Middle East: Renewed hostilities may threaten insurance costs, erode manufacturing margins —MAN warns
The Manufacturers’ Association of Nigeria (MAN) has expressed fears that the fresh crisis in the Middle East might trigger a surge in war-risk insurance premiums and erode manufacturers’ operating margins. The. . .
The Manufacturers’ Association of Nigeria (MAN) has expressed fears that the fresh crisis in the Middle East might trigger a surge in war-risk insurance premiums and erode manufacturers’ operating margins. The Director General of the association, Segun Ajayi-Kadir, stated this when contacted by Nigerian Tribune on the association’s concerns regarding the breakdown of the fragile peace deal, signed by the United States of America and Iran, recently. The MAN director general argued that the renewed hostilities carried significant implications for the nation’s manufacturing sector, since it might result in soaring energy and logistics costs, imported inflation, and currency depreciation. Besides, he noted, the development could undermine recent economic gains, such as: easing inflation and reduction in fuel pump price. According to him, the manufacturers depend heavily on Gas and Automotive Gas Oil (diesel) to power their factories due to grid instability, hostilities in the Middle East, therefore, would immediately affect global crude oil benchmarks, as evidenced in Brent crude, climbing past $84 per barrel, driving up domestic pump and depot prices in Nigeria and directly eroding manufacturers’ operating margins. Ajayi-Kadir stated further that the development could result in manufacturers facing significantly longer times to import essential machinery and raw materials, since shipping-lines would now be forced to take longer, alternative routes because of associated challenges with transit along the Strait of Hormuz and the Red Sea corridors, thereby leading to surge in war-risk insurance premiums and global freight forwarding costs. READ ALSO:Iran threatens to extend war beyond Middle East if US attacksThe MAN DG added that the compounding effects of expensive freight and costly energy would trigger severe imported inflation since local manufacturing is highly dependent on foreign inputs, resulting in higher production costs, thereby forcing factories to raise prices on finished goods. “Since Nigerian consumers are already battling squeezed purchasing power, manufacturers face a dual crisis of skyrocketing production costs and rapidly accumulating unsold inventory. “Besides, higher operating costs will make Nigerian-made products less competitive against imports or products from countries with lower production costs, potentially affecting exports and domestic market share. “Prolonged geopolitical instability creates uncertainty for businesses, making manufacturers more cautious about expanding production, investing in new equipment or hiring additional workers,” he added. He, therefore, called on the government to shield the domestic economy and protect citizens from the fallout of the Middle East crisis by fast-tracking and subsidising industrial energy transitions, domesticating the petroleum and petrochemical supply chain and providing relief on logistics and haulage costs. WATCH TOP VIDEOS FROM NIGERIAN TRIBUNE TVBack to School, Back to Business A Fresh StartRelationship Hangout: Public vs Private Proposals – Which Truly Wins in Love?“No” Is a Complete Sentence: Why You Should Stop Feeling GuiltyRelationship Hangout: Friendship Talk 2025 – How to Be a Good Friend & Big Questions on FriendshipPolice Overpower Armed Robbers in Ibadan After Fierce StruggleGet real-time news updates from Tribune Online! Follow us on WhatsApp for breaking news, exclusive stories and interviews, and much more. Join our WhatsApp Channel now