Shea nut: CPPE raises alarm over looming loan defaults

Economic think-tank, the Centre for the Promotion of Private Enterprise (CPPE), has raised an alarm over the recent ban on shea nut export by the Nigerian government.

Ripples Nigeria reports that on August 26, 2025 President Bola Tinubu ordered a six-month temporary ban on the export of raw shea nuts.

Explaining the rationale behind the ban, Abubakar Kyari, the Minister for Agriculture and Food Security, said it was to “secure supply for local processors, create jobs, and protect a value chain where 95% of pickers are women”.

He added that the ban on shea nut shipments will help correct an imbalance whereby the country produces nearly 40 per cent of the world’s supply, yet captures less than 1 per cent of a $6.5 billion global market.

Reacting to the ban in a statement on Sunday, September 14, 2025, Muda Yusuf, CPPE’s Chief Executive Officer (CEO), said the policy has triggered market disruptions and affected farmers’ income.

He disclosed that while the Federal Government’s six-month ban on raw shea nut exports, which is intended to accelerate domestic value addition and support Nigeria’s industrialisation drive, is laudable, the instantaneous implementation of the ban has created severe disruptions in the shea nut value chain—hurting farmers, aggregators, exporters, and logistics providers.

“Shea nut prices have fallen by over 30% since the ban, eroding incomes of farmers and aggregators,” he said.

“Existing export contracts face potential default, exposing exporters to legal and reputational risks.

“Loan defaults loom large, as many exporters rely on bank financing for procurement and aggregation.”

Yusuf said the federal government’s six-month ban on raw shea nut exports is aimed at promoting local value addition and advancing Nigeria’s industrialisation agenda.

However, he said the sudden implementation has severely disrupted the shea nut value chain, hurting farmers, aggregators, exporters, and logistics providers.

“This brief argues for a phased, consultative transition framework to safeguard investor confidence, preserve hard-won gains in non-oil exports, and ensure inclusive, market-driven growth,” Yusuf said.

The CPPE CEO said Nigeria accounts for about 40 percent of global shea nut production, giving it significant potential in the international market.

He said moving up the value chain through local processing could create jobs, earn foreign exchange, and build industrial capacity.

“However, policy credibility is crucial: sudden bans on exports with immediate effect introduce uncertainty, heighten risk, and undermine investor confidence—deterring investment not just in shea but across the broader non-oil export sector,” Yusuf said.

Highlighting key challenges, he said abrupt policy shifts send adverse signals to investors, who may perceive higher policy risk in Nigeria.

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“The progress made in non-oil exports—over $3 billion in the first quarter of 2025—could be reversed if confidence declines,” the CPPE said.

“The ban threatens thousands of jobs in cultivation, aggregation, logistics, and trade in shea nuts.

“The policy effectively penalises primary producers to benefit processors, creating a zero-sum scenario rather than a shared-growth model.”

Yusuf urged the federal government to set clear timelines for phasing out raw shea nut exports to give businesses time to adjust their operations.

“Permit fulfilment of existing export contracts to prevent defaults and maintain Nigeria’s credibility,” he said.

“Address structural challenges—power supply, logistics, infrastructure, financing—to enable processors to purchase raw materials at market prices and still compete internationally.

“Promote innovation and efficiency in processing rather than reliance on artificially low input costs.”

Yusuf also asked the federal government to ensure farmers receive fair market value for their produce, in order to sustain rural livelihoods and encourage production.

“Avoid policies that force primary producers to subsidise processors indirectly. Establish regular consultative platforms involving farmers, processors, exporters, and financiers, improve policy predictability and transparency to build investor trust” he said.

The economist said local value addition is vital for Nigeria’s economic diversification, but it should be implemented through a strategic, inclusive, and market-driven approach.

Concluding, Yusuf stated, “Local value addition is a critical step toward Nigeria’s economic diversification, but it must be pursued in a way that is strategic, inclusive, and market-friendly.

“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 subsidised raw materials.

“Policy stability and stakeholder engagement are essential to achieving a win-win outcome for farmers, processors, and the broader economy”.

By: Babajide Okeowo

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