The Centre for the Promotion of Private Enterprise (CPPE) says the Federal Government’s sudden six-month ban on raw shea nut exports has triggered a sharp decline in market prices, falling by over 30%, and caused widespread disruption across Nigeria’s shea value chain.
While the policy aims to boost local processing and industrial growth, its immediate implementation has left farmers, aggregators, exporters, and logistics providers grappling with severe economic consequences.
Dr. Muda Yusuf, CEO of CPPE, raised alarm over the fallout in a recent policy brief, urging the government to adopt a phased and consultative approach to avoid further damage to rural incomes and investor confidence.
A Price Shock That Hit the Grassroots First
Since President Bola Tinubu approved the temporary export ban last month, the shea nut market has experienced a dramatic price collapse. According to Dr. Yusuf, “Shea nut prices have fallen by over 30% since the ban, eroding incomes of farmers and aggregators.”
For many rural producers, shea nut sales represent a vital seasonal income stream. The sudden drop in prices has left them unable to recover costs, let alone make a profit.
He said aggregators, who serve as intermediaries between farmers and exporters, have also been hit hard. With export channels abruptly closed, stockpiles of unsold shea nuts are mounting, and many are now at risk of defaulting on bank loans used to finance procurement.
Export Contracts and Financial Exposure
The ripple effects extend beyond the farm gate. Exporters, many of whom operate on tight margins and rely on international contracts, now face potential legal and reputational risks due to non-fulfillment. “Existing export contracts face potential default,” the CPPE brief warned, “exposing exporters to litigation and damaging Nigeria’s credibility in global markets.”
The financial exposure is significant. Many exporters depend on bank financing to fund aggregation and logistics. With the export pipeline blocked, repayment capacity is compromised, raising the specter of widespread loan defaults across the sector.
Investor Confidence and Economic Stability at Risk
Nigeria’s non-oil export sector has made notable progress, generating over $3 billion in revenue in the first quarter of 2025 alone. However, abrupt policy shifts like the shea nut ban send troubling signals to investors.
“Sudden bans on exports with immediate effect introduce uncertainty, heighten risk, and undermine investor confidence,” Dr. Yusuf cautioned. “This deters investment not just in shea, but across the broader non-oil export sector.”
The ban also threatens thousands of jobs in cultivation, aggregation, logistics, and trade. Dr. Yusuf described the policy as “effectively penalizing primary producers to benefit processors,” creating a zero-sum dynamic that undermines inclusive growth.
Recommendations for a Balanced Transition
To mitigate the damage and realign the policy with economic realities, CPPE has proposed a series of recommendations:
- Phased Transition Approach: Introduce clear timelines for phasing out raw exports, allowing businesses to adjust operations and fulfill existing contracts to preserve Nigeria’s credibility.
- Enhance Processing Competitiveness: Address structural challenges—such as power supply, logistics, infrastructure, and financing—to enable processors to operate efficiently without relying on artificially low input costs.
- Protect Primary Producers: Ensure farmers receive fair market value for their produce. Policies should avoid forcing them to subsidize processors indirectly, which undermines rural livelihoods.
- Institutionalize Stakeholder Engagement: Establish regular consultative platforms involving farmers, processors, exporters, and financiers. Transparent and predictable policymaking is essential to building long-term trust.
Industrialization Must Not Come at the Expense of Farmers
Local value addition is a vital component of Nigeria’s economic diversification strategy. However, it must be pursued through strategic, inclusive, and market-friendly policies.
As Dr. Yusuf emphasized, “A phased transition, supported by structural reforms, will protect rural incomes, sustain non-oil export growth, and ensure that processors thrive on competitiveness rather than on a regime of subsidized raw materials.”
The shea nut export ban may have noble intentions, but its execution must be recalibrated to avoid deepening rural poverty and destabilizing investor sentiment. A win-win outcome is possible if policy is guided by pragmatism, consultation, and economic empathy.
What You Should Know
- Last month, President Bola Tinubu approved the 6-month temporary ban on the export of raw shea nut to curb informal trade, boost local processing, protect and grow Nigeria’s shea industry.
- The ban, which is with immediate effect, is subject to review on expiration and specifically aimed at boosting Nigeria’s shea value chain to generate around $300 million annually in the short term.
