The Centre for the Promotion of Private Enterprise (CPPE) has warned the Federal Government about its plan to ban the export of raw materials without domestic value addition, saying it could backfire if critical conditions are not met.

The warning comes in response to a policy brief released considering the passage of the Raw Materials Research and Development Council (RMRDC) Amendment Bill by the National Assembly.

The bill, which now awaits presidential assent, mandates that a minimum of 30 per cent value addition be made to raw materials such as lithium and cocoa before they can be exported.

The primary objective of the proposed law is to promote industrialisation, create jobs and reduce the export of unprocessed resources.

The legislation, which is currently awaiting presidential approval, aims to boost industrialisation, generate employment, and prevent the export of valuable resources. It requires processing, beneficiation or manufacturing of resources like lithium and cocoa before they can be exported from the country.

In a document signed by its Chief Executive Officer, Dr Muda Yusuf, the CPPE emphasised the importance of domestic value addition for Nigeria’s long-term industrial transformation.

The document stated that any policy framework that mandates compulsory domestic processing before export must be guided by fundamental economic principles. The principles include that adequate, efficient, and competitive domestic processing capacity must exist before imposing export restrictions on primary products.

The CPPE highlighted the significance of policy sequencing, asserting that processing capacity, efficiency and competitiveness must be established before imposing compulsory processing. The document warned that reversing this order could lead to the suppression of primary-product prices, penalise rural producers, discourage aggregators and weaken export performance.

The CPPE maintained that sustainable industrialisation is achieved by building competitive capacity that enables Nigerian processed products to succeed both locally and globally. This success is attributed to the products’ efficiency, quality and cost competitiveness.

According to the Centre, a balanced, inclusive and capacity-driven strategy will lead to credible export growth, resilient rural livelihoods, and sustainable industrial development for Nigeria.

The CPPE emphasised that where such foundational capacity is lacking, compulsory value-addition policies can create distortions in commodity markets and cause significant hardship for actors within the primary production value chain.