Norwegian stock fish and fish in Nigeria

Trade Relationship: Nigeria and Norway

It is a known fact that trade is a principal driver for economic growth. Thus, the potential gains from international trade for a sub-sharan African emerging market country like Nigeria is (positively) significant. This piece examines trade between Norway and Nigeria as, though arguably widely unknown, both countries have been engaging in trade since the 1890s. While trade has primarily been in stockfish, the extent to which this trade impacted on the economy and livelihoods of people in both countries was not evident until 2015. In 2015, Nigeria suffered a severe currency crises (among other avoidable economic drawbacks) that led the economy into a recession — a recession that lasted until recently in 2017.

The economic situation in Nigeria and ensuing recession affected Norway because Norwegian fish exporters saw a fall in their exports due to decreasing requests from Nigerian importers who were either unable to buy dollars (per the Nigerian Central Bank’s restriction) or thereafter, waiting for the volatile rates to somewhat stabilize. This left Norwegian exporters scrambling for a solution, and some of them were forced to layoff employees to cut costs. Consequently, the Norwegian government had to intervene to find a solution for exporters. And they have, to some degree, been successful given the stabilizing and increasing demand for Norwegian fish products by Nigerian importers as of 2017.

Trade Flow: Nigeria and Norway

The recession mirrored the trade dependence Norway has on Nigeria, and vice versa, for their sustenance and livelihoods. Trade analysis between Nigeria and Norway also showed that Nigeria is Norway’s biggest trading partner on the African continent, and many Nigerians depend on Norway for stockfish, otherwise known as Okporoko. Analysis however showed that this trade is largely one-sided. In other words, the flow of trade was primarily from Norway to Nigeria and barely any trade from Nigeria to Norway. This unfavorable trade balance or gap needs to be remedied and beyond seafood, there are also opportunities in other segments such as agribusiness and energy. As Norway has a well developed fishery and aquaculture sector, it can positively influence the Nigerian economy via investment and knowledge transfer.

Norwegian fish in Nigeria

The push back against investing in Nigeria in any capacity (i.e. manufacturing, packaging and bulk storage of stockfish can potentially lead to job creation) has been based on the perception that Nigeria is too risky. While partly true, this is only one side of the story–because there are many individuals and importers who are business ready, reliable and hardworking. Moreover, there should be an incentive to further strengthen the trade relationships between both countries. The reality is that if Nigeria suddenly decides to cease buying fish from Norway, many Norwegian businesses will suffer and lives will be affected. Likewise, many Nigerian families may lose access to a delicacy that provides some essential nutrients and importers might lose access to their living wage.

So, the questions remain: what should be done to make the trade between Norway and Nigeria mutually beneficial? And how can we ensure that Norway does not lose its market share in Nigeria to other “new” entrants  who are potentially capitalizing on the positive work that the Norwegian Seafood Council is doing in the country?

On one hand, the economic and trading climate in Nigeria needs to be overhauled, processes need to be transparent and attractive for investment both by Norwegian government and exporters. The Nigerian government must establish and enforce procedures that create clarity instead of frustration – and thus tackle corruption in this segment head-on. Economic, fiscal, and currency stability, along with an accountable rule of law will also go a long way in evolving the negative perceptions of the country, which will lead to more value creating investments (by citizens and foreigners alike), not only in the seafood sector but  across all industry sectors in Nigeria.

On the other hand, relevant Norwegian stakeholders need not wait for the path to be fully laid before they “come in.” In essence, they need to be a part of the process and must endeavor to create some degree of local value in the long run – calling out flaws where they see them, and participating in finding solutions. When entering into any African country, Nigeria included, there needs to be a long term view, as opposed to the customary short term view. There is a need for both the Norwegian government and exporters who have benefitted from doing business in Nigeria over the years, to consider options to transfer or create value to and for the country. It is also advisable that Norwegian exporters visit Nigeria frequently, to further strengthen trade relationships and deepen loyalty with the local importers.

To further explore the possibility of trade between both countries as a catalyst for economic growth and development, we spoke with Trond Kostveit, Director for Central and Western African Region, at the Norwegian Seafood Council.

Read our interview below.

  1. Can you tell me a little bit about the Norwegian Seafood Council and what they do?

The Norwegian Seafood Council is an organization within the Norwegian Ministry of Trade and Fisheries. Norwegian exporters fund the Norwegian Seafood Council, and there are about 450 exporters, who pay a small percentage of their exports to us. In essence, we represent the exporters and promote Norwegian seafood. The Norwegian Seafood Council places a representative in markets with the highest potential. At present, there are 15 representatives around the world. Central and West Africa, are new regions that the Norwegian Seafood Council wants to explore, in addition to India. So I am responsible for the Central and West African region.

  1. What percentage of Norwegian seafood is sold in Africa?

It varies and we have seen a decline from 2014 (which was a very good year) to 2015. A lot of the import is related to the oil price, for the main trade partners (Nigeria and Angola). So in 2015, the export volume was about 75% that of 2014, and likewise, in 2016 export volume from Norway was about 75% of what was imported in 2015. However, in 2017 we are seeing an increase, especially for stockfish to in Nigeria. As of now, we see a volume that is twice the size of what it was in the same period last year. In terms of Africa, we estimate a sale of about 2billion NOK ($250,000,000.00). Which is approximately about 2% of total Norwegian seafood sales.

  1. You are the director of West and Central Africa, how do you manage such a large region?

The way we work depends on the markets. If there is no previous trade with Norway, we consider it a new market. So we begin by learning more about the market. We analyze the country, the population size, barriers, quotas, and competitors – basically all relevant items to evaluate if it’s worth encouraging Norwegian exporters to explore. For markets where we are already established, we look at access and further development. In Nigeria for example, given the recent oil crisis, there has been a difficulty with currency, and that is an issue that we are continually working on. In this case, we work on finding out what is happening so we can inform exporters about what is going on and the possibility of finding a solution for it.

Nigeria is a mature country for trade because Norway has exported stockfish to it since 1890. This means that in Nigeria, we work with concrete problems that we have. With regards to Herring and Mackerel, Nigeria is also a significant market. As Nigeria is a large market for Norway, my work also involves a certain degree of research and information gathering on local opportunities and market potentials, which I share with Norwegian exporters.

I also facilitate communications and partnerships between Nigerian and Norwegian traders and clarify misconceptions. For example, some people believe that the stockfish Nigerians like is of lower quality in comparison to the stockfish imported in Italy. But this is not true as both types of stockfish are produced in exactly the same way with the same raw materials, but in the production process, something happens and some of the fish tastes stronger than others. The stockfish exported to Nigeria has a much stronger and richer taste, as Africans generally like stronger tastes, but this does not make it inferior. That the Nigerian market generally prefers the stockfish with a stronger taste might be indicative of how this delicacy is prepared, as it is used in traditional dishes that typically have strong tastes of various spices.

Exporters also incorrectly assume that there is no market in Nigeria for the type of stockfish that has traditionally been exported to Italy. I work to clarify that this is a wrong impression and the market demand supports this, as we have seen that there is a market for that quality of fish. Those who hail from the Igbo ethnicity in Nigeria especially love the ‘Italian’ grade quality of fish. This ‘Italian’ grade of fish is more expensive, but as you know, there are many wealthy people in Nigeria.

With regard to salmon, particularly fresh salmon, Nigeria is a new market. This means that the market potential is huge, as there are many people in Nigeria who can afford salmon..

  1. What is a typical workday for you like?

If I am not travelling, I’m either at the head office in Tromsø, travelling in Norway visiting exporters, preparing presentations, or engaging in a variety of correspondence. As it relates to Nigeria for example, we have made a documentary of Norwegian stockfish in Nigeria, which will soon be shown on national TV. We commissioned a Nigerian journalist who visited Lofoten where we filmed the documentary to explore Norwegian stockfish and the processes involved in making it and the associated nutritional benefits.

  1. What challenges do you face in working and pushing Norwegian seafood forward in Africa? And in Nigeria?

Challenges include availability of FOREX, and the high and volatile exchange rate. In the last few years, especially with the oil crises, it has been extremely difficult to be a businessman who engages in international transactions in Nigeria. These days, as a benefit of a more stable (albeit relatively high) rate and lower risks, we are seeing an increase in purchases again.

It is also a problem that many people do not know about Norwegian fish. So, I spend quite a bit of time informing people about Norway and putting people in touch. I have had two large meetings with importers in Nigeria, the first and second meetings with 60 and 70 attendees respectively.

  1. Why do you think many Nigerians do not know about Norway in terms of its trade with Nigeria?

I am not particularly sure as some people actually think stockfish comes from Nigeria. But it might have something to do with the fact that many Norwegian exporters do not travel to Nigeria. Norwegians have this unwarranted fear of Nigeria and Africa. Icelandic exporters however do better at travelling to Nigeria. I am currently working on changing this and I have made some progress. A few months ago, I took about 20 Norwegian exporters to Nigeria, and that helped a lot as they saw that it was not that dangerous after all. So after this trip, they dared to travel by themselves.

  1. Nigeria is Norway’s largest trading partner on the African continent, so the Norwegian Stock fish market was affected by the 2015 currency crisis in Nigeria. What processes have been put in place to ensure continuity and uninterrupted trade since, and what are the benefits for both Norwegian and Nigerian suppliers?

We have had a couple of stakeholder meetings to inform about Norway that was welcomed with large attendance by Nigerian importers. It has resulted in increased knowledge about Norway and Norwegian fish. Stockfish and Fresh fish Trade between Nigeria and NorwayAlso, for Nigerian importers, I am now able to put them in touch with all the Norwegian exporters. Resultantly, Norwegian exporters have seen an increase in inquiry and sales. More concretely, as I am a diplomat, I work with the Norwegian embassy in Nigeria and that helps in setting up meetings with the Customs and the Nigerian Central Bank, allowing us further opportunities to inform about Norway and the quality of fish. We also work to emphasize the importance of fish for both countries as for many people in Nigeria; fish is an important part of their livelihoods and nutrition (proteins). Which has led the authorities to work towards a more stable currency. We have also advocated for a lower import duty for fish and I have heard orally (although not seen it in writing) that this has been done. Consequently, the duty has been lowered from 20 percent to 10 percent. And this is significant. The Nigerian Customs have also agreed to calculate the real value of goods, which will further lower the import duty, the cost of fish, and the price of the fish when it hits the market.

  1. Are Norwegian exporters doing more than just exporting fish to Nigeria?

I don’t think they do more than that but they are now more open to travelling to Nigeria and to create better partnerships with Nigerian importers. Nonetheless, there are opportunities for Norwegian exporters to do more. For example, they can engage in value-added activities in Nigeria. Some of the exporters have begun to sell small packaged fish in Nigeria. This process of packaging can perhaps be done locally in Nigeria. This is something that some people are evaluating now.

There is also an opportunity to streamline the complete lifecycle of purchasing stockfish to save time, where Norwegian exporters can place some of their stocks in Nigeria. Currently, Norwegian companies consider this a huge risk, but if they are able to move past this, their stock will turn around much quicker. This will lead to an increased sale as Nigerians can buy more frequently and in the local currency (Naira).

  1. Iceland has positioned itself as a strong competitor for exporting stockfish to Nigeria, and they have been known to be better at establishing a local presence and are more open to adapting to different ways of doing business, as opposed to the Norwegians whom are very set in their own ways. How does Norwegian suppliers try to change or adapt to this?

Norwegian exporters should travel to Nigeria, meet more importers and establish long-term relationships. Icelandic exporters travel to Nigeria often and this helps them a lot as they have been able to create long-term partnerships and loyalty with Nigerian importers.

Icelandic stockfish is also cheaper than Norwegian stockfish when they reach the local markets, and this could be because Icelandic exporters compress their fish heads more than Norwegian exporters. Thereby allowing them the opportunity to transport more. And this reduces the transport cost per head.

Furthermore, in Iceland, the fish heads are cut differently from the Norwegian fish heads. This means that there’s more flesh in the Icelandic fish head, leading to preference by some Nigerians, over the Norwegian fish heads.

Moreover, many exporters in Iceland declare their export as animal feed, thereby leading to lower import duties. But we do not do this because it is illegal in Norway.

  1. What opportunities would you say are available in the seafood industry in both countries? Beyond import and export.

In terms of investments, an opportunity would be to store fish stocks locally. This mandates ensuring that the storage room is well suited and controlled for temperature and humidity. And for fish such as mackerel, there is a need for a cold room. There’s also an opportunity for value added contributions in packaging. There are also opportunities for huge investments in aquaculture.

  1. While Nigeria and Norway enjoys a good bilateral trade relationship, the trade appears to be one-domensional, as Norway relatively imports little (if any) from Nigeria. As it relates to the seafood industry, how and in which areas can the Norwegian government and seafood industry invest in Nigeria?

There are some thoughts about this but it has not been done on a large scale yet. The embassy has been working on this a bit but more needs to be done because the Nigerian aquaculture sector needs a stronger focus. Knowing that the population of Nigeria is going to increase in the next few years, there’s a need to create more options to feed the populace. And one of the ways to do this is through aquaculture.

The fish feed is also a huge problem and it needs to be done locally. There should be no need to use FOREX to purchase fish feed. As Norway has a lot of knowledge in both aquaculture and animal feed, this is perhaps something we can contribute to Nigeria.

The problem in Norway is that many companies are generally comfortable in their space and aren’t hungry to explore international markets, but it is important to get across to Norway the need and benefits to establish itself as a key player in Nigeria.

  1. The Norwegian Deputy Minister of Trade, Industry and Fisheries Mr. Ronny Berg, recently admitted via the Ambassador of Norway to Nigeria, Jens-Peter Kjemprud, that there are a lot opportunities in the seafood sector and specified that Norway is determined to collaborate with Nigeria to explore the sector. What has been done since? Can you comment on the progress on this?

What has happened is that we are continuing to work with the Nigerian customs. The Norwegian customs were also present at the meetings with Nigerian customs and some agreements were made. We agreed in that meeting that Nigerian customs would calculate import duties on the real value of imports (as opposed to the generic value that was previously used). There was also a request from the Nigerian side for frequent updates of Norwegian prices to verify prices reported by the Norwegian exporters and Nigerian importers.hm

  1. In your opinion, what can the Nigerian government do to further improve/grow its seafood industry?

The Ministry of Fisheries is helping and is in contact with importers. I know they have some stakeholder meetings. I have also heard that they have lowered the import duties, and this is a tremendous step by the authorities. And I look forward to seeing this officially in writing.

  1. How can trade in seafood lead to job creation in Norway and Nigeria?

Naturally, higher imports will lead to more jobs. There are three levels, as you know. The importer, the wholesaler, and the retailer. And quite a lot of people are involved in this both on the production and consumption side.

  1. In your position as Director – Central and West Africa at Norwegian Seafood Council, do you work with people in the local market (Africa)?

I work with consultants in Nigeria but no full time employees.

  1. What are the different ways that investors can penetrate the seafood market in Nigeria and Norway?

I get this question a lot. You need an import license and with certain fishes, you need a quota. There’s also a need to get in touch with exporters and begin correspondence. Of course, it is important to have the funds and it is even more important to have your papers in order in Nigeria before you can proceed

  1. How easy is it to become an exporter of fish in Norway?

It’s relatively easy. You need to register and pay. And thereafter, you can begin exporting.

  1. What is the capacity for Norwegian Seafood in Africa?

The capacity is huge. For mackerel, it varies and depends on the quotas in Norway. Exporters often try to sell their fish in the markets where they get the highest price for it. Japan, South Korea and Turkey are strong markets for Norway in this regard. Thereafter, Egypt and other African countries are good candidates. With fish in general, the volume of trade is different year to year, and we expect a significant increase by the end of the year, and years thereafter. Moreover, with fish heads, there is no quota and there is a huge capacity to further increase this.

  1. Do you predict increased growth in seafood trade between Nigeria and Norway?

Yes, certainly. Stockfish, pelagic fish (mackerel and herring) and salmon will increase in the coming months and years with increased partnerships between Nigerian importers and Norwegian exporters. We are also exploring the means to promote the sale of Bacalao (salt Cod) in Nigeria.

  1. What is your hope for the seafood trade between Nigeria and Norway/Norway and Africa?

My hope is that we significantly increase sale and build stronger relationships between exporters and importers to further promote trade and partnership between our two countries and regions. I know that there is certainly potential for further growth and trade.