My Conversation with Adedayo was an enjoyable experience, as you can tell from the lighthearted tone. He is brilliant and still very much underrated. He also has an incredible personal story - the triumph of choice, opportunity, and knowledge. I hope he gets to tell it one day. The recurrent theme in our conversation is knowledge (human capital) and its importance to development. You can also listen on Stitcher here or read the transcript below. Many thanks to Quadbee for the continued Herculean efforts in making these conversations possible.

Transcript

Tobi: This is Ideas Untrapped and I am here with Adedayo Bakare. Adedayo is an investment banker, an economist, an entrepreneur and an all-round smart guy. So Dayo it's nice to have you here.

Dayo: Thanks for having me, Tobi. I've been looking forward to this and...so I'm very excited.

Tobi: So have I, actually. So...let me just jump right in on something you said very recently about trade that, for example, if a country collects twenty percent of its taxes in tariffs, it's definitely killing trade. Just explore that angle a bit and get us into your frame of mind in thinking about that.

Dayo: I think I was responding to a tweet about the implications in terms of tax revenues if Africa countries get to implement this continental trade agreement that was recently signed that would start being implemented in 2020. And so I think one of the issues, (i mean) at least protests, from some segment of, say, policy analysts is that a lot of African countries actually depend on revenues from trade - that is, tariff revenues - and one of the ways I think that happens is...(I mean) most African economies are informal in nature. In Nigeria, for instance, I think IMF estimates that [the] level of informality we have in the economy is around sixty percent. So what happens is if government is not able to tax a lot of productive activities that is going on in the economy, and one of the easiest ways to continue to raise money, which is also tied to industrial policy, is around [raising] tariffs.

In Nigeria, for instance, we are very big on tariffs to encourage what they call local production even if in some cases we do not have the capacity to do it, but [the] government never stops. The auto policy for instance that was implemented under the Jonathan  era raised tariffs on motor vehicles to like seventy percent to encourage FDI into assembly plants for cars and all sorts. Then you start to imagine how does this even make any sense when we really do not have the capacity, we don't have the skill, expertise, we don't have a good business environment that will support industrialization. So why are we embarking on such a policy? And since the implementation of that policy it has failed woefully, because, obviously, I think it's only Innoson that has been able to, at least, benefit from that policy; and even when you think in terms of his manufacturing capacity, how many cars does he produced in a year? In terms of how affordable the car is, is it affordable for the ordinary Nigerian to buy? It's not. So obviously you have... you have that problem.

The starting point should not be that a lot of African countries will lose revenues from tariffs. The starting point should be that does it even make sense for an economy to be reliant on trade for its revenues, that is, in terms of tariff revenues as a share of total government revenues. - AB

Now in terms of revenues, one of the easiest ways to actually raise revenue is also to raise tariffs. You can have thirty percent tariffs, you can have fifty percent tariffs on some items and that is why overtime when you combine that with a largely informal economy (where taxation is very very [low], tax to GDP ratios are lower than, say, other emerging markets and advanced economies) then you tend to get a sense of why tariff revenues make up in a very large of share government's revenue.

Now, my argument is, the starting point should not be that a lot of African countries will lose revenues from tariffs. The starting point should be that does it even make sense for an economy to be reliant on trade for its revenues, that is, in terms of tariff revenues as a share of total government revenues. If we look at most of, say, the advanced economies you'll see that tariff revenues are a very very small component...

Tobi: Yeah.

Adedayo: Of total government earnings and I feel like that is what Africa should try to explore.

Clears throat

And by exploring that we could open up a new vista of opportunities for the economy which could propel growth and prosperity. But the catch is this, it is very very easy to quantify one, the other is very hard to quantify.

Tobi: Yeah.

Adedayo: You can easily quantify the fact that, oh, if we export a certain amount of goods in a year, if we tax it at this rate we're going to obtain this size of revenue. But when you tell a government to, oh, relax your tariffs to encourage maybe even your manufacturing sector such that they have access to quality raw materials, it's hard to capture into, you know, the productivity gains for the company or basically the employment potential of it, and even the taxes that accrue to the government from that extra productivity. It's actually hard for economies to quantify them. So that is why it is easy for someone to come out and say, oh, Cote d'Ivoire is going to lose 10% of their, er...

Tobi: Revenue.

Adedayo: Revenues... because of the implementation of the AfCFTA [African Continental Free Trade Agreement].

So apart the fact that a lot of Africans do not even trade... a lot of African countries do not trade with Africa, so a large chunk of the tariff is actually trade with external partners, that is, Asia primarily now and maybe Europe in the case of Nigeria. I think our major trading partners are Asia and Europe. So even when we start to develop, you know, local value chains to say, oh, we're exporting into the African market. Some of the natural resource that we have, most African countries do not even have the capacity or the industry to use it so we still have to export a lot of those things outside Africa and you can still generate whatever tariff revenues you're obtaining from that. But really the idea is that, for African countries, we have to look past trade as this money-spinning machine for the government. It's something that should spur enterprise and development and the development of processing industries and local value chains. We should see it as something...we should see in the sense that... the way the World Bank captures ease of doing business, say, oh, access to roads or the time it takes to...er say...

Tobi: Register a company.

Adedayo: To register a company or to register a property.

Tobi: Yeah.

Adedayo: Trade should also be something like that. I mean, tariffs should also be something like that - how liberal your tariffs are. Especially in the developing countries. Because it is also important, it goes a long way in what you have in the manufacturing sector and I think nobody would argue, even the government, with what we've seen  between 2015 and 2016 when we had the currency crisis and a lot of manufacturing companies could not obtain raw materials to use in production and we saw the impact on the books those companies and even for government which eventually collects revenue from them. So I think that is the way to actually think about it [but] unfortunately trade is very very contentious, and...

Tobi: Why is that, really? Is it really a case of failing to learn from history because, I mean, you talk about quantifiability, it may be difficult in the case of any specific country to prospectively quantify how much you'll gain from trade. But historically we know there are gains from trade. Huge gains actually. So is it simply a case...or what is really the constraint?... why is trade so contentious for us?

Adedayo: Umm, it's really the way we think about it. In Nigeria for instance, many people see trade - imports - for instance, they see it as "if you're importing from someone, you're at a disadvantage". That's the general idea which the Nigerian media will call waste. So Nigeria wastes 200 million dollars in importing tomato paste.

Tobi: Yeah

Adedayo: Or Nigeria wastes...

Tobi: Or we're losing...

Adedayo: Oh, we're losing our FX [foreign exchange] in importing iPhones...but they never say that about iPhones...

Laughs

Tobi: Or Champagnes for that matter.

Laughs

Adedayo: They never say. So you start to wonder why? I think there are several reasons. One of the reasons that I feel like most people overlook is: the average Nigerian believe that when it comes to certain kind of products, (agriculture is one) the Nigerian might have a palm oil tree in their house or they do maize, you know, in their backyard - they plant maize in their backyard which even if it's not commercial farming, for subsistent use - and a lot of them...it's hard for them to understand that people trade based on what we now know as comparative advantage. You specialise in something you can do better than other countries such that by the time you're exporting to other countries they will buy it cheaper and it's good for everybody.

But the average Nigerian believes, you know, agriculture. We are very big on agriculture. We have the land so I can plant oranges behind my...in my garden, so why are you now saying Nigeria cannot produce this and we have to import it? They do not understand that it's probably cheaper, maybe fifty percent even cheaper to plant rice in Thailand or Vietnam than in Nigeria. Most do not understand that maybe the soil you have (the soil formation you have) is not conducive to deriving high yields of those products; and it is on that basis that you have trading with other nations because you assume that oh, a country can do it better than you and you go there to import it; and basically the average Nigerian doesn't understand that. They just want to know that - palm oil...we are good at palm oil. Malaysia - they came to get their seeds...

Tobi: Yeah, how true is that story by the way?

Laughs

Adedayo: I actually don't know how true that is but they will tell you that - Malaysia - they came to get their seeds for palm oil in Nigeria. And now look at them, they're the largest producers of palm oil... [stuttering]

Tobi: Whatever proxy we use...

Adedayo: Exactly...in and the world. And you begin to ask that okay so let's even assume they got the seedlings from Nigeria, what have you done to improve those seedlings? There are different varieties of palm oil, for instance - they have this Tenera, there is Pisifera, there is another one [Dura]. And what you find that a lot of Nigerians are planting, they are varieties that have not been improved. So in terms of yield, it's very very poor. The gestation period is extended, some go into six, seven years. You see palm trees taller than houses- like, you're basically going to hire someone to help you harvest your fruits. Many do not think in the sense that that is unproductive. They don't think in the sense that yields are very very poor; because when you process, what you can derive, the output you can derive is actually very very low compared to other countries. They just think in terms of we can plant it in Nigeria. They don't think in terms of "can we plant it better than other countries"? I mean, rice or palm oil or whatever it is essentially. So in a way, I feel like that is actually a crucial factor because in my discussions with ordinary Nigerians, they will tell you "I plant cassava, I plant this" but the question is not if you can plant it...

Tobi: We have Bamboos so why do we have to import toothpicks?

Adedayo: Why did we have to import toothpicks, exactly. But do you have the ecosystem to support the production of toothpicks? Oh, we have... there [are] tomatoes wasting in the North why are we importing tomato paste?

Tobi: Yeah.

Adedayo: It goes beyond primary production, being able to produce tomatoes. Then you start asking, what kind of variety of tomatoes are you even producing? Are they suitable for processing? So those are the questions that Nigerians do not understand. Then there's also the case which is something connected to what is, I think, happening all over the world. We're seeing rising protectionism.

Tobi: Yeah...yeah.

Adedayo: It's actually all over the world and one of the things is...

Tobi: It's sad.

Adedayo: It is sad.

Laugh

Adedayo: So for trade, overall, there is a net gain, right?

Tobi: Yeah.

Adedayo: It's been proven historically that there is a net gain to society from trading. However, there could also be displacements...

Tobi: Definitely.

Adedayo: In certain sectors or industries, so you have politicians appealing to those sentiments and a lot of that view. People too, we tend to appeal to those sentiments because even when you see the conversations around the free trade agreement in Africa, a lot of people would say, "oh, they will come and dump goods in Nigeria - the manufacturing sector, they're going to kill jobs, they're going to do this"; and I always tell them "have you even taken a look at the manufacturing sector in Nigeria?" As a share of GDP it's not so big, but when you take it in absolute terms I think there are only, maybe, three more countries that have bigger manufacturing sectors - maybe Egypt. Morocco is also doing a lot now and South Africa.

Tobi: Yeah

Adedayo: Now the challenge with Nigeria is our manufacturing is not quite as sophisticated or complex as what you have in South Africa, in Morocco or in Egypt for instance. But in terms of saying "oh, do we have a big manufacturing sector?" Yeah, we have a bigger manufacturing sector than most of [our] African peers. We actually export a lot of manufacturing products through land and, of course, there's a question where... also when you think in terms even the trade balance (manufacturing trade balance with other African countries) I think we only have a negative trade balance with probably South Africa. When you look at West Africa as a whole in terms of manufacturing, we actually have a positive trade balance with West Africa because we have a big manufacturing sector even if it's just textiles or footwear and garments being manufactured in Abia... I mean Aba. We are sending it to [the] Benin Republic, we're sending it to Togo, we're sending it to Cameroon. If it's not even as sophisticated but we are, at least, doing something.

Tobi: The problem is we don't want them to send to us.

Adedayo: Exactly. Now, the problem is you don't want those things to come into Nigeria. So in that sense, there's a lot of fear around the dislocation of, maybe, workers, and there's a lot of literature on it as well and many people would usually say "oh, they should, maybe, train people who lose jobs and try to integrate them into other sectors of the economy" but I think one of the things we're missing is: even in terms of manufacturing, if we have liberal trade in Africa it could actually open the doors for other industries which we've actually not looked at in Africa that would actually take up some of the [un]employed people. As a share of employment, the manufacturing sector is very low. I don't think the manufacturing sector employs up to ten percent. We all scream "Dangote! Dangote! Dangote!" How many people can Dangote Cement employ?

And even that is connected to my ideas around seeing manufacturing as a way to growth and prosperity in Africa.

Tobi: Yeah, we will get to that.

Adedayo: When you start to explore it. So, really, trade is actually very very tedious in terms of the underlying concepts called comparative advantage. The ordinary man does not understand that and I think that is really the biggest misconception about trade and why we have challenges [in] having to implement liberal trade policies in Africa.

Tobi: You talked about agriculture.

Adedayo: Yeah.

Tobi: I'll like to explore something I was discussing recently with some people. You know, agriculture (and you can correct me if I'm wrong on this) currently employs about fifty percent of the workforce...

Adedayo: Very close. Very close. Yes, forty-five... about forty-five percent.

Tobi: But, again, when you look at history for example; over, say, the last 300 years; the global population - we've grown the global population by about sevenfold from around a billion to seven billion currently. We've grown agricultural productivity to about tenfold, that is, we actually produce a lot of food. But when you see agriculture share of employment, it has gone from about 75% to about 2.5% currently.

Adedayo: Exactly.

Tobi: So, now, my question is, isn't our share of agricultural jobs really a problem for productivity rather than people looking at it as a positive, you know, like, "oh, agriculture is the largest employer of labour in Nigeria hence you have to direct resources to it here". But isn't the correct framework to look at it be that to achieve agricultural productivity we might actually have to lose agricultural jobs?

Adedayo: Yeah, absolutely. It's very interesting because there was something I explored when I was at PwC [PriceWaterhouseCoopers] and we were looking at job creation in Nigeria and we were looking at basically services, the industrial sector, and agriculture and that forced me to, like, look at advanced economies and to see the structural transformation of the economies (that is, the structure of the GDP over time) and what you discover is as these societies evolve, as they continue to grow, the share of [agriculture] employment has reduced drastically, later on manufacturing starts falling and really what starts expanding is [services]. It's the services that really becomes the biggest share of GDP. So in Nigeria, it's actually quite interesting that you mentioned that because we have too many people in agriculture. I believe we have too many people in agriculture and they are largely unproductive. So...I've been reading a lot about what I call political crops in Nigeria.

Tobi: That's interesting.

Laughs

Adedayo: They are very political. Rice is one of them...

Tobi: Okay...

Adedayo: Tomato is one of them...

Tobi: Okay...

Adedayo: Oil palm is one of them.

Tobi: All from Kano.

Laughter

Adedayo: Rice from Kano. So one of the experiences that has shaped my ideas about agriculture is the project I was on with CUSO International. We had to work with farmers in different sub-sectors of agriculture and what you find out is: the challenge is actually...it's a lot of challenges, really.

When you go to the field you discover that it's not necessarily cheap money that is the problem of farmers. I had farmers in my project who had money but it was very difficult for them to source inputs. - AB

The farmers, for instance, one of the ways government approaches it is to say "let's pump more resources into agriculture". By more resources, basically more money - cheap money. But when you go to the field you discover that it's not necessarily cheap money that is the problem of farmers. I had farmers in my project who had money but it was very difficult for them to source inputs. They had to travel, you know, to the next town or the next city just to get fertilizer or to get inputs into what they were doing. So in my thinking about agriculture, what I would like to say is mainly Nigerian farmers are unproductive, yields are very very low and they've not improved for decades. Cereal, for instance, we say one of the most consumed things globally is cereal, right? And, so, I remember I was writing a report and I had to just go and look at how yields are trended over the years and I discovered that over the past four decades Nigeria has made no notable progress; in terms of expanding yields for cereal which is actually...which you could say is crucial to food security, right?

Tobi: Yeah

Adedayo: Draw a chart of other countries - Asian countries - and you'll see the rapid kind of improvements they've made. And I feel like that is what we have to start looking at. Government has to start looking at "how can we drive productivity?" One of the things I've been exploring of late too is: we're giving money to all these people [to] go and start farms. What is the total arable land we have in Nigeria? With the level of productivity we have in this country, when the population doubles according to [the] UN by 2050; if we plant rice on all arable lands in Nigeria, will you be able to feed 400 million people with the level of youth you have currently?

So the question is - how do we do more using less land resources and getting more value per hectare? (And) that is one area I think the government needs to focus on that they've not been able to focus on, and to do that, really, you probably have to let go of most of the manpower you have [in agriculture]. Because it ties into what you're saying. When you start thinking [about it], agriculture is difficult but in Nigeria it is usually the last hope for someone who can't hack it in other fields.

"I'll go back to the farm", right?

Tobi: Yeah.

Adedayo: They'll say they will go back to the farm as if agriculture is something that requires no intelligence, no form of knowledge or skill. "I'll go back to the farm or I'll plant this".

And that is why a lot of them can't get out of the trap; because when you are involved in agriculture then you start thinking about "you want to start a farm"...a large [organisation like] PZ, for instance, which is doing a lot of backward integration. They want start a farm, they'll go and look for "okay, where are the best places in Nigeria to site this farm?" I want to plant rice, am I planting rice...the land I have, is it upland or lowland? Will I be able to irrigate the lands? The yields on irrigated lands are better [than] on non-irrigated lands for rice. [But] a lot of Nigerian farmers do not know this because they have no skill, they did not go to school, they have no knowledge. Fertilizer: what percentage of fertilizer should I apply? What size? What are the nutrients necessary for this type of crop? The average farmer cannot know this because they did not go to school, they did not have access to even informal education to learn this; then you start asking yourself, should agriculture really be for the people who have not been able to do anything in their life - without skill, without knowledge? It's not. Government is shouting food security. To achieve that, by boosting productivity, we actually need to evolve in the way our agriculture is structured in Nigeria. Smallholder farmers will eventually not take us to the destination we want because they are too unproductive, they're too unorganised and that's even when you're producing a lot, [then] aggregating it becomes very very difficult in terms of access to, maybe, improved seedlings. Government is not doing enough in investing in the research institutes we have. We have agricultural research institutes - I know for one that NIFOR [Nigerian Institute for Oil Palm Research] is in Benin and a lot of the palm oil farmers I monitored then usually travel to Benin to actually get seed for planting in the nursery and sell it to farmers.

Tobi: There is a cocoa research institute in Ibadan.

Adedayo: Exactly. They are not investing a lot for them to actually generate ideas that could unlock our productivity deficit in agriculture. So for me, I feel it is necessary for Nigeria to move beyond the current structure we have where we have a lot of smallholder farmers. Like I've said; they are not fit for the job. If our task is really to feed Nigerians by producing locally, and with full knowledge that eventually we're going to get to the stage where we won't be able to import all of our food needs and we will need to start investing locally in food value chains because if we're going to have 200 million more mouths to feed in the next 30 years.

Tobi: That's scary.

Adedayo: It's scary. And you want to ask "what are we doing?" I mean, I don't know what the government is going to do about it but the current structure - if we want economic prosperity, if we want food security - it can't stand. We need to go into ... When people say large-scale (large-scale) farming, it is because a large-scale farmer would probably be a bit more serious, [she] would apply more thought before going into farming than someone who believes - "Farming is my last resort. When I go to Lagos and it fails, I go back to the farm". A large-scale manufacturer will not think in terms of that. We are recently consulting for a giant in Nigerian consumer space now. [A] household name. So they are backward integrating and they want to start...they've actually started - oil palm plantations. And, do you know what their challenge is now? It's actually to estimate the size of the market. Because there is no reliable data on something as simple as oil palm consumption in Nigeria and that's basically what we're working with them on.

Tobi: Wow.

Adedayo: They want to commit a lot of resources into it and that is why they are thinking about it that - "oh, do these opportunities really exist?'' In terms of selecting the place to site their farms, we know we have more oil palm businesses in the Niger Delta - Benin and Cross-Rivers and all these places. The thought required in terms of the soil requirement, the seedlings requirement, the fertilizer requirement - you can't rely on the smallholder farmers to make those decisions. It is the large-scale farmers, the commercial farmers that would undertake that, even if later on they employee labourers on the fields. But from the strategy perspective and in terms of boosting yields and everything, they are going to apply more thought than the ordinary smallholder farmer. So the question is how does this end? On the part of government I'm really not optimistic that they would do more than just giving cheap loans or giving subsidized fertilizer. Which is another policy area that is challenging. Government will say "oh, we will ban the importation of fertilizer" but different farms, different crops need different fertilizer requirements. It's also a very complex decision for framers to make but you're selling the same type of fertilizer or you're trying to sell the same type of fertilizer for every farmer; for the person planting maize, for the person...laughs

For the farmer planting tomatoes and everything. So you start asking yourself "now, okay, how does this make any sense?" And to break out of this chain, I think what will just happen is a lot of Nigerian companies especially those listed [on the stock exchange] and which we talk to their management regularly, we've discovered that they are trying to backward integrate as much as possible. So maybe that would spur some form of commercial activity and maybe we will continue to have private interests, maybe beyond the requirements for them to process their goods. They are going to start looking to export markets and, you have, maybe, PZ for instance. [They] have an oil palm plantation which they do not use all of the output maybe they would now start exploring outside markets (market outside Nigeria) and that could cause a chain of continuous investment in the value chain. That is the way I see it currently, that those companies (private interests) can continue to expand and slowly we see... because think about it- if Olam continues to invest in rice for instance and we know Olam will prioritize yields and all those things and they will be a bit more productive, at least, than the smallholder farmer; we could get to a stage where Olam (even in the domestic market) become very competitive such that even the normal farmer won't be able to go to the market and say "oh, I want to go and sell my paddy" because there is an Olam who has a large farm with very very high yields and, maybe, probably cheaper prices, better quality rice output that would now make the smallholder very uncompetitive and as a result of that you'll see that the share of smallholder farmers in terms of planting some of these crops that are so vital to food security continues to fall and you continue to have a lot of a private interest in that area.

Unfortunately data in Nigeria is actually very hard to gather and that is one of my issues also with development interventions in Nigeria because when you look at multilateral firms or NGOs. Once they embark on projects, there's usually a bit more thought into it; even in terms of monitoring and evaluating such projects.

Tobi: Even if they sometimes invest in the wrong projects.

Adedayo: Yes. Even if they sometimes invest in the wrong projects but to an extent, you can, at least, get data to analyse and see. Because we say "knowledge! knowledge!" Knowledge is compounding.

Tobi: Yep.

Adedayo: We just didn't start using laptops or iPhones. It was some people that started and we kept building on it, we kept accumulating that type of knowledge. So the questions for the Nigerian policy makers is: all the government interventions which is one of the reasons why... probably why all these bad ideas persist anyway because nobody actually tracks anything. You don't monitor it. The CBN does not issue a policy paper to explain their reasons for backing cassava [or] for backing oil palm or collect data on loans that were extended to farmers, repayment terms and everything. On productivity, monitoring those firms sort of productivity for their yields. I've never seen any report on that from the CBN or from the Federal Ministry of Agriculture. Yet they pump billions. Then it's now difficult for us to measure - did this program actually work? Did it not work? What are the lessons from the past that we can actually apply to recent policies? We don't. Because nobody is keeping the data. So it's one of the ways I think all these bad ideas persist because we're not collecting data on it. There is nothing to analyse. You're basically flying blind. So as analysts, we basically just say "oh, this is not likely to work" because this this this or because in other countries that have done it this is how they've gone about. But in Nigeria, we've been doing development intervention since when?

Tobi: Yeah, a long time.

Adedayo: For a very long time and you will discover that the same ideas continue till today.

Tobi: Exactly.

Adedayo: So you start to ask if it's not working then why do you think it's going to work now? What are we doing differently? Are we learning any lessons? I feel like if we've been learning a lot from those decades we should have had a body of knowledge that we should have discarded some ideas already that this is not working and we should continue to build on it even if it takes a long time. Currently, it seems like everything is the same. Which is the same thing. They closed the border in the 1980s, they are closing the border today. So, really, that is the way out, I think. We are going to have more private capital into agriculture, not deliberately or incentivised by government themselves but by the fact that as more companies see reasons to backward integrate, as they see reasons to even improve competitiveness even in terms of their sourcing because they need to protect their margins and to be competitive globally. We're going to see a bit more interest and that would maybe force us to explore export market and that is the way out, basically. I have no faith in the government to take us out of...

Tobi: That's interesting. There are two things I'll just like to quickly pick up on from what you said. You talked about political crops...

Laughs

Tobi: I don't know, I love that term so much and it's one of my challenges with the concept of comparative advantage...

Adedayo: Okay.

Tobi: I think that the problem with comparative advantage in our own context is that we naturally see our comparative advantages in our natural resources and when we try to do development that's where we...

Adedayo: Focus on...

Tobi: Funnel resources into, and historically you'll see that that actually causes deindustrialisation because some of your trading partners (they) then specialise and they will only deal or trade with you based on your identified comparative advantage which may just be primary products and then you make a lot of money when prices (international prices) are high but you have no industrial capacity whatsoever. So do we really need to rethink the concept of comparative advantage in our own context?

And then secondly, maybe a bit of a push back on large-scale farming. One underexplored area is land rights for farmers. I don't work with farmers so I don't know much in that area but from a little bit of experience, I know that some of them work in farming collectives. Some of them do not even have rights to the land on which they plant and if you recall one of the big policy changes in Asia, for example, was to give farmers the rights to their land. Even smallholder farmers became productive. So is it really about farms sizes or is it about who owns the land, basically?

Adedayo: Let me start [with] the first question. Yeah. I think in terms of comparative advantage, us looking at natural resources, I feel like...I really don't think it's a problem with comparative advantage. It's more of a problem with what we've decided to focus on, which is also connected to I think what you mentioned earlier about government organisations going into wrong projects. I think the starting point is trying to ask this question: how do we...in the case of Nigeria, for instance, how do we create millions of jobs, right? So I think what they look at is just - which sector employs...

Tobi: Close to that?

Adedayo: Close to that. Oh, Agriculture. Okay, let's invest in agriculture. So it's something of that sort because they would say... they'll say you have comparative advantage. Why? because a lot of them are in agriculture already. Like I said earlier, they are really not very knowledgeable people, so they're already in agriculture. I can't say Nigeria is even more productive in terms of maybe planting tomato than a comparable country. They [policy makers] can't also say that. So rather than say, maybe, explore other sectors or maybe even other sub-sectors even under agriculture that could kind of bring a lot of change, they keep focusing on the same thing. For me, I really don't think it's about comparative advantage. You see comparative advantage in what you can explore. If you don't believe human capital can be explored for development, for instance; it's hard for you to want to now say "oh" or for a development organisation you could say - oh, Nigeria has a lot of people - or we have a lot of young graduates and if we don't see them as capital to an extent, we might not much see them as comparative advantage...because basically some do not look at human capital as comparative advantage and it could actually be one of the things that could unlock maybe some of the progress we want to see. But you are fixated on agriculture. You start from the sector and you're now trying to find within the sector what Nigerians can do better. I really don't think development interventions is from the perspective of what people can do better. It's from what are people doing and how can we make them better at what they are doing? That's why if you read FAO, World Bank and all those research, they'll say "oh, we have a lot of people, we have women in farming". The question is should these women be in farming? Are they planting the right things? Should they be trained to go into other sectors where they could be better used as labourers? No. What they try to do is: they're already farming, why don't we make them better at what they're already doing? It's really not from the idea that... maybe we should...

Tobi: What's the best to use...

Adedayo: What's the best use of these...

Tobi: Of their...

Adedayo: Of their labour?

Tobi: Of their capacity?

Adedayo: Or their capacity. So it's basically around - let's just help them do what [they do]. It's just like the average Nigerian man and maybe you are a rich family man where people come and knock on your door and they come and meet you and you're like "okay, what are you doing now?" [The person responds] "Oh, I'm into furniture".

Tobi: And you give them money.

Adedayo: And you'll be like "so, what do you need to improve your business?" Oh, I need a loan. You give them the loan. You're not asking whether "should you be doing carpentry? Shouldn't you explore something that would be better for you? It's a very lazy approach, I agree with you. So in terms of comparative advantages, I think we've been... we've not been open-minded a lot about it and we're not ready for the kind of changes we're going to have to make to look past maybe the natural resources sector has comparative advantages for Nigeria. In terms of (also) natural resources that are very very easy to get, the oil and gas sector for instance; one could say is natural resources, right? And it's one of those sectors where overtime maybe we should have seen more industrialisation if we've had a lot of local content into the industry. But it was so easy for us because we just had the resources. We had no capital. We didn't even have the labour because we don't have skilled personnel to actually say "oh, we want to mine oil or anything". We just hired...

Tobi: IOCs [International Oil Companies]

Adedayo: IOCs. "Come and do this for us". It's like you're in your house...so I hire cooks, I hire cleaners. If I live in a rich man's house or my father is rich, I might not know how to do those things and they could be useful skills for you maybe in terms of application even if you don't want to become a cook or you don't want to become a cleaner. But nobody thinks about that and that is one of the things I've seen in that sector as well.

Because if you think about oil and gas, it's very capital-intensive. You need a lot of knowledge. We need to be able to build things and apply things and yet we've not seen it (kind of) spur innovation in other sectors of the economy (that is, the knowledge we've learnt from building ships or building rigs or doing all those things), we've not been able to see it in other parts of the economy.

Tobi: We can't even maintain refineries.

Laughs

Adedayo: Not talk of building new things. Even in natural resources, there are unexplored areas that could actually cause a chain of development in other sectors. We've not seen it, really and it's actually quite disappointing. I think also [that] it's on the part of [the] government to do most of these things. In terms of local content, they're celebrating this Egina field. They're saying they did a fabrication and whatever at Ladol here in Nigeria. But ain't we like four decades late or something? because imagine if we've had that from the start...

Tobi: Yeah.

Adedayo: A lot of those people would have...with the