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Cablegate: Nigeria: Economic Roundup February 20

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

UNCLAS SECTION 01 OF 02 ABUJA 000367

SIPDIS


STATE FOR AF/W
STATE PASS OPIC, TDA, AND EX-IM
STATE PASS USTR AND DOT
COMMERCE FOR ITA/MAC
STATE PASS USTR


E.O. 12958: N/A
TAGS: ECON ETRD EAGR ELTN EPET EIND EINV NI
SUBJECT: NIGERIA: ECONOMIC ROUNDUP FEBRUARY 20

1. This periodic economic report from Abuja and Lagos
includes:
--Canned Beer and Soda Coming Soon to Nigeria
--Nigeria's Juice Ban Squeezes Out U.S. Exports
--Trucks Roll Only at Night in Port Harcourt


Canned Beer and Soda Coming Soon to Nigeria
-------------------------------------------
2. The U.S. Trade and Development Agency (USTDA) and Brewtech
Nigeria signed a $251,000 grant agreement January 23 in Abuja
to fund a feasibility study on the construction of an
aluminum can manufacturing facility in Lagos State. Roeslein
and Associates, in conjunction with Ball Packaging, will
conduct the study. The USTDA grant will partially fund the
cost of the study, with Roeslein and Associates providing an
additional $166,320 to complete the total project. This early
planning assistance will provide a full assessment of the
current economic, financial, and environmental conditions for
the construction of a can production line in Nigeria.


3. Currently, Nigeria imports cans from South Africa.
However, South Africa is reaching its capacity and has been
unable to supply a sufficient amount of cans to the Nigerian
fillers, including Coca-Cola, Vita-Malt and Nigerian
Breweries. When fully implemented, the project could lead to
hundreds of new jobs in can manufacturing, filling processes,
and logistics management. In addition, it could stimulate
exports of $32 million in U.S. goods and services.


Nigeria's Juice Ban Squeezes Out U.S. Exports
---------------------------------------------
4. Information Minister Jerry Gana announced on January 29
that Nigeria's Federal Cabinet had banned the import of fruit
juices in retail packs effective immediately. Gana continued,
"Juices to be imported into the country must be in drums and
must be processed in the country to generate income and
employment. Packaged fruit juices imported into the country
will be destroyed at the point of entry unless the
consignment is in drums." Industry sources indicate that the
ban is to protect local production and a few importers of
juice concentrates.


5. Nigeria's overall import figures are not readily
available; however, import demand increased markedly over the
past four years. The ban has cut off growing U.S. exports of
fruit juices to Nigeria which reached a record level of
$304,000 (U.S. trade data) last fiscal year.


Trucks Roll Only at Night in Port Harcourt
------------------------------------------
6. A new Rivers State law restricts the movement of trucks to
night hours. Effective February 1, 2003, Heavy Goods Vehicles
(HGV), including all trucks and trucks with trailers, are
allowed on the state's roadways only between 2100 and 0600.
The measure is aimed at easing congestion, reducing accidents
and, according to the government circular, to "bring back
sanity to our roads and streets." One major shipping company
reports that police are stopping and arresting drivers of
trucks traveling in daylight hours.


7. This concept is not new to Nigeria; under the Buhari
regime, truck traffic in and around Lagos was restricted to
the hours of midnight to 0600 with some success, but the
policy was abandoned when Ibrahim Babangida came to power in
1985. A source in the shipping industry believes the
restriction will be loosened and companies will be able to
obtain decals allowing them to drive trucks during daylight
hours upon the payment of special fees.


8. Comment: The Port Harcourt area of Rivers State has long
suffered acute road congestion, particularly at Eleme or
"Refinery" Junction. Many of Nigeria's interstate roads,
particularly in the south, have become dilapidated and in
some areas nearly impassable, leading to ever-increasing
traffic congestion and vehicular accidents. Large trucks ply
the roads of Rivers State with loads picked up from the docks
of Port Harcourt as well as petroleum products. On the
highway leading out of Port Harcourt northeastward, tanker
trucks park along both sides of the road for miles near the
entrance to the government-run oil refinery, while others
move in and out of traffic slowly and erratically. In many
places roadways are reduced to rutted, water-filled single
lanes, sometimes haphazardly repaired by local boys with
shovels who ask passing motorists for money. It is common to
see large trucks tipped over, their cargo strewn along the
roadways.


9. Comment Continued: Forcing trucks to travel only at night
may help ease congestion in Rivers State, but it also forces
shippers, transport firms and other companies to adjust their
business practices. For example, Panalpina World Transport
now makes deliveries in Rivers State only at night. Further,
given the state of the roadways in the south, truck passage
may become more hazardous with less visibility and the
increased risk of highway robbery at night.


10. Comment Continued: It is unclear what effect forcing
trucks to travel at night will have on economic conditions
overall in Rivers State or to what extent the policy will
affect commerce between Port Harcourt and the rest of
Nigeria. We expect exemptions or daylight permits to be
offered for special fees. But if successful, we may see calls
for similar measures in traffic-choked cities such as Lagos
and Ibadan. End Comment.
JETER

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