Africa PMI Rises in Q1 2026 as Inflation Threatens Recovery

By Jennete Ugo Anya

Private sector activity across Africa expanded in the first quarter of 2026, with six of eight tracked economies recording Purchasing Managers’ Index (PMI) readings above 50, signalling growth. This marks a gradual improvement from five expansions in Q1 2025 and three in Q1 2024, despite rising geopolitical tensions linked to the United States–Israel–Iran conflict.

DECISION HIGHLIGHT
Firms across multiple markets increased output, hiring, and inventory accumulation, indicating forward positioning for demand—despite escalating input costs and supply disruptions.

DECISION MEMO
The latest PMI data presents a dual-speed African recovery: demand-led expansion in select economies coexists with cost-induced contraction elsewhere. Uganda’s performance illustrates a domestically anchored growth model, where consumer demand and macro stability offset external shocks. In contrast, Egypt’s contraction reflects vulnerability to imported inflation and geopolitical spillovers.

Christopher Legilisho, economist at Stanbic Bank, noted: “Firms reported expansions in output, new orders and employment, implying broad-based growth driven by robust client purchasing power.” Yet this expansion is not efficiency-led; it is cost-pass-through driven, as firms raise prices to protect margins.

South Africa’s lagging performance underscores structural drag. David Owen, senior economist at S&P Global Market Intelligence, observed: “The downturn intensified… as customers reacted to higher prices and broader economic headwinds.” This highlights weakening demand elasticity under inflationary pressure.

The broader signal is that Africa’s recovery is not synchronised. Expansion is occurring, but its quality is uneven—tilted toward consumption resilience rather than productivity or export strength.

DATA BOX

• 6/8 economies in expansion (Q1 2026) vs 5 (Q1 2025), 3 (Q1 2024)
• Uganda PMI: 53.8 (Q1 2026), strongest performer
• Egypt PMI: 48.9, weakest; lowest in ~2 years (March)
• Ghana PMI: 49.7, flat year-on-year
• South Africa PMI (2025 avg): 49.3 (down from 50.0 in 2024)
• Uganda inflation: 2.8% (March 2026)
• South Africa repo rate: 6.75% after easing
• Key pressures: energy costs, raw materials, logistics disruptions

WHO WINS / WHO LOSES

• Winners: Demand-driven economies (Uganda, partially Nigeria) with stronger domestic consumption buffers
• Losers: Import-dependent and externally exposed economies (Egypt, Ghana), and structurally constrained markets (South Africa)

POLICY SIGNALS

• Monetary easing remains selective; inflation pass-through complicates rate paths
• Domestic demand support policies gain prominence over export-led strategies
• Structural reforms remain critical in lagging economies to address demand fragility

INVESTOR SIGNAL

• Short-term opportunities in consumption-led sectors in high-PMI markets
• Caution on cost-sensitive industries exposed to imported inflation
• Divergence across markets increases importance of country-specific allocation

RISK RADAR

• Geopolitical spillovers into energy and supply chains
• Inflation persistence despite easing headline rates
• Weak external demand constraining export recovery
• Structural bottlenecks (logistics, policy inertia) limiting sustained expansion