POLICY DEEP DIVE

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Policy Deep Dive

Marina Times
3:34 PM

Prologue

Nigeria’s evolving economic reform agenda continues to reflect an effort to strengthen fiscal governance, deepen domestic value creation, and reinforce financial sector resilience amid shifting global and domestic pressures. Recent policy actions, including the Executive Order mandating direct remittance of oil and gas revenues to the Federation Account, the extension of the ban on raw shea nut exports, and the ongoing trajectory of bank recapitalisation in Nigeria’s financial system, illustrate a coordinated attempt to address structural inefficiencies that have historically constrained transparency, industrial competitiveness, and financial stability.

While the above measures promise gains ranging from improved revenue accountability and expanded value-added agricultural exports to stronger banking sector buffers, their implementation also exposes operational constraints, stakeholder concerns, and transitional adjustment costs across key sectors. Against this backdrop, the article examines each policy action through a structured lens, outlining the policy background and chronology, gains achieved so far, sectoral constraints and impacts, and forward-looking recommendations necessary to sustain reform momentum and translate policy intent into durable economic outcomes.

Specifically, the policy actions include:

Presidential Executive Order on Direct Remittance of Oil & Gas Revenues to the Federation Account
Extension of Ban on Raw Shea Nut Exports
The Central Bank of Nigeria Bank Recapitalisation: From CBN Establishment till Present

A. The Executive Order on Direct Remittance of Oil & Gas Revenues to the Federation Account

Policy Background and Chronology

Historical context: Nigeria’s oil revenue system historically involved multiple layers of deductions and retainers before remittances reached the Federation Account. Under the Petroleum Industry Act (PIA) 2021, a framework existed for revenue allocation and deductions (including Frontier Exploration Funds and management retainers) that limited total remittances available for allocation to federal, state, and local governments. The absence of a single direct remittance point contributed to fiscal opacity, under-remittances, and wide variability in Nigeria’s oil revenue flows.

Recent reform: In February 2026, President Bola Ahmed Tinubu issued Executive Order 9, mandating the direct remittance of all government revenues from oil and gas (including tax oil, profit oil, profit gas, and royalties) to the Federation Account. The order requires producers and contractors to pay entitlements directly into the account, eliminating duplicative deductions and wasteful procedures.

Gains or Positive Outcomes

Transparency and accountability: The Nigeria Extractive Industries Transparency Initiative (NEITI) publicly commended the executive order for strengthening transparency and accountability in the oil sector, noting its alignment with constitutional entitlements and longstanding transparency goals.
Fiscal integrity: By centralising remittances, the policy aims to reduce leakages and “opaque deductions” that had previously reduced available revenue for public budgets. South-South governors, whose states host much of Nigeria’s oil production, emphasised that this change helps restore constitutional integrity in revenue sharing.

Constraints and Sector Impacts

Industry concerns: Key oil sector unions such as PENGASSAN have raised objections, warning that certain provisions (e.g., direct remittance of 30% profit oil to the Federation Account) could destabilise operations, particularly affecting staffing costs and operational stability within the NNPC Limited, given the current handling of management fees.
Stakeholder engagement gaps: Experts like Prof. Emeritus Wunmi Iledare have urged more comprehensive engagement with lawmakers and stakeholders on statutory coherence, highlighting risks that abrupt policy shifts may destabilise investor confidence or conflict with existing legislation like the PIA.
Legislative friction: Parliamentary reviews and investigations into the executive order have encountered procedural delays, illustrating tension between the executive and legislature over authority and implementation timelines.

Recommendations and Way Forward

Codify into law: Amend the Petroleum Industry Act to reflect the direct remittance framework, ensuring legislative backing and regulatory clarity for investors and producers.
Issue implementation guidelines: Establish transparent remittance procedures and timelines with clear data reporting between operators, the NNPCL, the Nigerian government, and other relevant stakeholders.
Strengthen oversight: Empower independent audit bodies and civil societies to track remittances and affirm accountability to all tiers of government.
Engage stakeholders: Systematically consult industry operators, unions, and fiscal experts to refine remittance structures that balance transparency with operational sustainability.

B. Extension of Ban on Raw Shea Nut Exports

Policy Background and Chronology

Nigeria is a leading producer of shea nuts, supplying nearly 40% of the global crop. Despite this, Nigeria historically captured less than 1% of the global shea market, largely due to exporting raw nuts instead of processed value-added products like shea butter.

Initial policy: In August 2025, the Tinubu administration implemented a six-month ban on raw shea nut exports aimed at curbing informal trade flows that undercut domestic processors, improving local value addition, and stimulating rural incomes.
Extension: On Feb. 26, 2026, the government extended this ban for one year (to Feb. 25, 2027), reinforcing ambitions to build processing capacity, strengthen agricultural value chains, and shift from raw export reliance to higher-value exports like shea butter.

Gains or Positive Outcomes

Value addition and exports: The extension reinforces industrialisation, aligning with the Renewed Hope Agenda and expected to deepen processing capacity and shift the export mix toward higher-value products.
Higher earnings potential: Processed shea butter can command 10–20x the price of raw shea nuts on international markets, offering a route to significantly higher export earnings and enhanced rural incomes.
Institutional alignment: Implementation is supported through a unified national framework and the adoption of an export system via the Nigerian Commodity Exchange (NCX), thus standardising trade and reducing informal market distortions.

Constraints and Sector Impacts

Market disruption: Early reports indicate that abrupt bans without sufficiently scaled processing infrastructure can depress raw nut prices and reduce income for rural collectors, especially women who harvest shea nuts by hand. Informal intermediaries have reportedly exited the trade due to the restriction.
Capacity limits: Nigeria’s existing processing infrastructure has struggled to absorb the total local supply, limiting immediate benefits and creating bottlenecks in value-added processing.
Short-term foreign exchange loss: Reducing raw exports can temporarily compress export receipts from shea nuts until processing facilities scale and export markets for finished products mature.

Recommendations and Way Forward

Scale processing infrastructure: Prioritise investment incentives (tax credits, concessional finance) for shea processing facilities, including decentralised agro-industrial parks.
Support small-scale processors: Provide technical support and finance to cooperatives, especially women’s groups, to absorb more raw inputs and produce export-ready shea butter.
Market development: Facilitate trade missions and international market linkages for Nigerian shea-butter products to secure premium global buyers.
Data & impact tracking: Establish consistent data on production, processing capacity utilisation, and export performance to quantify policy impacts over time.

C. Nigeria’s Bank Recapitalisation: From the Central Bank of Nigeria’s (CBN) Establishment to Present

Policy Background and Chronology

Nigeria’s banking sector has undergone multiple recapitalisation exercises since the establishment of the Central Bank of Nigeria (CBN) in 1958, evolving dramatically through deregulation and crisis periods.

Key phases include:

Early consolidation: In the 1980s and 1990s, limited capital requirements reflected an economy still liberating from strict foreign controls.
2004 banking reforms: Under CBN Governor Charles Soludo, the minimum capital requirement was raised sharply (from ₦2 billion to ₦25 billion), triggering an era of mergers and acquisitions and significantly strengthening balance sheets.
Post-2008 crisis: Capital buffers were reinforced after the global financial crisis revealed weaknesses in risk management and asset quality.
Recent changes: Between 2010s and 2020s, incremental increases and stress tests improved resilience, with regulators emphasizing risk-based capital adequacy aligned to Basel II/III principles.

Gains to Date

Stronger balance sheets: Progressive recapitalisation measures have enlarged equity buffers, reducing vulnerability to shocks and strengthening depositor confidence.
Market consolidation: Earlier reforms led to the creation of larger banking groups, increasing operational scale and competitiveness in digital finance.
Risk management: Regulatory frameworks now mandate stringent capital adequacy ratios (CAR) and liquidity requirements, helping prevent systemic failures and resilience.

Constraints and Sector Impacts

SME finance gaps: Despite stronger banks, lending to small and medium enterprises remains constrained due to risk perceptions and high collateral demands.
Asset quality concerns: NPL (non-performing loan) ratios periodically rise during economic downturns, reflecting broader economic stresses that banks must absorb.
Digital disruption: Fintech innovations challenge traditional banks to adapt swiftly or risk market share erosion.

Recommendations and Way Forward

Targeted recapitalisation: Consider strategic capital injections tied to lending performance for underserved sectors (e.g., agriculture, SMEs).
Strengthen risk culture: Enhance stress testing, credit-risk analytics, and macroprudential supervision to anticipate emerging vulnerabilities.
Promote financial inclusion: Incentivise banks to partner with fintechs, expanding access to digital financial services across underserved populations.
Continued regulatory alignment: Ensure the CBN’s capital frameworks align with international standards (e.g., Basel III) while accommodating domestic economic realities.

Conclusion: Each policy examined reflects Nigeria’s broader goals: strengthening fiscal governance, deepening industrial and agricultural value chains, and building a resilient financial sector. Achieving these goals requires balanced implementation, stakeholder engagement, and strategic investments to overcome short-term constraints while unlocking long-term growth and competitiveness.

References

Central Bank of Nigeria. (2023). Central Bank of Nigeria annual report and financial statements.
https://www.cbn.gov.ng/Out/2024/CCD/CBN%202023%20Annual%20Report.pdf

Nigeria Extractive Industries Transparency Initiative. (2023). NEITI oil and gas industry report.
https://neiti.gov.ng/publications

Nigerian National Petroleum Company Limited. (2023). NNPC Ltd annual statistical bulletin.
https://nnpcgroup.com

International Monetary Fund. (2024). Nigeria: 2024 Article IV consultation report.
https://www.imf.org/en/Countries/NGA

World Bank. (2023). Nigeria development update: Fiscal reforms and oil revenue management.
https://www.worldbank.org/en/country/nigeria/publication/nigeria-development-update

Revenue Mobilisation Allocation and Fiscal Commission. (2023). Federation account allocation framework.
https://rmafc.gov.ng

Food and Agriculture Organization. (2022). Shea value chain analysis in West Africa.
https://www.fao.org

United Nations Industrial Development Organization. (2022). Developing the shea butter value chain in West Africa.
https://www.unido.org

International Trade Centre. (2023). Shea products market analysis and trade statistics.
https://www.intracen.org

Global Shea Alliance. (2023). Global shea industry report.
https://globalshea.com

National Bureau of Statistics. (2023). Foreign trade statistics report.
https://www.nigerianstat.gov.ng

Federal Ministry of Industry, Trade and Investment. (2023). Nigeria agro-processing and export policy framework.
https://fmiti.gov.ng

Central Bank of Nigeria. (2004). Consolidating the Nigerian banking industry to meet the development challenges of the 21st century.
https://www.cbn.gov.ng/OUT/SPEECHES/2004/GOVADD-6JUL.PDF

Central Bank of Nigeria. (2024). Guidelines on banking sector recapitalisation.
https://www.cbn.gov.ng

Sanusi, L. S. (2010). The Nigerian banking industry: What went wrong and the way forward.
https://www.bis.org/review/r100419c.pdf

Nigeria Deposit Insurance Corporation. (2023). NDIC annual report.
https://ndic.gov.ng

International Monetary Fund. (2023). Nigeria financial sector assessment program.
https://www.imf.org

World Bank. (2023). Nigeria financial sector stability review.
https://www.worldbank.org

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