Shea butter ban drives 5% surge in local processing – Report

Nigeria’s push to restrict raw shea nut exports and promote local processing is beginning to show early signs of traction, with crude shea oil (karite oil) exports rising five percent over a one-year period.

Exports rose from N1.25 billion in the third quarter (Q3) of 2024 to N1.31 billion in the same period of 2025, according to a recent industry report.

The report entitled ‘Keeping Value at Home’ highlights that this growth reflects a gradual shift away from raw commodity exports towards domestic value addition – a key pillar of Nigeria’s industrial strategy.

The policy restricting raw shea nut exports is designed to compel processors to refine nuts locally into butter and oil before export, thereby retaining more value within the country.

Capturing more of the value chain

At the heart of the policy debate is profit distribution across the global shea value chain.

Research cited in the report shows that collectors, involving mostly rural women, capture about 19.45% of total profit in the global shea market. Primary processors account for roughly 13.55%.

Meanwhile, marketers and retailers abroad, who refine, brand and sell finished cosmetic and confectionery products, control as much as 67%of total profit. Exporting raw nuts effectively transfers that higher-margin downstream value to foreign processors.

“The conversation surrounding the restriction of raw shea nut exports is not merely a debate about trade,” the report says. “It is a debate about whether Nigeria is ready to capture the middle and top of the global value chain within the industry.”

Industry analysts say the jump from raw nut exports to kaarite oil and butter processing can raise margins by between 19% and 21% compared to simple aggregation and export of unprocessed nuts.

The report notes that to understand why the current shea policy is vital, one must look at how marginal processing creates exponential wealth.

Citing the global oil industry as an example, it notes that exporting a barrel of crude oil provides a baseline revenue. However, “refining that same barrel into petrochemicals, aviation fuel, or lubricants doesn’t just double the profit, it can increase the value by five or ten times.”

It highlights that the same logic applies to agricultural commodities like timber, which gains massive value when turned into furniture, or cotton, which becomes exponentially more valuable as high-end textile.

Role of national industrial policy

Nigeria’s shea policy is being positioned as a test case for its broader industrialisation ambitions under the National Industrial Policy, which prioritises domestic processing of raw materials before export.

“Nigeria’s National Industrial Policy is built on the idea that we must consume what we produce and add value to what we export,” the report says.

The logic mirrors developments in other sectors: crude oil yields far higher returns when refined into petrochemicals and aviation fuel; cocoa generates multiples more value when processed into chocolate; and timber commands stronger prices when converted into finished furniture.

What shea value addition requires

However, scaling shea processing beyond crude butter to full industrial refining, including fractionation into stearin and olein, will require heavy capital investment and technology transfer.

Shea stearin is widely used as a cocoa butter equivalent in confectionery manufacturing, while shea olein is a premium input in cosmetics. These segments command significantly higher margins than primary processing.

“Industrialisation should move from catchy slogans to calculated economic strategies to capture wealth at higher levels of value chains that currently elude us,” the report notes.

However, investors require policy consistency before committing to large-scale refining plants.

“If the government maintains its consistency, it tells the world that Nigeria is no longer a place to just buy raw nuts, but a place to build refineries. This consistency is what transforms a trade policy into an industrial agenda,” the report adds.

The five percent rise in crude shea oil exports suggests primary processing is beginning to expand. But analysts caution that the figure remains small relative to the global shea trade, which is dominated by established processors in Europe and Asia.