MICHEL DEELEN doubles as head of Netherlands representation in Lagos and deputy head of mission in Abuja. In this interview with ODINAKA ANUDU and EDOZIE IFEBI, he spoke on his target to expand non-oil trade relations between the Dutch and Nigeria, while suggesting that Africa’s largest economy must remove bottlenecks and disincentives to investment. Excerpts:
In terms of trade, what is the Netherlands’ major interest in Nigeria?
Oil has been the general thrust for Nigeria. But we don’t necessarily need an embassy or trade body to boost trade in oil. Our focus here is, indeed, agriculture, infrastructure and water-related cooperation, and it is all business, meaning we are not a development cooperation kind of entity. We try to bring businesses together. Agriculture is a specific interest that we have. If you look at the Dutch economy, you’ll see that we are the 2nd or 3rd largest exporter of agric products in the world, which is amazing for a small country such as the Netherlands. What we have is basically the expertise to increase agricultural production in Nigeria, which is what we export. We export expertise and agro services, management of supply chain which we have huge experience in, not just products and animals.
Expertise is an area where we can assist; where we can transfer knowledge and work together with Nigerian businesses, universities, government, and so on.
We handle agric and everything around it, right from the seeds, fertilizer, logistics, transport, warehousing, marketing, and price setting (auctioning). There are a lot of things we can offer to the Nigerian market.
I know there are issues with logistics in agric in Nigeria. But Nigeria should produce a lot more food stuff for itself before export. Lagos, with all its millions of inhabitants, needs to be fed. Who is going to produce that?
So, what do you suggest should be the best way to defeat logistic challenges to prop the agric sector in the country?
The easy solution will be to build warehouses and install electricity. But if you take a step back, then it is the market that should provide these things. But why is the market not doing that? Apparently, there are not the right incentives or if you compare between producing something yourself, or importing, at a certain level, it is easier to import and more difficult to produce yourself. So, the market decides to import. In a market that compares alternatives, what is the alternative to good logistics: bad logistics but import? That seems more favourable moneywise than fixing the logistics system. That, in a way, shows where the problem is. Why isn’t there enough electricity generated? Why are the transmission networks not yet upgraded? Apparently, it is either because it costs too much money or the profit is not high enough. So, the market says it is cheaper to have the alternative, instead. To solve this, some things need to be tweaked. Incentives have to be given, or blockades will need to be removed. The problem with incentives is that when the government starts subsidies schemes, there is usually the chance that the money might disappear. So, in many ways, it then becomes a matter of removing obstacles that are there for people to invest.
Cobalt International Services says Holland has become largest importer of Nigeria’s non-oil commodities, as trade surplus with the Netherlands stands at €500 million. How do you intend to further improve this trade?
This is the challenge we have here as an office; we bring in trade missions. The minister for foreign trade visited Nigeria with a trade delegation. We bring in Dutch companies who are already interested in doing business in Nigeria. Some may have done that in the past, while some haven’t. We try to be open and honest with them with the problems and challenges they could face while doing business here in Nigeria, and not create any image that does not reflect reality. We bring them in on the high level with a group of companies. In October we had a trade delegation focused on the poultry sector. Next year, we are planning to have a trade delegation focused on renewable energy and energy solutions.
We are not only here for the Dutch companies; we are also here to promote Nigerian companies in the Netherlands. We also want to promote not just buying products from the Netherlands, but also investing in the Netherlands. A lot of oil-producing countries like Nigeria have investments in Europe, either in manufacturing or in real estate.
So we focus on three areas: Dutch companies that are here, Dutch companies that want to come in, and then Nigerian investments in the Netherlands.
In trying to attract more Dutch companies into Nigeria, what has been the most significant challenge?
The picture is that Nigeria is a huge market, with economic growth of more than 6 percent. The middle-class now demands better products. So, if a Dutch company wants to come in, we will give an explanation of all the potentials and opportunities, and then the challenges, which are that there is an electricity problem, there is a problem with corruption. There are many problems, so they have to work with a local partner and not do it on their own. As an outsider, it is sound business practice to work with a local partner to mitigate some of the risks.
Have there been recent investors from the Netherlands into Nigeria?
There has been some capacity expansion by traditional investors like Nigerian Breweries and Unilever. There have been some of them that are coming back, which are in relation to shipbuilding. We had a poultry mission in October. Lots of them made good contacts that would result into orders for equipment in that sector, not for the animals themselves. So, I see some of them coming in soon.
To the public at large, the most visible Dutch companies are Heineken, Nigerian Breweries, Friesland Campina and WAMCO. But if you look at the ports, APM Terminals, which is a subsidiary of Maersk, headquartered in the Netherlands, is one. We’ve also had meetings with a cocoa processing company called Tulip Cocoa, a Dutch company. We’ve also spoken with a container housing company, which is new to the Nigerian market. They have an establishment in Lekki, Lagos.
There are a lot of them that are active in the ports, in transport logistics and warehousing. Most of the companies we have visited so far are rather optimistic about the country.
Are they also optimistic about security in the country?
The security in Lagos has improved. The improvement has been tremendous compared with when I first visited in 1999 till 2003. The improvement is very visible. I was pleasantly surprised when I came in.
The problem with Nigeria is its reputation. It is very difficult to turn that around; to change people’s perception of what Nigeria is.
Nigeria has been known to be a country with huge potential. The question is: When will it materialise? We see it happening, but it maybe slow, and not fast enough. If there weren’t some of these logistical hiccups, it could go faster.
When people in Europe read about Boko Haram attacks in Nigeria, they tend to plan their trips to other countries instead of Nigeria. These are all realities, and it affects businesses and the country. It doesn’t help. We hope that the issue will be resolved.
You have talked so much about poor electricity supply in the country. What do you suggest leaders should do to develop the gas to power sector?
If you look at the volumes of gas that Nigeria has in the ground, and if you look at how much LNG Nigeria exports, then, of course, it is crazy that gas cannot be used for local power generation. We could have 24-hour electricity without any problems, but something went wrong along the line. People have mentioned gas prices. The government gets a better price by exporting it rather than selling it to electricity producing companies, and that is a pity. This means that you’ll have to raise gas prices and electricity prices.
At the end of the day, you’d hope that we get uninterrupted power supply. But I understand that consumers might be hesitant to pay more because they still get lousy services. Consumers haven’t yet seen that quality electricity supply can be delivered to them. It is all linked to each other.
This is not rocket science. There isn’t even enough gas for the West African Gas Pipeline. How can that be when there is abundant gas in Niger Delta?
We understand that you bought more cocoa from Nigeria than any other country in 2013. What other specific areas of agriculture do you intend to explore?
There are some specific fields in agric. Part of it is the horticulture, tomatoes and cucumbers. Those are the varieties in which we have a lot of experience in. There are other ones like onions and potatoes too. The Netherlands is one of the biggest exporters of potato seeds. The potatoes in the Jos plateau present a lot of opportunity if their varieties are improved and then transported down to the cities.
We are trying to link some of the Dutch companies to horticulture producers here, but we want to know where the problems are. So, we have initiated a study to see where the challenges lie. We also see an opportunity in poultry.
Manufacturing seems to be the focal point of the present government now. How can Nigeria and the Netherlands collaborate in this area?
As a result of labour costs, Dutch manufacturing has moved to automated manufacturing. In the Netherlands, we have service companies that build or automate or improve your factory for you. They won’t run it, but they will design it. They design refineries, agro industries and dairy processing plants. Nigerians in those fields know this.
What do you want to be remembered for, by the Dutch and Nigerians?
I intend to achieve an increase in non-oil trading between Nigeria and the Netherlands – an increase in trade in services, in the number of Dutch companies that are active in the field of water, coastal protection, land reclamation, and other services. I believe that we will see an increase in the numbers in the bilateral trade within the next few years.
