NIGERIA: GOVERNMENT AND EXPORTERS ARE OPTIMISTIC ON

UNCLAS SECTION 01 OF 03 ABUJA 002340 SENSITIVE SIPDIS DEPT PASS TO USTR-AGAMA AND GARDE; AID FOR GWEYNAND AND SLAWETZ; AND SBA FOR SMITH TREASURY FOR PETERS AND HALL DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ANESA/DHARRIS USDA/FAS FOR MAURICE HOUSE, DOROTHY ADAMS DOJ FOR KOUAME E.O. 12958: N/A TAGS: ETRD ECON KIPR EAGR EINV EAID PGOV NI SUBJECT: NIGERIA: GOVERNMENT AND EXPORTERS ARE OPTIMISTIC ON DEEPENING US/NIGERIA TRADE AND INVESTMENT REF: A. ABUJA 2302 ¶B. ABUJA 2295 ¶C. ABUJA 2278 ¶D. ABUJA 2223 ¶E. ABUJA 2197 ¶F. ABUJA 2177 ¶G. ABUJA 2146 ¶H. ABUJA 1977 ¶I. ABUJA 1925 ¶1. (SBU) Summary. During the November 17 - 20 visit of Laurie-Ann Agama, Director for African Affairs in the Office of the United States Trade Representative (USTR),Government of Nigeria (GON) officials reiterated Nigeria's commitment to the U.S. - Nigeria Trade and Investment Framework Agreement (TIFA),improving Nigeria's non-oil export performance under the African Growth and Opportunity Act (AGOA),and negotiating a bilateral investment treaty (BIT). They agreed that the U.S. - Nigeria trade and investment relationship should be enhanced beyond AGOA. The GON acknowledged there are obstacles to improving Nigeria's non-oil export performance and business climate, but remain optimistic that the obstacles are not insurmountable. In the Ambassador's November 26 meeting with the President's Chief Economic Advisor Tanimu Yakubu, she pushed for better engagement on the BIT and further reduction on the import bans. Yakubu responded that the GON would send a delegation to the U.S. to discuss BIT and look again at bans. End Summary. . Meeting With the Ministry of Commerce and Industry -------------- -------------- . ¶2. (SBU) Laurie-Ann Agama, Acting EconCouns and EconSpecialist met with officials of the Ministry of Commerce and Industry (MCI) led by the Permanent Secretary, Elizabeth Emuren on November 17, 2008. Emuren reiterated Nigeria's commitment to the TIFA, AGOA, BIT and trade reforms. She underscored that collaboration and dialogue is necessary to making more progress on the U.S. - Nigeria trade agenda. ¶3. (SBU) Agama commended the GON on its recent tariff policy changes that resulted in a substantial reduction in the number of items on the import prohibition list and reductions in the tariff rates. She also commended the reduction in the tariff on goods in the fifth tariff band from 50% to 35%. Agama asked for clarification whether Nigeria's West African neighbors have or will accept the fifth tariff band and its applicable duty in the Economic Community of West African States (ECOWAS) Common External Tariff (CET) template. ¶4. (SBU) In response to Agama's question, Badeji Abikoye, Director of Trade at MCI, stated that the fifth tariff band introduced by Nigeria has been ratified by the ECOWAS Council of Ministers, and negotiations are ongoing between Nigeria and its ECOWAS neighbors on the issue. Abikoy related that to the best of his knowledge there was no timeline to conclude the negotiations. (Note: Agama and Acting EconCouns attended part of a three-day conference at ECOWAS regarding implementation of the fifth band. The GON notified ECOWAS of the products to be included in the fifth band, reported that these products were included to promote industrial development and it was open to further negotiations. End Note). ¶5. (SBU) Agama stressed the need for the GON to deepen reforms to improve the business environment. She cited the violation of Marriott International's trademark and the U.S. Export-Import Bank's relationship with U.S. company EarthCare Technologies as examples that illustrate the challenges of doing business in Nigeria. Abikoye agreed with Agama on the need for further reforms and said he would work with the relevant agencies to resolve the Marriott issue. ¶6. (SBU) Regarding Nigeria's AGOA strategy and focus sectors, Abikoye said that an inter-agency group is presently working on it, and he opined that the focus products will include shea butter, handcrafts, and seafood. He expressed concerned with technical barriers to trade such as Sanitary and Phytosanitary Standards (SPS) and requested the USG certify either the National Agency for Food and Drug Administration and Control or the Standards Organization of Nigeria laboratory as adequate for quality assurance tests for ABUJA 00002340 002 OF 003 Nigerian exports rather than having Nigerian exporters take their goods to Accra, Ghana, for testing. Agama said she will pass on the request to the relevant U.S. government agencies. She also mentioned that the West African Trade Hub plans to enhance the Nigeria AGOA Resource Center in Lagos. ¶7. (SBU) Regarding the date for the next TIFA council meeting to be held in Washington, D.C., Emuren agreed with Agama to reschedule the meeting for late January after the new U.S. administration has been inaugurated. . Bilateral Investment Treaty - Way Forward -------------- . ¶8. (SBU) Regarding the BIT process, Agama explained that an "exploratory process" should first be embarked upon by both parties to better understand the contents of the BIT in order to decide whether to launch negotiations. The GON reported that it already established a ministerial committee chaired by the Chief Economic Advisor to the President to study the U.S. Model BIT text, and make comments while comparing it with the Nigerian model Investment Promotion and Protection Agreement text. MCI officials acknowledged the explanation provided by Agama but advised that the explanation should also be provided to the Chief Economic Advisor, in order to avoid dissipating so much energy on an issue the exploratory process could easily resolve. ¶9. (SBU) On November 26 the Ambassador met with the President's Chief Economic Advisor Tanimu Yakubu and conveyed this point to which he agreed. Yakubu said beginning in January 2009 the GON would send a team to Washington first, followed by participation in 5-8 digital video conference sessions afterward. Yakubu commented that his government was committed to moving forward on this issue and that he was supportive of reducing bans even further. The Ambassador gave the recent example of her trip to Taraba State in early November as an example of how bans hurt Nigeria's trade (reftel C). She explained that many items, such as Taraba's highland tea which need better packaging and inputs to make them trade competitive, are banned by the GON. Yakubu took this on board and said he would look at the issue. . NEPC Already Forging Ahead -------------- . ¶10. (SBU) On November 18, 2008, during a meeting with Sidi Aliyu and Opeyemi Abebe of the Nigerian Export Promotion Council (NEPC),both said the NEPC is focusing on the supply-side bottlenecks faced by exporters. Specifically, NEPC has engaged the services of consultants to provide training to Nigerian exporters on product development, while the consultants are also assisting with marketing the products in the U.S. Abebe reported that there is a new focus to target U.S. consumers through online channels rather than focusing on attracting established U.S. importers. Agama responded by commending the NEPC but also advised that while assisting exporters in product development, it is also important to consider product design so that the products will be appealing to U.S. customers. She promised to put the NEPC in contact with U.S. consultants that can assist in this area. ¶11. (SBU) Aliyu and Abebe also stated that a report on the AGOA focus sectors has been completed and sent to USAID for comments. The focus sectors include handcrafts, shea butter, and leather. NEPC also plans to draft an AGOA strategy in conjunction with other stakeholders in the GON and the private sector. The workshops will be held during the first quarter of 2009 and NEPC requested USAID play a role. Agama advised that NEPC should take the lead, initiative, and ownership of the project, and the USG will find a way to collaborate. ¶12. (SBU) Abebe signified NEPC's interest in signing up for the U.S. Department of Commerce's e-learning toolkit on "Industry Analysis and Trade Policy" which is available to developing countries trade policy officials. Agama promised to liaise with the Department of Commerce on the request. . SMEDAN EAGER TO WORK WITH SBA -------------- . ABUJA 00002340 003 OF 003 ¶13. (SBU) Agama and EconSpecialist met with officials of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN),led by Acting Director General Wale Fasanya. Fasanya stated that SMEDAN has established "Business Support Centers" in some states in collaboration with state governments, and "Business Information Centers" in collaboration with local governments, community groups and business associations. Through these centers SMEDAN provides enterprise development services to small businesses. The enterprise development services include training on how to write business plans, accounting, marketing, selling techniques, legal and regulatory framework for doing business, registering products, how to access finance (psychology in approaching banks for loan), operational aspects of production, and product quality. ¶14. (SBU) Fasanya reported that SMEDAN is also collaborating with the National Poverty Eradication Program (NAPEP) and the Office on Millennium Development Goals to provide entrepreneurship training to individuals that benefit from the NAPEP loan scheme. Moreover, SMEDAN plans to organize small businesses into clusters and enhance their capacity to produce and export. ¶15. (SBU) Regarding AGOA and TIFA, Fasanya said that the December 2007 TIFA in Abuja was the maiden participation of SMEDAN in issues relating to the TIFA and AGOA. He noted that SMEDAN is collaborating with the NEPC and other GON agencies to improve the capacity of small businesses to export not only within the region but to developed markets in the U.S. and Europe. ¶16. (SBU) Fasanya underscored that SMEDAN is interested in building a robust relationship with the U.S. Small Business Administration (SBA). He said that a Memorandum of Understanding was signed between SMEDAN and SBA in 2004/2005 but it was not implemented. He hoped that a partnership can be established. Agama promised to pass the request to SBA officials in Washington. . Nigerian Exporters Eager to Take Advantage of AGOA -------------- -------------- . ¶17. (SBU) On November 17, 2008 Laurie-Ann Agama, Acting EconCouns and EconSpecialist met with Joseph Idiong, President of the Nigerian Exporters Association, who said that Nigerian exporters want to take advantage of opportunities available under AGOA to export to the U.S. He said that he organized several trade missions to the U.S. in the past and plans to do more in the future. He also asked for further information on U.S. trade groups that his association could partner with to establish collaboration aimed at attracting investment and improving Nigeria's export performance. Idiong also requested advocacy training for Nigerian exporters. ¶18. (SBU) Idiong mentioned that though the private sector is willing to explore the U.S. market under AGOA, inconsistency in government trade policy and focus remains a problem. Specifically he stated that successive Ministers of Commerce have their personal focus sectors and projects they want to implement but unfortunately there is no continuity in implementation whenever a new minister is appointed. Idiong also said that there is lack of coordination among various GON agencies responsible for trade policy formulation and implementation. . Comment -------------- . ¶19. (SBU) Past USG assistance and GON efforts have improved AGOA awareness in Nigeria. USG assistance will achieve better results if the Nigerians can take leadership and ownership of their programs while the USG only steps in to complement their efforts. Despite many challenges to improving non-oil export performance, there are some GON officials and the private sector that are optimistic that achievements are possible. An update from the GON at the January 2009 TIFA Council Meeting should provide a strong indication of whether the GON has taken the initiative. SANDERS