By Adeyemi David
The Centre for the Promotion of Private Enterprise (CPPE) has cautioned policymakers against imposing compulsory domestic processing requirements on primary products without first establishing adequate local capacity, warning that such measures could distort markets and harm producers.
In a policy brief released on Sunday by the Executive Officer of CPPE, Dr. Muda Yusuf acknowledged the growing push for domestic value addition as a pathway to industrialisation, job creation, export diversification and improved foreign-exchange earnings.
However, it stressed that policies mandating local processing must be carefully sequenced to avoid undermining Nigeria’s non-oil export gains.
He emphasised that “compulsion must follow capacity, not precede it,” noting that sustainable value addition depends on sufficient processing capability, competitive production costs, reliable infrastructure, access to finance, modern technology and skilled labour.
The organisation warned that restricting exports of raw commodities in the absence of strong domestic demand could suppress farm-gate prices by creating excess local supply, thereby reducing incomes for farmers and rural communities.
According to the brief, such policies effectively transfer value from primary producers to processors through policy-induced price distortions rather than productivity gains.
It further noted that primary producers form the backbone of commodity value chains and support millions of livelihoods. Policies that limit export opportunities or depress prices could weaken incentives for production, threaten rural employment and erode the supply base needed for future industrial growth.
He also highlighted the risk of losing global competitiveness if processing industries are sustained mainly by protectionist export restrictions instead of efficiency. Potential consequences include higher production costs, weak international demand, unsold inventories, declining foreign-exchange earnings and increased smuggling of primary products.
The think tank added that sudden or poorly designed mandates could heighten regulatory uncertainty and discourage long-term investment across commodity sectors, ultimately weakening confidence in Nigeria’s export environment.
To achieve durable value addition, CPPE recommended a sequencing strategy that prioritises competitiveness before compulsion.
This includes expanding processing capacity through public- and private-sector investment, addressing structural cost challenges such as power and logistics, ensuring access to affordable financing, upgrading technology and developing workforce skills.
The group also urged policymakers to protect the economics of primary producers by ensuring they receive fair, market-aligned prices, stressing that industrial policy should not rely on depressing farm incomes to support downstream industries.
According to him, any transition toward compulsory value addition should be gradual, predictable and market-responsive, anchored on measurable improvements in domestic capacity and developed through stakeholder consultation.
He concluded that while domestic value addition is critical to Nigeria’s long-term industrial transformation, reversing the policy sequence could penalise rural producers and weaken export performance. It maintained that building competitive processing capacity remains the most credible route to sustainable industrialisation and resilient export growth.
