Netherlands’ aim is to make Nigeria’s agric value chain more efficient

MICHEL L.H. DEELEN is the Deputy Ambassador of the Kingdom of the Netherlands in Nigeria. In that position he is based in Lagos where he is Head of Netherlands Representation in Lagos. This is the office where the country gives serious attention to pushing its economic and business diplomacy, working to ensure that economic and business relations between Nigeria and the Netherlands go smoothly. Ambassador Deelen received a team of business a.m. executives made up of PHILLIP ISAKPA, STEVE OMANUFEME & AMADI IHEUKWUMERE in his office last week where he spoke about his country’s renewed interest in Nigeria, especially deepening the economic relationship and working in the area of agriculture with Nigeria. PHOTO CREDIT: ISAAC JAYEOLA

Changing Dutch interest and response to business demands in Nigeria?

But we soon found out that there are two sectors where there are lots of questions and demands and requests for response – one is urbanization, which is anything that happens in the city, from waste to coastal protection, erosion, town planning, energy, to a certain extent. The other thing is agriculture. Those are the issues that we focus on, and within agriculture there’s quite a lot of focus on horticulture; I’ll say on vegetables, lately. At the beginning where we were looking at everything, we thought to narrow it down and focus on the issues and now, we are really focusing a lot on agriculture. Next week we would have a delegation from the Netherlands coming over to do scoping mis- sion for a programme on agriculture whereby we can see how we can assist in making the whole value chain more efficient, from the north to the south.

So these are the things we are looking at there. Then in the field of organisation, we’ve got also transport. It was in the newspaper that we went to see the Lagos state commissioner for transport, because there are many things where we can relate. Basically, the population of the Netherlands as a country is almost the same as the population of Lagos state and we also have a few geographical similarities, the soil is made up of sand, we both have a proximity to the coast, so it’s not really an area where you’d have a metro or a lot of underground railways because of the structure of the soil, but we have a lot of people on small landmass; so that’s basically (I don’t know if you’ve been to the Netherlands) our system of transport is very dense – so the railways, the highways, the cycling lanes, everything, is used to almost a maximum extent. So transport and logistics are things that we, in our country, have perfected to the extent that, if you are waiting for a train in Netherlands, you should not wait for more than 15 minutes and then the next train would come, even though it is not a metro line, it’s a real train, but it’s really good because of the growth also in population and the growth in economic centres.

Another thing is agriculture where we turned out to be the second largest exporter of agriculture products in the world after the U.S. But that is to do with the fact that we have a small domestic market, so we export a lot, automatically. I mean there are other countries, who produce more, but they consume more in their domestic markets. Now, we obviously produce quite a lot in horticulture, but also in diary, and a lot of that is exported. And to do all that, you need a system that works, rather than logistic way. And these are the things we have experiences on and we would like to share these experiences with Nigeria; not copy because, you know Nigeria has a very different system, a different climate, like we build green houses to keep our plants warm, here if you build a greenhouse your plants will boil, so you need different setting, different approach to things. But there are certain things that we have developed ourselves and that we’ve mastered and that we would really like to share with Nigeria. And from there on, we can move forward together. I think the most important thing is exposure, is education. Sometimes, people visit this office and say, ‘Oh, we need a bridge or we need a road.’ Well, you know, fine; you build the bridge, you build the road, or you ask the Chinese to build the road for you, fine. Well, what we can offer, and what I think is much more important is transfer of knowledge, transfer of technology, exposure, those are the crucial things. We really have to move away from this idea of what is in it for me, and development cooperation and free money, because those things lead to, you know, ‘oh we would not fix the road because somebody will come to us and fix the road for us.’ We won’t be like that. We all know that there is a lot that needs to be done. Yes, and in the context of Nigeria, that seems to be extra difficult.

What are your major observations of the country since you have been in Nigeria?

I’ve been in Nigeria now for four years and sometimes, I think things could be more efficient; but there is a system that purposely creates faults and unclarity or vagueness, and certain people might benefit from that, but the majority of the population just does not. I thought it was interesting that a while ago, maybe two years ago, I sat by somebody in a symposium who said: ‘Yeah, they say there are more than 250 different tribes in Nigeria, but actually there are only two – the haves and the haves-nots.’ And that’s basically how I look at it and if you can empower the have nots, if you can assist the upcoming middle class and if the upcoming middle class can actually demand accountability from government, from leaders, then you might end up with a situation whereby oil money is not wasted or is not sent to Swiss bank accounts.

As I said, the country of Netherlands has about the same population as Lagos State. Our economy is 1.5 times the economy of Nigeria. So, that should be shocking. How can we as a small country produce 1.5 times more wealth than Nigeria, as the biggest country, population wise, in Africa? It doesn’t make sense. So there’s a lot of work to be done. And as I said, we are ready to engage with Nigeria on that, with the private sector, with the government; I must admit, in this office, we do more with the private sector than the government. I mean government is there to create an enabling environment, government is there to create infrastructure, but in the end, the real development has to come from the private sector.

How does the Dutch Embassy pursue its economic work in Nigeria?

So, we work together with the private sector, we have dif- ferent investment funds that the Dutch government has set up to support private sector in countries like Nigeria. There is the Dutch development bank, FMO, and they are very active in Ni- geria. So, we do quite a lot in support to the private sector. But all the private companies face the same issues; let’s call it red- tape or let’s call it inefficiencies in the systems and that’s just very sad. If I see what happens, for example, in the port of Apa- pa with that road. How difficult is it to fix a road? Why does that take so long? And this is a port where most of the imports of Nigeria pass through. To me, it’s very surprising. I understand vested interests, but I also understand that it is in the interest of everybody to have operations that function, that work, so that you can bring your trucks in and out; instead of them having to wait for weeks on that bridge.

In the areas of logistics and transport, you have explained the similarities between Netherlands and Lagos State. Do you have any programme with the Lagos State government in the areas of transport and logistics?

What we discussed with the Lagos state commissioner was water transport. But there are other issues of transport in La- gos State [that are] also interesting. I mean we all know about the buses; once Lagos State has enough buses, then that would also generate transport flows. I know you all like the ‘danfos’ and it looks nice, but traffic wise, it’s sort of tricky and as we know, very uncomfortable. So it’s three things actually: to make transport more professional, therefore, you need better equip- ment, better buses; then to see how you can manage the trans- port flows in a better way. Lagos State has done many studies in this, so they know what they are talking about, they are very well-informed; and there are also studies on water transport. So, from where to where would you need ferry lanes and where would you find ferry terminals? So, it’s not just the hardware. It’s also the master plan, of the design, from where to where do you need transport, and, indeed, it includes both water and land transport. We’ve been engaging Lagos State for the past couple of years on this, and this was an invitation from the commissioner himself. So, this is interesting that we want to follow-up on that; how we can see how we can assist in that.

That is separate from the port because the port is a federal thing and we haven’t started that discussion yet. We are not talking about railways because even though we have lots of railways in Netherlands, we don’t have companies that build rail stock. We buy our own trains either from France or Ger- many; and there has been a consolidation in the number of companies that build rolling stocks, so it is either a Canadian company, French company, German company or now, of course, the Chinese. So there, there was something that we deliberately kept out – the railway discussion. But what is hap- pening, I think, is very, very good. The construction of the new railway between Lagos and Kano, when I see what our Chinese friends are building, I’m very, very impressed. That would re- ally be a game changer if that’s up and running. Then we would have different things that might happen at the same time – the new refinery by Dangote, and a functioning railway line and a good public transport system in Lagos. The thing we need now is electricity.

As the Dutch government directs its gaze on Nigeria and tries to expand its footprints in Nigeria, I’m sure on the back of it would be private sector companies from the Nether- lands. How enthusiastic are they, what are the broad areas they are looking at?

Let’s say that there are a number of companies already here for many years; so Heineken, with Nigerian Breweries, Friesland-Campina with Wamco, Unilever, Shell and many others. These companies are here, they are here to stay and they are doing well and growing bigger; and there are also a number of new companies. Probably, every month, I receive delegations from companies that think of establishing them- selves or look for business partners, in Nigeria; and that ranges from oil and gas sector, which is still interesting. I said earlier, we focused on organisation and agriculture, but we have not forgotten oil and gas. Last week, I had a delegation from a com- pany working in basically maintenance of platforms. There is appetite to come to Nigeria and do business, but it is not easy, so we bring in companies, say once a year, on trade missions, we had a trade mission in February this year, and there were about twelve companies that came. If you do Dutch trade mis- sion to America, we would have 200 companies, if you organ- ise one to Nigeria, we’re very happy that we have 12. Basically, this is because of two main reasons. One is Nigeria’s reputation, so they Google Nigeria, and there are security issues. And the other thing is the business climate. The business climate is that when you come, where do you start? The people you engage with, how do you find a reliable partner, and so on? As I said, we also work together with the Nigerian government, so the Ni- gerian Investment Promotion Commission, they had a presen- tation the other day for Dutch companies; and we refer compa- nies to them as sort of a one-stop shop to assist them but even then, it is not easy, we talk a lot to the Presidential committee on the ease of doing business and I think they are doing a great job, but I think they are also facing a lot of problems. I think it is a bit strange that we have organisations outside the exist- ing ministries to improve the work of the government. I under- stand why it happens, but it also means it seems to be impos- sible to improve the government from the inside, the work of certain ministries from the inside; and that is very strange. At a certain moment somebody should take the decision and say, ‘come, change, what does that mean?’

So, we see that the investment climate has improved a little bit, but it is not easy. Can you imagine, you come here as a foreign company and you are not very well prepared. So yes, there is interest, and we do see a small increase in the number of companies that want to come here, and most of them start off basically, either as traders or contractors or sub-contractors for projects that are up to and running here; and if there is enough business, they can decide to stay.

When Nigeria returned to democracy in 1999, and up un- til 2007, there was the story of a rising middle class, which now appears to have disappeared. Can you share with us the lessons that can be learnt from the Netherlands, in terms of building that middle class?

The Gini coefficient, the difference between the rich and the poor and how do you make sure there’s a trickledown effect? If you look at Nigeria’s GDP, that’s very nice, and if you look at the GDP per person – just divide the GDP by the number of Nigerians – it is still very nice, but it doesn’t work that way. You have a very small group of extremely rich people, located around here [Victoria Island, Ikoyi in Lagos] actually, and the rest is just poor. And we’ve just seen in the newspaper yesterday [Tuesday June 26, 2018] that Nigeria now has the dubious honour of being the country with the most poor people; more than India. That’s a very sad situation, and that has a lot to do with trickledown effect. If the money is accumulated in a group of rich people, and at the same moment they buy off the poor for the poor not to come after them, that is not the way or how you build an economy – it’s not that I give you N5,000 so you go and do something. You need to create employment, jobs for those people. It’s something that is of our own interest in the Netherlands too, because if you see in the western world, Eu- rope and also America, you’d see that the difference between the rich and poor is also growing there. It’s not that blatant but you see that there is the issue whereby there’s a group of people at the bottom of the society that does not benefit from econom- ic growth. We saw that with the last economic crisis of 2008, and we got out of the crisis after a certain number of years; af- ter the crisis, we see that the middle class is doing fine; upper class is doing fine; but there is some continuous soil-level at the bottom, that doesn’t benefit from the economy picking up. And that’s tricky and can be dangerous, if that group is too large to pick; and you end up with social problems, at least, and you might end up having security problems.

In Nigeria, in addition to the division of money in the coun- try, there is also the growing population. So you have a lot of new, young people who need schooling, who then need a job. And if they don’t find a job, what are they going to do? Yea, you can become a vigilante or Boko Haram, blow up pipelines, anything! But preferably, it would be nice if you could contribute to the economy of your country and benefit from it at the same time. So, I think this middle class is crucial. The problem, of course, was that when the oil prices went up, that’s when everybody started writing articles about Africa, Nigeria being up-coming and so on. But it was very much linked to the oil price, and as soon as the oil price went down, without oil to sustain this, we have an issue, we have a problem. Although , if you looked at the numbers, the oil sector is only 15 percent of the Nigerian economy; so you could think that the rest – agriculture, services, creative industry, Nollywood and everything around it, along with fashion, etc, that could sort of stand on its own, but, you know, if there is no oil money to deliver in- put, it is difficult. That’s what we saw, and that lots of people were laid off by the banks and insurance companies – and that was the middle class and they suffered quite a lot. To be honest, I don’t know if they have recuperated now, but I don’t think so. And that is really a pity because, how does that relate to the next elections? What does that mean for voters? Well, they say, this government did really, really bad for me and, I will go with someone else, or not. What is the alternative, I don’t know. It is one candidate now, and what is the alternative to Mr. President. But the middle class is really needed now because at the end of the day, it is the middle class who makes the economy grow, who demand accountability from government, and it is also the middle class which decides at some point to say, I don’t like it and I’m moving out of the country, I’m going to U.K, or America or to the Netherlands.

Let’s go back to the twelve companies coming to Nigeria, you are looking at oil and gas, what of the other sectors, the creative industry is there, media, are there interest in these sectors?

The answer is yes and no. There is to the extent that the mov- ie, The Wedding Party, was shown in the Netherlands, so that was an export product. I don’t know if the rest of Nollywood has reached out but, of course, there is a Nigerian Diaspora, there are 10,000 Nigerians or so who live in Netherlands and I’m sure they are much aware of any new movie that comes out. We had in November last year, a group of five Dutch who were in Lagos coincidentally at the same time who were working here, taking photographs and giving masterclasses, some were here because of various issues like residence in Lagos. So there is some exchange, but let’s say from an economic point of view, it doesn’t mean much, it is more of cultural exchange. It is very important because it creates visibility on both sides, so it is something we very much support, but business-wise, it is not too much as far as newspapers are concerned.

I want to return to the whole notion of a private sector led economy. Can you share with us what it is like in The Neth- erlands, when the government says your economy is private sector led?

I work for the Dutch government, but as a private person I can tell you that all governments have a mis-understanding of the private sector, whether it be the Dutch, the Nigerian and maybe, even the American. Because government in many cases they try to please the private sector. They say, ‘ah, you want this, we’ll give you this and this. But the private sector does not want goodies, doesn’t want handouts; the private sector just wants a leveled playing field, and wants a good business climate; and any special subsidy schemes, that the government would put in place, would be abused and would distort the market. And that happens in the Netherlands, in Europe, and happens here. A clear example is the European agriculture policy, which was set up after the Second World War because we wanted to be self-sufficient as a European union. But because the subsidies were so beneficial, production for export increased to such an extent that it was trade distortive, and we saw that in the field of sugar, diary and some other products that were exported. It is nice to be self-sufficient and support your farmers but you are actually distorting the market, and you produce a lot more than you need. In the situation of Nigeria, where money is scarce and government has to sort of have to turn around every kobo that they spend more efficiently, yes it is very difficult to see it.

The private sector is fine but it is difficult to pick winners as a government. look at the rice sector, the government is not supposed to start interfering so much because it will not grow, because basically government interference has a bad reputation but also, they make decision not based on the economy but on power and then, the money is wasted. So, I think if the country can just reach a leveled playing field, we had a meeting the other day with the industrialization committee under the presidency and we came up with all sorts of ideas, interventions to do this, in different sector and trading, it looked very interesting but the country doesn’t have the capacity to do that. But you have the capacity to simply fix the road to Apapa, and that would benefit most industries in this country. So, what are you talking about, all these plans and policies you have written down, instead just keep it simple, with a few targeted interventions, you can make a difference, and I think that is infrastructure, education; education is so crucial, and I think from there on, you got to develop the economy further, and at a certain point, corruption might fade out because corruption is basically another way of getting transactions done. If a policeman ask all of us money for the weekend, that is also because the salary the policeman gets is quite low, if some other entity ask me for 5 percent of my revenue, that might be because the person doesn’t get a decent wage or is forced to generate revenue and it goes away or because everybody does it so that person will also do it, so if you change that system, if the economy picks up and economic growth picks up and you just have someone who says let’s move in this direction, I think the need for people to corrupt will also be less, I would hope. Because what we see now is that the EFCC goes after a certain group of people but it can go after a lot of people, if that is the case.

In what area of cooperation would Netherlands be look- ing in working with Nigeria to improve technology?

In all sectors where we can. We also have a lot to learn from Nigeria. If you look at technology like ICT and you look at THE FACT THAT Microsoft, Facebook, Google and Cisco are all interested in picking the brains of Nigerian youth, they organized these hackathons in Lagos, and you have very smart Nigerians boys who are not Yahoo boys but actually make something, I think that is the future. There are some that say proven technology in agriculture, oil and gas. I was in Ibadan for seminar on developing the diary value chain. Of course, those are the things that we share and would like to bring to Nigeria, but I think on the Nigerian side, there are very smart people who are doing the ICT. I think you don’t always need the latest technology, people always come up with the example of mobile phones, that NITEL was not working anymore and Nigeria leapfrogged to the mobile phone era, but the problem is after the mobile phone sector, it is very difficult to find any other sector like that. But you can look at agriculture, because with agriculture, with some navigations and drones, it is not too complicated to have abstracts that show on his land what type of soil it is, what variant it is, when it would rain or won’t rain, which place needs to be irrigated, what type of fertilizer to use, you can do these things nowadays, so I think with some smart apps in agriculture sector, you also come a long way. I know the government is working on a programme to introduce more mechanized agriculture, more tractors and so on, if you do that the old fashioned way, it would mean that as a govern- ment, you would buy tractors that, after a few years, they would be wasting because nobody claim responsibility for it, but if you turn that in a way whereby people are responsible for it, and you use modern technology by linking the tractors to apps and see where they are needed and where they should go to, I think this would make it more efficient. That is one thing about technology; the other thing is exchange between universities and research institutions and so on. I think in the first 20 years after Nigeria’s independence, there were exchanges between universities in Nigeria and other universities, but gradually the education system collapsed, and most of these programmes stopped but now we are slowly trying to pick up again, we are trying to establish an academic link between the University of Netherlands and the University of Lagos. Last year we had student exchange, so Dutch students come in to Lagos for 10 days and it went very well. That is something we are really proud of because we have fellowship programmes, but Dutch students as a group, about 12 students from different universities came. And that is good because that is also exposure on their side, saying what is this Nigeria they keep on hearing about, how does it really look and it was very nice. That also exchanges the technology and information. It is very crucial.

What is the size of trade between both countries and in terms of expansion, how bullish is the Dutch government to see that the current size of trade is expanded?

We are very bullish, but sometimes it is not the government who can influence this. Last year, we had 29 percent increase in trade and I wish I could write it on my account; I did write it on my account but nobody believed me, of course, because the trade were highly influenced by the price of oil. I can give you the numbers, I don’t know them by heart but it is about two billion euros, together 4 billion euros. It was more when oil price was higher. What we see in the trade figures is that a lot of crude oil goes to the port of Rotterdam, gets refined and then the petrol is being bought by traders or government and ends up here. So, this is not something that we give our right to; it’s the world market for oil and refined products that works in that way. Then you see that a high percentage of the trade consists of crude oil and refined products, and that is actually the part I am not interested in. The part I’m interested in is the rest, because, in the rest, I can assist companies to do business in rice, and the rice is part of the agriculture. We also support the Nigeria Export Promotion Council, and we have a two year programme with them. In March, we assisted Nigerian companies to the Netherlands. These are companies in the fields of sesame seeds, cocoa, cashew and ginger. That was quite successful and we can see that there is an increase in export of these agriculture products to Netherlands. I think there is also a small increase in machinery from Netherlands to Nigeria but as I said, the bulk is still refined products, but once Mr. Dangote’s refinery is up and running, you would certainly see a very big difference and that is something we should be prepared, and it would be interest- ing because then we would see the real market.

What other things come from Netherlands?

Well, not that much. If you talk about diary in Nigeria, Wamco company in Nigeria, they have Peak milk and Three Crowns and that is basically powdered milk. It is a little bit like the oil market, there is the world market for the milk powder, and Wamco just buys milk powder from the world market. It can buy from Ireland or New Zealand, bring it to Nigeria, adds vitamins and sells it. Now, the Nigerian government for some years now, are saying thank you very much but add more value in Nigeria, which is a very valid point. So that is why they started the diary value programme in Nigeria to increase the production of milk in the country and that turned out to be a very successful programme. They produce milk in Ogun state and bring it to Lagos. So if you look at what is imported from the Netherlands, it is very few. The interesting thing is that the companies that are based here produce locally, so Nigerian breweries produce Heineken, and Nigeria is one of the few countries that produce Heineken locally. In most countries, Heineken is imported. But here, it is brewed in Lagos, and that also shows you the good quality of beer that can be produced here. Things are produced

here, Unilever with the soaps, toothpastes and so on are produced here. A lot of people don’t consider them Dutch companies because for example Nigerian breweries which brews Heineken is done here, but there are Dutch companies.

Do you have any deliberate intention or plan to support small and medium levels of businesses in your agriculture drive?

The answer is yes, but not in rice because we consider that we don’t have the expertise in rice production. But in horticulture, yes; that is why we are having this mission next week to come and see where and which sectors, and which way we can support, but what we are doing so far is basically provide technical assistance, so we have a programme called ‘To scale,’ which creates a link between small Nigerian farmers and markets, and markets can be consumer markets because big companies that want a steady supply of products are a super markets. And we all know that more super markets are opening in Nigeria and people want a steady supply of vegetables, so you need to be able as a producer to produce almost throughout the year, and in good quality. What we do is to provide technical assistance to the small scale farmers, and see how we can improve their quality and their yield in general and make sure that there is a buyer in the market for their products. And that programme has been running in Nigeria for four to five years, if not more, and now we are looking at building further upon that programme.

The Netherlands used to have some sort of funding for this level of small holder farmers and SMEs, is there still any funding available for them?

Not directly, so what we do is the funding of the technical assistance to the scale programmes. But that is actually linked to some clusters, certain places for certain products. And there are some micro credit banks that are supported, so if you look at financial support, they could go through microcredit banks but not direct funding.

Let’s bring this to a close. What do you see looking ahead, what is your outlook, first in the relationship between the Netherlands and Nigeria and then having been here for 4 years, what do you see in terms of outlook for the Nigerian economy?

Ok, as far as the relationship is concerned, I see a lot of positive development, we are going to sign a memorandum of understanding (MoU) between Dutch and Nigerian government by next month and intensification of the relations whereby we set up bilateral committees to discuss issues of mutual interests and we would actually structure our relationship in a better way. We had the idea a few years ago, and at the time, the Nigerian government said we really do need this, we know where we are and we can find each other, and this time the request came from the Nigerian government and we said yes, let’s do this. It is very good because it gives us the position whereby the structure that we need very often is in place and ministers to ministers and government to government can discuss issues of mutual interests and there are a lot because Nigeria is not just any country, it is the biggest. And, therefore, anything that happens in Nigeria is of interest to us, is of concern to us. On the economy, I think the economy will pick up because we have seen it pick up under very difficult circumstances, and I would imagine that if the circumstances improve even more, it will pick up even more. It is sometimes sad to see that development could have gone a lot further, because of certain decisions, it is a pity. But I think it would develop further, but the challenge is that if the economy grows by two percent a year and population by three percent, that is a major issue and I know people talk about it. If I go to Abuja, and talk to the minister of agri- culture or the vice president, they all know and say we need to do something, but then what happens. There is rhetoric on this but what is actually happening? How many jobs are created in the private sector because of the environment the government has created? The government should not create jobs, the government already has too many jobs but I’m quite positive and it will take some courageous decisions, to make the economy work even better.