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When countries such as Nigeria export most of their raw materials in their natural form, they fail to maximize several economic benefits. They export their jobs and severely slow down the pace of industrial growth. Adding value to raw materials increases export earnings, strengthens local industries, and reduces dependence on volatile commodity markets. Over the past decade, Nigeria has improved its raw material value addition, rising from 15.6% in 2013 to 25.2% in 2023. However, this growth remains modest compared to its peers. South Africa grew from 63.2% to 75.6%, Egypt from 51.1% to 64.8%, and Brazil from 83.4% to 97.6% within the same period. On average, Nigeria’s value addition over the ten years was 20.43%, far below South Africa’s 69.4%, Egypt’s 57.79%, and Brazil’s 89.93%. Despite Nigeria’s upward trend, the significant and persistent gaps – such as 50.4 percentage points behind South Africa and 72.4 points behind Brazil in 2023 – highlight that the country lags significantly in industrial development.
Exporting raw materials without local processing perpetuates underdevelopment, as highlighted by the Nigerian president at the recent UN General Assembly (UNGA). He noted that Africa’s reliance on raw material exports leaves it vulnerable to foreign markets, forcing countries to repurchase finished products at much higher prices. This practice drains foreign exchange, stifles local industries, and limits job creation, ultimately prolonging economic challenges. In contrast, countries like Indonesia, which banned raw nickel exports to promote domestic refining, have demonstrated how value addition can attract investment and foster sustainable growth. Similarly, Ghana’s efforts to process cocoa locally aim to capture more value within the country, strengthening its economy. Ensuring raw materials undergo significant processing before export is essential for African nations to break the cycle of economic dependence and achieve long-term development.
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South Africa and Egypt, which have invested more in processing industries, enjoy higher industrial output, reflecting their ability to retain more value within their economies. In contrast, Nigeria’s weak industrial base and over-reliance on raw material exports leave the country vulnerable to external markets. The low levels of value addition force Nigeria to re-import finished products at higher prices, limiting its industrial growth and deepening economic challenges. Without solid domestic industries, Nigeria lags far behind its peers in South Africa, which maintains a robust index above 0.6, showcasing the benefits of value-added production. This comparison highlights the need for Nigeria to shift towards processing its raw materials locally to foster sustainable industrialization.
For instance, Nigeria’s total imports between April 2023 and June 2024 reveal that manufactured goods are dominant with ₦27.3 trillion, far surpassing imports of raw materials (₦5.4 trillion), oil/energy (₦16.7 trillion), agriculture (₦3.6 trillion), and solid minerals (₦314 billion). This overwhelming dependence on manufactured imports is a significant factor contributing to the instability of the naira, as it exerts pressure on the country’s foreign exchange reserves. Much of Nigeria’s foreign currency is spent on purchasing finished products that could otherwise be produced domestically if local raw materials were adequately processed and utilized. Consequently, if Nigeria increased the processing of local raw materials, it could reduce the importation of manufactured goods, conserve foreign exchange, and stabilize the naira. Addressing the structural reliance on manufacturing imports through better utilization of raw materials is essential for achieving long-term economic stability and industrial self-sufficiency.
Again, Nigeria’s poor performance in secondary raw material utilization shows that the country is missing critical opportunities to advance sustainable development. In 2023, Nigeria’s secondary raw material utilization stood at 4.8%, far behind South Africa (26.2%), Egypt (21%), and Brazil (47.6%). This highlights a significant gap in Nigeria’s ability to recycle, reuse, and process waste materials into new products – activities that could complement its industrial efforts while promoting environmental sustainability.
Pursuing increased value addition in raw materials must align with the United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), 13 (Climate Action), 15 (Life on Land), and 17 (Partnerships for the Goals). Efficient utilization of secondary raw materials, like recycled metals or bio-waste, can reduce dependence on energy-intensive imports, foster renewable energy industries, and make energy production more sustainable. Increased recycling and secondary material use help reduce carbon emissions from mining and raw material extraction, contributing to Nigeria’s efforts to combat climate change. Secondary material utilization limits environmental degradation caused by excessive extraction of natural resources, thereby protecting ecosystems, biodiversity, and land resources. Finally, expanding Nigeria’s capabilities in secondary raw material industries requires partnerships with other countries and industries that have excelled in recycling and sustainable manufacturing. Such collaborations can enhance technology transfer, foster innovation, and promote circular economy practices.
The responsibility for driving increased value addition and secondary raw material utilization in Nigeria rests heavily on the Raw Materials Research and Development Council (RMRDC). As the agency tasked with promoting the efficient use of local resources, the RMRDC must lead efforts to foster industrialization by ensuring raw materials are processed domestically and secondary resources are fully utilized. Nigerians are looking to the Council to rise to the challenge by developing sustainable strategies, supporting local industries, and promoting research and innovation. Without decisive action from the RMRDC, the country will continue to miss out on the economic and environmental benefits of value addition, recycling, and resource optimization – opportunities critical for stabilizing the naira, reducing imports, and achieving sustainable development.
That is why, as a response, the Council has articulated a three-pronged strategy to reposition itself and engage effectively with these pressing challenges. The first strand involves the co-creation of a 10-year roadmap with the African Development Bank (AfDB), which will outline clear objectives and actionable steps for achieving substantial value addition and secondary raw material utilization. This roadmap will align with regional and global best practices, ensuring Nigeria’s strategies are competitive within Africa and beyond.
The second strand focuses on developing agile infrastructure and processes needed to support the roadmap’s implementation. This infrastructure development involves setting up 17 modern research and advanced raw material testing centres, a robust raw material information system with a combination of all relevant databases, two machine development workshops, 3D printing and proof-of-concept demonstrations laboratory, technology transfer offices, and a Center for Circularity and Repurposing all of which collectively provide industrial support facilities, and creating frameworks encouraging private-sector participation in value addition. These infrastructures are critical for enabling local industries to refine raw materials, reduce dependency on imports, and boost exports of finished products, ultimately contributing to the stabilization of the naira.
The third strand emphasizes facilitating critical partnerships and collaborations with international organizations, research institutions, private enterprises, and government agencies. By fostering partnerships, the RMRDC aims to unlock opportunities for technology transfer, capacity building, and sustainable industrial practices. Collaborations will also open access to funding, innovation, and expertise needed to scale up secondary raw material utilization and promote a circular economy in line with SDGs 7, 13, 15, and 17.
With these strategies, Nigerians expect the RMRDC to take the lead in transforming the country’s raw material sector into a hub of innovation and sustainable development. The success of these efforts will reduce the burden of imported manufactured goods, promote local industries, and stabilize the economy, making Nigeria more self-reliant and globally competitive.
On the policy and supporting law end, the Raw Materials Research and Development Council (RMRDC) is sponsoring a critical bill to reshape the nation’s export and import policies. The bill, when passed, will mandate that all raw materials exported from Nigeria must have at least 30% value addition, ensuring that processing takes place domestically. It also seeks to restrict the importation of raw materials that are abundantly available in the country, a measure designed to boost local industries. This legislative effort represents a bold attempt to stimulate industrialization, reduce the trade deficit, and foster economic sustainability by encouraging Nigeria to shift from exporting raw commodities to producing higher-value goods.
The proposed RMRDC-sponsored bill aims to ensure that a portion of the raw material value chain remains within Nigeria. When raw materials undergo some processing – such as turning cocoa beans into cocoa butter or refining crude oil into petrochemicals – the resulting products are more valuable and generate higher export earnings. The bill also restricts imports of raw materials substantially available domestically, reducing Nigeria’s dependence on foreign products and encouraging local production. This dual approach will undeniably unlock new industrial opportunities, attract investment, and create jobs, positioning Nigeria as a key player in global markets.
Several African countries have implemented similar policies with measurable success, providing valuable lessons for Nigeria. In Botswana, the government enacted laws mandating the domestic processing of diamonds before export. This move attracted international investors who established cutting and polishing factories within the country, creating jobs and boosting revenue. As a result, Botswana’s diamond sector has become a cornerstone of the economy, contributing significantly to GDP growth and employment. Similarly, Ivory Coast has implemented policies to promote the local grinding of cocoa, its primary export commodity. Tax incentives and penalties introduced by the government have encouraged domestic processing, allowing the country to transform over 40% of its cocoa beans into higher-value products like cocoa butter and powder. This shift has strengthened Ivory Coast’s economy, created employment opportunities, and improved its trade balance.
Zambia’s experience in the copper industry also highlights the benefits of value-addition policies. The government’s requirement for local smelting and refining of copper ore has led to the establishment of processing facilities, increasing revenue and generating jobs. The country has retained more value within its borders by selling refined copper rather than raw ore, demonstrating the transformative potential of value-addition strategies.
The economic benefits of value-addition policies are clear. Processed goods command higher prices on global markets, leading to increased export revenue and greater foreign exchange earnings. Local processing industries require skilled labour to create jobs and reduce unemployment. The development of these industries also fosters broader industrial growth, attracting investments in infrastructure and manufacturing. Moreover, countries can reduce trade deficits and strengthen economies by limiting raw material exports and reducing the importation of available resources. The growth of local industries further encourages technology transfer and skill development, contributing to long-term economic resilience.
