NIGERIA: TREASURY DELEGATION MEETS WITH GON AND NGOS

UNCLAS SECTION 01 OF 02 ABUJA 001412

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E.O. 12958: N/A
TAGS: EFIN EPET ECON SENV PREL ENRG PGOV ELAB NI
SUBJECT: NIGERIA: TREASURY DELEGATION MEETS WITH GON AND NGOS

REF: A) ABUJA 1139
B) ABUJA 1290

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SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY.


1. (SBU) Summary: Treasury Senior Advisor Ian Solomon and Senior
G-20 Policy Advisor Robin Ritterhoff visited Abuja from July 12-15
to meet with the Governor of the Central Bank of Nigeria, the
Minister of State for Finance, representatives of the Nigerian
Extractive Industries Transparency Initiative (NEITI),
non-governmental organizations, the Country Director for the World
Bank, and farmers. The CBN Governor thanked Treasury for its
engagement with the CBN and expressed his hope that Treasury will
maintain a position of confidence in Nigeria's banking system. The
Minister of State for Finance emphasized the need for additional
funding for education and health, while the NEITI stated that its
2005 audit report on the oil and gas sector has not yet been
released. The World Bank Country Director gave the delegation an
overview of the Bank's role in Nigeria. Representatives of civil
society organizations stressed the need for financial and capacity
building assistance to strengthen their work and role in Nigeria's
extractive industry. End Summary.

Central Bank
--------------


2. (SBU) Accompanied by the Ambassador, EconOff and Econ Specialist,
Senior Advisor to Treasury Secretary Timothy Geithner, Ian Solomon,
and Senior Policy Advisor on G-20, Robin Ritterhoff, met briefly
with the Governor of the Central Bank of Nigeria Lamido Sanusi. The
delegation inquired about changes the Governor has made since he
became Governor in June and about the general health of the banking
sector. As he did earlier (ref B),Sanusi discussed audits being
conducted to determine the financial health of banks. He did not,
he said, foresee a systematic crisis in the banking sector, but
wants banks to present their true financial position to the public.
He is aware of the risk of a loss of confidence by international
banks, and noted that they take their signals from the views of the
U.S. Sanusi thanked Treasury for its engagement with the CBN and
expressed his hope that the U.S. will maintain a position of
confidence in Nigeria's banking system. He indicated that they
would appreciate technical assistance and capacity building support
from Treasury (Note: The Ambassador, on July 24, transmitted a
letter from Treasury containing an offer of technical assistance to
deal with problems related to the global financial crisis. End
Note).


3. (SBU) Sanusi and his staff indicated that the results of the
re-launched Wholesale Dutch Auction process were positive. (Note:
the Wholesale Auction was suspended in January due to foreign
currency supply shortage and reintroduced on July 13. End Note).
Sanusi believes the auctions will provide some exchange rate
stability, which together with the downward trend on inflation
should help rebuild confidence. Also, at the meeting the Governor
confirmed to the Ambassador his attendance of the AGOA Forum,
scheduled for August 4-6 in Nairobi.

Minister of State for Finance
--------------


4. (SBU) Accompanied by EconOff and Econ Specialist, the delegation
met with the Minister of State for Finance, Aderemi Babalola, to
discuss the general health of the Nigerian economy. Babalola
touched on many issues, including the affects of the global
financial crisis on Nigeria and the need for increased expenditure
in the health and education sectors.


5. (SBU) With regard to the global financial crisis, he stated that
Nigeria was not affected as much as other countries, but that
Nigeria would have been in a tremendous trouble if the crisis had
occurred 6-7 years ago since the banks were weak before the 2004-05
consolidation.

NEITI
--------------


6. (SBU) The delegation met with the leadership of the Nigerian

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Extractive Industries Transparency Initiative (NEITI),accompanied
by EconOff and Econ Intern. NEITI is mandated by law to promote
transparency and accountability in the management of Nigeria's oil,
gas and mining revenues. NEITI Chairman Professor Humphrey Asobie
thanked the USG, especially USAID, for the support it has provided
his organization. Solomon congratulated Asobie on the NEITI's
accomplishments to-date and asked the status of the 2005 audit
report. Asobie reported that the report has been completed;
however, it will not be released until it is presented to the
Federal Executive Council (FEC) and approved by the National
Assembly. He expressed concern over the lack of leadership and
commitment toward revenue transparency in the National Assembly and
that bickering in the National Assembly might bog down the approval
and release of the 2005 audit.


7. (SBU) Asobie expressed distress over the delay in the submission
of the 2005 audit report, which they attributed to the slow start of
their organization (2004) due to lack of funding. Asobie said that
the 2006, 2007, and 2008 audits will be completed together, and the
contract for the audit work, expected to cost $3 million, will be
award within a few weeks. Funding, he said, is a constant challenge
that bears on the NEITI's ability to hire more professional staff to
conduct audits in a timely manner. NEITI officials would be
receiving World Bank funding to look into the mining sector. Asobie
maintained that the three new regulatory agencies proposed in the
Petroleum Industry Bill should facilitate NEITI's job since they
would have oversight responsibilities on oil and gas revenues.

Civil Society Organizations
--------------


8. (SBU) The U.S. delegation held an informal discussion with four
civil society organizations: Transparency in Nigeria (national
chapter of Transparency International),Civil Society Legislative
Advocacy Center, Zero-Corruption Coalition, and Publish What You Pay
Nigeria. Asked about progress and challenges facing civil society
organizations, the attendees cited lack of funding and institutional
capacity.

World Bank
--------------


9. (SBU) World Bank Country Director Ohno Ruhl stated that the Bank
will be coming out with its new country strategy soon. Regarding
food security, the Bank is scaling up its agricultural projects,
specifically in the area of commercial agriculture, but is
challenged by the lack of consistent GON agricultural policies.

Farmers
--------------


10. (SBU) The U.S. delegation visited a farm sponsored by the Gates
Foundation within the Federal Capital Territory (FTC). Local
farmers and agro-businesses work with the International Institute
for Tropical Agriculture (IITA) on finding the best way to increase
crop production and improve the quality of seeds. These farmers are
eager for drought resistant crops, particularly maize, as it is the
most successful crop in all ecological zones of the country. The
farmers noted their perennial problems of persistent drought, weed
infestation, pesticide prices, and fertilizer shortages.


11. (U) This cable was coordinated with Consulate Lagos.

SANDERS