Managing Nigeria’s Shea Nut Export Ban: Balancing Value Addition With Economic Inclusion

By Dr Muda Yusuf

 

Introduction

The Federal Government’s six-month ban on raw shea nut exports is intended to accelerate domestic value addition and support Nigeria’s industrialization drive. While the goal is laudable, the instantaneous implementation of the ban has created severe disruptions in the shea nut value chain—hurting farmers, aggregators, exporters, and logistics providers.

Dr Muda Yusuf, Chief Executive Officer, Centre for The Promotion of Private Enterpise (CPPE) in a statement made available to Gentechnews noted that this brief argues for a phased, consultative transition framework to safeguard investor confidence, preserve hard-won gains in non-oil exports, and ensure inclusive, market-driven growth.

Context and Policy Objective

Nigeria holds significant potential in the global shea nut market, accounting for an estimated 40% of global production. Moving up the value chain through local processing could generate jobs, foreign exchange, and industrial capacity. However, policy credibility is crucial: sudden bans on exports with immediate effect introduce uncertainty, heighten risk, and undermine investor confidence—deterring investment not just in shea but across the broader non-oil export sector.

Key Challenges

1. Market Disruptions and Price Collapse

• Shea nut prices have fallen by over 30% since the ban, eroding incomes of farmers and aggregators.
• Existing export contracts face potential default, exposing exporters to legal and reputational risks.
• Loan defaults loom large, as many exporters rely on bank financing for procurement and aggregation.

2. Investor Confidence at Risk

• Abrupt policy shifts send negative signals to investors, who may perceive higher policy risk in Nigeria.
• The progress made in non-oil exports—over $3 billion in the first quarter of 2025—could be reversed if confidence declines.

3. Employment and Social Impact

• The ban threatens thousands of jobs in cultivation, aggregation, logistics, and trade in sheanuts.
• The policy effectively penalizes primary producers to benefit processors, creating a zero-sum scenario rather than a shared-growth model.

Policy Recommendations

1. Adopt a Phased Transition Approach

• Introduce clear timelines for phasing out raw exports, allowing businesses to adjust operations.
• Permit fulfillment of existing export contracts to prevent defaults and maintain Nigeria’s credibility.

2. Enhance Competitiveness of Local Processing

• Address structural challenges—power supply, logistics, infrastructure, financing—to enable processors to purchase raw materials at market prices and still compete internationally.
• Promote innovation and efficiency in processing rather than reliance on artificially low input costs.

3. Protect Primary Producers

• Ensure farmers capture fair market value for their produce, sustaining rural livelihoods and incentivizing production.
• Avoid policies that force primary producers to subsidize processors indirectly.

4. Institutionalize Stakeholder Engagement

• Establish regular consultative platforms involving farmers, processors, exporters, and financiers.
• Improve policy predictability and transparency to build investor trust.

Conclusion

Local value addition is a critical step toward Nigeria’s economic diversification, but it must be pursued in a way that is strategic, inclusive, and market-friendly. A phased transition—supported by structural reforms—will protect rural incomes, sustain non-oil export growth, and ensure that processors thrive on competitiveness rather than on a regime of subsidized raw materials. Policy stability and stakeholder engagement are essential to achieving a win-win outcome for farmers, processors, and the broader economy.