The Hidden Tax on African Manufacturing: Why Logistics and Borders Decide Who Competes

Africa’s manufacturing challenge is often framed in terms of industrial policy, access to finance, and infrastructure gaps. While these factors matter, a less visible but equally decisive constraint continues to undermine competitiveness across the continent: logistics inefficiency and border friction. For manufacturers, logistics are not a peripheral concern. They shape costs, cash flows, and ultimately the viability of industrial investment.

In practice, the difference between a competitive and an uncompetitive manufacturer in Africa is often measured not in productivity alone, but in days lost at ports, hours delayed at borders, and working capital trapped in transit. These delays impose a hidden tax on manufacturing, one that erodes margins, weakens balance sheets, and discourages scale long before firms reach export competitiveness.

Manufacturing Does Not Stop at the Factory Gate

Across Africa, manufacturing performance is frequently assessed within factory walls: output levels, labour productivity, and cost structures. Yet for manufacturers operating on the continent, production is only one part of the equation. The movement of inputs into factories and finished goods to markets is just as critical.

In South Africa, for example, manufacturers are increasingly constrained by congestion at the Port of Durban. Extended vessel waiting times and backlogs have lengthened lead times for both imported inputs and exports, forcing manufacturers to hold higher inventory buffers and absorb additional financing costs. For automotive and components manufacturers operating on just-in-time models, port inefficiencies directly translate into production disruptions and delayed cash inflows.

Similarly, manufacturers in Kenya serving regional markets through the Northern Corridor face unpredictable transit times when moving goods to and from Uganda, Rwanda, and the Democratic Republic of Congo. While road infrastructure has improved, border delays and procedural inconsistencies continue to undermine reliability. For firms supplying time-sensitive goods, these uncertainties limit their ability to commit to regional customers.

In both cases, logistics performance outside the factory gate becomes a binding constraint on industrial competitiveness.

Logistics Delays Are Financial Constraints in Disguise

Logistics inefficiencies are often discussed as infrastructure or trade facilitation challenges. In reality, they are financial constraints.

When goods are delayed at ports or borders, cash is locked up in inventory and receivables. Manufacturers experience longer cash-conversion cycles, tighter liquidity, and greater reliance on short-term borrowing. In countries such as Nigeria, manufacturers importing machinery or intermediate inputs through congested ports must often finance extended clearance periods, increasing interest costs and foreign-exchange exposure.

From a lender’s perspective, these dynamics increase risk. Longer working-capital cycles weaken debt service capacity and raise the likelihood of covenant stress. What is often labelled as “manufacturing sector risk” is, in many cases, logistics-induced cash-flow risk. Ignoring this link leads to mispricing of credit and underestimation of systemic constraints.

Borders as Bottlenecks to Regional Scale

Borders remain one of the most significant obstacles to regional manufacturing integration in Africa. Despite AfCFTA’s ambitions, the lived experience of cross-border trade for manufacturers remains challenging.

Along the Zambia-DRC corridor, for instance, manufacturers and suppliers serving the Copperbelt regularly face delays due to congestion, inspections, and documentation requirements. While the corridor is critical for mining inputs, machinery, and manufactured goods, inefficiencies raise transport costs and undermine reliability for firms attempting to operate regionally.

In West Africa, manufacturers moving goods between Ghana, Côte d’Ivoire, and Nigeria encounter varying customs procedures, checkpoints, and enforcement practices. These frictions fragment what should be a natural regional market and discourage firms from building production strategies around cross-border demand.

As a result, many manufacturers default to serving domestic markets, not because regional opportunities are absent, but because borders remain too costly and unpredictable.

Why AfCFTA Has Not Yet Transformed Manufacturing

AfCFTA has created a framework for tariff reduction, but tariffs were never the main barrier to African manufacturing integration. Time, cost, and uncertainty at borders remain the binding constraints.

Without parallel improvements in port efficiency, corridor infrastructure, customs digitisation, and inter-agency coordination, tariff liberalisation alone cannot unlock industrial scale. Manufacturers still face delays that undermine regional sourcing, distribution, and production planning.

For AfCFTA to meaningfully support manufacturing, it must be operationalised through efficient corridors, harmonised procedures, and predictable border processes. Until then, its impact on industrial competitiveness will remain uneven and limited.

The Role of Finance in Addressing the Logistics Constraint

Finance plays a critical but often underdeveloped role in addressing logistics-related manufacturing risk.

Banks and DFIs typically assess manufacturers at the firm level, treating logistics conditions as external risks rather than system-wide constraints. A more strategic approach would recognise logistics as a shared risk environment requiring tailored financial solutions.

In practice, this could include working-capital facilities structured around longer transit times, supply-chain finance that supports firms across borders, and investment financing for logistics infrastructure linked to industrial zones and corridors. In countries such as Ethiopia, where industrial parks like Bole Lemi are designed to cluster manufacturers, the integration of financing with logistics and customs processes has proven critical to improving export performance.

By aligning financial products with logistics realities, financiers can reduce risk rather than simply price it.

Logistics as a Test of Industrial Seriousness

Ultimately, logistics and border efficiency are a test of how serious African economies are about industrialisation. Manufacturing cannot thrive where goods move slowly, unpredictably, and at high cost.

The question is no longer whether Africa should industrialise, but whether it is willing to address the unglamorous systems, ports, borders, corridors, and procedures that determine who competes and who falls behind. Until logistics reform is treated as a core component of industrial policy, Africa’s manufacturers will continue to face a hidden tax that undermines scale, competitiveness, and investment.

Industrialisation is not decided by declarations alone. It is decided at ports, along corridors, and at borders, where time, cost, and coordination either enable factories to compete or quietly hold them back.

Author

Sinethemba Mazibuko

Development Analyst | Industrialisation & Trade