In August, the Associated Press reported that Nigeria had passed a law prohibiting the export of raw shea nuts — a key ingredient in many cosmetics.
Shea nuts are big business in Nigeria, a country responsible for about 40 percent of the world’s shea crop production. The initiative was designed to position Nigeria as a leading producer of refined shea butter and other skincare products.
“The ban will transform Nigeria from an exporter of raw shea nut to a global supplier of refined shea butter, oil, and other derivatives,” Nigeria’s vice president, Kashim Shettima, announced.
The ban is not permanent, officials said, and is slated for review after six months. That is a good thing, because evidence shows the prohibition is already having consequences — and not the intended ones. The BBC reports that the ban on exports had “backfired.”
“The intention was to boost local production of the finished butter…and so increase the amount of the profit which stays in Nigeria,” BBC reporter Todah Opeyemi said. “But the sudden shift has led to a fall in demand for the shea nut as there is not enough local capacity to process all of the country’s harvest.”
This might sound like a small matter, but it’s not. Nigeria produces roughly 350,000 tonnes of shea nuts each year. The industry supports millions of workers — predominantly poor women.
The Centre for the Promotion of Imports from developing countries (CBI), a Dutch government agency that helps developing-country producers access European markets, notes that shea butter is often called “women’s gold” because it provides livelihoods for over 2.2 million Nigerian women who work as shea nut collectors and processors.
Most of these workers are impoverished by Western standards. The BBC profiled Hajaratu Isah, a 40-year-old worker with six children who has spent her entire adult life preparing the fruit. Prior to the export ban, she could make as much as 5,000 naira ($3.30 USD) per day, which allowed her to purchase medicine and education services. Her earnings have reportedly fallen to less than half of that amount in the wake of the ban.
“Since the announcement, we have been suffering,” she told the BBC. “It does not affect only us but the entire chain of people working here, including the labourers.”
Nigeria’s shea nut ban is a classic case of backfire economics, where a policy ends up harming the very people it’s meant to help. To be fair, there was a certain logic to the Nigerian government’s central plan.
The plan was to get a bigger piece of the $6.5 billion shea market. Nigeria might account for nearly half of the world’s shea nut production, but it accounts for just a sliver of the global shea butter marketplace — roughly one percent — because the vast majority of its nuts are shipped out in raw form and processed elsewhere.
The solution seemed simple: instead of exporting raw shea nuts, refine them in Nigeria. It turns out, however, that refining shea nuts is not exactly easy.
I won’t claim to know anything about shea nuts — I couldn’t identify one if you showed it to me—but papers on the subject describe the refinement as an arduous task. Nuts have to be cleaned and sorted, cracked open, roasted just right, ground into a paste, and then squeezed to obtain butter — all without ruining the quality. In rural areas, much of this work is done by hand, but parts of the process require capital investment — decent equipment, lots of water, and clean storage (if not, the butter goes bad).
Nigeria does have at least one major shea nut processing plant: Salid Agriculture Nigeria Limited. On its website, it says it produces 100 tonnes of shea butter a day — about one-tenth of what Nigeria would require — and boasts that it “empowers” 45,000 rural women workers.
Salid Agriculture is “an ally of the current government,” according to the BBC. And the company stands to benefit from the policy. Plummeting demand for shea nuts has already resulted in a collapse in prices, which means the firm can acquire raw materials at a fraction of their former cost — and potentially dominate the newly protected domestic processing market.
The ban will no doubt be a windfall for some. But for millions of Nigerians, it could be devastating.
“When I heard about the export ban, I could not sleep,” one 55-year-old woman, Fatima Ndako, told the BBC, adding that 14 people live in her house. “The money we make is what we use to feed our families.”
We don’t know how Ndako and millions of other Nigerian women and their families will be affected by the ban on shea nuts, but students of economic history can be forgiven for fearing the worst. Attempts to plan and ban vast amounts of economic activity, even with the noblest intentions, can instead create human tragedies of catastrophic proportions. Similar efforts at economic self-sufficiency by force underlay the Holodomor famine in Ukraine under Stalin’s First Five-Year Plan, Mao’s disastrous Great Leap Forward, and Cambodia’s bloody attempt at agrarian utopia, among others.
“The curious task of economics,” Nobel laureate F.A. Hayek observed, “is to demonstrate to men how little they really know about what they imagine they can design.”
The idea that something as simple as an export ban on a nut can plunge millions into deeper poverty shows just how little control planners truly have over complex economic systems. Hopefully, the Nigerian government’s ham-fisted attempt to remake its shea industry by decree is quickly reversed and provides a lesson in humility — and not a humanitarian disaster.