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Cablegate: Improving the Environment for American Investment

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 002184

SIPDIS

SENSITIVE

USDOC/ITA/MAC FOR ASSISTANT SECRETARY LASH
USDOC/ITA/USFCS FOR BOBETTE ORR

E.O. 12958: N/A
TAGS: BEXP BTIO EINV NI AGOA
SUBJECT: IMPROVING THE ENVIRONMENT FOR AMERICAN INVESTMENT
IN NIGERIAN INDUSTRIES TO EXPORT UNDER AGOA

SENSITIVE BUT UNCLASSIFIED, NOT FOR PUBLICATION ON THE
INTERNET OR INTRANET.

1. The Embassy, including FCS, proposes that the Department
of Commerce consider Instituting a program to improve the
climate for American private investment in Nigerian
industries that would export to the U.S. under AGOA. Such a
program would seek to create partnerships between individual
Nigerian firms, the GON, and USDOC to improve the Nigerian
firm's capability to export to the U.S. under AGOA, and
thereby to attract U.S. private investments in that Nigerian
export capability. Each Nigerian firm that participates
would agree to a program of benchmarks it must meet, the GON
would provide organizational and other support, and USDOC
would make specialized expertise available to the firms via
consultants.

----------
BACKGROUND
----------

2. Although there is considerable U.S. business investment in
Nigeria, precious little goes into industries or agriculture
exporting to the U.S. under AGOA. Most of it goes into the
oil sector; a small amount goes into large projects
privatized by the Nigerian Government (GON), or vendors to
the GON, that will have a negligible impact on Nigeria's
economy or trade patterns. The Embassy, including FCS, also
hear gripes all the time about how the USG is not helping
Nigerians take advantage of AGOA. Our not helping is not the
main reason, but it is certainly true that Nigerians do not
take much advantage of AGOA.

3. While we cannot guarantee that Nigerian firms will take
full advantage of AGOA if their capabilities improve, we know
that few of them have the expertise to discover and exploit,
by themselves, markets in the U.S. they could otherwise
develop. The proposed USDOC program could facilitate such
Nigerian companies' entry into U.S. markets, as well as
improving and opening them as opportunities for U.S. private
investment.

----------------
PROGRAM PROPOSAL
----------------

4. The idea would be for USDOC to launch a partnership with
the GON and individual Nigerian firms for improving their
competitiveness in global markets, specifically the U.S via
AGOA, in order to make their expansion into exports
attractive for U.S. investors. The EU did a similar program
with Tunisia as part of the Association Agreement, and it
worked very well for all concerned. A contract is made with
each firm where:

-- The Nigerian firm commits to meet benchmarks on product
development, standards, opportunity for foreign investment
participation (read U.S. private investment), and on
eventually exporting to the U.S. market.

-- The GON provides organization for the processes of
screening Nigerian firms to participate and ensuring the
Nigerian firms meet the benchmarks below. The GON may also
be able to provide some seed money (or tax incentives) to the
firms' development of export capabilities, and perhaps some
expertise to the firms, and;

-- The USG participates in the screening and makes available
consultants to provide expertise the GON cannot on export
product development, marketing, U.S. market standards and
capital financing.

5. The screening of Nigerian firms seeking to participate can
be done wholly in Nigeria, by a combination of the GON and
the Embassy, possibly with the help of an outside American
contractor in Nigeria. USDOC in Washington could also
participate in the screening, if that were preferable.

--------
BENEFITS
--------

6. The GON would have to commit in advance to facilitating
investment by U.S. companies in such improved Nigerian firms,
and the Embassy believes such a USDOC program would also help
us in advocacy on behalf of other U.S. firms seeking to make
greenfield investments in Nigeria. Successful development of
Nigerian firms' exporting capabilities would also create
opportunities in Nigeria for U.S. exports, such as capital
goods, to the Nigerian firms.
7. For Nigeria, the program would ease the concentration of
its economy, and especially its exports, on the oil and gas
sector. It would also be a highly visible USG commitment to
AGOA, and to Nigeria's private sector development.

8. Please advise.
MEECE

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