Nigeria’s raw material sector has a storied history, with early international collaborations shaping the landscape. The continent’s abundant raw materials, critical for fueling industrial activities in Europe, spurred the colonization of Africa. During the colonial era, Nigeria was a major exporter of agro-based industrial raw materials such as cocoa, palm oil, and groundnuts, which were critical for industrial production and the prosperity of the British economy. Post-independence, the focus shifted to include solid minerals and oil, with foreign companies playing a significant role in their extraction.
Today, Nigeria’s raw material sector presents lots of opportunities and challenges. The Nigeria Bureau of Statistics reported that the raw material sector contributes approximately 10% to Nigeria’s GDP, with agriculture as the most significant contributor. Solid minerals contribute less than 1% to GDP, indicating a considerable underutilization despite their abundance. The energy sector, primarily oil and gas, accounts for about 8% of GDP and nearly 90% of export earnings. The enormous potential regardless, the raw material sector, particularly the agro raw materials, faces numerous inefficiencies and lacks competitiveness. One major challenge is the inability to meet international quality standards for exports, which leads to significant rejections and losses estimated at $1 billion annually.
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International partnerships are increasingly crucial to address these challenges. There are at least four ways they can orchestrate enhanced local raw material production and utilization. These are technology transfer, capacity building, financial investment, research and development, market access and global competitiveness.
International partnerships have often introduced advanced techniques and machinery, enabling Nigerian industries to optimize extraction processes, reduce waste, and improve product quality. For instance, collaborations between Nigerian and foreign firms in the agricultural sector have often led to the increased adoption of mechanized farming and increased productivity unofficially estimated at over 20% in essential crops like cocoa and cassava. In the mining sector, Chinese partnerships have introduced modern mining technologies that have boosted the output of solid minerals, such as limestone and granite, by approximately 15%. The resulting technology transfers have always facilitated the development of local expertise.
By investing in technology transfer and training, international partnerships empower the Nigerian workforce to handle complex processes more effectively and catalyze the growth of Nigeria’s raw material sector, fostering sustainable development and economic diversification. One excellent example is the role of the United Nations Industrial Development Organization (UNIDO), which has trained over 10,000 Nigerians in quality management, environmental standards, and production techniques through its collaborations. These programs have significantly improved productivity and innovation in the raw material sector.
Other examples include the World Bank’s Mineral Sector Support for Economic Diversification Project (MinDiver), which was approved in 2017 and aims to build capacity in Nigeria’s mining sector by providing technical assistance, training, and equipment. The project has facilitated the exploitation of solid minerals like gold and tin, focusing on improving local expertise in mining operations and environmental management. The China-Nigeria Capacity Building Initiative has equally provided modern mining technologies and included extensive training programs for Nigerian engineers and technicians. This partnership has improved the efficiency of local mining operations, particularly in the extraction and processing of limestone and granite. The EU-Nigeria Renewable Energy Program is another crucial capacity-building program in Nigeria’s energy sector that has significantly contributed to utilizing local energy resources. The EU’s support in developing solar energy projects has involved training Nigerian engineers and technicians, enhancing the local capacity to harness and use solar energy efficiently.
Foreign direct investment (FDI) is another critical aspect of international partnerships that should significantly impact Nigeria’s raw material sector. In 2023, Nigeria attracted over $3 billion in FDI, with a substantial portion directed towards mining and agriculture. This influx of capital is vital for developing infrastructure and expanding operations, enabling the sector’s modernization and enhancing its global competitiveness. For instance, the mining sector has seen notable investments that have improved extraction technologies and operational efficiencies. In the second quarter of 2023 alone, FDI inflows amounted to approximately $86 million, reflecting ongoing interest in the sector despite fluctuations in previous years, such as a record low of -$1.5 billion in June 2022.
Moreover, international partnerships also provide essential funding for capacity building. The European Union has committed €18 million to support research, development, and skills enhancement in Nigeria’s pharmaceutical industry, which is crucial for local vaccine production and medical technology development. These investments bolster Nigeria’s raw material production and foster innovation and sustainability, positioning the country as a critical player in the global market.
Collaborative research and development (R&D) efforts have driven innovation in Nigeria’s raw material sector. Partnerships with international research institutions have led to the development of new methods for processing raw materials, reducing waste, and improving efficiency. The Raw Materials Research and Development Council [RMRDC] has partnered with various international bodies to promote using indigenous materials. For example, in collaboration with Obafemi Awolowo University and Star Auto Ltd, RMRDC developed an automotive brake pad using palm kernel shell (PKS) as a friction material. This innovation provides an environmentally friendly alternative to asbestos-based brake pads and meets the Standards Organization of Nigeria (SON) quality expectations. The technology is patented, indicating its potential for commercial application. Again, in partnership with Cresol Nigeria Limited, RMRDC produced web offset ink using 80% local raw materials. This initiative reduces Nigeria’s annual expenditure of over ₦1 billion on imported inks, particularly in the printing industry, which consumes about 182 metric tonnes of web offset ink annually.
International partnerships have also opened access to global markets for Nigerian raw materials. For example, the collaboration between Nigerian agribusinesses and European buyers has resulted in the export of high-quality cocoa and sesame seeds to Europe, earning Nigeria over $200 million in 2022 alone. The export value of raw materials from Nigeria was approximately N505.9 billion Naira (about $1.2 billion) in 2021, demonstrating a growing trend in international trade. The export increase is attributable to enhanced quality control measures and compliance with international standards facilitated by partnerships with foreign entities. For instance, Nigeria’s cocoa exports to the European Union have been enhanced through partnerships that help meet stringent quality requirements. Despite facing a 6.1% tariff on cocoa exports to the EU, Nigerian agribusinesses have successfully leveraged technology and training to enhance product quality. In the same vein, the collaboration between Nigerian farmers and European buyers has led to a significant increase in sesame seed exports. In 2022, Nigeria became one of the largest suppliers of sesame seeds to Europe, with exports contributing a substantial portion of the country’s agricultural revenue.
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The Raw Materials Research and Development Council (RMRDC) has been pivotal in enhancing the quality of Nigerian raw materials and developed a GIS-Based Raw Materials Information System through partnerships with international research institutions to deepen the exploitation of local raw materials. According to the Manufacturer’s Association of Nigeria (MAN), local raw materials sourcing averaged 53.5% in 2023, reflecting a gradual improvement in domestic production capabilities. This performance level is still below that of countries like South Africa and India, which boast 70% and 80% local sourcing rates, respectively.
Despite the numerous ways that international partnerships can potentially enhance the performance of Nigeria’s raw material sector, several impediments undermine their effectiveness. One significant challenge is the inadequate regulatory framework, which hampers operational efficiency. Nigeria ranks 131st out of 190 countries in the World Bank’s Ease of Doing Business report, primarily due to complex customs procedures involving at least ten different agencies, which can lead to delays and increased costs for exporters. This bureaucratic inefficiency makes it difficult for Nigerian raw materials to compete globally.
Nigeria’s local sourcing capability also remains low, averaging around 53.5% in 2023, compared to 70% in South Africa and 80% in India. The resulting reliance on imported materials reflects a lack of local expertise in processing and production, exacerbated by insufficient training and capacity-building. Many workers in the raw material sector lack the necessary skills to operate efficiently. High tariffs many overseas trading partners impose also hinder Nigeria’s export potential. For example, Nigerian cocoa exports face a 6.1% tariff in the European Union, which diminishes their competitiveness against products from countries with advanced processing technologies. This tariff barrier, frequent policy changes, and corruption create an unpredictable business environment that deters investment and complicates trade.
Similar to the impediment of the regulatory environment, inadequate infrastructure is a significant obstacle to the growth of Nigeria’s raw material sector. Poor transportation networks and unreliable power supply increase operational costs and limit the ability to meet international quality standards. Without substantial investment in infrastructure and a commitment to streamline regulations, Nigeria’s raw material sector will continue to struggle to improve its performance regardless of international partnerships.
Despite the challenges facing Nigeria’s raw material sector, significant opportunities exist for forging new international partnerships, particularly with emerging markets in Africa and Asia. These regions present untapped potential for collaboration, allowing Nigeria to explore new resources and expand its market reach. Strategic alliances with emerging economies, especially within the BRICS group, can provide valuable insights and resources to enhance Nigeria’s raw material sector. For instance, The African Continental Free Trade Area (AfCFTA) offers a platform for Nigeria to strengthen regional partnerships by harmonizing trade policies and reducing tariffs, ultimately increasing its competitiveness on the global stage.
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As global attention shifts towards sustainability, Nigeria can attract international partners by adopting green and sustainable development practices in its raw material sector. This focus aligns with global sustainability goals and positions Nigeria favourably in a market increasingly driven by environmental considerations. Nigeria must implement policy changes to fully leverage these opportunities, including strengthening our regulatory framework, incentivizing foreign investment, enhancing infrastructure, and promoting transparency and good governance, ensuring we can effectively capitalize on international partnerships for economic growth.
In conclusion, international partnerships offer a pathway to overcoming the challenges facing Nigeria’s raw material sector, enabling the country to enhance its global competitiveness and achieve sustainable economic growth. However, to fully leverage these opportunities, Nigeria must address the regulatory, infrastructural, and operational challenges that currently impede progress.
