Nigeria’s chemical and pharmaceutical manufacturers face the highest risk from the ongoing US–Israel–Iran conflict, the Manufacturers Association of Nigeria has warned, citing their heavy exposure to global oil price shocks and export dependence on the United States market.
In a position paper made available to Saturday PUNCH on Friday on the implications of the crisis, MAN said the Chemical and Pharmaceuticals Sector remained the most vulnerable, noting that in 2023, chemical products accounted for $136.45m out of Nigeria’s $154.11m manufactured exports to the US.
The association said, “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 per cent).”
It added that petrochemical derivatives, which dominate the sector, are highly sensitive to fluctuations in crude oil prices, warning that disruptions in global petroleum markets would have immediate cost implications.
“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,” MAN stated.
The manufacturers’ body explained that the escalating tensions in the Middle East had already triggered volatility in global energy markets, with crude oil prices rising sharply and shipping routes facing disruptions.
MAN said, “For the Nigerian manufacturer, global geopolitics is no longer a television spectacle; it is a direct tax on the cost of production.” It warned that rising crude oil prices, increased freight costs, and higher insurance premiums on global shipping would significantly inflate input costs for local manufacturers, particularly those dependent on imported raw materials.
It noted that the United States remains a critical trading partner, with Nigeria exporting $5.91bn worth of goods to the country in 2024, representing 9.3 per cent of total exports, adding that any disruption to this trade flow would directly affect manufacturing output.
It stated, “We anticipate immediate spikes in global freight forwarding costs, prolonged lead times for imported raw materials, and an imported inflation surge.”
Beyond the chemical and pharmaceutical segment, MAN said other sectors, including basic metals, iron and steel, as well as food, beverage and tobacco, would also face significant pressure from rising energy costs and imported inflation.
It stressed that the broader manufacturing sector was already vulnerable despite recent macroeconomic improvements, warning that the crisis could reverse gains such as easing inflation and improved capacity utilisation.
The association noted that “this sudden geopolitical shock could reverse the hard-won macroeconomic gains.” Drawing lessons from the US–Iraq War, the association warned that similar conflicts in the past had triggered severe downturns in Nigeria’s manufacturing performance.
It stated, “Total manufacturing exports plummeted from $901.35m in 2002 to a dismal $496.87m in 2003, while manufacturing GDP growth collapsed from 17.74 per cent to -10.8 per cent.”
The association called on the Federal Government to take urgent steps to shield manufacturers, including fast-tracking energy transition initiatives, guaranteeing foreign exchange for critical imports, and prioritising domestic supply of refined petroleum products.
MAN said, “We cannot control the geopolitics of the Gulf, but we can and must control our domestic policy responses.”