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TO RUEHC/SECSTATE WASHDC IMMEDIATE 1431
INFO RUEHAB/AMEMBASSY ABIDJAN PRIORITY 0143
RUEHBP/AMEMBASSY BAMAKO PRIORITY 0054
RUEHOU/AMEMBASSY OUAGADOUGOU PRIORITY 0034
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UNCLAS SECTION 01 OF 03 ABUJA 002380
SIPDIS
SENSITIVE
SIPDIS
DEPARTMENT PLEASE PASS TO USTR (FLISER)
ENERGY FOR CAROLYN GAY
E.O. 12958: N/A
TAGS: ECON ENRG EFIN PGOV PREL NI
SUBJECT: NIGERIANS INTERESTED IN INCREASED US INVESTMENT IN
INFRASTRUTURE AND NON-OIL SECTOR
REF: A. ABUJA 1582
B. ABUJA 2059
C. ABUJA 2191
SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY
1. (SBU) SUMMARY: On November 12 the Deputy Secretary and
A/S Frazer met with bankers, businessmen, government
representatives from telecommunications, trade and commerce,
and Deputy Economic Advisor to the President to discuss the
current investment climate in Nigeria. The bankers were
interested in partnerships with U.S. banks in Nigeria and
creating branches in the U.S. The representative from the
Ministry of Commerce and Industry sought help in encouraging
U.S. Customs to ease U.S. import standards on Nigerian
textiles to take advantage of AGOA. A private businessman
emphasized the need for a bilateral investment/trade
mechanism to spur U.S. investment in Nigeria. The
representative from the Nigerian Communications Commission
urged for more competition in this fast growing sector and
thanked USAID for technical assistance in Nigeria and the
region. Faced with an increasing demand for electricity,
First Bank Chair suggested that the U.S. and Nigeria partner
on nuclear energy projects. END SUMMARY.
BANKING SECTOR
--------------
2. (SBU) Alhaji U.A. Mutallab, Chairman of First Bank (one of
the biggest banks in Nigeria with more than 400 branches and
offices in the UK and South Africa) reported that the bank
was interested in the U.S. market but that U.S. bank
regulators have made it nearly impossible to do business
there with more than one million shareholders. First Bank is
publicly traded on the Lagos Stock Exchange and plans to list
on the London Stock Exchange soon. Nigerian banks are
heavily capitalized and are investing in power, petroleum,
solid minerals and telecom sectors. Mutallab commented that
the bank raised 100 billion naira ($838 million) in a recent
public offering for shares, that was over-subscribed by 400
billion naira.
3. (SBU) Senator Faruk Bello Bunza, Managing Director of
Guaranty Bank, said that Nigerian banks do not provide
sufficient capital to assist in the development of Nigeria's
infrastructure, agriculture sector and industry. Annual
interest rates of 16 to 30% are too high and unsustainable
for Nigerian industries. As a result, industries are
closing, such as the textile industry (reftel A). Bunza
noted that while there are some non-oil American companies
here, U.S. investment is relatively low.
TELECOMMUNICATIONS
------------------
4. (SBU) Funlola Akiode, Head of Economic Analysis, Nigerian
Communications Commission, reported that since 2000 the
number of phone lines in Nigeria have jumped from 500,000 to
8 million, still insufficient to satisfy the high demand.
She said that 50 companies are in the sector, including five
GSM providers and 24 fixed wireless; and are all money-making
ventures. She argued that competition was good and the
sector needed more players particularly to invest in rural
markets. The biggest challenges in the sector were
inadequate power, not enough skilled technicians and
engineers, and insufficient access to funds.
BILATERAL INVESTMENT TREATY
---------------------------
5. (SBU) Obiora Okonkwo, President of the Nigeria-Belgium
Business Forum, stressed that a bilateral investment treaty
(BIT) with the U.S. would be a great benefit to companies
ABUJA 00002380 002 OF 003
like his who seek greater ties to the U.S. Drawing on his
experience in helping to promote a BIT with Belgium, Okonkwo
said that high level support from former President Obasanjo
had been key to finalizing the negotiation. He suggested
that the U.S. and Nigeria discuss a BIT at the upcoming Trade
and Investment Framework Agreement Council meetings in
December. Deputy Secretary and A/S Frazer concurred that the
U.S. wants to improve its relationship with Nigeria, sees
value in establishing economic agreements that demonstrate a
long-term committment to the economic relationship, and
agreed that a BIT should be examined further.
6. (SBU) Ajuji Ahmed, Deputy Economic Advisor to President
Yar'adua, explained that a process of regular meetings began
in 1999 to discuss deeper economic ties and led to the
creation of the Joint Economic Partnership Committeee.
However, those talks ended after 2-3 years. First Bank
Chairman Mutallab underscored that a BIT should be negotiated
to spur U.S. investors. The Deputy Secretary noted that
perhaps now was the time to resurrect efforts to deepen trade
and investment ties.
7. (SBU) Mary Ejembi, Deputy Director for External Trade, at
the Ministry of Commerce and Industry, said Nigerian agencies
met last week to discuss takeaways for the upcoming TIFA and
stressed that U.S. expertise and investment are welcome. She
said that AGOA is not working well in Nigeria because U.S.
import standards are too high for Nigerian textile
manufacturers. A/S Frazer commented that the issue of
standards has been a problem in other countries and we are
working to prevent it from being a barrier to trade.
8. (SBU) The CDA reported that a team from the U.S.
Export-Import Bank was in Lagos exploring increased
opportunities and that the Secretary of the Department of
Commerce would lead a trade delegation to Nigeria in March
2008. Ejembi commented that the Indians, Chinese and
Japanese have been more eager to discuss opportunities than
the U.S.
ELECTRICITY SECTOR - CURSE AND OPPORTUNITY
------------------------------------------
9. (SBU) Ajuji Ahmed said that an important factor limiting
economic development was insufficient electricity. He
reported that less than 3,500 MW are supplied to consumers
from this grid and that unmet demand was well over 10,000 MW.
He said that lack of power has resulted in the closure of
businesses in the manufacturing sector, including textiles
(reftel B). Ahmed explained that a number of Independent
Power Projects (IPPs) were seeking to divert flared natural
gas but that these IPPs are all located in the volatile Niger
Delta. Due to instability in the Niger Delta, a number of
IPPs could be disrupted (reftel C). Ahmed supported
expanding the number of IPPs in other parts of the country to
avoid violent disruptions.
10. (SBU) Mutallab offered that Nigeria and the U.S. should
partner to bring atomic energy to the forefront. He
considered nuclear energy the quickest method to increase the
supply of electricity and an area of expertise that the U.S.
could share with Nigeria. He said Nigeria was open to
foreign operators. The Deputy Secretary said that this was
another area of possible cooperation.
ISLAMIC BANKING
----------------
11. (SBU) The CDA asked the Bankers whether Islamic banking
was a growth area in Nigeria. Mutallab responded that his
bank was interested and that the Nigerian Central Bank has
approved the establishment of Islamic banks. He said that
Islamic banks were "long overdue" in Nigeria and his
ABUJA 00002380 003 OF 003
shareholders overwhelming support them. First Bank is in
negotiations with other banks to create an Islamic bank in
Nigeria.
12. (SBU) Participants:
U.S.
The Deputy Secretary
A/S Frazer
CDA Lisa Piascik
Gustavo Delgado, D Staff
Ted Wittenstein, D Staff
Terry Pflaumer, PolCouns
Robert Tansey, EconCouns
Sharon Cromer, USAID MD
Tony Fernandes, Embassy Notetaker
Nigeria
Obiora Okonkwo, President of the Nigeria-Belgium Business
Forum
Senator Faruk Bello Bunza, MD Guaranty Bank
Alhaji U.A. Mutallab, Chairman of First Bank
Ajuji Ahmed, Deputy Economic Advisor to President Yar'adua
Funlola Akiode, Head of Economic Analysis, Nigerian
Communications Commission
Mary Ejembi, Deputy Director for External Trade, Ministry of
Commerce and Industry
13. (U) The Deputy Secretary's staff has cleared this message.
PIASCIK