Cablegate: Nigeria Q 2008 President's Report On Agoa

DE RUEHUJA #0521/01 0781541
P 181541Z MAR 08





E.O. 12598: N/A

REF: STATE 20082

1. In response to reftel, this cable contains Nigeria's submission
for the 2008 President's Report on AGOA.
Market Economy/Economic Reform/Elimination of Trade Barriers
--------------------------------------------- --
2. A new government headed by Umaru Musa Yar'Adua was sworn in on
May 29, 2007 with the goal of implementing market based reforms,
however, progress has been slow. Nigeria continues to implement the
Economic Community of West African States (ECOWAS) Common External
Tariff (CET); however, negotiations remain stalled over the contents
of the fifth, or excepted, band of CET goods, despite a planned
completion date of January 1, 2008. Negotiations on Type B
exceptions and the 50 percent duty band for luxury items are ongoing
and Nigeria plans to further reduce the 50 percent duty on luxury
goods. The United States continues to have serious concerns about
the Nigerian governmentQs use of non-tariff barriers to trade. A
potential sign of progress is the new government's promise to review
the existing import bans. The governmentQs lack of capacity to
address IPR issues is a major constraint to enforcement. The
National Assembly is considering a bill that would amend several
laws covering trademarks, patents and designs, plant and animal
varieties, and establish an industrial property commission.
Political Pluralism/Rule of Law/Anti-Corruption
--------------------------------------------- --
3. The general elections held in April 2007 were seriously flawed,
with credible reports of malfeasance and vote rigging across the
country. Despite this, however, the May 29, 2007 inauguration
marked the first civilian-to-civilian transfer of power in Nigeria's
history. The legitimacy of the new administration remains in
question and the two leading opposition candidates have petitioned
the electoral tribunal to nullify the election. The tribunal upheld
the election results; however, the petitioners have appealed to the
Supreme Court. Despite the formation of an electoral reform
committee, there has been little to no substantive progress toward
electoral reform by the new administration. Civil and criminal
cases move slowly through NigeriaQs courts. The judicial system
lacks the resources to function effectively. In response to public
demand, ShariQa (Islamic law) was established in 12 of NigeriaQs
northern states in 2000. The government has taken steps to tackle
corruption, such as establishing two anti-corruption commissions and
announcing measures to improve fiscal responsibility in federal
budgeting and procurement; however, the corruption remains endemic.
Corruption cases involving senior government officials and state
governors are pending before various courts. In July 2006, Nigeria
was removed from the Financial Action Task Force list of
Non-Cooperative Countries and Territories, and in June 2007 the
Nigerian Financial Intelligence Unit (NFIU) was admitted into the
Egmont Group of Financial Intelligence Units. This also led to
delisting Nigeria from the FINCEN advisory list.
Poverty Reduction
4. The governmentQs economic reform program, the National Economic
Empowerment and Development Strategy (NEEDS) is undergoing a review
that would incorporate President Yar'Adua's seven point agenda.
Though Nigeria no longer has a Policy Support Instrument (PSI) with
the IMF, it however, maintains a cordial relationship with the IMF
which allows for evaluation of economic policies and provision of
advisory services. Recent comments by the IMF team in early
February 2008 noted concerns about the use of Nigeria's excess crude
Labor/Child Labor
5. The constitution recognizes the right of workers to join or form
trade unions; however, less than ten percent of the total workforce
is organized, and workers in Export Processing Zones may not join a
union until ten years after the anniversary date of the enterprise
establishment. Minimum wages, the length of the workday or
workweek, and general health and safety provisions are statutorily
mandated, but enforcement remains weak.

6. Nigeria has ratified all eight core ILO conventions. Nigerian
law forbids forced or bonded labor and restricts the employment of
children younger than 15 to home-based agricultural or domestic work
for no more than eight hours per day; nonetheless, child labor
remains a problem. The ILO is working with the government and civil
society as part of the ILOQs International Program on the
Elimination of Child Labor. The government launched awareness and
training programs for law enforcement, customs and other officials

ABUJA 00000521 002 OF 003

and has provided additional training in child labor issues for labor
inspection officers. Nigeria is participating in the West African
Cocoa Agriculture Project to eliminate the worst forms of child
labor. Private and government initiatives to stem the incidence of
child employment continued but were largely ineffective.
Investigations of child trafficking are hampered by official
corruption. Reports of human rights problems included: security
force use of excessive force and involvement in unlawful killings,
including some that were alleged to be politically-motivated; and
mistreatment of prisoners and detainees.
Nigeria: Competitiveness Hubs and Regional USAID Mission
--------------------------------------------- --------
7. The two Competitiveness Hubs in West Africa Q in Accra, Ghana
and Dakar, Senegal Q work in conjunction with each and are funded
through and managed by the USAID West Africa Mission (USAID/WA).
The Accra and Dakar Hubs have assisted firms in 21 West and Central
African countries, including Nigeria, to exhibit at international
trade shows, providing firm-specific training on strategies to
access the U.S. and other international markets, including
information related to quality certifications, packaging, pricing,
marketing, and financial management. From October 2005 through
September 2007, the West Africa Hubs facilitated over $600,000 in
exports from Nigeria, facilitated nearly $200,000 in new
investments, and provided hands-on technical assistance to nearly 80
Nigerian companies. Specialized training was provided to nearly
1,000 Nigerians, over 50% of which were women.

8. In nearly every West African country eligible under AGOA, the
Hubs have established partnerships with local organizations (such as
chambers of commerce) to operate AGOA Resource Centers (ARCs), which
serve as information centers for a wide array of information on
AGOA. The ARC in Nigeria is housed in the Nigerian-American Chamber
of Commerce in Lagos, while the Hub also works extensively with the
Nigerian Export Promotion Council to hold sector-specific workshops
(including an export packaging seminar in Lagos in late 2006) as
well as AGOA-specific events. The Hub organized an AGOA Export
Strategy Workshop for Nigerian entrepreneurs in December 2007 in
conjunction with the U.S.-Nigeria Trade and Investment Framework
Agreement (TIFA) Meetings. The Hub responded to requests from the
Nigerian government in November 2006 to train customs and other
officials on procedures to comply with AGOA textile visa and
certification requirements.

9. Sector focuses for the Hubs include cashews, shea butter,
apparel, handicrafts, specialty foods and seafood. The Hub acts as
the Secretariat for the African Cashew Alliance (ACA), which aims to
strengthen the African cashew value chain and increase processing
capacity in West Africa to achieve competitive, value-added (rather
than raw nut) cashew exports from the region. Nigeria is a crucial
participant in the ACA with its relatively high processing capacity;
international commodity company and founding member of the ACA -
Olam opening a second major processing facility in Nigeria in 2007.
The Hub organized an ACA meeting in Ibadan in January and in Abuja
in July 2007. Early successes include connecting Nigerian
processors with suppliers in Burkina Faso and Benin, as well as
direct Nigerian exports of 30 metric tons of cashews to the United
States. Nigeria also holds potential in the shea butter sector, and
the Hubs are encouraging production and processing methods that
ensure higher quality shea butter for export. One Trade Hub client
exports bulk shea butter to Europe.
10. USAID/WA and the Hubs also work with ECOWAS in Abuja to address
some of the key costs of doing business, which have a direct impact
on competitiveness, including irregular and costly supplies of
electricity and high telecommunications charges, mostly arising
because of a poor investment environment in the subregion. USAIDQs
involvement in regional energy sector in 2007 included ongoing
technical assistance support for the West Africa Power Pool,
building on the West African Gas Pipeline project that will deliver
natural gas from Nigeria to Benin, Togo and Ghana. The Power Pool
aims to integrate and strengthen energy infrastructure and
regulation among ECOWAS member states for lower cost and more
reliable power. USAID also funded advisors to support the Common
External Tariff, a long-standing ECOWAS initiative meant to enhance
regional integration and export competitiveness.

11. A related initiative saw the Trade Hub conduct an audit of
Nigerian Customs Service hardware, software, institutional setup and
data collection methods in preparation for establishing a Regional
Trade Information Systems Database across Nigeria, Benin, Togo,
Ghana and Cote dQIvoire. The Hub also completed an SPS capacity
evaluation in Nigeria, a part of their broader efforts to harmonize

ABUJA 00000521 003 OF 003

the West African Economic and Monetary Union (UEMOA) countries
Sanitary and Phytosanitary (SPS) regulations with non-UEMOA
countries (such as Nigeria) in order to increase the likelihood of
agricultural exports within and from ECOWAS countries elsewhere.


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