Cablegate: Nigeria: Gum Arabic Success Story

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 ABUJA 000630

SIPDIS

NSC FOR USTR RWHITKER

E.O. 12958: N/A
TAGS: ECON EINV EAID EAGR NI
SUBJECT: NIGERIA: GUM ARABIC SUCCESS STORY

1. Summary. Ambassador Jeter and AUSTR Whitaker visited
Jigawa and Kano states on January 28 and 29 respectively. Two
years of negotiations, involving the U.S. private sector,
Nigerian State and Federal Governments, USTR and the U.S.
Embassy resulted in the January 28 launching of the Gum
Arabic Initiative, and the sale of the facility,s entire
2002 annual production to Coca Cola and other U.S. corporate
consumers. The Gum Arabic Initiative, jointly funded by
USAID and Coca-Cola, established a quality control laboratory
in Jigawa and will train farmers on quality control. By
producing an unadulterated product of certifiable quality,
the Initiative will help Nigerian gum arabic exports to the
U.S. grow from virtually zero to encompass the entire crop of
Jigawa and much of the superior grade-1 produce from
surrounding states, creating at least 600 new jobs. Niger
Republic will also be an indirect beneficiary. Gum arabic is
the first totally new public-private business opportunity
created since Nigeria,s 1999 return to civilian government,
and it offers economic development to one of the nation,s
poorest areas. In northern Nigeria,s commercial center of
Kano, the Ambassador and AUSTR Whitaker met leaders from the
private sector, State government officials and the powerful
Emir of Kano to discuss developing other goods for export
under AGOA. End Summary.

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Gum Arabic Project in Jigawa State
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2. On January 28, Ambassador Jeter and AUSTR Rosa Whitaker,
accompanied by Embassy officers (ECON, USAID), traveled to
the Maigatari Export Free Zone in Jigawa State to launch the
Gum Arabic Initiative. The ceremony was attended by over
2,000 people, including the governors of Kano, Zamfara,
Bauchi, Kebbi, and Jigawa States, the Federal Minister of
Agriculture, Minister of Commerce, traditional rulers from
Jigawa State, farmers, journalists and private sector
representatives, including three of the top purchases of gum
arabic from the United States and officials of Coca-Cola.

3. In her speech, AUSTR Whitaker noted that the Gum Arabic
Initiative represented an important partnership between the
Jigawa State Government, the USG and U.S. industry. The
partnership will continue through USAID-provided training for
numerous farmers in all gum arabic-producing states on tree
cultivation, management and harvesting techniques that will
enable them to produce higher-quality gum. Coca-Cola and
USAID together funded the construction of a gum arabic
quality control laboratory in Maigatari. The quality control
laboratory will ensure that Nigerian gum arabic is
unadulterated and meets required high U.S. standards.

4. In his remarks, the Ambassador emphasized that the gum
arabic initiative was just one step in growing economic
cooperation between Nigeria and the U.S. aimed at developing
the agricultural sector. The gum arabic launching
represented a significant non-oil economic dividend for
Nigeria and should help Nigeria establish itself in an
important niche market in the U.S., he noted.

5. Presidents of Importers Service Corporation, Atlantic
Gums, and executives from Coca-Cola represented the U.S.
private sector. These three U.S. firms constitute nearly 70
percent of U.S. gum arabic imports and consume 50 percent of
gum arabic exports worldwide. In an historic move, these
firms announced their agreement to purchase the entire crop
(300 metric tons) of high-grade gum arabic from Jigawa State
this season. This purchase is expected to generate 600 jobs
for Jigawa farmers. Gum arabic farmers from surrounding
states as well as producers from the Niger Republic also
stand to benefit as more and more regional production is
channeled through Jigawa at the testing facility there. The
new quality control laboratory has provided the assurance
needed to change U.S. industry's long-standing position of
not purchasing Nigerian gum arabic in bulk because of the
high level of adulteration.

6. The gum arabic launching was a tremendous success and was
favorably featured in all the major media and lauded by many
Nigerian leaders. The Minister of Agriculture publicly
praised the public-private partnership between the U.S.
Government, U.S. industry and the GON. He also announced
that the Ministry of Agriculture would promote the production
of acacia (gum arabic) seeds and seedlings for distribution
to farmers at subsidized rates.

7. This success story has encouraged Nigerian Governors and
farmers who look forward to the expansion of the project to
other gum producing states, and emulation of this program in
other agricultural sub-sectors. In this vein, the Ambassador
emphasized that the quality control laboratory and U.S.
support for Nigeria's gum arabic exports would not be limited
to Jigawa State, but expanded to include the entire gum
arabic producing belt.

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The Kano Private Sector: Export of Leather Goods and Fruit?
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8. On January 28, the Ambassador also hosted a dinner in Kano
for AUSTR Whitaker to meet members of the Kano Chamber Of
Commerce, Industry, Mines and Agriculture (KACCIMA).
Introducing Rosa Whitaker as a leader and key implementor of
AGOA, the Ambassador stressed the meeting would allow the
Kano Chamber to air concerns or questions regarding AGOA
benefits. AUSTR Whitaker explained that AGOA has brought an
additional USD 1.2 billion in U.S. trade and USD 1 billion in
U.S. investment to Africa. Whitaker gave examples of African
achievements using AGOA, including the creation of 30,000
jobs in Madagascar, 50,000 jobs in Kenya, and 66,000 jobs in
South Africa, with South Africa now a major exporter of
assembled Mercedes Benz and BMW vehicles. Moreover, Namibia
had attracted USD 100 million in the garment manufacturing
industry, directly tied to AGOA.

9. Whitaker stressed that Nigeria and, in particular, Kano
State could benefit from AGOA. She said, for example, that
Nigeria could become a leading exporter of leather goods,
noting that Kano has comparative advantage in the production
of leather. High tariffs on leather goods originating in
Taiwan and China would give further advantage to Nigerian
leather producers. The Chamber members noted that Nigerian
leather is presently exported to Italy and Spain, though on a
small-scale. Whitaker offered to link the Nigerian leather
goods industry to prospective buyers in the U.S. once the
quality is improved and a wholesaler emerges.

10. Chamber members also commented that Nigeria produced
large amounts of fruit, which eventually spoiled due to poor
storage and preservation techniques. Whitaker replied that
if appropriate preservation techniques were adopted, a large
market exists in the U.S for fruit and fruit products. She
noted that cane and straw products (furniture, baskets etc),
also were in high demand in the U.S., a market she believed
Nigeria could capture. The Chamber members replied that they
would convey Whitaker,s message to their constituency and
would define areas where they might need U.S. support.
Whitaker promised to help find a market for the products and
assist in ensuring that the products meet the required
standards.

11. Ambassador Jeter and AUSTR Whitaker also met with key
players in the Kano public and private agriculture sector.
During the meeting, USAID and the Kano agriculturists agreed
to form a committee to discuss on a regular basis USAID
programs, such as the farmer-to-farmer program, and link
these programs with AGOA export opportunities.

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Meeting with Kano State Governor and Emir
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12. The Ambassador and Whitaker met January 29 with the
Governor of Kano State, Dr. Rabiu Musa Kwankwanso and members
of the Governor's Cabinet. Whitaker elaborated on the AGOA
initiative and its achievements in Lesotho, Madagascar,
Kenya, Namibia and South Africa. She noted that leather
(hides) could be produced at a comparative advantage in Kano.

13. Governor Kwankwanso thanked the Ambassador for the Gum
Arabic Initiative, noting that the press in Kano State has
called it the "Ambassador,s Initiative". The Governor said
that the gum arabic plantation in Jigawa was shared between
both States since Jigawa was originally part of Kano State.
Governor Kwankwanso said that his government would support
farmers' participation in the initiative, and Kano would
definitely benefit.

14. The Ambassador and Whitaker also paid a courtesy visit
on the Emir of Kano, Alhaji Ado Bayero. The Ambassador
discussed the willingness of the United States to help the
Nigerian agricultural sector and the economy of Kano. USAID
had just sponsored a conference for Nigerian exporters and
trade associations to identify export products where Nigeria
might have a comparative advantage. Whitaker noted that
Nigeria was not fully availing itself of opportunities such
as AGOA. Nigeria has comparative advantage in several
products, e.g. cashew nuts, leather (hides), ginger, sesame
and cotton because of duty free treatment under AGOA. The
Ambassador advised that a private sector-led development
strategy should be pursued in areas such as fertilizer sales
and distribution, and USAID had just launched an initiative
to do just that.

15. Whitaker emphasized that if Nigeria does not move quickly
under AGOA, the country could miss the window of opportunity
currently provided by large amounts of available capital
seeking investment opportunities. The Emir agreed that
Kano's economy was based primarily on agriculture and looked
forward to future U.S. cooperation with Kano, such as USAID's
proposed meetings with Kano agriculturists. The Emir praised
the Gum Arabic Initiative and hoped it would be a success.

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Jigawa State Governor Turaki
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16. Governor Turaki, through the gum arabic and other
initiatives, provides an excellent example of how a
successful State Governor can "deliver the goods" to his
constituency. Governor Turaki has generated several
initiatives during numerous trips to the U.S. in pursuit of
foreign investment and trade. The Governor's success has
helped to vindicate him from growing criticism of
participating in "excessive" trips abroad.

17. Besides the gum arabic initiative, Governor Turaki's
other initiatives are noteworthy. First, Arkel Sugar in
Louisiana has agreed to develop a sugar production project in
Jigawa that may expand to include a bio-mass energy
production facility. Second, a Maryland firm, TCS, recently
completed the first phase (broad band network) of Jigawa's
telecommunications infrastructure as a part of the Governor's
plan to have internet accessibility for all schools in the
state. Third, the Tennessee Valley Authority (TVA) has been
working in Jigawa over the past two years to complete the
state's infrastructure plan and will soon begin installing a
power project.

18. Several prominent Nigerian officials skeptical of
Turaki's trips abroad expressed surprise and pleasure that
the Governor is now landing deals. These officials
unexpectedly opined that of all Nigeria's State Governors,
Turaki was the least likely to be re-elected in 2003 due to
the perception that he has spent more time abroad than in
Jigawa. Many have criticized him for trying to do too much
in an unfocused manner. However, President Obasanjo told the
Ambassador and Whitaker that he approved of Governor Turaki;
"He's a maverick. People think he's a mad-man, but he's mad
with a method," he said. Now that Turaki's initiatives have
borne fruit, we suspect that his election prospect will be
enhanced in 2003.

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Comment
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19. The Gum Arabic Initiative was a great success and
positive image-maker for the U.S. Mission in Nigeria.
Through this initiative, the USG has made significant inroads
in introducing U.S. businesses to Northern Nigeria, a
previously overlooked region. Moreover, the USG has earned
credibility with the Ministries of Commerce and Agriculture
and northern State Governors in bringing U.S. investment into
the country. While the Embassy is receiving credit for this
program, this initiative was really conceived and implemented
by AUSTR Rosa Whitaker. Ms. Whitaker deserves full credit
for her hard work and leadership over the past two years to
make this initiative a reality.

Jeter

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