Cablegate: Analysis of Application for Opic Finance: Jackdan

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

301507Z Aug 05




E.O. 12958: N/A

REF: STATE 148325

1. Per action request in reftel, Post submits observations on
the planned OPIC loan of USD 2.4 million to support the
development of Jackdan Breweries Nigeria Limited, a
microbrewery and water treatment and bottling project in Uyo,
Akwa Ibom State.

2. There is a significant consumer base for beverages of all
types in Nigeria; however, the two main producers, Nigerian
Breweries and Guinness Nigeria, have tight control on the
production side of this equation. Their market strength and
lack of interest in encouraging competition would make it
hard on potential newcomers. South African Breweries is the
only foreign firm to have penetrated the Nigerian market on
any appreciable scale. The most successful recent launch of
an alcoholic beverage was the introduction of Gordon Spark, a
fruity gin drink, by Guinness. The launch was successful in
large part because of the participation by Guinness. Support
from one of the Nigerian major producers is a large factor to
success in this market.

3. The Foreign Commercial Service (FCS) reports no knowledge
of Jackdan Breweries or its owner, Mr. Daniel Jack. The
governor of Akwa Ibom State, Victor Attah, is a well known
figure. He is U.S. trained and seeks U.S. investments for
state projects. These projects, however, tend to be large,
and sustained funding has been a problem. For instance, work
with General Electric (GE) on a power plant began in 2001,
but the plant is not operational. Construction has also
begun on a hangar for an airport; however, an international
airport already exists within 383 kilometers at nearby Port
Harcourt. .

4. Akwa Ibom may not be the best of locations for a brewery.
Most of the demand for beers lies west of Akwa Ibom, and the
road networks connecting East and West are poor. Both
Nigerian Breweries and Guinness have facilities in Aba, Abia
State which is 351 kilometers from Akwa Ibom's capital.
These facilities cover much of the demand in the eastern
regions, and transportation networks from Aba are much more
friendly to national distribution than UYO. A startup would
do better either in Aba or further west near Lagos. Post
would advise that a detailed feasibility study be conducted
on this project before proceeding.

5. Political risks to companies operating in Nigeria include
agitation by local communities who may be politically
disaffected or motivated by monetary gain. Risks include
physical attacks on company personnel or infrastructure.
However, we are not aware of the beverage industry being the
target of such community opposition in the past. The U.S.
Department of State maintains a travel advisory for Nigeria,
noting, "Violent crime committed by ordinary criminals, as
well as by persons in police and military uniforms, can occur
throughout the country."

6. This cable has been cleared by Embassy Abuja.

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