Nigeria's Manufacturers Association maps out strategies to cushion impact of US-Iran tensions on local producers

The Manufacturers Association of Nigeria has sounded the alarm on the severe risks posed by the unfolding geopolitical tensions in the Middle East to Nigeria's manufacturing sector, highlighting the need for urgent measures to protect industry operators.

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According to Director General of MAN, Segun Ajayi-Kadir, the sector is already feeling the effects of the global energy shock triggered by the conflict, which threatens to derail the sector's projected 3.1 per cent real growth target for 2026.

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Ajayi-Kadir noted that manufacturers' heavy reliance on gas and Automotive Gas Oil (diesel) for production has made them vulnerable to soaring energy costs, as rising global crude oil prices drive up domestic pump and depot prices, eroding operating margins.

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He stated that "Energy cost escalation is biting hard" and that many manufacturers are seeing their margins disappear almost overnight due to the escalating energy costs.

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Ajayi-Kadir also pointed out that imported inflation and rising freight costs are exacerbating the crisis, with extended transit times and higher shipping expenses making it increasingly difficult to import critical raw materials.

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The implication, he explained, is that production costs are rising sharply, while consumer purchasing power is weakening, creating a precarious situation where manufacturers are battling both high costs and unsold inventories.

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Ajayi-Kadir warned that manufacturers are now facing the dual threat of skyrocketing production costs and unsold inventories, which could derail the sector's projected 3.1 per cent growth in 2026.

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To mitigate the looming crisis, MAN is calling on the Federal Government to implement targeted interventions, including fast-tracking the Presidential Compressed Natural Gas (CNG) initiative for industrial clusters to reduce dependence on diesel.

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The association is also advocating for the establishment of a dedicated foreign exchange window through the Central Bank of Nigeria for the importation of critical inputs, as well as the domestication of petroleum supply chains.

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This, Ajayi-Kadir said, would involve ensuring that local refineries prioritise supply to domestic manufacturers at competitive rates, alongside a temporary suspension of logistics levies and multiple taxation on haulage.

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Ajayi-Kadir noted that "the current crisis is a stark reminder of Nigeria's vulnerability to external shocks due to our dependence on imported inputs", emphasizing that while Nigeria cannot control global geopolitics, it can control its domestic response.

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He stressed that the situation presents a critical opportunity for Nigeria to pivot towards genuine manufacturing self-sufficiency, warning that failure to act decisively could result in widespread factory closures and job losses across the country.

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MAN has recommended an immediate six-month suspension of multiple haulage levies, highway taxes and transit tolls imposed on manufacturers to cushion logistics pressures.

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Ajayi-Kadir stated that "this crisis must serve as a catalyst for building a more resilient and self-sufficient manufacturing sector, rather than repeating the mistakes of the past", warning that failure to act decisively could lead to widespread factory closures, job losses and a significant setback to Nigeria's industrialisation drive.