NIGERIA: BI-WEEKLY POL/ECON UPDATES FOR DECEMBER 1-14,

UNCLAS SECTION 01 OF 05 ABUJA 002438 SENSITIVE SIPDIS DEPARTMENT PASS TO USTR-AGAMA DOE FOR GPERSON, CHAYLOCK LABOR FOR SHALEY E.O. 12958: N/A TAGS: PGOV ECON ELAB EPET EFIN EAGR KDEM NI SUBJECT: NIGERIA: BI-WEEKLY POL/ECON UPDATES FOR DECEMBER 1-14, 2008 Ref: A. ABUJA 2377 ¶B. ABUJA 2358 ¶1. (U) The Following is a joint Embassy Abuja, ConGen Lagos compilation of December 1-14 political/economic highlights, which did not feature in our other reporting, covering: --Economic News --Southern Economic News --Delta Security Incidents --Oil and Gas --Human Rights --Labor --Corruption --Election Tribunals Economic News -------------- ¶2. (U) AMERICAN/NIGERIAN AVIATION COMPANY UNVEILING: The Ambassador gave welcoming remarks at a dinner honoring the inauguration of a new American/Nigerian aviation company - CITA-TRIAX Aviation Ltd - on November 25 Abuja. The company is providing aviation consultant services, cargo delivery, and services for infrastructure development in West Africa. To improve capacity building in Nigeria's aviation sector, the company announced a partnership with Western Michigan University College of Aviation. The CITA group is in discussions with several state governments for a location to build a local aviation college campus in Nigeria. ¶3. (U) COCOA EXPORTS ON THE RISE: Nigerian Federal Produce Inspection Service announced on November 18 that Nigeria's cocoa exports surged 36% in 2008. A total of 119,432 metric tons (mt) was shipped, compared with 87,997 mt in 2007. Nigeria is currently the world's fourth largest exporter of cocoa beans. ¶4. (U) INFLATION HITS 14.7 PERCENT: Inflation rose to 14.7% in October from 13% in September, the National Bureau of Statistics reported on November 19. Growth in food prices, which form much of the index basket, increased to 19.2% in October from 17.1% in September. ¶5. (U) WORLD BANK LOANS TO NIGERIA: On November 24 the Minister of Finance Shamsuddeen Usman disclosed that since 1999 the World Bank has loaned Nigeria nearly $3.5 billion. ¶6. (U) WEST AFRICAN CURRENCY DUE DEC. 2009: In November 24 press reports the common West African currency, the Eco, is expected to unveil by December 1, 2009. Not all member states of the West African Monetary Agency (WAMA) will join in implementation because some countries will not meet the requirements such as an inflation rate of 5% and budget deficit of 4% of GDP. At the time of writing, Nigeria does not meet WAMA requirements. ¶7. (U) INDIAN INVESTMENT IN NIGERIA: The Indian Deputy High Commissioner reported on November 20 that the Indian government will invest over $15 billion into various sectors of the Nigerian economy within the next few years. He disclosed that bilateral trade between the two countries was more than $8 billion in 2007 and India is the fourth largest non-oil export destination for Nigerian products. ¶8. (U) GON ISSUED BONDS VALUED AT $14.6 BILLION: As reported in the press on November 24, the total value of bonds issued by the GON in the last five years was 1.73 trillion naira ($14.6 billion). These bonds were issued between 2003 and September 2008 to finance capital projects. ¶9. (SBU) ISSUANCE OF 20 YEAR BONDS: On November 28, 2008, the Nigerian government's Debt Management Office for the time issued 20 year bonds. The 20 year bonds have a coupon rate of 15% and 10 billion naira ($74 million) were issued although total demand was 23.52 billion naira ($174 million). The bond issue was oversubscribed by 135% because there were 57 bids and only 38 were successful. In a December 4 meeting with the DMO DG, EconSpec was told that the DMO was surprised at the demand for the bonds and had ABUJA 00002438 002 OF 005 been warned by industry experts to not go forward with it. ¶10. (U) DEFICIT TO BE FINANCED BY ISSUING BONDS: According to President Umar Yar'adua in his budget speech, the federal government plans to finance some portion of the proposed deficit in the 2009 budget by issuing $500 million worth of bonds in the international financial markets. GON officials confirmed that the proposed bond issue is primarily aimed at testing the financial market's appetite for Nigerian debt instruments. The terms and schedule for issuing the bonds have not been set as yet by the GON. ¶11. (U) WHO MEASLES CAMPAIGN: The World Health Organization (WHO) coordinator for Kaduna state announced on November 25 that out of 800,000 deaths from measles worldwide reported in 2008, 4,000 are from Kaduna state. He stated that 75% of all measles death in Africa were in Nigeria and the WHO pre-measles campaign took place from November 26-30. A similar campaign took place in the 17 remaining states from December 10-14th. ¶12. (U) INFRASTRUCTURE CONCESSION REGULATORY COMMISSION (ICRC): On November 27, President Yar'Adua inaugurated the Board of the ICRC whose mandate is to develop and issue guidelines on PPP policies, process and procedures. In addition, the commission will develop the appropriate framework to concession and handle all infrastructure projects. The ICRC board has 12 members with Chief Ernest Shoneken as a Chairman. Southern Economic News -------------- ¶13. (U) At the South-East Economic Summit held in Owerri, Imo State, December 4-5, Deputy Senate President, Ike Ekweremadu said the federal government has approved plans to upgrade Enugu airport to an international airport to serve Nigeria's South East. Ekweremadu said federal legislators from Enugu state have agreed to use their constituency allowances to help upgrade the airport and urged the region's governors and federal legislators from other South East states to support the project. He said such direct access to the world would encourage the Igbo peoples' entrepreneurial spirit and help boost the region's economy. Imo Governors Ikedi Ohakim and Anambra Governor Peter Obi attended the conference; other regional governors sent representatives. ¶14. (U) On December 12, Anabel Mobile Limited, an integrated mobile device and telecommunications content company, launched its new product line, a series of phones and Blackberry-like devices capable of handling not only phone, text and email access, but also access to Microsoft Word, Excel and other computer software. Microsoft's West Africa division told Pol-Econ Chief that the Anabel platform was Microsoft's first introduction of the technology in Africa. Anabel's President and CEO, Nicholas Okoye, is a former Chairman of Transcorp. ¶15. (U) On December 3, Econoffs met with Mansur Ahmed, current Director General of the Nigerian Economic Summit Group, who was recently appointed head of the Federal Government's new Infrastructure Concession Regulatory Commission (ICRC). He said the ICRC will develop and issue guidelines on Nigeria's Public Private Partnership (PPP) policies, processes and procedures in infrastructure development. The ICRC will collaborate with state governments to harmonize the framework for contracting PPP infrastructure projects. He said electric power, roads and railways will be priorities for the new Commission, though the ICRC will also have control of all concessions of trans-state waterways. Ahmed said ICRC may start with some viable PPP projects like the Lagos-Ibadan motorway and the Lagos-Kano-Nguru rail line. ¶16. (U) On November 27 President Yar'Adua inaugurated the 12-member ICRC board in accordance with the ICRC Act passed during President Obasanjo's tenure. The board chaired by Chief Ernest Shonekan, former Head of Government of Nigeria, is under the President's supervision. Though the ICRC is tasked with the responsibility to identify potential PPP projects and take a lead in the development and procurement processes that will enable private sector participation in line with international best practices, it does not have the power to sanction erring partners in whatever projects it brokers. ABUJA 00002438 003 OF 005 Delta Incidents; No Americans Involved -------------- ¶17. (SBU) On December 2 the Bulgarian Foreign Ministry announced the release of their citizen, who had been taken hostage the previous week. No further details were provided. ¶18. (SBU) Three Christian missionaries of unspecified West African nationality were taken hostage on December 7 according to Post security contacts. They were released unharmed without payment of a ransom on December 10. Oil and Gas -------------- ¶19. (SBU) Business Day reported on December 10 that the joint venture cash call for 2009 will be USD 15 billion, similar to 2008's cash call. Like last year, the GON will be short, funding only USD 5 billion of the USD 8.8 billion it owes based on its ownership stake in the joint ventures. According to the paper, the GON will seek "alternative funding sources" from the credit markets; in 2008 that meant loans from international oil companies. (Comment: This is not the ideal time to seek financing from either credit markets or oil companies. Joint venture oil production will not improve until the funding issue is resolved. End Comment.) ¶20. (SBU) Shell announced plans to lay off 1,000 employees from its joint venture with the Nigerian National Petroleum Corporation (NNPC) as part of a staffing rationalization plan called "One Shell". No timeline for the layoffs was announced and there has been no response from NNPC. (Comment: This is becoming an annual holiday ritual for Shell; it tried to lay off employees the same time last year under the guise of the One Shell program. NNPC and the GON blocked those layoffs. End Comment.) ¶21. (U) On December 10, Lagos Consul General met with Uju Ifejika, the Managing Director and Chairman of local oil company Brittania-U. Ifejika is the only woman-head of a local oil company in Nigeria and is the company's majority shareholder. In early 2009, Brittania-U plans to start production of 10,000 barrels per day from the Ajapa oil field located near off-shore Delta State. Using funding from Oceanic Bank, the company purchased an 88,000 barrel-capacity barge to be used as a floating production platform and a 78,000 barrel coastal tanker to transport the oil from the field to nearby Escravos oil terminal. These $12 million dollar investments are currently being overhauled in Houma, Louisiana; delivery is scheduled for February 2009. Human Rights -------------- ¶22. (U) On December 16 Public Affairs' locally engaged staff from Jos reported that the Sultan of Sokoto and the head of the Christian Association of Nigeria are meeting with both Muslim and Christian communities in the area to help further reduce tensions. In addition, the Plateau Government has provided applications for communities to fill out for property loss. Despite this, tension remained high in Jos and simple incidents can spank fear. For example, on December 10 a swarm of bees triggered a wave of panic that caused many to initially believe the violence had reignited (reftel A). According to reports, a honeycomb fell from a tree creating a surge of bees that compelled people to run for safety, which in turn caused others in the vicinity to follow suit fearing a reprisal of the previous week's violence. The pandemonium lasted for three hours, but subsided due to constant radio announcements that there was no cause for alarm. Although there were no reports of actual violence resulting from the chaos, there were minor injuries and accidents as a result of people trying to flee the area. Labor -------------- ¶23. (U) According to press reports and embassy sources, the Judiciary Staff Union of Nigeria (JUSUN) commenced a nationwide strike on December 1 to protest of failure to pay uniform salaries ABUJA 00002438 004 OF 005 to judicial staff at federal and state levels. The strike is the second within the year by JUSUN, made up of mostly judiciary administration staff, and is crippling court activities in the country. The strike did not affect the Supreme Court's ruling on December 13, which ruled in favor of Yar'Adua's 2007 disputed election victory. However, the strike did disrupt the money laundering and corruption hearing on charges brought against former Edo State Governor Lucky Igbinedion by the Economic and Financial Crime Commission (EFCC). Igbinedion and his team of lawyers arrived at the Federal High Court and were refused entrance. The court will resume the trial on December 17. Corruption -------------- ¶24. (U) According to the Daily Trust on December 2, the EFCC declared five Rivers State officials wanted over $27 million in connection with alleged fraud. The officials included the Government House Administration Permanent Secretary Fudera Hark and Government House Director of Finance and Accounts Robert Aya, both wanted for signing government house checks from an account under investigation. Three other people, Harrison Princewill, Nathan Wike and Bright Ikonwa, all staff of the Government House are also on the wanted list for making substantial withdrawals from the same account. According to the EFCC, "efforts to get the five officials to appear before the EFCC have proved difficult as they have taken refuge in the Government House in Port Harcourt." ¶25. (U) At a December 1 anti-corruption conference, attended by President Yar'Adua and Economic and Financial Crimes Commission (EFCC) Chairwoman Waziri, Representative of the United Nations Office on Drugs and Crime (UNODC) Oliver Stolpe declared to journalists that public office holders in Nigeria have misappropriated $100 billion meant for the development of various projects across the economy over the years. The amount is approximately three times what Nigeria owes as foreign debt ($28.5 billion). Stolpe referenced a recent 2007 survey of 2,203 businesses, conducted by the EFCC in conjunction with the National Bureau of Statistics in Lagos, Delta and seven other states, which indicates that 75.6% and 71% of businesses felt strongly that crime/security and corruption are impeding the growth of business in Nigeria. Stolpe also told the journalists that the police force remained the most corrupt institution in Nigeria, according to 62.6% surveyed, but also noted that corruption permeated every facet of Nigerian society. EFCC responded to Stolpe's claims, telling the journalists that "over concentration of reporting corruption on individuals and persons will not do us good." ¶26. (U) On December 11, Transparency in Nigeria (TIN),an affiliate of Transparency International, expressed its reservations to media representatives about the independence of the Economic and Financial Crimes Commission (EFCC),specifically noting the circumstances under which former Chairman Ribadu was removed from office and demoted. TIN's Secretary General, Osita Ogbu, also told journalists that Ribadu's prosecution appears to be part of the world-wide persecution of anti-corruption crusaders and human rights defenders, and called on President Yar'Adua's government to uphold its commitment under the United Nations Convention against Corruption and International Human Rights to ensure that anti-corruption advocates can operate in a safe environment. ¶27. (U) On December 10, EFCC Chair Farida Waziri announced Nigeria's Anti Corruption Revolution Campaign (ANCOR) in Abuja. Waziri also announced that the EFCC secured 296 convictions within the last five years related to cases of corruption, money laundering, advance fee fraud, bank fraud, and pipeline vandalism. Waziri maintained that the EFCC recovered assets worth $5.6 billion over the same period (Note: Post cannot confirm this number) and revealed that there are over 15 cases involving Politically Exposed Persons (PEPs) in various stages of prosecution in the courts. Election Tribunals -------------- ¶28. On December 2, the Kogi State Elections Tribunal hearing the petition of Abubakar Audu to overturn the March 29, 2008 rerun Kogi ABUJA 00002438 005 OF 005 State Gubernatorial elections upheld the declared victory of sitting Governor Ibrahim Idris (reftel B). The tribunal ruled that the petitioner failed to prove beyond reasonable doubt that there were malpractices, noting "if election fails in a few polling boths, that is not enough to affect the overall result." (Note: Idris was the declared winner in the 2007 gubernatorial polls as well; however, the rerun election was called when the Tribunal annulled the 2007 results. Observers reported that little progress was made in correcting the flaws that plagued the 2007 elections.) No violence was reported following the announcement of the Tribunal ruling. SANDERS