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O 150844Z NOV 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1431
INFO RUEHAB/AMEMBASSY ABIDJAN PRIORITY 0143
RUEHBP/AMEMBASSY BAMAKO PRIORITY 0054
RUEHOU/AMEMBASSY OUAGADOUGOU PRIORITY 0034
RUEHOS/AMCONSUL LAGOS PRIORITY 8257
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RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
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RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 03 ABUJA 002380 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PLEASE PASS TO USTR (FLISER) 
ENERGY FOR CAROLYN GAY 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EFIN PGOV PREL NI
SUBJECT: NIGERIANS INTERESTED IN INCREASED US INVESTMENT IN 
INFRASTRUTURE AND NON-OIL SECTOR 
 
REF: A. ABUJA 1582 
     ¶B. ABUJA 2059 
     ¶C. ABUJA 2191 
 
SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY 
 
¶1. (SBU) SUMMARY:  On November 12 the Deputy Secretary and 
A/S Frazer met with bankers, businessmen, government 
representatives from telecommunications, trade and commerce, 
and Deputy Economic Advisor to the President to discuss the 
current investment climate in Nigeria.  The bankers were 
interested in partnerships with U.S. banks in Nigeria and 
creating branches in the U.S.  The representative from the 
Ministry of Commerce and Industry sought help in encouraging 
U.S. Customs to ease U.S. import standards on Nigerian 
textiles to take advantage of AGOA.  A private businessman 
emphasized the need for a bilateral investment/trade 
mechanism to spur U.S. investment in Nigeria.  The 
representative from the Nigerian Communications Commission 
urged for more competition in this fast growing sector and 
thanked USAID for technical assistance in Nigeria and the 
region.  Faced with an increasing demand for electricity, 
First Bank Chair suggested that the U.S. and Nigeria partner 
on nuclear energy projects. END SUMMARY. 
 
BANKING SECTOR 
-------------- 
 
¶2. (SBU) Alhaji U.A. Mutallab, Chairman of First Bank (one of 
the biggest banks in Nigeria with more than 400 branches and 
offices in the UK and South Africa) reported that the bank 
was interested in the U.S. market but that U.S. bank 
regulators have made it nearly impossible to do business 
there with more than one million shareholders.  First Bank is 
publicly traded on the Lagos Stock Exchange and plans to list 
on the London Stock Exchange soon.  Nigerian banks are 
heavily capitalized and are investing in power, petroleum, 
solid minerals and telecom sectors.  Mutallab commented that 
the bank raised 100 billion naira ($838 million) in a recent 
public offering for shares, that was over-subscribed by 400 
billion naira. 
 
¶3. (SBU) Senator Faruk Bello Bunza, Managing Director of 
Guaranty Bank, said that Nigerian banks do not provide 
sufficient capital to assist in the development of Nigeria's 
infrastructure, agriculture sector and industry.  Annual 
interest rates of 16 to 30% are too high and unsustainable 
for Nigerian industries.  As a result, industries are 
closing, such as the textile industry (reftel A).  Bunza 
noted that while there are some non-oil American companies 
here, U.S. investment is relatively low. 
 
TELECOMMUNICATIONS 
------------------ 
 
¶4. (SBU) Funlola Akiode, Head of Economic Analysis, Nigerian 
Communications Commission, reported that since 2000 the 
number of phone lines in Nigeria have jumped from 500,000 to 
8 million, still insufficient to satisfy the high demand. 
She said that 50 companies are in the sector, including five 
GSM providers and 24 fixed wireless; and are all money-making 
ventures.  She argued that competition was good and the 
sector needed more players particularly to invest in rural 
markets.  The biggest challenges in the sector were 
inadequate power, not enough skilled technicians and 
engineers, and insufficient access to funds. 
 
BILATERAL INVESTMENT TREATY 
--------------------------- 
 
¶5. (SBU) Obiora Okonkwo, President of the Nigeria-Belgium 
Business Forum, stressed that a bilateral investment treaty 
(BIT) with the U.S. would be a great benefit to companies 
 
ABUJA 00002380  002 OF 003 
 
 
like his who seek greater ties to the U.S.  Drawing on his 
experience in helping to promote a BIT with Belgium, Okonkwo 
said that high level support from former President Obasanjo 
had been key to finalizing the negotiation.  He suggested 
that the U.S. and Nigeria discuss a BIT at the upcoming Trade 
and Investment Framework Agreement Council meetings in 
December.  Deputy Secretary and A/S Frazer concurred that the 
U.S. wants to improve its relationship with Nigeria, sees 
value in establishing economic agreements that demonstrate a 
long-term committment to the economic relationship, and 
agreed that a BIT should be examined further. 
 
¶6. (SBU) Ajuji Ahmed, Deputy Economic Advisor to President 
Yar'adua, explained that a process of regular meetings began 
in 1999 to discuss deeper economic ties and led to the 
creation of the Joint Economic Partnership Committeee. 
However, those talks ended after 2-3 years.  First Bank 
Chairman Mutallab underscored that a BIT should be negotiated 
to spur U.S. investors.  The Deputy Secretary noted that 
perhaps now was the time to resurrect efforts to deepen trade 
and investment ties. 
 
¶7. (SBU) Mary Ejembi, Deputy Director for External Trade, at 
the Ministry of Commerce and Industry, said Nigerian agencies 
met last week to discuss takeaways for the upcoming TIFA and 
stressed that U.S. expertise and investment are welcome.  She 
said that AGOA is not working well in Nigeria because U.S. 
import standards are too high for Nigerian textile 
manufacturers.  A/S Frazer commented that the issue of 
standards has been a problem in other countries and we are 
working to prevent it from being a barrier to trade. 
 
¶8. (SBU) The CDA reported that a team from the U.S. 
Export-Import Bank was in Lagos exploring increased 
opportunities and that the Secretary of the Department of 
Commerce would lead a trade delegation to Nigeria in March 
¶2008.  Ejembi commented that the Indians, Chinese and 
Japanese have been more eager to discuss opportunities than 
the U.S. 
 
ELECTRICITY SECTOR - CURSE AND OPPORTUNITY 
------------------------------------------ 
 
¶9. (SBU) Ajuji Ahmed said that an important factor limiting 
economic development was insufficient electricity.  He 
reported that less than 3,500 MW are supplied to consumers 
from this grid and that unmet demand was well over 10,000 MW. 
 He said that lack of power has resulted in the closure of 
businesses in the manufacturing sector, including textiles 
(reftel B).  Ahmed explained that a number of Independent 
Power Projects (IPPs) were seeking to divert flared natural 
gas but that these IPPs are all located in the volatile Niger 
Delta.  Due to instability in the Niger Delta, a number of 
IPPs could be disrupted (reftel C).  Ahmed supported 
expanding the number of IPPs in other parts of the country to 
avoid violent disruptions. 
 
¶10. (SBU) Mutallab offered that Nigeria and the U.S. should 
partner to bring atomic energy to the forefront.  He 
considered nuclear energy the quickest method to increase the 
supply of electricity and an area of expertise that the U.S. 
could share with Nigeria.  He said Nigeria was open to 
foreign operators.  The Deputy Secretary said that this was 
another area of possible cooperation. 
 
ISLAMIC BANKING 
---------------- 
 
¶11. (SBU) The CDA asked the Bankers whether Islamic banking 
was a growth area in Nigeria.  Mutallab responded that his 
bank was interested and that the Nigerian Central Bank has 
approved the establishment of Islamic banks.  He said that 
Islamic banks were "long overdue" in Nigeria and his 
 
ABUJA 00002380  003 OF 003 
 
 
shareholders overwhelming support them.  First Bank is in 
negotiations with other banks to create an Islamic bank in 
Nigeria. 
 
¶12. (SBU) Participants: 
 
U.S. 
The Deputy Secretary 
A/S Frazer 
CDA Lisa Piascik 
Gustavo Delgado, D Staff 
Ted Wittenstein, D Staff 
Terry Pflaumer, PolCouns 
Robert Tansey, EconCouns 
Sharon Cromer, USAID MD 
Tony Fernandes, Embassy Notetaker 
 
Nigeria 
Obiora Okonkwo, President of the Nigeria-Belgium Business 
Forum 
Senator Faruk Bello Bunza, MD Guaranty Bank 
Alhaji U.A. Mutallab, Chairman of First Bank 
Ajuji Ahmed, Deputy Economic Advisor to President Yar'adua 
Funlola Akiode, Head of Economic Analysis, Nigerian 
Communications Commission 
Mary Ejembi, Deputy Director for External Trade, Ministry of 
Commerce and Industry 
 
¶13. (U) The Deputy Secretary's staff has cleared this message. 
PIASCIK