US embassy cable - 03LAGOS2023

UNCLAS SECTION 01 OF 03 LAGOS 002023 
 
SIPDIS 
 
 
STATE FOR AF/EPS - DKRZYWDA 
STATE PASS TO USTR - CHAMILTON 
COMMERCE FOR ITA - HVINEYARD 
TREASURY FOR OWHYCHE-SHAW 
 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, ELAB, PREL, PGOV, NI, AGOA 
SUBJECT: NIGERIA: AGOA ELIGIBILITY REVIEW 
 
REF: (A) STATE 263702 (B) 02 ABUJA 02803 
 
 
1. (U) In response to Ref A, U.S. Mission Nigeria is 
pleased to provide the following update to the 2002 
AGOA eligibility review (Ref B).  Nigeria's progress 
toward fulfilling AGOA eligibility requirements has 
been slow and fitful, but progress continues.  Post 
recommends that Nigeria remain eligible for AGOA 
benefits. 
 
 
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PROGRESS TOWARD A MARKET-BASED ECONOMY 
-------------------------------------- 
 
 
2. (U) Nigeria continues to make progress toward 
establishing a market-based economy that protects 
private property rights and minimizes government 
interference.  Since its 1999 launch of a three-stage 
privatization program, the GON has privatized 25 
enterprises (among them hotels, banks and cement 
manufacturing firms) and moved toward the privatization 
of several others, including the National Electric 
Power Authority (NEPA) and Nigeria Telecommunications 
Limited (NITEL).  The GON plans to split NEPA into 
autonomous generating, transmission, distribution and 
billing firms and expects to divest 51 percent of its 
shares in NITEL at the expiration of the firm's three- 
year management contract with Pentascope International, 
a Dutch communications consortium.  The GON also raised 
fuel prices and has hinted at plans for an additional 
increase, thereby reaffirming its commitment to 
reducing government interference in the economy. 
 
 
3. (U) Progress toward establishing a rules-based open 
trading system has been slower; the GON still tends to 
change policies suddenly and arbitrarily.  In March 
2003, the GON once again cut duties on many items 
(mostly raw materials and capital equipment) and raised 
them on others (primarily finished goods and 
agricultural products).  A protectionist bent is 
increasingly evident in Nigerian trade policy, as many 
items - frozen poultry, certain printed fabrics, 
cassava, ice cream, fruit juice in retail packs, 
toothpicks, beer and pasta - are simply banned, 
ostensibly to foster domestic production, even though 
domestic industries cannot meet demand. 
 
 
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THE RULE OF LAW AND POLITICAL PLURALISM 
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4. (U) Ethnic and religious tensions pose significant 
challenges to GON efforts to establish the rule of law 
and political pluralism.  Communal clashes have 
resulted in numerous injuries and deaths, and Nigeria's 
under-funded, under-trained and under-equipped police 
force is often hard-pressed to stop or prevent 
violence.  The Nigerian military has managed to calm 
some particularly violent areas, but looting and 
indiscriminate killing have marred its efforts. 
 
 
5. (U) Civil and criminal cases move through Nigeria's 
courts slowly, and the country's judicial system 
generally lacks the resources and administrative 
capability to function effectively.  The adoption of 
Sharia law in 12 of Nigeria's northern states remains a 
contentious issue, and few people in government or the 
courts are willing to address the problem.  Still, the 
Supreme Court and appellate courts command wide 
respect, and the former continues to assert its role as 
the final arbiter of disputes in Nigeria's ongoing 
efforts to adopt political and economic reforms. 
 
 
6. (U) Nigeria's record of political pluralism is 
slightly better.  Thirty political parties contested 
the spring 2003 federal and state elections, and 
various parties' elected officials share power at all 
levels.  Despite reports of widespread electoral fraud, 
President Obasanjo's administration enjoys broad 
support, and the vast majority of Nigerians continue to 
support democratic practices. 
 
 
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ELIMINATION OF BARRIERS TO U.S. TRADE AND INVESTMENT 
--------------------------------------------- ------- 
 
 
7. (U) Nigeria continues to make progress toward 
creating an environment conducive to domestic and 
freign investment.  The GON allows for the free 
movement of foreign exchange across Nigeria's borders 
and generally does not discriminate against U.S. goods 
or services.  Foreign firms are allowed to invest in 
all sectors of the Nigerian economy, and investors who 
abide by regulations governing the establishment of 
businesses are assured national treatment. 
 
 
8. (U) Nigeria's record of intellectual property rights 
protection has improved.  The country is party to 
numerous conventions and agreements regarding patent, 
trademark and copyright protection, and laws generally 
favor intellectual property owners and impose criminal 
penalties on violations of owners' rights.  The GON has 
introduced legislation to create a quasi-independent 
intellectual property rights commission and bring 
Nigeria into full compliance with the WTO TRIPS 
agreement.  Licensed software and visual materials are 
better protected now than they once were.  Still, 
scarce resources and a lack of expertise make 
enforcement of intellectual property rights difficult. 
 
 
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POVERTY REDUCTION AND PROMOTION OF PRIVATE ENTERPRISE 
--------------------------------------------- -------- 
 
 
9. (U) The GON recently unveiled a new economic plan, 
the National Economic Empowerment and Development 
Strategy, that outlines strategies for attaining macro- 
economic stability (with emphasis on low inflation and 
stable interest and exchange rates), achieving annual 
GDP growth of 5-7 percent, and reducing poverty.  The 
plan reflects the GON's commitment to fiscal discipline 
and public sector reforms and emphasizes health, 
education and agriculture.  If the plan is implemented 
effectively (a far from certain prospect), the GON may 
begin to make progress in improving the living 
standards of the two-thirds of Nigerians who live in 
poverty. 
 
 
10. (U) The GON continues to promote the development of 
private enterprise through its Small and Medium 
Industries Equity Investment Scheme, under which banks 
are required to set aside 10 percent of before-tax 
profits for equity investments in industrial 
enterprises.  80 banks had set aside $103 million but 
had invested only ten percent of the available funds in 
36 different projects as of December 2002. 
 
 
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EFFORTS TO COMBAT CORRUPTION 
---------------------------- 
 
 
11. (U) Nigeria continues to make progress toward 
reducing corruption.  A federal anti-corruption 
commission is in place, and public enterprises are 
regularly audited.  The GON awards government contracts 
under an increasingly transparent open tender system 
and now subjects federally funded capital projects over 
USD 10,000 to due diligence tests.  In general, the GON 
has succeeded in reducing the most blatant forms of 
corruption; it has been less successful, however, in 
preventing back-room maneuvers that bias decisions. 
 
 
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PROTECTION OF INTERNATIONALLY RECOGNIZED WORKER RIGHTS 
--------------------------------------------- --------- 
 
 
12. (U) The Nigerian Constitution protects the right of 
association and the right to organize and bargain 
collectively, but several statutory restrictions remain 
in place.  Only one labor federation, the Nigeria Labor 
Congress, is recognized, but the GON has indicated that 
it may amend existing legislation to allow multiple 
trade federations. 
 
 
13. (U) Nigerian law outlaws forced or bonded labor, 
prohibits the employment of children younger than age 
15 in commerce and industry, and restricts other child 
labor to home-based agricultural or domestic work for a 
maximum of 8 hours per day.  Minimum wages, hours of 
work, and general health and safety provisions are 
statutorily mandated, but enforcement remains weak. 
The private sector's reliance on casual or part-time 
labor is a problem, particularly as casual workers are 
denied benefits and prohibited from joining labor 
unions.  The GON has been slow to address the issue, 
but increasingly loud protests from Nigerian workers 
may prompt progress. 
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U.S. NATIONAL SECURITY AND FOREIGN POLICY INTERESTS 
--------------------------------------------- ------ 
 
 
14. (U) Nigeria does not engage in activities that 
undermine U.S. national security or foreign policy 
interests. 
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PROTECTION OF INTERNATIONALLY RECOGNIZED HUMAN RIGHTS 
--------------------------------------------- -------- 
15. (U) The GON's human rights performance has been 
mixed.  There have been improvements in several areas, 
but serious problems remain.  Nigeria does not support 
international terrorism; on the contrary, it has been a 
staunch ally in the U.S.-led war on terror. 
 
 
HINSON-JONES