MAN’s Director General, Segun Ajayi-Kadir
MAN warns global geopolitical crisis could reverse Nigeria’s manufacturing gains, urges proactive policy response
The Manufacturers Association of Nigeria (MAN) has warned that the escalating geopolitical crisis involving the United States, Israel, and Iran poses a significant threat to Nigeria’s manufacturing sector and risks undermining recent macroeconomic progress.
According to MAN, the conflict has sent undeniable shockwaves across the global macroeconomic landscape. It comes at a time when Nigeria’s annual inflation had encouragingly eased to 15.10 percent and manufacturing capacity utilization had begun to recover above the 60 percent threshold. MAN cautioned that this sudden geopolitical shock could undo these hard-won gains.
In a position paper, MAN’s Director General, Segun Ajayi-Kadir, explained that the conflict has already disrupted the global economy through rising oil prices, shifting shipping routes, and volatile energy markets—all of which pose serious risks to domestic production and industrial stability in Nigeria.
Ajayi-Kadir noted that heightened hostilities in the Middle East have transformed the global energy and logistics landscape. Brent crude has surged above $84.50 per barrel, while global freight and war-risk insurance premiums have risen sharply as shipping routes divert away from the Red Sea corridor and the Strait of Hormuz.
He observed that while higher oil prices would typically 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 capacity to fully capitalize on the price surge.
MAN also warned that Nigeria’s strong trade ties with the United States could be affected. In 2024, Nigeria exported goods worth $5.91 billion to the US, accounting for 9.3 percent of total exports, while imports from the US stood at $4.33 billion. The association stated that the ongoing crisis could result in higher freight costs, extended delivery timelines for raw materials, and increased imported inflation, ultimately weakening consumer purchasing power and straining factory operations.
The association identified energy cost escalation, rising freight charges, and weakening consumer demand as the most immediate threats to manufacturers. It noted that higher diesel and gas prices could erode operating margins and lead to unsold inventories.
MAN highlighted that certain sectors face heightened exposure to the crisis. The chemical and pharmaceutical sector, which accounts for approximately 88 percent of Nigeria’s manufactured exports to the United States and relies heavily on petrochemical derivatives sensitive to oil price shocks, is particularly vulnerable. The basic metal, iron and steel sector was also cited as susceptible due to its 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 fell from $901.35 million in 2002 to $496.87 million in 2003, while manufacturing GDP growth declined sharply from 17.74 percent to -10.8 percent—underscoring the potential impact of geopolitical conflicts on the sector.
The association stressed that while Nigeria cannot control global geopolitical tensions, it must strengthen domestic policies to protect its manufacturing base. It warned that continued reliance on imported raw materials leaves the sector highly exposed 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, prioritize domestic supply of refined petroleum products to local manufacturers, and suspend logistics and haulage levies for at least six months.
MAN emphasized that proactive policy measures are essential to prevent factory closures and ensure industrial resilience. It urged 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 leverage the current global crisis as a catalyst for achieving genuine manufacturing autonomy and economic stability.
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