M’East conflict threatens Nigeria’s $200b non-oil export revenue target

Nigeria’s ambitious plan to generate up to $200 billion in non-oil export revenues over the next five years is under threat as escalating tensions in the Middle East disrupt global shipping routes and drive logistics costs, industry stakeholders have warned.

Exporters and supply chain experts say the ongoing conflict between Iran and Israel is already deepening losses for exporters by raising freight charges, increasing insurance premiums and delaying cargo movement through critical maritime corridors.

Chief Executive Officer, Produce Export Development Alliance, Aiyeoola Adetiloye, said the rising cost of shipping and uncertainty surrounding maritime routes are already affecting the viability of agricultural exports such as cocoa, sesame and cashew.

Describing the situation as economically devastating, Adetiloye said the conflict has stalled shipments at the ports.

“I have two containers of sesame at the port that are not leaving because of this war,” he said, lamenting the mounting challenges exporters now face in moving goods to international markets.

Director-General, African Centre for Supply Chain, Dr. Obiora Madu, said the crisis is creating ripple effects across global logistics networks, particularly for agro-exports that depend heavily on maritime transport.

“What we should be looking at is the implications on supply chain generally. If you talk about the implications on exports, people quickly think about oil exports. But what about agro-exports? The implications there are really the implications on the supply chain,” Madu said.

According to him, cargo movement — the backbone of supply chain operations — is already slowing due to rising insecurity in key shipping routes.

“Right now, a lot of cargo is no longer moving. And you know supply chain is all about moving cargo. If cargo can’t move, then you have a big problem,” he said.

Madu noted that even when shipments continue, exporters and importers must contend with sharply rising operational costs.

“For those who are still willing to move cargo, costs are escalating because insurance has increased significantly as a result of the war and its implications,” he said.

He added that security fears around the Red Sea and surrounding waters have forced shipping lines to adopt longer routes, further increasing costs.

“For example, there are fears around the Red Sea. Some vessels would rather go down through the Cape of Good Hope instead of using the Suez Canal, which is a shorter distance and consumes less fuel,” Madu said.

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The alternative route significantly lengthens travel time and increases fuel consumption, adding further pressure to global trade operations.

“The implications on supply chain are huge. One of the major challenges for supply chains this year going forward is geopolitical disruption, and that is exactly where we are right now,” he said.

Madu stressed that the effects extend beyond exporters to importers and manufacturers who depend on global logistics networks for raw materials and spare parts.

“Whether you are importing or exporting, you are affected,” he said.

He warned that consumers will ultimately bear the burden of the rising logistics costs.

“The implication for you and I as the average buyer will be price increases. If suddenly I have to pay much more because insurance has gone up and ships are taking longer routes, I will have to pass those costs on,” he said.

However, exporters may find it harder to adjust to the rising costs because prices for many agricultural exports are usually fixed in advance through international contracts.

“It is even easier for importers because they can increase prices and buyers will pay. For exporters it is more difficult because prices are already fixed,” Madu said.

He explained that in most export transactions, prices are negotiated before shipping arrangements are completed, leaving exporters exposed when logistics costs suddenly rise.

“A price was agreed when the shipment was arranged. The importer is supposed to pay the freight, but if he cannot find a vessel or the cost becomes too high, he may withdraw from the transaction entirely,” he added.

The Executive Director / Chief Executive of the Institute of Export Operations and Management (IEOM), Dr. Ofon Udofia, also warned that the escalating conflict is beginning to disrupt trade routes commonly used for Nigerian agricultural exports, particularly shipments to the Middle East.

According to him, the growing insecurity in the Gulf region is discouraging shipping lines from operating along some routes.

“The entire Gulf region is gradually becoming a no-go area for vessels. How do you move cargo under such circumstances? It is going to be a very big problem,” he said.

Nigeria exports a wide range of agricultural commodities, including cashew, cocoa, sesame seeds and ginger, to markets across the Middle East and Asia. Prolonged instability in the region could therefore translate into significant export losses.

Udofia said several shipping lines have already suspended or reduced their services due to security concerns.

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“As long as the war lingers, most shipping lines are not willing to go in that direction. Even those taking alternative routes are charging far higher freight rates than before. That is a serious threat to exporters,” he said.

He warned that the surge in freight costs is rapidly eroding the competitiveness of Nigerian agricultural products in international markets.

“In terms of the threats we are seeing, freight costs have increased significantly because of the risks involved. This makes it more difficult for exporters to move their products profitably,” Udofia said.

He added that smaller exporters may suffer the most because they lack the financial capacity to absorb rising logistics costs or withstand long shipping delays.

“I just pray the war will end soon. If it continues for long, exporters will struggle to move goods and Nigeria’s agricultural export earnings could be seriously impacted,” he said.

Industry analysts say the situation highlights the vulnerability of Nigeria’s export supply chain to geopolitical shocks, especially where global shipping routes and maritime security conditions play a critical role.

The conflict has already disrupted shipping activities around the strategic Strait of Hormuz, a key corridor for global trade, where more than 100 container ships have reportedly been stranded due to security concerns.

Experts also warned that the crisis could trigger wider disruptions in agricultural production through rising fertiliser prices. Fertilizer accounts for about 25 percent of agricultural commodity production costs, and analysts estimate that roughly one-third of global fertilizer trade could be affected by the conflict.

With nearly a quarter of global fertilizer supplies moving through the Strait of Hormuz, prices are already surging. In parts of the Middle East, the price of urea has reportedly risen by about 19 percent within a week, raising concerns about higher production costs for farmers worldwide.

For Nigerian exporters, the challenges are compounded by strict plant health and market regulations governing fresh produce shipments. These rules often prevent exporters from redirecting cargo to alternative markets if the original destination becomes inaccessible.