The Centre for the Promotion of Private Enterprise (CPPE) has cautioned against the premature enforcement of compulsory domestic value-addition policies, warning that such measures could distort commodity markets and undermine Nigeria’s non-oil export gains.
In a policy brief titled “Primary Product Export vs Value Addition: Imperative of Proper Policy Sequencing,” the CPPE acknowledged the growing advocacy for domestic processing of primary commodities as a pathway to industrialisation, job creation, export diversification and improved foreign-exchange earnings.
However, the Centre stressed that export restrictions on raw commodities should only be introduced after adequate and competitive domestic processing capacity has been established.
According to the CPPE, “compulsion must follow capacity, not precede it,” noting that sustainable value-addition policies require sufficient installed and operational processing capacity, competitive production costs, reliable infrastructure, access to affordable long-term finance, modern technology and skilled labour, as well as efficient linkages between producers and processors.
The Centre expressed concern that imposing export prohibitions in the absence of these enabling conditions could suppress domestic prices of primary products due to excess local supply.
It warned that such a scenario would reduce incomes for farmers, aggregators and rural communities, effectively transferring value from producers to processors through policy-induced price distortions.
The CPPE argued that primary producers form the foundation of commodity value chains and sustain millions of livelihoods. Policies that weaken production incentives or restrict access to export markets, it said, could erode rural incomes, discourage long-term investment and ultimately weaken the supply base needed for future industrial processing.
The organisation further noted that value addition only generates economic benefits when processed goods are globally competitive in price and quality.
It warned that protectionist measures that shield inefficient processing operations could result in high production costs, weak global demand, inventory build-up, declining foreign-exchange earnings and increased smuggling of primary commodities.
The Centre also raised concerns about investor confidence, stating that sudden or poorly sequenced value-addition mandates could heighten regulatory uncertainty and discourage investment across both primary production and processing segments.
To achieve sustainable industrialisation, the CPPE recommended a phased and capacity-driven approach. It urged government to prioritise investment in processing infrastructure, improve power supply and logistics, facilitate access to affordable finance, upgrade technology and enhance workforce skills before considering compulsory measures.
The Centre also emphasised the need to protect the economic interests of primary producers, insisting that industrial policy should not depend on depressing farm-gate prices to support downstream industries.
It further advised that any transition toward mandatory value addition should be gradual, predictable and anchored on measurable improvements in domestic processing capacity, with broad stakeholder consultation.
According to the CPPE, trade restrictions should remain flexible fiscal and trade-policy instruments managed by relevant authorities rather than rigid legislative mandates, allowing government to respond to changing economic realities.
In conclusion, the Centre maintained that while domestic value addition is critical to Nigeria’s long-term industrial transformation, proper policy sequencing is essential to avoid unintended consequences.
“Sustainable industrialisation is achieved by building competitive capacity that enables Nigerian processed products to succeed locally and globally on the strength of efficiency, quality and cost competitiveness,” the policy brief stated.
The brief was signed by Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise.
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