NIGERIA: 14 KILOMETERS OF LOST PRODUCTIVITY

UNCLAS ABUJA 001542

SIPDIS

DEPT FOR AF/W, INR/AA

E.O. 12958: N/A
TAGS: ECON ELAB PGOV NI
SUBJECT: NIGERIA: 14 KILOMETERS OF LOST PRODUCTIVITY


1. (SBU) On a recent trip to Ilorin, Poloff passed a 14
kilometer (8.7 mile) line of tractor trailer trucks waiting
to pick up cement from the Obajana Cement Factory in Obajana,
Kogi State (135 miles southwest of Abuja). The cement
factory, owned by Aliko Dangote of Dangote Industries
Limited, was officially commissioned in April and reportedly
has an installed capacity of five million metric tons of
cement per year at an estimated project cost of $798 million
(according to the International Financial Corporation, IFC).
Approximately $479 million was financed by the IFC, European
Investment Bank (EIB) and other international lenders. The
factory is reported to be the largest in Africa, and
production is expected to reduce the current level of cement
imports (also imported by Dangote Industries),which account
for more than 80 percent of cement consumed in Nigeria.
Dangote announced plans in February to list the cement
factory on the New York Stock Exchange; however, no further
announcements to this effect have been made.


2. (SBU) On July 15, Poloff witnessed literally several
thousand tractor trailer trucks sitting idly by the side of
the road in Obajana awaiting loading. The line of trucks,
which stretched over 14 kilometers (8.7 miles,) had a
semi-permanent feel to it as economic activities have sprung
up along the roadside to support the idle drivers and
loaders. Enterprising women cook and sell food and water to
the "captive" consumers and young boys circulate selling
buckets of water for bathing. Poloff spoke to a "load boy"
sitting next to one of the trucks near the front of the line.
The young man told Poloff he and the driver came from Abuja
and had been waiting seven days for their load of cement.
Though longer than the normal three to four day wait, he
maintained he once waited almost two weeks to load. The load
boy told Poloff the truck owner pays the driver 7,000 Naira
($59) and the load boy 3,000 Naira ($25) for each load.


3. (SBU) Comment. The 14 kilometer line of trucks highlights
the inefficiencies that often lie just below the surface of
some of Nigeria's prominent economic success stories. The
lost productivity of several thousand trucks sitting idly by
the roadside for days to weeks at a time is mind-boggling.
In addition, with Dangote Industries controlling both the
imported and domestically produced supply of cement, the
higher costs are simply passed along to the consumer. Even
the positive impact on the local economy seemingly has a
downside, as the Embassy motorpool driver (who grew up about
an hour from Obajana),lamented that prostitution, HIV/AIDS,
and sexually transmitted diseases are on the rise as truckers
(well-paid by local, rural standards) sit idly. As bilateral
talks continue on removing import bans and opening up
restrictive import licensing schemes, the truck drivers in
Obajana serve as a reminder of the inefficiencies introduced
by these restrictive trade policies. End Comment.
PIASCIK