Domestic Production, Port Reforms Key to Shielding Nigeria from Global Supply Chain Shocks, Says Expert

Logistics and supply chain analyst, Mr. Anukwuocha Paul Ody, has called for stronger investment in domestic production and urgent reforms in Nigeria’s port and logistics infrastructure as global conflicts continue to disrupt supply chains and drive up the cost of living.

In a policy commentary examining the impact of geopolitical instability on emerging economies, Anukwuocha said Nigeria’s heavy dependence on imports has left the country highly exposed to external shocks linked to wars, trade tensions and global shipping disruptions.

According to him, rising geopolitical conflicts are already pushing up the prices of food, fuel, medicine, industrial goods and other essential commodities across Nigeria.

“Wars fought thousands of kilometres away are quietly restructuring what Nigerians pay and, sometimes, cannot buy at all,” he stated.

Anukwuocha noted that Nigeria’s reliance on imported refined petroleum products, wheat, pharmaceuticals, machinery and electronics has made the economy particularly vulnerable to disruptions in global trade routes and international commodity markets.

To reduce that vulnerability, he urged the Federal Government and private sector players to deepen investment in local manufacturing, regional trade and transport infrastructure.

He described the emergence of Dangote Refinery as a positive step towards reducing dependence on imported fuel and called for similar investments in pharmaceuticals, fertiliser production, food processing and industrial manufacturing.

He also stressed the need for reforms at Apapa and Tin Can Island ports, where congestion, demurrage charges, and customs inefficiencies continue to increase operating costs for businesses.

According to him, improving rail freight systems, inland dry ports and digital customs processes would strengthen supply chain resilience and reduce the economic impact of future global disruptions.

“Building domestic production capacity and modern logistics infrastructure is no longer just an economic issue,” he said. “It is now a matter of national security.”

Red Sea Crisis Raises Shipping Costs

Anukwuocha identified the Red Sea crisis as one of the most immediate threats to global logistics.

Following the outbreak of the Israel-Hamas conflict in late 2023, attacks on commercial vessels in the Red Sea forced major shipping companies to reroute cargo around the Cape of Good Hope, significantly increasing transit times and freight costs.

He noted that container traffic through the Suez Canal dropped sharply in 2024, while global freight rates surged as shipping firms adjusted to the disruptions.

For Nigerian importers and manufacturers, the impact has been severe.

“Manufacturers already operating on tight margins were forced to increase inventory levels and absorb higher logistics costs,” he explained, adding that longer shipping timelines also disrupted production schedules.

Ukraine War Deepens Food Inflation

The ongoing Russia-Ukraine war has also contributed significantly to food inflation in Nigeria, particularly through disruptions in global wheat supply.

Russia and Ukraine are among the world’s largest wheat exporters, and the conflict triggered sharp increases in global grain prices shortly after the invasion began in 2022.

Nigeria, which imports substantial quantities of wheat for bread, flour, noodles and pasta production, has consequently experienced mounting pressure on food prices.

The analyst said the resulting increase in food inflation has worsened economic hardship for households already struggling with currency depreciation and rising transportation costs.

He also pointed to insecurity in farming communities, flooding and exchange-rate volatility as additional domestic factors worsening the food crisis.

US-China Tensions Create New Risks

Beyond military conflicts, Anukwuocha warned that the prolonged trade tensions between the United States and China are reshaping global manufacturing and supply chains.

He explained that multinational firms are increasingly moving production away from China to alternative markets such as Vietnam and India under the ‘China Plus One’ strategy.

According to him, the shift is creating new sourcing challenges for Nigerian businesses that rely heavily on imported industrial and consumer goods.

He further warned that any escalation involving Taiwan — a major global producer of semiconductor chips — could disrupt technology supply chains and affect Nigeria’s growing digital economy.

Naira Depreciation Worsens Pressure

Anukwuocha noted that the depreciation of the naira has amplified the impact of global disruptions, as international freight, insurance, and import transactions are largely denominated in US dollars.

“With the naira weakening significantly, Nigerian businesses now require far more local currency to pay for the same imports,” he said.

He added that rising logistics costs, forex scarcity, and inflationary pressures have forced many businesses to either transfer costs to consumers or scale back operations.