VZCZCXRO6820
PP RUEHMA RUEHPA
DE RUEHUJA #0953/01 1361124
ZNR UUUUU ZZH
P 161124Z MAY 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 9517
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 6861
RUEHWR/AMEMBASSY WARSAW 0337
RUEHCD/AMCONSUL CIUDAD JUAREZ 0333
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 000953 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PASS TO USTR FOR LAGAMA 
TREASURY FOR 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: REVIEW OF NEEDS AND DEVELOPMENT OF NEEDS-2 
 
REF: ABUJA 887 
 
ABUJA 00000953  001.2 OF 003 
 
 
¶1. Summary. On May 3, 2007, the Government of Nigeria 
(GON) presented a review of its National Empowerment and 
Development Strategy (NEEDS) and the status of its 
successor, NEEDS-2. NEEDS exceeded it targets but 
development challenges remain.  NEEDS-2 takes a medium- term outlook 
from 2008-2011 aimed at reducing poverty by 
30%, generating an average annual GDP growth rate of 10%, 
and creating 10 million new jobs. Agriculture is the 
"engine" expected to drive the economy, eliminate food 
imports, and generate $3 billion in exports.  Massive 
investments totaling $12.8 billion for infrastructure and 
tapping large gas reserves in the Niger Delta expected to 
generate $10 billion yearly are contingent on continued 
economic reforms and a favorable political environment. 
The final draft of NEEDS-2 is scheduled to be presented 
to the President by May 18, who will review it and hand 
it over to the new administration before May 29, 2007. 
Stay tuned. End Summary. 
 
¶2. On May 3, 2007, Senator Abdulla Wali, Deputy Chairman 
of the National Planning Commission presented a review of 
its National Empowerment and Development Strategy (NEEDS) 
and the status of its successor, NEEDS-2.  NEEDS covered 
2003-2007. Its gross domestic product (GDP) growth rate, 
non-oil sector growth, poverty incidence and inflation 
targets were exceeded in 2004-2006.  Another key area, 
oil sector growth, was targeted at "zero" increases, but 
exceeded the targets for every year except 2006, when 
sabotage in the Niger Delta resulted in a 4.5% loss. 
Exchange rates have been stable and parallel and official 
rates converged with the introduction of the Wholesale 
Dutch Action.  External reserves grew from $7.68 billion 
in 2004 to $42 billion at the end of 2006 (446% 
increase!) vs. the NEEDS target of 26% growth from 2004- 
¶2007.  From 2004-2006 agriculture was the largest  contributor to 
GDP followed by petroleum, solid minerals, 
telecommunication, and manufacturing.  Telecoms, 
manufacturing, solid minerals, agriculture and petroleum 
led the overall growth rate. 
 
Poverty Reduction and Wealth Creation 
------------------------------------- 
 
¶3. The 2006 Core Welfare Indicator Survey, a national 
survey that monitors poverty and living standards at the 
national, state and local levels, showed living standards 
had improved with increased access to drinking water 
(84%, NEEDS target was 70%) and electricity (54%). The 
NEEDS report claims progress in reducing poverty; in 1996 
there was a poverty incidence level of 65.6% based on a 
population of 102.3 million and in 2004 the poverty 
incidence level dropped to 54.4% with a population 
increase of over 126 million. Adult Literacy rate is 
64.2%, youth literacy rate 76.5%, with access to primary 
education at 74.6% and secondary education at 46.3%. The 
target for increasing the adult literacy rate from 57%- 
65% was accomplished. (Comment: Much of the "poverty 
reduction" is achieved by redefining the poverty line 
down to about two-thirds of the previous level. On 
education, access is not the same as enrolled. The 
Education Ministry provided numbers estimating 50% of 
primary school-age children were attending school. End 
Comment) 
 
¶4. There have been 110 privatization transactions and 21 
port concessions completed between 1999-2006 with over $4 
billion from sales between 2005 and 2006.  Since pension 
reforms were introduced in 2004, funds have reached close 
to 1 billion naira. The Economic and Financial Crimes 
Commission and the Independent Corrupt Practice 
Commission have worked to curb corruption and graft. 
Public service reforms are being extended after an 
initial nine pilot government agencies reduced staff by 
35% and eight thousand ghost workers were discovered and 
removed. 
 
NEEDS 2 
------- 
 
ABUJA 00000953  002.2 OF 003 
 
 
 
¶5. NEED-2 hopes to reduce poverty in a growing population 
by dealing with massive unemployment, increase 
development in the Niger Delta, bridge human and physical 
infrastructure gaps, and link science, technology and 
research to real sector performance.  As in the initial 
NEEDS, NEEDS-2 will have a four-year timeframe from 2008- 
2011 to address employment generation, poverty reduction, 
and wealth creation.  NEED-2 aims to reduce poverty by 
30% by 2011, support an average 10% GDP growth rate, and 
generate 10 million new jobs in the informal and formal 
sectors.  It assumes continued economic reforms, 
macroeconomic stability, improved infrastructure, 
favorable oil prices, single digit inflation and 
investment of 9%-10% annually.  The major drivers will be 
the agriculture, manufacturing, infrastructure, 
communications and oil and gas sectors.  All of this is 
also contingent on a favorable political environment. The 
final draft is scheduled to be presented to the President 
by May 18.  President Obasanjo is expected to review and 
hand over the plan to the incoming administration prior 
to the May 29 handover. 
 
¶6. Agriculture is expected to grow at an average of 11% 
annually, with a zero net food imports by 2011.  This is 
in line with GON commitment to make agriculture the 
"engine" to drive rapid economic growth, poverty 
alleviation, non-oil exports and job creation. Proposed 
strategies to achieve this include progressive 
elimination of food imports, and fast tracking credit to 
the rural level. In manufacturing, NEEDS-2 hopes to 
increase growth rates above 10% annually, and capacity 
utilization from 55% to 80% by 2011. The strategies 
include targeted incentives to link production and 
research institutions, improved infrastructure and better 
access to credit for small and medium enterprises. 
(Comment: Food import bans have encouraged smuggling 
rather than increased food production, and specialized 
credit programs have a poor track record. End Comment.) 
 
 
¶7. The NEED-2 offers very aggressive targets in 
infrastructure.  Electrical generation is to grow to 
17,000 megawatts (mw) by 2011, raising existing per 
capita consumption from 105 kilowatts per hour (kwh) to 
over 500kwh all requiring a minimum investment of $12.8 
billion. It also calls for the development of alternative 
energy; public/private sector partnerships and a new 
pricing framework. In communications, the targets are to 
increase teledensity to half of the national population 
by providing up to 90 million fixed and cellular 
telephone lines and broad band service to 75% of 
residents in state capitals. (Note: The Nigerian 
Communications Satellite (NIGCOMSAT-1) was launched by 
China.  This is the first time that a foreign power has 
purchased a Chinese satellite and its launching service. 
The satellite is expected to offer broadcasting, 
telecommunications and broadband internet services for 
Africa. End note) 
 
¶8. In the oil and gas sector, crude oil reserves are 
expected to increase to 40 billion barrels and production 
capacity to 4.5 million barrels per day.  Gas flaring is 
slated to end and Nigeria hopes to tap its large gas 
reserves to contribute $10 billion per year. The 
government is targeting 70% local content in this sector 
by 2011.  The plan calls for competitive and transparent 
bidding and allocation of oil blocks, alternative funding 
schemes, a comprehensive oil and gas policy, long-term 
financing for local content and cost effective domestic 
pricing. 
 
¶9. The education sector is supposed to increase basic 
educational enrollment by 6% annually and achieve a 
teacher/pupil ratio of 1:35 in primary school, and see 
all students move from primary to junior secondary 
school. Enrollment in "quality" tertiary education 
institutions is to rise from 1.3 million to 2.5 million 
students; girls' enrollment is to rise by 50% in six 
states. Other targets address science and technology, and 
 
ABUJA 00000953  003.2 OF 003 
 
 
information technology education. 
 
¶10. In the health sector NEED-2 seeks to reduce the 
current infant mortality rate of 113 per 1000 births, and 
the under five mortality rate of 201 per 100 births. 
Strategies are to strengthen public health centers and 
routine immunization; promote community partnerships for 
all health stakeholders and improve health research. 
Recent surveys show rates of HIV/AIDS, malaria and polio 
declining; however, there is some concern about the 
national immunization program that is being consolidated 
under the Ministry of Health, where it might get less 
attention. 
CAMPBELL