The Centre for the Promotion of Private Enterprise (CPPE), a leading Nigerian economic policy think tank, has issued a robust critique of the Federal Government’s recent decision to impose an immediate six-month ban on the export of raw shea nuts. While acknowledging the government’s intention to foster domestic value addition and enhance Nigeria’s industrial capacity, the CPPE has raised significant concerns about the abrupt implementation of the policy, warning that it has already triggered severe disruptions across the shea nut value chain. These disruptions threaten the livelihoods of farmers, aggregators, and exporters, while also jeopardizing Nigeria’s broader non-oil export ambitions.
In a detailed policy brief released in September 2025, the CPPE, under the leadership of its Chief Executive Officer, Dr. Muda Yusuf, outlined the far-reaching implications of the export ban. The organization emphasized that while the policy’s objective of promoting local processing and value addition is commendable, its sudden enforcement has caused unintended economic consequences, including a sharp decline in shea nut prices, financial hardship for primary producers, and risks to Nigeria’s reputation as a reliable player in the global trade market. The brief calls for a strategic, phased approach to the policy’s implementation, alongside structural reforms to address systemic challenges in the shea nut industry.
Background: The Importance of Shea Nuts in Nigeria’s Economy
Shea nuts, derived from the shea tree (Vitellaria paradoxa), are a critical agricultural commodity in Nigeria, particularly in rural communities across the northern and central regions of the country. The shea industry supports millions of livelihoods, especially for women who dominate the harvesting, processing, and trading of shea nuts and their derivatives, such as shea butter. Nigeria is one of the world’s leading producers of shea nuts, with the commodity playing a pivotal role in the country’s non-oil export sector. In the first quarter of 2025, Nigeria’s non-oil exports, including shea nuts, contributed over $3 billion to the national economy, underscoring the sector’s importance in diversifying Nigeria’s revenue base away from crude oil.
Shea nuts are highly valued in global markets, particularly in the cosmetics, food, and pharmaceutical industries, where shea butter is used in products ranging from skincare creams to confectionery. The export of raw shea nuts has traditionally been a significant source of foreign exchange for Nigeria, with countries in Europe, Asia, and North America serving as key markets. However, the Nigerian government’s decision to ban raw shea nut exports reflects a broader policy shift toward promoting domestic processing and value addition, with the aim of capturing more economic value within the country.
The Policy and Its Immediate Impact
The Federal Government’s six-month ban on raw shea nut exports, announced in early 2025, was introduced as part of a broader strategy to encourage local processing and boost the manufacturing sector. The policy aligns with Nigeria’s Economic Recovery and Growth Plan (ERGP) and the National Industrial Revolution Plan (NIRP), both of which prioritize industrialization and value addition in key agricultural sectors. By restricting the export of raw shea nuts, the government hopes to incentivize investments in local processing facilities, create jobs, and increase the export of higher-value shea products, such as refined shea butter.
However, the CPPE’s policy brief argues that the sudden implementation of the ban has caused significant economic disruptions, particularly for stakeholders in the shea nut value chain. According to the CPPE, the policy has led to a 30% drop in shea nut prices in local markets, as exporters are unable to fulfill existing contracts, and domestic processors lack the capacity to absorb the surplus supply. This price collapse has had a devastating impact on primary producers—mostly smallholder farmers and rural women—who rely on shea nut sales for their livelihoods.
Dr. Muda Yusuf, the CPPE’s CEO, highlighted the financial hardship faced by these producers, noting that the price decline has eroded their incomes and pushed many into economic distress. “The immediate effect of the ban has been a 30% drop in shea nut prices,” Dr. Yusuf stated. “This has created severe financial hardship for farmers and aggregators and put existing export contracts at risk of default.” The ripple effects of the policy extend beyond farmers to include aggregators, transporters, and exporters, all of whom face financial losses and potential loan defaults due to the sudden disruption of their operations.
Broader Economic Implications
The CPPE’s policy brief underscores the broader economic implications of the export ban, particularly its potential to undermine Nigeria’s non-oil export sector. In recent years, Nigeria has made significant strides in diversifying its economy, with non-oil exports emerging as a critical driver of growth. The $3 billion recorded in non-oil export revenue in the first quarter of 2025 reflects the sector’s growing importance, with agricultural commodities like shea nuts, cocoa, and sesame seeds playing a central role. However, the CPPE warns that abrupt policy changes, such as the shea nut export ban, could erode investor confidence and jeopardize these gains.
“Abrupt policy changes send negative signals to investors, who may view Nigeria as a high-risk environment for business,” the CPPE brief stated. The organization argues that the sudden imposition of the ban has created uncertainty for both domestic and international stakeholders, who rely on policy predictability to make long-term investment decisions. For exporters, the inability to fulfill existing contracts risks damaging Nigeria’s reputation as a reliable supplier in global markets, potentially leading to a loss of market share to competitors in countries like Ghana, Mali, and Burkina Faso, which are also major shea nut producers.
Moreover, the CPPE highlighted the potential job losses associated with the ban. The shea nut value chain supports thousands of jobs, from cultivation and harvesting to aggregation, transportation, and export logistics. By disrupting this value chain, the policy threatens the livelihoods of countless workers, particularly in rural communities where alternative employment opportunities are scarce. The brief argues that the policy effectively penalizes primary producers to benefit processors, creating an imbalance that could exacerbate poverty and inequality in rural areas.
Challenges in the Shea Nut Value Chain
The CPPE’s policy brief provides a detailed analysis of the challenges posed by the export ban, identifying several key issues that have contributed to its disruptive impact. These challenges include:
Price Collapse and Income Losses: The 30% drop in shea nut prices has directly reduced the incomes of primary producers, many of whom are smallholder farmers operating on thin profit margins. The lack of alternative markets for their produce has left farmers with limited options, forcing them to sell at depressed prices or risk spoilage of their harvests.
Risk of Loan Defaults: Many exporters and aggregators rely on bank loans to finance their operations, including the purchase of shea nuts from farmers. The sudden halt in export activities has disrupted their cash flows, putting them at risk of defaulting on these loans. This could have broader implications for the financial sector, as non-performing loans increase.
Insufficient Domestic Processing Capacity: While the government’s goal is to promote local processing, Nigeria’s shea processing industry currently lacks the capacity to absorb the volume of raw shea nuts previously destined for export. The CPPE notes that many processing facilities face challenges such as unreliable power supply, high logistics costs, and limited access to modern technology, which hinder their competitiveness.
Erosion of Investor Confidence: The abrupt nature of the policy has raised concerns among investors about Nigeria’s business environment. The CPPE warns that such unpredictability could deter both domestic and foreign investment in the shea industry and other agricultural sectors.
Job Losses and Social Impact: The disruption of the shea nut value chain threatens thousands of jobs, particularly in rural communities where shea production is a primary source of income. Women, who make up a significant portion of the workforce in this sector, are particularly vulnerable to the policy’s adverse effects.
Recommendations for a Strategic Transition
To address these challenges, the CPPE has proposed a series of recommendations aimed at mitigating the negative impacts of the export ban while supporting the government’s goal of promoting domestic value addition. The organization advocates for a strategic, phased approach to the policy’s implementation, emphasizing the need for inclusivity, stakeholder engagement, and structural reforms. Key recommendations include:
Phased Implementation of the Ban: The CPPE urges the government to allow a transition period during which existing export contracts can be fulfilled. This would provide exporters with the time needed to adjust their operations and minimize financial losses. The brief suggests setting clear timelines for the ban’s full implementation, giving stakeholders certainty and predictability.
Structural Reforms to Enhance Processing Capacity: To support local processing, the government must address systemic challenges in the shea industry, such as unreliable power supply, high transportation costs, and limited access to modern processing technology. The CPPE recommends targeted investments in infrastructure, including rural electrification and road networks, to reduce the cost of doing business for processors.
Protecting Primary Producers: The CPPE emphasizes the importance of ensuring that farmers receive fair market value for their shea nuts. The government should implement measures to prevent processors from exploiting the surplus supply created by the export ban, which could further depress prices and harm farmers. Potential interventions include price support mechanisms or subsidies for smallholder farmers.
Stakeholder Engagement and Policy Predictability: The CPPE calls for the institutionalization of regular consultative platforms involving all stakeholders in the shea nut value chain, including farmers, exporters, processors, and policymakers. These platforms would facilitate dialogue, improve policy predictability, and build trust between the government and private sector.
Incentives for Local Processors: To encourage investment in local processing, the government should provide incentives such as tax breaks, access to low-interest loans, and technical support for small and medium-sized enterprises (SMEs) in the shea industry. These measures would help bridge the capacity gap and enable processors to absorb the surplus supply of raw shea nuts.
Capacity Building and Technology Transfer: The CPPE recommends investing in training programs and technology transfer initiatives to enhance the skills and capabilities of local processors. This would improve the quality and competitiveness of Nigerian shea products in global markets, supporting the government’s value addition goals.
A Call for Inclusive and Sustainable Policy
In its concluding remarks, the CPPE stresses that achieving local value addition in the shea industry must be done strategically and inclusively to avoid unintended consequences. Dr. Yusuf emphasized the need for a “win-win outcome” that balances the interests of primary producers, exporters, processors, and other stakeholders. “A phased approach, combined with structural reforms and stakeholder collaboration, would ensure a sustainable economic diversification strategy that benefits all participants in the shea nut value chain,” he stated.
The CPPE’s policy brief serves as a timely reminder of the complexities involved in implementing economic policies in a developing economy like Nigeria. While the government’s intention to promote local processing is laudable, the abrupt nature of the shea nut export ban highlights the importance of careful planning and stakeholder consultation. By adopting the CPPE’s recommendations, the government can mitigate the policy’s adverse effects, protect vulnerable stakeholders, and position Nigeria’s shea industry for long-term growth and competitiveness.
Broader Context: Nigeria’s Non-Oil Export Ambitions
The shea nut export ban is part of a broader push by the Nigerian government to diversify its economy and reduce its dependence on oil revenue. Nigeria, Africa’s largest economy, has long relied on crude oil as its primary source of foreign exchange, but volatility in global oil markets and the need for sustainable growth have prompted policymakers to focus on non-oil sectors. Agriculture, in particular, has been identified as a key driver of economic diversification, given Nigeria’s vast arable land, favorable climate, and large rural workforce.
The shea industry, with its strong export potential and significant social impact, is a critical component of this diversification strategy. However, the CPPE’s critique of the export ban underscores the challenges of balancing short-term policy objectives with long-term economic goals. Without adequate preparation and support, policies aimed at promoting value addition can inadvertently harm the very stakeholders they are intended to benefit.
Conclusion
The CPPE’s policy brief on Nigeria’s shea nut export ban offers a comprehensive and nuanced perspective on the policy’s implications for the country’s economy and its stakeholders. While the government’s goal of promoting domestic processing is a step in the right direction, the abrupt implementation of the ban has caused significant disruptions, threatening the livelihoods of farmers, exporters, and other participants in the shea nut value chain. By adopting a phased approach, investing in structural reforms, and fostering stakeholder collaboration, the government can address these challenges and create a more inclusive and sustainable shea industry.
As Nigeria continues its journey toward economic diversification, the lessons from the shea nut export ban highlight the importance of evidence-based policymaking, stakeholder engagement, and a commitment to balancing the interests of all parties. The CPPE’s recommendations provide a roadmap for achieving these goals, ensuring that Nigeria’s shea industry can thrive in a competitive global market while delivering tangible benefits to its people.
