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Cablegate: Nigeria: Usitc Study On U.S. - Sub-Saharan

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 LAGOS 001870

SIPDIS


USDOC PASS TO USITC FOR DAN LEAHY


E.O. 12958: N/A
TAGS: ETRD EINV EFIN NI XA
SUBJECT: NIGERIA: USITC STUDY ON U.S. - SUB-SAHARAN
AFRICA TRADE AND INVESTMENT

REF: STATE 224559


1. (U) U.S. Mission Nigeria is pleased to provide the
following information in response to reftel.


--------------------------------------------
DEVELOPMENTS IN NIGERIAN ECONOMIC, TRADE AND INVESTMENT
POLICIES
--------------------------------------------


2. (U) In August 2003, the GON unveiled a new economic
plan, the National Economic Empowerment and Development
Strategy (NEEDS), that outlines strategies for
attaining macro-economic stability (with emphasis on
low inflation and stable interest and exchange rates)
as well as achieving annual GDP growth of 5-7 percent.
The ambitious plan emphasizes the GON's commitment to
fiscal discipline and public sector reforms, places
special emphasis on health, education and agriculture,
and aims to raise the rate of industrial capacity
utilization from 40 to 80 percent.


3. (U) Despite its stated commitment to an open and
rules-based trading system, Nigeria's trade policy
remains inconsistent. In March 2003, the GON cut
duties on many line items (mostly raw materials and
capital equipment) but raised them on others (primarily
finished goods and agricultural products). This
followed similar year-on-year cuts and increases, often
on the same goods. A protectionist bent is
increasingly evident in Nigerian trade policy, as many
items - including frozen poultry, certain printed
fabrics, cassava, ice cream, fruit juice in retail
packs, toothpicks, beer and pasta - are simply banned,
ostensibly to foster domestic production (even though
domestic industries are unable to meet demand).


4. (U) Nigeria reduced its port taxes in 2001 and 2003
and has begun to remove administrative obstacles that
hamper efficient operations. Port congestion and
clearance rates, particularly at Lagos's Apapa Port,
which handles over 40 percent of Nigeria's trade, have
improved significantly, as have efforts to enforce the
GON's policy of inspecting 100 percent of imports for
contraband. In addition, the GON intends to implement
a destination inspection regime for valuation of import
duties in January 2004 (after several failed attempts
in recent years), but the Nigerian Customs Service's
capacity to handle that responsibility is questionable.


5. (U) The GON offers export incentives ranging from
grants to guaranteed loans to tax concessions, but few
Nigerian firms benefit from them. Some businesses,
however, have begun to take advantage of the Calabar
and Onne free trade zones (FTZs). The latter has
become increasingly attractive to oil and gas
companies, which use it as a bonded warehouse for
supplies and equipment and liquefied natural gas
exports. The GON now allows products assembled in the
Calabar FTZ from reduced-tariff imports to be sold in
Nigeria free of import duties. Nigeria remains the
primary market for Calabar FTZ products.


6. (U) Investment remains concentrated in the oil and
gas sector, which continues to attract funds for oil
and gas exploration and production, liquefied natural
gas projects and related activities. The
telecommunications sector has grown at an explosive
pace, and some investment is being channeled into
manufacturing and industry.


----------------------------------------
DEVELOPMENTS IN MAJOR REGIONAL GROUPINGS
----------------------------------------


7. (U) No significant changes have occurred. Nigeria
remains an active member of ECOWAS and other regional
economic, commercial and financial organizations.


--------------------------------------------- --------
UPDATED INFORMATION ON NIGERIAN PRIVATIZATION EFFORTS
--------------------------------------------- --------


8. (U) More than 30 enterprises - including cement
manufacturing firms, banks and hotels - have been
privatized since the GON's 1999 launch of a three-stage
privatization program. Attempts to privatize the NICON
Hilton Hotel and Nigeria Telecommunications Limited
(NITEL), however, have been unsuccessful. The GON
recently selected a Dutch consortium, Pentascope
International, to manage NITEL until mid-2006 and now
expects to divest at least 51 percent of its shares at
the expiration of that contract.


9. (U) The privatization of Nigeria's National Electric
Power Authority (NEPA) continues to move slowly. Given
the complexities of the sale, NEPA's poor financial
condition, and strong public opposition, the
privatization could take time. NEPA is moving slowly
to unbundle its services. The company will be split
into several autonomous firms encompassing power
generation, transmission, distribution, and billing.


-------------------------------
MAJOR AGOA-RELATED DEVELOPMENTS
-------------------------------


10. (U) Nigeria has not capitalized on AGOA trade
preferences to any discernible degree (oil and gas
products continue to dominate U.S. imports under the
program) and has yet to adopt a visa regime that will
allow it to take advantage of AGOA's textile and
apparel benefits. The GON has, however, amended the
1990 Customs and Excise Management Act to base the
valuation of imports on actual transaction values and
to penalize transshipment of goods by imposing fines of
up to three times the value of the goods involved. The
legislation thereby moves Nigeria closer to satisfying
AGOA-related rules of origin requirements.


--------------------------------------------- ---
EXAMPLES OF U.S. TRADE CAPACITY-BUILDING EFFORTS
--------------------------------------------- ---


11. (U) The USG continues to work with Nigerian trade
associations and businesses to facilitate bilateral
trade and investment. Post supports the Nigerian
Investment Promotion Commission in its efforts to lower
or remove barriers to investment and maintains ongoing
contact with the Nigerian-American Chamber of Commerce,
the Lagos Chamber of Commerce and Industry, and other
trade promotion organizations.


12. (U) The U.S. Commercial Service hosts two week-long
trade fairs annually to showcase U.S. goods and
services available to Nigerian businessmen and holds an
annual agent-distributor forum to explore ways of
improving market access through lower tariffs, more
thorough product certification, and improved local
business practices. In early 2003, the U.S. Commercial
Service also launched its Global Trade and Investment
Management (GTIM) program. GTIM supports Nigerian
entrepreneurs by providing access to online market
development training and trade and investment
information. The program also provides access to a
series of business service centers.


HINSON-JONES

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