A new report from the Milken Institute argues that artificial intelligence and targeted manufacturing innovation are essential to unlocking Africa’s industrial transformation, with the continent on track to represent a quarter of the world’s population and $16 trillion in business and consumer spending by 2050 — but at risk of continuing to lag in production capacity unless urgent action is taken.
Released in April, the report titled “Next-Gen Industry: A Prize in Scalable AI and Manufacturing Innovation” was authored by Terry Mulligan, Emily Musil and Adoma Addo. It provides a detailed analysis of Africa’s manufacturing landscape, the structural constraints holding back industrial growth, the role of Industry 4.0 technologies in raising productivity, and the design of the Milken-Motsepe Innovation Prize Program supporting scalable, market-ready solutions.
The scale of the opportunity is significant. African manufacturing accounts for just 10% of continental gross domestic product and 2% of global manufacturing value added, despite the continent’s rapidly growing population and consumer market. Africa needs to create approximately 18 million new jobs annually through 2035 to match its population growth, and the report identifies manufacturing as a critical lever — with each new manufacturing job in Africa supporting roughly 8 to 20 additional jobs across logistics, services and local commerce.
Persistent productivity challenges underscore the urgency. African factories generate $7,608 of value added per worker, compared to $30,292 in East Asia and the Pacific. Sub-Saharan African manufacturers experience approximately 14 hours of power outages each month and lose around 5% of total annual sales to electrical outages. In Ethiopia, postharvest agricultural losses range from 15% to 45%, while fabric scraps account for 28.6% of all cut-and-sew waste in the country’s garment sector.
The report identifies AI as a practical solution to these bottlenecks. Predictive maintenance can reduce maintenance costs by up to 30%, AI-powered computer vision can achieve 99% defect-detection accuracy compared to 85% for manual inspection, and energy savings of 8% in light industry are projected to be achievable by 2035. Real-world examples include Twiga Foods in Kenya, which has used AI-driven demand forecasting to reduce postharvest losses from 30% to 4%.
A key argument in the report is that Africa can leapfrog through low-cost, edge-based AI systems that operate directly on shop-floor devices with limited internet connectivity, keeping data local and resilient during power gaps. The report says this approach is particularly suited to Africa’s younger industrial base, where recently upgraded plants can adopt advanced systems without legacy constraints.
The policy environment is increasingly aligned with this opportunity. The number of African nations with official AI or digital industry strategies has grown from zero in 2018 to 17, with others in development. The African Continental Free Trade Area’s Digital Trade Protocol is establishing continent-wide standards for data flows, e-signatures and cybersecurity, while more than 220 special economic and industrial parks now exist across 47 of Africa’s 54 countries.
Despite this momentum, capital remains a constraint. In 2024, finance attracted 59% of African venture capital dollars, while industrial start-ups continue to struggle to prove their technology on real production lines. The report describes this as an innovation gap: manufacturers need practical AI in their plants, while builders need places to prove it.
The Milken-Motsepe Innovation Prize Program — a partnership between the Milken Institute and the Motsepe Foundation — is positioned in the report as a tool to bridge this gap. The latest prize cycle, focused on AI and manufacturing, will distribute $2 million in unrestricted, non-dilutive capital across semifinalists, finalists and grand prize winners, with the grand prize winner set to receive $1 million when awarded in May 2026.
Ten semifinalists have already been named, including South Africa-based DataProphet and GreenBDG Africa, Cameroon-based BleagLee, Tanzania-based Freshpack Technologies, Egypt-based INDOS, and Rwanda-based Toto Safi, alongside companies based in the UK, India, the UAE and the United States. The judging panel includes Cisco Senior Vice President Guy Diedrich, McKinsey Global Institute Director Kweilin Ellingrud, Africa AI leader John Kamara, IBM Chief Sustainability Officer Christina Shim, Cisco’s Francine Katsoudas and former U.S. Ambassador to Kenya Meg Whitman.
The report frames AI-driven manufacturing as a growth driver aligned with the African Continental Free Trade Area and integrated continental value chains. It calls for urgent policy, investment and private-sector collaboration to ensure Africa captures more of the value from its own growth trajectory rather than seeing that value created elsewhere.
Read the full report below
