Cablegate: President Obasanjo's Forum On Economic Stakeholders

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1. Summary. In April, President Obasanjo hosted a "Presidential
Forum with Stakeholders of the Economy". Presentations were made by
key ministries and government agencies giving a glowing tribute to
Obasanjo's leadership. The general theme was that there had been
progress, but many challenges remained, especially if Nigeria were
to become one of the top 20 economies in the world by 2020. Nigeria
needs to sustain an economic growth rate of 12.4% over the next 15
years with massive investments in basic infrastructure, health and
education to achieve the Millennium Development Goals (MDGs). Key
legislation on Fiscal Responsibility, Nigerian Extractive Industries
Transparency Initiative (NEITI), and Tax Reform are unlikely to be
passed in the current National Assembly. The declared
President-elect, Alhaji Umaru Musa Yar'Adua has promised that
reforms will continue. End Summary.

2. President Obasanjo hosted a "Presidential Forum with Stakeholders
of the Economy" in April. The forum took a congratulatory tone to
progress made during his tenure as president from 1999-2007. Key
ministries and government agencies made presentations including the
Ministries of National Planning, Finance, Agriculture and Water
Resources, Energy, Commerce and Industry, Foreign Affairs, the
Central Bank and the Nigerian National Petroleum Corporation (NNPC).
Comments and discussion followed, with President Obasanjo fielding
questions from participants.

Central Bank of Nigeria (CBN)

3. Charles Soludo, Governor of the CBN, gave a presentation. His
initial topic, "The Nigerian Economy Then and Now" was changed at
the last minute to "Financial System Strategy 2020 (FSS 2020)". FSS
2020 is a strategic plan led by the CBN to integrate reforms to
ensure that Nigeria becomes Africa's financial hub and one of the
20th largest economies in the world by 2020. Soludo based his
assessment on Goldman Sachs's research on the economies of Brazil,
Russia, India and China (BRIC) and their potential to surpass the G6
nations on key economic indicators by 2050. After the BRICs,
Goldman Sachs's named the "next 11" or, the "N11" countries, which
have the potential to be BRIC-like, Nigeria among them. Goldman
Sachs's predicted that in terms of GDP, Nigeria could overtake Italy
by 2015. To overtake Italy and be on target with the 20th largest
economies of the world, Soludo stressed that Nigeria must maintain
an average economic growth rate of 12.4% over the next 15 years.
This would include the continued economic reforms, improved power,
transportation and telecom infrastructure and a more industrial, and
agricultural economy less dependent on oil revenues. The GON also
needed to increase its commitment to education and security.

Ministry of Finance

4. Minister Nenadi E. Usman gave MOF's presentation. She highlighted
statistics that indicated Nigeria was on sound footing for the
future. GDP has been robust since 2003 at roughly 6%. Inflation
last year was in the single digits (headline at 8.5% and year on
year at 3.9% from CBN). The Naira was stable with the official and
parallel rates converging. Foreign reserves climbed steadily since
2003 reaching over $43 billion in 2006. Nigeria's has had two
positive reviews by the IMF of its Policy Support Instrument (PSI).
The PSI played a critical role in Nigerian debt relief from the
Paris and London Clubs. A third review was completed in February
2007, which is expected to show positive results. Nigeria has
received sovereign credit ratings from both FitchRatings and
Standard and Poors (S&P) last year. Fitch reaffirmed their BB-
rating last month with S&P's new 2007 rating expected very soon.
Nenadi said the next steps should be at the federal level to
consolidate the reforms in public financial management, in
budgeting, debt and due process. She said there was an urgent need
to extend the reforms to state and local governments, and to focus
on developing growth strategies in the non-oil sectors.

Ministry of Commerce and Industry

5. Minister Aliyu Modibbo Umar made the presentation on "Commerce
44, Foundation for a Non-Oil Sector Economy". Commerce 44 is an
initiative to develop, promote and export eleven agricultural
commodities, eleven manufactured products, and eleven solid
minerals, focusing on eleven counties/regions of the world taking
advantage of concessions in bilateral and multilateral agreements.

ABUJA 00000887 002.2 OF 003

Commerce 44 targets a 10% growth rate per year in non-oil exports.
Umar said operational, enforcement and policy issues needed to be
addressed. Policy approaches that emphasized large-scale enterprises
that bypassed the poor and now a concerted effort was needed to
develop small and medium enterprises that offered better
opportunities for employment creation and growth. On the
operational side, they needed to address port delays and the long
period for claims processing especially in the Export Expansion
Grant Scheme (EEGS). This fund provides cash inducement for
exporters that have exported a minimum of 50,000 naira of
semi-manufactured products. On the policy, multiple levies, VAT,
and limited export financing were obstacles. Umar touched on the
Free Trade Zones and their impact in providing foreign direct
investment (FDI), developing industries, employment, revenue
generation and uplifting adjacent communities. Umar cited the $6.7
billion OKLNG project and the Tinapa Free Trade Zone as examples.
The GON envisions Tinapa as a manufacturing, distribution and
tourism hub for Africa comparable to Dubai.

Ministry of Agriculture (MOA)

6. Minister of Agriculture and Water Resources, Otunda B. F. Dada
gave the presentation. The MOA wants to make agriculture the
"engine" to drive the economy and support rapid economic growth,
poverty alleviation, job creation and a stable economy. Presently
the sector contributes 41% of GDP and 88% of non-oil foreign
exchange; employs nearly 70% of the active labor force and supplies
raw materials to the industrial sector. Growth rates have steadily
increased from 2.9% in 1998 to 8% in 2006. Challenges to
increasing productivity include the need to develop an almost
non-existent water irrigation systems, and the high cost of
agro-inputs, most of which are imported. Good quality fertilizers
are needed to be supplied in time and in sufficient quantities.
Underdeveloped markets have inadequate infrastructure that completes
distribution and transport of produce and inputs. Another area of
concern is water availability. Nigeria has abundant land, good soil
and water resources that have not been exploited with an over
dependence on rain fed agriculture.

Nigerian National Petroleum Corporation (NNPC)
--------------------------------------------- -

7. NNPC Group Managing Director Funso Kupolokun gave the
presentation based on President Obasanjo's agenda from 1999 for the
oil sector. This agenda envisaged by 2010 Nigeria would have crude
oil reserves of 40 billion barrels and a production capacity of 4
million barrels per day (mbpd) with a concerted effort to integrate
the oil and gas sectors. Growth in oil reserves as of 2006 had
reached 35 billion barrels, a 59% increase from 1999, and by the end
of this year installed capacity would reach 3 mbpd. Local
refineries had generally operated at 70% of capacity, supplemented
by imports that still could not meet demand. Since February of 2006
two refineries were completely shut down due to sabotage of
pipelines by armed militants. Nigeria has enormous gas reserves;
exports of liquefied natural gas (LNG) are expected to grow from 22
metric tones per annum (mtpa) to 50mtpa by 2010 and add an estimated
$10 billion a year in earnings. Domestically, LNG will be used for
private consumption, manufacturing (cement, steel, and aluminum) and
for power generation. Kupolokun noted that regional cooperation
projects with Equatorial Guinea, the West African Gas Pipeline
(WAGP) and the Trans Sahara Pipeline projects were ongoing.

President Obasanjo's Participation

19. In a departure from the past, the President was an active
participant and moderated the event. He introduced each minister,
and made comments after each presentation. Afterward, he took the
podium to field questions and gave a lengthy exhortation on where
Nigeria was before he took office. He indicated the future looked
bright, but stressed that a few setbacks would negate the progress
of the past eight years. He made the surprise announcement that Mr.
Nuhu Ribadu was reappointed as the Executive Chairman of the
Economic and Financial Crimes Commission for another four years and
promoted to Assistant Inspector General (AIG) of the Nigerian Police
Force. (Note: In previous discussions with Embassy officers, Ribadu
indicated that he would not seek another term. There were rumors
that he would be appointed the Inspector General (IG) of Police and
consolidate the EFCC and NFIU under his command. End Note)

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20. Although GON officials painted a rosy picture, amid the
abundance of reserves and increasing revenues there still are
shortfalls in the local economy. There are frequent queues at the
gas pumps and not enough refined products to satisfy domestic
demand. Nigeria needs massive investments in basic infrastructure
--power, roads, telecoms--and increased funding and focus in health
and education to achieve the Millennium Development Goals (MDGs). It
is bad news that key legislation such as Fiscal Responsibility,
NEITI, and Tax Reform are unlikely to be passed by the National
Assembly before the new administration takes office on May 29.
Following a change of administration, a new government is unlikely
to focus on these issues soon. All of the bills will have to be
re-introduced and begin the process from scratch. So far, the
President-elect has promised that the reforms will continue.

© Scoop Media

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