A proposed bill in Nigeria mandating that all raw materials be processed locally to a minimum of 30 percent before export is stirring a mix of reactions from analysts and industry stakeholders.
Currently under review by the Nigerian Senate, the bill seeks to amend the Raw Materials Research and Development Council Act, aiming to boost the local manufacturing and processing sectors, create jobs, and reduce the country’s dependence on imported goods.
Sponsored by Senator Peter Nwaebonyi of Ebonyi North, the bill has already passed a public hearing and is awaiting a third reading before final passage.
If enacted, the bill would impose penalties on exporters failing to meet the 30 percent processing threshold. It also calls for the establishment of a certification system for exporters and the creation of a list of raw materials earmarked for local processing.
Proponents of the bill, including Nwaebonyi, argue that the policy is essential for Nigeria’s economic growth. “This bill seeks to enshrine a fundamental economic truth: no nation can attain true economic greatness by exporting its wealth in its crudest form,” Nwaebonyi said during the bill’s introduction.
Supporters contend that the bill will incentivize value-added production within Nigeria, enhancing export revenue and contributing to the broader goal of economic diversification.
However, critics, including some economists and industry leaders, have raised concerns about the bill’s potential to impose additional burdens on local businesses, which are already grappling with infrastructure challenges. Muda Yusuf, CEO of the Centre for Promotion of Private Enterprise (CPPE), cautioned that the bill might be premature. “You don’t start by punishing producers,” Yusuf said. “First, create an environment where local manufacturing thrives, then introduce restrictions.”
Yusuf pointed to Nigeria’s struggling cocoa processing sector as an example of the country’s ongoing challenges with local production, underscoring the need for improvements in infrastructure and incentives for local manufacturers.
Charles Sanni, an economist and supporter of the bill, sees it as a potential boost to Nigeria’s trade balance. “Currently, we export raw materials at low prices and import finished goods at higher prices. By processing these materials locally, we could increase export earnings and strengthen our foreign exchange reserves,” Sanni said. However, he also stressed the need for significant improvements in infrastructure to ensure the policy’s success.
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The bill has also sparked debate about enforcement challenges. Bamidele Ayemibo, an export consultant, questioned how the government would ensure compliance, particularly given the difficulties in tracking informal exports. “How do we ensure 30 percent processing when many products leave Nigeria undocumented, by road or rail?” Ayemibo asked.
Industry leaders, including Benedict Obhiosa, Executive Secretary of the Manufacturers Association of Nigeria Export Promotion Group, have largely supported the bill but echoed concerns over the country’s infrastructure. Obhiosa cited the example of cashew nuts, which are exported raw to countries like Vietnam and Brazil for processing, only to be sold back to Nigeria at a higher price. “Why shouldn’t Nigeria benefit from processing its own raw materials?” he said.
Despite the bill’s potential to drive industrialization, Obhiosa stressed that addressing infrastructural deficits such as poor roads, security issues, and high credit costs would be critical to the success of local processing industries.
If passed, the bill could represent a significant step towards reducing Nigeria’s reliance on raw material exports and accelerating the country’s industrialisation. However, its success will depend largely on the government’s ability to tackle the infrastructural and financial obstacles that have long hindered the growth of local industries.
