Nigeria is forfeiting billions of dollars in potential economic value by exporting raw materials instead of processing, branding and marketing finished products, a report by Rome Business School Nigeria has revealed.
According to The Punch, the report, titled Rethinking ‘Made in Nigeria’: Value Chains, Global Positioning and Economic Identity Transformation, said weak domestic value chains are preventing Nigerian businesses from creating more jobs, generating foreign exchange and competing effectively in international markets.
The country’s shea industry was cited as a major example of the problem.
According to the report, Nigeria produces about 40 per cent of the world’s raw shea nuts but accounts for only about one per cent of the global shea products market, which is valued at approximately $6.5bn.
It noted that a significant portion of the value is generated after the raw materials leave Nigeria, where they are processed into cosmetics and other consumer goods before being packaged and marketed by international brands.
The report said a similar situation exists in the cocoa, leather, spice and other agricultural commodity sectors, with Nigerian producers largely supplying raw materials while foreign companies benefit more from processing, branding and distribution.
The problem, it added, is not limited to agriculture. Nigeria retains only about 15 per cent of the value generated in its petroleum industry, compared with more than 40 per cent in Brazil, highlighting the cost of inadequate domestic value addition.
The findings come amid efforts by Nigeria to diversify its economy away from crude oil and boost domestic production as the country grapples with foreign exchange pressures and declining household purchasing power.
According to data cited in the report, crude oil represented 74.98 per cent of Nigeria’s exports in the second quarter of 2024 and 65.44 per cent in the third quarter.
Manufacturing contributes approximately nine per cent to the country’s gross domestic product, while factories operate at around 57 per cent of their installed capacity.
The report also identified significant challenges in the agricultural sector, estimating that more than 40 per cent of fresh farm produce is lost after harvest due to inadequate storage facilities, poor transportation networks and weak cold-chain infrastructure.
As a result, smallholder farmers lose more than 30 per cent of their income, according to the report.
Micro, small and medium-sized enterprises make up 96.9 per cent of businesses in Nigeria, employ 87.9 per cent of the workforce and contribute 46.32 per cent of GDP.
However, they account for only 6.21 per cent of exports, reflecting the difficulty faced by local businesses in accessing international markets.
Founding president and dean of Rome Business School Nigeria, Professor Antonio Ragusa, said Nigeria possesses the resources and entrepreneurial capacity needed to establish a stronger manufacturing sector but must do more to retain value from its products.
Nigeria must move beyond exporting commodities and focus on processing, innovation, branding and production that can meet international standards, Ragusa said.
He argued that “Made in Nigeria” should become associated with quality, innovation, reliability and international competitiveness rather than being treated primarily as a patriotic campaign.
The Head of Academics at Rome Business School Nigeria, Sam Igwe, said strengthening institutions, industrial infrastructure and supply chains would help Nigeria develop a stronger national brand.
He pointed to Afrobeats as an example of how Nigerian creativity has gained global recognition, saying similar strategies should be adopted to improve the international profile of Nigerian-made products.
The General Manager of Rome Business School Nigeria, Olakunle Asummo, said policymakers and manufacturers must tackle infrastructure, access to finance, certification, packaging and internationally recognised standards to enable Nigerian businesses to compete more successfully in foreign markets.
The report further identified consumer confidence as another challenge confronting domestic brands.
It said many Nigerians opt for imported products because they perceive them as offering more consistent quality, better packaging, warranties and stronger consumer protection, rather than simply because they dislike locally produced goods.
It recommended that future “Made in Nigeria” initiatives prioritise five areas: international certification, product design, premium packaging, authentic storytelling and stronger consumer protection.
Ultimately, the report said Nigeria’s major challenge is not a lack of natural resources or entrepreneurs but the failure to effectively connect production with processing, logistics, branding and global distribution.
Bridging these gaps, it said, would enable Nigerian businesses to retain more economic value locally, increase exports, create better-paying jobs and reduce the country’s dependence on raw commodity exports.
