exposure to trade disruptions, including tariffs and shifting global trade rules, has added another layer of vulnerability. At the same time, low levels of local content in many manufacturing supply chains have limited the development of deep, resilient industrial ecosystems.

South Africa does, however, retain important strengths. It still has a relatively skilled workforce, long-standing industrial facilities, and institutional experience in manufacturing. Yet these advantages have been steadily eroded by years of competitive disadvantage and policy gaps that have discouraged investment and slowed productivity growth. Without structural reform and a renewed industrial strategy, these remaining strengths risk being further diluted in the face of more agile and better-positioned competitors like Morocco.

Beyond Automobiles: A Broader Industrial Implication

The automotive comparison is a powerful lens, but the story replicates across other industrial sectors. South Africa’s broader manufacturing PMI contraction mirrors weakness in metal fabrication, chemicals, and consumer goods, all reflective of constrained demand and cost pressures. Morocco’s gains in automotive suggest a model for integrated industrial clusters that leverage comparative advantage and connectivity.

African manufacturing cannot thrive in silos. Continental initiatives like the African Continental Free Trade Area (AfCFTA) offer frameworks for cross-border value chain development, but national strategies must align with these to unlock scale, competitiveness, and resilience.

What This Means for Africa’s Industrial Future

Morocco’s ascent and South Africa’s contraction are not just national stories, they are continental signals. They reveal what manufacturing success looks like in the 21st century: adaptability, export-orientation, policy clarity, and integration into global value chains.

For African policymakers, investors, and industrial strategists, the imperative is clear: building robust, diversified, and competitive industrial ecosystems requires forward-looking policy, infrastructure investment, and strategic global partnerships. Without these, historical manufacturing champions risk ceding ground to more agile regional competitors.

As Africa seeks economic sovereignty, the comparison between South Africa and Morocco isn’t just about production statistics,  it is about vision, execution, and the future of industrial Africa.