Chief Executive Officer, CEO, of the Center For The Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf
CPPE warns against forcing domestic value addition without adequate processing capacity
The Centre for the Promotion of Private Enterprise (CPPE) has raised an alarm against implementing compulsory domestic value-addition policies without first ensuring sufficient local processing capabilities.
Dr. Muda Yusuf, founder of the CPPE and former President of the Lagos State Chamber of Commerce and Industry (LCCI), issued the caution in a statement on Sunday in Lagos.
Yusuf acknowledged the policy goal of promoting domestic value addition to drive industrialization, job creation, and export diversification.
He affirmed that moving Nigeria up the export value chain aligns with the broader economic transformation agenda.
However, he stressed that any mandate requiring local processing before export must be founded on a critical 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,” Yusuf stated.
He expressed particular concern given the recent strong momentum in Nigeria’s non-oil export sector, fueled by foreign exchange reforms that enhanced export incentives.
He warned that premature value-addition mandates could undermine these gains.
Yusuf explained that the sustainable policy principle is that compulsion must follow capacity, not precede it.
He argued that domestic processing should develop organically from sufficient installed capacity, competitive costs, reliable infrastructure, affordable finance, modern technology, and skilled labour.
Forcing value addition without these conditions, he cautioned, could suppress domestic prices for primary products, reduce farmer incomes, and effectively subsidize processors at the expense of producers.
He added that value addition only delivers benefits when processed goods are globally competitive. Processing sustained by protectionist export restrictions often results in high costs, weak international demand, unsold stock, declining foreign exchange earnings, and increased smuggling.
On investor confidence, Yusuf said sudden mandates heighten regulatory risk, deter investment, and weaken confidence in Nigeria’s non-oil export environment.
He advocated for a policy pathway that prioritizes competitiveness before compulsion, urging Nigeria to first expand processing capacity through coordinated investment while tackling structural constraints like power, logistics, finance, and technology.
Yusuf stressed that industrial policy must protect primary producers and rural livelihoods, ensuring they receive fair, market-aligned prices.
He recommended that any shift toward compulsory value addition be gradual, predictable, and selective, based on measurable improvements in capacity and extensive stakeholder consultation.
While endorsing domestic value addition as essential for long-term industrial transformation, Yusuf warned that reversing the proper policy sequence risks suppressing primary-product prices, weakening export performance, and undermining inclusive growth.
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