M’East crisis pushing up production costs, manufacturers lament
Higher energy costs forced by the U.S.–Israel–Iran conflict have translated into increased production expenses, which are already triggering higher prices and weakening demand for industrial goods, African manufacturers have cried
Higher energy costs forced by the U.S.–Israel–Iran conflict have translated into increased production expenses, which are already triggering higher prices and weakening demand for industrial goods, African manufacturers have cried out.
African manufacturers under their umbrella body, Pan African Manufacturers Association (PAMA), lamented that the ripple effects of the ongoing crisis in the Middle East are becoming particularly significant.
PAMA, which serves as the continental voice of manufacturers, said this is because many industries on the continent rely heavily on petroleum products for electricity generation, logistics, and packaging materials such as plastics.
The Association, currently led by Interim President Engr. Mansur Ahmed and Interim Co-Secretary Segun Ajayi-Kadir, in addition, said disruptions to global shipping routes have raised the cost of importing industrial inputs and extended delivery times.
“This has created further challenges for manufacturers that depend on timely access to machinery, raw materials, and intermediate goods,” Ajayi-Kadir said.
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Furthermore, the conflict, he noted, has reinforced the strong relationship between global oil prices and currency movements.
According to him, as crude oil prices rise in the international market, demand for the U.S. dollar tends to increase, strengthening the currency relative to others.
“This has contributed to the depreciation of many African currencies, further increasing the cost of imported industrial inputs and exacerbating inflationary pressures,” the PAMA Interim Co-Secretary stated.
He further pointed out that disruptions in fertiliser supply could indirectly affect agro-processing industries. Sustained constraints in fertiliser availability are likely to increase agricultural production costs and reduce the supply of raw materials for food processing industries across the continent.
PAMA, therefore, said the current geopolitical crisis highlights the urgent need to strengthen the resilience of Africa’s manufacturing sector.
The Association, therefore the development of domestic refineries and strategic oil reserves is critical for African governments to pursue, to guard against future shocks arising from energy supply disruptions.
It also said African economies must reduce excessive dependence on imported industrial inputs by strengthening backward integration, regional manufacturing networks, and local value chains.
“A stable and affordable energy supply is essential for industrial competitiveness. Governments, in partnership with relevant private sector stakeholders, should accelerate investments in renewable energy, gas infrastructure, and regional power integration,” Ajayi-Kadir stated.
He also said expanding domestic production of fertilisers, petrochemicals, steel, and industrial chemicals will help reduce vulnerability to external supply shocks.
Besides, efficient transport corridors, ports, and logistics systems, he said, are necessary to lower trade costs and improve industrial competitiveness.
Also, prioritising the patronage of locally made products will help support and stabilize industrial production amid global pressures.
In putting forward the afore-mentioned policy imperatives, Ajayi-Kadir said the global manufacturing system has always been sensitive to geopolitical developments, particularly those affecting energy supply and global trade corridors.
According to him, the ongoing conflict involving the United States, Israel, and Iran, which began on 28 February 2026, has rapidly escalated into a major geopolitical shock with far-reaching economic consequences.
The conflict, he said, has triggered disruptions across multiple pillars of the global economic system.
Energy markets have been severely affected as tensions escalate around the Persian Gulf, while maritime and aviation logistics have been disrupted due to security concerns and restrictions in regional airspace.
These disruptions, the Association, lamented, have translated into rising global shipping costs, surging oil prices, and growing uncertainty in financial markets.
PAMA said one of the most significant economic consequences of the conflict has been the disruption of the Strait of Hormuz, one of the most critical maritime corridors in the global economy.
The Strait of Hormuz is a narrow waterway linking the Persian Gulf with the Arabian Sea and serves as the main export route for oil and Liquefied Natural Gas (LNG) from major producers, including Saudi Arabia, Iraq, Kuwait, Qatar, and the United Arab Emirates.
According to the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA), roughly 20 million barrels of oil per day—about 20 per cent of global petroleum consumption—normally pass through the Strait of Hormuz.
However, since the escalation of hostilities, the Iran Revolutionary Guard Corps has reportedly shut down parts of the route and continues to target oil vessels, leading to a sharp decline in commercial traffic through the Strait.
As a result, many vessels are avoiding the region due to security risks, with several rerouting through longer and more expensive alternative routes around southern Africa.
The disruption has already created one of the largest oil supply shocks in recent history. Estimates from the IEA suggest that global oil supply could decline by up to eight million barrels per day.
The closure of the Strait of Hormuz, therefore, represents a major shock to global trade and industrial supply chains.
