African Manufacturers Confront New Cost Challenges Amid Energy, Fertiliser Disruptions

The Pan-African Manufacturers Association (PAMA) has highlighted the need for resilience in the African manufacturing sector, as ongoing geopolitical tensions, particularly the U.S.–Israel–Iran conflict, are driving up energy costs and disrupting critical supply chains for fertilisers and other industrial inputs.

Many industries across Africa rely on petroleum products for power, logistics, and plastic production. The current fertiliser shortages, linked to reduced urea exports, are increasing costs for agro-processors. With vessels rerouting around southern Africa to address security concerns, import costs and delivery times for machinery and raw materials have increased, impacting demand for industrial goods.

In its March 2026 News Bulletin, PAMA noted that the global manufacturing system is sensitive to geopolitical developments, particularly those affecting energy supply and trade routes, saying that the conflict, which escalated on February 28, 2026, has rapidly emerged as a significant geopolitical shift with wide-ranging economic implications.

According to the Bulletin, these tensions have disrupted multiple aspects of the global economy. Energy markets are under significant strain due to rising tensions in the Persian Gulf, while maritime and aviation logistics are affected by heightened security concerns. This scenario has led to rising global shipping costs, increased oil prices, and greater uncertainty in financial markets.

PAMA pointed out that military confrontations and security threats in the Gulf have disrupted maritime traffic, raising concerns about the safety of vital shipping routes for energy transportation. Consequently, global energy markets, shipping networks, and industrial supply chains are experiencing higher volatility.

“For the African manufacturing sector, which is already grappling with challenges like high energy costs, limited industrial infrastructure, and currency fluctuations, these developments add a layer of complexity.

“Since hostilities began, reports indicate that parts of key shipping routes have faced disruptions, leading to notable reductions in commercial traffic through the Strait. Many vessels are choosing longer, more costly alternative routes,” the Bulletin stated.

PAMA emphasized that “the ongoing geopolitical crisis presents an opportunity for African manufacturers to strengthen their operations. Many industries depend on petroleum products for electricity, logistics, and packaging materials. Therefore, rising energy costs can lead to increased production expenses, compelling manufacturers to find innovative solutions to maintain competitive pricing and demand.

“Moreover, the disruptions in global shipping routes have resulted in higher import costs and extended delivery timelines. To address these challenges, manufacturers must prioritize timely access to machinery, raw materials, and intermediate goods.”

The Association also noted “the correlation between global oil prices and currency movements, explaining that increased crude oil prices often lead to a stronger U.S. dollar, which can impact the value of many African currencies. This relationship heightens the cost of imported industrial inputs and contributes to inflation.”

In light of these challenges, PAMA stressed the importance of bolstering the resilience of Africa’s manufacturing sector, stating that “developing domestic refineries and establishing strategic oil reserves can help African governments better prepare for future energy supply disruptions. Additionally, reducing reliance on imported industrial inputs through strengthened backward integration, enhanced regional manufacturing networks, and localised value chains will be crucial for sustainable growth.”