This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 ABUJA 001635 
 
SIPDIS 
 
 
AF/FO FOR DAS PERRY 
 
 
E.O. 12598:N/A 
TAGS: EAID PREL ECON SENV NI
SUBJECT: NIGERIA: NEED TO SUPPORT IMPORTANT FY-02 ESF PROPOSALS 
 
REF: 01 ABUJA 3162 
 
 
¶1.  This cable provides additional justification for 
two of the FY-02 ESF proposals submitted reftel. The 
following justifications are in order of Mission 
priority. Complete project descriptions will be faxed 
to AF/W. 
 
 
 
 
¶A.  PRIVATE/PUBLIC PARTNERSHIP TO DEVELOP AGRIBUSINESS 
IN THE NORTH 
 
 
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Project Overview and USG Interests 
---------------------------------- 
 
 
¶2. We need creative projects that directly address key 
American interests and concerns in Nigeria. This 
project fits that description by advancing important 
goals of Economic Growth, Democratization and 
Combating Terrorism, three of the Mission's key 
performance goals under the latest MPP. Northern 
Nigeria needs greater USG penetration, diplomatically 
as well as by our economic assistance. Nigeria is home 
to Africa's largest Muslim population, and most 
Nigerian Muslims live in the North. The project will 
be an important symbol that the USG regards Nigeria's 
Muslims as its friends and partners. Our diplomatic 
efforts to engage Nigeria's Muslim community will fall 
on deaf ears if not accompanied by demonstrations of 
targeted assistance that have a visible impact. Again, 
this project fits the bill nicely. 
 
 
¶3. Kano is a key state economically and politically 
and Jigawa is a recently created state, formerly part 
of Kano.  Kano's capital, which bears the same name as 
the State, is the North's largest city. Unfortunately, 
both the city and state have experienced significant 
unemployment and economic dislocations in recent years 
due to declining agricultural production and the 
impact of global economic competition on local 
industries, particularly textiles and leatherwork. Due 
to the high levels of unemployment and poverty, Kano 
has experienced severe disruptions in the recent past. 
Because of economic want, the local population is 
restive and Kano is a potential home for Islamic 
radicalism and divisive political regionalism. 
Organizations from Saudi Arabia, Sudan, Iraq, Iran, 
Pakistan and Libya have established themselves in Kano 
and elsewhere in the North.  Not only do these groups 
provide Islamic education, many also promote anti- 
American sentiment. This project will help counter 
their presence. 
 
 
¶4. By putting people to work and energizing the 
agricultural sector, the project will be a catalyst in 
the local economy. Not only is agriculture the 
dominant economic sector in the North, every new job 
created helps support 5-10 other people. Thus, job 
creation under this project will have a ripple effect, 
spurring growth beyond the activities directly related 
to the project. Additionally, the more people are 
gainfully employed, the less likely they are prone to 
social unrest and extremism of any form. The project 
promotes the order and stability necessary for 
sustaining democracy. This is exceedingly important as 
Nigeria moves to state and national elections in 2003. 
Key project objectives are to: 
 
 
--Create a private/public partnership to develop a 
strong agro-business base and leverage $6 million in 
private sector investment; 
 
 
--Focus on existing crops with a strong agro- 
industrial potential and development of a sustainable 
local seed industry; 
 
 
--Counter the deforestation that degrades water 
quality and encourages erosion; 
 
 
--Introduce several high-value industrial tree crops 
with strong global market demand; and 
 
 
-- Create a minimum of 5,000 jobs in agribusiness, 
particularly among rural youth, with a program for 
continued job creation for the coming decade. 
 
 
¶5.  Agro-industry in Northern Nigeria is in its 
infancy and not currently managed well. Bolstering 
agro-industry in the region, this initiative will 
focus on cotton for domestic use as well as tomatoes 
and other horticultural products for domestic use and 
export to the European Union and Middle East using the 
cargo facilities at Kano's International Airport. 
Locally grown cotton can be processed for the domestic 
textile industry, providing a basis for taking 
advantage of AGOA in the future.  Cotton by-products 
can be used for animal feed and oil for various 
industrial end-uses.  High value tree crops with 
strong global markets include the (1) Karite tree's 
shay nuts used by the cosmetics and soap industries; 
(2) Tee Tree (melaleuca spp.) oil marketed as a 
natural antiseptic and antifungal agent; (3) Gum 
Arabic derived from the Acacia Tree, used as an 
emulsifier; and (4) Neem Tree Oil, used by the 
furniture/wood industry. Making tree crops more 
valuable should reduce cutting for firewood, a 
principal cause of deforestation in the Guinea 
Savannah and Sahel. 
 
 
¶6. Project Partners: Implementing this project, 
USAID's primary partners will be Schaffer and 
Associates (SAIL), Dangote Industries, Ltd. (DIL), 
AfricaGlobal (AFG), and Michigan State University 
(MSU).  These partners will work with reputable local 
firms, State Governments, NGOs, CBOs (for out 
growers), and the Federal Government, to develop new 
private sector investment opportunities in agro- 
business and to create jobs. SAIL and MSU will have 
primary responsibility for all trials and training. 
SAIL and DIL, working with the local states, will 
focus on developing cotton, tomatoes and other 
horticultural products as agro-industrial crops. They 
will also explore the creation of a local private seed 
industry. Depending on how these develop, SAIL and DIL 
will assess exploitation of high value tree crops. 
SAIL/AFG will have primary responsibility for 
structuring new investment in agribusiness, working 
with DIL and other potential investors. MSU will work 
with AFG to develop a youth training/employment 
component for each crop. USAID will have overall 
responsibility for project implementation through a 
Cooperative Agreement with MSU through the 
Partnerships for Food Industry Development or similar 
mechanism. 
 
 
¶7. Project Outputs: Within 2 years, the project will 
have: (1) created at least ten new agribusiness 
investment opportunities; (2) trained/mentored at 
1,000 youth for agro-business related jobs; (3) 
leveraged $6 million in new agribusiness investment; 
and (4) created 5,000 new jobs. 
 
 
 
 
¶B.  CREATING A RESPONSIVE ENVIRONMENTAL INDUSTRY 
(THE NIGER DELTA - SOUTH) 
 
 
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Project Overview and USG Interests 
--------------------------------------------- 
 
 
¶8. This project advances the Mission Goals of Economic 
Growth and Democracy. The Niger Delta is economically 
important to the United States. Nigeria furnishes 
approximately 8 percent of U.S. oil imports and the 
nearly all Nigeria's production comes from the Delta. 
The region also is blessed with major natural gas 
reserves and large-scale gas extraction is imminent. 
As with oil, American companies will likely be major 
players, and Nigeria can become an important source of 
natural gas for the United States. 
 
 
¶9. However, despite the wealth generated by the 
extractive industries, the Delta remains an 
economically depressed, environmentally challenged and 
politically troubled region.  There is significant 
discontent among residents that both their government 
and the oil companies have paid inadequate attention 
to their basic needs. Residents believe the local 
ecological system has been tossed off-balance by the 
extractive activities yet they have not been 
compensated for this adverse by-product of the oil 
industry, notwithstanding considerable resources from 
the oil companies for mitigation of environmental 
impact and investments in social infrastructure. For 
example, water contamination and improper waste 
management have contributed to a diminution of 
traditional means of livelihood (agriculture and 
fishing) but there also has been very little modern 
development (schools, roads, health clinics 
industries) in the region. 
 
 
¶10. Because of this adverse combination, the Delta has 
seen more than its share of social unrest. 
Frequently, this discontent is focused against the oil 
companies.  Protests and facility takeovers have 
disrupted operations and put personnel in harm's way. 
There is a history of kidnappings of oil company 
personnel.  These types of disturbances can 
potentially disrupt an important source of oil for the 
U.S.  Because oil revenues constitute the vast 
majority of Nigeria's national income, any major 
unrest and sustained disruption of production could 
hinder economic stability and growth in Nigeria. 
Additionally, the competition for scarce local 
resources by the Delta's inhabitants has led to 
persistent inter-ethnic clashes.  These clashes 
undermine political stability and democratization. 
Last, although the U.S. oil companies in the Delta are 
private sector operations, they represent the United 
States to local residents. The extent we work with the 
local populace, government and the oil companies to 
address environmental and developmental concerns, the 
better will be our relationship and the greater our 
influence here.  Key project objectives are to: 
 
 
--Build a quality local private sector environmental 
services industry to more adequately address major 
environmental needs in the Delta; 
 
 
--Develop a center of excellence at Port Harcourt 
University's Institute of Environmental Studies to 
provide entrepreneurial and skills training to 
strengthen and expanded the private sector 
environmental services industry; 
 
 
--Create a youth employment and training program for 
the local private sector environmental services 
industry; 
 
 
--Urge private sector energy companies such as Shell, 
ExxonMobil, Chevron and others to contract with local 
private sector environmental firms assisted through 
this project; 
 
 
--Create a minimum of 1,000 jobs in the local 
environmental services industry within two years, with 
a program for continued job creation each year for the 
coming decade; and 
 
 
--Assist selected communities in the Delta to manage 
more efficiently the resources received from the GON 
and oil companies. 
 
 
¶11.  This project will help fill a serious gap -- the 
existing private/public sector capacity for 
environmental services in the Delta is inadequate. As 
a result, the environmental needs of the region cannot 
be sufficiently addressed by in-country resources. 
Environmental issues in the Delta typically include 
poor potable water quality/capacity, untreated or 
under-treated wastewater, lack of appropriate solid 
and medical waste management, contamination from oil 
and the related energy industry and natural resource 
depletion. These issues have a direct linkage to 
regional health and economic problems. The lack of 
adequate environmental services further compounds 
other development gaps such as poor roads and 
inadequate health services. 
 
 
¶12.  Implementing Consortium: Millennium Science 
Engineering is a premier U.S. environmental services 
group with relevant global experience, including 
Africa. In addition to training local firms, they will 
help improve Port Harcourt University's Institute of 
Environmental Studies. AfricaGlobal has worked a 
number of years in the Delta, including with state 
governments, Port Harcourt University and oil 
companies. AfricaGlobal will ensure participation by 
all local stakeholders and help manage aspects of the 
project, including youth employment. Fresh and Green, 
a locally registered environmental services firm, will 
assist with training local firms, and with youth 
training and employment. Port Harcourt University will 
provide the venue and facilities for all local 
training. 
 
 
¶13. Project Outputs: Within 2 years, the project will 
have: (a) created a center of excellence at the 
University of Port Harcourt; (b) trained/mentored at 
least 20 local environmental services firms and more 
than 100 youths; (c) assisted at least ten firms to 
win contracts with oil companies and the public sector 
to deliver environmental services; (d) created 1,000 
new jobs; and (e) improved financial management in 6 
to 10 LGAs in the Delta. 
ANDREWS