By Oluwaferanmi Bello

Sir: On February 25, 2026, President Bola Tinubu extended the ban on raw shea nut exports for another year, following an earlier six-month ban. The government framed the export ban as an effort to boost domestic processing and strengthen Nigeria’s industrial capacity within the agricultural sector.

However, the ban alone cannot deliver the expected results. Shea nut processing plants remain scarce and underutilised; investment has not kept pace with production, and Nigeria still lacks large-scale, modern refineries. Addressing these challenges requires sustained investment in processing infrastructure and alternative power supply, while allowing the shea industry to thrive on demand and supply.

Nigeria produces 350,000 to 500,000 tonnes of shea nuts yearly, but domestic processing plants produce only about 160,000 tonnes yearly. While the low production is due to raw shea exports, there are also structural challenges, such as erratic power supply, poor infrastructure, and limited financing options, that constrain the industry. Despite the extended export ban, smuggling and black-market activities would continue to limit domestic processing of shea nuts. If Nigeria does not address these issues, it will struggle to meet its short-term revenue target of $300 million from shea nuts and is even less likely to reach the projected $3 billion by 2027.

To sustain investment in processing infrastructure, entrepreneurs in the shea industry need access to reliable sources of funding, such as long-term, low-interest loans, venture capital, and credit guarantees. Government-backed financial institutions in Nigeria, including the Bank of Industry, Nigerian Export-Import Bank, Development Bank of Nigeria, and Bank of Agriculture, can support entrepreneurs by offering affordable long-term loans to boost local processing of shea nuts. Loans would enable businesses to purchase modern equipment, fund processing operations, and serve as seed capital to build new plants.

These institutions should also monitor the funds to ensure they are used effectively. In addition, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending should provide credit guarantees to banks to reduce lending risks and encourage more financing for shea nut processors. Entrepreneurs can also raise capital from private equity investors for their businesses.

Adequate funding would gradually expand Nigeria’s processing capacity to match its production and help processors meet global standards.

It would also support the establishment of more large-scale processing facilities across the Middle Belt, where most shea nuts are produced. With improved access to capital, processors could also invest in logistics systems that enable direct sourcing from farmers.

Nigeria’s power supply remains highly unstable; the national grid collapsed 10 times in 2024, sometimes within days of each incident, and has continued to fail through 2025 and 2026. Under such conditions, processing plants, including shea facilities, frequently lose access to electricity. The Electricity Act 2023 allows entrepreneurs to generate power to meet their own industrial needs, making alternative energy a necessity. Gas, solar, or hybrid systems can provide a more reliable supply, depending on the business’s financial capacity. High-voltage power generator sets can also serve as backup during outages, load shedding, or local distribution failures, although entrepreneurs must still navigate state-level regulations.

By switching to alternative power sources, owners of shea processing plants can ensure uninterrupted processing. This would support fair competition and ensure prompt delivery of shea butter to cosmetic companies. It would also enhance the production capacity of their plants and enable them to meet market demand better. Although investing in alternative power sources entails additional costs, it would significantly expand Nigeria’s domestic processing capability and grow the shea industry’s market. In addition, entrepreneurs will gain greater control over processing output and will prepare better for uncertainties that could otherwise disrupt the value chain.

Nigeria’s ban on raw shea exports aligns with a broader trend across West African countries, including Ghana, Burkina Faso, Mali, and Togo. However, the ban alone does not guarantee that Nigeria’s value in the global shea market will improve. While the extended ban creates an avenue to export excess shea nuts through the Nigerian Commodity Exchange framework, this path has limitations.

Most shea farmers are smallholders who manage tiny plots and rely on traditional methods. The Nigerian Commodity Exchange (NCX), although relatively transparent and fair, requires registration, compliance with quality standards, and formal procedures that many farmers cannot meet on their own. As a result, they often depend on cooperatives or middlemen to access the market, adding extra layers that reduce flexibility and slow down transactions.

When the federal government of Nigeria revokes the extended ban and allows the shea industry to operate by free market, farmers and processors can respond directly to demand, negotiate prices, and expand processing without procedural bottlenecks. Countries like Malaysia, Brazil, and Taiwan strengthened sectors such as palm oil and soybeans not through export bans, but through tax incentives, export credits, private investment, and technology adoption to promote value addition.

Nigeria’s shea industry can pioneer the transition to a non-oil export economy when entrepreneurs operate in an enabling environment that supports scale, efficiency, and market freedom. This would increase the market value of the shea industry through innovation and competition, rather than through restrictions and state control.

Oluwaferanmi Bello is a writing fellow of African Liberty.