Fixing Nigeria’s Agro Exports Through Local Processing

Global trade often rewards those who control processing, not just production. While countries like Vietnam process and export high-value cashew products, many raw commodity producers like Nigeria remain stuck at the bottom of the value chain. A single cashew nut can be exported raw, processed abroad, and re-imported at several times its original value. In 2023 alone, 97.6% of Nigeria’s agricultural exports were raw, despite estimates that local processing could multiply revenues by ten. The implications are clear: low foreign exchange gains, stunted industrial growth, and dependence on imported finished goods. But this isn’t a yield issue. Nigeria already produces high volumes of cashew and cocoa. The real bottleneck lies in the lack of processing infrastructure and investment. To fix the agro-export imbalance, Nigeria doesn’t need to grow more. It needs to process more and keep more value within its borders.

Why Raw Exports Hold Nigeria Back

At the heart of Nigeria’s agricultural export challenge is its continued reliance on raw commodity exports. This model strips the country of potential revenue and job creation opportunities. A large share of Nigeria’s agricultural products, like cocoa and cashew, is exported without any value addition. This keeps the country stuck at the lower end of the global market, where profits are smaller and less stable. Countries that process these same raw materials into chocolate, cashew butter, or sesame oil earn exponentially more. In 2023, Nigeria earned about $708 million from cocoa exports. However, experts estimate the country could have made significantly more if a larger share had been processed locally. In 2022, Nigeria exported raw cashew worth $252 million. Meanwhile, Vietnam, which processes most of Nigeria’s cashew, earned over $4.3 billion from selling processed cashew products in 2024. These numbers illustrate a painful reality: Nigeria isn’t exporting crops, it’s exporting potential. The cost of this is more than financial. Processing creates jobs across packaging, logistics, storage, and equipment maintenance. Between 2015 and 2020, nearly seven million jobs were linked to agro-processing initiatives. By exporting raw produce, Nigeria is not just giving away crops. it’s giving away jobs, skills, and opportunities for industrial development. This limits income for farmers, discourages rural investment, and stifles long-term economic transformation.

Making Local Processing a National Priority

Too often, the story of agriculture ends at the harvest. Crops are grown, loaded onto trucks, and shipped out, still in raw form. But the real value of agricultural exports begins after the harvest. And for Nigeria, choosing not to process locally means forfeiting that value before it even has the chance to grow. One of the most immediate advantages is the increase in export earnings. Global markets place far more value on processed goods than on raw ones. For example, cocoa beans sold in their unprocessed state fetch a fraction of the price that chocolate or cocoa butter would. Estimates suggest Nigeria could earn up to ten times more from the same volume of exports if value were added locally. In early 2023, Nigeria exported over ₦279 billion worth of agricultural products, but with 97.6% of them going out raw, much of the potential revenue was left untapped. This loss is not just about money; it’s about missed opportunities to position Nigerian goods competitively in global markets. Processed products are more profitable and better received in international trade, giving Nigeria access to premium buyers and strengthening the reputation of its export brand.

Retaining processing activities within the country also allows Nigeria to hold onto more of the agricultural value chain. Instead of sending raw cashew or sesame abroad to be processed and re-exported at a markup, domestic processing means more profits, more skills development, and better control over quality. It shifts Nigeria from being a supplier of raw inputs to being a producer of refined goods, capturing greater value at every step. The impact goes beyond trade. Processing agricultural goods locally fuels employment across multiple sectors. From packaging and logistics to equipment maintenance and marketing, the value chain becomes a source of jobs, particularly in rural areas where work is scarce. Between 2015 and 2020, close to seven million jobs were linked to agro-processing initiatives in Nigeria. As more firms invest in processing, the need for both skilled and semi-skilled workers grows, providing a pathway for economic inclusion and reducing rural-to-urban migration. Local processing also supports Nigeria’s long-standing goal of economic diversification. Agriculture already contributes over 75% of the country’s non-oil export earnings, and scaling processing capacity would deepen that contribution. With global demand for processed foods projected to reach $7.6 trillion in 2025, Nigeria stands to benefit if it can build the infrastructure and policy environment needed to compete. Moves like the proposed Raw Materials Processing and Local Production Protection Act reflect an important shift in thinking, offering hope for a more integrated, self-sustaining export economy. Other West African countries show what’s possible when value addition is prioritized. Ghana has built a strong domestic cocoa processing industry, while Côte d’Ivoire now processes over 40% of its cocoa domestically. Senegal has also invested in agro-processing clusters for peanuts and fish, boosting export value and creating rural jobs. These examples demonstrate that local processing is not just desirable, it is entirely achievable.

Fixing the Gaps in Nigeria’s Processing Ecosystem

The growth of Nigeria’s agro-processing sector has long been constrained, not for lack of raw materials or market demand, but because the structures needed to support value addition remain fragile. Shifting this reality means looking beyond isolated problems and toward a connected set of reforms that can unlock the sector’s full potential. It begins with infrastructure. Unreliable electricity, deteriorating road networks, and insufficient storage facilities continue to limit productivity and raise operating costs for processors, especially in rural areas. This challenge has not gone unnoticed. The Special Agro-Industrial Processing Zones (SAPZs), currently being implemented in states like Kano, Ogun, and Cross River, offer a glimpse of what integrated solutions can achieve. By co-locating processing facilities with essential services, these zones reduce operational inefficiencies and attract investment. Yet infrastructure alone is not enough. Even with the right facilities, many processors lack the capital to invest in equipment or expand operations.

The agricultural sector receives less than 4% of total bank credit in Nigeria, and formal financial institutions are scarce in rural communities. Where public-private partnerships have emerged such as in Benue and Nigerthey have enabled processors to access credit, improve output, and raise incomes. These cases demonstrate how financing reforms can support infrastructure-led growth. Policy consistency is the next piece of the puzzle. Unpredictable export bans, vague incentives, and a general absence of long-term strategy make it difficult for agro-processors to plan. New legislative efforts, such as the proposed Raw Materials Processing and Local Production Protection Act, could help shift this dynamic by mandating local value addition before export and offering tax reliefs for processors. However, even well-designed policies must contend with the realities of international trade. Nigerian goods often face higher tariffs when exported in processed form than as raw commodities, reducing their competitiveness abroad. Trade negotiations under AfCFTA and at the WTO level could help reverse these structural disadvantages and open premium markets to value-added Nigerian products. Finally, the issue of rural insecurity cannot be overlooked. States like Benue, once known for their agricultural output, have seen farming communities displaced due to conflict. This undermines both raw material supply and rural investment. Without basic security, efforts to grow local processing will remain vulnerable. Still, local success stories, such as the Lemu Women Rice Processors or Kaduna Milling House, offer proof that the model works. When infrastructure, finance, policy, trade, and security are aligned, agro-processing scales.

Moving Nigeria Up the Agricultural Ladder

Nigeria’s transition from raw commodity exporter to value-added agro-industrial hub hinges on strategic investment in infrastructure, stable policy frameworks, and accessible financing. Initiatives like the Special Agro-Industrial Processing Zones and local processor successes demonstrate the potential of targeted reforms. However, sustained progress requires addressing structural challenges from power deficits to insecurity that limit processing capacity. This is not solely an agricultural concern, but a national economic imperative. By shifting from exporting raw produce to exporting refined value, Nigeria can stimulate industrial growth, create employment, and strengthen its position in global agricultural trade.