VZCZCXRO8269
PP RUEHMA RUEHPA
DE RUEHUJA #2260/01 2971344
ZNR UUUUU ZZH
P 241344Z OCT 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 1278
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 8139
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 02 ABUJA 002260
SIPDIS
SIPDIS
SENSITIVE
E.O. 12598: N/A
TAGS: ECON EINV EMIN ENRG PGOV NI
SUBJECT: THE LEBANESE BUSINESS COMMUNITY IN NORTHERN NIGERIA
REF: ABUJA 2191
1. (SBU) Summary. The majority of the wealthy Lebanese business
community left Nigeria during the military period and only remnants
remain. Successive poorly planned and executed government policies,
such as government subsidies and import bans, have hurt local
industries. The Nigerian mining sector is rich in high value
minerals, but investors face high risks and so far - little reward.
Nigerian leadership will need to address the concerns of the
business community if it is serious in reaching the heights the new
administration has suggested. End Summary.
2. (SBU) On October 4, 2007, Charge d'Affaires and Econoff met with
Gabriel Ashkar, a well-placed Lebanese businessman based in Kano.
His family settled in Kano in the 1920's, and began business
ventures in processing vegetable oil then expanding into a number of
industries, including breweries and mining.
.
Nigeriazation of the Economic Elites
------------------------------------
.
3. (SBU) Ashkar reviewed the interesting but sad history of
Nigeria's Lebanese community. During the period of successive
military governments a large portion of the "elite" and wealthy
Lebanese community left Nigeria. Those remaining are largely
uneducated and will never be able reach the heights before the
military government took power, Ashkar said. The military
governments were bent on changing the business landscape by creating
laws that replaced expat industrial leadership with Nigerians. He
was critical of government subsidies and import bans especially when
they did not even attain the stated goal of greater control of the
economy by Nigerian businessmen.
4. (SBU) The import bans created and continue to protect industries
that cannot be sustained. Kano did not benefit much from these
policies because it is only a trading center. The "false economy"
created by the subsidies and import bans have left industries in the
north noncompetitive. Ashkar said if subsidies are removed the
industries for which they were created (except textiles) will not
last more than a few years and definitely not in a competitive
environment. He contended that the bans should have been focused on
those products or areas where Nigeria has a comparative advantage,
and Nigeria cannot insulate itself from global competition. In
addition, he cited a number of impediments to business - crumbling
infrastructure, lack of power, expensive telecommunications and
transport. GON policies on manufacturing, agriculture, energy, and
information technology are woefully inadequate, and local businesses
can not continue to rely on individual generators and personal
communications systems.
.
Nigeria's Mining Sector
-----------------------
.
5. (SBU) Ashkar provided a snapshot into the mining sector, where he
has substantial investments. Nigeria has some of the highest
quality minerals (i.e. granite, gold, tin) in the world, and in
large quantities that could be exploited and used as a catalyst for
development. His investments are approximately $40 million in tin
mining and smelting started in 1988, and he owns 40% of Consolidated
Tin Mines with the Nigerian Mining Corporation (NMC), a state owned
corporation. Ashkar reported that in the short-term he has not seen
any tangible returns, and lamented that mining is a long-term
investment. He is seeking to get out of the mining business and NMC
through the Bureau of Public Enterprises who is trying to sell
Consolidated Tin Mines. He hopes to recoup between $7-8 million,
far less than his initial $40 million investment.
.
Is There Hope in the Mining Sector?
-----------------------------------
.
6. (SBU) Due to the lack of accurate geospatial information, Ashkar
believes the only way to realistically exploit the mining sector
would be for the GON to fully survey the topography through
satellite and GPS mapping, followed by preliminary exploration to
determine where the minerals are and in what quantities. The GON
should then hold an international conference to attract large
multinationals that have the money to invest over the long term.
.
Business Community Chagrined
----------------------------
.
7. (SBU) Comment. Ashkar is representative of a number of long-time
Nigeria "hands" who have become more and more disappointed with the
business climate in Nigeria. This group contains Indians, Lebanese
and others that have lived and invested in Nigeria from
pre-independence days. Ashkar and others have seen local industries
devastated by ill-considered and poorly implemented policies. As a
ABUJA 00002260 002 OF 002
result, their desire to continue business operations has waned. If
Nigeria hopes to improve its business conditions, it must address
the concerns of these Nigeria "hands." End Comment.
PIASCIK