FG Targets N23.2tn GDP with Value-Addition Bill to Curtail Raw Material Exports

As Nigeria’s Gross Domestic Product averaged ₦19.83tn in 2024, the Federal Government is pushing forward a bold legislative move to stem economic losses caused by the export of unprocessed raw materials. With projections targeting a 17% year-on-year growth, the government expects to boost real GDP to ₦23.2tn and beyond in 2025 through a mandatory value-addition policy.

This proposed legislation mandates that exporters must process at least 30% of raw materials locally before they are exported. Failure to comply would attract a 15% levy on export value and possible revocation or suspension of value-addition certificates. The bill, sponsored by Senator Onyekachi Nwebonyi, passed through the Senate on July 2, 2025, and now awaits presidential assent.

According to Professor Nnayelugo Ike-Muonso, Director-General of the Raw Materials Research and Development Council (RMRDC), the initiative is a strategic move to improve domestic productivity and reduce economic leakage caused by raw exports.

“Our helicopter-model projection shows real output could grow by more than 17% annually,” he stated in an interview with The PUNCH.

Scope of the Value-Addition Law

The amendment aligns with a 2009 ECOWAS directive on value-added exports and is designed to cover both non-oil and oil sectors. Although widely seen as targeting solid minerals and agricultural produce, Ike-Muonso clarified that crude oil, as a raw material, would also be subject to the policy in the long run.

“If this bill is fully understood and implemented, it won’t stop at the non-oil sector—it will extend to crude oil. Right now, we export crude and import refined products, losing enormous value in the process.”

Under the proposed framework, any export that fails to meet the 30% value-addition threshold will be treated as smuggled goods under Nigerian customs law. The RMRDC will issue guidelines outlining what qualifies as value addition—including processes like refining, packaging, moisture control, or component selection—and also oversee enforcement by training Customs and other border officials.

“You don’t necessarily need to turn sand into blocks,” Ike-Muonso explained. “Even packaging or improving shelf life qualifies.”

Private Sector Response: Support with Caution

The private sector, particularly manufacturers and industrialists, have responded positively—albeit cautiously—to the proposed law. Many believe the 30% threshold is realistic, as several companies already exceed it through backward integration strategies.

“Thirty per cent is an easy target,” said George Onafowokan, Chairman of the Manufacturers Association of Nigeria (MAN), Ogun Chapter. “We are achieving 40–60% already. This bill ensures genuine local content participation.”

Segun Kuti-George, National Vice President of the National Association of Small-Scale Industrialists, also supported the move, noting that the bill will reduce exploitation and loss of value in international trade.

“We export cocoa for $10/kg and import chocolate at $100/kg. This law is long overdue,” he added.

However, industry stakeholders are calling for clarity on enforcement and full stakeholder engagement before the law takes effect.

Enforcement and Anti-Smuggling Strategy

To curb illegal exports and smuggling, the bill includes strong penalty clauses and requires rigorous enforcement by border and port agencies. Ike-Muonso assured that Customs and related agencies will be trained to identify unprocessed goods and embedded materials like gold in copper or sand.

“Customs has reached out to us for training to better identify raw and value-added materials,” he said.

The RMRDC is also developing a compliance certificate system, and plans to audit raw material usage in manufacturing facilities. Manufacturers who use a minimum of 30% local materials may also qualify for tax incentives.

Presidential Interest and Broader Implications

Insiders say that President Bola Tinubu is showing strong interest in the bill, especially due to its potential impact on Nigeria’s cocoa sector, where manufacturers are reportedly struggling to find raw inputs.

“Factories can’t find enough cocoa here because everything is being exported raw. The President is aware and concerned,” Ike-Muonso disclosed.

This scarcity extends to local staples. According to him, “Even food vendors struggle to find fio-fio or basic ingredients. This is because we export everything in raw form and create artificial scarcity at home.”

Towards Industrialisation and Economic Sovereignty

Beyond increasing GDP, the value-addition bill is being seen as a foundational step toward industrialising Nigeria, reducing import dependency, and creating employment.

“This is the best chance Nigeria has to industrialise sustainably,” said Ike-Muonso. “If raw materials are processed here, manufacturers will no longer have to import what should be locally available, which will reduce costs and enhance competitiveness.”

The Council is also working to support research institutions and startups developing ways to convert local resources—such as lithium—into finished products like batteries, lamenting that foreign firms continue to dominate value chains for Nigeria’s own raw materials.

“We’re clapping for foreign firms making batteries from our lithium, while ignoring innovators at home,” he said.

He urged widespread support from both government and private stakeholders to ensure the bill’s success.