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Cablegate: Change of Management at National Hospital,

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

241055Z Jun 04

UNCLAS SECTION 01 OF 02 LAGOS 001291

SIPDIS

E.O. 12958: N/A
TAGS: TBIO SOCI ECON PGOV NI
SUBJECT: CHANGE OF MANAGEMENT AT NATIONAL HOSPITAL,
ABUJA: RISKS AND OPPORTUNITIES


1. Summary. In early May 2004, President Obasanjo
canceled the contract of the expatriate management team
of the National Hospital of Abuja, a year before it was
to be up for review. The British managers had been
facing discontented staff, equipment breaking down, and
the envy of Nigerian professionals who believe they are
as qualified as were the expatriates to run the
hospital. To do this well, the interim management team
will have to liquidate substantial salary arrears and
ensure repair and maintenance of key equipment.
Commissioned in 1999, the hospital had state-of-the art
equipment that risks falling into disrepair unless the
new team effects a quick turnaround. The time may be
right for U.S. firms like Adams & Associates to take up
the challenge. End summary.

2. In April 2004, Obasanjo dissolved the governing
board of the National Hospital, Abuja and replaced it
with an interim management committee. He also
terminated the GON's management services agreement with
International Hospitals Group Limited, a British firm,
at that time. Obasanjo's action may have been
motivated in part by longstanding unresolved labor
issues at the hospital. According a Daily Times report
of October 3, 2003, the hospital staff was then owed 34
months salary arrears. By then, IHG had been managing
the National Hospital about a year; that is, since
November 2002 based on a contract signed in February
2002. Perhaps these arrears should not be attributed
solely to the IHG, however. The Daily Times further
reported that while the Presidency had released funds
to cover 17 of the 34 months in arrears, the Hospital
had, as of October 2003, not confirmed receipt of such
funds.

3. Whether such funds were ever disbursed is
questionable. It is possible that the GON withheld
these funds from the National Hospital on the grounds
that its contract with IHG was generous enough for the
latter to cover the hospital's personnel costs. An
article that appeared in ThisDay, a leading Nigerian
daily newspaper, in late 2002 or 2003 asserted that IHG
was to receive $6.55 million annually over a ten-year
period. The award of the contract had provoked the ire
of a former speaker of the Federal House of
Representatives, Ghali Umar Na'Abba. At his
instigation, the Special Project Committee of the House
had issued a report concluding that "for reasons of
cost., availability of Nigerian doctors and personnel
here and abroad to do this job, national security and
pride, stemming the brain-drain, etc., the [Special
Project Committee] advised that the management contract
option be given another thought if not entirely put
away."

4. Critics of the contract had alleged that that the
British firm lacked experience and the capability to
handle the project. Obasanjo replied that "the
selection process [had] adopted international bidding
standards through transparent and competitive
tendering." The President had further noted that
unlike other bidders for the contract, IHG's proposed
professional fee had been among the lowest and IHG had
submitted audited accounts of its operations covering
the preceding six years. More important, IHG had been
the only bidder offering to invest in the National
Hospital. While more than a year ago Na'Abba had
asserted that staff morale had plummeted following the
news of the proposed privatization of the hospital, as
recently as May 11, 2004 the Daily Trust claimed that a
South African firm was then negotiating to buy the
hospital.

5. Whether the change in management at National
Hospital, Abuja is a sign that privatization is moving
along is arguable. The communiqu issued at the end of
the annual general conference of the Nigerian Medical
Association on May 2, 2004 at Kwara Hotels, Ilorin
gives cause for concern. The communiqu noted that
"the association commends the Federal Government for
terminating its contract with the IHG Management
Consultants hitherto engaged to manage the National
Hospital and bringing back on board Nigerians to manage
the hospital. The Association sees this as a positive
development, as it has always affirmed its firm belief
in the ability of Nigerian doctors to manage the
Nation's hospitals. The Association hopes that the
newly engaged indigenous managers will be given the
utmost assistance and free hand in their efforts to
reposition the National Hospital."

6. Plans for the establishment of the National
Hospital, Abuja, had been on the drawing board a long
time. Former Nigerian president Shehu Shagari first
suggested the project on September 23, 1981. His plan
was derailed until the mid nineties when the wife of
the former dictator Sonny Abacha declared in Beijing in
1996 that his government would soon build was then to
become the National Hospital for Women and Children.
The hospital was commissioned in May 1999 by the
military chief of state General Abdulsalami Abubakar.
A year later, President Obasanjo approved its change of
name to National Hospital, Abuja, to confirm its access
to male and female patients.

7. Comment. The performance of the management teams
of the National Hospital, Abuja has been less than
stellar since its opening five years ago. The politics
of labor may have prevented IHG from performing as well
as it might have under a less politicized clime. The
risk is great that the interim Nigerian managers will
do no better. The Daily Trust report of May 11 suggest,
however, that the GON may be prepared to weather the
storm. If that report is correct, Obasanjo's
termination of the contract with IHG may have provided
an opportunity for a firm like Adams and Associates of
Cambridge to manage or invest in the National Hospital,
Abuja. This U.S. company is working with EX-IM Bank on
other public health projects in Nigeria and might be
prepared to take up this challenge.

Kramer

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