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Cablegate: Nigeria: Bi-Weekly Pol/Econ Updates for June 1-15,

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UNCLAS SECTION 01 OF 03 ABUJA 001245

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TAGS: PGOV KDEM ECON EPET ETRD KCOR MOPS NI
SUBJECT: NIGERIA: BI-WEEKLY POL/ECON UPDATES FOR JUNE 1-15,
2008

REF: ABUJA 1014

1. (U) Following is a joint Embassy Abuja ConGen Lagos
compilation of June 1-15, 2008 political/economic highlights,
which did not feature in our other reporting, covering:

-- National Assembly
-- The Presidency
-- Niger Delta
-- Oil and Gas
-- General Economic News
-- Other Important Issues

National Assembly
-----------------
2. (SBU) On June 3, 2008 former Senator Abba-Aji replaced
former Senator Florence Ita-Giwa as the President's Special
Advisor for National Assembly matters. Ita-Giwa's exit came
only a few days after the Presidency announced the departure
of Chief of Staff General Abdullahi Mohammed. Like General
Mohammed, Senator Ita-Giwa was first appointed under the
Obasanjo administration and had been retained by President
Yar'Adua. Although Ita-Giwa insisted that she voluntarily
left the Special Advisor post to "concentrate on and serve
her own people" from the Bakassi region, many observers
believe her resignation, coupled with her speedy replacement
by a loyal Yar'Adua man, is another diminution of former
President Obasanjo's political influence within the current
government.

3. (U) On June 15th, the Senate Committee on the Federal
Capital Territory (FCT) recommended that the FCT government
revoke the titles to a total of 4,352 plots of land in Abuja
allocated by former FCT Minister Mallam Nasir El-Rufai during
his final 30 days in office. The recommendation was
contained in the committee's interim report on its
investigation into activities of the past FCT Administration
(1999-2007). Senators faulted the allocations, particularly
those to Rufai,s family members, as well as 655 plots signed
out by Rufai May 28, 2007 (the last day of the previous
administration) several days after the dissolution of the
Federal Executive Council by the former President. The
Senate committee has concluded that the land distributions in
the final days of the administration were illegal because by
law Rufai was no longer the minister after Obasanjo dissolved
his cabinet.

The Presidency
--------------
4. (SBU) On June 8, 2008, Joseph Makoju, Special Advisor to
the President on Energy, announced his resignation from the
government. However, Makojou, another holdover from the
previous administration, has offered to continue to advise
Yar'Adua in an "honorary" capacity. Makojou was first
appointed by former President Obasanjo to turn around the
crisis-ridden Nigeria Electric Power Authority (now named
Power Holding Company of Nigeria), and was then elevated to
the position of Presidential Advisor. In spite of the
lingering crisis in the energy sector, he remained an
influential figure in the last administration. His exit is
viewed as another setback for Obasanjo.

Niger Delta
-----------
5. (U) The GON signed a Memorandum of Understanding (MOU)
with the British government for the establishment of a legal
framework for permanent and visiting military training teams.
While press reports did not give the specifics of the June
12 agreement, it appears the MOU will lay the groundwork for
greater UK involvement in the training of Nigerian military
forces operating in the restive Niger Delta region, and
possibly also in preparing Nigerian troops for their
international peacekeeping deployments. In signing the
agreement, Minister of Defense Mahmud Yayale Ahmed is
reported to have said that the lack of British military
involvement with Nigeria "has allowed others to scavenge and
take into more and more of our defense policies." While Post

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is unsure what the DefMin meant by this, his comments were
made at a time when Nigeria's military has been increasing
its engagement with foreign, primarily Western, militaries,
including with his Chief of Defense Staff publicly talking
about working with Africom.

6. (U) In the face of criticism from the Movement for the
Survival of the Ogoni People and the Ijaw Youth Council,
Senior Special Assistant to the Vice President Ima Niboro
issued a June 12 statement supporting the choice of U.N.
Under-Secretary General for Political Affairs Ibrahim Agboola
Gambari as chairman of the steering committee for the
upcoming summit on the Niger Delta. The statement said that
Gambari's extensive experience in international conflict
resolution gave the "Niger Delta issue a global perspective."
Several indigenous ethnic groups have criticized what they
say was Gambari's lack of a constructive role following the
1995 execution of Ken Saro-Wiwa and ten other Ogoni
activists, and have threatened to boycott any proceedings
held under Gambari's auspices.

Oil and Gas
-----------
7. (U) The GON has delayed a decision on raising gasoline
prices until December 31, 2008. While announcing the delay,
the Minister of State for Energy (Petroleum) Odein Ajumogobia
hinted at the possibility that a change to subsidy would
target assistance to the poor rather than set one fixed
gasoline price for all consumers. Union leaders said that
any price increase would be unacceptable.

Banking Sector
--------------
8. (U) On May 11, the Executive Director of Corporate Banking
at Oceanic Bank told Econoff of plans to reinvigorate the
Association of Nigerian Bankers. In addition to acting as a
type of think tank for banking and management best practices,
the association will serve as a banking trade group to
articulate the industry's views on government policy. The
association will be separate from the Bankers Committee, a
semi-regulatory body chaired by the Central Bank of Nigeria
(CBN).

9. (U) On June 2, the CBN increased the Monetary Policy Rate
from 10% to 10.25%, its third increase this year (see
reftel). During the Monetary Policy Committee meeting, the
CBN also increased the cash reserve requirement from 3% to 4%
for commercial banks, with an effective date of June 9.

10. (U) On June 11, the Nigerian Minister of Finance
announced that the South African government endorsed three
Nigerian banks to operate in South Africa: First Bank, Union
Bank and United Bank of Africa (UBA).

11. (U) In cooperation with a June 12-13 U.S. Mission event
on export credit financing for the Export-Import Bank
(Ex-Im), U.S. Trade Development Agency, Foreign Agricultural
Service, and Foreign Commercial Service, Ex-Im announced that
it is more doubling the size of the Nigerian Bank Facility to
$1 billion. The Facility covering 14 Nigerian banks allows
for expedited processing of short- and medium-term insurance,
and guarantees transactions in support of U.S. exports. The
increase in the Facility is to meet Nigerian banks growing
demand for medium-term financing (5-7 years) to support U.S.
exports of passenger aircraft, oil and gas equipment,
dredges, and telecommunications and manufacturing equipment.

Other Important News
--------------------
12. (SBU) Cancer Rates in Abia State: A team of doctors from
MD Anderson Cancer Center in Houston, Texas visiting Abia
State told PolOffs on April 13 that the incidence of cancer
in Abia State was overwhelming. The group was concerned with
the rising number of breast cancer cases in the region, and
it recommended investigations into lifestyle, water and food
sources, and environmental factors as possible causes. The
team focused on capacity building of available health care

ABUJA 00001245 003 OF 003


facility staff, public education, cancer screenings and
subsequent referrals to local hospitals, and the
establishment of an effective referral system. The First
Lady of Abia State provided transportation for the group, and
said she would pay for the follow-up care of the patients
seen by the team.

13. (U) Import Duties: In a front page headline, the daily
"Leadership" urged the GON to "review import duties and to
allow for a free flow of goods into the country." The
article commented that "the high import tariff regime is
counterproductive and largely responsible for the low revenue
from customs duties even at this time of import boom."
Meanwhile, Ambassador, Econoff, and USAID have followed up on
this issue with both the Minister of Commerce (June 10) and
Minister of Agriculture (June 24) on these issues.

14. (U) Cocoa Farming: Akinwale Ojo, Executive Secretary for
the Cocoa Association of Nigeria, has urged the GON to offer
cash subsidies to farmers, contending that the GON should do
more than just distribute insecticides. He told the press
that all of Nigeria's cocoa production is exported, 14 out of
36 states produce cocoa, and 80% of the production comes from
five primary states.

15. (U) Roadway Funding: The Federal Executive Council (FEC)
approved on June 11 a loan of N38.28 billion ($330 million)
for federal road infrastructure development and upgrade. The
interest-free loan is to be secured from the International
Development Association of the World Bank and will be used
for the upgrade of the Sagamu-Ibadan Expressway, the
Abuja-Kaduna-Zaria-Kano link road, and the
Enugu-Abakiliki-Ogoja junction. The project is expected to
start on July 28 of this year and end in 2016.

16. (SBU) Nigerian Customs Service (NCS) shakeup continues:
The GON has re-structured the NCS, breaking the service into
four departments: Corporate Support Service, Strategic
Research and Policy, Tariff and Trade, and Enforcement,
Investigation and Inspection. The move also led to the
removal/retirement of eight top officials, including Deputy
Controller General A.K. Haliru and Assistant Controller
General B.L. Kpagih, who both met with EconOff on May 8 to
discuss temporary import licenses.

17. (SBU) Energy Partners Coordination Forum: At urging of
Embassy Econ and USAID, the World Bank convened a new energy
partners working group on June 5. The group should prove a
useful forum for coordination on oil and gas and electric
power policy and program initiatives. Participants included
UNDP, AfDB, ECOWAS, UNIDO and German, French and U.K. reps.
Upcoming meetings will focus on rural access, renewable
energy, private sector investment, and broader policy issues.

18. (SBU) Dept Management Office: Acting AID Mission
Director, Econcouns and U.S. Treasury Resident Advisor met
with DMO Director General Dr. Abraham Nwankwo to celebrate
eight years of productive USG technical assistance to the
DMO. The TA has accomplished the following: move of
domestic debt portfolio from the Central Bank to the DMO,
relaunch of Federal Government Bond Market in 2003 after a
lapse of 18 years, development of secondary market in
government securities and bonds, licensing of 19 primary
dealers and market makers, and improvement in Nigeria's
credit rating. DMO has a new focus on debt management at the
state level. The agency will keep close contact with
Embassy, USAID and Treasury about its efforts and possible
needs for assistance going forward. One area not addressed
in this closeout meeting was need for federal ministries and
other agencies to establish dedicated accounts within the
central bank, in place of the current use of commercial
accounts for ongoing government functioning.
SANDERS

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