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Nigeria is the largest producer of Shea nuts, a crop that provides income for thousands of rural women and traders, especially in the North. According to NEPC (The Nigeria Export Promotion Council), as of May 2024, Nigeria produces about 400,000 tons of Shea nuts making it the world largest producer accounting for 53% of total output ahead of Burkina-Faso, Ivory Coast and Ghana.

The nuts processed into Shea butter are highly sought after in cosmetics, food and pharmaceutical industries , globally. 

The Ban & it's Immediate Impact

On August 26, President Bola Ahmed Tinubu announced a six-month suspension of raw Shea nut exports, with the goal of encouraging local processing and boosting Nigeria’s industrial sector.

However, the immediate impact was painful:

• Shea nut prices fell by over 30%, cutting farmers’ incomes.

• Aggregators pleaded with the government for a 90-day grace period, citing heavy investments in pending shipments.

• Thousands of rural women, who form the backbone of Shea collection, were the hardest hit.

Government’s Strategy 

The Federal Government argues the ban will create long-term value by forcing a shift from raw exports to processed products.

A key project driving this change is a new factory in Kudu, Niger State, owned by Salid Agriculture Nigeria Limited. Described as Africa’s largest dedicated Shea butter facility, it boasts an annual processing capacity of 30,000 tons. The plant aims to produce butter for cosmetics, food, and pharmaceuticals, offering farmers the chance to sell locally instead of seeking foreign buyers. These global players shifted to Nigeria after Burkina Faso introduced its own export ban in September 2024, followed by similar restrictions in Mali, Ivory Coast and Togo.

Currently, Nigeria exports only about 9,000 tons (5%) of its annual production. By processing more at home, the government hopes to raise Nigeria’s economic value, strengthen foreign exchange earnings, and improve trade credibility.

Industry experts, however, caution against a rushed rollout. “Nigeria has the capacity to take charge of the Shea butter industry. But standards must be in place,” warns Mobola Sagoe, head of Shea Origin and ambassador of the government-backed Shea Nigeria initiative.

Legal Dimensions

• Contract Risks: Exporters who already signed contracts for raw Shea nut deliveries now face , Breach of contract risks with foreign buyers., Possible arbitration or lawsuits (London, Paris, Lagos courts/arbitration centers), Financial losses (penalties, loss of trade relationships, reputational damage).
  
  

• Force Majeure : Exporters may argue that the government ban qualifies as a “force majeure” event. Force  majeure means an unexpected and uncontrollable event (like war, natural disaster, or government action) that stops you from fulfilling a contract. It’s basically a legal “safety net” saying: “This was beyond my control, so I shouldn’t be punished.” but its acceptance under international arbitration (UNCITRAL or English law) is not guaranteed.
  
  

• Trade Law Angle: The suspension could raise questions under Economic Community of West African States (ECOWAS) trade protocols and even Nigeria’s World Trade Organization (WTO)  obligations.

Business & Economic Risks

• Nigeria risks losing credibility in the commodity global market, Foreign buyers may turn to other countries 

• It’s a threat to livelihoods: Thousands of farmers and small traders now face income cuts, with rural women as the hardest hit. It’s an approach that is penalizing primary producers to benefit processors. Definitely not a win-win situation.

• Local processors may not have enough capacity to absorb the Shea nut surplus, leading to wastage and farmer losses.

Way Forward / Solutions

The Government strategy 

As part of its plan to cushion the impact of the ban, the Federal Government has approved the construction of a 30-ton capacity Shea butter processing plant.

Currently, Nigeria produces around 400,000 tons of Shea nuts yearly, yet only 9,000 tons (about 5%) are exported. The rest is either underutilized or processed informally. By shifting focus to processed Shea butter exports instead of raw nuts, the government argues that farmers will benefit more. Instead of struggling to find foreign buyers, they could simply supply the new plant locally and earn faster income.

Mobola Sagoe, head of Shea Origin and ambassador of the government-backed Shea Nigeria initiative, which promotes local processing and certification, stresses that scaling-up must be done carefully.

"Nigeria has the capacity to take charge of the shea butter industry. But standards must be in place," she says.

If implemented effectively, this policy could not only raise the country’s economic value but also positively influence Nigeria’s exchange rate by boosting value-added exports instead of just raw  commodity sales.

Initial Measures the Government Should have Taken

• Provide transition measures like grace periods for existing contracts, or time to adjust operations to protect Nigeria’s reputation as a reliable trading partner.

• Strengthen local processing capacity before enforcing the ban fully- like tackling poor electricity supply, limited access to financing and inadequate infrastructure. 

• Negotiate with trade partners to avoid lawsuits and create consultation platforms that bring together all stakeholders- farmers, exporters, banks, processors to discuss policy changes before being implemented. 

Traders should:

• Review contracts for force majeure clauses .

• Engage lawyers early to mitigate risks.

• Consider shifting to processed Shea exports to stay compliant.

Conclusion 

Shea nut is not just an agricultural export; it’s a livelihood issue for thousands of Nigerian farmers and If handled poorly, the ban could spark lawsuits, trade disputes, and damage Nigeria’s reputation. Although this ban could strengthen Nigeria’s industrial sector , it would work better if only reforms protect farmers and traders in the short term. A balanced approach is needed to protect both national interests and traders’ obligations.