Africa Attracting More Low-Cost Manufacturers, Corruption Threatens – IDC

The amount of investment flowing into African countries and the number of global brands investing in Africa has risen sharply in recent years, according to the latest analysis from IDC Manufacturing Insights.

For many low-cost manufacturers, the future lies in undeveloped regions such as Africa.

These manufacturers will encounter various issues and risks along the way, but many proven, profitable examples exist of successful manufacturing investments in African countries.

The inherent proposition of the low-cost manufacturing model is forcing many global manufacturers to re-align their strategies and constantly seek new, low-cost manufacturing opportunities in emerging economies. Some traditional hubs for low-cost labor (e.g., China, Taiwan, India, and Malaysia) have seen a gradual increase in their labor costs as they successfully move up the value chain in their quest to meet higher quality standards.

"Some major manufacturing brands like H&M, Coca-Cola, GE, Pepsi, Nestle, and Renault have managed to leverage opportunities in Africa," says Martin Kuban, IDC Manufacturing Insights' lead research analyst for Central and Eastern Europe, the Middle East, and Africa (CEMA). "Africa has also seen a massive increase in foreign direct investment (FDI) from China in recent years, which means even Chinese manufacturing companies are keen on tapping into low-cost options."