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By Merit Ibe
The Manufacturers Association of Nigeria (MAN) has warned that the geopolitical crisis between the United States, Israel and Iran could significantly disrupt Nigeria’s manufacturing sector and reverse recent macroeconomic gains.
The conflict which it said has undeniably sent shockwaves across the global macroeconomic landscape is coming at a time when Nigeria’s annual inflation had encouragingly eased to 15.10% and manufacturing capacity utilization had begun to climb back above the 60% threshold, “this sudden geopolitical shock could reverse the hard-won macroeconomic gains.”
Director General of MAN, Segun Ajayi-Kadir, in a position paper, explained that the conflict has already sent shockwaves across the global economy, with rising oil prices, disrupted shipping routes and volatile energy markets posing serious risks to domestic production and industrial stability in Nigeria.
Ajayi-Kadir noted that the intensification of hostilities in the Middle East has altered the global energy and logistics landscape, with Brent crude surging above $84.50 per barrel and global freight and war-risk insurance premiums rising sharply as shipping routes shift away from the Red Sea corridor and the Strait of Hormuz.
According to him, although higher oil prices should ordinarily boost Nigeria’s foreign exchange earnings and strengthen the naira, the country’s low crude production level—estimated at between 1.3 and 1.4 million barrels per day—limits its ability to benefit fully from the price surge.
MAN further warned that Nigeria’s strong trade relationship with the United States could also be affected, noting that Nigeria exported goods worth $5.91 billion to the US in 2024, representing 9.3 per cent of total exports, while imports from the US stood at $4.33 billion.
The association stated that the ongoing crisis could lead to higher freight costs, longer delivery timelines for raw materials and increased imported inflation, which would ultimately weaken consumer purchasing power and put additional pressure on factory operations.
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Identifying energy cost escalation, rising freight charges and weakening consumer demand as the most immediate threats facing manufacturers, MAN viewed that increased diesel and gas prices could wipe out operating margins and lead to unsold inventories.
MAN warned that several sectoral groups face higher exposure to the crisis, particularly the chemical and pharmaceutical sector, which accounts for about 88 per cent of Nigeria’s manufactured exports to the United States and relies heavily on petrochemical derivatives sensitive to oil price shocks.
The basic metal, iron and steel sector was also highlighted as vulnerable due to its heavy dependence on stable energy supply, while the food, beverage and tobacco sector could suffer from rising costs of imported grains and packaging materials.
Drawing lessons from the US-Iraq War, MAN recalled that Nigeria’s manufacturing exports dropped from $901.35 million in 2002 to $496.87 million in 2003, while manufacturing GDP growth declined sharply from 17.74 per cent to -10.8 per cent, underscoring the potential impact of geopolitical conflicts on the sector.
The association stressed that Nigeria cannot control global geopolitical tensions but must strengthen domestic policies to protect its manufacturing base, warning that continued reliance on imported raw materials leaves the sector highly vulnerable to external shocks.
To mitigate the impact, MAN called on the Federal Government to urgently fast-track energy transition initiatives for industries, guarantee foreign exchange for critical raw materials, prioritise domestic supply of refined petroleum products to local manufacturers and suspend logistics and haulage levies for at least six months.
MAN emphasised that proactive policy measures are needed to prevent factory closures and ensure industrial resilience, urging the government to use the crisis as an opportunity to strengthen local manufacturing and reduce dependence on external supply chains.
The association concluded that Nigeria must avoid repeating the mistakes of the early 2000s, when oil price gains were not translated into industrial growth, and instead use the current global crisis as a catalyst for achieving genuine manufacturing autonomy and economic stability.
