CPPE kicks against raw materials bill, seeks withdrawal

The Centre for the Promotion of Private Enterprise (CPPE) has criticised the Raw Materials Research and Development Council (RMRDC) Bill currently before the National Assembly, warning that it could have significant adverse and unintended consequences for Nigerian exporters and manufacturers.

The bill proposes, among other things, that “no primary products 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 quantity in the country.”

Dr Muda Yusuf, Director/CEO of the CPPE, stated in a press release on Monday that while the idea of promoting local value addition may appear beneficial for the economy and could potentially boost export earnings, the policy must strike a balance between the interests of primary product exporters and processors.

He said, “It is imperative to undertake a robust study on domestic raw material availability before legislating any ban on raw materials for manufacturers. What is needed is a win-win proposition, not a zero-sum game.”

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Dr Yusuf warned that the bill, in its current form, would penalise exporters—most of whom export primary products—and could threaten thousands of jobs along the primary product export supply chain.

He highlighted that Nigeria’s major non-oil exports include cocoa beans and cocoa butter, cashew nuts, gum arabic, ginger, sesame seeds, and shea butter. Even crude oil, he noted, remains a major export product.

“Until recently, domestic refining capacity was nil, and this proposition raises a number of questions,” he said.

“What metrics would be used to determine the minimum 30% value addition? Who will approve such exports? What study has been conducted to ascertain the local processing capacity for each category of currently exported primary products? What criteria will determine which raw materials manufacturers may import into the country? What is the timeline for implementation? Is it even within the mandate of the RMRDC to promote the banning of exports or imports?” Dr Yusuf queried.

He reiterated the CPPE’s stance that the bill raises more questions than answers and reflects a simplistic approach that fails to consider the critical challenges of manufacturing, processing, and value addition in Nigeria.

According to him, understanding the broader context is crucial to informing debates around the raw materials bill.

“Most agro-processors have collapsed not because of raw material shortages, but due to challenges around productivity and competitiveness. Production costs are prohibitive. Energy costs, cost of capital, logistics expenses, bureaucratic bottlenecks, exchange rate instability, and multiple taxation—these are the bigger issues that must be addressed to promote value addition. We must be causative in our problem-solving approach, rather than merely treating symptoms,” he argued.

Dr Yusuf further warned that if passed, the bill would open new avenues for corruption within the bureaucracy, as businesses would be subjected to additional layers of approvals.

“Furthermore, the issue of banning imports or exports does not fall within the jurisdiction of the Raw Materials Research and Development Council or the Ministry of Science and Technology. These are fiscal policy matters that lie with the Ministry of Finance, in collaboration with the Ministry of National Planning and the Ministry of Industry, Trade and Investment. In this case, the Nigerian Export Promotion Council (NEPC) must also be involved.

“This is vital to assess the implications for the non-oil export sector, the manufacturing sector, and the economy as a whole. Coordination and coherence in policy-making are essential. Import and export regulations are typically matters of trade policy, which are revised from time to time based on prevailing economic conditions. They are not usually subjects for legislation,” he emphasised.

“Trade policies need to be flexible—hence their exclusion from statutory legislation. We therefore urge the National Assembly to halt deliberations on the bill and instead encourage the RMRDC to focus on its core mandate of conducting research to offer cost-effective raw material options to manufacturers,” Dr Yusuf concluded.

The CPPE maintained that the Council’s involvement in trade policy matters is misplaced, that the bill offers little value, and advised the RMRDC to formally withdraw it.