Dutch Multinational Businesses, Dutch Government and the Promotion of Productive Employment in Sub-Sahara Africa: A Comparative Study of Kenya and Nigeria

The study project ‘Dutch Multinational Businesses, Dutch Government and the Promotion of Productive Employment in Kenya and Nigeria' aims to investigate the policies adopted by Dutch multinational companies (MNCs), as well as by their home and host governments, in order to identify the conditions that enable the transfer of skills and the integration of local businesses into international value chains in Kenya and Nigeria. The following are the interim findings and policy messages from the mid-term report.

Interim findings

  • While the Nigerian government seeks to attract MNCs to boost large-scale agricultural productivity, key issues like inconsistent and erratic government policies, an unorganized civil service, the insurgency in the north-eastern part of the country, and inconsistent and unclear foreign exchange policies, among other things, have been hampering the productive employment of Nigerian farmers and their integration into the value chains of MNCs.
  • Government policies are frequently made and operationalized in collaboration with economic and political interest groups masquerading as stakeholders, rather than the real stakeholders. This often leads to the formulation of policies that do little to improve the wellbeing of the business groups they are supposed to support. It is impractical to expect MNCs with little comparative advantage in agriculture to drive government policy in the sector. Hence, there is a need for farmers in proximate geographical areas in Nigeria to establish forums for discussing their problems and challenges and influence policy change.
  • In the past three decades, Kenya has been the only African country that the Netherlands has had sustained development cooperation with.
  • Dutch expertise in ‘top sectors’ being put to use in developing countries should theoretically generate a win-win solution for both the Netherlands and the recipient country. However, issues of tax avoidance by MNCs, a limited focus on supply chains, insufficient knowledge infrastructure and the continued lack of a broadly-accepted framework for evaluating business impact on development are hampering the assessment of the role of government funding and instruments for private sector development, as well as the quality of employment created. This puts the transition from aid to trade into question.

Policy messages

  • Ensure sector-wide consultation and the identification of real stakeholders: Policy-makers should always consult with stakeholders who participate in the value chain of multinationals before making policies that will affect such stakeholders, as well as when operationalizing such policies. To identify ‘real’ stakeholders it is recommended to prescribe the minimum qualifications for becoming a representative of a stakeholder group. These could include, for instance, proof of active participation in the main business of the stakeholder group for a minimum number of years.
  • Promote the generation, expansion and use of local raw materials: The governments of Kenya and Nigeria could do more to promote the use of local raw materials by MNCs for industrial production.
  • Promote meaningful local value chain schemes: The expectation that MNCs should play a prominent role in promoting economic activities in their supply chain is not always practicable. Most meaningful value chain promotion schemes, especially those based on backward integration, need to be supported by clear government-driven policies and schemes to be sustainable. Host governments must play their part in promoting the use of local raw materials, for instance, by MNCs, including by putting in place policies that ensure that such raw materials are in abundant supply, rather than expect MNCs to produce them.

Summary

The nature of the relationship between multinational businesses and their host and home governments influences the character of such companies. Mistrusts, around the divergent interests of the stakeholders sometimes lead to relationship tensions. This research, using Kenya as its main case study and Nigeria as a comparative, will explore how the above stakeholders can reduce institutional and operational tensions that affect multinational business operations in Africa.

Creating the enabling environment for policies that can lead to enhanced skills transfer and integrating local businesses into multinational business supply chain may be critical. Home government support can also help facilitate the above goals.

In summary, the research aims to document and critique the policies of all the above stakeholders since independence, deepen our understanding of the dynamics in the relationships of the stakeholders, and facilitate the establishment of problem solving networks all aimed at enhancing the utility value of multinationals in Africa.

Output

Book or monography

  • A. Dietz, C. Uche, A. Akinyoade(2017): Entrepreneurship in Africa

Scientific article

Publication meant for a broad audience

Publications for the general public

Details

Project number

W 08.370.105

Main applicant

Prof. C. Uche

Affiliated with

Universiteit Leiden, African Studies Centre

Team members

Dr. A. Akinyoade, Dr. P. Kamau, A. Kazimierczuk, Dr. B.K. Kinyanjui Kinuthia, F. Kodhiambo, C. Ubagwu, Prof. C. Uche

Duration

01/10/2014 to 28/03/2018