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Cablegate: Nigeria: Bi-Weekly Pol/Econ Updates for December 1-14,

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UNCLAS SECTION 01 OF 05 ABUJA 002438

SENSITIVE
SIPDIS

DEPARTMENT PASS TO USTR-AGAMA
DOE FOR GPERSON, CHAYLOCK
LABOR FOR SHALEY

E.O. 12958: N/A
TAGS: PGOV ECON ELAB EPET EFIN EAGR KDEM NI
SUBJECT: NIGERIA: BI-WEEKLY POL/ECON UPDATES FOR DECEMBER 1-14,
2008

Ref: A. ABUJA 2377
B. ABUJA 2358

1. (U) The Following is a joint Embassy Abuja, ConGen Lagos
compilation of December 1-14 political/economic highlights, which
did not feature in our other reporting, covering:

--Economic News
--Southern Economic News
--Delta Security Incidents
--Oil and Gas
--Human Rights
--Labor
--Corruption
--Election Tribunals

Economic News
-------------

2. (U) AMERICAN/NIGERIAN AVIATION COMPANY UNVEILING: The Ambassador
gave welcoming remarks at a dinner honoring the inauguration of a
new American/Nigerian aviation company - CITA-TRIAX Aviation Ltd -
on November 25 Abuja. The company is providing aviation consultant
services, cargo delivery, and services for infrastructure
development in West Africa. To improve capacity building in
Nigeria's aviation sector, the company announced a partnership with
Western Michigan University College of Aviation. The CITA group is
in discussions with several state governments for a location to
build a local aviation college campus in Nigeria.

3. (U) COCOA EXPORTS ON THE RISE: Nigerian Federal Produce
Inspection Service announced on November 18 that Nigeria's cocoa
exports surged 36% in 2008. A total of 119,432 metric tons (mt) was
shipped, compared with 87,997 mt in 2007. Nigeria is currently the
world's fourth largest exporter of cocoa beans.

4. (U) INFLATION HITS 14.7 PERCENT: Inflation rose to 14.7% in
October from 13% in September, the National Bureau of Statistics
reported on November 19. Growth in food prices, which form much of
the index basket, increased to 19.2% in October from 17.1% in
September.

5. (U) WORLD BANK LOANS TO NIGERIA: On November 24 the Minister of
Finance Shamsuddeen Usman disclosed that since 1999 the World Bank
has loaned Nigeria nearly $3.5 billion.

6. (U) WEST AFRICAN CURRENCY DUE DEC. 2009: In November 24 press
reports the common West African currency, the Eco, is expected to
unveil by December 1, 2009. Not all member states of the West
African Monetary Agency (WAMA) will join in implementation because
some countries will not meet the requirements such as an inflation
rate of 5% and budget deficit of 4% of GDP. At the time of writing,
Nigeria does not meet WAMA requirements.

7. (U) INDIAN INVESTMENT IN NIGERIA: The Indian Deputy High
Commissioner reported on November 20 that the Indian government will
invest over $15 billion into various sectors of the Nigerian economy
within the next few years. He disclosed that bilateral trade
between the two countries was more than $8 billion in 2007 and India
is the fourth largest non-oil export destination for Nigerian
products.

8. (U) GON ISSUED BONDS VALUED AT $14.6 BILLION: As reported in the
press on November 24, the total value of bonds issued by the GON in
the last five years was 1.73 trillion naira ($14.6 billion). These
bonds were issued between 2003 and September 2008 to finance capital
projects.

9. (SBU) ISSUANCE OF 20 YEAR BONDS: On November 28, 2008, the
Nigerian government's Debt Management Office for the time issued 20
year bonds. The 20 year bonds have a coupon rate of 15% and 10
billion naira ($74 million) were issued although total demand was
23.52 billion naira ($174 million). The bond issue was
oversubscribed by 135% because there were 57 bids and only 38 were
successful. In a December 4 meeting with the DMO DG, EconSpec was
told that the DMO was surprised at the demand for the bonds and had

ABUJA 00002438 002 OF 005


been warned by industry experts to not go forward with it.

10. (U) DEFICIT TO BE FINANCED BY ISSUING BONDS: According to
President Umar Yar'adua in his budget speech, the federal government
plans to finance some portion of the proposed deficit in the 2009
budget by issuing $500 million worth of bonds in the international
financial markets. GON officials confirmed that the proposed bond
issue is primarily aimed at testing the financial market's appetite
for Nigerian debt instruments. The terms and schedule for issuing
the bonds have not been set as yet by the GON.

11. (U) WHO MEASLES CAMPAIGN: The World Health Organization (WHO)
coordinator for Kaduna state announced on November 25 that out of
800,000 deaths from measles worldwide reported in 2008, 4,000 are
from Kaduna state. He stated that 75% of all measles death in
Africa were in Nigeria and the WHO pre-measles campaign took place
from November 26-30. A similar campaign took place in the 17
remaining states from December 10-14th.
12. (U) INFRASTRUCTURE CONCESSION REGULATORY COMMISSION (ICRC): On
November 27, President Yar'Adua inaugurated the Board of the ICRC
whose mandate is to develop and issue guidelines on PPP policies,
process and procedures. In addition, the commission will develop
the appropriate framework to concession and handle all
infrastructure projects. The ICRC board has 12 members with Chief
Ernest Shoneken as a Chairman.
Southern Economic News
----------------------

13. (U) At the South-East Economic Summit held in Owerri, Imo State,
December 4-5, Deputy Senate President, Ike Ekweremadu said the
federal government has approved plans to upgrade Enugu airport to an
international airport to serve Nigeria's South East. Ekweremadu
said federal legislators from Enugu state have agreed to use their
constituency allowances to help upgrade the airport and urged the
region's governors and federal legislators from other South East
states to support the project. He said such direct access to the
world would encourage the Igbo peoples' entrepreneurial spirit and
help boost the region's economy. Imo Governors Ikedi Ohakim and
Anambra Governor Peter Obi attended the conference; other regional
governors sent representatives.

14. (U) On December 12, Anabel Mobile Limited, an integrated mobile
device and telecommunications content company, launched its new
product line, a series of phones and Blackberry-like devices capable
of handling not only phone, text and email access, but also access
to Microsoft Word, Excel and other computer software. Microsoft's
West Africa division told Pol-Econ Chief that the Anabel platform
was Microsoft's first introduction of the technology in Africa.
Anabel's President and CEO, Nicholas Okoye, is a former Chairman of
Transcorp.

15. (U) On December 3, Econoffs met with Mansur Ahmed, current
Director General of the Nigerian Economic Summit Group, who was
recently appointed head of the Federal Government's new
Infrastructure Concession Regulatory Commission (ICRC). He said the
ICRC will develop and issue guidelines on Nigeria's Public Private
Partnership (PPP) policies, processes and procedures in
infrastructure development. The ICRC will collaborate with state
governments to harmonize the framework for contracting PPP
infrastructure projects. He said electric power, roads and railways
will be priorities for the new Commission, though the ICRC will also
have control of all concessions of trans-state waterways. Ahmed said
ICRC may start with some viable PPP projects like the Lagos-Ibadan
motorway and the Lagos-Kano-Nguru rail line.

16. (U) On November 27 President Yar'Adua inaugurated the 12-member
ICRC board in accordance with the ICRC Act passed during President
Obasanjo's tenure. The board chaired by Chief Ernest Shonekan,
former Head of Government of Nigeria, is under the President's
supervision. Though the ICRC is tasked with the responsibility to
identify potential PPP projects and take a lead in the development
and procurement processes that will enable private sector
participation in line with international best practices, it does not
have the power to sanction erring partners in whatever projects it
brokers.


ABUJA 00002438 003 OF 005


Delta Incidents; No Americans Involved
---------------------------------------

17. (SBU) On December 2 the Bulgarian Foreign Ministry announced the
release of their citizen, who had been taken hostage the previous
week. No further details were provided.

18. (SBU) Three Christian missionaries of unspecified West African
nationality were taken hostage on December 7 according to Post
security contacts. They were released unharmed without payment of a
ransom on December 10.

Oil and Gas
-----------

19. (SBU) Business Day reported on December 10 that the joint
venture cash call for 2009 will be USD 15 billion, similar to 2008's
cash call. Like last year, the GON will be short, funding only USD
5 billion of the USD 8.8 billion it owes based on its ownership
stake in the joint ventures. According to the paper, the GON will
seek "alternative funding sources" from the credit markets; in 2008
that meant loans from international oil companies. (Comment: This
is not the ideal time to seek financing from either credit markets
or oil companies. Joint venture oil production will not improve
until the funding issue is resolved. End Comment.)

20. (SBU) Shell announced plans to lay off 1,000 employees from its
joint venture with the Nigerian National Petroleum Corporation
(NNPC) as part of a staffing rationalization plan called "One
Shell". No timeline for the layoffs was announced and there has
been no response from NNPC. (Comment: This is becoming an annual
holiday ritual for Shell; it tried to lay off employees the same
time last year under the guise of the One Shell program. NNPC and
the GON blocked those layoffs. End Comment.)

21. (U) On December 10, Lagos Consul General met with Uju Ifejika,
the Managing Director and Chairman of local oil company Brittania-U.
Ifejika is the only woman-head of a local oil company in Nigeria
and is the company's majority shareholder. In early 2009,
Brittania-U plans to start production of 10,000 barrels per day from
the Ajapa oil field located near off-shore Delta State. Using
funding from Oceanic Bank, the company purchased an 88,000
barrel-capacity barge to be used as a floating production platform
and a 78,000 barrel coastal tanker to transport the oil from the
field to nearby Escravos oil terminal. These $12 million dollar
investments are currently being overhauled in Houma, Louisiana;
delivery is scheduled for February 2009.

Human Rights
------------

22. (U) On December 16 Public Affairs' locally engaged staff from
Jos reported that the Sultan of Sokoto and the head of the Christian
Association of Nigeria are meeting with both Muslim and Christian
communities in the area to help further reduce tensions. In
addition, the Plateau Government has provided applications for
communities to fill out for property loss. Despite this, tension
remained high in Jos and simple incidents can spank fear. For
example, on December 10 a swarm of bees triggered a wave of panic
that caused many to initially believe the violence had reignited
(reftel A). According to reports, a honeycomb fell from a tree
creating a surge of bees that compelled people to run for safety,
which in turn caused others in the vicinity to follow suit fearing a
reprisal of the previous week's violence. The pandemonium lasted
for three hours, but subsided due to constant radio announcements
that there was no cause for alarm. Although there were no reports
of actual violence resulting from the chaos, there were minor
injuries and accidents as a result of people trying to flee the
area.

Labor
-----

23. (U) According to press reports and embassy sources, the
Judiciary Staff Union of Nigeria (JUSUN) commenced a nationwide
strike on December 1 to protest of failure to pay uniform salaries

ABUJA 00002438 004 OF 005


to judicial staff at federal and state levels. The strike is the
second within the year by JUSUN, made up of mostly judiciary
administration staff, and is crippling court activities in the
country. The strike did not affect the Supreme Court's ruling on
December 13, which ruled in favor of Yar'Adua's 2007 disputed
election victory. However, the strike did disrupt the money
laundering and corruption hearing on charges brought against former
Edo State Governor Lucky Igbinedion by the Economic and Financial
Crime Commission (EFCC). Igbinedion and his team of lawyers arrived
at the Federal High Court and were refused entrance. The court will
resume the trial on December 17.

Corruption
----------

24. (U) According to the Daily Trust on December 2, the EFCC
declared five Rivers State officials wanted over $27 million in
connection with alleged fraud. The officials included the
Government House Administration Permanent Secretary Fudera Hark and
Government House Director of Finance and Accounts Robert Aya, both
wanted for signing government house checks from an account under
investigation. Three other people, Harrison Princewill, Nathan Wike
and Bright Ikonwa, all staff of the Government House are also on the
wanted list for making substantial withdrawals from the same
account. According to the EFCC, "efforts to get the five officials
to appear before the EFCC have proved difficult as they have taken
refuge in the Government House in Port Harcourt."

25. (U) At a December 1 anti-corruption conference, attended by
President Yar'Adua and Economic and Financial Crimes Commission
(EFCC) Chairwoman Waziri, Representative of the United Nations
Office on Drugs and Crime (UNODC) Oliver Stolpe declared to
journalists that public office holders in Nigeria have
misappropriated $100 billion meant for the development of various
projects across the economy over the years. The amount is
approximately three times what Nigeria owes as foreign debt ($28.5
billion). Stolpe referenced a recent 2007 survey of 2,203
businesses, conducted by the EFCC in conjunction with the National
Bureau of Statistics in Lagos, Delta and seven other states, which
indicates that 75.6% and 71% of businesses felt strongly that
crime/security and corruption are impeding the growth of business in
Nigeria. Stolpe also told the journalists that the police force
remained the most corrupt institution in Nigeria, according to 62.6%
surveyed, but also noted that corruption permeated every facet of
Nigerian society. EFCC responded to Stolpe's claims, telling the
journalists that "over concentration of reporting corruption on
individuals and persons will not do us good."

26. (U) On December 11, Transparency in Nigeria (TIN), an affiliate
of Transparency International, expressed its reservations to media
representatives about the independence of the Economic and Financial
Crimes Commission (EFCC), specifically noting the circumstances
under which former Chairman Ribadu was removed from office and
demoted. TIN's Secretary General, Osita Ogbu, also told journalists
that Ribadu's prosecution appears to be part of the world-wide
persecution of anti-corruption crusaders and human rights defenders,
and called on President Yar'Adua's government to uphold its
commitment under the United Nations Convention against Corruption
and International Human Rights to ensure that anti-corruption
advocates can operate in a safe environment.

27. (U) On December 10, EFCC Chair Farida Waziri announced Nigeria's
Anti Corruption Revolution Campaign (ANCOR) in Abuja. Waziri also
announced that the EFCC secured 296 convictions within the last five
years related to cases of corruption, money laundering, advance fee
fraud, bank fraud, and pipeline vandalism. Waziri maintained that
the EFCC recovered assets worth $5.6 billion over the same period
(Note: Post cannot confirm this number) and revealed that there are
over 15 cases involving Politically Exposed Persons (PEPs) in
various stages of prosecution in the courts.

Election Tribunals
------------------

28. On December 2, the Kogi State Elections Tribunal hearing the
petition of Abubakar Audu to overturn the March 29, 2008 rerun Kogi

ABUJA 00002438 005 OF 005


State Gubernatorial elections upheld the declared victory of sitting
Governor Ibrahim Idris (reftel B). The tribunal ruled that the
petitioner failed to prove beyond reasonable doubt that there were
malpractices, noting "if election fails in a few polling boths, that
is not enough to affect the overall result." (Note: Idris was the
declared winner in the 2007 gubernatorial polls as well; however,
the rerun election was called when the Tribunal annulled the 2007
results. Observers reported that little progress was made in
correcting the flaws that plagued the 2007 elections.) No violence
was reported following the announcement of the Tribunal ruling.

SANDERS

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