In a decisive policy shift aimed at bolstering Nigeria’s position in the global value chain, the Presidency, on 26 August 2025, announced an immediate six-month prohibition on the exportation of raw shea nuts. Framed as a “pro-value addition policy” by Vice President Kashim Shettima, this measure signals a determined shift from Nigeria’s traditional role as a purveyor of unprocessed agricultural commodities towards becoming a hub for refined shea butter and its derivatives. Nigeria accounts for an estimated 35–40% of global shea nut production but, as at 2024, captured less than 1% of the current $6.5 billion market – projected to expand to nearly $9 billion by 2030. This disparity underscores a clear imperative: transition from exporting raw shea nuts to developing domestic value chains that stimulate industrial growth, create employment, and generate much-needed foreign exchange. Shea kernels, highly prized for producing butter used predominantly in cosmetics and food products, serve primarily consumers in Europe and North America, while demand in Asia is growing rapidly as plant-based oils gain wider consumer acceptance. West Africa remains the dominant production region, led by Nigeria, Mali, Burkina Faso, Benin, and Ghana.

This policy initiative aligns with the Nigerian government’s broader economic vision encapsulated in the “Zero Oil Plan,” which seeks to diversify the country’s export base beyond crude petroleum. It also reflects a growing regional trend in West Africa, where nations including Ghana and Burkina Faso have pursued restrictions on raw shea exports to stimulate local processing capacity. For Nigeria, the policy aspires to scale processed shea earnings tenfold from an estimated $65 million today to $300 million in the near term, with potential growth to $3 billion by 2027. Realising such growth demands accelerated industrial expansion, infrastructure improvements, and accessible financing – particularly for rural women who, as at early 2025, constituted c. 95% of the shea collection and initial processing workforce.

Figure 1: Sheanut Production (‘000 Metric Tonnes)

Source: Tridge.com

Productivity Amid Capacity Constraints

Nigeria’s shea industry tells a story of abundant natural endowment hampered by limited industrial development. The country’s shea belt encompasses over five million hectares of wild shea trees, with processing plants installed to handle approximately 160,000 metric tonnes annually. Despite this, factories currently operate at a suboptimal 35–50% capacity utilisation. An estimated 18% of harvested shea nuts undergo domestic processing, while the bulk is exported raw or lost through informal cross-border leakage, estimated at nearly 90,000 metric tonnes annually. This represents a sizeable leakage in the value chain, which is curtailing domestic upstream benefits and enriching foreign processors, notably in Europe and increasingly in neighbouring Ghana and Burkina Faso, through manufacturing shea butter for cosmetics, food, and pharmaceuticals. Ghana’s relative policy consistency and success in attracting multinational investment, exemplified by the Bunge Loders Croklaan processing plant in Tema, has become a regional benchmark for Nigeria’s ambitions.

Figure 2: Shea Belt Region (Distribution of Shea trees in Africa)

Source: The Centre for the Promotion of Imports from Developing Countries (CBI)

The Nigerian government’s objective is to reverse this dynamic by stopping raw exports and compelling local value addition. We believe that success will hinge on five crucial variables: the swift scaling of processing infrastructure, improvement in rural logistics and power supply, progressive financing schemes accessible to predominantly female shea collectors and processors, effective border enforcement to curtail smuggling, and restored confidence of global buyers.

Disruption and Immediate Economic Impact

The announcement of the export ban precipitated a rapid 33% drop in domestic raw shea nut prices within just three days, descending to around ₦800,000 per tonne by 29 August 2025. This plunge has inflicted financial shockwaves among rural sheanut farmers and collectors, many of whom rely on their sales as a primary income source. Exporters, too, face severe operational challenges as contractual obligations collide with the new regulatory environment, forcing abrupt renegotiations or cancellations. Local factories have yet to demonstrate the absorptive capacity to utilise the resultant surplus, amplifying risks of inventory build-ups and liquidity constraints through the supply chain.

Enforcement Challenges and Regulatory Gaps

The policy’s success rests critically on its enforcement, an area fraught with uncertainty. Nigeria’s porous borders, previously conduits for smuggling in commodities such as rice, are expected to represent a significant loophole. The government has disclosed few concrete steps for border control reinforcement, making illicit trade in raw shea nuts a credible and imminent threat to policy objectives. Compounding this is the absence of mechanisms to stabilise farm-gate prices. Without guaranteed minimum prices or interventionist support, rural producers are vulnerable to market imbalances dominated by more powerful processors. This imbalance risks eroding collection incentives, potentially reducing the volume of raw material necessary for sustained industrial expansion.

Structural Challenges Beyond the Ban

Criticism abounds regarding the measure’s scope. The ban does not tackle entrenched structural constraints – erratic power supply, poor infrastructure, and limited financing options – which collectively hinder the agroprocessing sub-sector. The risk of an expanding black market driven by price disparities looms large, potentially eroding government revenue and control. There is also a significant risk that farmers might abandon collection activities if local prices fail to compensate for labour intensity, ultimately reducing raw input availability – the very resource the initiative seeks to harness. The six-month period is also largely viewed as insufficient for the industrial modernisation required to absorb Nigeria’s raw production effectively. This pause in export is also in stark contrast to the government’s broader reform ethos, which embraces market liberalisation as reflected in the exchange rate unification and petrol subsidy removal. Its abruptness raises legal and trade policy questions, potentially risking disputes under the World Trade Organisation (WTO) framework and undermining investment attractiveness.

Lessons from Regional Precedents and Policy Alternatives

Comparisons with Ghana’s carefully crafted strategy provide instructive insights. Ghana’s success was underpinned by policy stability and international partnerships that facilitated technology transfer and capital inflows. Indonesia’s raw nickel export ban offers another example of enforced industrial upgrading, albeit one contingent on rigorous governance frameworks and sustained investment – not assured in Nigeria’s current context. More measured options, such as export tariffs on raw shea nuts combined with fiscal incentives for processors, concessional loans, and phased implementation, could have balanced disruption with growth. This approach would allow exporters to honour existing contracts, preserving exporter confidence while gradually shifting towards processing activities to mitigate social dislocation.

Conclusion: Weighing Ambition Against Practical Realities

In conclusion, Nigeria’s shea nut export ban is an ambitious, bold policy reflecting a strategic push towards value addition and economic diversification. The core of this industrial gamble is a trade-off: foregoing the more certain, albeit smaller, revenues from raw nut exports ($60 million) in pursuit of a fivefold increase in earnings to a projected $300 million from processed goods in the near term. Whether the government can realise this larger prize remains the central question. Its materialisation is contingent not just on the ban itself, but on the swift resolution of attendant challenges: protecting vulnerable rural communities from price shocks, rigorously enforcing border controls to prevent leakages, and addressing the deep-seated structural impediments that have historically constrained the processing sub-sector. We believe that the coming months will decisively reveal the policy’s longer-term efficacy and legacy – either as a catalyst for transformation or a costly shock that unsettled a vital rural economy and ceded competitive advantage to neighbouring countries.