By Chukwuma Ngaha
There is no doubt that there has been a sharp and significant decline in Nigeria’s revenue and foreign exchange from crude oil in recent years.
The recent press conference led by Prof. Nnanyelugo Ike-Muonso, Director-General (DG/CEO) of the Raw Materials Research and Development Council (RMRDC) is therefore audacious even as it is timely.
There is no gainsaying the fact that the DG’s has illuminated the deep-seated economic challenges Nigeria faces.
His answers in response to journalists’ questions underscored the alarming reality that Nigeria continues to lose precious resources and foreign exchange by exporting unprocessed raw materials, an issue that demands immediate attention and action from policymakers and economic stakeholders.
Ike-Muonso’s assertion that unprocessed raw materials cannot compete in value with imported value-added products highlights the urgency of transforming Nigeria’s raw materials sector.
The country’s natural wealth, in agriculture and minerals, has yet to be fully harnessed for economic growth, leaving vast potential untapped. While Nigeria has long touted raw materials value addition as a solution, progress has remained disappointingly slow.
At a time when the country’s oil revenues are dwindling, there is an increasing imperative to diversify the economy. Among the many avenues for economic diversification, the processing of raw materials holds the key to significant growth, industrialization, and job creation. Yet, Nigeria’s failure to make substantial progress in this area remains a persistent barrier to prosperity.
The influence of global financial institutions like the World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank cannot be overstated. While these organizations have played a role in shaping Nigeria's economic policies, the country’s over- reliance on their frameworks has stifled the development of a more independent economic strategy. These institutions’ prescriptions, often based on a one-size-fits-all approach, fail to account for Nigeria’s unique circumstances, limiting the country’s ability to chart its own path to sustainable development.
The RMRDC’s Quarterly Statistical Bulletin, which reveals key trends in Nigeria;s raw materials import-export market, further highlights the missed opportunities in raw material value addition. Nigeria’s economy is burdened by the importation of both agricultural and mineral raw materials, with limited local processing. The country’s total mineral raw materials imports reached N2.3 trillion in Q1 2024, including items like kaolin, sulfur, and petroleum jelly—products that could be sourced or processed domestically. The heavy dependence on imported raw materials not only drains foreign reserves but also stifles the growth of Nigeria’s local industries, preventing the development of a competitive, self-sustaining economy.
Similarly, Nigeria imported agricultural raw materials worth N1.1 trillion, such as cod head, fish, and sunflower oil—items that could be produced or processed locally given the country’s vast agricultural potential. This dependency on imports further strains Nigeria’s balance of trade, hindering economic stability and growth.
In stark contrast, Nigeria continues to export vast quantities of raw materials without value addition. The Bulletin highlights that, in the first quarter of 2024, Nigeria’s top mineral exports included titanium, zinc ores, and crude petroleum, valued at N3.9 trillion. However, exporting raw crude oil, without refining or adding significant value locally, means Nigeria is missing out on billions in potential revenue. Similarly, the export of cocoa and cashew nuts in raw form demonstrates the country’s failure to capitalize on its agricultural abundance, with these commodities fetching far more value if processed before being exported.
The problem extends beyond just exports. Nigeria also imports significant quantities of value-added versions of its own raw materials. For example, Nigeria imports cocoa powder and cocoa butter, both derived from its own cocoa exports, reflecting a worrying processing gap. The same applies to other agricultural products like ginger and sesame seeds, which are exported in raw form but imported as processed derivatives. The mineral sector also suffers from a similar processing deprivation, as Nigeria imports refined versions of tin, zinc, and lead, all of which are abundant in the country. This failure to process raw materials domestically represents not only a loss in foreign exchange earnings but also a systemic economic flaw that weakens local manufacturing capabilities.
Despite these troubling figures, the potential for Nigeria to begin utilizing its raw materials locally is evident. According to the Quarterly Statistical Bulletin, Nigeria’s mineral exports in Q1 2024 included 15.4 million kilograms of petroleum oil. While this export volume is noteworthy, it remains largely unprocessed. The country’s continued reliance on raw material exports, rather than processed goods, serves as a clarion call for structural reforms in policy and industry.
In light of the growing demand for economic diversification and the sharp decline in oil revenues, Nigeria must rethink its approach to raw materials. Relying on exports of unprocessed raw materials, especially when value-added products could be produced domestically, represents a strategic misstep. The country’s vast resources in agriculture and minerals present an incredible opportunity for industrialization, job creation, and revenue generation, but these opportunities are only fully realized when the necessary infrastructure, technology, and policy frameworks are put in place to support local processing.
To correct this course, Ike-Muonso wants all relevant sectors, including the government really fast and decisively too. There is an urgent need for policies that incentivize investment in local processing industries, including tax breaks, easier access to credit, and closer collaboration between the public and private sectors. Technological innovation, which comes very crucial, skill development, and infrastructure improvements must be prioritized to shift the country’s focus from raw material exportation to value-added production.
The RMRDC, under the leadership of the DG, has taken a crucial first step in raising awareness about the need for raw materials value addition. However, the real impact of these efforts will depend on how Nigeria’s policymakers, industrialists, and investors respond.
By leveraging the potential of raw materials through local sourcing and processing, Nigeria can transition from an import-dependent economy to one that thrives on innovation, industrial growth, and sustainable development.
In conclusion, Nigeria’s raw materials sector holds the key to a more self-reliant and prosperous future. However, unlocking its full potential requires moving beyond rhetoric and taking concrete action. With the right investments in local processing and value addition, Nigeria can diversify its economy, reduce dependence on oil exports, and achieve sustainable growth. The time for talk is over—its time to act and turn Nigeria’s raw materials into the cornerstone of its economic transformation. The RMRDC, under the visionary leadership of Ike-Muonso, is poised to lead the charge in this transformative journey.
