The restriction of raw commodities export without adequate domestic processing demand often constrains the market, as there is always excess local supply, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has said.

This imbalance exerts downward pressure on farm-gate prices, reducing incomes for farmers, aggregators, and rural communities.

Yusuf said owing to this, value is transferred from primary producers to processors—not through productivity or efficiency gains, but through policy-induced price suppression.

He noted that such an outcome amounts to an implicit subsidisation of processors by primary producers, a situation that is inequitable, distortionary, and unsustainable.

He said that primary producers constitute the foundation of commodity value chains and sustain the livelihoods of millions of Nigerians.

According to him, policies that depress prices or restrict access to export markets can weaken incentives for production and long-term investment; threaten rural employment and household incomes; deepen poverty and vulnerability in agrarian communities; and erode the supply base required for future industrial processing.

Yusuf stressed that a compulsory value-addition regime that suppresses producers to support processors creates a zero-sum dynamic that undermines inclusive and sustainable growth.

He said: “Value addition yields economic benefits only when processed outputs are globally competitive in price, quality, and reliability. Processing sustained primarily by protectionist export restrictions—rather than efficiency and productivity—often leads to elevated production costs; weak international demand for processed goods; accumulation of unsold inventories; declining foreign-exchange earnings; and smuggling of primary products outside the country.

“Under such conditions, restricting primary-product exports may destroy existing export value without generating sustainable new industrial value. Long-term investment across both primary production and processing depends on predictable, transparent, and market-aligned policy frameworks.

“Sudden, arbitrary, or premature value-addition mandates heighten perceptions of regulatory risk, discourage investment across commodity sectors, and weaken confidence in Nigeria’s non-oil export environment.”

While noting that achieving durable domestic value addition requires a sequencing strategy that prioritises competitiveness before compulsion, he suggested that Nigeria must build adequate processing capacity through coordinated public- and private-sector investment aimed at expanding installed capacity, improving utilisation rates, and ensuring processors can absorb domestic output without distorting primary product prices.

“Structural cost constraints must be addressed decisively. Reliable and affordable power, efficient transport and logistics, access to long-term and reasonably priced finance, technology upgrading, and workforce skills development are the true foundations of competitive processing. Reducing these structural barriers is far more effective than restricting primary-product exports.

“The economics of primary producers and rural livelihoods must be protected. Producers should receive fair, market-aligned prices, and industrial policy must not depend on depressing farm incomes to support downstream industries.

“Any transition toward compulsory value addition should be gradual, predictable, selective and market-responsive—anchored on measurable increases in domestic processing capacity and developed through stakeholder consultation,” he said.

Yusuf disclosed that trade restrictions should not be matters for legislative enactment; rather, they should be fiscal and trade-policy instruments administered by relevant fiscal authorities with sufficient flexibility to respond to prevailing economic conditions.

He added that such an approach promotes shared prosperity across the value chain, rather than redistribution through distortionary controls.