The Manufacturers Association of Nigeria (MAN) says that the disruptions to the Strait of Hormuz – the global shipping routes occasioned by the US middle East War, have started arriving on the doorsteps of domestic factories in Nigeria.
The sectoral groups being mostly impacted are Chemical and Pharmaceuticals including the Food, Beverage and Tobacco Industries.
Segun Ajayi-Kadir, the Director- General of MAN, emphasised that with the strategic Strait of Hormuz facing severe disruptions, for the Nigerian manufacturer, global geopolitics is no longer a television spectacle; it is a direct tax on the cost of production.
MAN, in its analyses of the global geopolitical shifts through the lens of local industrial survival, said that indeed, when the US and Middle East sneeze, the global economy catches a cold and the Nigerian economy is not an exception.
This conflict has undeniable sent shockwave across the global macroeconomic landscape, We anticipate immediate spikes in global freight forwarding costs, prolonged lead times for imported raw materials and an imported inflation surge.
With the Middle Eastern transit corridors severely compromised, the cost of securing inputs for Nigerian factories will inevitably rise,” said MAN.
Implications for the Manufacturing Sector
For the manufacturing sector, the implications are immediate, severe and multifaceted:
Energy Cost Escalation: Manufacturers heavily rely on gas and Automotive Gas Oil (diesel) to power operations.
The global energy shock is driving domestic pump and depot prices upward, wiping out operating margins.
Imported Inflation & Freight Costs: Extended transit times and multiplied shipping costs are making raw material procurement prohibitively expensive.
Demand Destruction: As the cost of staple goods rises, consumer purchasing power collapses.
Manufacturers now face the dual threat of soaring production costs and rapidly accumulating unsold inventories, jeopardizing our target of achieving a 3.1% real growth rate for the sector in 2026.
Which Sectoral Groups Will be Mostly Impacted?A rising tide of global conflict does not sink all ships equally; some sectors are fundamentally more exposed.
While the entire real sector will feel the pinch, specific Sectoral Groups within MAN face existential headwinds: Chemical and Pharmaceuticals Sector:
This group is at the highest risk.In 2023, out of the $154,107,280 total Nigerian manufactured exports to the US, chemical products alone accounted for a staggering $136,446,180 (approximately 88%).
Petrochemical derivatives are highly sensitive to crude oil price shocks.
Any disruption in global petroleum markets will immediately inflate the cost of APIs (Active Pharmaceutical Ingredients) and chemical base materials, squeezing margins and threatening the export dominance of operators within the Sectoral Group.
Basic Metal, Iron and Steel Sector: This heavily energy-dependent sector relies on stable domestic gas and diesel pricing.
Should the global crisis trigger local energy price surges, the operational expenditure for these manufacturers will become unsustainable.
Food, Beverage and Tobacco Sector: Highly dependent on imported grains and packaging materials, this sector will face severe imported inflation. Escalating freight costs will force price hikes, directly impacting the Nigerian consumer’s daily survival.
