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RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 06 ABUJA 000219 
 
SENSITIVE 
 
SIPDIS 
 
DEPARTMENT PASS TO USTR-AGAMA 
DEPARTMENT PASS TO USAID/AFR FOR ATWOOD 
DOE FOR GPERSON, CHAYLOCK 
LABOR FOR SHALEY 
USDA/FAS/OTP FOR MCKENZIE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ELAB EPET EFIN EAGR KDEM NI
SUBJECT: NIGERIA:  BI-WEEKLY POL/ECON UPDATES FOR JANUARY 16-31, 
2009 
 
Ref: A. ABUJA 122 
 ¶B. LAGOS 2 
 ¶C. 08 ABUJA 2438 
 ¶D. 08 ABUJA 2372 
 
¶1. (U) The Following is a joint Embassy Abuja, ConGen Lagos 
compilation of January 16-31 political/economic highlights, which 
did not feature in our other reporting, covering: 
 
--Economy 
--Agriculture 
--Environment 
--Aviation 
--Elections 
--Labor 
--Corruption 
--Delta Incidents 
--Oil, Gas, and Power 
--Other Southern News 
 
ECONOMY 
------- 
¶2. (U) NEMT SHUFFLE: The National Economic Management Team (NEMT) 
was inaugurated on Tuesday, February 2, without the 
Directors-General of the Debt Management Office and Bureau of Public 
Enterprises and Chairman of the Federal Inland Revenue Service 
(FIRS) included on the team, despite early press reports to the 
contrary.  The media reported that these three agencies will still 
be part of the Technical Working Groups (TWGs) under the NEMT. 
 
¶3. (U) HOUSE OF REPRESENTATIVES PASSES 2009 BUDGET:  On January 29, 
the House of Representatives passed the 2009 budget of 3.087 
trillion naira ($20.5 billion). The budget is higher than the 3.04 
trillion naira ($20.2 billion) the Senate passed in December 2008, 
and 2.91 trillion naira ($19.3 billion) President Yar'Adua proposed. 
 House and Senate committees will meet to harmonize their separate 
versions of the bill.  The House retained the benchmark price of 
crude oil at $45 with a daily production of 2.29 million barrels. 
 
¶4. (U) GROWING CONCERN OVER INTEREST RATES: On January 25, 2009 the 
media reported commercial and retail borrowers are facing hard times 
as banks raise interest rates to cover shrinking business, the 
falling naira, higher deposit rates and increased number of loan 
defaults.  The official lending rate is 17% but actual rates at 
banks are higher, up to 30%. Press reports state that banks are 
raising interest rates for all new and existing loans.  Banking 
experts claim that the Central Bank of Nigeria (CBN) is reluctant to 
reduce interest rates for fear that might cause higher inflation. 
In December 2008 inflation was 15.1% compared to 6.6% in December 
¶2007. 
 
¶5. (U) NIGERIAN STOCK MARKET RATED THE WORST: The Nigerian Stock 
market was rated the worst performing market in the world for the 
month of January, according to a report published by a London 
research company, Business Monitor International (BMI).  The report 
stated that the Nigeria's Gross Domestic Product (GDP) will drop 
from 6.3% in 2008 to 3.6% in 2009.  BMI also said that the Nigerian 
stock market was the worst possible investment in 2009.  Less oil 
money circulating through the economy, coupled with other financial 
crises, will have a large impact on businesses in Nigeria. 
 
¶6. (U) PARTIAL COMMERCIALIZATION FOR MEDIA ORGANIZATIONS AND REFORMS 
FOR POSTAL SERVICES:  The Bureau of Public Enterprises (BPE) 
announced on January 27 that four media organizations are listed for 
partial commercialization: the Nigerian Television Authority (NTA), 
the Federal Radio Corporation of Nigeria (FRCN), the News Agency of 
Nigeria (NAN) and the National Film Corporation (NFC).  BPE also 
announced reforms to the Nigerian Postal Services (NIPOST) to keep 
costs down and improve efficiency.  No specific dates were given, 
for accomplishing these reforms. 
 
¶7. (SBU) SUDATEL AND INTERCELLULAR AGREE TERMS: EconSpec spoke with 
 
ABUJA 00000219  002 OF 006 
 
 
Executive Director of Intercellular Nigeria Ltd on February 06, 2009 
to confirm media reports regarding the agreement reached in 
principle by Sudanese company Sudatel Group for Telecommunication 
(Sudatel) to purchase a 70% stake in Nigerian public telephony 
operator (PTO) Intercellular. The Director confirmed that the 
holding is worth an estimated 68.75 billion naira ($591.5 million). 
As part of the terms of the purchase,  Intercellular shareholders 
receive $10 million and  Intercellular gets an immediate loan of $10 
million, and $30 million for "other expenses". Under the deal, 
Sudatel is obliged to invest $100 million a year into the expansion 
of Intercellular over the next five years. The Director underscored 
that operations have slowed down due to the inability of Sudatel to 
provide funds, owing to the current crisis in the financial market. 
 
 
AGRICULTURE 
----------- 
¶8. (U) VISIT TO OBASANJO FARM: Lagos Consul General and Agriculture 
Attach visited the Obasanjo Farm at Ota, home to one of the largest 
poultry operations and piggeries in Nigeria.  In addition to poultry 
and pigs, the farm has ducks, snails, grass cutters, rabbits, 
catfish ponds and a corrugated paper recycling plant to produce 30 
count egg trays.  For poultry, the farm at Ota produces broilers as 
well as day old chicks for other poultry producers.  According to 
the operations manager, the demand for day old chicks has declined 
because of the high price of inputs like corn.  The manager 
indicated an interest in sourcing U.S. corn and using USDA credit 
programs and is scheduled to visit FAS Lagos soon.  The farm 
appeared to have diligent measures in place to prevent avian flu. 
Vehicles and people's shoes were disinfected when entering and 
leaving areas that contained animals. 
 
¶9. (SBU) ANE TO SEND 15 NIGERIANS FOR SHEA BUTTER TRAINING: The 
Association of Nigerian Exporters (ANE) will send 15 Nigerians from 
the Shea butter production chain sector to a training program in 
Atlanta, Georgia, in the third quarter of 2009.  Over the past year, 
DepEcon Chief has met several times with ANE to encourage their 
participation in the Trade and Investment Framework Agreement 
Council Meetings and to support their trade promotion agenda in 
trade policy discussions with the GON.  Following the training there 
is the potential for increased exports of Nigerian Shea butter to 
the U.S. 
 
¶10. (U) POOR UNDERSTANDING OF AGRICULTURAL POLICIES: On January 27, 
International Food Policy Research Institute (IFPRI) hosted a local 
university lecturer who presented findings of his research on 
Institutional Capacity for Designing and Implementing Agricultural 
Policies in Nigeria.  His research found that universities, 
ministries and other stakeholders working on agricultural policies 
have a poor understanding on these policies, do not share 
information among different stakeholders, and do not understand how 
to implement agricultural policies. 
 
¶11. (U) AGRICULTURAL LOAN FROM JAPAN TO NIGERIA: Press reported on 
January 30 that Nigeria and eleven other countries in Sub-Saharan 
Africa will share $4.2 billion as part of a five-year loan from the 
Japanese government to boost rice production.  The other countries 
included are Cameroon, Ghana, Guinea, Kenya, Madagascar, Mali, 
Mozambique, Senegal, Sierra Leone, Tanzania and Uganda. 
 
¶12. (U) POSSIBLE REMOVAL OF EXCISE DUTY ON NON-ALCOHOLIC BEVERAGES: 
On January 30 during a meeting with the Association of Food, 
Beverages and Tobacco Employers, Minister of State for Finance Remi 
Babalola said the government is considering removal of the 5% excise 
duty on non-alcoholic beverages and instant noodles.  Domestic 
manufacturers complain that the duty adds to their costs, increases 
prices on their goods and puts locally produced non-alcoholic 
beverages and noodles at a competitive disadvantage to imports. 
 
¶13. (U) NIGERIA SPENDS $3.5 BILLION ANNUALLY ON PROCESS EQUIPMENT 
AND MACHINERY IMPORTATION: Head of Raw Materials Research and 
Development Council (RMRDC) said to the press on February 3 that 
 
ABUJA 00000219  003 OF 006 
 
 
Nigeria spends over 538 billion naira ($3.5 billion) annually on the 
importation of process equipment and machinery.  RMRDC stated that 
Nigeria is dependent on machinery imports and over 90 per cent of 
process equipment used by the manufacturers in Nigeria is imported. 
 
 
ENVIRONMENT 
------------ 
¶14. (SBU) U.S. TRAINS 64 NIGERIAN ENVIRONMENTAL OFFICERS ON OIL 
SPILL DETECTION AND RECOVERY METHODS: U.S. Science Fellow Michael 
Solecki, from the U.S. Environmental Protection Agency (EPA) is in 
Nigeria for 12 weeks providing technical assistance and training for 
several Nigerian organizations.  Under the program, twenty-one 
Abuja-based environmental officers from the National Oil Spill 
Detention and Response Agency (NOSDRA) and the Pipeline Product 
Marketing Company (PPMC) have received three weeks of training on 
oil spill detection and clean-up and restoration of affected areas. 
Mike is conducting similar training for 43 NOSDRA environmental 
officers from the Delta region in Lagos from February 2 - 13.  He is 
also helping the organization develop its own training manual for 
future in-house training.  This training is a direct result of the 
GON's request for U.S. technical assistance in training NOSDRA's 
workforce and advances the Mission's objective of partnering with 
the GON and others in protecting the Nigerian environment and 
encouraging sustainable economic development. 
 
¶15. (SBU) NOTED NIGERIAN ENVIRONMENTALIST DECRIES HIGH GREENHOUSE 
GAS EMISSIONS IN NIGERIA: In an interview he gave to the Financial 
Standard (Feb 2, 2009), Dr. Newton Jibunoh, Founder of the Fight 
Against Desert Encroachment (FADE) and Embassy IV alumnus, stated 
that Nigeria produces 25% of greenhouse emissions in Africa from gas 
flaring activities, negatively impacting the physical and social 
wellbeing of the people of the Delta.  He lamented that although 
various Nigerian administrations have made pronouncements to end gas 
flaring little has been done to end it.  Dr. Jibunoh attributed this 
to various administrations' desire to see quick results before the 
end of their terms, but environmental actions need extended time 
(10-20 years) to bear desired results. 
 
AVIATION 
--------- 
¶16. (SBU) AVIATION PPP: The U.S. Mission expanded its Public Private 
Partnership (PPP) to include not only assisting the government of 
Nigeria to attain its FAA Category 1 certification, but to establish 
a U.S. university partnership to establish a scholarship program and 
begin the accreditation for U.S. sponsored satellite college of 
aviation campus.  As a first step toward establishing the aviation 
college link, EconOff and PDOff met with PPP partners Cita-Triax 
(Cita), Chairman of the Board of Committee of the International 
Aviation College of Kwara State Mr. Raxak Atunwa Esq.,and Tom Davis, 
also of Cita, acting in his capacity as Advisory Board member of WMU 
Aviation College.  Nigeria's Kwara State Aviation College and Cita 
pledged mutual support towards scholarship programs and 
technical/liaison support from WMU.  Mr Atunwa was invited to visit 
the WMU campus. 
 
ELECTIONS 
--------- 
¶17. (U) NIGERIANS ABROAD ALLOWED TO VOTE: On January 27, the 
Nigerian News Service reported that the Federal High Court in Abuja 
ruled in favor of diaspora leaders' law suit to allow Nigerians 
living abroad to vote.  The group's lawyer cited the African Charter 
on Human and People's Rights in 1990, Electoral Act of 2006, and the 
Constitution of the Federal Republic of Nigeria of 1999, to argue 
its case.  The Attorney General's Office and the Independent 
National Electoral Commission (INEC) both opposed the suit and 
argued that the Nigerian Embassies and High Commissions cannot be 
used for voting as they do not form part of the constituencies under 
which elections could be held in Nigeria.  In his December 18, 2008 
ruling, Justice Adamu Bello stated that "since Nigerians living 
abroad have convinced the court that they are entitled vote, and be 
voted for, it is the constitutional responsibility of INEC to put in 
 
ABUJA 00000219  004 OF 006 
 
 
place the relevant machinery to assist the plaintiffs to vote from 
abroad."  He also stated that "the time is ripe for Nigeria to give 
its citizens living abroad the opportunity to register and vote from 
abroad in any election in Nigeria without having to travel for that 
purpose."  The ruling specifically calls for INEC to set up 
registration centers and polling stations of the Federal Republic of 
Nigeria in all High Commissions and Embassies of the Federal 
Republic of Nigeria. 
 
LABOR 
----- 
¶18. (U) NIGERIAN LABOR CRISES: On January 27 the Nigeria Labor 
Congress Secretary General John Odah issued a press statement to 
protest the Petroleum Products Pricing Regulatory Agency's (PPPRA) 
proposal for import-driven deregulation of the downstream oil 
sector.  Odah stated that Nigerians cannot afford to deregulate the 
downstream sector and solely depend on the importation of refined 
petroleum products at the expense of Nigeria's local refineries. 
Odah also criticized the reduction in the price of refined gasoline 
from N70.00 ($0.48) to N65.00 ($0.44), asserting that "the collapse 
of crude oil price from 147 dollar to 41 dollar would have made it 
possible for the reduction in the pump price domestically to be far 
more than N5.00."  (NOTE: Despite the sharp increase in world oil 
prices in recent years, the domestic price for refined gasoline has 
been held fairly constant--increasing from only 65 ($0.44) to 70 
Naira ($0.48) in 2007 and no increase in 2008--largely in response 
to demands by Labor.) 
 
¶19. (U) Averting a potential nation-wide strike, the Minister of 
Labor met with the NLC on February 3 to discuss issues of 
casualization and contract staffing, insecurity in the Niger Delta, 
abuse of labor laws by entrepreneurs operating in the oil and gas 
sector, the expatriate quota abuse, the Nigerian government's 
introduction of full deregulation of petroleum products pricing, the 
recent reduction in the pump price of petrol, and the increase in 
the price of diesel.  Meanwhile, the Petroleum Tanker Drivers (PTD) 
in Lagos went strike on January 29 to protest the seizure of four of 
their trucks by police. 
 
CORRUPTION 
----------- 
¶20. (U) EFCC STILL GOING AFTER FORMER AVIATION MINISTER: On January 
28, The Punch reported that an Abuja High Court may decide to allow 
the Economic and Financial Crimes Commission (EFCC) to file new 
evidence against former Aviation Minister, Babalola Borisade and 
others accused of complicity in an alleged N6.5bn ($44.7 million) 
aviation scam.  The EFCC had slammed an 11-count charge of 
conspiracy, forgery, and fraud on the ex-minister.  Other accused 
persons standing trial with Borisade include the Managing Director 
of Avsatel Communications, George Eider, the former Managing 
Director, of the Nigerian Airspace Management Agency, Roland Iyayi 
and a former Personal Assistant to Borishade, T.A Dairo. 
 
¶21. (U) EFCC DECLARES EL-RUFAI WANTED: The former Federal Capital 
Territory (FCT) Minister, Mallam Nasir el-Rufai issued a statement 
in response to the Economic and Financial Crimes Commission's (EFCC) 
investigation of his alleged fraud of over N32 billion ($220 
million) related to abuse of office and misappropriation of public 
funds.  El-Rufai issued the statement via his "media consultant" who 
stated that "the onslaught unleashed on Mallam Nasir el-Rufai by the 
executive and legislative branches of the current government is a 
classic case of persecution, and there is no need to be 
mealy-mouthed about it."  The EFCC had recently declared el-Rufai 
"wanted" and according to the Nigerian Tribune, enlisted the 
cooperation of the Interpol to arrest him.  The Nigerian Tribune 
also reported that that el-Rufai is in hiding in Boston, 
Massachusetts.  Other reports have been circulated that el-Rufai was 
also hiding out in Dubai and London. 
 
NIGER DELTA INCIDENTS; NO AMERICANS INVOLVED 
--------------------------------------------- 
¶22. (U) Local press reported that on January 21, the M/V "Meredith" 
 
ABUJA 00000219  005 OF 006 
 
 
was attacked off the coast of Nigeria by armed men who used 
explosives causing serious damage to the superstructure.  One 
Romanian crewman was taken hostage, but later released. 
 
¶23. (U) Local press and Shell executives reported that gunmen shot 
at the M/V "Front Chief", a very large crude carrier (VLCC) sized 
tanker berthed at Bonny Terminal on January 17.  The gunmen 
attempted to board the tanker, but were unable to gain access.  A 
tugboat and two service boats in the area were subsequently 
attacked; the crew from one service boat taken hostage and the 
tugboat captain killed.  A spokesman who claimed to represent MEND 
said "affiliates" of the group carried out the attack. 
 
¶24. (U) Local press reported that on January 23, gunmen in two 
speedboats attacked the M/V Ngoni while it was 12 nautical miles 
south of the Bonny river fairway buoy.  The captain and two 
engineers were briefly kidnapped but later released.  The Nigerian 
Navy later claimed in a public statement to have engaged armed men 
in three speedboats who attempted to hijack a vessel on January 23. 
It is unclear if this is related to the "Ngoni" incident. 
 
¶25. (U) A Catholic priest was seized by gunman from in front of his 
Church in Port Harcourt on January 24 according to local press 
reports.  Purported MEND spokesman Jomo Gbomo has issued a statement 
promising to find and release him. 
 
¶26. (U) On January 27, a Lebanese citizen working for Nigercat 
Construction Company was kidnapped by gunmen while going to work 
near Warri, Delta State.  According to press reports he was released 
later the same day; it is unknown if a ransom was paid. 
 
¶27. (U) According to press reports and Shell executives, an eight 
year old Nigerian boy was kidnapped and his eleven year old sister 
shot dead while they were being driven to school in Port Harcourt, 
Rivers State, on January 29.  No group has claimed responsibility. 
The father works for Shell Petroleum Development Company. 
 
¶28. (U) To date in 2009, a total of nine expatriates (no Americans) 
have been taken hostage; four are still being held by their captors. 
 In addition, nine Nigerians have been taken hostage; three are 
still being held.  Two people, one of unknown nationality and one 
Nigerian, have been killed in incidents involving 
kidnapping/hijacking-attempts. 
 
OIL, GAS, AND POWER 
------------------- 
¶29. (SBU) The GON announced a reduction in the retail price of 
gasoline and a change in the way gasoline would be priced in the 
future.  Responding to criticism that the price of gasoline has not 
fallen despite recent the drop in oil prices, the GON reduced the 
price from 70 naira ($0.48) per liter to 65 naira ($0.44) per liter. 
 Additionally, 65 naira ($0.44) is now a cap, with the price of 
gasoline free to fluctuate below that amount.  Many gasoline 
marketers, small and large, failed to reduce their prices noting 
that they had imported their current stocks based on the old price 
and complaining that the GON still owes them money for the fuel they 
imported in 2008.  The Department of Petroleum Resources responded 
by closing some non-complying gasoline stations.  Trade union 
officials also criticized the price reduction, fearing it is a first 
step to full price deregulation.  Mission officers reported long 
lines for gasoline at some stations in Abuja and Lagos.  (Comment: 
Lowering the price of gasoline was easy.  Raising it again, when oil 
prices eventually recover, will not be so easy; fully deregulating 
it will be even harder.  However, a little perspective is in order. 
In relative terms, Nigeria's gasoline subsidy is not particularly 
outrageous.  In fact, an International Energy Agency study reported 
that the average retail price of gasoline in the United States in 
November 2008 was less than the retail price of gasoline in Nigeria. 
 End Comment.) 
 
¶30. (U) On January 22, the JTF handed over six Ghanaians and one 
Nigerian to the EFCC for prosecution on charges of oil theft.  The 
 
ABUJA 00000219  006 OF 006 
 
 
seven were arrested by the JTF in late December in Chanomi Creek, 
Delta State near Shell's Forcados export terminal.  Their vessel, 
alternately called the M/T Atima and M/T Hope was loaded with 4000 
metric tons (29,300 barrels) of crude oil. 
 
¶31. (SBU) Ann Pickard, Shell's Executive Vice President for Africa, 
hosted the Consul General and Lagos officers for a dinner with Shell 
and industry executives on January 30.  At the dinner a senior Shell 
executive expressed concern that supertanker owners may refuse to 
send their ships to Nigerian export terminals following the January 
17 attack on M/V "Front Chief".  According to the executive, 
supertankers are now taking anti-piracy precautions in Nigerian 
waters similar to measures they employ when sailing near Somali 
waters.  In an aside, the executive also noted that local officials 
are demanding a bribe to move forward with the prosecution of a 
Nigerian accused of murdering a Shell adult dependent in her 
residence in December 2006.  Shell refuses to pay, but is closely 
monitoring the status of the accused to ensure he remains in 
pre-trial confinement.  The victim was a Dutch citizen, and the 
executive noted that the Dutch government would not assist in the 
prosecution because the GON could impose the death penalty if the 
accused is found guilty. 
 
OTHER SOUTHERN NEWS 
------------------- 
¶32. (U) On January 28, Lagos Pol-Econ Chief, opening a workshop on 
university-community interaction held by the Lagos State University 
Faculty of Social Sciences, addressed the group about town-gown 
exchanges in the United States.  Participants described Nigerian 
universities as walled enclaves, on the outskirts of the cities 
where they are located, whose professors and students seldom venture 
out to interact with local citizens.  When professors and students 
do venture into the communities, they conduct research but provide 
no reciprocal benefit, which has resulted in some resentment by 
communities.  Workshop participants pointed out that, as the economy 
has changed, universities are finding it harder to provide the kinds 
of services to faculty and students that they once did, and are 
turning to the private sector to supply housing, food and 
transportation.  Speakers suggested ways Nigerian universities can 
contribute more to their surrounding communities. 
 
¶33. (U) On January 29, The Lagos Consul General spoke at the 
inauguration of the chapter of the American Studies Association of 
Nigeria (ASAN) at Covenant University (CU), one of Nigeria's leading 
private universities.  The self-sufficient institution in Ota, Ogun 
State, is modeled on Oral Roberts University and has its own water 
processing and bottling plant, publication press, entrepreneurial 
development studies center, and other assets, allegedly built 
without assistance from non-Nigerians.  An estimated 4,000 people 
turned out for the speech which wove together the personal stories 
of three American leaders: Barack Obama, Martin Luther King, Jr. and 
Abraham Lincoln.  (Comment:  When compared to federal institutions 
of higher learning in Nigeria, which tend to appear run down and 
under funded, CU is quite impressive.  End Comment.) 
 
SANDERS