Global Crisis, Local Pain: MAN Sounds Alarm on Manufacturing Sector

Speaking against the backdrop of rising global uncertainty, Ajayi-Kadiri described the crisis as a “distant conflict with immediate local consequences,” stressing that Nigerian manufacturers are already feeling the pressure from surging energy costs, supply chain disruptions, and foreign exchange volatility.
A Recovery at Risk
According to MAN, Nigeria’s manufacturing sector had only just begun to regain momentum, with inflation easing to 15.10% and capacity utilization climbing above 60%. However, Ajayi-Kadiri warned that the current geopolitical shock threatens to reverse these gains.
“Manufacturers operate within a global ecosystem,” he said. “What happens in the Middle East does not stay there. It travels through oil prices, shipping routes, and currency markets, eventually landing on our factory floors.”
The ongoing disruptions in strategic corridors such as the Strait of Hormuz and the Red Sea have pushed Brent crude prices above $84.50 per barrel, while freight costs and war-risk insurance premiums continue to surge.
The Oil Paradox and Nigeria’s Vulnerability
Ajayi-Kadiri pointed to what he described as Nigeria’s “oil paradox”—a situation where rising global crude prices should ordinarily benefit the economy but instead expose structural weaknesses.
With oil production still hovering between 1.3 and 1.4 million barrels per day, Nigeria is unable to fully capitalize on higher prices. Instead, the country faces increased costs of production, inflationary pressures, and renewed strain on the naira.
“We are earning more per barrel in theory, but producing less in reality. That gap is where the pain lies for manufacturers,” he noted.
Trade Disruptions and FX Pressures
The MAN DG further highlighted the risks to Nigeria’s trade relations, particularly with the United States, a key export destination. Rising logistics costs, delayed shipments, and supply chain bottlenecks are expected to increase the cost of imported raw materials.
At the same time, global investors’ flight to safety has strengthened the US dollar, adding pressure on the naira and complicating access to foreign exchange for manufacturers.
“The combination of higher input costs and weaker consumer purchasing power creates a perfect storm for our sector,” Ajayi-Kadiri warned.
Sectoral Pressure Points
Providing deeper insight, Ajayi-Kadiri identified the most vulnerable segments within the manufacturing ecosystem:
Chemical and Pharmaceutical Sector: Highly dependent on petrochemical inputs, this segment faces immediate cost escalation risks, potentially undermining its export competitiveness.
Basic Metals, Iron and Steel: With operations heavily reliant on energy, rising diesel and gas prices could significantly inflate production costs.
Food, Beverage, and Tobacco: Increased costs of imported raw materials and logistics are likely to translate into higher food prices, worsening inflationary pressures on households.
He stressed that manufacturers are now caught between escalating production costs and declining consumer demand, a scenario that could stall growth projections for the sector.
Lessons from History
Ajayi-Kadiri also drew parallels with the economic fallout of the US-Iraq War, recalling how Nigeria’s manufacturing sector experienced a sharp downturn.
“History reminds us that external shocks, if not managed properly, can wipe out years of progress,” he said, citing declines in manufacturing exports and GDP contribution during that period.
Urgent Policy Actions Needed
In response, MAN is calling for swift and decisive government intervention to shield the sector from the worst impacts of the crisis.
Ajayi-Kadiri outlined key measures, including:
Accelerating the transition to Compressed Natural Gas (CNG) to reduce reliance on diesel
Creating a dedicated foreign exchange window for manufacturers
Prioritizing the domestic supply of refined petroleum products to local industries
Implementing a temporary suspension of multiple taxes and levies on logistics and transportation
“These are not optional measures; they are urgent necessities if we are to prevent factory closures and job losses,” he emphasized.
A Defining Moment for Industrial Policy
Ajayi-Kadiri concluded that the unfolding geopolitical crisis should serve as a wake-up call for Nigeria to strengthen its industrial base and reduce dependence on imported inputs.
“We cannot control global conflicts, but we can control how prepared we are,” he said. “This is a defining moment for Nigeria’s manufacturing sector. We must choose resilience over vulnerability.”
As global tensions persist, stakeholders warn that Nigeria’s response in the coming months will determine whether its manufacturing sector weathers the storm—or succumbs to it.
MAN DG Segun Ajayi-Kadiri warns that the Middle East crisis could disrupt Nigeria’s manufacturing sector, citing rising energy costs, FX pressure, and supply chain challenges.
He highlights risks of the US-Israel-Iran conflict on Nigeria’s manufacturing sector, warning of rising costs, trade disruptions, and an urgent need for policy action.