VZCZCXYZ0000
PP RUEHWEB

DE RUEHUJA #1990/01 3031241
ZNR UUUUU ZZH
P 301241Z OCT 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 7362
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 2193
RUEHNM/AMEMBASSY NIAMEY 0208

UNCLAS ABUJA 001990 
 
ECOWAS COLLECTIVE 
 
DEPT OF COMMERCE WASHDC 
DEPT OF AGRICULTURE WASHDC 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS TO USTR-AGAMA 
DEPT PASS TO USAID AFR/SD FOR CURTIS AND ATWOOD 
DOC FOR 3317/ITA/OA/BURRESS AND 3130/USFC/OIO/ANESA/CREED 
USDA FOR FAS/OTP MCKENZIE 
 
E.O. 12958: N/A 
TAGS: ECON EIND EAGR ENRG ETRD EAID PGOV NI
SUBJECT:  KANO'S INFRASTRUCTURE PROBLEMS CONTRIBUTE TO ECONOMIC 
DECLINE 
 
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SUMMARY 
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¶1.  (SBU) Representatives of Kano's Chamber of Commerce told USTDA 
visitors that the state's irregular power supply and poor 
infrastructure have contributed to business closures and high 
unemployment.  Agricultural activity suffers from the lack of 
improved agricultural inputs and a well-developed and integrated 
value chain.  Local government and business would welcome investment 
in the rehabilitation of infrastructure.  END SUMMARY. 
 
 
 
 
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ASSESSMENT OF KANO'S ECONOMIC SECTORS 
------------------------------------- 
 
¶2.  (U) Kano is the second-most populous state in Nigeria after 
Lagos, with a population of over 12 million.  The state is the 
citadel of Islamic civilization and political activism in Nigeria. 
Its main economic sectors are agriculture, commerce, and 
manufacturing.  Kano was a commercial hub in the 1970s and 1980s for 
Nigeria and the entire West Africa region.  The former center of 
manufacturing and commerce with a diverse religious, social, and 
cultural mix is now in social and economic decline. 
 
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AGRICULTURE 
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¶3.  (U) Agriculture is the economy's largest sector and largest 
employer.  Over 70 percent of the work force is directly or 
indirectly engaged in agriculture and animal husbandry.  There are 
over 24 dams in the state, the primary ones being the Challawa and 
Tiga Dams, which provide water for irrigation activities. 
 
¶4.  (U) Principal agricultural products include: groundnuts 
(peanuts), guinea corn, maize, sugarcane, gum arabic, rice, honey, 
ginger, pepper, and different kinds of vegetables. The livestock 
consists of cattle, sheep, goats, donkeys, camels, and horses. 
Kano's Dawanau grain market is the largest grain market in West 
Africa.  Agricultural products support the food needs of the state, 
provide raw materials for its industries, and generate employment 
for its growing population.  Agricultural growth slowed in the 1970s 
due to the oil boom that shifted the government's focus to oil and 
gas production and away from other sectors. 
 
¶5.  (U) Agriculture is faced with a shortage of improved 
agricultural inputs such as seeds, equipment, and financing.  It 
also suffers from the lack of a well-developed and integrated value 
chain, desertification, and deforestation. 
 
 
 
 
 
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COMMERCE 
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¶6.  (U) Commerce is the second largest sector.  The state once 
benefited from the growth of large, medium and small-scale 
commercial enterprises, but now commercial activities focus on the 
sale and distribution of primarily imported goods such as textiles, 
cosmetics, chemicals, pharmaceuticals, spare parts, vehicles, 
buildings materials, and electronics.  Commercial activities are 
hindered by poor transportation infrastructure, including poorly 
maintained roads, inoperable railway lines, and a long-neglected 
international airport. 
 
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MANUFACTURING 
------------- 
 
¶7.  (U) Kano is still Nigeria's second largest manufacturing center 
 
 
after Lagos.  However, its manufacturing sector has been stagnant 
for 20 years largely due to an irregular power supply.  Kano's 
textile industry faces serious challenges from smuggled products 
from China and other Asian countries, according to the Kano Chamber 
of Commerce. 
 
¶8.  (U) Kano's manufacturing sector witnessed strong growth during 
the early 1980s because the state government provided manufacturing 
incentives such as free land and tax exemptions for prospective 
manufacturers.  However, the state experienced a massive decline in 
manufacturing in the mid-1980s due to the removal of manufacturing 
subsidies as well as high production costs arising from the lack of 
infrastructure. 
 
--------------------------------------------- ---- 
THE BUSINESS COMMUNITY LAMENTS INDUSTRIAL DECLINE 
--------------------------------------------- ---- 
 
¶9.  (SBU) The Governor's Special Adviser on Economic Development and 
the Private Sector, Abdullahi Rabiu Mai Kano, acknowledged during a 
recent round table with the Kano business community that power 
generation is the main problem hindering industrial growth in the 
state.  He regretted the low water level in the rivers, which 
adversely affects power generation, and said the state government 
has signed a memorandum of understanding with a Chinese firm to 
generate 49 megawatts of hybrid power, a combination of wind and 
oil, to boost power generation.  Mai Kano said the irregular power 
supply has forced companies to rely on costly diesel generators and 
has reduced work days from seven to five. 
 
¶10.  (U) USTDA African Business Development Manager Jason Nagy 
explained that the agency's goal is to support project development 
in developing countries by funding feasibility studies that will 
further create business opportunities.  He also briefed the business 
community on USTDA's technical assistance to the Nigerian 
Electricity Regulatory Commission (NERC), which involved developing 
health and safety standards that are being implemented and enforced 
by the NERC.  Nagy also noted that the USTDA is funding a 
feasibility study for the Kiri Dam in Adamawa State. 
 
¶11.  (SBU) Dala Foods Nigeria Limited Managing Director Ali Madugu, 
who doubles as the Chairman of the Kano Chapter of the Manufacturers 
Association of Nigeria, appealed for private investment in 
transportation, particularly the rehabilitation of railroad 
infrastructure, the construction of rural roads, and the 
modernization of airports to boost economic activity.  Madugu 
described the deplorable state of the Aminu Kano International 
Airport, which prevents foreign airlines such as British Airways and 
Lufthansa from flying to Kano, and called for private investment in 
airport modernization.  The Transportation Officer underscored the 
U.S mission's collaboration with the Government of Nigeria in 
enhancing aviation safety to attain United States Federal Aviation 
Administration Category 1 status, which would enable Nigerian 
airlines to fly directly to the United States. 
 
¶12.  (SBU) Madugu also requested a feasibility study for railroad 
rehabilitation to facilitate commerce and trade within and outside 
the state.  He also encouraged investment in waste recycling for the 
conversion of human waste to electricity and natural fertilizers. 
 
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THE DILEMMA FOR MANUFACTURING INDUSTRIES 
---------------------------------------- 
 
¶13.  (SBU) The delegation visited several manufacturing sites where 
inadequate power supply and poor infrastructure were major 
constraints to industrial growth.  Northern Nigeria Flour Mills 
Deputy Managing Director Bob Cameron said that "over 50 percent of 
Northern Nigeria Flour Mills' operations depend on diesel 
generators." 
 
¶14.  (SBU) Officials from Gongoni Industry, a major manufacturer of 
insecticides and chemical agents, lamented the influx of inferior 
counterfeit products from China and Malaysia.  The Gongoni officials 
said the company is spending large sums of money fighting product 
piracy.  Industry sources also complained about the government's 
failure to stop the dumping of pirated and smuggled products. 
 
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COMMENT 
 
 
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¶15.  (SBU) Kano's economic decline is painful for those businessmen 
who remember the city's past glory as the prosperous commercial 
capital of Northern Nigeria.  However, the problems that Kano faces 
are common to almost every other city in Nigeria. 
 
¶16.  (U) The Embassy coordinated this telegram with ConGen Lagos. 
 
SANDERS