VZCZCXRO7707
PP RUEHMA RUEHPA
DE RUEHUJA #0887/01 1271510
ZNR UUUUU ZZH
P 071510Z MAY 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 9433
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 6793
RUEHWR/AMEMBASSY WARSAW 0316
RUEHCD/AMCONSUL CIUDAD JUAREZ 0312
RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 03 ABUJA 000887 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PASS TO USTR FOR LAGAMA 
TREASURY FOR LUKAS KOHLER/DAN PETERS 
USDOC FOR 3317/ITA/OA/KBURRESS 
USDOC FOR 3130/USFC/OIO/ANESA/DHARRIS 
DOE FOR CAROLYN GAY 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD ENRG PINR NI
SUBJECT: PRESIDENT OBASANJO'S FORUM ON ECONOMIC STAKEHOLDERS 
 
ABUJA 00000887  001.2 OF 003 
 
 
¶1. Summary.  In April, President Obasanjo hosted a "Presidential 
Forum with Stakeholders of the Economy".  Presentations were made by 
key ministries and government agencies giving a glowing tribute to 
Obasanjo's leadership.  The general theme was that there had been 
progress, but many challenges remained, especially if Nigeria were 
to become one of the top 20 economies in the world by 2020.  Nigeria 
needs to sustain an economic growth rate of 12.4% over the next 15 
years with massive investments in basic infrastructure, health and 
education to achieve the Millennium Development Goals (MDGs).  Key 
legislation on Fiscal Responsibility, Nigerian Extractive Industries 
Transparency Initiative (NEITI), and Tax Reform are unlikely to be 
passed in the current National Assembly.  The declared 
President-elect, Alhaji Umaru Musa Yar'Adua has promised that 
reforms will continue.  End Summary. 
 
¶2. President Obasanjo hosted a "Presidential Forum with Stakeholders 
of the Economy" in April.  The forum took a congratulatory tone to 
progress made during his tenure as president from 1999-2007.  Key 
ministries and government agencies made presentations including the 
Ministries of National Planning, Finance, Agriculture and Water 
Resources, Energy, Commerce and Industry, Foreign Affairs, the 
Central Bank and the Nigerian National Petroleum Corporation (NNPC). 
 Comments and discussion followed, with President Obasanjo fielding 
questions from participants. 
 
Central Bank of Nigeria (CBN) 
----------------------------- 
 
¶3. Charles Soludo, Governor of the CBN, gave a presentation.  His 
initial topic, "The Nigerian Economy Then and Now" was changed at 
the last minute to "Financial System Strategy 2020 (FSS 2020)".  FSS 
2020 is a strategic plan led by the CBN to integrate reforms to 
ensure that Nigeria becomes Africa's financial hub and one of the 
20th largest economies in the world by 2020. Soludo based his 
assessment on Goldman Sachs's research on the economies of Brazil, 
Russia, India and China (BRIC) and their potential to surpass the G6 
nations on key economic indicators by 2050.  After the BRICs, 
Goldman Sachs's named the "next 11" or, the "N11" countries, which 
have the potential to be BRIC-like, Nigeria among them.  Goldman 
Sachs's predicted that in terms of GDP, Nigeria could overtake Italy 
by 2015.  To overtake Italy and be on target with the 20th largest 
economies of the world, Soludo stressed that Nigeria must maintain 
an average economic growth rate of 12.4% over the next 15 years. 
This would include the continued economic reforms, improved power, 
transportation and telecom infrastructure and a more industrial, and 
agricultural economy less dependent on oil revenues.  The GON also 
needed to increase its commitment to education and security. 
 
Ministry of Finance 
------------------- 
 
¶4. Minister Nenadi E. Usman gave MOF's presentation. She highlighted 
statistics that indicated Nigeria was on sound footing for the 
future. GDP has been robust since 2003 at roughly 6%.  Inflation 
last year was in the single digits (headline at 8.5% and year on 
year at 3.9% from CBN). The Naira was stable with the official and 
parallel rates converging. Foreign reserves climbed steadily since 
2003 reaching over $43 billion in 2006. Nigeria's has had two 
positive reviews by the IMF of its Policy Support Instrument (PSI). 
The PSI played a critical role in Nigerian debt relief from the 
Paris and London Clubs.  A third review was completed in February 
2007, which is expected to show positive results.  Nigeria has 
received sovereign credit ratings from both FitchRatings and 
Standard and Poors (S&P) last year.  Fitch reaffirmed their BB- 
rating last month with S&P's new 2007 rating expected very soon. 
Nenadi said the next steps should be at the federal level to 
consolidate the reforms in public financial management, in 
budgeting, debt and due process.  She said there was an urgent need 
to extend the reforms to state and local governments, and to focus 
on developing growth strategies in the non-oil sectors. 
 
Ministry of Commerce and Industry 
--------------------------------- 
 
¶5. Minister Aliyu Modibbo Umar made the presentation on "Commerce 
44, Foundation for a Non-Oil Sector Economy".  Commerce 44 is an 
initiative to develop, promote and export eleven agricultural 
commodities, eleven manufactured products, and eleven solid 
minerals, focusing on eleven counties/regions of the world taking 
advantage of concessions in bilateral and multilateral agreements. 
 
ABUJA 00000887  002.2 OF 003 
 
 
Commerce 44 targets a 10% growth rate per year in non-oil exports. 
Umar said operational, enforcement and policy issues needed to be 
addressed. Policy approaches that emphasized large-scale enterprises 
that bypassed the poor and now a concerted effort was needed to 
develop small and medium enterprises that offered better 
opportunities for employment creation and growth.  On the 
operational side, they needed to address port delays and the long 
period for claims processing especially in the Export Expansion 
Grant Scheme (EEGS).  This fund provides cash inducement for 
exporters that have exported a minimum of 50,000 naira of 
semi-manufactured products.  On the policy, multiple levies, VAT, 
and limited export financing were obstacles.  Umar touched on the 
Free Trade Zones and their impact in providing foreign direct 
investment (FDI), developing industries, employment, revenue 
generation and uplifting adjacent communities.  Umar cited the $6.7 
billion OKLNG project and the Tinapa Free Trade Zone as examples. 
The GON envisions Tinapa as a manufacturing, distribution and 
tourism hub for Africa comparable to Dubai. 
 
Ministry of Agriculture (MOA) 
----------------------------- 
 
¶6. Minister of Agriculture and Water Resources, Otunda B. F. Dada 
gave the presentation. The MOA wants to make agriculture the 
"engine" to drive the economy and support rapid economic growth, 
poverty alleviation, job creation and a stable economy.  Presently 
the sector contributes 41% of GDP and 88% of non-oil foreign 
exchange; employs nearly 70% of the active labor force and supplies 
raw materials to the industrial sector.  Growth rates have steadily 
increased from 2.9% in 1998 to 8% in 2006.   Challenges to 
increasing productivity include the need to develop an almost 
non-existent water irrigation systems, and the high cost of 
agro-inputs, most of which are imported.  Good quality fertilizers 
are needed to be supplied in time and in sufficient  quantities. 
Underdeveloped markets have inadequate infrastructure that completes 
distribution and transport of produce and inputs. Another area of 
concern is water availability.  Nigeria has abundant land, good soil 
and water resources that have not been exploited with an over 
dependence on rain fed agriculture. 
 
Nigerian National Petroleum Corporation (NNPC) 
--------------------------------------------- - 
 
¶7. NNPC Group Managing Director Funso Kupolokun gave the 
presentation based on President Obasanjo's agenda from 1999 for the 
oil sector.  This agenda envisaged by 2010 Nigeria would have crude 
oil reserves of 40 billion barrels and a production capacity of 4 
million barrels per day (mbpd) with a concerted effort to integrate 
the oil and gas sectors. Growth in oil reserves as of 2006 had 
reached 35 billion barrels, a 59% increase from 1999, and by the end 
of this year installed capacity would reach 3 mbpd.  Local 
refineries had generally operated at 70% of capacity, supplemented 
by imports that still could not meet demand.  Since February of 2006 
two refineries were completely shut down due to sabotage of 
pipelines by armed militants.  Nigeria has enormous gas reserves; 
exports of liquefied natural gas (LNG) are expected to grow from 22 
metric tones per annum (mtpa) to 50mtpa by 2010 and add an estimated 
$10 billion a year in earnings.  Domestically, LNG will be used for 
private consumption, manufacturing (cement, steel, and aluminum) and 
for power generation.  Kupolokun noted that regional cooperation 
projects with Equatorial Guinea, the West African Gas Pipeline 
(WAGP) and the Trans Sahara Pipeline projects were ongoing. 
 
President Obasanjo's Participation 
---------------------------------- 
 
¶19. In a departure from the past, the President was an active 
participant and moderated the event.  He introduced each minister, 
and made comments after each presentation.  Afterward, he took the 
podium to field questions and gave a lengthy exhortation on where 
Nigeria was before he took office.  He indicated the future looked 
bright, but stressed that a few setbacks would negate the progress 
of the past eight years.  He made the surprise announcement that Mr. 
Nuhu Ribadu was reappointed as the Executive Chairman of the 
Economic and Financial Crimes Commission for another four years and 
promoted to Assistant Inspector General (AIG) of the Nigerian Police 
Force.  (Note: In previous discussions with Embassy officers, Ribadu 
indicated that he would not seek another term.  There were rumors 
that he would be appointed the Inspector General (IG) of Police and 
consolidate the EFCC and NFIU under his command.  End Note) 
 
ABUJA 00000887  003.2 OF 003 
 
 
 
Comment 
------- 
 
¶20. Although GON officials painted a rosy picture, amid the 
abundance of reserves and increasing revenues there still are 
shortfalls in the local economy.  There are frequent queues at the 
gas pumps and not enough refined products to satisfy domestic 
demand.  Nigeria needs massive investments in basic infrastructure 
--power, roads, telecoms--and increased funding and focus in health 
and education to achieve the Millennium Development Goals (MDGs). It 
is bad news that key legislation such as Fiscal Responsibility, 
NEITI, and Tax Reform are unlikely to be passed by the National 
Assembly before the new administration takes office on May 29. 
Following a change of administration, a new government is unlikely 
to focus on these issues soon.  All of the bills will have to be 
re-introduced and begin the process from scratch.  So far, the 
President-elect has promised that the reforms will continue. 
CAMPBELL