WORLD BANK STRATEGY FOR DEBT RELIEF IN NIGERIA MAY

UNCLAS LAGOS 001064 SIPDIS E.O. 12958: N/A TAGS: EFIN ECON PGOV PREL NI SUBJECT: WORLD BANK STRATEGY FOR DEBT RELIEF IN NIGERIA MAY FALL SHORT OF REAL NEEDS ¶1. (U) On July 5, 2005, the Lagos Business School held its usual monthly breakfast for Nigerian business leaders. Different from the usual, however, this month's meeting focused on Nigeria's recent triumph in securing debt relief from Paris Club donors. Hafez Ghanem, the World Bank (WB) Country Director for Nigeria, spoke on debt relief and its impact on planned development programs in the country. ¶2. (U) Ghanem confirmed that, in response to debt relief and the vote of confidence in Nigeria's economic reform programs, the WB would be nearly doubling its Nigeria portfolio from its present level of about $1.2 billion over the next two years. The WB's total portfolio in Africa is valued at approximately $5 billion. Ghanem then reiterated the WB's traditional commitment to poverty reduction and assistance in the areas of governance, infrastructure, and trade, but cited corruption and gender inequalities as problems that would receive particular attention in Nigeria. ¶3. (U) Ghanem also said that he was hopeful that Nigeria would avoid common pitfalls of debt relief, namely that the country uses its increased creditworthiness to incur more debt, and swiftly returns to highly indebted status. Unfortunately, these remarks were met with a series of chuckles and acknowledgement on the part of many of the banking leaders present. Ghanem had trouble responding to one business leader's observation that neither debt relief nor WB programs affect the rising unemployment rate, one of the most inveterate and incapacitating problems facing Nigeria today. ¶4. (U) Ghanem closed with an appeal for the audience to view debt relief and increasing development funds as a new and different start, but business leaders present appeared to adopt a wait-and-see posture. ¶5. (U) This cable has been cleared by U.S. Embassy Abuja. HOWE