Cablegate: Nigeria: Proposed Post-Jepc Bilateral Economic

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

UNCLAS SECTION 01 OF 03 ABUJA 000387

SIPDIS

AF/W, E FOR APENCE, NSC

E.O. 12958: N/A
TAGS: ECON ETRD EINV NI
SUBJECT: NIGERIA: PROPOSED POST-JEPC BILATERAL ECONOMIC
COMMITTEE

1. This cable contains an action request in para 14.

2. During extensive discussions with GON officials late last
year and throughout this month, including the President's
Chief Economic Advisor (CEA), we have reached general
agreement on a way forward on a post-JEPC arrangement. This
new arrangement mixes elements of a new approach to economic
cooperation with those elements of the former JEPC that
should be continued. The JEPC focused almost exclusively on
discussions regarding policy and institutional reform. This
top-down perspective remains a major component of the new
model. However, to stimulate actual business ventures and
activities that demonstrate the benefits of reform, the new
model weds the top-down with a bottom-up approach. Under
this complementary arrangement, the proposed Economic
Committee would form working groups on non-oil trade, direct
investment, agricultural infrastructure and energy to
identify and facilitate discrete projects and activities.
This structure would require the identification of feasible
projects/activities and would wed this identification to a
focus on problem-solving in order to turn the feasible into
actual progress on the ground.

3. To effectuate this new approach, the working groups would
meet more frequently than the full Committee in order to
achieve substantive progress on the concrete objectives in
the enumerated sector. The Committee could meet
periodically, for example, semi-annually or annually, while
the working groups would convene as appropriate, perhaps
monthly in Abuja and quarterly with some or all Washington
participants.

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Time and Place
--------------

4. The initial meeting of the Lead Committee has been
proposed for April 16-17 or May 7-8, 2002. Both sides agree
to hold the first meeting in Washington to best serve the
goal of maximizing high-level U.S. government and private
sector participation.

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The Process
------------

5. The Mission and GON have basically outlined the following
sequence of preparations for the Washington session.

-- First, we have informally constituted a U.S.-GON
preparatory committee comprised of U.S. Mission elements
(Pol/Econ and USAID) and GON officials (CEA office, Commerce
Ministry, Vice President's office).

-- Second, with Washington's assent, the Embassy will draft a
working paper that outlines the concepts of the new JEPC.
This paper will be shared with GON members of the preparatory
committee and is intended to memorialize our mutual agreement
to the new approach and to serve as the foundation for
further preparations. The working paper will exactly mirror
the information contained in this cable.

-- Third, after the GON endorses the working paper, the
preparatory committee will hold meetings on the particular
working groups to be recommended to the Lead Committee in
Washington. For each working group, the preparatory
committee will develop papers containing recommendations
focusing on the projects for the working group and
composition of the working group, i.e., what U.S. and Nigeria
agencies will be members of which groups.

-- Fourth, the deliberations of the preparatory committee
will also develop recommendations on the agenda and make-up
of the delegation to the Lead Committee meeting.
Additionally, it will make recommendations regarding private
sector and state and local government participation in the
Lead Committee sessions and for the working groups.

-- Fifth, the Lead Committee will meet. The Lead Committee
is exactly what the name suggests -- it is the committee that
provides overall policy guidance and the bureaucratic muscle
needed to make this approach work. It is the Lead Committee
that tasks the working groups and from which these working
groups get their mandate. As such, the Lead Committee will
discuss the framework issues of investment, trade,
agriculture and energy, providing policy direction on how
these issues should be pursued within the working groups.
The Lead Committee will also discuss and approve/reject the
recommendations made by the preparatory committee regarding
the membership and mandate of the working groups, the
projects/activities for each group and private sector and
state government participation in the working group.

----------------------
Five Working Groups
----------------------

6. The Mission and GON have preliminarily agreed to suggest
five working groups to the Lead Committee. For each working
group, the Committee would identify specific activities or
case studies. For example, the Investment Working Group may
be tasked with the case study of helping to revive the
textile industry in Kano through domestic, U.S. or perhaps
other foreign investment. By identifying obstacles to
bringing in U.S. investment in textiles, the working group
would develop solutions to problems in Kano as well as
determine if these solutions have more general application in
the Nigerian economy.

7. Each working group would have a core group of members from
both the Nigerian and U.S. sides that would participate in
all activities of that working group. Also, each group would
have ancillary members agencies and persons who might be
called to attend particular working group sessions dealing
with an issues within that agency's or person's ken. The
five suggested working groups are:

-----------------------------
Investment in Non-Oil Sectors
-----------------------------

8. This working group would focus on identifying and bringing
to fruition actual non-oil direct investment. Possibilities
for this working group include investment in Kano's textile
sector, Kaduna's solid minerals sector, and Nigeria's housing
sector. The core working group would include the State
Department, USAID and Department of Commerce on the U.S.
side. The Office of the Vice President, Office of the Chief
Economic Advisor, Ministry of Commerce and Nigerian
Investment Promotion Council would form the core elements on
the Nigerian side. To address a specific objective, such as
Kano's textile sector, TDA, OPIC and EXIM might be involved
on the U.S. side while the Kano State government would be
involved on the Nigerian side.

9. Investment in Nigeria's housing sector is another specific
objective that could be tasked to this working group. The
lack of sufficient low- and medium-income housing in urban
areas has become a major political issue for the Obasanjo
Administration. Providing relief in this area would have a
positive impact on the lives of average Nigerians and be
viewed as a demonstrable 'democracy dividend'. TDA is
currently reviewing a proposal to conduct a feasibility study
on developing a secondary mortgage financing market. Based
on the study's recommendations, the working group could
assemble the know-how and provide impetus to move this
project forward. In addition to the core working group
participants, others working the housing issue might include
Fannie Mae/Freddie Mac, OPIC and TDA on the U.S. side and the
Ministry of Works and Housing on the Nigerian side.

----------------
Bilateral Trade
----------------

10. The Committee might establish a working group to
encourage the export of specific goods under AGOA, such as
footwear or leather. To support this objective, the Embassy
has $750,000 in ESF committed to conduct AGOA-related
feasibility studies. These feasibility studies will support
investment in industries that benefit from AGOA and could
lead to the development of products for export. Core working
group participants would include State, USAID, Commerce and
USTR on the U.S. side and the Office of the CEA, Office of
the Vice President, Ministry of Commerce and Export Promotion
Council on the Nigerian side. Sectoral manufacturing
associations would be included in the working group on an
issue-specific basis.

---------------------------
Agriculture Infrastructure
---------------------------

11. This committee would deal with non-trade, agriculture
issues. To develop the agriculture sector, Nigeria must
improve its agriculture infrastructure, such as feeder rural
roads, increase capacity and productivity, pursue
opportunities in biotechnology, and explore commodity trading
and price stabilization methods. Core working group
participants would include State, USAID and USDA on the U.S.
side with the Office of the CEA, Office of the Vice President
and Ministry of Agriculture on the Nigerian side. The
Ministry of Science and Technology would be included in
discussions regarding biotechnology. Additional working
sub-groups may be included to address financial issues
related to commodity trading and price stabilization

-------
Energy
-------

12. Energy comprises the largest commercial component of the
U.S.-Nigeria relationship. This working group would address
bilateral energy issues as they arise. Specific topics might
include Nigeria's oil exports to the U.S., deregulation and
privatization of the power industry, opportunities for U.S.
investment in power production and oil refining, and problems
U.S. energy companies may be experiencing in Nigeria. Core
working group members would include State, USAID, and
Department of Energy on the U.S. side with the Office of the
CEA, the Office of the President, the Ministry of Power and
Steel and Nigerian National Petroleum Corporation (NNPC) on
the Nigerian side. Additional working group participants
would be invited on an as needed basis.

--------------------------------
Policy Reform and Implementation
--------------------------------

13. This working group would deal primarily with policy
issues that arise from the other four working groups. For
example, if the Investment Working Group decided that a
specific customs regulation governing the importation of
cotton or yarn was prohibiting foreign investment, not just
for this project but more generally in the textile sector,
the Policy Reform Working Group would be informed and tasked
with pushing that particular regulatory change through the
national bureaucracy. It would also look at economic policy
problems generated by the Lead Committee and private sector
that cannot be properly addressed by other working groups.
The participants will coordinate and implement policy reforms
needed to achieve the specific objectives identified by the
Economic Committee. Core working group members would include
State and USAID on the U.S. side and the Office of the CEA
and Office of the Vice President on the Nigerian side.

14. Action requested: Post requests the Department's
approval of this amended concept for the U.S.-Nigerian
Economic Committee. Once we have received Washington's
approval, we will forward the working paper to the GON.
Simultaneously, we will engage in a conversation with the GON
and Washington that, as the process unfolds, will determine
the specific agenda for the Lead Committee meeting as well as
the specific role the USG agencies and the U.S. private
sector, including the CCA, will have at the Lead Committee
meeting and beyond.
Jeter

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