CPPE Warns Against Premature Value-Addition Mandates That Could Distort Non-Oil Export Gains
The Centre for the Promotion of Private Enterprise (CPPE) has raised a red flag over compulsory domestic value-addition policies, cautioning that poorly sequenced mandates could distort commodity markets, suppress primary producers’ incomes, and erode Nigeria’s hard-won non-oil export gains.
In a statement issued in Lagos, CPPE founder, Dr Muda Yusuf, acknowledged the growing emphasis on domestic value addition as a pathway to industrialisation, job creation, and improved foreign-exchange earnings. He affirmed that moving Nigeria up the value chain in the production and export of primary commodities is legitimate and aligned with the country’s broader transformation agenda.
However, Yusuf stressed that compulsion must follow capacity, not precede it. “Where such capacity is weak or absent, compulsory value-addition policies risk creating market distortions and imposing hardship on actors within the primary production value chain,” he warned. The caution comes at a time when Nigeria’s non-oil export sector has recorded strong momentum over the past two years, largely driven by foreign exchange reforms that improved competitiveness.
In contrast, Yusuf argued that premature mandates could undermine these gains, weaken investor confidence, and discourage capital inflows into the sector. He explained that sustainable value addition requires sufficient installed processing capacity, competitive production costs, reliable infrastructure, affordable long-term finance, modern technology, skilled labour, and efficient linkages between producers and processors. Without these fundamentals, he noted, compulsory processing risks becoming an implicit subsidy for processors at the expense of farmers and rural communities.
Yusuf added that value addition delivers benefits only when processed outputs are globally competitive in price, quality, and reliability. Policies sustained mainly by protectionist restrictions, he cautioned, often lead to high production costs, unsold inventories, declining foreign-exchange earnings, and increased smuggling of primary products.
On investor confidence, Yusuf said sudden or arbitrary mandates heighten regulatory risk and weaken trust in Nigeria’s non-oil export environment. He advocated a gradual, predictable, and market-responsive transition anchored on measurable improvements in domestic processing capacity and extensive stakeholder consultation. “Nigeria must first expand domestic processing capacity through coordinated public and private sector investment, while addressing structural cost constraints such as power supply, transport and logistics, access to finance, technology and skills development,” he said.
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