The ongoing geopolitical tensions involving the United States, Israel, and Iran are now presenting profound implications for Nigerian industry, with the country’s chemical and pharmaceutical sectors singled out as particularly vulnerable due to export concentration and sensitivity to crude oil market shocks, according to the Manufacturers Association of Nigeria (MAN).
In a position paper made available to Business A.M., MAN noted that chemical products accounted for $136.45 million of Nigeria’s $154.11 million manufactured exports to the US in 2023, about 88 per cent of the total. Petrochemical derivatives, which dominate the sector, are highly sensitive to crude oil price fluctuations, putting margins and export dominance under threat.
“Petrochemical derivatives are highly sensitive to crude oil price shocks. Any disruption in global petroleum markets will immediately inflate the cost of APIs and chemical base materials, squeezing margins,” MAN said.
The association emphasised that rising tensions in the Middle East have already triggered global energy market volatility, pushing crude oil prices higher and disrupting shipping routes. For Nigerian manufacturers, MAN stressed, “Global geopolitics is no longer a television spectacle; it is a direct tax on the cost of production.”
The paper warned of immediate cost pressures from higher crude oil prices, shipping insurance premiums, and freight rates, particularly for businesses reliant on imported raw materials. The United States remains a critical trading partner, importing $5.91 billion worth of Nigerian goods in 2024, or 9.3 per cent of total exports. Any disruption to this trade flow could have a direct impact on manufacturing output.
MAN highlighted that while chemical and pharmaceutical manufacturers are most at risk, other sectors including basic metals, iron and steel, and food, beverage and tobacco, are also susceptible to imported inflation and rising energy costs.
The association cautioned that Nigeria’s manufacturing gains, such as easing inflation and improved capacity utilisation, could be quickly reversed. Drawing lessons from the US–Iraq War, MAN noted that total manufacturing exports fell from $901.35 million in 2002 to $496.87 million in 2003, while manufacturing GDP growth collapsed from 17.74% to -10.8%.
MAN urged the federal government to shield domestic manufacturers by fast-tracking energy transition initiatives, guaranteeing foreign exchange for critical imports, and prioritizing the domestic supply of refined petroleum products.
“We cannot control the geopolitics of the Gulf, but we can and must control our domestic policy responses,” the association stated.
