The Manufacturers Association of Nigeria (MAN) has raised urgent concerns over the potential impact of the escalating US-Iran-Israel military confrontation on Nigeria’s manufacturing sector. The association warns that rising energy costs, disrupted supply chains, and imported inflation could severely undermine local industrial growth.Speaking to the media, Segun Ajayi-Kadiri, Director-General of MAN, emphasized the immediacy of the threat:
“While this conflict unfolds thousands of miles away, its economic repercussions are landing directly on Nigerian factory floors. Manufacturers are already grappling with rising fuel costs, supply chain delays, and volatile raw material prices. Without immediate interventions, the sector risks retracing the painful setbacks of the early 2000s.”
Geopolitical Shockwaves and Domestic Implications
The intensifying hostilities in the Middle East have sent global oil markets and shipping lanes into turbulence. Disruptions at the Strait of Hormuz, a key oil transit chokepoint, have pushed Brent crude above $84.50 per barrel. Shipping insurance premiums have skyrocketed, while vessels reroute to avoid conflict zones, adding delays and cost to trade.
MAN warns that these global developments translate into direct challenges for Nigerian manufacturers. Energy-intensive industries face rising domestic diesel and gas prices, while prolonged shipping times inflate the cost of imported raw materials.
Celestine Ukpong, economist, added context to the potential economic impact:
“The global flight to safe-haven assets has strengthened the US dollar, putting renewed pressure on the Naira. Manufacturers importing critical raw materials will face higher costs, squeezing margins and threatening the affordability of consumer goods.”
Sectoral Risks
MAN has highlighted sectors that are particularly vulnerable:
Chemical and Pharmaceuticals: Chemicals accounted for 88% of Nigerian manufactured exports to the US in 2023. Volatility in oil markets threatens the cost of Active Pharmaceutical Ingredients (APIs) and chemical raw materials.
Basic Metal, Iron, and Steel: Highly energy-dependent, this sector risks unsustainable operational costs if fuel prices surge domestically.
Food, Beverage, and Tobacco: Reliant on imported grains and packaging materials, this sector is especially exposed to imported inflation, which could impact pricing for consumers.
Dr. Ejike Nduilo, PR specialist, stressed the importance of stakeholder communication:
“Manufacturers must communicate transparently with investors, suppliers, and customers to manage expectations and maintain confidence during external shocks.”
Peter Adebayo FCA, financial expert, added:
“Firms need to review cash flow forecasts, hedge against currency and energy volatility, and adjust financial plans proactively. Failure to do so could risk solvency if costs continue to rise.”
Historical Lessons
MAN drew lessons from the US-Iraq War, noting severe setbacks for Nigerian manufacturing:
Total manufacturing exports fell from $901.35 million in 2002 to $496.87 million in 2003.
Manufacturing GDP growth contracted from 17.74% to -10.8%.
Contribution to GDP dropped from 11.68% to 9.7% in a single year.
These historical trends highlight Nigeria’s vulnerability to global shocks and the need for urgent policy intervention.
Recommendations for Government Action
To safeguard Nigerian manufacturers, MAN, under the leadership of DG Ajayi-Kadiri, recommends:
Fast-Track Energy Transition: Accelerate and subsidize the Presidential Compressed Natural Gas (CNG) initiative for manufacturing hubs and logistics to reduce reliance on imported diesel.
Guaranteed FX for Critical Inputs: Establish a dedicated FX window for essential raw materials and machinery to insulate manufacturers from currency volatility.
Domesticate Petroleum Supply Chains: Ensure domestic refineries prioritize supplying fuels and petrochemicals to local industries at discounted, non-import-parity rates.
Suspend Logistics & Haulage Levies: Implement a six-month moratorium on highway levies, haulage taxes, and multiple transit tolls to reduce costs on goods distribution.
Ajayi-Kadiri concluded:
“We cannot control the geopolitics of the Gulf, but we can fortify our domestic manufacturing base. The time for proactive measures is now. Failure to act risks repeating the industrial setbacks of the past while leaving consumers to bear the brunt of imported inflation.”
MAN’s call comes as the Nigerian manufacturing sector seeks stability and resilience amid an increasingly volatile global environment.
The Manufacturers Association of Nigeria (MAN), led by DG Segun Ajayi-Kadiri, warns that the US-Iran-Israel conflict could raise energy costs, disrupt supply chains, and drive imported inflation, threatening Nigerian manufacturing.
MAN warns Nigerian manufacturing faces severe risks from the US-Iran-Israel conflict. DG Segun Ajayi-Kadiri urges urgent energy, FX, and policy interventions to protect factories and stabilize production.
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