NIGERIA: KADUNA PRIVATE SECTOR SEEKS US INVESTMENT

UNCLAS SECTION 01 OF 02 ABUJA 000666 SENSITIVE SIPDIS DEPT PASS TO USTR-AGAMA DEPT PASS USAID AFR/SD FOR CURTIS AND ATWOOD BAGHDAD FOR DUNDAS MCCULLOUGH TREASURY FOR PETERS, IERONIMO AND HALL DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ANESA/CREED DOE FOR PERSON, HAYLOCK AND SPERL USDA FOR FAS/OTP MCKENZIE E.O. 12598: N/A TAGS: ECON ENRG CVIS EINV EAGR EAID PGOV NI SUBJECT: NIGERIA: KADUNA PRIVATE SECTOR SEEKS US INVESTMENT REF: ABUJA 549 ¶1. (SBU) Summary. During a March 5-6 visit to Kaduna by EconDeputy, Kaduna Chapter Members of the Nigeria-American Chamber of Commerce (NACC) were unanimous in their displeasure with the Yar'Adua administration's inability to increase electricity supply. They complained that epileptic electricity supply severely hampers business activity and industrial growth. Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA) officials lamented the "dismal" level of U.S. company interest in investing in Kaduna State, despite their contention that Kaduna has a much more favorable business climate than Lagos or Kano. Various interlocutors stated over and over that companies from China, India, Malaysia and Indonesia were far more involved in the area, supporting more trade missions and streamlining visa procedures. End Summary. ¶2. (U) EconDeputy and Econ Specialist met with a wide range of northern private sector business leaders March 5-6 to discuss the business climate in Kaduna State. They also attended the opening of 30th annual Kaduna International Trade Fair, which was organized by KADCCIMA. . DISAPPOINTMENT WITH THE PRESIDENT -------------- . ¶3. (SBU) During a roundtable discussion with members of the Nigeria- American Chamber of Commerce, Alhaji Ibrahim Usman, Managing Director of Powerseal Nigeria, complained that the Yar'Adua administration has failed to manage the nation's electricity crisis. (Note: Usman was vice presidential candidate on the African Democratic Congress (ADC) ticket of Professor Pat Utomi during the April 2007 Nigerian presidential election. Usman also attended the PowerGen convention in Orlando, Florida in December 2008 at the invitation of the U.S. Commercial Service. End Note.) He further lamented the recent "unjust removal" of Engineer Bello Suleiman, former Executive Vice Chairman of the Power Holding Company of Nigeria (PHCN). Usman asserted that Suleiman's removal was a deliberate political action, "without reason", and will only serve to further weaken the nation's power sector. He commended Suleiman for his systematic approach and vision to reform the power sector. (Comment: The media reported Minister of Power Babalola removed Suleiman in March because of internal political struggles. Suleiman previously served as Minister of Power and Steel during the transitional government of General Abdulsalami Abubakar from June 1998 to May 1999, as well as Managing Director of the defunct National Electric Power Authority from 1999 - 2001. These tenures were marked by no notable achievements. End Comment.) ¶4. (SBU) Usman and other members stressed that Kaduna state was experiencing low industrial growth as a direct result of epileptic electricity supply that restricts manufacturing operations. The businessmen lamented that operating companies on generator power was extremely expensive due to high fuel costs for generator fuel. ¶5. (SBU) A major complaint expressed by NACC members was that U.S. nonimmigrant visa processing was too "cumbersome" and "arbitrary" and harmed opportunities for U.S. exports to Nigeria. Businessmen contrasted what they considered "friendly" and "reasonable" procedures for Asian countries with the long waits for appointments and opaque decision making process by U.S. Consular Officers. Also mentioned was that businessmen with Muslim names often faced "further processing," which made it impossible for them to travel in a timely manner. ¶6. (SBU) At a dinner organized by the NACC, retired politician Alhaji Umaru Dikko told EconDeputy that the economy's dependence on oil revenues was a disaster. He said Nigeria was blessed with enormous agriculture potential that could be harnessed to boost agro-production and eradicate poverty. When asked in what direction the country was going under the Yar'Adua administration, Dikko said he was not optimistic that it was the "right" direction. (Comment: Dikko is former politician who was a trusted adviser to President Shehu Shagari. End Comment.) . KADCCIMA ABUJA 00000666 002 OF 002 -------------- . ¶7. (SBU) The Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA) organizes the annual Kaduna trade fair and is the most prominent business association in Kaduna State. KADCCIMA was established in 1973 to provide a network of national and international business contacts and opportunities through trade fairs and promoting the private sector. Alhaji Usman Garba Saulauwa, Secretary General of KADCCIMA, lamented the lack of interest in investing in Kaduna on the part of U.S. companies. He stated that KADCCIMA had trade partnerships and exchange visits with Asian countries such as China, India, Indonesia, Malaysia, Taiwan and Singapore, but U.S. companies were simply not engaging with the Chamber. EconDep responded that the major barrier to U.S. investment in Kaduna was the lack of infrastructure. The unreliable electricity supply and poor transportation infrastructure makes Kaduna less attractive than Lagos for U.S. investment. ¶8. (SBU) Saulauwa asserted that Kaduna is a better place for foreign investment than Kano, Lagos or other Nigerian cities. He maintained that Kaduna State had a favorable business climate, and the fact that the city served as "an administrative seat" to the 19 Northern states makes it a favorable choice for logistical reasons. Saulauwa added that Kaduna State was blessed with a highly educated and skilled workforce, costs of doing business were low, business culture was "favorable" and crime was low. He cited the World Bank 2008 report on "Doing Business in Nigeria", which chose Kaduna State as the "best place for doing business." (Note: The four indicators used in the World Bank report were: costs associated with starting a business; the number of procedures required to attain a construction license; the number of procedures required to register property; and the efficiency of the legal system in enforcing contracts. End Note). Saulauwa complained that the closure of the former Kaduna United States Information Service office (USIS) in 1997 was a mistake, adding that the USG should "move back to Kaduna" to re-build social and economic ties to the city. . 30th Kaduna International Trade fair -------------- . ¶9. (SBU) The 2009 theme of the Kaduna trade fair was "Energizing Industry and Agriculture for National Development." EconDeputy and Econ Specialist at the fair observed that the vast majority of products were manufactured in China with only a few U.S. products sprinkled in, most notably cosmetics. Businessmen reported a low turnout of exhibitors at the trade fair, attributing it to the downturn in the local economy. Exhibitors reported more businesses were closing in Kaduna because of poor electricity supplies, port congestion in Lagos that delays imports and exports and the high transportation costs from Kaduna to other parts of the country. . Comment -------------- . ¶10. (SBU) EconDeputy heard from numerous interlocutors that businesses in Kaduna were suffering and that company closures were on the rise. A combination of too little electricity, high transportation costs and the national and global economic downturn were taking their toll. The remaining businesses are eager for foreign investment and wish to partner with U.S. companies, but don't see U.S. companies showing much interest in the area - likely for the same reasons businesses already in Kaduna were closing. For now, Kaduna businessmen are focusing on attracting Asian investors to grow the economy. ¶11. (U) This cable was coordinated with ConGen Lagos. SANDERS