NIGERIAN TRADE POLICY: BUSINESS (AND POLITICS) AS

C O N F I D E N T I A L ABUJA 003075

SIPDIS


STATE PASS USTR
STATE FOR AF/W AND AT EB/TPP
STATE PLEASE PASS DEPT OF AGRICULTURE
COMMERCE FOR ITA/MAC


E.O. 12958: DECL: 11/11/2012
TAGS: ECON ETRD EAGR BEXP NI
SUBJECT: NIGERIAN TRADE POLICY: BUSINESS (AND POLITICS) AS
USUAL


REF: ABUJA 1163


Classified by Ambassador Howard F. Jeter, reasons 1.5 (b and
d)


(C) 1. Summary. Refuting reports that the GON planned a 100
percent tariff on most imported goods that can also be made
in Nigeria, the President's Chief Economic Advisor
acknowledged some officials were advocating the idea, but
said "there will be no such thing." However, the Principal
Secretary to the President told a U.S. businessman that the

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tariff would be imposed. The GON tariff policy is not yet
settled as free traders and protectionists seek to prevail
against each other. In the end, tariff policy will likely be
more of what currently exists--not an across-the-board
increase but a mixed bag of increases and decreases that
reflect political considerations in an election year as much
as they reflect GON economic concerns. Meanwhile, confusion
at the ports likely will reign. End Summary.



2. (SBU) Procter and Gamble (P&G) Vice-President for
Sub-Saharan Africa Philippe Bovay met Principal Private
Secretary to the President Stephen Oronsaye on November 4 to

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discuss the March 2002 40 to 100 percent tariff increase on
detergents. Bovay told Econoff that during the meeting,
"Oronsaye re-iterated that it has become a matter of national
policy to impose 100 percent import duty for items already
manufactured in Nigeria, as a means to encourage more local
manufacturing." According to Bovay, "Oronsaye advised there
were two schools of thought in the Government, one for lower
duties and one for 100 percent protectionist duties, and that
the 100 percent school of thought was the current prevailing
position."



3. (C) During a November 11 conversation, Econoff asked
Oronsaye whether the GON had amended its trade policy to
implement a 100 percent tariff on the import of all goods
that are also manufactured in Nigeria. Oronsaye said that he
was "not able to comment." He suggested that within the next
two weeks the picture would become clearer, after the
Ministers of Finance, Commerce, and Industry had concluded
their discussions on trade policy for the 2003 GON budget
submission.



4. (C) Chief Economic Advisor to the President Magnus Kpakol
told Econoff on November 11 that the GON 2003 budget would
not include a 100 percent tariff on all imported goods for
which there are local competitors. However, he claimed that
"There were people fighting for such a trade policy," and
"that defeating them had been difficult." According to
Kpakol, even if 100 percent tariffs helped to promote
domestic industry, in practice the primary result would be
steeply increased smuggling, with actually less protection
for the domestic industry and no additional tariff revenue
collected.



5. (C) Kpakol denied press reports that the GON planned to
ban imports of certain pharmaceuticals that could be produced
in Nigeria. Kpakol said that although a Ministry of Health
official made such a claim at a meeting of the Pharmaceutical
Society of Nigeria, wiser heads would prevail, and no such
policy would be established.



6. (C) Comment. Kpakol is a key voice in GON economic policy
and his stance on open markets is encouraging. However, at
times Kpakol can overestimate his influence and can be overly
optimistic about the strength of free traders in GON
policymaking. He also knows us and knows what to tell us to
cast the GON in the best possible light. Right now, the view
on GON tariff policy is unclear. We cannot tell if there will
be a radical increase in tariff rates. Our best guess is that
a 100 percent comprehensive increase is improbable. However,
some increases are indeed likely. As has been the case the
past two years (Reftel),the tariff schedule will remain both
a tool of GON economic policy as well as of political
concerns. Meanwhile, confusion at the ports will likely reign
as customs officials attempt to collect levies not based on
the official tariff schedule that might be weeks or months in
coming but, in an effort to extract additional payments, on
the latest public announcement or media report that purports
to reflect GON policy. End Comment.
JETER