he Manufacturers Association of Nigeria (MAN) has expressed deep concern over the escalating military confrontation involving the United States, Israel, and Iran, warning that the geopolitical crisis poses significant risks to Nigeria’s manufacturing sector and the broader economy.
As the umbrella body representing domestic wealth creators, MAN stated that while the conflict is unfolding far from Nigeria’s shores, its economic consequences are already reverberating through global energy markets, shipping routes and supply chains placing Nigerian manufacturers in a precarious position.
The Association noted that the crisis comes at a delicate time for Nigeria’s economy. With annual inflation recently easing to 15.10% and manufacturing capacity utilisation climbing above 60%, the sector had begun to show signs of gradual recovery. However, rising global oil prices, freight disruptions and heightened currency volatility now threaten to reverse these hard-earned gains.
Global Shockwaves, Local Consequences
The intensification of hostilities in the Middle East has disrupted the global energy and logistics landscape, particularly around the Strait of Hormuz. Brent crude prices have surged past $84 per barrel, while freight forwarding charges and war-risk insurance premiums have escalated sharply.
For Nigerian manufacturers, this translates directly into higher production costs. “Global geopolitics is no longer a distant spectacle; it is a direct tax on the cost of domestic production,” MAN stated.
Although higher oil prices could theoretically strengthen Nigeria’s fiscal position and foreign exchange reserves, the Association highlighted a macroeconomic paradox: with crude production still hovering between 1.3 and 1.4 million barrels per day due to structural constraints, Nigeria captures price gains without fully benefiting from volume gains.
The United States remains one of Nigeria’s most important trading partners. In 2024, Nigeria’s exports to the US stood at $5.91 billion (9.3% of total exports), while imports totaled $4.33 billion. MAN warned that the ongoing conflict threatens this bilateral trade flow through increased freight costs, longer lead times for imported raw materials and renewed depreciation pressure on the Naira.
Severe Implications for Manufacturers
MAN outlined three major threats confronting the sector as: Energy Cost Escalation: Rising global oil prices are driving up domestic gas and diesel costs, severely squeezing operating margins.
Imported Inflation & Freight Costs: Higher shipping charges and extended transit times are making raw material procurement increasingly expensive.
Demand Destruction: Escalating production costs will inevitably translate into higher prices for essential goods, weakening consumer purchasing power and risking inventory build-ups across factories.
The Association warned that these pressures could jeopardize the sector’s projected 3.1% real growth target for 2026.
Most Vulnerable Sectoral Groups
While the entire real sector is exposed, MAN identified specific sectoral groups facing heightened risk:
Chemical and Pharmaceuticals: Highly dependent on petrochemical derivatives and imported Active Pharmaceutical Ingredients (APIs), this sector is particularly vulnerable to crude oil price shocks and global petroleum disruptions.
Basic Metal, Iron and Steel: As a heavily energy-intensive industry, any sustained rise in gas and diesel prices could render operations financially unsustainable.
Food, Beverage and Tobacco: Dependence on imported grains and packaging materials exposes this group to imported inflation, directly impacting consumer food prices.
Lessons from History
MAN drew parallels with the US–Iraq War, during which Nigeria’s manufacturing sector suffered significant setbacks. Between 2002 and 2003, total manufacturing exports fell from $901.35 million to $496.87 million, manufacturing GDP growth declined from 17.74% to -10.8%, and the sector’s contribution to GDP dropped from 11.68% to 9.7%.
“The lesson is clear, external conflicts can trigger severe domestic industrial contractions if proactive measures are not taken.” MAN said.
Call for Immediate Government Action
To safeguard the sector and prevent widespread factory closures, MAN urged the Federal Government to implement the following measures urgently:
Fast-Track Energy Transition for Industry: Scale and subsidise the Presidential Compressed Natural Gas (CNG) initiative specifically for manufacturing hubs and heavy-duty logistics to reduce dependence on imported diesel.
Guarantee Foreign Exchange for Critical Inputs: Establish a dedicated FX window through the Central Bank of Nigeria (CBN) for manufacturers importing essential raw materials and machinery.
Domesticate Petroleum Supply Chains: Mandate domestic mega-refineries to prioritise the supply of refined fuels and petrochemicals to local manufacturers at competitive, non-import-parity pricing.
Suspend Logistics and Haulage Levies: Introduce a six-month moratorium on discretionary highway levies, haulage taxes, and multiple transit tolls to cushion rising transportation costs.
A Defining Moment for Industrial Policy
MAN concluded that the current crisis is a stark reminder of Nigeria’s vulnerability to external shocks due to heavy reliance on imported raw materials. The Association called on policymakers to treat the situation as a catalyst for strengthening domestic manufacturing autonomy.
“We cannot control the geopolitics of the Gulf, but we can and must control our domestic policy response. The time for proactive manufacturing fortification is now,’’ MAN emphasised.
