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Cablegate: Northern Nigeria Economic Quarterly

R 091239Z OCT 85
FM AMCONSUL KADUNA
TO AMEMBASSY LAGOS
SECSTATE WASHDC 8129

UNCLAS KADUNA 1207

E.O. 12356: N/A
TAGS: ECON EIND ELAB EPET EAGR NI
SUBJECT: NORTHERN NIGERIA ECONOMIC QUARTERLY

1. SUMMARY. PUBLIC ACCEPTANCE OF THE NEW GOVERMENT'S
POLICIES REMAINS TENTATIVE IN THE NORTH. MOST CONSUMER
GOODS ARE IN GOOD SUPPLY, AND PRICES ARE GENERALLY LOWER
THAN A YEAR AGO. DIFFICULTY IN OBTAINING RAW MATERIALS
HAS LED TO PLANT CLOSURES TEMPORARILY IDLING MANY WORKERS,
BUT EMPLOYMENT LEVELS GENERALLY HAVE REMAINED STEADY. THE
AGRICULTURAL PICTURE IS STILL BRIGHT, ALTHOUGH A NUMBER OF
FACTORS MAY REDUCE THE HOPED-FOR RECORD HARVEST. WITH THE
EXCEPTION OF A BRIEF WALKOUT AT THE KADUNA PEUGEOT PLANT,
THE LABOR SCENE HAS BEEN RELATIVELY QUITE. END SUMMARY.

2. THIS IS THE FIRST IN A SERIES OF QUARTERLY ECONOMIC
REPORTS AIMED AT GAUGING PUBLIC REACTION TO THE BABANGIDA
GOVERNMENT AND THE ECONOMY'S RESPONSE TO ITS POLICIES.
THIS INITIAL REPORT FOCUSES PRIMARILY ON KADUNA, BUT
FUTURE REPORTS WILL INCLUDE THE ENTIRE NORTH AND THE SCOPE
WILL BE BROADENED TO INCLUDE ADDITIONAL ECONOMIC
INDICATORS AND REACTIONS.

3. PUBLIC CONFIDENCE IN THE ECONOMY

THE GENERAL PUBLIC CONTINUES TO TAKE A WAIT AND SEE
ATTITUDE TOWARD THE BABANGIDA GOVERNMENT'S ECONOMIC
POLICIES. KADUNA'S NEW GOVERNOR SEEMS KEENLY AWARE OF THE
DISPARITIES BETWEEN THE HAVES AND THE HAVENOTS, AND THE
BASIC ECONOMIC NEEDS OF THE GENERAL PUBLIC SERTAIN TO
BE A MAJOR FACTOR IN DETERMINING WHAT FUTURE ROAD TO
FOLLOW. WHILE POPULAR SENTIMENT HAD TURNED AGAINST THE
FMG IN THE LATTER STAGES OF THE BUHARI REGIME, THE PUBLIC
SEEMS WILLING TO GIVE THE NEW GOVERNMENT THE BENEFIT OF
THE DOUBT. EVEN THE RECENT BANNING OF RICE AND MAIZE
IMPORTS, A MOVE WHICH COULD CAUSE HARDSHIP FOR SOME
PEOPLE, HAS RAISED NO PUBLIC OUTCRY.

4. MARKET SURVEY

--AVAILABILITY OF GOODS: MOST CONSUMER ITEMS ARE IN
GOOD SUPPLY IN KADUNA. AUTOMOBILE SPARE PARTS ARE
OCCASIONALLY AT A PREMIUM, BUT THE SITUATION IS MUCH
IMPROVED FROM A YEAR AGO. TIRES THEN AVAILABLE FOR NAIRA
300 (APPROX. USDOL 330) CAN NOW BE FOUND FOR LESS THAN
NAIRA 100. PETROLEUM PRODUCTS WERE BRIEFLY SCARCE DURING
THE FIRST WEEK OF OCTOBER, EVIDENTLY DUE TO PANIC BUYING
WHEN THE PUBLIC LEARNED THAT THE NIGERIAN NATIONAL
PETROLEUM CORPORATION (NNPC) REFINERY WOULD BE CLOSING
TEMPORARILY FOR ITS REGULAR ANNUAL MAINTENANCE.
DISTRIBUTION PROBLEMS SEEM TO HAVE BEEN SOLVED, AND THE
SITUATION HAS RETURNED TO NORMAL. THE EXPECTED GOOD
HARVEST SHOULD KEEP FOOD SUPPLIES PLENTIFUL IN THE
MARKETPLACE.

--PRICES: PRICES ARE GENERALLY LOWER THAN LAST YEAR
FOR MOST ESSENTIAL COMMODITIES, AGAIN REFLECTING THE GOOD
HARVEST. GRAIN PRODUCTS ARE SELLING AT PRICES 25 TO 50
PERCENT BELOW LAST OCTOBER'S LEVELS. PRICES, HOWEVER, ARE
SUBJECT TO FLUCTUATION DUE TO A VARIETY OF CHANGING
ECONOMIC FACTORS. THE PRICE OF RICE MORE THAN DOUBLED IN
KADUNA'S CENTRAL MARKET AFTER THE OCTOBER 1ST ANNOUNCEMENT
THAT IMPORTATION WOULD BE BANNED, BUT MAIZE PRICES REMAIN
STEADY EVEN THOUGH ITS IMPORTATION HS ALSO BEEN BANNED.
GROUNDNUT OIL PRICES JUMPED AFTER PRESS REPORTS THAT A
SIGNIFICANT PORTION OF THE CROP WILL BE LOST TO ROSETTE
DISEASE. HERE IN KADUNA, BEAN PRICES ALSO HAVE LEAPED
DURING THE PAST TWO WEEKS, EVIDENTLY DUE TO HEAVY INSECT
INFION ON LOCAL FARMS. PRICES FOR NON-FOOD ITEMS,
SUCH AS LAUNDRY DETERGENT, ARE AS MUCH AS 25 PERCENT LESS
THAN 1984 LEVELS.

5. EMPLOYMENT

THE TEMPORARY CLOSURE OF THE PEUGEOT ASSEMBLY PLANT IN
AUGUST AND SEPTEMBER WAS THE MAJOR EMPLOYMENT NEWS IN
KADUNA RECENTLY. THE SIX WEEKS OF FORCED LEAVE IDLED MORE
THAN 4,000 WORKERS, BUT THE PLANT HAS NOW RESUMED
PRODUCTION. DIFFICULTY IN OBTAINING RAW MATERIALS FROM
ABROAD CONTINUES TO BE A PROBLEM FOR MAJOR INDUSTRIAL
CONCERNS IN THE NORTH. PRESS REPORTS SUGGEST THAT THE
STEYR TRUCK PLANT IN BAUCHI MAY ALSO SOON BE FORCED TO
CLOSE TEMPORARILY FOR THE SAME REASON. NO MAJOR
RETRENCHMENT EXERCISES HAVE OCCURRED RECENTLY. THE NEW
STATE GOVERNORS HAVE TALKED ABOUT REDUCING THE NUMBER OF
CIVIL SERVANTS, BUT THEY HAVE ALSO PROPOSED SETTING UP
ALTERNATE EMPLOYMENT SCHEMES, PRIMARILY FARMING PROJECTS,
TO ABSORB THE DISPLACED GOVERNMENT WORKERS.

6. AGRICULTURE

RAINS THROUGHOUT THE NORTH HAVE BEEN EXCELLENT THIS YEAR,
BUT EARLIER PREDICTIONS FOR A BUMPER HARVEST MAY HAVE BEEN
PREMATURE. WHILE CROP PRODUCTION WILL CERTAINLY BE BETTER
THAN MOST PREVIOUS YEARS, A NUMBER OF FACTORS WILL REDUCE
HOPED-FOR RECORD CROPS. IRONICALLY, FLOODING CAUSED BY
TOO MUCH RAIN IN AREAS HIT LAST YEAR BY DROUGHT HAS
DESTROYED MANY CROPS, AND PEST INFESTATION AND DISEASE
HAVE STRUCK ELSEWHERE. ONCE THE HARVEST IS IN, STORAGE
AND DISTRIBUTION SEEM LIKELY TO BECOME PROBLEMS.

7. NEW INDUSTRY

UNIPETROL WILL BE INAUGURATING A NEW MOTOR OIL/LUBRICANT
FACILITY IN KADUNA ON OCTOBER 15. THE PLANT, LOCATED ON
THE NNPC REFINERY COMPLEX, IS HIGHLY AUTOMATED WITH
LARGELY FRENCH-MADE EQUIPMENT. IT WILL SUPPLY OILS AND
LUBRICANTS FOR MUCH OF THE NORTH, GETTING VOST OF ITS RAW
MATERIALS DIRECTLY FROM THE REFINERY; SOME ADDITIVES WILL
BE IMPORTED FROM FRANCE. THE FACILITY WILL ADD ONLY ABOUT
20 JO LOCAL EMPLOYMENT ROLLS.

8. LABOR

THE LABOR SCENE GENERALLY HAS BEEN QUITE IN THE NORTH.
THE ONLY NOTABLE RUMBLINGS WERE AT KADUNA'S PEUGEOT
ASSEMBLY PLANT OCTOBER 4 WHEN WORKERS WALKED OUT AFTER
LEARNING OF COMPANY PLANS TO DEDUCT 15 DAYS' PAY FROM
UPCOMING MONTHLY SALARIES TO MAKE UP FOR DAYS LOST DURING
THE SIX WEEKS OF FORCED LEAVE IN AUGUST AND SEPTEMBER.


LEE

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