PAMA Warns: African Currency Stability Masks Deep Cost Mismatch for Manufacturers

The Pan-African Manufacturers Association (PAMA) has cautioned that recent stability in some African currencies, including Nigeria’s naira and Kenya’s shilling, does not signal a lasting economic recovery. In its April 2026 News Bulletin, the association warned that a fundamental mismatch between local-currency revenues and dollar, euro, and renminbi-priced inputs remains a major problem for manufacturers.

PAMA stated that while perceptions of currency strength may suggest macroeconomic improvement, geopolitical risks and shifts in global liquidity continue to create vulnerabilities. The association said factors like shifting US monetary policy and commodity price fluctuations are driving the current relative calm, not genuine economic reforms.

In contrast, countries like Ghana face persistent pressure on their currencies, and many others still struggle with foreign exchange shortages. PAMA explained that African industries operate under a complex cost structure involving multiple currencies for various commodities, creating a mismatch between domestic revenues and multi-currency costs.

Geopolitical Risks and Energy Market Volatility

The bulletin highlighted renewed geopolitical risk in the Middle East, which has reignited volatility in global energy markets. Fluctuations in oil prices remain acutely sensitive to conflict risks and supply uncertainties, with immediate consequences for African economies. Oil-exporting nations may see surging prices boost foreign exchange earnings and strengthen local currencies. But oil-importing countries often bear the brunt, facing rising energy costs that worsen trade balances and fuel inflation, adding pressure to already stretched economies.

Imported Inputs Keep Production Costs Vulnerable

PAMA noted that across much of Africa, reliance on imported raw materials, machinery, spare parts, chemicals, packaging inputs, and advanced industrial technologies makes exchange rate movements a direct threat to production costs. The association warned that while the current relative currency stability may appear promising, it should be viewed as a temporary operational window rather than a sign of enduring stability.

Future economic conditions, PAMA said, will depend less on prevailing exchange rates and more on the interplay of global financial situations, energy markets, and the trajectory of domestic reforms. Manufacturers remain heavily exposed, and any shift in currency values could quickly reverse recent gains.