CPPE picks holes in 30% raw materials value addition bill

The Centre for the Promotion of Private Enterprise (CPPE) has kicked against the Raw Materials Research and Development Council (RMRDC) Bill currently before the National Assembly, saying the bill if passed into law, has the prospect of creating significant adverse and unintended consequences for Nigerian exporters and manufacturers. The bill currently proposes, among others, that […]

The Centre for the Promotion of Private Enterprise (CPPE) has kicked against the Raw Materials Research and Development Council (RMRDC) Bill currently before the National Assembly, saying the bill if passed into law, has the prospect of creating significant adverse and unintended consequences for Nigerian exporters and manufacturers.

The bill currently proposes, among others, that no primary products of export should take place unless there is a minimum of 30% local value addition and that manufacturers will not be allowed to import raw materials that are available in sufficient quantities in the country.

Daily Trust reports that the federal government had pushed for the passage of the bill, which, it stated, could attract $30bn investment in the next decade.

It would be recalled that a public hearing on the bill was held on March 5, 2025, where the Senate President, Senator Godswill Akpabio, described it as a game changer for Nigeria’s economic development and industrial transformation.

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The Director General of RMRDC, Prof. Nnanyelugo M. Ike-Muonso, had decried the present situation where the nation’s raw materials are exported in their virgin forms at very low prices and then imported into the country as finished goods at very high prices.

He stated that when passed into law and implemented, the country would not only provide jobs for its citizens, but would also improve its foreign exchange earnings.

But the Director/CEO of the centre, Dr Muda Yusuf, said while the idea of promoting local value addition is good for the economy and potentially enhances the chances of better earnings from our exports, the policy has to ensure a balance between the interests of exporters of primary products and the processors.

He said, “It is also imperative to undertake a robust study on domestic raw materials availability before legislating on a ban on raw materials for manufacturers.”

“What is needed is a win-win proposition, not a zero-sum game. The current proposal in the bill will penalise exporters in the country, most of whom export primary products.

“Thousands of jobs in the primary products export supply chain would be put at risk.  The major non-oil exports are: cocoa beans and cocoa butter, cashew nuts, Gum Arabic, Ginger, sesame seeds, shea butter.  Even crude oil export is still a major component of Nigeria’s export. Until recently, domestic refining capacity was nil.”

The Centre queried the metrics to be used to determine the minimum 30% value addition and who will determine and give approval for the export to proceed, adding that what metrics would be used to determine raw materials that manufacturers would be allowed to import into the country.

“The position of the CPPE is that this bill raises more questions than answers.  It is a very simplistic proposition which has not taken into account the critical challenges of manufacturing, processing and value addition in the Nigerian economy.

“This contextual understanding is very critical to enrich the conversations around the raw materials bill.  Most agro-processors have collapsed not so much because of the raw materials availability, but the challenges of productivity and competitiveness.

Production costs are prohibitive. The cost of energy, cost of funds, logistics cost, bureaucratic bottlenecks, exchange rate, multiple taxation etc.  These are bigger issues that need to be addressed to promote value addition. We should be causative in our approach to solving problems and focus less on the symptoms.”

According to Yusuf, if passed, the bill would create new corruption gateways in the bureaucracy as businesses will now be burdened with another chain of approvals.

The centre explained that import and export regulations are not often legislated but they are trade policy issues “which are calibrated from time to time by the fiscal policy authorities in the light of prevailing economic conditions.”

It urged the National Assembly to discontinue deliberations on the bill and encouraged the Raw Materials Research and Development Council to focus on its core mandate of raw materials research to offer the most cost-effective raw material options for manufacturers.