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Cablegate: Nigeria: American Business Council Says Customs

VZCZCXRO1595
RR RUEHMA RUEHPA
DE RUEHOS #0766/01 3370601
ZNR UUUUU ZZH
R 030601Z DEC 07
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9631
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 9377
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 LAGOS 000766

SIPDIS

SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY
SIPDIS

STATE FOR AF/W
TREASURY FOR DPETERS, RHALL, RABDULRAZAK
COMMERCE FOR KBURRESS
STATE PASS USTR FOR LISER, AGAMA
STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS
STATE PASS TDA FOR EEBONG,
STATE PASS EXIM FOR JRICHTER
STATE PASS USAID FOR NFREEMAN, GBERTOLIN

E.O. 12958: N/A
TAGS: ECON EINV ETRD PGOV NI
SUBJECT: NIGERIA: AMERICAN BUSINESS COUNCIL SAYS CUSTOMS
REFORM, STABILITY NEEDED FOR INVESTMENT

1. (U) Summary: In a meeting with Embassy Economic
Counselor November 15, representatives of the American
Business Council (ABC) listed the Government of Nigeria's
propensity to announce policies seemingly with little
concern for their impact as problems they would like to see
addressed during Trade and Investment Framework Agreement
(TIFA) talks. They specifically listed inconsistent
enforcement of laws and idiosyncratic changes in
regulations, inability to provide security for persons and
property, and failure to effect customs reform as
priorities. EconCouns stated that improving the business
climate will benefit all businesses, foreign and domestic,
invested in Nigeria, and help to attract new investors. End
Summary.

2. (SBU) EconCouns met with the members of the ABC ahead of
TIFA talks. EconCouns emphasized the need for Nigeria to
make the business climate more predictable, and to
strengthen the current trade relationship. The Government
of Nigeria must uphold previously made contracts and
commitments to companies and investors. Improvements to the
business climate benefit already invested U.S. and Nigerian
businesses and attract more foreign investment. The ABC can
be helpful in focusing efforts of the Government on these
goals.

3. (SBU) Dick Kramer, of Strategic Research and Investment
Nigeria Ltd., deplored what he called the &ready, fire,
aim8 approach of the Nigerian federal government that
contributes to the country,s already volatile business
environment. The government's announcement that it would
not pay cash calls, and comments by the Central Bank
Governor that Nigerian banks are not for sale to foreigners,
have unnecessarily increased investment uncertainty in
Nigeria, he said.

4. (SBU) The regulatory environment in Nigeria is weak;
while good laws may exist at the federal, state and local
levels, they are inconsistently enforced. Investors are
also frustrated by regulations unfavorable to their efforts.
Wole Obayomi, of KPMG, said the recent Lagos State
government revisions of land transfer costs that ignore the
uniform formula written into the existing law has had the
result that capital assets are currently valued at different
rates than were previously used. Godwin Oteri, Johnson Wax
Nigeria Ltd., decried the recent Lagos State energy levy
(which left companies wondering why they should pay a fee
for electricity they don,t consistently receive) and
unrealistic deadlines for registration. The lack of
security has caused Johnson Wax to shut down its night-time
production shifts because police are unable to protect
workers and facilities from criminals.

5. (SBU) Kramer noted that the Federal Government also acts
inconsistently; it recently stated it wants to increase the
VAT, which Kramer views as counterproductive because it
stifles businesses. The African Growth Opportunities Act
(AGOA) offers market access but not production assistance;
companies still must meet the hurdles of producing on their
own*faced with all the aforementioned obstacles. The lack
of customs reform has dissuaded companies from investing, and
the lack of transparency in the entire system makes doing
business difficult.

6. (SBU) COMMENT: The ABC is a fledgling organization
affiliated with the American Chamber of Commerce. Launched
in October 2007, it has not yet developed position papers
precisely articulating its views on trade and the investment
climate. At the group's monthly board meeting, held the week
following EconCouns's visit, the group noted that frivolous
lawsuits intended to harass foreign-invested companie,
import bans and high tariffs were also of concern to ABC
members, and discussed writing a white paper for use at the
TIFA private sector round table. ABC leaders have been in
touch with EconCouns to coordinate efforts in raising doing

LAGOS 00000766 002 OF 002


business issues with a range of GON officials.

7. (U) This cable has been coordinated with Embassy Abuja.
HUTCHINSON

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