CPPE warns against premature compulsory value-addition policies

The Centre for the Promotion of Private Enterprise (CPPE) yesterday warned against the adoption of compulsory domestic value-addition policies without adequate processing capacity.

The CPPE Chief Executive Officer, Dr Muda Yusuf, in a statement, on Sunday, said such measures can distort commodity markets and undermine Nigeria’s non-oil export growth. He made this known on Sunday in Lagos via a statement.

He said the growing policy places emphasis on domestic value addition as a pathway to industrialisation, job creation, export diversification and improved foreign-exchange earnings.

He affirmed that efforts to move Nigeria up the value chain in the production and export of primary commodities were legitimate and aligned with the country’s broader economic transformation agenda.

“Value addition is important, but it must be pursued with realism and proper sequencing. Exporting primary products should not be discouraged in an environment where the cost of processing is uncompetitive,” Yusuf said.

He explained that Nigeria’s manufacturing sector still battles high production costs due to poor power supply, weak infrastructure, logistics challenges, and multiple taxation, making large-scale processing difficult in the short term.

He stressed that any policy framework mandating compulsory domestic processing before export must be guided by a fundamental economic principle; the existence of adequate, efficient and competitive domestic processing capacity.

“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 said.

Yusuf noted that the concern was particularly critical given the strong momentum recorded by Nigeria’s non-oil export sector over the past two years, largely driven by foreign exchange reforms that improved export incentives and competitiveness.

He stated that premature or poorly sequenced value-addition mandates could undermine these hard-won gains.

Yusuf explained that the core principle underpinning sustainable value-addition policy was that compulsion must follow capacity, not precede it.

He said domestic processing should evolve organically from sufficient installed and operational processing capacity, competitive production costs, reliable infrastructure, access to affordable long-term finance, modern technology, skilled labour and efficient linkages between producers and processors.

He warned that forcing value addition through export restrictions in the absence of these conditions could suppress domestic prices for primary products, reduce incomes for farmers and rural communities, and amount to an implicit subsidy of processors at the expense of producers.

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