MAN: Escalating US-Israeli/Iranian War Threatens $136.45m Chemicals, Pharmaceutical Exports

Dike Onwuamaeze 

The Manufacturers Association of Nigeria (MAN) has declared that the ongoing United States of America and Israel war on Iran is a threat to Nigeria’s over $136.45 million chemicals and pharmaceuticals export.

It also declared that the war has an immediate, severe and multifaceted implications for the Nigerian manufacturing sector via soaring production costs, rapid accumulation of unsold inventories that could jeopardise its target of achieving a 3.1 per cent real growth rate in 2026.

MAN expressed these views during the weekend in a press statement titled “Position of MAN on the US-Iranian Crisis for the Manufacturing Sector.” 

The statement said specifically that three sectoral groups of MAN, namely the chemical and pharmaceuticals group, the basic metal, iron and steel group and the food, beverages and tobacco group would face “existential headwinds” even though the entire real sector would feel the pinch.

It said: “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, these specific sectoral groups within MAN face existential headwinds.”

According to MAN, the chemical and pharmaceuticals group is at the highest risk. 

“In 2023, out of the $154,107,280 total Nigerian manufactured exports to the United States, chemical products alone accounted for a staggering $136,446,180 (approximately 88 per cent). 

“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 this sectoral group.”

It also said that “the operational expenditure for manufacturers” in the basic metal, iron and steel sectoral group that is a heavily dependent on stable domestic gas and diesel pricing “will become unsustainable” should “the global crisis trigger local energy price upsurge.”

Furthermore, MAN stated that the food, beverage and tobacco sectoral group that is highly dependent on imported grains and packaging materials will face price hikes emanating from severe imported inflation and escalating freight costs, which would directly impact the Nigerian consumer’s daily survival.

It said that the operating margins of manufacturers that rely heavily on gas and diesel to power operations would be wiped out by the global energy shock that is driving domestic pump and depot prices upward.

It added that the extended transit times needed for ships to avoid the turbulent Strait of Hormuz would multiply shipping costs and make raw material procurement prohibitively expensive for manufacturers.

It said: “The United States America (USA) remains one of Nigeria’s most vital bilateral trading partners. According to recent data, Nigeria’s total exports to the USA in 2024 stood at $5.91 billion, accounting for 9.3 per cent of our $63.6 billion total exports. 

“Conversely, our imports from the USA totaled $4.33 billion in the same period. The current conflict severely threatens this bilateral trade flow.  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, threatening to erode the already fragile purchasing power of the Nigerian consumer. Also, the global flight to safe-haven assets has strengthened the USA’s dollar, applying renewed depreciation pressure on our currency.”

MAN added, “The adverse ripple effects of these could arrive squarely on our factory floors.”

MAN said that this sudden geopolitical shock, which is coming at a time when Nigeria’s annual inflation had encouragingly eased to 15.10 per cent and manufacturing capacity utilisation had begun to climb back above the 60 per cent threshold, “could reverse the hard-won macroeconomic gains.

“We recognise that while this geopolitical crisis is unfolding thousands of miles away, its economic shrapnel threatens to strike the heart of the Nigerian economy through disruptions to global shipping routes, volatile energy markets and supply chain bottlenecks that present an imminent threat to domestic production. For manufacturers, global geopolitics is no longer a television spectacle; it is a direct tax on the cost of production.”

MAN stated that a perusal of data from the immediate fallout of the USA-Iraq war in 2003 on Nigeria’s manufacturing sector would leave no one guessing what the devastating impacts of the current military confrontation between USA-Israel versus Iran would mean for the sector presently.

It also recommended government should guarantee FX for critical manufacturing inputs.

“The Central Bank of Nigeria must establish a dedicated, prioritised FX window for manufacturers importing critical raw materials and machinery, insulating them from speculative volatility,” MAN said.