US embassy cable - 03ABUJA2184

UNCLAS SECTION 01 OF 02 ABUJA 002184 
 
SIPDIS 
 
SENSITIVE 
 
USDOC/ITA/MAC FOR ASSISTANT SECRETARY LASH 
USDOC/ITA/USFCS FOR BOBETTE ORR 
 
E.O. 12958: N/A 
TAGS: BEXP, BTIO, EINV, NI, AGOA 
SUBJECT: IMPROVING THE ENVIRONMENT FOR AMERICAN INVESTMENT 
IN NIGERIAN INDUSTRIES TO EXPORT UNDER AGOA 
 
SENSITIVE BUT UNCLASSIFIED, NOT FOR PUBLICATION ON THE 
INTERNET OR INTRANET. 
 
1. The Embassy, including FCS, proposes that the Department 
of Commerce consider Instituting a program to improve the 
climate for American private investment in Nigerian 
industries that would export to the U.S. under AGOA.  Such a 
program would seek to create partnerships between individual 
Nigerian firms, the GON, and USDOC to improve the Nigerian 
firm's capability to export to the U.S. under AGOA, and 
thereby to attract U.S. private investments in that Nigerian 
export capability.  Each Nigerian firm that participates 
would agree to a program of benchmarks it must meet, the GON 
would provide organizational and other support, and USDOC 
would make specialized expertise available to the firms via 
consultants. 
 
---------- 
BACKGROUND 
---------- 
 
2. Although there is considerable U.S. business investment in 
Nigeria, precious little goes into industries or agriculture 
exporting to the U.S. under AGOA.  Most of it goes into the 
oil sector; a small amount goes into large projects 
privatized by the Nigerian Government (GON), or vendors to 
the GON, that will have a negligible impact on Nigeria's 
economy or trade patterns.  The Embassy, including FCS, also 
hear gripes all the time about how the USG is not helping 
Nigerians take advantage of AGOA.  Our not helping is not the 
main reason, but it is certainly true that Nigerians do not 
take much advantage of AGOA. 
 
3. While we cannot guarantee that Nigerian firms will take 
full advantage of AGOA if their capabilities improve, we know 
that few of them have the expertise to discover and exploit, 
by themselves, markets in the U.S. they could otherwise 
develop.  The proposed USDOC program could facilitate such 
Nigerian companies' entry into U.S. markets, as well as 
improving and opening them as opportunities for U.S. private 
investment. 
 
---------------- 
PROGRAM PROPOSAL 
---------------- 
 
4. The idea would be for USDOC to launch a partnership with 
the GON and individual Nigerian firms for improving their 
competitiveness in global markets, specifically the U.S via 
AGOA, in order to make their expansion into exports 
attractive for U.S. investors.  The EU did a similar program 
with Tunisia as part of the Association Agreement, and it 
worked very well for all concerned.  A contract is made with 
each firm where: 
 
-- The Nigerian firm commits to meet benchmarks on product 
development, standards, opportunity for foreign investment 
participation (read U.S. private investment), and on 
eventually exporting to the U.S. market. 
 
-- The GON provides organization for the processes of 
screening Nigerian firms to participate and ensuring the 
Nigerian firms meet the benchmarks below.  The GON may also 
be able to provide some seed money (or tax incentives) to the 
firms' development of export capabilities, and perhaps some 
expertise to the firms, and; 
 
-- The USG participates in the screening and makes available 
consultants to provide expertise the GON cannot on export 
product development, marketing, U.S. market standards and 
capital financing. 
 
5. The screening of Nigerian firms seeking to participate can 
be done wholly in Nigeria, by a combination of the GON and 
the Embassy, possibly with the help of an outside American 
contractor in Nigeria.  USDOC in Washington could also 
participate in the screening, if that were preferable. 
 
-------- 
BENEFITS 
-------- 
 
6. The GON would have to commit in advance to facilitating 
investment by U.S. companies in such improved Nigerian firms, 
and the Embassy believes such a USDOC program would also help 
us in advocacy on behalf of other U.S. firms seeking to make 
greenfield investments in Nigeria.  Successful development of 
Nigerian firms' exporting capabilities would also create 
opportunities in Nigeria for U.S. exports, such as capital 
goods, to the Nigerian firms. 
7. For Nigeria, the program would ease the concentration of 
its economy, and especially its exports, on the oil and gas 
sector.  It would also be a highly visible USG commitment to 
AGOA, and to Nigeria's private sector development. 
 
8. Please advise. 
MEECE