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Cablegate: Kaduna Roundtable: Grim Economic Outlook and Lack

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

291225Z Jul 04

UNCLAS SECTION 01 OF 02 ABUJA 001319

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PGOV PREL PHUM ECON NI
SUBJECT: KADUNA ROUNDTABLE: GRIM ECONOMIC OUTLOOK AND LACK
OF REFORMS CONTRIBUTE TO VIOLENCE


1. (U) Summary. The Ambassador recently traveled to Kaduna,
the political nerve center of the North, where he met
political and religious leaders. All agreed that Nigeria's
situation was difficult, with less money in circulation in
spite of outsized oil revenues over the last few years and
President Obasanjo's economic reforms exacting an excessive
toll on the ordinary people. They also identified poverty
and unemployment as two of the principle factors that trigger
seemingly constant clashes among Nigerian communities. End
Summary.

2. (U) On July 15, the Ambassador traveled to Kaduna, the
political nerve center of the North. Long a haven for
retired military officers and politicians, Kaduna provides a
cross-section of northern political currents. The Ambassador
engaged locals on a variety of topics. In addition to a
meeting with the Governor (septel), he also met with a group
of religious and political contacts. They agreed that
Nigeria faced many problems and identified poverty and
unemployment as two of the worst contributors to communal
violence.

--------------
On the Economy
--------------

3. (SBU) Suleiman Hunkuyi, ANPP gubernatorial candidate and
former Kaduna finance commissioner observed that the living
standard of Nigerians was fast diminishing in spite of the
"colossal amount of money generated from oil," adding that
average citizens now found it difficult to meet basic family
obligations. "Many parents already owe school fees and find
it difficult to feed their families," Hunkuyi stated. He
mentioned that half of the shops at the Kaduna Central
Market, the biggest in the state, stand empty due to
Nigeria's dismal economic performance over the past few
years. "Since the purchasing power of most people has been
eroded, traders find it difficult to sell their wares," he
said.

4. (SBU) Retired Colonel Hamid Ali, former Kaduna military
governor and the current Secretary of Arewa Consultative
Forum (ACF), an influential Northern pressure group,
attributed the current economic problems to the shrinking of
capital expenditure. Because the government is a major
player in the Nigerian economy, he said, its failure to
execute capital projects is having a devastating effect on
the economy. According to him, there has been almost no
major capital investment in the country over the last five
years and without this, economic activities will continue to
dry up.

5. (SBU) Bello Suleiman, Minister of Power and Steel under
General Abdulsami Abubakar, blamed the newly introduced GSM
cell phone standard for impoverishing many families. While
Obasanjo recently touted GSM as a success because many young
boys were hawking recharge cards on street corners, Bellos
said that breadwinners now divert money meant for family
upkeep to buying recharge cards. GSM in Nigeria provides
questionable service, but has assumed a its place as a status
symbol in society: many low-income earners struggle to
purchase GSM lines to demonstrate their status.

---------------------------------------
Economic Reforms: a Blessing or Curse?
---------------------------------------

6. (U) The group unanimously averred that the reforms of the
Obasanjo administration were good policies, designed with
good intentions, but they complained that the institutions to
support the reforms were either non-existent or too weak to
implement the needed changes. For example, deregulation of
oil was a laudable policy, they said, but attempts by the
Government to implement this policy without expanding
Nigeria's tattered safety net had entrenched poverty and
encouraged more corruption. Nigerians are poorer now and the
standard of living has plummeted to a level unprecedented in
Nigeria's history, they agreed.

7. (SBU) Ali viewed the current economic reforms as
desirable but said they lacked a "human face." He criticized
reform implementation as "poor and counterproductive." Ali
told the Ambassador that Obasanjo's "boardroom" economic
strategies contradict "practical economic realities" and said
some aspects of the reforms were hurriedly implemented
without considering local conditions. He described the
recent banning of the importation of rice by the Nigerian
government as "hasty" and "untimely," leading to price
increases and excess profits for smugglers. Ali wondered
what the government hoped to gain by the ban when it had
instituted no plans to stimulate local production.

8. (SBU) Hunkuyi echoed Ali's sentiments, emphasizing that
it is counterproductive to ban imports without making
provisions for local substitutes. He claimed that serious
local and international investors who expressed interest in
supporting the reforms had been frustrated. Hunkuyi recalled
recently that an American firm offered to boost local
production of rice in Nigeria by setting up rice mills and
growing the rice locally, providing employment and improving
the quality of the product. According to him, the American
firm had followed all procedures and satisfied all
conditions, but abandoned the project due to harassment by
government officials.

---------------------------
Causes of Communal Violence
---------------------------

9. (SBU) Reverend Bitrus Dangiwa of the Inter-Faith
Mediation Center, a Kaduna-based NGO promoting harmony
between Muslims and Christians, said that politicians and
mischief-makers recruit unemployed youths to advance their
cause during communal crises. In the course of his work,
Dangiwa said he encountered a direct correlation between
poverty and ethnic conflicts. "To address the issue of
conflict, you must properly address the issue of poverty," he
said. He claimed politicians incite the unemployed against
political opponents using religion, land ownership, economic
disparity, and the settler-indigene issue to appeal to the
lowest common denominator.

10. (SBU) Hunkuyi concurred with Dangiwa, pointing out that
there is more tension and political upheaval now than during
the military era, and he also identified poverty as one of
the primary causes of communal unrest. "Unemployed and poor
people do not consider that life has any value. Because of
this they attack, kill, and maim at the slightest
provocation," Hunkuyi commented.

11. (SBU) Colonel Ali blamed the Obasanjo administration's
neglect of agriculture for creating "dislocations and
distortions" in society. He said that in addition to
hastening rural-urban migration, it had created more
unemployment and widened the gap between the rich and poor.
"The escalating cost of agricultural inputs and lack of
stable prices for farm produce have forced many farmers to
abandon this age-long profession in search of elusive and
non-existent urban jobs," exacerbating societal decay, Ali
commented.

-------
Comment
-------

12. (U) All interlocutors at this meeting professed to be
"supporters" of America in Nigeria. As observers of the
Nigerian condition, they each brought a unique view to the
conversation but invariably came back to the same conclusion:
Nigeria's economy is not improving.
CAMPBELL

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