Pharma, chemicals hit hardest as global tensions threaten costs, exports, and naira stability….
Nigeria’s manufacturing sector is coming under fresh pressure as escalating tensions involving the United States, Israel, and Iran begin to ripple through the global economy.
The Manufacturers Association of Nigeria has warned that local industries particularly in the chemical and pharmaceutical space face the most severe risks as geopolitical instability drives up costs and disrupts supply chains.
In a statement, the association’s Director-General, Segun Ajayi-Kadir, said the deepening crisis is already sending “shockwaves across the global macroeconomic landscape,” threatening to undo recent improvements in Nigeria’s economy.
Fragile gains now under threat
According to MAN, Nigeria had begun to see signs of recovery, including easing inflation recently around 15.10% and improved manufacturing capacity utilisation above 60%.
But those gains are now at risk.
Ajayi-Kadir noted that global political tensions have effectively become a cost driver for local industries, with ripple effects felt from exchange rates to raw material prices.
“When major economies sneeze, countries like Nigeria catch a cold,” he said, highlighting the sector’s vulnerability to external shocks.
Oil paradox: Higher prices, limited gains
Despite rising crude oil prices hovering around $84 per barrel, Nigeria is unlikely to fully benefit.
The reason: low production levels, estimated between 1.3 and 1.4 million barrels per day.
This creates a difficult paradox:
- Higher prices should boost revenue
- But weak output limits actual earnings and foreign exchange inflows
The result is continued pressure on the economy, particularly the naira.
Trade and currency pressures mounting
MAN also flagged potential risks to Nigeria’s trade relationship with the United States, one of its key export destinations.
- Exports to the US: $5.91bn (2024)
- Imports from the US: $4.33bn
At the same time, a stronger US dollar driven by global investors seeking safer assets is adding fresh strain on the naira, increasing the cost of imports for manufacturers.
Supply chain disruptions loom
The association warned that instability in the Middle East could disrupt key trade routes, leading to:
- Higher freight and shipping costs
- Longer delivery timelines
- Increased imported inflation
For manufacturers already battling high operating costs, this could significantly squeeze margins.
Pharma and chemical sector in the danger zone
Among all industries, the chemical and pharmaceutical segment faces the greatest exposure.
MAN’s data shows that:
- Chemical products made up about 88% of Nigeria’s manufactured exports to the US in 2023
- The sector relies heavily on imported inputs such as Active Pharmaceutical Ingredients (APIs)
Rising global petrochemical prices and supply disruptions could therefore:
- Drive up production costs
- Reduce export competitiveness
- Threaten overall profitability
Other sectors not spared
The impact is expected to spread across multiple industries:
- Basic metals, iron, and steel: Higher energy costs
- Food, beverage, and tobacco: Rising prices of grains and packaging materials
This creates a double burden of rising production costs and weakening consumer demand.
Growth outlook at risk
MAN warned that these pressures could derail the sector’s projected 3.1% growth in 2026, unless urgent action is taken.
“The time for reactive measures is over,” the association said, urging policymakers to take proactive steps to strengthen Nigeria’s industrial base against external shocks.
A critical moment for industry
With global uncertainty rising and domestic vulnerabilities exposed, Nigeria’s manufacturing sector is entering a high-risk phase.
The message from industry leaders is clear: without strategic intervention, external crises could quickly translate into factory-level disruptions, higher prices, and slower economic growth at home.
About the Author
