NIGERIA: AGOA ELIGIBILITY REVIEW

UNCLAS SECTION 01 OF 03 ABUJA 002803 SIPDIS DEPARTMENT FOR AF/EPS - WENDELL ALBRIGHT, PASS TO USTR - C. HAMILTON, COMMERCE/ITA - G. GELDMAN, TREASURY - ¶E. BARBER E.O. 12958: N/A TAGS: ECON ETRD PGOV NI AGOA SUBJECT: NIGERIA: AGOA ELIGIBILITY REVIEW REF: (A) STATE 171150; (B) 01 ABUJA 02856; (C) 00 STATE 110733; (D) 00 STATE 127971; (E) 00 STATE 126813 ¶1. In response to Ref A, the following is an update of the information provided previously in Nigeria's AGOA eligibility (Ref B.) PROGRESS TOWARD A MARKET ECONOMY -------------- -------------- Item 4.1.1A: The GON continues to make incremental progress toward establishing a market-based economy that protects private property rights, incorporates an open rules-based trading system and generally reduces government interference in the economy. Despite the failure of winning bidders to obtain the financing necessary to pay the purchase price for the telecommunications monopoly NITEL and the disintegration of the joint partnership that won the bid on the ship repair facility Nigerdock, the GON remains committed to the privatization process. Efforts to privatize two large, modern hotels in Abuja, as well as newsprint, sugar and tractor manufacturing companies are proceeding apace. After the GON successfully auctioned three GSM licenses in 2001, a second national telecommunications carrier was designated in August 2002. In July, the Central Bank of Nigeria (CBN) re- introduced a modified Dutch Auction System (DAS) for foreign exchange which tied officially traded Naira to a market mechanism, greatly reducing the discount between the parallel market and officially traded Naira. Prior to the DAS, the spread between the two rates had risen to 17-20 percent, thus diverting a significant amount of banking activities from investment into non-productive arbitrage activities. For the current fiscal year 2002, the Executive agreed to the CBN request to cap deficit spending at 12.5 percent of the total expected revenue for the year. This established a hard-line of debt, beyond which the government cannot spend. The result has been periodic halts to all government payments for capital projects and delays on recurrent expenditures until the CBN receives revenues so as to remain within the 12.5 percent deficit band. The Presidency established in 2001 an office to review all capital projects of more than USD $10,000. This new "due diligence" requirement has reduced some of the most blatant forms of corruption in new capital projects, but it is time consuming , not widely understood by many contractors or civil servants and still can be circumvented. Government policies helped lower year-to-year inflation rates (from 19.5 to 16.5 percent) and reduced growth of the money supply to within CBN targets, both improvements over last year's performance. They also demonstrated commitment to a significant degree of economic reform and fiscal discipline by the Obasanjo Administration at considerable political cost during the build up to the 2003 elections. POLITICAL PLURALISM AND THE RULE OF LAW -------------- Item 4.1.1 B: The elected civilian government is now in its fourth year. The GON has repeated its commitment to the rule of law, human rights and democracy and has established a commission to investigate abuses by security forces related to ethnic violence between the Tivs and Jukun ethnic groups in 2001. Despite the Executive-Legislature impasse over budget and spending processes, and the threatened impeachment proceedings against the President, all key political figures and the vast majority of Nigerians steadfastly support the democratic process. Three new political parties have been registered, and a voter registration program was conducted in September 2002, albeit with widespread complaints that large numbers of Nigerians were unable to register due to a lack of materials and other irregularities with the process. National, including Presidential and state elections, are planned for 2003. Local elections will take place in late 2002 or early 2003. A USG-supported police modernization project was launched in July 2002 with ICITAP personnel on the ground in several cities providing training and technical assistance. The Supreme Court made landmark decisions in early 2002 that affirmed its role as the final arbiter of the national constitution in the ongoing process of the development of Nigerian democratic federalism. While the Supreme Court and Appellate Courts have distinguished themselves, the overall the judicial system lacks the resources and administrative capability to function effectively. This results in long delays in resolving civil and criminal cases. In several instances in the year, local Shari'a courts have imposed stoning sentences against women for adultery, which is a crime under the new Shari'a code in many States in Nigeria. Several of the cases have been dismissed. In the highly publicized case of Safiya Husseini, the stoning sentence was overturned by a State Appellate Court in March. Another well- publicized stoning case is in the appellate process. The Federal Government has stated its opposition to these sentences; under the Nigerian constitution, it must allow these matters to be resolved by the judicial system. Ethnic and religious tension continued in 2002, though at a lower level than 2001. Communal clashes resulted in dozens of deaths and injuries, and displaced hundreds of people. The GON has established and supports commissions and other groups working to end communal violence. NONDISCRIMINATION IN TRADE -------------- Item 4.1.1C: Nigeria generally does not discriminate against U.S. goods or services and allows for the free movement of foreign exchange into and out of the country. The GON continues to move toward policies eliminating barriers to US trade and investment, although tariffs were amended and revised upwards in ¶2002. The GON is moving toward lower tariffs on manufacturing inputs and reduced the duty on wheat to 5%, but prohibitive tariffs were implemented in 2002 on other imports, notably detergents, rice, poultry and printed fabrics and other items were banned outright. The GON continues to work toward restructuring the intellectual property rights regime, with legislation pending to create a quasi-independent IPR commission and to bring Nigeria into full compliance with the WTO TRIPS agreement. Nigeria is party to numerous conventions and agreements regarding patent, trademark and copyright protection, and the country' s laws generally favor protection of intellectual property owners and provide criminal penalties for violation of their rights. Even though significant progress has been made in strengthening IPR laws and regulations, enforcement of IPR laws is weak due to scarce resources and a lack of expertise by the courts and enforcement officials. Limited progress has been made in regard to licensed materials such as software and optical media. POVERTY REDUCTION -------------- Item 4.1.1D: Poverty alleviation progresses at a slow pace. GDP growth was at 3.9% for 2001, while the country's population grew at 3.1%. After a slow start, the GON is now engaged with the World Bank and donor community in preparing a Poverty Reduction Strategy Paper with a view towards coordinating its own anti-poverty efforts with those of the international community. Other parts of the GON Poverty Alleviation program include an on-again, off- again program of paying small stipends to a limited number of the unemployed and Universal Basic Education, which is building two schools in each of Nigeria's 774 local government areas. The Niger Delta Development Commission (NDDC),a publicly funded entity, was created to better promote development in the eight states of the oil-producing region, one of the poorest in the country. As of September 2002, the NDDC had received N32 billion ($254 million US) over the 20 months ending September 2002. CORRUPTION -------------- Item 4.1.1E: Corruption remains a perceived and real problem throughout Nigerian institutions, and the GON maintains efforts to combat corruption, with uneven results. An anti-corruption commission is in place, and the GON continues to audit public enterprises. Since 2001, all federally funded capital projects over USD $ 10,000 must pass a due diligence test before funding and implementation. U.S. NATIONAL SECURITY -------------- ITEM 4.1.F.2: The GON does not engage in activities that undermine US national security or foreign policy interests. Nigeria has been one of our staunchest anti-terrorism allies in Africa. CHILD LABOR -------------- ITEM 5: In 2002 President Obasanjo signed the instruments of ratification for ILO Convention 182, Worst form of Child Labor, Convention138, Minimum Age for Employment, and Convention 111, Equality of Occupation. Existing legislation prohibits children under 15 years to work in most sectors and outlaws forced or compulsory labor, but enforcement remains weak. Draft legislation was under review in the National Assembly that would make trafficking in persons (including children) a crime; however, no action was taken on it by year's end. There were few statistics available to determine the success of ongoing antitrafficking campaigns. JETER