Nigerian manufacturers have warned that rising prices sparked by Russia’s war on Ukraine present a “looming crisis” for companies in Africa’s largest economy.
The surge in costs of diesel, wheat and other imported materials, combined with high interest rates, US dollar shortages and soaring inflation, is crippling production in Africa’s most-populous country, the Manufacturers Association of Nigeria said in an emailed presentation on Thursday.
Nigerian manufacturers rely largely on diesel — which has doubled in price this year — to power their machines because of unreliable electricity supply from the national grid. The price of wheat, a key raw material for flour millers and other food processors, has also shot up.
Companies are worried that inflation, which accelerated to 15.9% in March, could climb further if a longer conflict prolongs supply chain disruptions, the group said.
Dangote Cement Plc, the nation’s biggest company, reported 3.6% drop in sales in the first quarter to 7.2 million tons compared with year ago, partly due to volatility in the value and landing costs of cement and clinker in some of its markets. That comes as some countries stopped exports, fearing local supply could be impacted by the war, Chief Executive Officer Michel Puchercos said at an investor call.
The current situation “calls for the crafting of a national response and sustainability strategic plan to avert the looming economic crisis and shortages that would arise from the impact of the Russia invasion of Ukraine,” the manufacturing body said.