By Seun Ibiyemi
The Manufacturers Association of Nigeria (MAN) has raised concerns over the potential negative impact of the escalating conflict involving the United States, Israel, and Iran on Nigeria’s manufacturing sector, warning that recent economic gains could be reversed.
In a position paper, MAN said the geopolitical tensions have already sent shockwaves across the global economy, posing risks to Nigeria through disruptions in shipping routes, rising energy costs, and supply chain bottlenecks.
The association noted that the crisis comes at a time when Nigeria’s inflation had eased to 15.10 per cent and manufacturing capacity utilisation had begun to recover above 60 per cent, stressing that the conflict could undermine these improvements.
According to MAN, the intensification of hostilities in the Middle East has significantly altered global energy and logistics dynamics, with Brent crude prices rising above 84 dollars per barrel and freight and war-risk insurance costs surging as vessels avoid high-risk routes.
It explained that while higher oil prices could ordinarily boost Nigeria’s foreign exchange earnings, the country’s low crude production levels estimated at 1.3 to 1.4 million barrels per day limit its ability to fully benefit from the price surge.
The association also highlighted risks to Nigeria’s trade relations with the United States, noting that exports to the U.S. stood at 5.91 billion dollars in 2024, representing 9.3 per cent of total exports, while imports were valued at 4.33 billion dollars.
MAN warned that disruptions to global supply chains would likely increase the cost of importing raw materials, extend delivery timelines, and fuel imported inflation, thereby raising production costs for local manufacturers.
It identified key challenges facing the sector, including rising energy costs driven by increased prices of diesel and gas, higher freight charges, and declining consumer purchasing power, which could lead to unsold inventories.
The association further noted that certain industries would be more vulnerable, particularly the chemical and pharmaceutical sector, which relies heavily on petrochemical inputs, as well as the iron and steel sector and the food, beverage, and tobacco industry dependent on imported raw materials.
Drawing parallels with the US-Iraq War, MAN recalled that Nigeria’s manufacturing exports dropped sharply from 901.35 million dollars in 2002 to 496.87 million dollars in 2003, while sectoral growth declined significantly during the period.
The association stressed that the current crisis underscores Nigeria’s vulnerability to external shocks due to its dependence on imported inputs, urging the government to adopt proactive measures to strengthen the sector.
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Among its recommendations, MAN called for accelerated adoption of compressed natural gas for industrial use, establishment of a dedicated foreign exchange window for manufacturers, prioritisation of local supply by domestic refineries, and a temporary suspension of logistics and haulage levies to ease cost pressures.
It emphasised that decisive policy action is needed to protect local industries, prevent factory closures, and sustain economic growth amid global uncertainties.
