CPPE Cautions Against Premature Compulsory Value-Addition Policies
Centre for the Promotion of Private Enterprise (CPPE) has cautioned against the adoption of compulsory domestic value-addition policies without adequate processing capacity.
According to CPPE founder, Dr Muda Yusuf, 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.
Yusuf acknowledged the growing policy 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.
He, however, 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. The CPPE boss explained that the core principle underpinning sustainable value-addition policy was that compulsion must follow capacity, not precede it.
Yusuf 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.
Yusuf added that value addition delivered benefits only when processed outputs are globally competitive in price, quality and reliability.
He said processing sustained mainly by protectionist export restrictions often led to high production costs, weak international demand, unsold inventories, declining foreign-exchange earnings and increased smuggling of primary products.
On investor confidence, Yusuf said sudden or arbitrary value-addition mandated heightened regulatory risk, discouraged investment and weakened confidence in Nigeria’s non-oil export environment. He advocated a more sustainable policy pathway that prioritised competitiveness before compulsion.
“Nigeria must first expand domestic processing capacity through coordinated public and private sector investment, while addressing structural cost constraints such as power supply, transport and logistics, access to finance, technology and skills development,” he said.
Yusuf stressed that industrial policy must protect the economics of primary producers and rural livelihoods, noting that producers should receive fair, market-aligned prices.
He added that any transition toward compulsory value addition should be gradual, predictable, selective and market-responsive, anchored on measurable improvements in domestic processing capacity and extensive stakeholder consultation.
Yusuf noted that while domestic value addition was essential to Nigeria’s long-term industrial transformation, reversing the proper policy sequence risked suppressing primary-product prices, weakening export performance and undermining inclusive growth. #CPPE Cautions Against Premature Compulsory Value-Addition Policies#
