The tightening of steel trade policies in advanced economies poses a significant threat to Africa’s industrial ambitions, warns the Pan-African Manufacturers Association (PAMA).
In a recent report, PAMA said that the EU and UK’s decision to reduce tariff-free steel import quotas will likely divert cheap steel exports to Africa, exacerbating the continent’s existing steel overcapacity issues.
The report explained that global excess steelmaking capacity is expected to exceed 720 million tonnes by 2027, which illustrates the widening gap between the world’s ability to produce steel and its capacity to absorb it commercially.
The report stressed that as major importing economies tighten market access, displaced exports are more likely to seek alternative destinations.
It stated that Africa’s steel market could face growing exposure to the diverted global exports.
Although the report noted that lower-priced imported steel may temporarily reduce production costs for downstream industries—including construction, engineering, machinery manufacturing and metal fabrication- longer-term consequences deserve careful attention.
“Persistent inflows of underpriced imports can weaken domestic steel producers, reduce capacity utilisation, discourage investment in modern production facilities and delay the emergence of internationally competitive regional steel value chains.”
PAMA urged policymakers to take immediate action to protect the continent’s steel industry, citing the risk that underpriced imports would weaken domestic producers.
“A competitive domestic steel sector is crucial for Africa’s industrial development.” “We cannot afford to let cheap imports undermine our efforts to build a robust manufacturing sector.”
According to the report, the implications of global steel overcapacity extend beyond the African steel industry.
The report explained that steel is a strategic industrial input that supports infrastructure development, transport equipment, energy systems, and capital goods manufacturing.
“A competitive domestic steel sector, therefore, plays a central role in broadening industrial capabilities, strengthening supply-chain resilience and increasing local value addition across the manufacturing economy.”
“The latest measures adopted in Europe and the United Kingdom reinforce a more forceful, visible shift in global industrial policy.”
The report noted that governments are relying less on the assumption that markets alone will determine industrial outcomes. It stated that instead, they are making greater use of safeguard measures, anti-dumping investigations and other trade-remedy instruments to preserve productive capacity in strategically important industries.
“Industrial competitiveness is rapidly being shaped by deliberate policy choices as much as by comparative advantage.”
“For African policymakers, this presents both a warning and an opportunity,” the report warned. It noted that a weakened steel sector could have far-reaching consequences for Africa’s economic growth.
The shift in global industrial policy requires African policymakers to be proactive, PAMA advised. “We need to strengthen our trade monitoring and use WTO-consistent trade-remedy instruments to protect our markets.”
The AfCFTA presents an opportunity for Africa to strengthen regional steel value chains, it said. By expanding intra-African sourcing and creating a larger integrated market, Africa can support globally competitive steel production and reduce its reliance on imports, the report added.
However, to achieve this goal, the report stated that it will require careful planning and coordination. “We need to invest in modern production facilities and develop our industrial capabilities to compete with global players.”
“African manufacturers must monitor international industrial policy to stay competitive.” “The global steel market is constantly evolving, and we need to stay ahead of the curve to succeed.”
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